EXHIBIT 10.1
 
 
 
LOAN AND SECURITY AGREEMENT
 
This LOAN AND SECURITY AGREEMENT (this "Agreement") is entered into as of May 8,
2018, by and between East West Bank ("Bank") and CAS Medical Systems, Inc.
("Borrower").
 
RECITALS
 
Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.
 
AGREEMENT
 
The parties agree as follows:
 
1.
DEFINITIONS AND CONSTRUCTION.

 
1.2   Definitions.  As used in this Agreement, all capitalized terms shall have
the definitions set forth on Exhibit A. Any term used in the Code and not
defined herein shall have the meaning given to the term in the Code.
 
1.3   Accounting Terms.  Any accounting term not specifically defined on Exhibit
A shall be construed in accordance with GAAP and all calculations shall be made
in accordance with GAAP. The term "financial statements" shall include the
accompanying notes and schedules.
 
2.
LOAN AND TERMS OF PAYMENT.

 
2.1   Credit Extensions.
 
(a)   Promise to Pay.  Borrower promises to pay to Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower, together with interest on the unpaid
principal amount of such Credit Extensions at rates and at such times in
accordance with the terms hereof.
 
(b)   Advances Under Revolving Line.
 
(i)   Amount.  Subject to and upon the terms and conditions of this Agreement,
including an audit of the Collateral, the results of which shall be satisfactory
to Bank in its sole discretion, Borrower may request Advances in an aggregate
outstanding amount not to exceed the lesser of (A) the Revolving Line or (B) the
Borrowing Base. Amounts borrowed pursuant to this Section 2.1(b) may be repaid
and reborrowed at any time without penalty or premium prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(b) shall be
immediately due and payable.
 
(ii)   Form of Request.  Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 12:00 p.m.,
Noon, Pacific time, on the Business Day that the Advance is to be made. Each
such notification shall be
 
 
 

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promptly confirmed by a Payment/Advance Form in substantially the form of
Exhibit C. Bank is authorized to make Advances under this Agreement, based upon
instructions received from a Responsible Officer or a designee of a Responsible
Officer, or without instructions if in Bank's discretion such Advances are
necessary to meet Obligations which have become due and remain unpaid. Bank
shall be entitled to rely on any facsimile or telephonic notice given by a
person who Bank reasonably believes to be a Responsible Officer or a designee
thereof, and Borrower shall indemnify and hold Bank harmless for any damages or
loss suffered by Bank as a result of such reliance, except to the extent such
damages or losses result from the gross negligence or willful misconduct of
Bank. Bank will credit the amount of Advances made under this Section 2.1(b) to
Borrower's deposit account.
 
(c)   Term Loan.
 
(i)   Amount.  Subject to and upon the terms and conditions of this Agreement,
on the Closing Date or as soon thereafter as is practical, Bank shall make one
term loan to Borrower in the amount of Ten Million Dollars ($10,000,000.00) (the
"Term Loan"), which amount shall be used to satisfy in full on the Closing Date
the Existing Indebtedness and for working capital.
 
(ii)   Repayment.  Interest shall accrue from the date the Term Loan is made at
the rate specified in Section 2.3(a), and shall be payable monthly on the first
Business Day of each month commencing on the first Business Day of the first
month after the Term Loan is made. Commencing on the Amortization Date, and
continuing on the same date of each month thereafter, Borrower shall make
consecutive equal monthly payments of principal, together with applicable
interest, in arrears, to Bank based upon a repayment schedule equal to (x)
thirty (30) months, if the Amortization Date is December 1, 2019; (y)
twenty-seven (27) months, if the Amortization Date is March 1, 2020; or (z)
twenty-four (24) months, if the Amortization Date is June 1, 2020; provided
that, if the Early Amortization Date is triggered, Borrower shall make
consecutive equal monthly payments of principal, together with applicable
interest, in arrears, to Bank commencing on the first Business Day of the first
month after the Early Amortization Date and continuing on the same date of each
month thereafter through the Term Loan Maturity Date. All unpaid principal and
accrued and unpaid interest with respect to the Term Loan is due and payable in
full on the Term Loan Maturity Date, at which time all amounts owing under this
Section 2.1(c) shall be immediately due and payable. The Term Loan, once repaid,
may not be reborrowed. Borrower may prepay the Term Loan only in accordance with
Sections 2.2(c)(iii) and (iv).
 
(iii)   Mandatory Prepayment.  If the Term Loan is accelerated following the
occurrence of an Event of Default, Borrower shall immediately pay to Bank an
amount equal to the sum of: (i) all outstanding principal of the Term Loan plus
accrued and unpaid interest thereon through the prepayment date, (ii) the Final
Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due
and payable, including Lenders' Expenses and interest at the Default Rate with
respect to any past due amounts. Notwithstanding (but without duplication with)
the foregoing, on the Term Loan Maturity Date, if the Final Payment had not
previously been paid in full in connection with the prepayment of the Term Loan
in full, Borrower shall pay to Bank the Final Payment in respect of the Term
Loan.
 
 
 
 
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(iv)   Permitted Prepayment of Term Loan.  Borrower shall have the option to
prepay all or any part of the Term Loan, provided Borrower (i) provides written
notice to Bank of its election to prepay the Term Loan at least thirty (30) days
prior to such prepayment, and (ii) pays to Bank on the date of such prepayment
an amount equal to the sum of (A) all outstanding principal of the Term Loan
subject to prepayment, plus accrued and unpaid interest thereon through the
prepayment date, (B) the Final Payment, (C) the Prepayment Fee, plus (D) all
other Obligations that are due and payable, including Bank Expenses and interest
at the Default Rate with respect to any past due amounts.
 
2.2   Overadvances.  If the aggregate amount of the outstanding Advances exceeds
the lesser of the Revolving Line or the Borrowing Base at any time, Borrower
shall immediately pay to Bank, in cash, the amount of such excess.
 
2.3   Interest Rates, Payments, and Calculations.
 
(a)   Interest Rates.
 
(i)   Advances.  Except as set forth in Section 2.3(b), the Advances shall bear
interest, on the outstanding daily balance thereof, at a floating per annum rate
equal to two and four-tenths percent (2.40%) above the Prime Rate.
 
(ii)   Term Loan.  Except as set forth in Section 2.3(b), the Term Loan shall
bear interest, on the outstanding daily balance thereof, at a floating per annum
rate equal to three and sixty-five hundredths percent (3.65%) above the Prime
Rate.
 
(b)   Late Fee; Default Rate.  If any payment is not made within ten (10) days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the greater of (i) six percent (6%) of the amount of such unpaid amount or (ii)
Five Dollars ($5.00). All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a rate (the
"Default Rate") equal to five (5) percentage points above the interest rate
applicable immediately prior to the occurrence of the Event of Default.
 
(c)   Payments.  Interest hereunder shall be due and payable on the first
calendar day of each month during the term hereof. Bank shall, at its option,
charge such interest, all Bank Expenses, and all Periodic Payments against any
of Borrower's deposit accounts or against the Revolving Line, in which case
those amounts shall thereafter accrue interest at the rate then applicable
hereunder. Any interest not paid when due shall be compounded by becoming a part
of the Obligations, and such interest shall thereafter accrue interest at the
rate then applicable hereunder. Without limiting the foregoing, Borrower
authorizes Bank, at its sole option, with respect to Obligations due hereunder,
to (i) debit the Revolving Line on or after the Closing Date (ii) debit any
other Borrower account with Bank, or (iii) make demand upon Borrower, for
payment of all attorneys' fees and expenses incurred by Bank in connection with
the negotiation and documentation of the Loan by counsel retained by Bank, which
attorney's fees and expenses become due through the Closing Date and/or after
the Closing Date.
 
(d)   Computation.  In the event the Prime Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or
decreased, effective as of the day the Prime Rate is changed, by an amount equal
to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
 
 
 
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2.4   Crediting Payments.  Prior to the occurrence of an Event of Default, Bank
shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. After the occurrence of an
Event of Default, Bank shall have the right, in its sole discretion, to
immediately apply any wire transfer of funds, check, or other item of payment
Bank may receive to conditionally reduce Obligations, but such applications of
funds shall not be considered a payment on account unless such payment is of
immediately available federal funds or unless and until such check or other item
of payment is honored when presented for payment. Notwithstanding anything to
the contrary contained herein, any wire transfer or payment received by Bank
after 12:00 noon Pacific time shall be deemed to have been received by Bank as
of the opening of business on the immediately following Business Day. Whenever
any payment to Bank under the Loan Documents would otherwise be due (except by
reason of acceleration) on a date that is not a Business Day, such payment shall
instead be due on the next Business Day, and additional fees or interest, as the
case may be, shall accrue and be payable for the period of such extension.
 
2.5   Fees.  Borrower shall pay to Bank the following:
 
(a)   Facility Fee.  On the Closing Date, a fee equal to Twenty Thousand Dollars
($20,000.00), on account of the Revolving Line, and One Hundred Thousand Dollars
($100,000.00) on account of the Term Loan; each of which shall be nonrefundable;
 
(b)   Unused Fee.   On June 1, 2018, and on the first day of each month
thereafter prior to the Revolving Maturity Date, and on the Revolving Maturity
Date, a fee (the "Unused Fee") in an amount equal to three-quarters of one
percent (0.75%) per annum of the average daily unused portion of the Revolving
Line, as reasonably determined by Bank;
 
(c)   Final Payment.  The Final Payment, when due hereunder;
 
(d)   Prepayment Fee.  The Prepayment Fee, if and when due hereunder; and
 
(e)   Bank Expenses.  On the Closing Date, all Bank Expenses incurred through
the Closing Date, and, after the Closing Date, all Bank Expenses, as and when
they become due.
 
2.6   Term.  This Agreement shall become effective on the Closing Date and,
subject to Section 12.8, shall continue in full force and effect for so long as
any Obligations remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.
 
3.
CONDITIONS OF LOANS.

 
3.1   Conditions Precedent to Initial Credit Extension.  The obligation of Bank
to make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:
 
 
 
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(a)   this Agreement;
 
(b)   an officer's certificate of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;
 
(c)   UCC National Form Financing Statement;
 
(d)   evidence of insurance;
 
(e)   the certificate for the Shares, together with Assignment(s) Separate from
Certificate, duly executed in blank;
 
(f)   a payoff letter from the Existing Lenders in respect of the Existing
Indebtedness;
 
(g)   evidence that (i) the Liens securing the Existing Indebtedness will be
terminated and (ii) the documents and/or filings evidencing the perfection of
such Liens, including without limitation any financing statements and/or control
agreements, have or will, concurrently with the Term Loan, be terminated;
 
(h)   payment of the fees and Bank Expenses then due specified in Section
2.5(e);
 
(i)   current SOS Reports indicating that except for Permitted Liens, there are
no other security interests or Liens of record in the Collateral;
 
(j)   current financial statements, including audited statements for Borrower's
most recently ended fiscal year, together with an unqualified opinion, company
prepared consolidated and consolidating (if any) balance sheets and income
statements for the most recently ended month in accordance with Section 6.2, and
such other updated financial information as Bank may reasonably request;
 
(k)   current Compliance Certificate in accordance with Section 6.2;
 
(l)   a Warrant for shares of Borrower, in form and substance satisfactory to
Bank;
 
(m)   a Perfection Certificate;
 
(n)   Subject to Section 6.6, deposit account control agreements with respect to
any accounts permitted hereunder to be maintained outside Bank;
 
(o)   a Lessor's Acknowledgment and Subordination with respect to each of
Borrower's leased locations, and a Bailee Waiver with respect to each
third-party location where Borrower maintains any Material Collateral;
 
(p)   [Intentionally omitted;]
 
(q)   an Automatic Debit Authorization;
 
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(r)   an audit of the Collateral, the results of which must be satisfactory to
Bank; and
 
(s)   such other documents or certificates, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
 
3.2   Conditions Precedent to all Credit Extensions.  The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is further
subject to the following conditions:
 
(a)   timely receipt by Bank of the Payment/Advance Form as provided in Section
2.1; and
 
(b)   the representations and warranties contained in Article 5 shall be true
and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2.
 
4.
CREATION OF SECURITY INTEREST.

 
4.1   Grant of Security Interest.  Borrower grants and pledges to Bank a
continuing security interest in the Collateral to secure prompt repayment of any
and all Obligations and to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents, Except as set forth in the
Schedule, and subject only to Permitted Liens that may have priority by
operation of law, such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and will constitute a
valid, first priority security interest in later-acquired Collateral. Borrower
also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant
a security interest in, or encumber any of its Intellectual Property, except as
provided in this Agreement in connection with Permitted Liens and Permitted
Transfers. Notwithstanding any termination of this Agreement, Bank's Lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.
 
4.2   Perfection of Security Interest.  Borrower authorizes Bank to file at any
time financing statements, continuation statements, and amendments thereto that
(i) either specifically describe the Collateral or describe the Collateral as
all assets of Borrower of the kind pledged hereunder, and (ii) contain any other
information required by the Code for the sufficiency of filing office acceptance
of any financing statement, continuation statement, or amendment, including
whether Borrower is an organization, the type of organization and any
organizational identification number issued to Borrower, if applicable. Any such
financing statements may be filed by Bank at any time in any jurisdiction
whether or not Revised Article 9 of the Code is then in effect in that
jurisdiction. Borrower shall from time to time endorse and deliver to Bank, at
the request of Bank, all Negotiable Collateral and other documents that Bank
 
 
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may reasonably request, in form satisfactory to Bank, to perfect and continue
perfection of Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
Borrower shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where Bank deems it reasonably prudent
to perfect its security interest by possession in addition to the filing of a
financing statement. Where Collateral is in possession of a third party bailee,
Borrower shall take such steps as Bank reasonably requests for Bank to (i)
obtain an acknowledgment, in form and substance satisfactory to Bank, of the
bailee that the bailee holds such Collateral for the benefit of Bank, and (ii)
obtain "control'' of any Collateral consisting of investment property, deposit
accounts, letter-of-credit rights or electronic chattel paper (as such items and
the term "control" are defined in Revised Article 9 of the Code) by causing the
securities intermediary or depositary institution or issuing bank to execute a
control agreement in form and substance satisfactory to Bank. Borrower will not
create any chattel paper without placing a legend on the chattel paper
acceptable to Bank indicating that Bank has a security interest in the chattel
paper. Borrower from time to time may deposit with Bank specific cash collateral
to secure specific Obligations; Borrower authorizes Bank to hold such specific
balances in pledge and to decline to honor any drafts thereon or any request by
Borrower or any other Person to pay or otherwise transfer any part of such
balances for so long as the specific Obligations are outstanding.
 
4.3   Right to Inspect.  Bank (through any of its officers, employees, or
agents) shall have the right, in addition to the initial audit of the
Collateral, upon reasonable prior notice, from time to time during Borrower's
usual business hours but no more than once a year (unless an Event of Default
has occurred and is continuing), to inspect Borrower's Books and to make copies
thereof and to check, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, condition of, or any other matter
relating to, the Collateral.
 
4.4   Pledge of Collateral.  Borrower hereby pledges, assigns and grants to Bank
a security interest in all the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing,
as security for the performance of the Obligations. On the Closing Date, the
certificate or certificates for the Shares will be delivered to Bank,
accompanied by an instrument of assignment duly executed in blank by Borrower.
To the extent required by the terms and conditions governing the Shares,
Borrower shall cause the books of each entity whose Shares are part of the
Collateral and any transfer agent to reflect the pledge of the Shares. Upon the
occurrence of an Event of Default hereunder, Bank may effect the transfer of any
securities included in the Collateral (including but not limited to the Shares)
into the name of Bank and cause new certificates representing such securities to
be issued in the name of Bank or its transferee. Borrower will execute and
deliver such documents, and take or cause to be taken such actions, as Bank may
reasonably request to perfect or continue the perfection of Bank's security
interest in the Shares. Unless an Event of Default shall have occurred and be
continuing, Borrower shall be entitled to exercise any voting rights with
respect to the Shares and to give consents, waivers and ratifications in respect
thereof, provided that no vote shall be cast or consent, waiver or ratification
given or action taken which would be inconsistent with any of the terms of this
Agreement or which would constitute or create any violation of any of such
terms. All such rights to vote and give consents, waivers and ratifications
shall terminate upon the occurrence and continuance of an Event of Default.
 
 
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5.
REPRESENTATIONS AND WARRANTIES.

 
Borrower represents and warrants as follows:
 
5.1   Due Organization and Qualification.  Borrower and each Subsidiary is an
entity duly existing under the laws of the jurisdiction in which it is organized
and qualified and licensed to do business in any state in which the conduct of
its business or its ownership of property requires that it be so qualified,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Effect.
 
5.2   Due Authorization; No Conflict.  The execution, delivery, and performance
of the Loan Documents are within Borrower's powers, have been duly authorized,
and are not in conflict with nor constitute a breach of any provision contained
in Borrower's organizational documents, nor will they constitute an event of
default under any material agreement by which Borrower is bound, Borrower is not
in default under any agreement by which it is bound, except to the extent such
default would not reasonably be expected to cause a Material Adverse Effect.
 
5.3   Collateral.  Borrower has rights in or the power to transfer the
Collateral, and its title to the Collateral is free and clear of Liens, adverse
claims, and restrictions on transfer or pledge except for Permitted Liens. The
Eligible Accounts are bona fide existing obligations. The property or services
giving rise to such Eligible Accounts has been delivered or rendered to the
account debtor or its agent for immediate shipment to and unconditional
acceptance by the account debtor. Borrower has not received notice of actual or
imminent Insolvency Proceeding of any account debtor whose accounts are included
in any Borrowing Base Certificate as an Eligible Account. No licenses or
agreements giving rise to such Eligible Accounts is with any Prohibited
Territory or with any Person organized under or doing business in a Prohibited
Territory. All Inventory is in all material respects of good and merchantable
quality, free from all material defects, except for Inventory for which adequate
reserves have been made. Except as set forth in the Schedule, none of the
Collateral is maintained or invested with a Person other than Bank or Bank's
Affiliates.
 
5.4   Intellectual Property Collateral.  Borrower is the sole owner of the
Intellectual Property Collateral, except for non-exclusive licenses granted by
Borrower to its customers in the ordinary course of business. To the best of
Borrower's knowledge, each of the Copyrights, Trademarks and Patents is valid
and enforceable, and no part of the Intellectual Property Collateral has been
judged invalid or unenforceable, in whole or in part, and no claim has been made
to Borrower that any part of the Intellectual Property Collateral violates the
rights of any third party except to the extent such claim could not reasonably
be expected to cause a Material Adverse Effect. Except as set forth in the
Schedule, Borrower's rights as a licensee of intellectual property do not give
rise to more than five percent (5%) of its gross revenue in any given month,
including without limitation revenue derived from the sale, licensing, rendering
or disposition of any product or service.
 
5.5   Name; Location of Chief Executive Office.  Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof, and its exact legal name is as set forth
in the first paragraph of this Agreement. The chief executive office of Borrower
is located in the Chief Executive Office State at the address indicated in
Section 10 hereof.
 
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5.6   Actions, Suits, Litigation, or Proceedings.  Except as set forth in the
Schedule or Borrower's periodic filings under the Securities Exchange Act of
1934, as amended ("Exchange Act Filings"), there are no actions, suits,
litigation or proceedings, at law or in equity, pending by or against Borrower
or any Subsidiary before any court, administrative agency, or arbitrator in
which a likely adverse decision could reasonably be expected to have a Material
Adverse Effect.
 
5.7   No Material Adverse Change in Financial Statements.  All consolidated and
consolidating (if any) financial statements related to Borrower and any
Subsidiary that are delivered by Borrower to Bank fairly present in all material
respects Borrower's consolidated and consolidating financial condition as of the
date thereof and Borrower's consolidated and consolidating results of operations
for the period then ended. There has not been a material adverse change in the
consolidated or in the consolidating financial condition of Borrower since the
date of the most recent of such financial statements submitted to Bank.
 
5.8   Solvency, Payment of Debts.  Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower's assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; and Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement.
 
5.9   Compliance with Laws and Regulations.  Borrower and each Subsidiary have
met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that could reasonably be expected to have a Material
Adverse Effect, Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T and U
of the Board of Governors of the Federal Reserve System). Borrower has complied
in all material respects with all the provisions of the Federal Fair Labor
Standards Act, Borrower is in compliance with all environmental laws,
regulations and ordinances except where the failure to comply is not reasonably
likely to have a Material Adverse Effect. Borrower has not violated any
statutes, laws, ordinances or rules applicable to it, the violation of which
could reasonably be expected to have a Material Adverse Effect. Borrower and
each Subsidiary have filed or caused to be filed all tax returns required to be
filed, and have paid, or have made adequate provision for the payment of, all
taxes reflected therein except those being contested in good faith with adequate
reserves under GAAP or where the failure to file such returns or pay such taxes
could not reasonably be expected to have a Material Adverse Effect.
 
5.10   Subsidiaries.  Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.
 
 
 
 
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5.11   Government Consents.  Borrower and each Subsidiary have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.
 
5.12   Inbound Licenses.  Except as disclosed on the Schedule, Borrower is not a
party to, nor is bound by, any inbound license or other agreement, the failure,
breach, or termination of which could reasonably be expected to cause a Material
Adverse Effect, or that prohibits or otherwise restricts Borrower from granting
a security interest in Borrower's interest in such license or agreement or any
other property.
 
5.13   Shares.  Borrower has full power and authority to create a first lien on
the Shares and no disability or contractual obligation exists that would
prohibit Borrower from pledging the Shares pursuant to this Agreement. To
Borrower's knowledge, there are no subscriptions, warrants, rights of first
refusal or other restrictions on transfer relative to, or options exercisable
with respect to the Shares. The Shares have been and will be duly authorized and
validly issued, and are fully paid and non-assessable. To Borrower's knowledge,
the Shares are not the subject of any present or threatened suit, action,
arbitration, administrative or other proceeding, and Borrower knows of no
reasonable grounds for the institution of any such proceedings.
 
5.14   Full Disclosure.  No representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Bank taken
together with all such certificates and written statements furnished to Bank
contains any untrue statement of a material fact or, together with the Company's
Exchange Act Filings, omits to state a material fact necessary in order to make
the statements contained in such certificates or statements not misleading, it
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results.
 
6.
AFFIRMATIVE COVENANTS.

 
Borrower covenants that, until payment in full of all outstanding Obligations,
and for so long as Bank may have any commitment to make a Credit Extension
hereunder, Borrower shall do all of the following:
 
6.1   Good Standing and Government Compliance.  Borrower shall maintain its and
each of its Subsidiaries' organizational existence and good standing in the
Borrower State, shall maintain qualification and good standing in each other
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect, and shall furnish to Bank the organizational
identification number issued to Borrower by the authorities of the jurisdiction
in which Borrower is organized, if applicable. Borrower shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA, Borrower shall comply in
all material respects with all applicable Environmental Laws, and maintain all
material permits, licenses and approvals
 
 
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required thereunder where the failure to do so could reasonably be expected to
have a Material Adverse Effect, Borrower shall comply, and shall cause each
Subsidiary to comply, with all statutes, laws, ordinances and government rules
and regulations to which it is subject, and shall maintain, and shall cause each
of its Subsidiaries to maintain, in force all licenses, approvals and
agreements, the loss of which or failure to comply with which would reasonably
be expected to have a Material Adverse Effect.
 
6.2   Financial Statements, Reports, Certificates.  Borrower shall deliver to
Bank:  (i) as soon as available, but in any event within thirty (30) days after
the end of each calendar month, a company prepared consolidated balance sheet,
income statement and statement of cash flow, covering Borrower's operations
during such period, in a form reasonably acceptable to Bank and certified by a
Responsible Officer; (ii) as soon as available, but in any event within one
hundred fifty (150) days after the end of Borrower's fiscal year, audited
consolidated financial statements of Borrower prepared in accordance with GAAP,
consistently applied, together with an opinion which is unqualified (including
no going concern comment or qualification) on such financial statements of a
PCAOB-registered independent certified public accounting firm reasonably
acceptable to Bank (Bank acknowledges that CohnReznick LLP is acceptable); (iii)
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Forms 8-K. 10- K and 10-Q as and when filed with the Securities
and Exchange Commission, provided that prompt notice from Borrower to Bank of
the filing of such statements, reports, notices and forms on EDGAR shall be
considered sufficient delivery of such statements, reports, notices and forms
pursuant to the requirements of this Section 6.2; (iv) promptly upon receipt of
notice thereof, a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower or
any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or more; (v)
promptly upon receipt, each management letter prepared by Borrower's independent
certified public accounting firm regarding Borrower's management control
systems; (vi) as soon as available, but in any event not later than January 31
of each calendar year, and within seven (7) days of any board-approved
modifications thereto, Borrower's financial and business projections and budget,
presented in a month-by-month format, for such year, with written certification
signed by a Responsible Officer of approval thereof by Borrower's board of
directors; provided that Borrower's board approved 2018-2019 plan shall have
been provided to, reviewed and approved by Bank prior to the Closing Date; (vii)
such budgets, sales projections, operating plans or other financial information
generally prepared by Borrower in the ordinary course of business as Bank may
reasonably request from time to time; and (viii) within thirty (30) days of the
last day of each fiscal quarter, a report signed by Borrower, in form reasonably
acceptable to Bank, listing any applications or registrations that Borrower has
made or filed in respect of any Patents, Copyrights or Trademarks and the status
of any outstanding applications or registrations, as well as any material change
in Borrower's Intellectual Property Collateral, including but not limited to any
subsequent ownership right of Borrower in or to any Trademark, Patent or
Copyright not previously identified to Bank.
 
(a)   Within thirty (30) days after the last day of each month when Advances are
outstanding, and with each request for an Advance, Borrower shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto, together with summary (and detailed,
as requested by Bank) aged listings by invoice date of accounts receivable and
accounts payable.
 
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(b)   Within thirty (30) days after the last day of each month, and within one
hundred fifty (150) days after the end of Borrower's fiscal year, Borrower shall
deliver to Bank with the financial statements a Compliance Certificate certified
as of the last day of the applicable period and signed by a Responsible Officer
in substantially the form of Exhibit E hereto.
 
(c)   Promptly upon becoming aware of the occurrence or existence of an Event of
Default hereunder, a written statement of a Responsible Officer setting forth
details of the Event of Default, and the action which Borrower has taken or
proposes to take with respect thereto.
 
(d)   Bank shall have a right from time to time hereafter (and in addition to
the initial audit) to audit Borrower's Accounts and appraise Collateral at
Borrower's expense, provided that such audits will be conducted no more often
than every twelve (12) months unless an Event of Default has occurred and is
continuing.
 
Borrower may deliver to Bank on an electronic basis any certificates, reports or
information required pursuant to this Section 6.2, and Bank shall be entitled to
rely on the information contained in the electronic files, provided that Bank in
good faith believes that the files were delivered by a Responsible Officer. If
Borrower delivers this information electronically, it shall also deliver to Bank
by U.S. Mail, reputable overnight courier service, hand delivery, facsimile or
.pdf file within five (5) Business Days of submission of the unsigned electronic
copy the certification of monthly financial statements, the intellectual
property report, the Borrowing Base Certificate and the Compliance Certificate,
each bearing the physical signature of the Responsible Officer.
 
6.3   Inventory; Returns.  Borrower shall keep all Inventory in good and
merchantable condition, free from all material defects except for Inventory for
which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist on the
Closing Date, Borrower shall promptly notify Bank of all returns and recoveries
and of all disputes and claims involving more than One Hundred Thousand Dollars
($100,000.00).
 
6.4   Taxes.  Borrower shall make, and cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, including, but not limited
to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability,
and will execute and deliver to Bank, on demand, proof satisfactory to Bank
indicating that Borrower or a Subsidiary has made such payments or deposits and
any appropriate certificates attesting to the payment or deposit thereof;
provided that Borrower or a Subsidiary need not make any payment if the amount
or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.
 
 
 
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6.5   Insurance.
 
(a)   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 ordinarily insured against by other owners in
similar businesses conducted in the locations where Borrower's business is
conducted on the date hereof. Borrower shall also maintain liability and other
insurance in amounts and of a type that are customary to businesses similar in
size and scope to Borrower's.
 
(b)   All such policies of insurance shall be in such form, with such companies,
and in such amounts as reasonably satisfactory to Bank. All policies of property
insurance shall contain a Bank's loss payable endorsement, in a form
satisfactory to Bank, showing Bank as an additional loss payee, and all
liability insurance policies shall show Bank as an additional insured and
specify that the insurer must give at least twenty (20) days' notice to Bank
before canceling its policy for any reason. Upon Bank's request, Borrower shall
deliver to Bank certified copies of the policies of insurance and evidence of
all premium payments. All proceeds payable under any such policy shall, at
Bank's option, be payable to Bank to be applied on account of the Obligations.
Notwithstanding the foregoing, (a) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy toward the replacement or repair of destroyed or damaged
property; provided that any such replaced or repaired property (i) shall be of
equal or like value as the replaced or repaired Collateral; (ii) shall be deemed
Collateral in which Bank has been granted a first priority security interest and
(iii) either (x) such replacement or repaired property is in Borrower's
possession within ninety (90) days of receipt of such proceeds or (y) firm
orders have been placed by Borrower for such replacement or repaired property
within thirty (30) days of receipt of such proceeds, and (b) after the
occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Bank, be payable to
Bank on account of the Obligations.
 
6.6   Accounts.
 
(a)   General.  From and after the date ninety (90) days from the Closing Date,
Borrower shall maintain its primary depository, operating and investment
accounts with Bank. Any accounts permitted hereunder to be maintained outside
Bank shall, within fifteen (15) days from the Closing Date, be subject to
control agreements in form and content reasonably acceptable to Bank.
Notwithstanding the forgoing, Borrower may maintain Borrower's account with Bank
of America, identified in writing to Bank prior to the Closing Date, so long as
(i) no Event of Default has occurred and is continuing; and (ii) at no time
shall the aggregate amount in such account exceed Twenty Five Thousand Dollars
($25,000.00).
 
(b)   Lock Box; Dominion of Funds.
 
(i)   Borrower agrees that the Obligations shall be on a "remittance basis". 
Borrower shall at its sole expense establish and maintain (and Bank, at Bank's
option, may establish and maintain at Borrower's expense), no later than July
15, 2018:
 
(1)   A United States Post Office lock box (the "Lock Box"), to which Bank shall
have exclusive access and control. Borrower expressly authorizes Bank, from time
to time, to remove the contents from the Lock Box, for disposition in accordance
with this Agreement. Borrower shall notify all account debtors and other parties
obligated to Borrower that all payments made to Borrower (other than payments by
electronic funds transfer) shall be remitted, for the credit of Borrower, to the
Lock Box, and Borrower shall include a like statement on all invoices; and
 
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(2)   A non-interest bearing deposit account with Bank which shall be titled as
designated by Bank (the "Dominion of Funds Account") to which Bank shall have
exclusive access and control. Borrower shall notify all account debtors and
other parties obligated to Borrower that all payments made to Borrower by
electronic funds transfer shall be remitted to the Dominion of Funds Account,
and Borrower, at Bank's request, shall include a like statement on all invoices.
Borrower shall execute all documents and authorizations as required by Bank to
establish and maintain the Lock Box and the Dominion of Funds Account.
 
(ii)   Borrower shall hold in trust for Bank all amounts that Borrower receives
despite the directions to make payments to the Lock Box or Dominion of Funds
Account, and immediately deliver such payments to Bank in their original form as
received from the account debtor, with proper endorsements for deposit into the
Lock Box or Dominion of Funds Account, as applicable.
 
(iii)   All items or amounts which are remitted to the Dominion of Funds
Account, or otherwise delivered by or for the benefit of Borrower to Bank on
account of partial or full payment of, or with respect to, any Collateral shall,
on a daily basis, be applied to the payment of outstanding Advances, whether
then due or not, with the balance, if any, deposited to Borrower's operating
account maintained at Bank.  After the occurrence and during the continuance of
an Event of Default, all items or amounts remitted to the Lock Box, the Dominion
of Funds Account or that Bank has otherwise received shall, in Bank's sole
discretion, be applied to the payment of any Obligations, whether then due or
not, in such order or at such time of application as Bank may determine in its
sole discretion. Bank shall not be liable for any loss or damage which Borrower
may suffer as a result of Bank's processing of items or its exercise of any
other rights or remedies under this Agreement, including without limitation
indirect, special or consequential damages, loss of revenues or profits, or any
claim, demand or action by any third party arising out of or in connection with
the processing of items or the exercise of any other rights or remedies under
this Agreement. Borrower shall indemnify and hold Bank harmless from and against
all such third party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney's fees and including
claims, damages, fines, expenses, liabilities or causes of action of whatever
kind resulting from bank's own negligence except to the extent (but only to the
extent) caused by Bank's gross negligence or willful misconduct.
 
6.7   Financial Covenants.  Borrower shall maintain and/or achieve the following
financial ratios and covenants:
 
(a)   Minimum Liquidity.  Liquidity at all times, measured monthly on a trailing
three (3) month basis, equal to at least five (5) months' Cash Burn; provided
that, if monthly Cash Burn is less than Five Hundred Thousand Dollars
($500,000.00), Borrower shall maintain at least six (6) months' Cash Burn.
 
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(b)   Performance to Plan; Minimum Revenue.  Actual revenue, measured monthly on
a trailing six (6) month basis, equal to at least (i) for 2018, eighty-five
percent (85.00%) of projected revenue and (ii) for 2019 and thereafter, eighty
percent (80.00%) of projected revenue; in each case, as set forth in the
projections provided to, and approved by, Bank prior to the Closing Date and
thereafter in accordance with Section 6.2 hereof.
 
Bank reserves the right to change and/or reset the foregoing financial covenants
upon (i) an Event of Default, and/or (ii) Bank's receipt of the projections
required to be delivered in connection with Section 6.2 hereof.
 
6.8   Registration of Intellectual Property Rights.
 
(a)   Borrower shall register or cause to be registered on an expedited basis
(to the extent not already registered) with the United States Patent and
Trademark Office or the United States Copyright Office, as the case may be,
those registrable intellectual property rights now owned or hereafter developed
or acquired by Borrower, to the extent that Borrower, in its reasonable business
judgment, deems it appropriate to so protect such intellectual property rights.
 
(b)   Borrower shall promptly give Bank written notice of any applications or
registrations of intellectual property rights filed with the United States
Patent and Trademark Office, including the date of such filing and the
registration or application numbers, if any.
 
(c)   Borrower shall (i) give Bank not less than thirty (30) days prior written
notice of the filing of any applications or registrations with the United States
Copyright Office, including the title of such intellectual property rights to be
registered, as such title will appear on such applications or registrations, and
the date such applications or registrations will be filed; (ii) prior to the
filing of any such applications or registrations, after an Event of Default,
execute such documents as Bank may reasonably request for Bank to maintain its
perfection in such intellectual property rights to be registered by Borrower;
(iii) upon the request of Bank, either deliver to Bank or file such documents
simultaneously with the filing of any such applications or registrations; (iv)
upon filing any such applications or registrations, promptly provide Bank with a
copy of such applications or registrations together with any exhibits, evidence
of the filing of any documents requested by Bank to be filed for Bank to
maintain the perfection and priority of its security interest in such
intellectual property rights, and the date of such filing.
 
(d)   Borrower shall execute and deliver such additional instruments and
documents from time to time after an Event of Default, as Bank shall reasonably
request to perfect and maintain the perfection and priority of Bank's security
interest in the Intellectual Property Collateral.
 
(e)   Borrower shall use commercially reasonably efforts in its reasonable
business judgment to (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents, Copyrights, and trade secrets, (ii)
detect infringements of the Trademarks, Patents and Copyrights and promptly
advise Bank in writing of material infringements detected and (iii) not allow
any material Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Bank, which shall not be
unreasonably withheld.
 
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(f)   Bank may audit Borrower's Intellectual Property Collateral to confirm
compliance with this Section 6.8, provided such audit may not occur more often
than twice per year, unless an Event of Default has occurred and is continuing.
Bank shall have the right, but not the obligation, to take, at Borrower's sole
expense, any actions that Borrower is required under this Section 6.8 to take
but which Borrower fails to take, after fifteen (15) days' notice to Borrower.
Borrower shall reimburse and indemnify Bank for all reasonable costs and
reasonable expenses related to the reasonable exercise of its rights under this
Section 6.8.
 
6.9   Consent of Inbound Licensors.  Prior to entering into or becoming bound by
any inbound license or agreement (other than over-the-counter software that is
commercially available to the public), the failure, breach, or termination of
which could reasonably be expected to cause a Material Adverse Effect, Borrower
shall:  (i) provide written notice to Bank of the material terms of such license
or agreement with a description of its likely impact on Borrower's business or
financial condition; and (ii) in good faith take such actions as Bank may
reasonably request to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (A) Borrower's interest in such licenses or
contract rights to be deemed Collateral and for Bank to have a security interest
in it that might otherwise be restricted by the terms of the applicable license
or agreement, whether now existing or entered into in the future, and (B) Bank
to have the ability in the event of a liquidation of any Collateral to dispose
of such Collateral in accordance with Bank's rights and remedies under this
Agreement and the other Loan Documents, provided, however, that the failure to
obtain any such consent or waiver shall not constitute a default under this
Agreement.
 
6.10   Creation/Acquisition of Subsidiaries.  In the event Borrower or any
Subsidiary creates or acquires any Subsidiary, Borrower and such Subsidiary
shall promptly notify Bank of the creation or acquisition of such new Subsidiary
and take all such action as may be reasonably required by Bank to cause each
such domestic Subsidiary to guarantee the Obligations of Borrower under the Loan
Documents and grant a continuing pledge and security interest in and to the
collateral of such Subsidiary (substantially as described on Exhibit B hereto),
and Borrower shall grant and pledge to Bank a perfected security interest in the
Shares of each Subsidiary (whether foreign or domestic).
 
6.11   Further Assurances.  At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.
 
7.
NEGATIVE COVENANTS.

 
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until the outstanding Obligations are paid in full or for so long
as Bank may have any commitment to make any Credit Extensions, Borrower will not
do any of the following without Bank's prior written consent, which shall not be
unreasonably withheld:
 
7.1   Dispositions.  Convey, sell, lease, license, transfer or otherwise dispose
of (collectively, to "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, or subject to Section 6.6 of the
Agreement, move cash balances on deposit with Bank to accounts opened at another
financial institution, other than Permitted Transfers, Without limiting the
foregoing, Borrower shall not make any Transfers to Statcorp.
 
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7.2   Change in Name, Location, Executive Office, or Executive Management;
Change in Business; Change in Fiscal Year; Change in Control.  Change its name
or the Borrower State or relocate its chief executive office without thirty (30)
days' prior written notification; replace its chief executive officer or chief
financial officer (i) without prompt notice to Bank and (ii) unless a
replacement for such officer is approved by Borrower's Board of Directors and
engaged by Borrower within ninety (90) days of such change; engage in any
business, or permit any of its Subsidiaries to engage in any business, other
than or reasonably related or incidental to the businesses currently engaged in
by Borrower; change its fiscal year end; have a Change in Control; provided that
the foregoing clause shall not apply to any Change of Control pursuant to which
the Obligations are indefeasibly paid in full in cash contemporaneously with the
close or consummation of such transaction and the Bank's obligations to make any
Credit Extensions are terminated as of the close or consummation of such
transaction.
 
7.3   Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another
Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person, or enter into any agreement to do any of the same, except where (i) such
transactions do not in the aggregate exceed One Hundred Thousand Dollars
($100,000.00) during any fiscal year, (ii) no Event of Default has occurred, is
continuing or would exist after giving effect to such transactions, (iii) such
transactions do not result in a Change in Control, and (iv) Borrower is the
surviving entity; provided that the foregoing Section 7.3 shall not apply to any
transaction pursuant to which the Obligations are indefeasibly paid in full in
cash contemporaneously with the close or consummation of such transaction and
the Bank's obligations to make any Credit Extensions are terminated as of the
close or consummation of such transaction.
 
7.4   Indebtedness.  Create, incur, assume, guarantee or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness, or prepay any Indebtedness or take any actions which
impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness
to Bank.
 
7.5   Encumbrances.  Create, incur, assume or allow any Lien with respect to any
of its property, or assign or otherwise convey any right to receive income,
including the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens, or covenant to any other Person that Borrower in the
future will refrain from creating, incurring, assuming or allowing any Lien with
respect to any of Borrower's property.
 
7.6   Distributions.  Pay any dividends or make any other distribution or
payment on account of or in redemption, retirement or purchase of any capital
stock, except that Borrower may (i) repurchase the stock of former employees
pursuant to stock repurchase agreements as long as an Event of Default does not
exist prior to such repurchase or would not exist after giving effect to such
repurchase, (ii) repurchase the stock of former employees pursuant to stock
repurchase agreements by the cancellation of indebtedness owed by such former
employees to Borrower regardless of whether an Event of Default exists, and
(iii) fulfill its obligations pursuant to the terms of the Borrower's currently
outstanding preferred stock by making non-cash, in kind distributions.
 
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7.7   Investments.  Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries to do so,
other than Permitted Investments, or maintain or invest any of its property with
a Person other than Bank or Bank's Affiliates or permit any Subsidiary to do so
unless such Person has entered into a control agreement with Bank, in form and
substance satisfactory to Bank, or suffer or permit any Subsidiary to be a party
to, or be bound by, an agreement that restricts such Subsidiary from paying
dividends or otherwise distributing property to Borrower.  Further, Borrower
shall not enter into any license or agreement with any Prohibited Territory or
with any Person organized under or doing business in a Prohibited Territory.
 
7.8   Transactions with Affiliates.  Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person.
 
7.9   Subordinated Debt.  Make any payment in respect of any Subordinated Debt,
or permit any of its Subsidiaries to make any such payment, except in compliance
with the terms of such Subordinated Debt and the terms of the subordination
agreement relating to such Subordinated Debt, or amend any provision of any
document evidencing such Subordinated Debt, except in compliance with the terms
of the subordination agreement relating to such Subordinated Debt, or amend any
provision affecting Bank's rights contained in any documentation relating to the
Subordinated Debt without Bank's prior written consent.
 
7.10   Inventory and Equipment.  Store any Material Collateral with a bailee,
warehouseman, or similar third party unless the third party has been notified of
Bank's security interest and Bank (a) has received an acknowledgment from the
third party that it is holding or will hold the Inventory or Equipment for
Bank's benefit or (b) is in possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment. Except for Inventory sold in
the ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Material Collateral only at the
location set forth in Section 10 and such other locations of which Borrower
gives Bank prior written notice and as to which Bank files a financing statement
where needed to perfect its security interest.
 
7.11   No Investment Company; Margin Regulation.  Become or be controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose.
 
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8.
EVENTS OF DEFAULT.

 
Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:
 
8.1   Payment Default.  If Borrower fails to pay any of the Obligations when
due;
 
8.2   Covenant Default.
 
(a)   If Borrower fails to perform any obligation under Article 6 or violates
any of the covenants contained in Article 7 of this Agreement; or
 
(b)   If Borrower fails or neglects to perform or observe any other material
term, provision, condition, covenant contained in this Agreement, in any of the
Loan Documents, or in any other present or future agreement between Borrower and
Bank and as to any default under such other term, provision, condition or
covenant that can be cured, has failed to cure such default within ten (10) days
after Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by Borrower be
cured within such ten (10) day period, and such default is likely to be cured
within a reasonable time, then Borrower shall have an additional reasonable
period (which shall not in any case exceed thirty (30) days) to attempt to cure
such default, so long as Borrower continues to diligently attempt to cure such
default, and within such reasonable time period the failure to have cured such
default shall not be deemed an Event of Default but no Credit Extensions will be
made;
 
8.3   Material Adverse Change.  If there occurs any circumstance or
circumstances that could reasonably be expected to have a Material Adverse
Effect.
 
8.4   Defective Perfection.  If Bank shall receive at any time following the
Closing Date an SOS Report indicating that except for Permitted Liens, Bank's
security interest in the Collateral is not prior to all other security interests
or Liens of record reflected in the report;
 
8.5   Attachment.  If any material portion of Borrower's assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within five (5) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within five (5) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that Bank may determine, in its sole and absolute discretion, that no Credit
Extensions will be made during such cure period);
 
 
 
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8.6   Insolvency.  If Borrower becomes insolvent, or if an Insolvency Proceeding
is commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within thirty (30) days (provided that
no Credit Extensions will be made prior to the dismissal of such Insolvency
Proceeding);
 
8.7   Other Agreements.  If there is a default or other failure to perform in
any agreement to which Borrower is a party with a third party or parties
resulting in a right by such third party or parties, whether or not exercised,
to accelerate the maturity of any Indebtedness in an amount in excess of One
Hundred Thousand Dollars ($100,000.00) or that would reasonably be expected to
have a Material Adverse Effect;
 
8.8   Subordinated Debt.  If Borrower makes any payment on account of
Subordinated Debt, except to the extent the payment is allowed under any
subordination agreement entered into with Bank;
 
8.9   Judgments.  If one or more final judgments, orders, or decrees for the
payment of money in an amount, individually or in the aggregate, of at least One
Hundred Thousand Dollars ($100,000.00) (not covered by independent third-party
insurance as to which liability has been accepted by such insurance carrier)
shall be rendered against Borrower or any Subsidiary and the same are not,
within ten (10) days after the entry thereof, discharged or execution thereof
stayed or bonded pending appeal, or such judgments are not discharged prior to
the expiration of any such stay (provided that Bank may determine, in its sole
and absolute discretion, that no Credit Extensions will be made prior to the
discharge, stay, or bonding of such judgment, order, or decree).
 
8.10   Misrepresentations.  If any material misrepresentation or material
misstatement exists now or when made hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
 
9.
BANK'S RIGHTS AND REMEDIES.

 
9.1   Rights and Remedies.  Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
 
(a)   Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable (provided
that upon the occurrence of an Event of Default described in Section 8.6
(insolvency), all Obligations shall become immediately due and payable without
any action by Bank);
 
(b)   Demand that Borrower (i) deposit cash with Bank in an amount equal to the
amount of any Letters of Credit remaining undrawn, and (ii) pay in advance all
Letter of Credit fees scheduled to be paid or payable over the remaining term of
the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;
 
(c)   Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement or under any other agreement between Borrower and
Bank;
 
 
 
 
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(d)   Settle or adjust disputes and claims directly with account debtors for
amounts, upon terms and in whatever order that Bank reasonably considers
advisable;
 
(e)   Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank's determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises, Borrower
hereby grants Bank a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Bank's rights or
remedies provided herein, at law, in equity, or otherwise;
 
(f)   Set off and apply to the Obligations any and all (i) balances and deposits
of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Bank;
 
(g)   Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, 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, in connection with Bank's
exercise of its rights under this Section 9.1, Borrower's rights under all
licenses and all franchise agreements shall inure to Bank's benefit;
 
(h)   Sell the Collateral at either a public or private sale, or both, by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Borrower's premises) as Bank determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate. Bank may sell the Collateral without
giving any warranties as to the Collateral. Bank may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. If Bank
sells any of the Collateral upon credit, Borrower will be credited only with
payments actually made by the purchaser, received by Bank, and applied to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral,
Bank may resell the Collateral and Borrower shall be credited with the proceeds
of the sale;
 
(i)   Bank may credit bid and purchase at any public sale;
 
(j)   Apply for the appointment of a receiver, trustee, liquidator or
conservator of the Collateral, without notice and without regard to the adequacy
of the security for the Obligations and without regard to the solvency of
Borrower, any guarantor or any other Person liable for any of the Obligations;
and
 
 
 
 
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(k)   Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrower.
 
Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.
 
9.2   Power of Attorney.  Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank's designated officers, or employees) as Borrower's true and
lawful attorney to:  (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrower's name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; (g)
enter into a short-form intellectual property security agreement consistent with
the terms of this Agreement for recording purposes only or modify, in its sole
discretion, any intellectual property security agreement entered into between
Borrower and Bank without first obtaining Borrower's approval of or signature to
such modification by amending Exhibits A, B, and C, thereof, as appropriate, to
include reference to any right, title or interest in any Copyrights, Patents or
Trademarks acquired by Borrower after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which Borrower no longer has or claims to have any right, title or
interest; and (h) file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Borrower where permitted by law; provided
Bank may exercise such power of attorney to sign the name of Borrower on any of
the documents described in clause (h) above, regardless of whether an Event of
Default has occurred, The appointment of Bank as Borrower's attorney in fact,
and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank's obligation to provide advances hereunder is terminated.
 
9.3   Accounts Collection.  At any time after the occurrence and during the
continuation of an Event of Default, Bank may notify any Person owing funds to
Borrower of Bank's security interest in such funds and verify the amount of such
Account. Borrower shall collect all amounts owing to Borrower for Bank, receive
in trust all payments as Bank's trustee, and immediately deliver such payments
to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.
 
9.4   Bank Expenses.  If Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then Bank may do any or all of the following after
reasonable notice to Borrower:  (a) make payment of the same or any part
thereof; (b) set up such reserves under the Revolving Line as Bank deems
necessary to protect Bank from the exposure created by such failure; or (c)
obtain and maintain insurance policies of the type discussed in Section 6.5 of
this Agreement,
 
 
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and take any action with respect to such policies as Bank deems prudent. Any
amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments made
by Bank shall not constitute an agreement by Bank to make similar payments in
the future or a waiver by Bank of any Event of Default under this Agreement.
 
9.5   Bank's Liability for Collateral.  Bank has no obligation to clean up or
otherwise prepare the Collateral for sale. All risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.
 
9.6   No Obligation to Pursue Others.  Bank has no obligation to attempt to
satisfy the Obligations by collecting them from any other person liable for them
and Bank may release, modify or waive any collateral provided by any other
Person to secure any of the Obligations, all without affecting Bank's rights
against Borrower. Borrower waives any right it may have to require Bank to
pursue any other Person for any of the Obligations.
 
9.7   Remedies Cumulative.  Bank's rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall be
deemed an election, and no waiver by Bank of any Event of Default on Borrower's
part shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be
effective only in the specific instance and for the specific purpose for which
it was given. Borrower expressly agrees that this Section 9,7 may not be waived
or modified by Bank by course of performance, conduct, estoppel or otherwise.
 
9.8   Demand; Protest.  Except as otherwise provided in this Agreement, Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment and any other notices relating to the Obligations.
 
10.
NOTICES.

 
Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements, compliance
certificates and other informational documents which may be sent by first-class
mail, postage prepaid or email) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to Borrower or to Bank, as the case may
be, at its addresses set forth below:
 
If to Borrower:
CAS Medical Systems, Inc.
 
44 East Industrial Road Branford, CT 06405
 
Attn:  Jeffery A. Baird, Chief Financial Officer
FAX:  (203) 488-9438
Email:  Jbaird@casmed.com
   

 
 
 
 
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If to Bank:
East West Bank
 
2350 Mission College Blvd., Suite 988
 
Santa Clara, CA 95054
 
Attn:  James Tai, Managing Director
 
FAX:  (408) 588-9688
 
Email:  james.tai@eastwestbank.com
   

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.
 
11.
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE.

 
California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Los Angeles County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in, or subsequently provided by Borrower in accordance with, Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower's actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.
 
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
 
WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES' AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the 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, who shall be a retired state or federal court
judge, mutually selected by the parties or, if they cannot agree, then any party
may seek to have a private judge appointed in accordance with California Code of
Civil Procedure §§ 638 and 640 (or pursuant to comparable provisions of federal
law if the dispute falls within the exclusive jurisdiction of the federal
courts). The
 
 
 
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reference proceedings shall be conducted pursuant to and in accordance with the
provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive. The private judge shall have the power, among others, to grant
provisional relief, including without limitation, entering temporary restraining
orders, issuing preliminary and permanent injunctions and appointing receivers. 
All such proceedings shall be closed to the public and confidential and all
records relating thereto shall be permanently sealed. If during the course of
any dispute, a party desires to seek provisional relief, but a judge has not
been appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and orders applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral, or obtain provisional remedies. The
private judge shall also determine all issues relating to the applicability,
interpretation, and enforceability of this paragraph.
 
The parties agree that time is of the essence in conducting the referenced
proceedings.  The parties shall promptly and diligently cooperate with one
another and the referee, and shall perform such acts as may be necessary to
obtain prompt and expeditious resolution of the dispute or controversy in
accordance with the terms hereof.  The costs shall be borne equally by the
parties.
 
12.
GENERAL PROVISIONS.

 
12.1   Successors and Assigns.  This Agreement shall bind and inure to the
benefit pf the respective successors and permitted assigns of each of the
parties and shall bind all persons who become bound as a debtor to this
Agreement; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.
 
12.2   Indemnification.  Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against:  (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement and/or the Loan Documents;
and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
Bank, its officers, employees and agents as a result of or in any way arising
out of, following, or consequential to transactions between Bank and Borrower
whether under this Agreement, or otherwise (including without limitation
reasonable attorney's fees and expenses), except for losses caused by Bank's
gross negligence or willful misconduct.
 
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12.3   Time of Essence.  Time is of the essence for the performance of all
obligations set forth in this Agreement.
 
12.4   Severability of Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
 
12.5   Correction of Loan Documents.  Bank may correct patent errors and fill in
any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.
 
12.6   Amendments in Writing; Integration.  All amendments to or terminations of
this Agreement or the other Loan Documents must be in writing signed by the
parties. All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.
 
12.7   Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
 
12.8   Survival.  All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding or Bank has any obligation to make any Credit Extension to
Borrower. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 12.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.
 
12.9   Confidentiality.  In handling any confidential information, Bank and all
employees and agents of Bank shall exercise the same degree of care that Bank
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to this Agreement except that disclosure of such information
may be made (i) to the subsidiaries or Affiliates of Bank in connection with
their present or prospective business relations with Borrower, (ii) to
prospective transferees or purchasers of any interest in the Loans, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Bank, (v) to Bank's accountants, auditors and
regulators, and (vi) as Bank may determine in connection with the enforcement of
any remedies hereunder. Confidential information hereunder shall not include
information that either:  (a) is in the public domain or in the knowledge or
possession of Bank when disclosed to Bank, or becomes part of the public domain
after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank
by a third party, provided Bank does not have actual knowledge that such third
party is prohibited from disclosing such information.
 
[Balance of Page Intentionally Left Blank]
 
 
 
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
 
 
 

 
CAS MEDICAL SYSTEMS, INC.
 
 
 
 
By:
/s/ Jeffery A. Baird
 
Name:
Jeffery A. Baird
 
Title:
Chief Financial Officer
             
EAST WEST BANK
 
 
 
 
By:
/s/ James Tai
 
Name:
James Tai
 
Title:
Managing Director/Head of Life Sciences
     

[Signature Page to Loan and Security Agreement]
 

 

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EXHIBIT A
 
DEFINITIONS
 
"Accounts" means all presently existing and hereafter arising accounts, contract
rights, payment intangibles and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower's Books relating to any of the foregoing.
 
"Advance" or "Advances" means a cash advance or cash advances under the
Revolving Line.
 
"Affiliate" means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person's senior
executive officers, directors, and partners.
 
"Amortization Date" is December 1, 2019; provided that, if Borrower achieves the
First Equity Event, the Amortization Date shall be March 1, 2020; and, if
Borrower achieves the Second Equity Event, the Amortization Date shall be June
1, 2020; provided further that, if Borrower fails to comply with any of the
financial covenants in this Agreement at any time, the Amortization Date shall
commence immediately thereupon, without any grace or cure period (such date, the
"Early Amortization Date").
 
"Bank Expenses" means all reasonable costs or expenses (including reasonable
attorneys' fees and expenses, whether generated in-house or by outside counsel)
incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank's
reasonable attorneys' fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, or validly enforcing or defending the
Loan Documents (including fees and expenses of appeal), incurred before, during
and after an Insolvency Proceeding, whether or not suit is brought.
 
"Borrower State" means Delaware, the state under whose laws Borrower is
organized.
 
"Borrower's Books" means all of Borrower's books and records including: 
ledgers; records concerning Borrower's assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment, containing such information.
 
"Borrowing Base" means an amount equal to eighty percent (80.00%) of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower; provided that Bank may, with prior notice to
Borrower, change the advance rate in Bank's reasonable discretion based upon the
results of Collateral audits.
 
"Business Day" means any day other than a Saturday or a Sunday or any day on
which commercial banks in Los Angeles, California, are authorized or required to
close.
 
"Cash" means unrestricted cash and cash equivalents.
 
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"Cash Burn" means the sum of EBDA (excluding fees and transaction expenses
associated with satisfaction of the Existing Indebtedness) plus the aggregate
amount of capital expenditures for any applicable measuring period.
 
"Change in Control" shall mean a transaction in which any "person" or "group"
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient number
of shares of all classes of stock then outstanding of Borrower ordinarily
entitled to vote in the election of directors, empowering such "person" or
"group" to elect a majority of the Board of Directors of Borrower, who did not
have such power before such transaction.
 
"Chief Executive Office State" means Connecticut, where Borrower's chief
executive office is located. "Closing Date" means the date of this Agreement.
 
"Code" means the California Uniform Commercial Code as amended or supplemented
from time to time.
 
"Collateral" means the property described on (x) prior to the occurrence of an
Liquidity Event, Exhibit B-1 attached hereto, and (y) after the occurrence and
during the continuance of an Liquidity Event, Exhibit B-2 attached hereto; and,
in each case, all Negotiable Collateral to the extent not described on Exhibit
B, except to the extent (i) any such property is nonassignable by its terms
without the consent of the licensor thereof or another party (but only to the
extent such prohibition on transfer is enforceable under applicable law,
including, without limitation, Sections 9406 and 9408 of the Code), (ii) the
granting of a security interest therein is contrary to applicable law, provided
that upon the cessation of any such restriction or prohibition, such property
shall automatically become part of the Collateral, or (iii) any such property
constitutes the capital stock of a controlled foreign corporation (as defined in
the IRC), in excess of sixty five percent (65%) of the voting power of all
classes of capital stock of such controlled foreign corporations entitled to
vote; provided that in no case shall the definition of "Collateral'' exclude any
Accounts, proceeds of the disposition of any property, or general intangibles
consisting of rights to payment.
 
"Contingent Obligation" means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term "Contingent Obligation" shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.
 
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"Copyrights" means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.
 
"Credit Extension" means each Advance, the Term Loan or any other extension of
credit by Bank to or for the benefit of Borrower hereunder.
 
"Default Rate" has the meaning assigned in Section 2.4(b).
 
"Dominion of Funds Account" has the meaning set forth in Section 6.6(b).
 
"EBDA" means earnings before depreciation and amortization.
 
"Eligible Accounts" means those Accounts that arise in the ordinary course of
Borrower's business that comply with all of Borrower's representations and
warranties to Bank set forth in Section 5.3; provided, that Bank may change the
standards of eligibility by giving Borrower thirty (30) days prior written
notice. Unless otherwise agreed to by Bank, Eligible Accounts shall not include
the following:
 
(a)
Accounts that the account debtor has failed to pay in full within ninety (90)
days of invoice date;

 
(b)
Credit balances over ninety (90) days;

 
(c)
Accounts with respect to an account debtor, twenty-five percent (25%) of whose
Accounts the account debtor has failed to pay within ninety (90) days of invoice
date, except as approved in writing by Bank;

 
(d)
Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrower exceed twenty-five percent (25%)
of all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank;

 
(e)
Accounts with respect to which the account debtor does not have its principal
place of business in the United States, except for Eligible Foreign Accounts;

 
(f)
Accounts with respect to which the account debtor is the United States or any
department, agency, or instrumentality of the United States, except for (i)
Accounts of the United States, or (ii) Accounts with the United States
Department of Veterans Affairs (and related hospitals), if in each case the
payee has assigned its payment rights to Bank and the assignment has been
acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C, 3727);

 
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(g)
Accounts with respect to which Borrower is liable to the account debtor for
goods sold or services rendered by the account debtor to Borrower, but only to
the extent of any amounts owing to the account debtor against amounts owed to
Borrower;

 
(h)
Accounts with respect to which goods are placed on consignment, guaranteed sale,
sale or return, sale on approval, bill and hold, demo or promotional, or other
terms by reason of which the payment by the account debtor may be conditional;

 
(i)
Accounts with respect to which the account debtor is an officer, employee, agent
or Affiliate of Borrower;

 
(j)
Accounts that have not yet been billed to the account debtor or that relate to
deposits (such as good faith deposits) or other property of the account debtor
held by Borrower for the performance of services or delivery of goods which
Borrower has not yet performed or delivered;

 
(k)
Accounts with respect to which the account debtor disputes liability or makes
any claim with respect thereto as to which Bank believes, in its sole
discretion, that there may be a basis for dispute (but only to the extent of the
amount subject to such dispute or claim), or is subject to any Insolvency
Proceeding, or becomes insolvent, or goes out of business;

 
(l)
Accounts the collection of which Bank reasonably determines after inquiry and
consultation with Borrower to be doubtful; and

 
(m)
Retentions and hold-backs.

 
"Eligible Foreign Accounts" means Accounts with respect to which the account
debtor does not have its principal place of business in the United States and is
not located in an OFAC sanctioned country and that are (i) supported by one or
more letters of credit in an amount and of a tenor, and issued by a financial
institution, acceptable to Bank, (ii) insured by the Export Import Bank of the
United States, (iii) generated by an account debtor with its principal place of
business in Canada, provided that the Bank has perfected its security interest
in the appropriate Canadian province, and (iv) in each case, approved by Bank on
a case-by-case basis. All Eligible Foreign Accounts must be calculated in U.S.
Dollars.
 
"Environmental Laws" means all laws, rules, regulations, orders and the like
issued by any federal state, local foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to
any hazardous materials or wastes, toxic substances, flammable, explosive or
radioactive materials, asbestos or other similar materials.
 
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
 
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.
 
"Event of Default" has the meaning assigned in Article 8.
 
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"Existing Indebtedness" is the Indebtedness of Borrower to the Existing Lenders
in the aggregate principal outstanding amount as of the Effective Date of
approximately Seven Million Thousand Dollars ($7,000,000.00) pursuant to that
certain Loan and Security Agreement, dated June 30, 2016, as amended, entered
into by and between the Existing Lenders and Borrower, plus all related fees and
expenses.
 
"Existing Lenders" means Bridge Bank and Solar Capital, and their affiliates.
 
"Final Payment" is a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) due on the earliest
to occur of (a) the Term Loan Maturity Date, or (b) the acceleration of the Term
Loan, or (c) the prepayment of the Term Loan pursuant to Section 2.2(c)(iii) or
(iv), equal to the original principal amount of the Term Loan multiplied by the
Final Payment Percentage.
 
"Final Payment Percentage" is four percent (4.00%).
 
"First Equity Event" means Borrower's receipt of gross proceeds (net of
underwriting or placement agent fees and expenses not to exceed Five Hundred
Thousand Dollars ($500,000.00)) from the sale of Borrower's equity securities of
at least Seven Million Five Hundred Thousand Dollars ($7,500,000.00).
 
"GAAP" means United States generally accepted accounting principles,
consistently applied, as in effect from time to time.
 
"Indebtedness" means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations, if any.
 
"Insolvency Proceeding" means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
 
"Intellectual Property Collateral" means all of Borrower's right, title, and
interest in and to the following:
 
(a)
Copyrights, Trademarks and Patents;

 
(b)
Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired or held;

 
(c)
Any and all design rights which may be available to Borrower now or hereafter
existing, created, acquired or held;

 
5

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(d)
Any and all claims for damages by way of past, present and future infringement
of any of the rights included above, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
intellectual property rights identified above;

 
(e)
All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights;

 
(f)
All amendments, renewals and extensions of any of the Copyrights, Trademarks or
Patents; and

 
(g)
All proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.

 
"Inventory" means all present and future inventory in which Borrower has any
interest.
 
"Investment" means any beneficial ownership of (including stock, partnership or
limited liability company interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
 
"IRC" means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder,
 
"Letter of Credit" means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower's request.
 
"Lien" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
 
"Liquidity" means the sum of Borrower's Cash on deposit with Bank plus
availability under the Revolving Line.
 
"Liquidity Event" means Borrower's Liquidity is less than four (4) months' Cash
Burn, measured on a trailing six (6) month basis; provided that, Borrower may
cure a "Liquidity Event," and such Liquidity Event shall be deemed to be
terminated, upon Borrower's receipt of net proceeds from the sale of Borrower's
equity securities, equal to at least ten (10) months' Cash Burn (as of the
Closing Date); provided further that any proceeds raised in the First Equity
Event or Second Equity Event shall not be considered in connection with any cure
of any Liquidity Event, if such First or Second Equity Event occurs after the
applicable Liquidity Event.
 
"Loan Documents" means, collectively, this Agreement, any note or notes executed
by Borrower in connection therewith, and any other document, instrument or
agreement entered into in connection with this Agreement, all as amended or
extended from time to time.
 
"Lock Box" has the meaning set forth in Section 6.6(b).
 
"Material Adverse Effect" means (a) a material impairment in the perfection or
priority of Bank's Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in
 
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the business, operations, or condition (financial or otherwise) of Borrower; (c)
a material impairment of the prospect of repayment of any portion of the
Obligations; or (d) Bank determines, based upon information available to it and
in its reasonable judgment, that there is a reasonable likelihood that Borrower
shall fail to comply with one or more of the financial or milestone covenants in
Section 6 during the next succeeding financial reporting period.
 
"Material Collateral" means, Collateral held at any particular location from
time to time, the aggregate value of which exceeds One Hundred Thousand Dollars
($100,000.00) at any time.
 
"Negotiable Collateral" means all of Borrower's present and future letters of
credit of which it is a beneficiary, drafts, instruments (including promissory
notes), securities, documents of title, and chattel paper, and Borrower's Books
relating to any of the foregoing,
 
"Obligations" means all debt, principal, interest, Bank Expenses, the Prepayment
Fee, the Final Payment, the Unused Fee, and other amounts owed to Bank by
Borrower pursuant to this Agreement or any other agreement, whether absolute or
contingent, due or to become due, now existing or hereafter arising, including
any interest that accrues after the commencement of an Insolvency Proceeding and
including any debt, liability, or obligation owing from Borrower to others that
Bank may have obtained by assignment or otherwise.
 
"Patents" means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same,
 
"Periodic Payments" means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank,
 
"Permitted Indebtedness" means:
 
(a)
Indebtedness of Borrower in favor of Bank arising under this Agreement or any
other Loan Document;

 
(b)
Indebtedness existing on the Closing Date and disclosed in the Schedule;

 
(c)
Indebtedness not to exceed Two Hundred Thousand Dollars ($200,000.00) in the
aggregate in any fiscal year of Borrower secured by a lien described in clause
(c) of the defined term "Permitted Liens," provided such Indebtedness does not
exceed the lesser of the cost or fair market value of the equipment financed
with such Indebtedness;

 
(d)
Subordinated Debt;

 
(e)
Indebtedness to trade creditors or vendors incurred in the ordinary course of
business; and

 
(f)
Extensions, refinancings and renewals of any items of Permitted Indebtedness,
provided that the principal amount is not increased or the terms modified to
impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be.

 
 
 
 
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"Permitted Investment" means:
 
(a)
Investments existing on the Closing Date disclosed in the Schedule;

 
(b)
(i) consistent with the Borrower's investment policy, marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency or any State thereof maturing within two (2) years from the date
of acquisition thereof, (ii) consistent with the Borrower's investment policy,
commercial paper maturing no more than two (2) years from the date of creation
thereof and currently having rating of at least A-2 or P-2 from either Standard
& Poor's Corporation or Moody's Investors Service, (iii) Bank's certificates of
deposit maturing no more than one (1) year from the date of investment therein,
and (iv) Bank's money market accounts;

 
(c)
Repurchases of stock from former employees or directors of Borrower under the
terms of applicable repurchase agreements (i) in an aggregate amount not to
exceed One Hundred Thousand Dollars ($100,000.00) in any fiscal year, provided
that no Event of Default has occurred, is continuing or would exist after giving
effect to the repurchases, or (ii) in any amount where the consideration for the
repurchase is the cancellation of indebtedness owed by such former employees to
Borrower regardless of whether an Event of Default exists;

 
(d)
Investments accepted in connection with Permitted Transfers;

 
(e)
Investments of Subsidiaries in or to Borrower and Investments by Borrower in
Subsidiaries, other than Statcorp, not to exceed One Hundred Thousand Dollars
($100,000.00) in the aggregate in any fiscal year; provided that Borrower may
not make any Investments in Statcorp;

 
(f)
Investments not to exceed One Hundred Thousand Dollars ($100,000.00) in the
aggregate in any fiscal year consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plan agreements approved by Borrower's Board of
Directors;

 
(g)
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower's business;

 
(h)
Investments consisting of notes receivable of, or prepaid royalties and other
credit extensions, to customers and suppliers who are not Affiliates, in the
ordinary course of business, provided that this subparagraph (h) shall not apply
to Investments of Borrower in any Subsidiary; and

 
(i)
Joint ventures or strategic alliances in the ordinary course of Borrower's
business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash Investments by Borrower do not exceed One Hundred Thousand Dollars
($100,000.00) in the aggregate in any fiscal year.

 
8

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"Permitted Liens'' means the following:
 
(a)
Any Liens existing on the Closing Date and disclosed in the Schedule (excluding
Liens to be satisfied with the proceeds of the Advances) or arising under this
Agreement or the other Loan Documents;

 
(b)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

 
(c)
Liens not to exceed Two Hundred Thousand Dollars ($200,000.00) in the aggregate
at any time (i) upon or in any Equipment acquired or held by Borrower or any of
its Subsidiaries to secure the purchase price of such Equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such
Equipment, or (ii) existing on such Equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such Equipment;

 
(d)
Liens incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through (c)
above, provided that any extension, renewal or replacement Lien shall be limited
to the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;

 
(e)
Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.5 (attachment) or 8.9
(judgments); and

 
(f)
Liens in favor of other financial institutions arising in connection with
Borrower's deposit accounts held at such institutions to secure standard fees
for deposit services charged by, but not financing made available by such
institutions, provided that Bank has a perfected security interest in the
amounts held in such deposit accounts.

 
"Permitted Transfer" means the conveyance, sale, lease, transfer or disposition
by Borrower or any Subsidiary of:
 
(a)
Inventory in the ordinary course of business;

 
(b)
Non-exclusive licenses and similar arrangements for the use of the property of
Borrower or its Subsidiaries in the ordinary course of business;

 
(c)
Worn-out or obsolete Equipment; or

 
9

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(d)
Other assets of Borrower or its Subsidiaries that do not in the aggregate exceed
One Hundred Thousand Dollars ($100,000.00) during any fiscal year.

 
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
 
"Prepayment Fee" is, with respect to the Term Loan subject to prepayment prior
to the Term Loan Maturity Date, whether by mandatory or voluntary prepayment,
acceleration or otherwise, an additional fee payable to Bank in an amount equal
to:
 
(i) for a prepayment made on or after the Closing Date through and including the
first anniversary thereof, three percent (3.00%) of the principal amount of the
Term Loan prepaid;
 
(ii) for a prepayment made after the first anniversary of the Closing Date
through and including the second anniversary of the Closing Date, two percent
(2.00%) of the principal amount of the Term Loan prepaid; and
 
(iii) for a prepayment made after the second anniversary of the Closing Date and
prior to the Term Loan Maturity Date, one percent (1.00%) of the principal
amount of the Term Loan prepaid;
 
provided that, no Prepayment Fee shall be due if the prepayment of the Term Loan
is as a result of the refinance thereof by Bank.
 
"Prime Rate" means the greater of four and three-quarters percent (4.75%) per
year, or the variable rate of interest, per annum, most recently announced by
Bank, as its "prime rate," whether or not such announced rate is the lowest rate
available from Bank.
 
"Prohibited Territory" means any person or country listed by the Office of
Foreign Assets Control of the United States Department of Treasury as to which
transactions between a United States Person and that territory are prohibited.
 
"Responsible Officer" means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower.
 
"Revolving Line" means a Credit Extension of up to Two Million Dollars
($2,000,000.00).
 
"Revolving Maturity Date" means May 8, 2022.
 
"Schedule" means the schedule of exceptions attached hereto and approved by Bank
(the execution of this Agreement constituting such approval by Bank).
 
"Schedule of Accounts" means the Schedule of Accounts provided to and approved
by Bank prior to the Closing Date.
 
"Second Equity Event" means Borrower's receipt of gross proceeds (net only of
underwriting or placement agent fees and expenses not to exceed Five Hundred
Thousand Dollars ($500,000.00)) from the sale of Borrower's equity securities,
which when added to the proceeds of the First Equity Event, equal or exceed
Fifteen Million Dollars ($15,000,000.00).
 
10

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"Shares" means (i) sixty-five percent (65%) of the issued and outstanding
capital stock, membership units or other securities owned or held of record by
Borrower in any Subsidiary of Borrower which is not an entity organized under
the laws of the United States or any territory thereof, and (ii) one hundred
percent (100%) of the issued and outstanding capital stock, membership units or
other securities owned or held of record by Borrower in any Subsidiary of
Borrower which is an entity organized under the laws of the United States or any
territory thereof.
 
"SOS Reports" means the official reports from the Secretaries of State of the
Chief Executive Office State and the Borrower State and other applicable
federal, state or local government offices identifying all current security
interests filed in the Collateral and Liens of record as of the date of such
report,
 
"Statcorp" means Statcorp, Inc., a Delaware corporation and wholly-owned,
dormant Subsidiary of Borrower.
 
"Subordinated Debt" means any debt incurred by Borrower that is subordinated in
writing to the debt owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank).
 
"Subsidiary" means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than
fifty percent (50%) of the stock, limited liability company interest or joint
venture of which by the terms thereof ordinary voting power to elect the Board
of Directors, managers or trustees of the entity, at the time as of which any
determination is being made, is owned by Borrower, either directly or through an
Affiliate.
 
"Tangible Net Worth" means at any date as of which the amount thereof shall be
determined, the sum of the capital stock, partnership interest or limited
liability company interest of Borrower and its Subsidiaries minus intangible
assets, determined in accordance with GAAP.
 
"Term Loan" has the meaning set forth in Section 2.1(c).
 
"Term Loan Maturity Date" means May 8, 2022.
 
"Trademarks" means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.
 
"Unused Fee" has the meaning set forth in Section 2.6(b).
 
 
 
 
 
 
11

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DEBTOR:
CAS Medical Systems, Inc.

 
SECURED PARTY:
EAST WEST BANK

 
EXHIBIT B-1
 
COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT
 
All personal property of Borrower (herein referred to as "Borrower" or "Debtor")
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:
 
All personal property of Debtor of every kind, whether presently existing or
hereafter created or acquired, and wherever located, including but not limited
to:  (a) all accounts (including health-care-insurance receivables), chattel
paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor's books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
and (b) any and all cash proceeds and/or noncash proceeds thereof, including,
without limitation, insurance proceeds, and all supporting obligations and the
security therefor or for any right to payment. All terms above have the meanings
given to them in the California Uniform Commercial Code, as amended or
supplemented from time to time.
 
Notwithstanding the foregoing, the Collateral shall not include any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or
hereafter acquired, or any claims for damages by way of any past, present and
future infringement of any of the foregoing (collectively, the "Intellectual
Property"); provided, however, that the Collateral shall include all accounts
and general intangibles that consist of rights to payment from the sale,
licensing or disposition of all or any part of, or rights in, the Intellectual
Property (the "Rights to Payment"). Notwithstanding the foregoing, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest in
the Rights to Payment, then the Collateral shall automatically, and effective as
of May 8, 2018, include the Intellectual Property to the extent necessary to
permit perfection of Bank's security interest in the Rights to Payment.
 
 
 
 
 
 
 
 
 
 
 

 
 

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DEBTOR:
CAS Medical Systems, Inc.

 
SECURED PARTY:
EAST WEST BANK

 
EXHIBIT B-2
 
COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT
 
All personal property of Borrower (herein referred to as "Borrower" or "Debtor")
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:
 
(e)
all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor's books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

 
(f)
all common law and statutory copyrights and copyright registrations,
applications for registration, now existing or hereafter arising, in the United
States of America or in any foreign jurisdiction, obtained or to be obtained on
or in connection with any of the foregoing, or any parts thereof or any
underlying or component elements of any of the foregoing, together with the
right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to sue in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;

 
(g)
all trademarks, service marks, trade names and service names and the goodwill
associated therewith, together with the right to trademark and all rights to
renew or extend such trademarks and the right (but not the obligation) of
Secured Party to sue in its own name and/or in the name of the Debtor for past,
present and future infringements of trademark;

 
(h)
all (i) patents and patent applications filed in the United States Patent and
Trademark Office or any similar office of any foreign jurisdiction, and
interests under patent license agreements, including, without limitation, the
inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and

 
(i)
any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time.