Exhibit 10.2

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Amended and Loan and Security Agreement (as amended hereafter, this
“Agreement”) is entered into as of May 26th, 2020 and confirms the understanding
and agreement by and between TECH CAPITAL, LLC, a California limited liability
company (“Lender”), with its headquarters at 2010 North First Street, Suite 300,
San Jose, California 95131 (Facsimile No. 408-467-2393), and NEPHROS, INC., a
Delaware corporation (“Borrower”), with its headquarters at 380 Lackawanna
Place, South Orange, NJ 07079 (its “Chief Executive Office”) (Facsimile No.
202-343-5207), regarding the loans to be made by Lender and Lender’s terms and
conditions.

 

RECITALS

 

A. Lender and Borrower previously entered into that certain Loan and Security
Agreement dated August 16th, 2017, as modified from time to time including
pursuant to that certain First Modification to Loan and Security Agreement
(collectively, the “Prior Form Loan Agreement”), and together with related
documents entered into from time to time in connection therewith (collectively,
the “Prior Form Related Loan Documents”). As of the date hereof, the Obligations
outstanding under the Prior Form Loan Agreement are $315,791.10 (the
“Outstanding Revolving Loan Obligations”). Borrower wishes to prepay all of the
Outstanding Revolving Loan Obligations, and Lender is amenable to same subject
to Borrower’s payment of the related Prepayment Fee.

 

B. Borrower previously executed in favor of Lender that certain Secured
Promissory Note (Single Advance – Non-Revolving) dated March 27th, 2018 in the
original principal amount of $1,187,000.00, as modified from time to time
(collectively, the “Prior Form Term Note”), which, as of the date hereof, has an
outstanding balance of $749,108.15 (the “Outstanding Term Loan Obligations”).

 

C. Borrower and Lender wish to amend and restate: (a) the Prior Form Loan
Agreement in its entirety in order to, among other things, eliminate Borrower’s
ability to obtain, and Lender’s obligation to make, Advances thereunder; and (b)
the Prior Form Term Note but with the Outstanding Term Loan Obligations as of
the date hereof in the amount of $749,108.15 hereby reaffirmed by Borrower and
to remain outstanding, due and payable pursuant to the terms of the Amended and
Restated Secured Promissory Note (Single Advance – Non-Revolving), being entered
into concurrently herewith (the “Amended and Restated Term Note”).

 

D. Accordingly, subject to the fulfillment of the Conditions Precedent set forth
in Section 51 below (including the permanent repayment of the Outstanding
Revolving Loan Obligations and payment of the related Prepayment Fee), the
parties hereby agree to amend and restate: (a) the Prior Form Loan Agreement on
the terms and conditions set forth herein; and (b) the Prior Form Term Note on
the terms and conditions set forth in the Amended and Restated Term Note.

 

AGREEMENT

 

1. Intentionally Omitted.

 

2. “Value” shall mean the lower of cost or fair market value. “Premises” shall
collectively mean the Chief Executive Office and 1089 Hudson Street, Union, New
Jersey 07083 (“L&A,” a third party warehouse), Borrower’s existing additional
place(s) of business, and Borrower’s hereafter additional place(s) of business
(individually and collectively, the “Other Locations”).

 

3. All Obligations, whenever and however created, shall become immediately due
and payable without demand upon the occurrence of an Event of Default (as
defined in Paragraph 27) or in the case of termination (as set forth in
Paragraph 32), whether by notice, lapse of time or otherwise, whichever occurs
first. Borrower shall be provided on-line internet access (or other access in
Lender’s discretion) to information regarding the Obligations, and such
information shall be conclusively presumed to be correct and constitute an
account stated unless, within thirty (30) days following any such information
first becoming available, Borrower delivers written objection thereto to Lender.

 

4. Obligations hereunder shall bear interest, on the average daily outstanding
balance, at the rate applicable to the Term Note obligations (the “Rate”).

 

5. Intentionally Omitted.

 

Page 1 of 12

 

 

6. This Agreement secures the following: (a) Borrower’s Obligations; (b) all of
Borrower’s other present and future obligations to Lender; (c) the repayment of
(i) any amounts that Lender may advance or spend for the maintenance or
preservation of the Collateral (as defined herein below) or any collateral
provided by any Guarantor (as defined in Paragraph 23); and (ii) any other
expenditures that Lender may make under the provisions of this Agreement or for
the benefit of Borrower; (d) all amounts owed under any modifications, renewals
or extensions of any of the foregoing obligations whether or not of the nature
contemplated at the date hereof; (e) all other amounts now or in the future owed
by Borrower or any Guarantor to Lender; (f) any of the foregoing and interest
thereon that arises after the filing of a petition by or against Borrower under
the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code § 362 or otherwise; and (g) interest on the
preceding amounts as set forth in this Agreement or the Loan Documents, or if no
such agreement, at the maximum rate permitted by law ((a) through (g)
collectively, the “Obligations”). These Obligations shall be secured by a
continuing security interest in all of the personal property and trade fixtures
now owned or hereafter acquired by Borrower whether now existing or hereafter
arising and wherever located, together with all collateral now or hereafter
described in any form UCC-1 filed against Borrower naming Lender as the secured
party, including without limitation, (1) all Accounts; (2) all Chattel Paper
including without limitation Electronic Chattel Paper; (3) all Inventory; (4)
all Equipment; (5) all trade fixtures and all Fixtures if real property
collateral is involved; (6) all Instruments; (7) all Financial Assets, including
without limitation, Investment Property; (8) all Documents; (9) all Deposit
Accounts; (10) all Letter of Credit Rights; (11) all General Intangibles
including without limitation copyrights, trademarks, and patents in all
countries, Payment Intangibles and Software, and all rights in and to domain
names in whatever form, and all derivative URLs; (12) all Supporting
Obligations; (13) any Commercial Tort Claim listed on any schedule provided
herewith or hereafter; (14) all returned or repossessed goods arising from or
relating to any Accounts or Chattel Paper; (15) all certificates of title and
certificates of origin or manufacturers statements of origin relating to any of
the foregoing, now owned or hereafter acquired; (16) all property similar to any
of the foregoing hereafter acquired by Borrower; (17) all ledger sheets, files,
records, documents, instruments, and other books and records (including without
limitation related electronic data processing Software) evidencing an interest
in or relating to the above; (18) all money, cash or cash equivalents; and (19)
to the extent not otherwise included in the foregoing, all proceeds, products,
insurance claims, and other rights to payment and all accessions to,
replacements for, substitutions for, and rents and profits of, and noncash
proceeds of each of the foregoing (all of the foregoing collectively, the
“Collateral”). All of the foregoing terms, capitalized or otherwise, shall have
the meaning given in the California Uniform Commercial Code, as amended from
time to time (the “UCC”). Notwithstanding any contrary term of this Agreement,
Collateral shall not include any waste or other materials that have been or may
be designated as toxic or hazardous. Each new Obligation(s) (and all prior
Obligations) shall be secured by this Agreement and all other security
agreements that Borrower has then given or caused to be given, or thereafter
gives or causes to be given, to Lender. Except to the extent otherwise provided,
this Agreement does not secure any obligation that is secured by a consensual
lien on real property.

 

7. Borrower shall preserve Borrower’s existence and not, in one transaction or a
series of related transactions: (a) merge into or consolidate with any other
entity, or sell any of Borrower’s assets (except for sales of Inventory in the
ordinary course of business); (b) change the Borrower’s State of organization or
formation or Borrower’s legal name; (c) relocate its Chief Executive Office or
Premises; or (d) open any new locations unless Borrower executes and delivers,
or causes to be executed and delivered, to Lender such agreements, documents,
and instruments as Lender may deem necessary or desirable to protect Lender’s
interests in the Collateral at such locations, including without limitation,
UCC-1 Financing Statements and waivers with an acknowledgement of Lender’s
interest from any landlord, bailee, or warehouseman in form and substance
satisfactory to Lender, or as Lender may require as a result of such change. The
Collateral, however, shall not at any time now or hereafter be stored with a
landlord, bailee, warehouseman, or similar party without Lender’s prior written
consent and Lender’s receipt of the above waivers with an acknowledgement from
the third party that it is holding the Collateral for the benefit of Lender.
Borrower shall provide Lender with thirty (30) days advanced notice of the sale
or contemplated sale of the Premises whether owned or leased. Borrower will
cooperate with Lender in obtaining possession or control, where Lender chooses
to require possession or control in addition to the filing of a financing
statement. Borrower will cooperate with Lender in obtaining possession or
control with respect to Collateral consisting of Deposit Accounts, Investment
Property, Letter of Credit Rights, and Electronic Chattel Paper. If Borrower has
or shall acquire a commercial tort claim, Borrower shall promptly notify Lender
in a writing signed by Borrower of the general details thereof and grant to
Lender in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to Lender.

 

8. Borrower shall not do business under any name other than Nephros, Inc. unless
Borrower has provided to Lender evidence it has taken such legal steps required
with respect to fictitious or assumed names under the applicable laws of the
jurisdictions in which Borrower is located and/or does business. To that effect,
Lender has received acceptable documentation indicating that Borrower will be
doing business under the following additional name(s): ———N/A———.

 

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9. So long as any Obligations remain outstanding, Borrower warrants, represents
and agrees that: (a) intentionally omitted; (b) all Collateral in which a
security interest has been or will be given or caused to be given by Borrower to
Lender is and will be a first priority security interest on the property
described in each such security agreement (except insofar as Borrower has
notified Lender to the contrary in writing and Lender has consented) and shall
remain personal property at all times; (c) the property covered by all security
agreements given or caused to be given by Borrower to Lender (1) is solely owned
by Borrower or the party described in such security agreement; or (2) Borrower
or such party has rights in or the power to grant a security interest in such
property; (d) the property covered by all security agreements given or caused to
be given by Borrower to Lender is free and clear of all liens, encumbrances,
security interests, adverse claims, or restrictions on transfer or pledge except
as created by such security agreements; (e) the Collateral covered by all
security agreements given or caused to be given by Borrower to Lender is kept in
good condition and repair, is not subject to waste, will not be affixed to any
real property in any manner which would change the Collateral’s nature from that
of personal property to real property and/or fixture, and (except for sales of
Inventory in the ordinary course of business but subject to the terms of
Paragraph 30) will not be removed from the Premises described in such security
agreements without first obtaining Lender’s prior written consent; (f) all
facts, figures, representations given, or caused to be given by Borrower to
Lender in connection with the Value of the Collateral or regarding each Account
or pertaining to anything done under this Agreement shall be true and correct;
(g) Borrower’s books and records fully and accurately reflect all of Borrower’s
assets and liabilities (absolute and contingent), are kept in the ordinary
course of business in accordance with GAAP, (as defined in Paragraph 43)
consistently applied and all information contained therein is true and correct;
and (h) the fair market value of the property covered by all security agreements
given by Borrower to Lender, is and shall at all times be, not less than the
price which Borrower paid therefor (less normal depreciation caused by ordinary
wear and tear) and as represented to Lender.

 

10. Borrower agrees to execute upon demand by Lender any and all documents or
statements intended to perfect and/or continue Lender’s security interest in the
Collateral, in whatsoever form Lender may require including but not limited to
an abbreviated Collateral description such as “All Assets of the Borrower”, as
provided for and defined in Division 9 of the California UCC, but Lender shall
be entitled and is hereby expressly authorized to execute and file the same on
Borrower’s behalf, and Lender is hereby appointed Borrower’s attorney-in-fact
for such purpose.

 

11. Each warranty, representation, and agreement contained in this Agreement
shall be conclusively presumed to have been relied on by Lender regardless of
any investigation made, or information possessed by Lender. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements
contained in any other document or instrument which Borrower shall give, or
cause to be given, to Lender either now or hereafter.

 

12. Notwithstanding termination of this Agreement, all assignments, pledges,
liens, and/or other security interests now or hereafter granted to Lender and
all other obligations required of Borrower pursuant to this Agreement, any of
the other Loan Documents, or any other procedure manual or other requirement of
Lender shall continue in full force until all of the Obligations owing to Lender
have been paid, including without limitation Borrower’s obligation to continue
to turn over sales information and invoices, and collections thereon, to Lender.

 

13. Borrower shall promptly pay any and all expenses of storing, warehousing,
insuring, handling and shipping of Borrower’s property, any and all excise,
property, sales and other taxes (providing Lender with evidence of payment
thereof) levied or imposed by any governmental or taxing authority on Borrower
or on any of Borrower’s property or any property caused to be given to Lender as
security, and any amounts owing to any third party that could give rise to any
security interest, encumbrance or lien on any of Borrower’s property or any
property serving as Lender’s Collateral. If Borrower fails to promptly pay when
due, whether to Lender or any other person, monies which Borrower is required to
pay under any requirement of this Agreement, Lender may, but need not, pay the
same and charge Borrower’s account therefore and Borrower shall promptly
reimburse Lender therefor. Any and all sums shall become additional indebtedness
owing to Lender and shall bear interest at the rate provided in Paragraph 4
hereof and shall be covered by all security now or hereafter given by Borrower
or which Borrower causes to be given to Lender. Lender need not inquire as to,
or contest the validity of, any such expense, tax, security interest,
encumbrance or lien, and the receipt for the payment thereof from the
appropriate governmental agency or other entity shall be conclusive evidence
that the same was validly due and owing.

 

14. All documents to be delivered by Borrower to Lender shall contain such terms
and be in such form as Lender may require. Each assignment, pledge or other
security agreement shall include and cover all of Borrower’s right, title, and
interest in property described therein and all of Borrower’s books, records, and
files relating thereto. All ledger sheets, files, records and documents, files
and records relating to Accounts, Inventory, or other Collateral assigned to
Lender shall, unless delivered to or removed by Lender, be kept on the Premises
in trust for, and without cost to Lender. Lender may at any time remove from the
Premises all documents, files and records relating to the Collateral.

 

Page 3 of 12

 

 

15. Intentionally Omitted.

 

16. Borrower acknowledges and agrees that Lender may from time to time at its
discretion obtain or prepare such further credit reports and other reports as it
may deem necessary to continue to keep itself apprised regarding the continued
financial condition of Borrower and hereby authorizes Lender to obtain or
prepare such credit and other reports from time to time as Lender deems
appropriate.

 

17. Lender may, at any time, without notice to or the assent of Borrower, after
the occurrence of an Event of Default,: (i) notify any account debtor that its
Accounts have been assigned to Lender by Borrower and that payment thereof is to
be made to the order of, and directed solely to, Lender; and (ii) send, or cause
to be sent by its designee, written or telephonic requests for verification of
any Accounts directly to the applicable account debtor.

 

18. Intentionally Omitted.

 

19. Intentionally Omitted.

 

20. Lender is hereby irrevocably appointed Borrower’s attorney-in-fact with
authority and power to: (A) following an Event of Default, endorse Borrower’s
name on any checks, notes, acceptances, money orders, drafts, or other forms of
payment or security that may come into Lender’s possession (whether checks or
other forms of payment are (i) in the name of Borrower, (ii) in any other name
under which it now does business or does business in the future, or (iii) in the
names of its products now or in the future, and Borrower additionally agrees not
to make any protest of any kind against Lender for negotiating such checks or
other items described herein); (B) following an Event of Default, sign
Borrower’s name on any invoice or bill of lading related to any Accounts, on
drafts against account debtors, on schedules and assignments of Accounts, on
verification of Accounts, and notices to account debtors; (C) following an Event
of Default, establish a lockbox arrangement and/or following an Event of Default
notify the post office authorities to change the address for delivery of
Borrower’s mail; (D) following an Event of Default, receive and open all mail
addressed to Borrower and retain all mail relating to Lender’s security,
forwarding all other mail to Borrower; (E) following an Event of Default, send,
whether in writing or by telephone, requests for verification of Accounts; (F)
following an Event of Default, with respect to Accounts or other Collateral,
extend the time of payment of, compromise or settle, and adjust disputes and
claims, upon any terms, which may include a release of any account debtor or
other obligor; (G) following an Event of Default, make, settle and adjust all
claims of Borrower’s policies of insurance and make all decisions with respect
thereto; (H) following an Event of Default, qualify Borrower to do business in
any state if Borrower shall promptly fail to do so following request by Lender;
(I) following an Event of Default, if Borrower has refused or failed to promptly
do so, execute and deliver any documents which Lender determines are reasonably
necessary in order to protect the interests of Lender hereunder; and (J)
following an Event of Default, do all things necessary to carry out this
Agreement. Following an Event of Default, Lender shall have the right at any
time to enforce Borrower’s rights against the account debtors and obligors, and
Lender may bring all proceedings for collection in Lender’s name or in
Borrower’s name and may exercise Borrower’s right of stoppage in transit,
replevin, and reclamation.

 

21. Intentionally Omitted.

 

22. Lender or its agents or employees shall have the right (during reasonable
business hours if prior to an Event of Default and, at any time, after an Event
of Default) to have access to Borrower’s premises, to examine, inspect and/or
audit any or all of Borrower’s books and records, including but not limited to
minute books, ledgers, records indicating, summarizing or evidencing the assets
(including Accounts, Inventory and Equipment) and liabilities, and all
information relating thereto, records indicating, summarizing or evidencing
Borrower’s business operations or financial condition, and all computer
programs, disc or tape files, printouts, runs and other computer prepared
information and the equipment containing such information, and permit Lender or
its employees or agents to copy and make extracts therefrom. Borrower hereby
irrevocably authorizes all accountants and third parties to disclose and deliver
to Lender all financial information, books and records, work papers, management
reports and other information in their possession relating to Borrower. In the
absence of an Event of Default, the actions permitted by this Paragraph shall be
taken by Lender (or its agents or employees) at no cost to Borrower.

 

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23. Borrower, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as are ordinarily insured against by other owners in
similar businesses. Borrower shall also maintain business interruption, public
liability, product liability, and property damage insurance relating to
Borrower’s ownership and use of the Collateral, as well as insurance against
larceny, embezzlement, and criminal misappropriation. Additionally, Borrower
shall maintain workers’ compensation insurance coverage for all employees as
required by law. All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be reasonably satisfactory to Lender. All
such policies of insurance (except those of public and product liability) shall
contain a 438BFU lender’s loss payable endorsement or comparable endorsement, in
a form satisfactory to Lender, showing Lender as additional loss payee thereof
(and with respect to public and product liability shall contain an additional
insured endorsement or comparable endorsement, in a form satisfactory to
Lender), and shall contain a waiver of warranties, and shall specify that the
insurer must give at least thirty (30) days’ prior written notice to Lender
before canceling its policy for any reason. Borrower shall deliver to Lender
certified copies of such policies of insurance and evidence of the payment of
all premiums therefor. All proceeds payable under any such policy shall be
payable to Lender to be applied on account of the Obligations. Unless Borrower
provides Lender with evidence of the insurance coverage as required by this
Agreement, Lender may purchase such insurance at Borrower’s expense to protect
Lender’s interests. This insurance may, but need not, also protect Borrower’s
interests. If any Collateral becomes damaged, the insurance coverage that Lender
purchases may not pay any claim Borrower makes or any claim made against
Borrower. Borrower may later cancel this coverage after providing evidence that
Borrower has obtained property coverage elsewhere. Borrower is responsible for
the cost of any insurance purchased by Lender, which shall constitute Lender
Expenses (as defined in Paragraph 26). The cost of obtaining of this insurance
may, at Lender’s option, be added to the Obligations. If the cost is added to
the Obligations, the Rate will apply to this added amount. The effective date of
coverage may be the date on which Borrower’s prior coverage lapsed or the date
Borrower failed to provide proof of coverage. The insurance coverage that Lender
purchases may be considerably more expensive than the insurance coverage that
Borrower could obtain and may not satisfy any need for property damage coverage
or any mandatory liability insurance requirements imposed by Borrower’s
contractual arrangements or applicable law.

 

24. Borrower promises and agrees to pay all costs and expenses and all
attorneys’ fees reasonably incurred by Lender in connection with this Agreement
or the Loan Documents or the transactions contemplated thereby (including the
prosecution of motions or actions seeking relief from any stay or restraint
under the United States Bankruptcy Code from pursuing any remedy hereunder),
whether or not suit between Borrower and/or any Guarantor, on the one hand, and
Lender, on the other hand, is brought. Borrower shall pay to Lender all costs
reasonably incurred by Lender for the purpose of enforcing Lender’s rights
hereunder and under the Loan Documents, including without limitation: (a) costs
of foreclosure; (b) costs of obtaining money damages; and (c) a reasonable fee
for the services of attorneys employed by Lender, including consultation,
drafting documents, sending notices or instituting, prosecuting or defending
litigation or arbitration, and in the case of bankruptcy, without limitation, in
providing debtor-in possession financing, in seeking relief from the automatic
stay, and in prosecuting a complaint to determine dischargeability and other
matters to enforce Lender’s rights; and (d) costs, and expenses of third party
claims or any other suit paid or incurred by Lender in enforcing or defending
the Loan Documents and adjusting or settling disputes and claims with account
debtors with respect to the Accounts; and Lender’s attorneys’ fees and expenses
incurred in advising, or enforcing the Obligations (all of the foregoing
together with any other costs, expenses, and attorneys’ fees set forth in this
Agreement and the Loan Documents, “Lender Expenses”). At Lender’s option, Lender
Expenses may be added to the Obligations. While non-binding, the intent of this
paragraph is to limit future expenses to events and cost incurred outside the
normal course of business

 

25. Borrower shall require and use its best efforts to ensure compliance by all
operators and occupants of the Premises with all applicable Environmental Laws
(as defined in Paragraph 26). Borrower agrees to defend, indemnify, save, and
hold Lender and its officers, employees, and agents harmless against all
obligations, demands, claims, and liabilities claimed or asserted by any other
person arising out of or relating to discharges or releases of Hazardous
Substance or Hazardous Waste (both as defined in Paragraph 26) into the
environment, including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substance or Hazardous
Waste or the clean-up or other remediation thereof, and all losses (including
without limitation attorneys’ fees and legal and other costs from outside
counsel or in-house counsel) in any way suffered, incurred, or paid by Lender as
a result of or in any way arising out of, following, or consequential thereto;
provided, however, that no such indemnification shall apply with respect to any
liability directly arising out of the gross negligence or willful misconduct on
the part of Lender or any of its officers, employees and agents in connection
with Hazardous Waste or Hazardous Substance.

 

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26. “Environmental Laws” means all federal, state, local and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or waste into the environment,
including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals, or industrial, toxic or hazardous substances or
waste or the clean-up or other remediation thereof, including without limitation
42 U.S.C. 9601 (14), Comprehensive Environmental Response, Compensation and
Liability Act of 1980 set forth at 42 U.S.C. 9601 et seq. (“CERCLA”), or the
Resource Conservation and Recovery Act of 1986 set forth at 42 U.S.C. 9601 et
seq. (“RCRA”) and all successor statutes and amendments thereto. “Hazardous
Substance” or “Hazardous Waste” means any hazardous waste or hazardous
substance, as defined in 42 U.S.C. 9601 (14) or any successor statute, all as
amended from time to time.

 

27. Without limiting any other portion of this Agreement, all Borrower’s
indebtedness and Obligations shall automatically accelerate and become
immediately due and payable upon termination (by lapse of time or otherwise) of
this Agreement or upon the happening of any one of the following which shall
constitute an “Event of Default”:

 

(a) Borrower’s or any Guarantor’s failure to make any payment of any or all of
the Obligations to Lender when due;

 

(b) Intentionally Omitted;

 

(c) Any significant degradation in Borrower’s financial condition or that of any
Guarantor, or any change in Borrower’s ability to pay and perform the
Obligations when due;

 

(d) Any change in the perfection or priority of any security interest in any
Collateral of Borrower or collateral of any Guarantor, or any change in Lender’s
rights and remedies hereunder or under the Loan Documents;

 

(e) Borrower or any Guarantor fails or neglects to perform, keep, or observe, or
is in breach of any term, provision, condition, covenant, or agreement contained
in this Agreement, or any of the Loan Documents, or in any other present or
future agreement between Borrower or any Guarantor, on the one hand, and Lender,
on the other hand; any default by Borrower or any Guarantor under, or breach or
violation of, any warranty, representation, obligation, agreement, condition or
undertaking contained herein or in any of the Loan Documents which Borrower or
any Guarantor now or hereafter executes and delivers to Lender, or which
Borrower or any Guarantor now or hereafter causes to be executed and delivered
to Lender; If an Event of Default occurs under this Paragraph 29(e) and provided
that such Event of Default is not otherwise a specified Event of Default under
any other subsection of this Paragraph 29, Borrower (if such an Event of Default
is curable) shall have ten (10) days to cure such an Event of Default occurring
solely under this Paragraph 29(e);

 

(f) The withdrawal or cancellation of (1) any guaranty of, or any validity
agreement or support agreement relating to, the Obligations; or (2) the
termination of, or breach of the terms of, any subordination agreement whereby
any indebtedness and/or liens is subordinated to Borrower’s Obligations and/or
Lender’s liens on the Collateral or collateral of any Guarantor;

 

(g) Borrower or any Guarantor ceases to do business as a going concern, makes an
assignment of any property for the benefit of creditors, or fails to pay its
debts or obligations as they become due or otherwise becomes insolvent;

 

(h) The filing by or against Borrower or any Guarantor of any petition or
application in bankruptcy, reorganization, arrangement, trusteeship or
receivership, or other insolvency relief, whether under the United States
Bankruptcy Code or otherwise, or the appointment of a trustee or receiver over
all or any part of the property or business of Borrower or any Guarantor;

 

(i) Any of the property or Collateral covered by any of the security agreements
given or caused to be given by Borrower or any Guarantor to Lender is lost,
secreted, misused, destroyed, transferred, or disposed of or is located in any
state other than the Collateral State(s) unless Lender has so agreed in writing;

 

(j) Borrower’s or any Guarantor’s failure to comply with any, or become subject
to any administrative or judicial proceeding under, any federal, state or local
(1) hazardous waste or environmental law; (2) asset forfeiture law; or (3) other
law, where noncompliance may have any effect on the Collateral;

 

Page 6 of 12

 

 

(k) Lender’s receipt at any time of a report from the Secretary of State
indicating that Lender’s security interest in the Collateral or collateral of
any Guarantor is not prior to all other security interests or encumbrances;

 

(l) Any delinquency on Borrower’s or any Guarantor’s part in paying any tax when
it comes due;

 

(m) Borrower makes any prohibited payment on account of indebtedness that has
been subordinated in right to payment to the payment of the Obligations;

 

(n) Borrower or any Guarantor defaults in the payment or performance under any
of its material third party agreements, or any material third party agreement to
which either is party is cancelled, matures or terminates, and which
circumstances would have a negative effect on either of such parties;

 

(o) Borrower or any Guarantor is enjoined, restrained, or in any way prevented
by court order from continuing to conduct all or any part of its business
affairs;

 

(p) A judgment or other claim is entered against Borrower or any Guarantor or
becomes a lien or encumbrance upon any property of Borrower or any Guarantor;

 

(q) Any property of Borrower or any Guarantor is attached, seized, subjected to
a writ or distress warrant or is levied upon;

 

(r) A notice of lien, levy or assessment is filed with respect to any property
of Borrower or any Guarantor by any governmental authority, or any debts owing
to any governmental authority becomes a lien upon any of such property; or

 

(s) An event of default under any of the Loan Documents or in connection with
any of the Obligations shall be an Event of Default under this Agreement, and
vice versa.

 

28. Upon the occurrence of any Event of Default described in Paragraph 27, all
Obligations shall, without notice or demand, become immediately due and payable
at Lender’s option. Thereafter, all amounts outstanding shall bear interest at
the default rate set forth in the Term Note (the “Default Rate”). Lender may,
upon the occurrence of an Event of Default, exercise and all rights and remedies
pursuant to the laws of the State of California, the UCC, the Loan Documents or
other applicable law, and Lender may cease extending credit to or for the
benefit of Borrower under this Agreement, the Loan Documents, or any other
agreement between Borrower and Lender. Lender may, upon the occurrence of an
Event of Default, revoke Borrower’s right (as permitted in this Agreement) to
sell, license or otherwise dispose of any of the Collateral including, without
limitation, (a) its right to sell Inventory in the ordinary course of business
free and clear of Lender’s security interest therein, and (b) Borrower’s right
to grant non-exclusive licenses of the Collateral in the ordinary course of
business. Upon the occurrence of any such Event of Default, Lender may
immediately, or at any time or times thereafter, without any demand or notice to
Borrower or any Guarantor and without advertisement or notice, all of which are
expressly waived, commence an action for the recovery of any and all such
Obligations, commence proceedings, without giving any warranties of
merchantability, fitness for purpose, title or similar warranty, to sell, lease
or otherwise dispose of any and all Collateral covered by this Agreement and by
all security agreements given or caused to be given by Borrower to Lender or,
without legal proceedings, enter such places as any of such Collateral may be
found and take possession of such Collateral and sell the same. Lender is hereby
granted an irrevocable license or other right to use, without charge, Borrower’s
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Borrower’s rights under all
licenses shall inure to Lender’s benefit. Such Collateral may be sold where it
is located at the time of the breach or default, or elsewhere, at public or
private sale, for cash, upon credit or otherwise at Lender’s sole option and
discretion. With respect to any of Borrower’s owned or leased Premises, Borrower
hereby grants Lender a license to enter into possession of such Premises and to
occupy the same, without charge, for up to one hundred twenty (120) days in
order to exercise any of Lender’s rights or remedies provided herein or in any
of the other Loan Documents, at law, in equity, or otherwise. Lender and
Borrower waive any requirements that such property be physically present at the
place of sale. Lender shall provide Borrower such notice of any private or
public sale as may be reasonable. Lender has no obligation to clean up or
otherwise prepare the Collateral for sale. Lender may specifically disclaim any
warranties of title or any similar warranty. Any person, including Lender, may
purchase at any such sale, free from any right of redemption which is expressly
waived by Borrower, and if Lender is the purchaser, may turn all or part of any
of Borrower’s indebtedness to Lender in toward payment of the purchase price.
The proceeds of any such sale or other disposition shall be applied, first, to
all costs, charges and expenses incurred in taking, removing, holding, repairing
and selling such Collateral, including without limitation, all attorneys’ fees
and costs incurred by Lender, and second, to the payment of all Obligations,
whether due, or to become due, and whether arising under this Agreement or
otherwise. The surplus, if any, shall be delivered to Borrower or as otherwise
required by applicable law. Borrower shall pay any deficiency forthwith.

 

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29. Borrower waives presentment, demand, protest, and notice of dishonor as to
any instrument. Borrower consents to any extensions, modifications, allowances,
compromises or releases of security which Lender may grant, none of which shall
release Borrower or any Guarantor from, or affect, any of Borrower’s or any
Guarantor’s obligations.

 

30. This Agreement is effective and shall remain in full force and effect until
all Obligations are finally paid in full and this this Agreement and all Loan
Documents are terminated. Lender reserves the right to terminate this Agreement
and the Amended and Restated Term Note at Lender’s sole discretion upon giving
ninety (90) days’ prior written notice to Borrower or should an Event of Default
occur, Lender may terminate this Agreement and the Amended and Restated Term
Note at any time without prior notice. After termination and when Lender has
finally received all sums due on account of the Obligations, Lender shall
reassign to Borrower all Collateral held by Lender, and shall execute a
cancellation of, and/or reconveyance under, all security agreements given by
Borrower to Lender.

 

31. Borrower shall pay any prepayment fees provided for in any other agreement
with Lender. The prepayment fee provided in any other agreements with Lender
shall be deemed included in the Obligations.

 

32. Lender may at its option to protect the interests of Lender advance sums to
Borrower or any Guarantor under the Agreement or under any other agreements
evidencing the Obligations and pay such sums directly to a third party
(including in the event there is an obligation owed by Borrower or any Guarantor
to the third party or in the event the third party is also a borrower of Lender)
and Lender at its option may add same to the Obligations, and Borrower shall
promptly reimburse Lender therefor together with interest thereon.

 

33. All notices or demands hereunder shall be in writing and may be made, and
deemed to be given, as follows: (a) if delivered in person or by courier
(overnight or otherwise), on the date when it is delivered; (b) if by facsimile,
when received at the correct number (proof of which shall be an original
facsimile transmission confirmation slip or equivalent); or (c) if sent by
certified or registered mail or the equivalent, on the earlier of the date such
mail is actually delivered or three (3) days after deposit thereof in the mail,
unless the date of actual delivery or such date three (3) days after deposit
thereof in the mail (as applicable) is not a business day in which case such
communication shall be deemed given and effective on the first following
business day. Any such notice or communication given hereunder shall be
addressed to the intended recipient at its address or facsimile number specified
in the preamble to this Agreement. The parties hereto may change the address or
at which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other.

 

34. Borrower has the risk of loss of the Collateral. Lender shall not be liable
or responsible for the safekeeping of any Collateral. Lender shall not be
responsible for any lost profits of Borrower arising from any breach of
contract, tort, or any other wrong arising from the establishment,
administration, or collection of the Obligations. Lender has no duty to collect
any income accruing on the Collateral or to preserve any rights relating to the
Collateral.

 

35. Borrower hereby releases and exculpates Lender, Lender’s officers,
employees, agents, designees, attorneys, directors, shareholders, and
accountants (the “Lender Parties”) from any liability arising from any acts
under this Agreement, the documents executed in connection with this Agreement
or subsequent to this Agreement or in furtherance thereof (each individually and
collectively the “Loan Documents”), whether of omission or commission, and
whether based upon any error of judgment or mistake of law or fact, except to
the extent of any liability caused by any of the Lender Parties’ gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction, but in no event shall the Lender Parties have any liability to
Borrower for lost profits or other special or consequential damages. Borrower
agrees to indemnify the Lender Parties against, and hold each of them harmless
from, any liability of any kind or nature, including attorneys’ fees and
Lender’s Expenses which may be imposed upon, incurred by, or asserted against
any of the Lender Parties, in any way relating to or arising out of this
Agreement or the transactions contemplated hereby, except to the extent of any
liability caused by any of the Lender Parties’ gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction, with the
foregoing indemnity and hold harmless to survive termination of this Agreement
and payment and performance of the Obligations and continue thereafter.

 

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36. If there are two or more Borrowers, then (a) Obligations hereunder shall be
deemed to be made to and incurred by each and all Borrowers and each Borrower
shall be jointly and severally obligated to repay the Obligations; (b) each
Borrower jointly and severally makes, and is liable for, each and every
warranty, representation, obligation, covenant and undertaking under this
Agreement; (c) when permitted by the context, the word “Borrower” shall include
and mean all, or any one of the undersigned Borrowers; (d) each Borrower hereby
waives its rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become available
to any Borrower by reason of Sections 2787 to 2855, inclusive of the California
Civil Code or similar provision; (e) each Borrower waives all rights and
defenses it may have if this Agreement is secured by real property, which means,
among other things: (1) Lender may collect from any Borrower without first
foreclosing on any real or personal property collateral pledged by Borrower; and
(2) if Lender forecloses on any real property collateral pledged by any
Borrower: (i) the amount of the debt may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (ii) Lender may collect from any Borrower even if
Lender, by foreclosing on the real property collateral, has destroyed any right
any Borrower may have to collect from any other Borrower. This is an
unconditional and irrevocable waiver of any rights and defenses any Borrower may
have because Borrower’s debt is secured by real property. These rights and
defenses include, but are not limited to, any rights or defenses based upon
Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure or similar
provisions; (f) each Borrower waives all rights and defenses arising out of an
election of remedies by Lender, even though that election of remedies, such as a
non-judicial foreclosure with respect to security for a guaranteed obligation,
has destroyed any Borrower’s rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the Code of Civil Procedure or
otherwise, and each Borrower further waives any and all benefits or defenses, if
any, arising directly or indirectly under any one or more of Sections 3116,
3118, 3119, 3419, 3605, 9504, 9505, and 9507 of the California Uniform
Commercial Code or similar provisions; and (g) each Borrower hereby agrees that
it is jointly and severally, directly, and primarily liable to Lender for
payment and performance in full of all duties, obligations, and liabilities
under this Agreement and each other document, instrument, and agreement entered
into by any Borrower with or in favor of Lender in connection herewith, and that
such liability is independent of the duties, obligations, and liabilities of any
other Borrower or any other Guarantor, as applicable. Each reference herein to
Borrower shall mean each and every Borrower that is a party hereto, individually
and collectively, jointly and severally.

 

37. Borrower consents to Lender’s use of Borrower’s company names and logos in
Lender’s written and oral presentations, including in Lender’s advertising,
promotional, and marketing materials, client lists, news releases, and Web site.
In connection with any client references in such written or oral presentations,
Borrower consents to the use of individual names and quotations. Borrower’s
consents herein shall survive termination of this Agreement until such time that
Borrower delivers, and Lender receives, written revocation of such consents.

 

38. Lender’s rights and remedies under this Agreement and all security
agreements shall be cumulative and Lender shall have all other rights and
remedies not inconsistent therewith as provided by law; no exercise by Lender of
one right or remedy shall be deemed an election and no waiver by Lender of any
default on Borrower’s part shall be deemed a continuing waiver or course of
dealing. No delay or omission by Lender shall constitute a waiver or election.
This Agreement is binding and this Agreement shall bind and inure to the benefit
of heirs, legatees, executors, administrators, successors, and assigns of Lender
and shall bind all parties, which become bound as a borrower to this Agreement.
Lender may assign any and all of Lender’s rights and interests under this
Agreement. However, Borrower may not assign this Agreement or any rights
hereunder without Lender’s prior written consent. No such consent by Lender
shall release Borrower or any Guarantor. Lender reserves the right to sell,
assign, transfer, negotiate, or grant participations in all or any part of, or
any interest in, Lender’s rights and benefits under each of the documents
executed herewith or hereafter. In connection therewith, Lender may disclose all
documents and information that Lender now has or may hereafter acquire relating
to any credit extended by Lender to Borrower, or about Borrower or Borrower’s
business, any Guarantor or the business of any such Guarantor, or any Collateral
hereunder. If an assignment is made by Lender, Borrower shall render performance
under this Agreement to such assignee. Borrower waives and will not assert
against any assignee any claims, defenses or set-offs that Borrower could assert
against Lender except defenses that cannot be waived.

 

39. Paragraphs and paragraph numbers have been set forth herein for convenience
only; unless the contrary is compelled by the context, everything contained in
each paragraph applies equally to all paragraphs herein. Neither this Agreement
nor any uncertainty, or ambiguity herein shall be construed or resolved against
Lender or Borrower whether under any rule of construction or otherwise; on the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words so used as to
fairly accomplish the purposes and intentions of all parties hereto. When
permitted by the context, the singular includes the plural and vice versa. No
reference to “proceeds” in this Agreement authorizes any sale, transfer, or
other disposition of the Collateral by Borrower (except for sales of Inventory
in the ordinary course of business but subject to the terms of Paragraph 30).
“Includes” and “including” are not limiting. “Or” is not exclusive. “All”
includes “any” and “any” includes “all”. Any reference herein to a “writing”, a
“written document”, or an executed document shall also mean an “authenticated”
writing or document or “authentication” (as defined in the UCC) unless Lender
shall otherwise require an original writing.

 

Page 9 of 12

 

 

40. This Agreement and all transactions contemplated hereunder and/or evidenced
hereby shall be governed by, construed under, and enforced in accordance with
the internal laws of the State of California without giving effect to conflicts
of law principles. This Agreement and all agreements relating to the subject
matter hereof are the product of negotiation and preparation by and among each
party and its respective attorneys, and shall be construed accordingly. The
parties waive the provisions of California Civil Code §1654 or similar
provision.

 

41. Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP (as in effect in the United States). All other terms contained in this
Agreement, which are not specifically defined herein, shall have the meanings
provided in the UCC to the extent the same are used herein. “GAAP” means
generally accepted accounting principles (as in effect in the United States) set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and pronouncements of the
Financial Accounting Standards Board (or any successor authority) that are
applicable as of the date of determination.

 

42. Any Collateral pledged to Lender to secure any of the Obligations of
Borrower under this Agreement shall also secure any of the other Obligations of
Borrower to Lender under any other agreements between Borrower and Lender,
except that any real property pledged to secure any Obligations of Borrower
under this Agreement shall only secure any other Obligation of Borrower if
Lender specifically so agrees in writing.

 

43. Each and every provision of this Agreement shall be severable from every
other provision for the purposes of determining legal enforceability of any such
provision or provisions.

 

44. This Agreement, together with the Loan Documents, embodies the entire
agreement and understanding among and between the parties hereto with respect to
the subject matter hereof and thereof, and supersedes all prior or
contemporaneous agreements and understandings between said parties, verbal or
written, express or implied, relating to the subject matter hereof. No promises
of any kind have been made by Lender or any third party to induce Borrower to
execute this Agreement or the Loan Documents. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Agreement or the Loan Documents.
Neither this Agreement nor any provisions hereof may be changed, waived,
discharged, or terminated, nor may any consent to the departure from the terms
hereof be given, orally (even if supported by new consideration), but may only
be by an instrument in writing signed by all parties to this Agreement. Any
waiver or consent so given shall be effective only in the specific instance and
for the specific purpose for which given.

 

45. This Agreement and any of the Loan Documents may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. This Agreement and any of the Loan
Documents, or a signature page thereto intended to be attached to a copy of this
Agreement or any of the Loan Documents, signed and transmitted by facsimile
machine, telecopier, or other electronic means (including via transmittal of an
e-mail or a ‘‘pdf ‘ file) shall be deemed and treated as an original document.
The signature of any person thereon, for purposes hereof, is to be considered as
an original signature, and the document transmitted is to be considered to have
the same binding effect as an original signature on an original document. At the
request of any party hereto, any facsimile, telecopy or other electronic
document is to be re-executed in original form by the persons who executed the
facsimile, telecopy of other electronic document. No party hereto may raise the
use of a facsimile machine, telecopier, or other electronic means or the fact
that any signature was transmitted through the use of a facsimile machine,
telecopier, or other electronic means as a defense to the enforcement of this
Agreement or any of the Loan Documents.

 

46. If the incurrence or payment of the Obligations by Borrower or any Guarantor
or the transfer by either or both of such parties to Lender of any property of
either or both such parties should for any reason subsequently be declared to be
void or voidable under any state or federal law relating to creditor’s rights,
including provisions of the United States Bankruptcy Code (11 U.S.C. §101 et
seq.), as amended, and any successor statute relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments or money or transfers or
property (collectively, a “Voidable Transfer”), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice or its counsel, then, as to any such Voidable
Transfer or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys’ fees of Lender
related thereto, the liability of Borrower or such Guarantor automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

 

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47. The parties hereby agree that (a) this Agreement is entered into and that
Borrower’s performance to Lender occurs at San Jose, California; and (b) all
actions or proceedings arising in connection with this Agreement and/or the Loan
Documents shall be tried and litigated only in the State and Federal courts
located in the County of Santa Clara, State of California or, at the sole option
of Lender, in any other court in which Lender shall initiate legal or equitable
proceedings and which has subject matter jurisdiction over the matter in
controversy. Each of Borrower and Lender waives, to the extent permitted under
applicable law, any right each may have to assert the doctrine of forum non
conveniens or to object to venue to the extent any proceeding is brought in
accordance with this section. BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO A
JURY TRIAL IN ANY ACTION HEREUNDER OR UNDER THE LOAN DOCUMENTS OR ARISING OUT OF
THE TRANSACTIONS BETWEEN BORROWER AND LENDER.

 

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY, if the above waiver of the right to a
trial by jury is not enforceable, the parties hereto agree that any and all
disputes or controversies of any nature between them arising at any time shall
be decided by a reference to a private judge, mutually selected by the parties
(or, if they cannot agree, by the Presiding Judge of the Santa Clara County,
California Superior Court) appointed in accordance with California Code of Civil
Procedure §638 as such section may be amended and/or re-numbered from time to
time (or pursuant to comparable provisions of federal law if the dispute falls
within the exclusive jurisdiction of the federal courts), sitting without a
jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceeding shall be conducted pursuant
to and in accordance with the provisions of California Code of Civil Procedure
§§638 through 645.1 inclusive, as such sections may be amended and/or
re-numbered from time to time. No provision of this Section shall limit the
right of any party (a) to exercise self-help remedies (including setoff), (b) to
foreclose against or sell any collateral, by power of sale or otherwise, or (c)
to obtain or oppose provisional or ancillary remedies from a court of competent
jurisdiction before, after or during the pendency of a reference. The exercise
of, or opposition to, any such remedy does not waive the right of any party to
reference pursuant to this Section. In the event of any challenge to the
legality or enforceability of this Section, the prevailing party shall be
entitled to recover the costs and expenses, including reasonable attorneys’
fees, incurred by it in connection therewith.

 

51. Borrower and Lender agree that, upon fulfillment of the conditions precedent
below: (a) the Prior Form Loan Agreement is hereby amended and restated in its
entirety, and all terms and conditions contained in this Agreement shall
hereafter replace the terms and conditions of the Prior Form Loan Agreement; and
(b) each reference, if any, in the Loan Documents to the Prior Form Loan
Agreement shall mean and be a reference to this Agreement. Except for any Loan
Documents being amended and restated contemporaneously herewith, all other Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Agreement shall not
operate as a waiver of any right, power or remedy of the Lender under any of the
Loan Documents or constitute a waiver of any provision of any of the Loan
Documents.

 

This Agreement constitutes an amendment and restatement of the Prior Form Loan
Agreement and is not intended to nor shall it extinguish any of the outstanding
indebtedness, obligations or agreements of Borrower (including the Outstanding
Term Loan Obligations, but with the exception of the extinguishment of the
Outstanding Revolving Loan Obligations upon their repayment), or Lender’s
outstanding rights, under the Prior Form Loan Agreement or Prior Related Loan
Documents in such a manner as would constitute a release or novation of the
outstanding original indebtedness, obligations or agreements of Borrower, or a
waiver of Lender’s outstanding rights, under the Prior Form Loan Agreement or
Prior Form Related Loan Documents, nor shall this Agreement affect or impair the
outstanding liens or security interests created thereby or in connection
therewith or their priority, it being the intention of the parties hereto to
preserve all outstanding liens and security interests securing payment of the
Obligations and their priority, which liens and security interests are
acknowledged by Borrowers to be valid and subsisting against the Collateral and
any other security or collateral for the Obligations.

 

The following (unless waived by Lender) are conditions precedent to, the
amendment and restatement of the Prior Form Loan Agreement and the effectiveness
of this Agreement, and the amendment and restatement of the Prior Form Term Loan
and the effectiveness of the Amended and Restated Term Note: (a) Lender’ receipt
of funds to permanently repay all Outstanding Revolving Loan Obligations; (b)
Lender’s receipt of a Prepayment Fee of $6,500 in connection with the prepayment
of the Outstanding Revolving Loan Obligations; (c) the delivery, execution,
resolution and/or completion (as applicable), to Lender’s satisfaction, of all
other documents, matters or acts required by Lender in connection with the
transactions contemplated by this Agreement including, without limitation,
Lender’s receipt of this Agreement and the Amended and Restated Term Note
executed by all parties thereto; and (d) Borrower shall have paid all of
Lender’s attorneys’ fees and costs incurred in connection with the preparation
and negotiation of this Agreement and related documents.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security
Agreement to be executed as of the date first set forth above.

 

NEPHROS, INC.,   TECH CAPITAL, LLC, A Delaware corporation   A California
limited liability company (“Borrower”)   (“Lender”)       /s/ Daron Evans   /s/
Hank Noon By:

Daron Evans

  By: Hank Noon Its: President & Chief Executive Officer   Its: Senior Vice
President

 

Page 12 of 12