Exhibit 10.15

 

 

 

 

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

DATED AS OF

 

MAY 31, 2017

 

between

 

TRINITY CAPITAL FUND III, L. P.

 

and AUGMEDIX, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is made as of May 31, 2017 (the “Closing
Date”), by and between TRINITY CAPITAL FUND III, L. P., a Delaware limited
partnership (“Lender”), with its principal office at 3075 West Ray Road, Suite
525, Chandler, Arizona 85226, and AUGMEDIX, INC., a Delaware corporation
(“Borrower”), with offices at 1161 Mission Street, Suite 210, San Francisco,
California 94103.

 

W I T N E S S E T H

 

WHEREAS, Borrower may, from time to time, desire to borrow from Lender and
Lender may, from time to time, make available to Borrower, a Term Loan (the
“Loan”); and

 

WHEREAS, Borrower and Lender desire that this Agreement shall serve as a master
agreement which sets forth the terms and conditions governing any Loan by Lender
to Borrower.

 

NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE 1

 

DEFINITIONS

 

As used herein, all capitalized terms shall have the meanings set forth below.
All other capitalized terms used but not defined herein shall have the meaning
given to such terms in the UCC. Any accounting term used but not defined herein
shall be construed in accordance with generally accepted accounting principles
and all calculations shall be made in accordance with generally accepted
accounting principles. The term “financial statements” shall include the
accompanying notes and schedules.

 

“Account Control Agreement” means any deposit account control agreement or
securities account control agreement in a form acceptable to Lender required to
perfect Lender’s security interest in all deposit accounts and security accounts
of Borrower and each of its Subsidiaries.

 

“Actual Knowledge” means the actual knowledge of the chief executive officer or
chief financial officer of Borrower.

 

“Advance” means any Loan funds advanced under this Agreement.

 

“Affiliate” means, with respect to any Person, any other Person that owns or
controls directly or indirectly ten percent (10%) or more of the stock of
another entity of such Person, any other Person that controls or is controlled
by or is under common control with such Person and each of such Person’s
officers, directors, managers, joint venturers or partners. For purposes of this
definition, the term “control” of a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting Equity
Securities, by contract or otherwise and the terms “controlled by” and “under
common control with” shall have correlative meanings.

 

“Agreement” means this Loan and Security Agreement and all Schedules and
Exhibits annexed hereto and made a part hereof, as the same may be amended,
supplemented and or modified from time to time by the parties hereto and all
documents and instruments executed in connection herewith.

 

“Amortization Schedule” has the meaning provided in Section 2.1(a).

  

 

 

 

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective September 24, 2001), the USA
PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the
laws administered by OFAC.

 

“Application Fee” has the meaning provided in Section 2.1(c).

 

“Bank” means Comerica Bank.

 

“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) owned or controlled
by, or acting for or on behalf of, any Person that is listed in the annex to, or
is otherwise subject to the provisions of, Executive Order No. 13224, (c) with
which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires
to commit or supports “terrorism” as defined in Executive Order No. 13224, or
(e) that is named a “specially designated national” or “blocked person” on the
most current list published by OFAC or other similar list.

 

“Business Day” means a day when the banks in Phoenix, Arizona are open for
business.

 

“Change of Control” means the closing of any transaction or series of
transactions by which Borrower shall merge with (whether or not Borrower is the
surviving entity) or consolidate into any other Person or lease or sell
substantially all of its and its subsidiaries’ assets substantially as an
entirety to any other Person or by which any Person, entity or group (within the
meaning of Rule 13d-5 under the Securities Exchange Act of 1934) acquires,
directly or indirectly, 25% or more of Borrower’s outstanding capital stock.

 

“Closing Date” has the meaning set forth in the preamble hereto.

 

“Closing Fee” has the meaning provided in Section 2.1(d).

 

“Collateral” has the meaning provided in Article 3.

 

“Compliance Certificate” is that certain certificate in substantially the form
attached hereto as Exhibit D.

 

“Conditions Precedent” has the meaning provided in Section 2.3.

 

“Debt” means (a) all indebtedness for borrowed money; (b) all indebtedness for
the deferred purchase price of property or services (other than (i) trade
payables and accrued expenses incurred in the ordinary course of business, (ii)
any earn-out, purchase price adjustment or similar obligation until such
obligation appears in the liabilities section of the balance sheet and (iii) any
amounts being disputed in good faith by Borrower where such dispute would not
cause, or be reasonably expected to cause, a Material Adverse Change); (c) all
obligations evidenced by notes, bonds, debentures or other similar instruments;
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property); (e) all
obligations, contingent or otherwise, as an account party or applicant under
acceptance, letter of credit or similar facilities in respect of obligations of
the kind referred to in subsections (a) through (d) of this definition; and (f)
all obligations of the kind referred to in subsections (a) through (e) above
secured by (or which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any lien on property (including
accounts and contract rights).

 

“Documentation and Funding Fee” has the meaning provided in Section 2.1(e).

 

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“End of Term Payment” has the meaning set forth in Section 2.6.

 

“Equity Securities” of any Person means (a) all common stock, preferred stock,
participations, shares, partnership interests, membership interests or other
equity interests in and of such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing.

 

“Event of Default” means any of the following events and conditions at any time,
unless waived in writing by Lender, and shall constitute an Event of Default:

 

(a) failure on the part of Borrower to remit to Lender any amount required to be
remitted under this Agreement or any Loan Documents on or before such amount is
due;

 

(b) failure on the part of Borrower: (A) to perform any obligation arising under
Section 4.2 or to comply with any covenants of Section 4.3, which failure
continues for a period of five (5) Business Days after the earlier of (x)
Borrower obtaining Knowledge of such failure or (y) the giving of written notice
of such failure to Borrower by Lender, or (B) duly to observe or perform in any
other of its respective covenants or agreements in this Agreement or any other
Loan Document, which failure continues for a period of ten (10) Business Days
after the earlier of (x) Borrower obtaining Knowledge of such failure or (y) the
giving of written notice of such failure to Borrower by Lender.

 

(c) there is (a) a default in any agreement to which Borrower or any of its
Subsidiaries 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 Debt in an amount in excess of One Hundred Thousand Dollars
($100,000.00) or that could reasonably be expected to have a Material Adverse
Change; (b) any default under a Material Agreement that permits the counterparty
thereto to accelerate the payments owed thereunder or (c) a revocation or
termination of a Material Agreement;

 

(d) if any representation or warranty of Borrower made in this Agreement or in
any certificate or other writing delivered pursuant hereto or any other related
document is materially incorrect or misleading as of the time when the same
shall have been made;

 

(e) any material provision of this Agreement or any lien or security interest of
Lender in the Collateral ceases for any reason to be valid, binding and in full
force and effect other than as expressly permitted hereunder and other than as a
result of a change in applicable law;

 

(f) any voluntary bankruptcy, insolvency or other similar proceeding is filed by
Borrower or any of its Subsidiaries;

 

(g) any involuntary bankruptcy, insolvency or other similar proceeding is filed
against Borrower or any of its Subsidiaries and such proceeding or petition
shall not be dismissed within forty-five (45) days after filing;

 

(h) any assignment is made by Borrower of any of its duties or rights hereunder,
except as specifically permitted hereunder or as allowed in a signed writing by
Lender;

 

(i) Borrower is consolidated with, merged with, or sells its properties and
assets substantially as an entity to another entity without Lender’s prior
written consent, provided that no consent of Lender shall be required if, in
connection with such merger or sale of properties and assets the Obligations
will be paid in full;

 

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(j) (a) If any material portion of Borrower’s or any of its Subsidiaries’ assets
(i) is attached, seized, subjected to a writ or distress warrant, or is levied
upon or (ii) 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 ten (10) days, (b) if
Borrower or any of its Subsidiaries is enjoined, restrained or in way prevented
by court order from continuing to conduct all or any material part of its
business affairs, (c) if a judgment or other claim becomes a lien or encumbrance
upon any material portion of Borrower’s or any of its Subsidiaries’ assets or
(d) if a notice of lien, levy or assessment if filed of record with respect to
any of Borrower’s or any of its Subsidiaries’ 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
ten (10) days after Borrower or any Subsidiary 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;

 

(k) If Borrower or any Subsidiary shall breach any term of any Warrant or any
other Loan Document and shall fail to have cured such breach within five (5)
Business Days after the earlier of (x) Borrower or Subsidiary obtaining
Knowledge of such failure or (y) the giving of written notice of such breach to
Borrower or Subsidiary by Lender;

 

(l) If Borrower shall breach any term of the Participation Rights Agreement, and
shall fail to have cured such breach within five (5) Business Days after the
earlier of (x) Borrower obtaining Knowledge of such failure or (y) the giving of
written notice of such breach to Borrower by Lender;

 

(m) If any of the Loan Documents shall cease to be (except because of a change
in applicable law),, or Borrower shall assert that any of the Loan Documents is
not, a legal, valid and binding obligation of Borrower enforceable in accordance
with its terms;

 

(n) If there occurs a Material Adverse Change to Borrower;

 

(o) there is a Change of Control, unless, as a condition to the closing of such
change of control the Obligations will be paid in full; or

 

(p) a final, non-appealable judgment which is not covered by insurance is
entered against Borrower or any Subsidiary for an amount in excess of One
Hundred Thousand Dollars ($100,000.00), which is not paid or bonded within ten
(10) days of entry.

 

“Foreign Subsidiary” means a subsidiary not organized under the laws of the
United States or any state or territory thereof or the District of Columbia.

 

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

 

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self regulatory
organization.

 

“Intellectual Property” means any and all intellectual property, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, all rights therein, and all rights
to sue at law or in equity for any past present or future infringement,
violation, misuse, misappropriation or other impairment thereof, whether arising
under United States, multinational or foreign laws or otherwise, including the
right to receive injunctive relief and all proceeds and damages therefrom.

 

“Intercompany Payables” means any transfer of funds by Borrower to Subsidiaries
as reimbursement for operational expenses incurred by such Subsidiaries in the
ordinary course of business.

 

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“Intercreditor Agreement” means the intercreditor agreement between Senior
Lender and Lender setting forth the parties respective rights and remedies with
respect to the Collateral, in a form acceptable to Lender in Lender’s sole
discretion.

 

“Interest Rate” means the rate of interest to be paid by Borrower under any
Loan. For the Loan, during the Interest Only Period, as defined in Section 2.1,
the Interest Rate shall be fixed at twelve percent (12.0%) per annum, and during
the Amortization Period, also as defined in Section 2.1, the Interest Rate shall
be fixed at twelve percent (12.0%) per annum.

 

“Investment” means the purchase or acquisition of any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or the extension of any advance, loan, extension of credit or capital
contribution to, or any other investment in, or deposit with, any Person.

 

“IP Security Agreement” is that certain Intellectual Property Security Agreement
executed and delivered by Borrower to Lender and dated as of the Closing Date.

 

“Key Person” is each of Borrower’s (i) Chief Executive Officer, who is Ian
Shakil; (ii) Chief Customer Officer and Secretary, who is Pelu Tran; and (iii)
Head of Global Operations, who is Lane Fenner, as of the Closing Date.

 

“Knowledge” or “Knowledge of Borrower” means the actual knowledge of the chief
executive officer or chief financial officer of Borrower and such knowledge that
would be obtained upon due inquiry and reasonable investigation by such Persons.

 

“Lenders’ Expenses” means all costs or expenses (including attorneys’ fees and
expenses) incurred in connection with the preparation, negotiation,
documentation, drafting, amendment, modification, administration, perfection and
funding of the Loan Documents; and all of Lenders’ attorneys’ fees, costs and
expenses incurred in enforcing or defending the Loan Documents (including fees
and expenses of appeal or review) and the rights of Lender in and to the Loan
and the Collateral or otherwise hereunder, including the exercise of any rights
or remedies afforded hereunder or under applicable law, whether or not suit is
brought, whether before or after bankruptcy or insolvency, including all fees
and costs incurred by any Lender in connection with such Lender’s enforcement of
its rights in a bankruptcy or insolvency proceeding filed by or against
Borrower, any Subsidiary or their respective Property.

 

“Lender Shares” shall mean the shares or preferred shares of the stock or other
securities of Borrower that Lender has the right to purchase and may purchase
under the terms of the Participation Rights Agreement and the Warrant.

 

“Loan” shall have the meaning provided in Section 2.1(b).

 

“Loan Documents” means this Agreement, the Notes (if any), the Warrant, the
Participation Rights Agreement, every Account Control Agreement, intercreditor
agreement, subordination agreement pledge agreement or mortgage, the IP Security
Agreement, any landlord waivers and bailee waivers, the Perfection Certificate,
each Compliance Certificate, each Loan Payment Request Form and every other
document evidencing, securing or relating to the Loan.

 

“Loan Payment Request Form” is that certain form attached hereto as Exhibit E.

 

“Loan Termination Date” means June 1, 2017.

 

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“Material Adverse Change” means (i) a materially adverse effect on the business,
financial condition, operations, performance or Property of Borrower, or (ii) a
material impairment of the ability of Borrower to perform its obligations under
or remain in compliance with this Agreement and the other Loan Documents, or any
documents executed in connection therewith; provided, however, that in no event
shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether
there has been or will be, a Material Adverse Change: (a) any changes or effects
resulting from the compliance by Borrower with any of the terms, conditions and
restrictions contained in this Agreement; (b) the failure of Borrower to meet
internal forecasts or financial projections in and of itself, provided that the
underlying basis for the failure to meet such forecasts or projections may be
taken into account in determining whether there has been a Material Adverse
Change; or (c) all changes in general economic conditions, changes in the U.S.
or global financial markets, changes in laws, changes in the Borrower’s
industry, changes in GAAP, the effects of war, the effects of terrorism and
other similar force majeure events.

 

“Material Agreement” is any license, agreement or other contractual arrangement
with a Person or Governmental Authority whereby Borrower or any of its
Subsidiaries is reasonably likely to be required to transfer, either in-kind or
in cash, prior to the Maturity Date, assets or property valued (book or market)
at more than One Hundred Fifty Thousand Dollars $150,000 in the aggregate or any
license, agreement or other contractual arrangement conveying rights in or to
any intellectual property necessary to make, use or sell any inventory, products
or services of Borrower or any Subsidiary.

 

“Maturity Date” means November 1, 2020.

 

“Maximum Credit Limit” means Ten Million Dollars ($10,000,000.00).

 

“Notes” means a promissory note or notes in the form of Exhibit A hereto.

 

“Obligations” means all present and future obligations owing by Borrower to
Lender governed or evidenced by the Loan Documents whether or not for the
payment of money, whether or not evidenced by any note or other instrument,
whether direct or indirect, absolute or contingent, due or to become due, joint
or several, primary or secondary, liquidated or unliquidated, secured or
unsecured, original or renewed or extended, whether arising before, during or
after the commencement of any bankruptcy case in which Borrower is a debtor
(specifically including interest accruing after the commencement of any
bankruptcy, insolvency or similar proceeding with respect to Borrower, whether
or not a claim for such post-commencement interest is allowed), including but
not limited to any obligations arising pursuant to letters of credit or
acceptance transactions or any other financial accommodations.

 

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the Closing Date, and, (a) if such Person is a corporation, its bylaws
in current form, (b) if such Person is a limited liability company, its limited
liability company agreement (or similar agreement), and (c) if such Person is a
partnership, its partnership agreement (or similar agreement), each of the
foregoing with all current amendments or modifications thereto.

 

“Participation Rights Agreement” means the option entitling Lender to purchase
shares of the capital stock of Borrower.

 

“Payment Date” means the first (1st) day of each month, or if such day is not a
Business Day, the next Business Day.

 

“Perfection Certificate” means the perfection certificate delivered to Lender
dated as of the Closing Date.

 

“Permitted Debt” means and includes:

 

(a) Debt of Borrower to Lender under this Agreement;

 

(b) Debt of Borrower not exceeding Two Hundred Thousand Dollars ($200,000)
secured by Liens permitted under clause (e) of the definition of Permitted
Liens;

 

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(c) Debt of Borrower existing on the date hereof and set forth on the Perfection
Certificate;

 

(d) Debt of Borrower consisting of purchase money security interests, equipment
financing arrangements or equipment lease lines for equipment financing securing
aggregate debt not exceeding Two Hundred Thousand Dollars ($200,000) in total
principal amount during each fiscal year on and after the Closing Date,
permitted under clause (g) of the definition of Permitted Liens;

 

(e) Subject to the terms of the Intercreditor Agreement, Debt of Borrower not
exceeding an aggregate principal amount of Five Million Dollars ($5,000,000),
consisting of a credit facility secured by Liens permitted under clause (f) of
the definition of Permitted Liens;

 

(f) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Debt under subsections (a)-(d) above; provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose materially more burdensome terms upon Borrower.

 

“Permitted Investment” means

 

(a) Deposits and deposit accounts (which shall be subject to Account Control
Agreements as required herein) with commercial banks organized under the laws of
the United States or a state thereof to the extent: (i) the deposit accounts of
each such institution are insured by the Federal Deposit Insurance Corporation
up to the legal limit; and (ii) each such institution has an aggregate capital
and surplus of not less than One Hundred Million Dollars ($100,000,000);

 

(b) Investments in marketable obligations issued or fully guaranteed by the
United States and maturing not more than one (1) year from the date of issuance;

 

(c) Investments with Bank in open market commercial paper rated at least “A1” or
“P1” or higher by a national credit rating agency and maturing not more than one
(1) year from the creation thereof;

 

(d) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

 

(e) Investments pursuant to or arising under currency agreements or interest
rate agreements entered into with Bank in the ordinary course of business, not
to exceed One Hundred Thousand Dollars ($100,000) at any given time;

 

(f) Investments outstanding on the date hereof and set forth on the Perfection
Certificate;

 

(g) Investments by Borrower in Subsidiaries not to exceed Two Hundred Thousand
Dollars ($200,000) at any given time, and which total shall not include
Intercompany Payables;

 

(h) 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 business;

 

(i) 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 paragraph shall not apply to
Investments of Borrower in any Subsidiary;

 

(j) Investments consisting of Intercompany Payables; and

 

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(k) Other Investments aggregating not in excess of One Hundred Thousand Dollars
($100,000) at any time.

 

“Permitted Liens” means any of the following: (a) liens outstanding on the date
hereof and set forth on the Perfection Certificate, (b) liens for taxes and
assessments not yet due and payable or, if due and payable, those being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in accordance with generally accepted accounting
principles; (c) liens arising in the ordinary course of business (such as liens
of carriers, warehousemen, mechanics, and materialmen) and other similar liens
imposed by law for sums not yet due and payable or, if due and payable, those
being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained in accordance with generally accepted
accounting principles; (d) easements, rights of way, restrictions, minor defects
or irregularities in title or other similar liens which alone or in the
aggregate do not interfere in any material way with the ordinary conduct of the
business of Borrower; (e) liens relating to the leasing of the Borrower’s
facilities located in San Francisco, California; (f) liens of Senior Lender
securing only repayment of Senior Debt agreeable to Lender; (g) other liens, in
addition to liens permitted by clauses (a) through (f), which are purchase money
security interests, equipment financing or lease lines for new equipment
financing securing aggregate debt not exceeding Two Hundred Thousand Dollars
($200,000) in the aggregate during each fiscal year on and after the Closing
Date.

 

“Person” means and includes any individual, any partnership, any corporation,
any business trust, any joint stock company, any limited liability company, any
unincorporated association or any other entity and any domestic or foreign
national, state or local government, foregoing.

 

“Pledge Agreement” means the pledge of Borrower’s equity interests in its
Subsidiaries, as set forth in the Agreement executed by Borrower and Lender as
of the Closing Date.

 

“Potential Event of Default” means any event or circumstance, which, with the
giving of notice or lapse of time or both, would become an Event of Default.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, whether tangible or intangible.

 

“Restricted License” means any license or other agreement with respect to which
Borrower is the licensee and such license or agreement is material to Borrower’s
business and that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower’s interest in such license or agreement or any
other property.

 

“Senior Lender” means Comerica Bank.

 

“Senior Lender Loan Documents” means the Loan and Security Agreement dated as of
June 11, 2015 by and between Senior Lender and Borrower and all amendments
thereto.

 

“Shareholder Agreements” shall mean the Participation Rights Agreement and the
Warrant.

 

“Solvent” with respect to any person or entity as of any date of determination,
means that on such date (a) the present fair salable value of the property and
assets of such person or entity exceeds the debts and liabilities, including
contingent liabilities, of such person or entity, (b) the present fair salable
value of the property and assets of such person or entity is greater than the
amount that will be required to pay the probable liability of such person or
entity on its debts and other liabilities, including contingent liabilities, as
such debts and other liabilities become absolute and matured, (c) such person or
entity does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts and liabilities, including contingent liabilities,
beyond its ability to pay such debts and liabilities as they become absolute and
matured, and (d) such person or entity does not have unreasonably small capital
with which to conduct the business in which it is engaged as such business is
now conducted and is proposed to be conducted. The amount of contingent
liabilities at any time shall be computed as the amount that, in the light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

 

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“Subordinated Debt” means indebtedness of Borrower that is expressly
subordinated to the indebtedness of Borrower owed to Lender pursuant to a
subordination agreement satisfactory in form and substance to Lender.

 

“Subsidiary” as to any Person, means any corporation, partnership, limited
liability company, joint venture, trust or estate of or in which more than fifty
percent (50%) of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class of such
corporation may have voting power upon the happening of a contingency), (b) the
interest in the capital or profits of such partnership, limited liability
company, or joint venture or (c) the beneficial interest in such trust or estate
is at the time directly or indirectly owned or controlled through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

 

“Term Loan” has the meaning ascribed to it in Section 2.1(a).

 

“UCC” means the Uniform Commercial Code as the same may from time to time be in
effect in the State of Delaware; provided, however, in the event, by reason of
mandatory provisions of law, any and all of the attachment, perfection or
priority of the security interest of Lender in and to the Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than
Delaware, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions; provided, further, that the term “UCC” shall include Article 9
thereof as in effect on the Closing Date.

 

“Warrant” means the separate warrant or warrants dated on or about the date
hereof, or issued by Borrower during the term of any Loan, in favor of Lender to
purchase securities of Borrower.

 

ARTICLE 2

 

THE LOAN; COLLATERAL

 

2.1 The Loan.

 

(a) Subject to the terms and conditions of this Agreement, Lender hereby agrees
to make a term loans (“Term Loan”) in a principal amount not to exceed the
Maximum Credit Limit. The Obligations of Borrower under this Agreement shall at
all times be absolute and unconditional. Borrower acknowledges and agrees that
any obligation of Lender to make any Advances hereunder is strictly contingent
upon the satisfaction of the conditions set forth in Section 2.3. Borrower shall
make monthly payments of interest only in arrears at the Interest Rate of such
Term Loan on the first (1st) twelve (12) Payment Dates following the date of the
Advance of such Term Loan (“Interest Only Period”), and (ii) beginning on the
thirteenth (13th) Payment Date after the date of the Advance of such Term Loan
(“Amortization Period”, Borrower shall make equal monthly payments on each
subsequent Payment Date in an amount determined through a calculation fully
amortizing the outstanding principal balance due under such Term Loan at the
Interest Rate over a period of thirty (30) months. For clarity, the payment
schedule as of the Closing Date is reflected in Exhibit B attached hereto, and
Lender may update such payment schedule from time to time in accordance with the
terms of the Loan Documents (as amended from time to time, the “Amortization
Schedule”). In the event of any inconsistency between the Amortization Schedule
and the terms of the Loan Documents (including this Section 2.1), the terms of
the Loan Documents shall prevail. Borrower shall continue to comply with all of
the terms and provisions hereof until all of the Obligations are paid and
satisfied in full. After the Loan Termination Date, no further loans shall be
available from Lender.

 

9

 

 

(b) The Loan, to be funded on the date hereof, shall be an amount not less than
Ten Million Dollars ($10,000,000.00).

 

(c) Lender acknowledges that prior to the date hereof, Borrower has paid a
fully-earned and non-refundable application fee in the amount of Fifty Thousand
Dollars ($50,000.00) (the “Application Fee”).

 

(d) As of the Closing Date, Lender shall have fully earned and Borrower shall
pay to Lender on the Closing Date, a non-refundable closing fee equal to 0.50%
of the total principal amount of the aggregate total of the Maximum Credit Limit
(the “Closing Fee”).

 

(e) At the time of the Advance hereunder, Borrower will pay Lender for all
actual costs related to the Loan including travel, UCC search, filing,
insurance, and legal costs for the first Loan (the “Documentation and Funding
Fee”).

 

2.2 Advances and Interest.

 

(a) The Loan must be requested by Borrower by 11:00 A.M. Arizona time, five (5)
Business Days prior to the date of such requested Loan. All requests or
confirmations of requests for a Loan are to be in writing and may be sent by
telecopy or facsimile transmission or by email provided that Lender shall have
the right to require that receipt of such request not be effective unless
confirmed via telephone with Lender. As express Conditions Precedent to Lender
making each Loan to Borrower, Borrower shall deliver to Lender the documents,
instruments and agreements required pursuant to Section 2.3 of this Agreement
(including, without limitation, the Loan Payment Request Form).

 

(b) The following amounts shall be deducted from the Loan: the Closing Fee and
the Documentation and Funding Fee. The unpaid principal balance of the Loan and
all other Obligations hereunder shall bear interest, subject to the terms
hereof, at the Interest Rate. The Loan shall be repaid with interest at the
Interest Rate computed on a year of 360 days for the number of days in each
month. All payments shall be due on the Payment Date, or if such day is not a
Business Day, the next succeeding Business Day. If Borrower fails to make a
monthly payment due within five (5) Business Days after the date such payment is
due, Borrower shall pay to Lender a late charge equal to ten percent (10%) of
the past due payment amount. After the occurrence and during the continuance of
an Event of Default hereunder, the per annum effective rate of interest on the
Loan outstanding hereunder, shall be increased to a rate equal to 500 basis
points in excess of the Interest Rate; provided, however, that the per annum
effective rate shall automatically and immediately decrease by the same 500
basis points on the Loan outstanding hereunder as soon as Borrower shall have
paid all late payments and the 10% penalty thereon. All contractual rates of
interest chargeable on the Loan shall continue to accrue and be paid even after
default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of
any kind or the happening of any event or occurrence similar or dissimilar. In
no contingency or event whatsoever shall the aggregate of all amounts deemed
interest hereunder and charged or collected pursuant to the terms of this
Agreement exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such court determines Lender has charged or received interest
hereunder in excess of the highest applicable rate, Lender shall in its sole
discretion, apply and set off such excess interest received by Lender against
other Obligations hereunder due or to become due and such rate shall
automatically be reduced to the maximum rate permitted by such law.

 

(c) Upon the occurrence and during the continuance of an Event of Default and/or
the maturity of any portion of the Obligations, any moneys on deposit with
Lender shall, at Lender’s option, be applied against the Obligations in such
order and manner as Lender may elect or as may otherwise be required under this
Agreement.

 

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2.3 Conditions Precedent. It shall be express Conditions Precedent to the
Advance of each Loan that (i) the representations and warranties contained in
Section 4.1 shall be true and correct as of the date of such Advance (provided,
however, that those representations and warranties expressly referring to
another date shall be true, correct and complete as of such other date), (ii) no
Event of Default or Potential Event of Default shall have occurred and be
continuing, (iii) receipt by Lender of an executed Loan Payment Request Form in
the form of Exhibit E attached hereto, (iv) all governmental and third party
approvals necessary in connection with the Loan and this Agreement shall have
been obtained and be in full force and effect, (v) Lender’s satisfaction, in
Lender’s sole discretion, of the results of Lender’s due diligence
investigation, including, without limitation, review of the financial statements
of Borrower dated no more than ninety (90) days prior to the funding of such
Advance, and (vi) Borrower shall have paid in full the Closing Fee, the
Application Fee, and the Documentation and Funding Fees. As additional
Conditions Precedent to the effectiveness of this Agreement and the Loan,
Borrower shall provide or cause to be provided to Lender all of the following
items:

 

(a) UCC-1 financing statements designating Borrower, as debtor, and Lender, as
secured party, for filing in the State of Borrower’s formation, the State of
Borrower’s chief executive office, the place where Borrower transacts business
or in any other State required by Lender with respect to all Collateral which
may be perfected under the UCC by the filing of a UCC-1 financing statement,
together with any other documents Lender deems necessary to evidence or perfect
Lender’s security interest with respect to all Collateral;

 

(b) Certificates as to authorizing resolutions of Borrower with specimen
signatures, substantially in the form of Exhibit C;

 

(c) The Operating Documents and good standing certificates from Borrower’s and
each Subsidiary’s jurisdiction of organization, where it maintains its chief
executive office and principal place of business and each jurisdiction in which
Borrower and each Subsidiary is qualified to conduct business;

 

(d) Landlord waivers and bailee waivers in the form reasonably acceptable to
Lender for each location where the Collateral is located, if any (which waivers
may be provided by Borrower within 30 days of the Closing Date);

 

(e) Certificates of insurance evidencing that the Collateral is insured in
accordance with the requirements of Section 4.1 hereof;

 

(f) A recent lien search in each of the jurisdictions where the Borrower and
each Subsidiary is organized and the assets of Borrower and each Subsidiary are
located, and such searches reveal no liens on any of the assets of Borrower or
any Subsidiary, except for Permitted Liens;

 

(g) Payment in full of the applicable Closing Fee, the Application Fee, and the
Documentation and Funding Fees;

 

(h) The fully executed Warrant;

 

(i) Fully executed copies of each Account Control Agreement;

 

(j) Fully executed copies of each Loan Document;

 

(k) A copy of any applicable Investors Rights Agreement and any amendments
thereto;

 

(l) A completed Perfection Certificate for Borrower and each of its
Subsidiaries;

 

(m) The Participation Rights Agreement;

 

(n) The Account Control Agreement(s); and

 

(o) Fully executed Pledge Agreement.

 

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2.4 Voluntary Prepayment. Borrower may prepay in whole or in part, the Loan at
any time, subject to payment of the premium set forth below (“Prepayment
Premium”). The calculated pre-payment amount shall include the outstanding
principal due under the Loan at the time of retirement, any partially accrued
interest thereon, and a Prepayment Premium based on the following schedule:

 

(a) On or before the first anniversary of the Closing Date the Prepayment
Premium shall be equal to three percent (3.0%) of the principal being repaid.

 

(b) After the first anniversary of the Closing Date and on or before the second
anniversary of the Closing Date the Prepayment Premium shall be equal to two
percent (2.0%) of the principal being repaid.

 

(c) After the second anniversary of the Closing Date and on or before the
fortieth (40th) month after the Closing Date, the Prepayment Premium shall be
equal to one percent (1.0%) of the principal being repaid.

 

2.5 Mandatory Prepayment. If a Change of Control occurs or the Loan is
accelerated following the occurrence of an Event of Default, Borrower shall
immediately pay to Lender an amount equal to the sum of: (i) all outstanding
principal of the Loan plus accrued and unpaid interest thereon through the
prepayment date, (ii) the Prepayment Premium, plus (iii) all other Obligations
that are due and payable, including, without limitation, Lenders’ Expenses and
interest at the rate set forth in Section 2.2(b) with respect to any past due
amounts.

 

2.6 End of Term Payment. On the Maturity Date or on the date of the earlier
prepayment of the Loan by Borrower pursuant to Section 2.4 or Section 2.5 or
acceleration of the balance of the Loan by Lender pursuant to Section 7.1,
Borrower shall pay to Lender the amount equal to six and 00/100 percent (6.0%)
of the original principal amount of the Loan in addition to all sums payable
hereunder.

 

2.7 Proceeds of Collateral. Following the occurrence and during the continuance
of an Event of Default, upon the written notice of Lender all proceeds from the
Collateral shall be immediately delivered to Lender and Lender may apply such
proceeds and payments to any of the Obligations in such order as Lender may
decide in its sole discretion.

 

2.8 Withholding. Payments received by the Lender from Borrower hereunder will be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or
other charges imposed by any governmental authority (including any interest,
additions to tax or penalties applicable thereto). Specifically, however, if at
any time any Governmental Authority, applicable law, regulation or international
agreement requires Borrower to make any withholding or deduction from any such
payment or other sum payable hereunder to the Lender, Borrower hereby covenants
and agrees that the amount due from Borrower with respect to such payment or
other sum payable hereunder will be increased to the extent necessary to ensure
that, after the making of such required withholding or deduction, Lender
receives a net sum equal to the sum which it would have received had no
withholding or deduction been required and Borrower shall pay the full amount
withheld or deducted to the relevant Governmental Authority. Borrower will, upon
request, furnish the Lender with proof reasonably satisfactory to the Lender
indicating that Borrower has made such withholding payment; provided, however,
that Borrower need not make any withholding payment if the amount or validity of
such withholding payment is contested in good faith by appropriate and timely
proceedings and as to which payment in full is bonded or reserved against by
Borrower. The agreements and obligations of Borrower contained in this Section
2.8 shall survive the termination of this Agreement.

 

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ARTICLE 3

 

CREATION OF SECURITY INTEREST

 

3.1 Grant of Security Interests. Borrower grants to Lender a valid, continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt, full and complete payment of any and all
Obligations and in order to secure prompt, full and complete performance by
Borrower of each of its covenants and duties under each of the Loan Documents.
The “Collateral” shall mean and include all right, title, interest, claims and
demands of Borrower in the following:

 

(a) All goods (and embedded computer programs and supporting information
included within the definition of “goods” under the UCC) and equipment now owned
or hereafter acquired, including all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles (including motor vehicles and
trailers), and other equipment and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;

 

(b) All inventory now owned or hereafter acquired, including all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process
and finished products including such inventory as is temporarily out of
Borrower’s custody or possession or in transit and including any returns upon
any accounts or other proceeds, including insurance proceeds, resulting from the
sale or disposition of any of the foregoing and any documents of title
representing any of the above, and Borrower’s books relating to any of the
foregoing;

 

(c) All contract rights and general intangibles (including Intellectual
Property), now owned or hereafter acquired, including goodwill, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, software, computer programs,
computer disks, computer tapes, literature, reports, catalogs, design rights,
income tax refunds, payment intangibles, commercial tort claims, payments of
insurance and rights to payment of any kind;

 

(d) All now existing and hereafter arising accounts, contract rights, royalties,
license rights, license fees and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower (subject, in each case, to the
contractual rights of third parties to require funds received by Borrower to be
expended in a particular manner), whether or not earned by performance, 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;

 

(e) All documents, cash, deposit accounts, letters of credit and letters of
credit rights (whether or not the letter of credit is evidenced by a writing)
and other supporting obligations, certificates of deposit, instruments,
promissory notes, chattel paper (whether tangible or electronic) and investment
property, including all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise,
wherever located, now owned or hereafter acquired and Borrower’s books relating
to the foregoing;

 

(f) To the extent not covered by clauses (a) through (e), all other personal
property of the Borrower, whether tangible or intangible, and any and all rights
and interests in any of the above and the foregoing and, any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof, including insurance, condemnation,
requisition or similar payments and proceeds of the sale or licensing of
Intellectual Property and all of Borrower’s books and records related to any
items of other Collateral.

 

13

 

 

Provided, however, that the following items shall not be considered Collateral:

 

(i) with respect to stock in Foreign Subsidiaries, more than sixty-five percent
(65.0%) of the presently existing and hereafter arising issued and outstanding
shares of capital stock owned by Borrower of any Foreign Subsidiary which shares
entitle the holder thereof to vote for directors or any other matter;

 

(ii) any interest of Borrower as a lessee or sublessee under a real property
lease;

 

(iii) rights held by Borrower as a licensee or a sub-licensee under an inbound
license or sub-license of Intellectual Property that are not assignable by their
terms without the consent of the licensor or sub-licensor thereof (but only to
the extent such restriction on assignment is enforceable under applicable law);
or

 

(iv) any interest of Borrower as a lessee under an equipment lease if Borrower
is prohibited by the terms of such lease from granting a security interest in
such lease or under which such an assignment or lien would cause a default to
occur under such lease; provided, however, that upon termination of such
prohibition, such interest shall immediately become Collateral without any
action by Borrower or Lender.

 

3.2 After-Acquired Property. If Borrower shall at any time acquire a commercial
tort claim, as defined in the UCC, Borrower shall promptly notify Lender in
writing signed by Borrower of the brief details thereof and grant to Lender in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Lender.

 

3.3 Location and Possession of Collateral. The Collateral is and shall remain in
the possession of Borrower at its location listed on the cover page hereof or as
set forth in the Perfection Certificate (the “Permitted Locations”) or as
otherwise approved by Lender in its sole discretion in writing ten (10) days
prior to relocation and, in the event that the Collateral at any new location is
valued in excess of One Hundred Thousand Dollars ($100,000.00) in the aggregate,
at Lender’s election, such bailee or landlord, as applicable, must execute and
deliver a bailee waiver or landlord waiver, as applicable, in form and substance
reasonably satisfactory to Lender prior to the addition of any new offices or
business locations, or any such storage with or delivery to any such bailee, as
the case may be. Borrower shall remain in full possession, enjoyment and control
of the Collateral (except only as may be otherwise required by Lender for
perfection of the security interests therein created hereunder) and so long as
no Event of Default has occurred and is continuing, shall be entitled to manage,
operate and use the same and each part thereof with the rights and franchises
appertaining thereto; provided that the possession, enjoyment, control and use
of the Collateral shall at all times be subject to the observance and
performance of the terms of this Agreement.

 

3.5 Delivery of Additional Documentation Required. Borrower shall from time to
time execute and deliver to Lender, at the request of Lender, all financing
statements and other documents Lender may reasonably request, in form reasonably
satisfactory to Lender, to perfect and continue Lender perfected security
interests in the Collateral and in order to consummate fully all of the
transactions contemplated under the Loan Documents.

 

3.6 Right to Inspect. Lender (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during
Borrower’s usual business hours, to inspect the books and records of Borrower
and Subsidiaries and to make copies thereof and to inspect, 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.

 

14

 

 

3.7 Intellectual Property. Borrower shall notify Lender before the federal
registration or filing by Borrower of any copyright or copyright application and
shall promptly execute and deliver to Lender any grants of security interests in
same, in form reasonably acceptable to Lender, to file with the United States
Copyright Office. In addition, Borrower shall deliver to Lender within ten (10)
Business Days after the end of each calendar quarter, a report (each, a “Patent
and Trademark Report”) reflecting the patents, patent applications, trademarks
and trademark applications that were registered or filed by Borrower during such
quarter and shall promptly execute and deliver to Lender any grants of security
interests in same, in form reasonably acceptable to Lender, to file with the
United States Patent and Trademark Office.

 

3.8 Protection of Intellectual Property. Borrower shall and shall cause its
Subsidiaries to:

 

(a) use all commercially reasonable efforts necessary to protect, defend and
maintain the validity and enforceability of its Intellectual Property and
promptly advise Lender in writing of material infringements;

 

(b) not allow any Intellectual Property material to Borrower’s or its
Subsidiaries business to be abandoned, forfeited or dedicated to the public
without Lender’s written consent;

 

(c) provide written notice to the Lender within ten (10) days of entering or
becoming bound by any Restricted License (other than over-the-counter software
that is commercially available to the public); and

 

(d) take such commercially reasonable steps as Lender requests to attempt to
obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for (i) any Restricted License to be deemed “Collateral” and for
Lender to have a security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such Restricted License, whether now
existing or entered into in the future, and (ii) Lender to have the ability in
the event of a liquidation of any Collateral to dispose of such Collateral in
accordance with the Lender rights and remedies under this Agreement and the
other Loan Documents.

 

ARTICLE 4

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

4.1 Representations and Warranties. Borrower hereby warrants, represents and
covenants that:

 

(a) Borrower and each Subsidiary is duly organized, validly existing and in good
standing under the laws of the state set forth in the Perfection Certificate.
Borrower and each Subsidiary is duly qualified to do business and is in good
standing in every other jurisdiction where the nature of its business requires
it to be qualified, except where failure to be so qualified would not result in
a Material Adverse Change, and is not subject to any bankruptcy, insolvency or
other similar proceedings. Borrower’s and each Subsidiary’s chief executive
office and principal place of business is located at the address set forth in
the Perfection Certificate;

 

(b) Borrower and each Subsidiary has full power, authority and legal right to
execute, deliver and perform this Agreement, the Notes (if any), the Shareholder
Agreements and each other Loan Document to which it is a party, and the
execution, delivery and performance hereof and thereof have been duly authorized
by all necessary action;

 

(c) This Agreement, the Notes (if any), the Shareholder Agreements and each
other Loan Document have been duly executed and delivered by Borrower and each
constitutes a legal, valid and binding obligation of Borrower and each
Subsidiary party thereto, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
enforcement of creditors’ rights generally and general equitable principles;

 

15

 

 

(d) The execution, delivery and performance of this Agreement, the Notes (if
any), the Shareholder Agreements and each other Loan Document respectively (i)
are not in contravention of any material agreement or indenture by which
Borrower or any Subsidiary is bound, or by which its properties may be affected,
(ii) do not require any shareholder approval, or any approval or consent of, or
filing or registration with, any governmental body or regulatory authority or
agency (other than state and federal securities filings, the filing of UCC
financing statements and filings with the United States Patent and Trademark
Office and United States Copyright Office, in connection with the registration
of the security interest granted hereunder), or any approval or consent of any
trustees or holders of any of its indebtedness or obligations, unless such
approval or consent has been obtained and (iii) do not contravene any law,
regulation, judgment or decree applicable to it or its Operating Documents;

 

(e) Borrower is not a “bank holding company” or a direct or indirect subsidiary
of a “bank holding company” as defined in the Bank Holding Company Act of 1956,
as amend, and Regulation Y thereunder of the Board of Governors of the Federal
Reserve System. Borrower is not an “investment company” or a company controlled
by an “investment company” under the Investment Company Act of 1940. Borrower is
not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (as defined in Regulation U of the Board of Governors of
the Federal Reserve System and no proceeds of any Loan will be used to purchase
or carry margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock;

 

(f) To Borrower’s Knowledge, Borrower and each Subsidiary is in material
compliance with all requirements of law and orders, rules or regulations of any
regulatory authority and no such requirement applicable to Borrower or any
Subsidiary or any item of Collateral could reasonably be expected to cause a
Material Adverse Change;

 

(g) Borrower is the owner and holder of all right, title and interest in and to
the Collateral (other than the right, title and interests granted under the
Permitted Liens) , and Borrower has not assigned or pledged and hereby covenants
that it will not assign or pledge, unless otherwise permitted by Lender in a
signed writing, so long as this Agreement shall remain in effect, the whole or
any part of the rights in the Collateral hereby and thereby assigned, to anyone
other than Lender, its designee, its successors or assigns, other than Permitted
Liens;

 

(h) Borrower has good and marketable title to the Collateral, and the Collateral
is free and clear of all liens, claims and encumbrances, other than Permitted
Liens;

 

(i) Borrower has delivered to Lender copies of the most recent annual reviewed
financial statements and most recent monthly and quarterly unaudited financial
statements required to be delivered pursuant to Section 4.2(f) hereof, or as may
hereafter be delivered in connection with the Loans (the “Financial
Statements”). Since the date of the last Financial Statement provided to Lender
through the date of this Agreement, no event has occurred which would reasonably
be expected to have a Material Adverse Change on Borrower or any Subsidiary. The
Financial Statements are true and correct and fairly present in all material
respects the financial condition of Borrower and its Subsidiaries;

 

(j) No default or event of default has occurred and is continuing under or with
respect to any material contractual obligation, loan or indenture of Borrower or
any Subsidiary;

 

(k) No action, suit, litigation, or proceeding of or before any arbitrator or
governmental or regulatory authority is pending or, to the Knowledge of Borrower
threatened in writing, by or against Borrower or against any of its property or
assets involving more than, individually or in the aggregate, One Hundred Fifty
Thousand Dollars ($150,000.00);

 

(l) To Borrower’s Knowledge, no facilities or properties leased or operated by
Borrower contains any “hazardous materials” in amount or concentrations that
could constitute a violation of any federal, state or local law, rule,
regulation, order or permit (the “Environmental Laws”). Borrower has not
received notice of any suspected or actual violations of any Environmental Laws
and Borrower’s Business has been operated in conformity with all Environmental
Laws;

 

16

 

 

(m) Neither Borrower nor any Subsidiary has done business under any name other
than that specified on the Perfection Certificate. Borrower’s and each
Subsidiary’s jurisdiction of incorporation, chief executive office, principal
place of business, and the place where Borrower maintains its records concerning
the Collateral are presently located in the state at the address set forth on
the Perfection Certificate. The Collateral is presently located at the address
set forth on the Perfection Certificate or as otherwise agreed by Lender
pursuant to Section 2.3;

 

(n) To the best of Borrower’s Knowledge, as of the date hereof and at all times
throughout the term of this Agreement, including after giving effect to any
transfers of interests permitted pursuant to the Loan Documents, (a) none of the
funds or other assets of Borrower, any of their Affiliates constitute (or will
constitute) property of, or are (or will be) beneficially owned, directly or
indirectly, by any Blocked Person; (b) no Blocked Person has (or will have) any
interest of any nature whatsoever in Borrower, in their Affiliates, with the
result that the investment in the respective party (whether directly or
indirectly), is prohibited by applicable law or the Loans are in violation of
applicable law; and (c) none of the funds of Borrower, or of their Affiliates
have been (or will be) derived from any unlawful activity with the result that
the investment in the respective party (whether directly or indirectly), is
prohibited by applicable law or the Loans are in violation of applicable law;

 

(o) Borrower has no Subsidiaries other than those listed on the Perfection
Certificate;

 

(p) To Borrower’s Knowledge, the Property of Borrower and the Collateral are
insured with financially sound and reputable insurance companies in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Borrower operates. The Perfection Certificate sets forth
a description of all insurance maintained by or on behalf of the Borrower. Each
insurance policy listed on the Perfection Certificate is in full force and
effect and all premiums in respect thereof that are due and payable have been
paid;

 

(q) To Borrower’s Knowledge, Borrower owns, or is licensed to use, all
Intellectual Property necessary for the conduct of its business as currently
conducted or proposed to be conducted. No material claim has been asserted and
is pending by any other person or entity challenging the use, validity or
effectiveness of any Intellectual Property, nor does the Borrower have Knowledge
of any basis for any such claim;

 

(r) Borrower and each Subsidiary has filed or obtained timely extensions for all
federal, state and other tax returns that are required to be filed and has paid
all taxes shown thereon to be due, together with applicable interest and
penalties, and all other taxes, fees or other charges imposed on it or any of
its property by any governmental or regulatory authority except (a) to the
extent such taxes are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor. No tax liens have been filed, and, to the
Knowledge of Borrower, no claim is being asserted, with respect to any such tax,
fee or other charge. Neither Borrower nor any Subsidiary is a party to any tax
sharing agreement;

 

(s) This Agreement creates in favor of Lender a legal, valid and continuing and
enforceable security interest in the Collateral, the enforceability of which is
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditor’s rights generally and subject to general
principles of equity. To the Knowledge of Borrower, upon Lender filing UCC-1
financing statements with the central filing location in the state of Borrower’s
formation and/or the State of Borrower’s chief executive office and/or the
obtaining of “control” (as defined under the UCC) through an Account Control
Agreement or otherwise, Lender will have a perfected lien on and security
interest in the Collateral, subject to any the Intercreditor Agreement and any
other subordination Agreement with Senior Lender;

 

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(t) Each of Borrower and each Subsidiary is, and after giving effect to the
incurrence of the debt evidenced by this Agreement and all obligations hereunder
will be, Solvent;

 

(u) (i) The Perfection Certificate lists all of Borrower’s and each Subsidiary’s
Intellectual Property, including patents and pending applications, registered
trademarks and pending applications, registered domain names, registered
copyrights and pending applications and material Intellectual Property licenses
owned by Borrower and each Subsidiary; (b) all of Borrower’s and each
Subsidiary’s Intellectual Property is, to Borrower’s knowledge, valid,
subsisting, unexpired and enforceable and has not been abandoned; (c) except as
described on the Perfection Certificate, Borrower and each Subsidiary is the
exclusive owner of all right, title and interest in and to, or has the right to
use, all of such Borrower’s or Subsidiary’s Intellectual Property; (d)
consummation and performance of this Agreement will not result in the
invalidity, unenforceability or impairment of any of Borrower’s or any
Subsidiary’s Intellectual Property, or in default or termination of any material
Intellectual Property license of Borrower or any Subsidiary; (e) except as
described on the Perfection Certificate, there are no outstanding holdings,
decisions, consents, settlements, decrees, orders, injunctions, rulings or
judgments that would limit, cancel or question the validity or enforceability of
any of Borrower’s or any Subsidiary’s Intellectual Property or Borrower’s or
such Subsidiary’s rights therein or use thereof; (f) to Borrower’s Knowledge,
except as described on the Perfection Certificate, the operation of Borrower’s
and each Subsidiary’s business and Borrower’s or such Subsidiary’s use of
Intellectual Property in connection therewith, does not infringe or
misappropriate the intellectual property rights of any other person or entity;
(g) except as described in the Perfection Certificate, no action or proceeding
is pending or, to Borrower’s Knowledge, threatened (i) seeking to limit, cancel
or question the validity of any of Borrower’s or any Subsidiary’s Intellectual
Property, (ii) which, if adversely determined, could be reasonably expected to
cause a Material Adverse Change on the value of any such Intellectual Property
or (iii) alleging that any such Intellectual Property, or Borrower’s or such
Subsidiary’s use thereof in the operation of its business, infringes or
misappropriates the intellectual property rights of any person or entity and (h)
to Borrower’s Knowledge, there has been no Material Adverse Change on Borrower’s
or any Subsidiary’s rights in its material trade secrets as a result of any
unauthorized use, disclosure or appropriation by or to any person, including
Borrower’s and each Subsidiary’s current and former employees, contractors and
agents;

 

(v) Borrower has disclosed on the Perfection Certificate all agreements,
instruments and corporate or other restrictions to which it and each Subsidiary
is subject, and all other matters to Borrower’s Knowledge that, individually or
in the aggregate, could reasonably be expected to cause a Material Adverse
Change. No statement or information contained in this Agreement or any document
or certificate executed or delivered, or hereafter delivered, in connection with
this Agreement or the Loans contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein no misleading; and

 

(w) The Lender Shares issuable under the Warrant are the same price and have
certain registration rights, anti-dilution rights, and other rights as set forth
in the Warrant, and other shareholder rights under Borrower’s Certificate of
Incorporation identical to those granted to other holders of preferred stock in
Borrower’s last round of investments in preferred stock.

 

4.2 Affirmative Covenants of Borrower. Borrower shall, and shall cause each of
its Subsidiaries to, do all of the following:

 

(a) maintain its corporate existence and its good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could reasonably be expected to cause a Material Adverse
Change

 

(b) maintain in force all licenses, approvals, agreements and Governmental
Approvals, the loss of which could reasonably be expected to cause a Material
Adverse Change;

 

18

 

 

(c) comply with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which could reasonably be
expected to cause a Material Adverse Change;

 

(d) if required by applicable law, pay and discharge or cause to be paid and
discharged, all sales, use, rental and personal property or similar taxes and
fees (excluding any taxes on Lender’s net income) which arise and are due prior
to each Advance in connection with the Collateral;

 

(e) assist Lender in obtaining and filing UCC-1 financing statements against the
Collateral and Account Control Agreements to the extent that Lender deems such
action necessary or desirable;

 

(f) deliver the following to Lender:

 

(i) as soon as available, but no later than thirty (30) days after the last day
of each month:

 

(A) at Lender’s request, a copy of Borrower’s unaudited financial statements
pertaining to the results of operations for the month then ended and certified
as true and correct by Borrower’s chief executive officer or chief financial
officer, consisting of a consolidated and consolidating balance sheet, income
statement and cash flow statement, prepared in accordance with generally
accepted accounting principles applied on a consistent basis;

 

(B) an updated Perfection Certificate to reflect any amendments, modifications
and updates to certain information in the Perfection Certificate after the
Closing Date to the extent such amendments, modifications and updates are
permitted by one or more specific provisions in this Agreement;

 

(C) copies of any material Governmental Approvals obtained by Borrower or any of
its Subsidiaries;

 

(D) written notice of the commencement of, and any material development in, the
proceedings contemplated by Section 4.2(j) hereof;

 

(E) written notice of any litigation or governmental proceedings pending or
threatened (in writing) against Borrower or any of its Subsidiaries, which could
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of One Hundred FiftyThousand Dollars ($150,000.00);

 

(F) written notice of all returns, recoveries, disputes and claims regarding
Inventory that involve more than One Hundred Fifty Thousand Dollars
($150,000.00) individually or in the aggregate in any calendar year; and

 

(G) At Lender’s request, a report of all Intercompany Payables paid by Borrower
for the preceding period, along with supporting documentation, if so requested.

 

(ii) within forty-five (45) days after the end of each fiscal quarter:

 

(A) a copy of Borrower’s unaudited financial statements pertaining to the
results of operations for the fiscal quarter then ended and certified as true
and correct by Borrower’s chief executive officer or chief financial officer,
consisting of a consolidated and consolidating balance sheet, income statement
and cash flow statement, prepared in accordance with generally accepted
accounting principles applied on a consistent basis;

 

19

 

 

(B) a copy of the SBA Quarterly Worksheet pertaining to the results of
operations for the fiscal quarter then ended and certified as true and correct
by Borrower’s chief executive officer or chief financial officer;

 

(C) copies of Borrower’s bank statements for all deposit accounts;

 

(D) a copy of Borrower’s capitalization table, as of the last day of the fiscal
quarter then ended;

 

(E) forward looking financial projections , prepared on a quarterly basis, and
covering a time period of no less than four (4) quarters;

 

(iii) within one hundred eighty (180) days following the end of each fiscal year
beginning for the fiscal year 2017:

 

(A)a list of the fixed assets of Borrower as of the date of the end of such
fiscal year;

 

(B)a copy of Borrower’s annual, financial statements consisting of a
consolidated and consolidating balance sheet, income statement and cash flow
statement prepared in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year and
presenting fairly in all material respects Borrower’s financial condition as at
the end of that fiscal year and the results of its operations for the twelve
(12) month period then ended and certified as true and correct by Borrower’s
chief financial officer. If Borrower has prepared audited financials for any
reason, then the financial statements provided to Lender pursuant to this
Section shall be audited, and shall include an unqualified opinion (provided
that such opinion may contain a “going concern” qualification solely with
respect to Borrower’s liquidity typical for venture-backed companies similar to
Borrower) on the financial statements from an independent certified public
accounting firm, acceptable to Lender in its reasonable discretion;

 

(iv) concurrently with the delivery of any item in Sections 4.2(f)(i), (ii) or
(iii), a duly completed Compliance Certificate signed by a Responsible Officer;

 

(v) as requested by Lender, have Borrower’s chief executive or chief financial
officer participate in monthly management update calls with Lender to discuss
such information about the operations and financial condition of the business of
the Borrower as Lender shall reasonably inquire into, at such times reasonably
scheduled by Lender; and

 

(vi) deliver such other financial information as Lender shall reasonably request
from time-to-time.

 

(g) deliver to Lender as soon as available, but in any event no later than
thirty (30) days after the end of each fiscal year, board certified annual
operating projections (including income statements, balance sheets and cash flow
statements presented in a monthly format) for the upcoming fiscal year, in form
and substance reasonably satisfactory to Lender;

 

(h) deliver to Lender from and after such time as Borrower becomes a publicly
reporting company, promptly as they are available and in any event: (i) at the
time of filing of Borrower’s Form 10-K with the Securities and Exchange
Commission after the end of each fiscal year of Borrower, the financial
statements of Borrower filed with such Form 10-K; and (ii) at the time of filing
of Borrower’s Form 10-Q with the Securities and Exchange Commission after the
end of each of the first three fiscal quarters of Borrower, the consolidated
financial statements of Borrower filed with such Form 10-Q; provided that to the
extent the foregoing documents are included in materials otherwise filed with
the Securities and Exchange Commission, such documents shall be deemed to have
been delivered on the date on which Borrower posts such documents, or provides a
link thereto, on Borrower’s website;

 

20

 

 

(i) deliver to Lender (A) promptly upon becoming available, copies of all
statements, reports and notices sent or made available generally by Borrower to
its security holders and (B) immediately upon receipt of written notice thereof,
a report of any material legal actions pending or threatened against Borrower or
the commencement of any action, proceeding or governmental investigation
involving Borrower is commenced that is reasonably expected to result in damages
or costs to Borrower of One Hundred Fifty Thousand Dollars ($150,000);

 

(j) deliver the following to Lender: (i) as of the date of each Compliance
Certificate, a list of all Intellectual Property owned or licensed to Borrower
and a list of items within the definition of Collateral hereunder since the date
of the last Compliance Certificate in such form as reasonably required by
Lender; (ii) promptly after the same are sent by Lender, copies of any
statements, reports, or correspondence required to be delivered to any other
lender; (iii) promptly upon receipt of the same, copies of all notices, requests
and other documents received by any other party pursuant any other material
contract, instrument, indenture regarding or relating to any material breach or
material default alleged by or against any party thereto or any other event that
could materially impair the value of the interests or rights of Lender or could
otherwise be reasonably expected to cause a Materially Adverse Change; and (iv)
such other information respecting the business, condition (financial or
otherwise), operations, performance, properties or prospects of Borrower as
Lender may from time to time reasonably request;

 

(k) make due and timely payment or deposit of all federal, state, and local
taxes, assessments, or contributions required of it by law or imposed upon any
Property belonging to it, and will execute and deliver to Lender, on demand,
appropriate certificates attesting to the payment or deposit thereof; and
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof reasonably satisfactory
to Lender indicating that Borrower and each Subsidiary has made such payments or
deposits; provided that Borrower need not make any payment if the amount or
validity of such payment is contested in good faith by appropriate proceedings
which suspend the collection thereof (provided that such proceedings do not
involve any substantial danger of the sale, forfeiture or loss of any material
item of Collateral or Collateral which in the aggregate is material to Borrower
and that Borrower has adequately bonded such amounts or reserves sufficient to
discharge such amounts have been provided on the books of Borrower); provided
further that Borrower shall not change its respective jurisdiction of residence
for taxation purposes, without the prior written consent of Lender;

 

(l) make or cause to be made all filings in respect of, and pay or cause to be
paid when due, all taxes, assessments, fines, fees and other liabilities
(including all taxes and other claims in respect of the Collateral) unless being
contested in good faith and for which Borrower maintains adequate reserves;

 

(m) perform all of Borrower’s and each Subsidiary’s obligations imposed by
applicable law, rule or regulation with respect to the Collateral;

 

(n) as soon as possible, and in any event within two (2) Business Days after
Borrower having obtained Knowledge of the occurrence of any Potential Event of
Default, provide a written notice setting forth the details of such Potential
Event of Default and the action, if any is permitted, which is proposed to be
taken by Borrower with respect thereto;

 

(o) as soon as possible, and in any event, no later than three (3) business days
after receipt, provide Lender with a copy of any notice of default, notice of
termination or similar notice pertaining to a lease of real property where any
Collateral is located.

 

(p) from time to time execute and deliver such further documents and do such
further acts and things as Lender may reasonably request in order to fully
effect the purposes of this Agreement and to protect Lender’s security interest
in the Collateral, and Borrower hereby authorizes Lender to execute and deliver
on behalf of Borrower and to file such financing statements (including an
indication that the financing statement covers “all assets or all personal
property” of Borrower in accordance with Section 9-504 of the UCC), collateral
assignments, notices, control agreements, security agreements and other
documents without the signature of Borrower either in Lender’s name or in the
name of Lender as agent and attorney-in-fact for Borrower;

 

21

 

 

(q) keep Borrower’s and its Subsidiaries’ business and the Collateral insured
for risks and in amounts standard for companies in Borrower’s and its
Subsidiaries’ industry and location and as Lender may reasonably request,
including, but not limited to, D&O insurance reasonably satisfactory to Lender.
Insurance policies shall be in a form, with companies, and in amounts that are
reasonably satisfactory to Lender. All property policies shall have a lender’s
loss payable endorsement showing Lender as lender loss payee and waive
subrogation against Lender, and all liability policies shall show, or have
endorsements showing Lender, as additional insured. Lender shall be named as
lender loss payee and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued by it
or by independent instruments furnished to Lender, that it will give Lender
thirty (30) days prior written notice before any such policy or policies shall
be materially altered or canceled (other than cancellation for non-payment of
premiums, for which ten (10) days’ prior written notice shall be required). At
Lender’s request, Borrower shall deliver certified copies of policies and
evidence of all premium payments. Proceeds payable under any policy shall, at
Lender’s option, be payable to Lender, on account of the Obligations. If
Borrower or any of its Subsidiaries fails to obtain insurance as required under
this Section 4.2(q) or to pay any amount or furnish any required proof of
payment to third persons, Lender may make (but has no obligation to do so), at
Borrower’s expense, all or part of such payment or obtain such insurance
policies required in this Section 4.2(q), and take any action under the policies
Lender deems prudent;

 

(r) during all times any amounts remain due from Borrower to Lender under this
Agreement or Borrower has any Obligations under the Loan Documents, (i)
preserve, renew and maintain in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal course of business; (ii) perform and
observe all the terms and provisions of any material contract, instrument, or
indenture to be performed or observed by it, maintain each such contract,
instrument, or indenture in full force and effect, and enforce such rights under
any material contract instrument, or indenture, unless the failure to do so
could not be reasonably expected to cause a Material Adverse Change; (iii) keep
proper books and records and accounts in which full, true and correct entries in
conformity with generally accepted accounting principles and all requirements of
any governmental or regulatory authorities shall be made of all dealings and
transactions and assets in relations to its business and activities; and (iv)
permit Lender to visit and inspect any of its assets and properties and examine
and make abstracts from any of its books and records at any time with or without
prior written notice and as often as may be reasonably desired at any time
during an Event of Default or upon prior written notice at reasonable times when
no Event of Default is continuing up to two (2) times per year, and to discuss
its business operations, properties and financial and other conditions with its
officers and employees and accountants;

 

(s) make available to the Lender, without expense to the Lender, Borrower and
each of Borrower’s officers, employees and agents and Borrower’s books, to the
extent that the Lender may reasonably deem them necessary to prosecute or defend
any third party suit or proceeding instituted by or against the Lender with
respect to any Collateral or relating to Borrower; and

 

(t) cooperate with Lender in fulfilling the requirements for compliance under
the Small Business Investment Company (“SBIC”) program, which includes providing
Small Business Administration (“SBA”) specific information as requested from
time to time by the SBA via Lender; Borrower acknowledges that Lender is a SBIC
as organized under the Small Business Investment Company Act of 1958.

 

22

 

 

4.3 Negative Covenants of Borrower. Borrower shall not, and shall not permit any
of its Subsidiaries to, do any of the following without the prior written
consent, which may be conditioned or withheld in its sole discretion:

 

(a) change its name, jurisdiction of incorporation, chief executive office, or
principal place of business without fifteen (15) days’ prior written notice to
Lender;

 

(b) (i) create, incur, assume, or permit to exist any lien or security interest
on any Property or Collateral now or hereafter acquired by Borrower or any
Subsidiary or on any income or rights in respect of any thereof, (including sale
of any accounts) except liens and security interests created pursuant to this
Agreement or Permitted Liens or (ii) or enter into any agreement with any Person
other than Lender or Senior Lender not to grant a security interest in, or
otherwise encumber, any of its property, or permit any Subsidiary to do so;

 

(c) (i) merge into or consolidate with any other entity, or permit any other
entity to merge or consolidate with Borrower or any Subsidiary, (ii) liquidate
or dissolve, (iii) acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock, shares or property of another Person or
(iv) engage in any business other than the business of the type conducted by
Borrower on the date hereof and business reasonably related thereto;

 

(d) dispose of any of its Property, whether now owned or hereafter acquired
except: (i) the sale of disposition of any machinery and equipment no longer
useful in its business; (ii) disposition of any obsolete or worn-out Property in
the ordinary course of business; (iii) the sale of inventory in the ordinary
course of business;

 

(e) amend, supplement or otherwise materially modify (pursuant to waiver or
otherwise) its Organizational Documents or any material contract, instrument, or
indenture, in any respect that would result in a Material Adverse Change;

 

(f) move any Collateral from the Permitted Locations except in compliance with
Section 3.3 above;

 

(g) (i) pay any dividends or make any distributions, on its Equity Securities;
(ii) purchase, redeem, retire, defease or otherwise acquire, redeem, retire,
defease or otherwise acquire, for value any of its Equity Securities (other than
repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not
to exceed Two Hundred Thousand Dollars ($200,000) in any fiscal year or without
regard to aggregate amount if conducted pursuant to a terminations of service
and such repurchases are at the original cost or less); (iii) return any capital
to any holder of its Equity Securities as such (other than repurchases of Equity
Securities at cost or below in connection with a termination of service); (iv)
make, any distribution of Property, Equity Securities, obligations or securities
to any holder of its Equity Securities; or (v) set apart any sum for any such
purpose; provided, however, that Borrower may (A) convert any of its convertible
securities into other securities pursuant to the terms of such convertible
securities or otherwise in exchange thereof, (B) pay dividends solely in the
form of common stock; (C) pay cash in lieu of fractional shares upon exercise or
conversion of any option, warrant or other convertible security;

 

(h) (i) engage in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto, (ii) have a change in Borrower’s
ownership equal to or greater than fifty percent (50%) other than by the sale by
Borrower of Borrower’s Equity Securities in a public offering or (iii) any Key
Person shall cease to be actively engaged in the management of Borrower unless
written notice thereof is provided to Lender within ten (10) days;

 

(i) (i) enter into any contractual obligation with any Affiliate or engage in
any other transaction with any Affiliate except upon terms at least as favorable
to Borrower as an arms-length transaction with Persons who are not Affiliates of
Borrower, or (ii) create a subsidiary without providing at least ten (10)
Business Days advance notice thereof to Lender and any such subsidiary shall
guaranty the Obligations and grant a security interest in its assets to secure
such guaranty;

 

23

 

 

(j) (i) prepay, redeem, purchase, defease or otherwise satisfy in any manner
prior to the scheduled repayment thereof any Debt for borrowed money (other than
amounts due or permitted to be prepaid under this Agreement or otherwise agreed
in writing by Lender), or (ii) amend, modify or otherwise change the terms of
any Debt for borrowed money or lease obligations so as to accelerate the
scheduled repayment thereof or (iii) repay any notes to officers, directors or
shareholders, provided, however, that nothing in this section shall prevent
Borrower from converting any debts or obligations described in this section into
Borrower’s Equity Securities according to the terms of this Agreement, or from
repaying or otherwise satisfying such debts or obligations by the issuance of
Borrower’s Equity Securities; provided further, however, that nothing in this
Section shall prevent Borrower from issuing Subordinated Debt in a manner not
otherwise prohibited by this Agreement;

 

(k) create, incur, assume or permit to exist any Debt except Permitted Debt;
provided however, notwithstanding any Debt that is permitted under the
definition of Permitted Debt, Borrower shall not create, incur, assume to exist
any Debt involving the sale or financing of its accounts receivables or any Debt
secured or supported by its accounts receivables without the prior written
consent of Lender;

 

(l) make, or permit any Subsidiary to make, any Investment except for Permitted
Investments;

 

(m) (i) become an “investment company” or a company controlled by an “investment
company” under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System), or use the proceeds of any Loan for that purpose; (ii) become subject
to any other federal or state law or regulation which purports to restrict or
regulate its ability to borrow money; or (iii) fail to meet the minimum funding
requirements of the Employment Retirement Income Security Act of 1974, and its
regulations, as amended from time to time (“ERISA”), permit, or permit any
Subsidiary to permit, a Reportable Event or Prohibited Transaction, as defined
in ERISA, to occur; (iv) fail to comply with the Federal Fair Labor Standards
Act or violate any other law or regulation, if the violation could reasonably be
expected to have a Material Adverse Change;

 

(n) (x) directly or indirectly, enter into any documents, instruments,
agreements or contracts with any Blocked Person or (y) directly or indirectly,
(A) knowingly conduct any business or engage in any transaction or dealing with
any Blocked Person, including the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (B)
knowingly deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked pursuant to Executive Order No. 13224,
any similar executive order or other Anti-Terrorism Law or (C) knowingly engage
in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in Executive Order No. 13224 or other Anti-Terrorism Law. Lender
hereby notifies Borrower that pursuant to the requirements of Anti-Terrorism
Laws and Lender’s policies and practices, Lender is required to obtain, verify
and record certain information and documentation that identifies Borrower and
its principals, which information includes the name and address of Borrower and
its principals and such other information that will allow Lender to identify
such party in accordance with Anti-Terrorism Laws. Borrower shall immediately
notify Lender if Borrower has knowledge that Borrower is listed on the OFAC
Lists or (i) is convicted on, (ii) pleads nolo contendere to, (iii) is indicted
on or (iv) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering;

 

(o) (i) maintain any deposit account or securities account except accounts with
respect to which Lender is able to take such actions as Lender deems necessary
to obtain a perfected security interest in such accounts through one or more
Account Control Agreements or other agreements giving Lender “control” as
defined under the UCC or (ii) grant or allow any other Person (other than
Lender) to perfect a security interest in, or enter into any agreements with any
Persons (other than Lender) accomplishing perfection via control as to, any of
its deposit accounts or securities accounts, provided, however, that Borrower
may hold deposit accounts or securities accounts at Wells Fargo Bank that are
not subject to an Account Control Agreement, so long as the total balance held
in such accounts does not exceed $300,000 in aggregate.

 

24

 

 

ARTICLE 5

 

LENDER REPRESENTATIONS, WARRANTIES AND COVENANTS

 

5.1 Lender Representations and Warranties. Lender hereby represents, warrants
and agrees as follows:

 

(a) Authority; Enforceability. Lender has all requisite power and authority to
execute and deliver this Agreement. In connection with the Lender’s receipt of
the Lender Shares, Lender has all requisite power and authority to execute and
deliver the Shareholder Agreements and to receive and hold the Lender Shares
upon exercise of the Shareholder Agreements.

 

(b) No Conflicts. The execution and delivery by Lender of this Agreement does
not, and the compliance by Lender with the terms thereof will not, conflict
with, or result in any violation of or default under, any agreement to which
Lender is a party or is otherwise bound or any statute, law, ordinance, rule or
regulation applicable to Lender. In connection with Lender’s receipt of the
Lender Shares, the execution and delivery of the Shareholder Agreements does
not, and the compliance by Lender with the terms thereof will not, conflict
with, or result in any violation of or default under, or result in the creation
of any pledge, lien, security interest, encumbrance, demand, claim or equitable
interest upon the Lender Shares under any provision of any judgment, order or
decree naming Lender, any agreement to which Lender is a party or is otherwise
bound or any statute, law, ordinance, rule or regulation applicable to Lender.
No material consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign or any other person, is required to be obtained or made by or with
respect to Lender in connection with the execution, delivery and performance of
the Shareholder Agreements.

 

ARTICLE 6

 

BORROWER’S INDEMNITY

 

6.1 Indemnity By Borrower. Borrower covenants and agrees, at its sole cost and
expense and without limiting any other rights which Lender has hereunder, to
indemnify, protect and save Lender and its directors, officers, employees,
consultants, agents, attorneys, or any other Person affiliated with or
representing Lender (each, an “Indemnified Person”) harmless against and from
any and all claims, damages, losses, liabilities, obligations, demands,
defenses, judgments, costs, disbursements or Lenders’ Expenses of any kind or of
any nature whatsoever which may be imposed upon, incurred by or asserted or
awarded against Lender and related to or arising from the following, unless such
claim, loss or damage shall be based upon the gross negligence or willful
misconduct of Lender or such Indemnified Person:

 

(a) the transactions contemplated by the Loan Documents (including reasonable
attorneys’ fees and expenses);

 

(b) any investigative, response, remedial, administrative or judicial matter or
proceeding, whether or not such Indemnified Person shall be designated a party
thereto and including any such proceeding initiated by or on behalf of Borrower,
and the reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by Lender)
asserting any right to payment for the transactions contemplated hereby which
may be imposed on, incurred by or asserted against such Indemnified Person as a
result of or in connection with the transactions contemplated hereby and the use
or intended use of the proceeds of the loan proceeds;

 

25

 

 

(c) any breach by Borrower of the representations, warranties, covenants, or
other obligations or agreements made by Borrower in this Agreement or in any
agreement related hereto or thereto;

 

(d) the violation by Borrower of any state or federal law, rule or regulation;

 

(e) a material misrepresentation made by Borrower to Lender; and

 

(f) any governmental fees, charges, taxes or penalties levied or imposed in
respect to any Collateral (other than income taxes).

 

6.2 Defense of Claims. Borrower agrees to pay all amounts due under this Article
6 promptly on notice thereof from Lender. To the extent that Borrower may make
or provide, to Lender’s satisfaction, for payment of all amounts due under this
Article 6, Borrower shall be subrogated to Lender’s rights with respect to such
events or conditions. So long as no Event of Default has occurred and is
continuing, Borrower may defend any claims with counsel of its own choosing
reasonably acceptable to Lender, provided if the claim creates a significant
exposure for Lender in its sole judgment, or attempts to establish legal
principle adverse to Lender, Lender shall select the defense counsel. Borrower
may settle any claims against Lender, provided such settlement includes a
complete release of Lender from any claims at no cost to Lender.

 

6.3 Survival. All of the indemnities and agreements contained in this Article 6
shall survive and continue in full force and effect notwithstanding termination
of this Agreement, the full payment of any Loans or Borrower’s performance of
all Obligations.

 

ARTICLE 7

 

DEFAULT

 

7.1. Lender’s Rights on Default. If an Event of Default occurs, Lender shall be
entitled to:

 

(i) declare the unpaid balance of the Loans and this Agreement immediately due
and payable, whether then due or thereafter arising;

 

(ii) modify the terms and conditions upon which Lender may be willing to
consider making Loans hereunder or immediately and automatically terminate any
further obligations to make Loans under this Agreement;

 

(iii) require Borrower to, and Borrower hereby agrees that it will at its
expense and upon request of Lender, assemble the Collateral or any part thereof,
as directed by Lender and make it available to Lender at a place and time to be
designated by Lender, for cash, on credit or for future delivery, and upon such
other terms as the Lender deems commercially reasonable;

 

(iv) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Lender and its agents and any purchasers at or after foreclosure are hereby
granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free
license or other right, solely pursuant to the provisions of this Section 7.1,
to use, without charge, Borrower’s Intellectual Property, including 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, now or at any time hereafter owned or acquired by Borrower or in which
Borrower now or at any time hereafter has any rights; provided that such license
shall only be exercisable in connection with the disposition of Collateral upon
Lender’s exercise of its remedies hereunder;

 

26

 

 

(v) without notice except as specified below, sell, resell, assign and deliver
or grant a license to use or otherwise dispose of the Collateral or any part
thereof, in one or more parcels at public or private sale, at any place
designated by Lender;

 

(vi) occupy any premises owned or leased by Borrower where the Collateral or any
part thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation to
Borrower in respect of such occupation;

 

(vii) commence and prosecute any bankruptcy, insolvency or other similar
proceeding or consent to Borrower commencing any bankruptcy, insolvency or other
similar proceeding;

 

(viii) place a “hold” on any account maintained with Lender and/or deliver a
notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Account Control Agreement or similar agreements
providing control of any Collateral;

 

(ix) exercise any and all rights and remedies of Borrower under or in connection
with the Collateral, or otherwise in respect of the Collateral, including
without limitation, (A) any and all rights of Borrower to demand or otherwise
require payment of any amount under, or performance of any provision of, the
accounts receivables and the other Collateral, (B) withdraw, or cause or direct
the withdrawal, of all funds with respect to any deposit accounts, (C) exercise
all other rights and remedies with respect to the accounts receivables and the
other Collateral, including without limitation, those set forth in Section 9-607
of the UCC and (D) exercise any and all voting, consensual and other rights with
respect to any Collateral; and

 

(x) exercise all rights and remedies available to Lender under the Loan
Documents or at law or equity, including all remedies provided under the UCC
(including disposal of the Collateral pursuant to the terms thereof).

 

Borrower agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Borrower of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. At any sale of the Collateral, if permitted by
applicable law, the Lender may be the purchaser, licensee, assignee or recipient
of the Collateral or any part thereof and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold, assigned or licensed at such sale, to use and
apply any of the Obligations as a credit on account of the purchase price of the
Collateral or any part thereof payable at such sale. To the extent permitted by
applicable law, Borrower waives all claims, damages and demands it may acquire
against the Lender arising out of the exercise by it of any rights hereunder.
Borrower hereby waives and releases to the fullest extent permitted by law any
right or equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshalling the Collateral and
any other security for the Obligations or otherwise. The Lender shall not be
liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall it be under any obligation to take any
action with regard thereto. The Lender shall not be obligated to make any sale
of the Collateral regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefore, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Lender shall not be
obligated to clean-up or otherwise prepare the Collateral for sale.

 

(xi) all payments received by Borrower in respect of the Collateral shall be
received in trust for the benefit of the Lender, shall be segregated from other
funds of Borrower and shall be forthwith paid over the Lender in the same form
as so received (with any necessary endorsement);

 

(xii) the Lender may, without notice to Borrower except as required by law and
at any time or from time to time, charge, set off and otherwise apply all or
part of the Obligations against any funds deposited with it or held by it;

 

27

 

 

(xiii) upon the written demand of the Lender, Borrower shall execute and deliver
to the Lender a collateral assignment or assignments of any or all of Borrower’s
Intellectual Property and such other documents and take such other actions as
are necessary or appropriate to carry out the intent and purposes hereof;

 

(xiv) 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 Lender may do any or all of the following: (a) make payment of
the same or any part thereof; or (b) obtain and maintain insurance policies of
the type discussed in Section 4.2 of this Agreement, and take any action with
respect to such policies as Lender deems prudent. Any amounts paid or deposited
by Lender shall constitute Lenders’ Expenses, shall be immediately due and
payable, shall bear interest at the Default Rate and shall be secured by the
Collateral. Any payments made by Lender shall not constitute an agreement by
Lender to make similar payments in the future or a waiver by Lender of any Event
of Default under this Agreement. Borrower shall pay all reasonable fees and
expenses, including Lenders’ Expenses, incurred by Lender in the enforcement or
attempt to enforce any of the Obligations hereunder not performed when due;

 

(xv) Lender’s rights and remedies under this Agreement, the Loan Documents, and
all other agreements shall be cumulative. Lender shall have all other rights and
remedies not inconsistent herewith as provided under the UCC, by law, or in
equity. No exercise by Lender of one right or remedy shall be deemed an
election, and no waiver by Lender of any Event of Default on Borrower’s part
shall be deemed a continuing waiver. No delay by Lender shall constitute a
waiver, election, or acquiescence by it. The Obligations of Borrower to any
Lender may be enforced by such Lender against Borrower in accordance with the
terms of this Agreement and the other Loan Documents and, to the fullest extent
permitted by applicable law, it shall not be necessary for any other party to be
joined as an additional party in any proceeding to enforce such Obligations;

 

(xvi) the proceeds and/or avails of the Collateral, or any part thereof, and the
proceeds and the avails of any remedy hereunder (as well as any other amounts of
any kind held by Lender, at the time of or received by Lender after the
occurrence of an Event of Default hereunder) shall be paid to and applied as
follows:

 

First, to the payment of documented, out-of-pocket actual costs and expenses,
including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and attorneys’ fees, incurred or made
hereunder by Lender, including Lenders’ Expenses;

 

Second, to the payment to Lender of the amount then owing or unpaid on the Loans
for any accrued and unpaid interest, the amounts which would have otherwise come
due under Sections 2.4, 2.5 or 2.6, if the Loans had been voluntarily prepaid,
the principal balance of the Loans, and all other Obligations with respect to
the Loans (provided, however, if such proceeds shall be insufficient to pay in
full the whole amount so due, owing or unpaid upon the Loans, then first, to the
unpaid interest thereon ratably, second, to the amounts which would have
otherwise come due under Section 2.3 ratably, if the Loans had been voluntarily
prepaid, third, to the principal balance of the Loans ratably, and fourth, to
the ratable payment of other amounts then payable to Lender under any of the
Loan Documents); and

 

Third, to the payment of the surplus, if any, to Borrower, its successors and
assigns or to the Person lawfully entitled to receive the same;

 

(xvii) Lender shall have proceeded to enforce any right under this Agreement or
any other of the Loan Documents by foreclosure, sale, entry or otherwise, and
such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely, then and in every such case (unless
otherwise ordered by a court of competent jurisdiction), Lender shall be
restored to its former position and rights hereunder with respect to the
Property subject to the security interest created under this Agreement.

 

28

 

 

7.2. Rights Cumulative; Waivers. All rights, remedies and powers granted to
Lender hereunder are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers
given hereunder, or in or by any other instrument, or available in law or
equity. Lender’s knowledge at any time of any breach of, or non-compliance with,
any representations, warranties, covenants or agreements hereunder shall not
constitute or be deemed a waiver of any of such rights or remedies hereunder,
and any waiver of any default shall not constitute a waiver of any other
default. Notwithstanding any foreclosure or sale of any item of Collateral by
Lender as permitted under this Agreement, Borrower shall remain liable for any
deficiency. All amounts realized by Lender in furtherance of its rights to sell
or foreclose upon the Collateral shall first be applied to all costs of the
action and all costs of enforcement or interpretation of this Agreement,
including any court costs, legal or expert fees and filing fees, then to any
outstanding interest or penalties payable under this Agreement, then to
repayment of principal of all Loans.

 

ARTICLE 8

 

MISCELLANEOUS

 

8.1. Costs and Expenses. Borrower will pay all Lenders’ Expenses on demand.

 

8.2. Power of Attorney. Borrower hereby irrevocably constitutes and appoints
Lender as Borrower’s attorney-in-fact with full power of substitution, for
Borrower and any of its Subsidiary’s and in Borrower’s or any of its
Subsidiary’s name to do, at Lender’s option and at Borrower’s expense upon the
occurrence and during the continuance of an Event of Default, to (a) ask,
demand, collect (including, but not limited to the execution, in Borrower’s or
any Subsidiary’s name, of notification letters), sue for, compound and give
acquittance for any and all payments assigned hereunder and to endorse, in
writing or by stamp, Borrower’s name or otherwise on all checks for any monies
in respect of the Collateral; (b) sign Borrower’s or any of its Subsidiaries’
name on any invoice or bill of lading for any account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about any accounts directly
with Account Debtors, for amounts and on terms Lender determines reasonable; (d)
make, settle, and adjust all claims under Borrower’s insurance policies; (e)
pay, contest or settle any lien, charge, encumbrance, security interest, and
adverse claim in or to the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; and (f) transfer
the Collateral into the name of Lender or a third party as the UCC or any
applicable law permits. Borrower hereby appoints Lender as its lawful
attorney-in-fact to sign Borrower’s or any of its Subsidiaries’ name on any
documents necessary to perfect or continue the perfection of Lender’s security
interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations (other than inchoate indemnity obligations) have
been satisfied in full and Lender is under no further obligation to make extend
loans hereunder. Lender’s foregoing appointment as Borrower’s or any of its
Subsidiaries’ attorney in fact, and all of Lender’s rights and powers, coupled
with an interest, are irrevocable until all Obligations (other than inchoate
indemnity obligations) have been fully repaid and performed and Lender’s
obligation to provide loans terminates.

 

8.3. Survival. All representations, warranties and indemnities contained in this
Agreement (and any and each other agreement or instrument delivered pursuant
hereto) shall survive (i) the execution and delivery of this Agreement, (ii) the
consummation of the transactions contemplated hereby, (iii) the payment of the
Loans, (iv) the performance of all Obligations, and (v) termination of this
Agreement.

 

8.4. Assignments. Except as herein provided, this Agreement shall be binding
upon and inure to the benefit of Lender and Borrower and their respective
representatives, successors and assigns. Lender may assign this Agreement and
the Notes (if any) in whole or in part or sell participations therein without
notice to Borrower or Borrower’s consent. Notwithstanding the foregoing,
Borrower may not assign, transfer or otherwise convey this Agreement, in whole
or in part, without Lenders’ prior written consent.

 

8.5. Intentionally omitted.

 

29

 

 

8.6. Notice. All notices, consents, requests, instructions, approvals and
communications provided herein shall be validly given, made or served, effective
only if in writing, except as otherwise provided herein, and sent by overnight
courier, certified U.S. mail, postage prepaid, or by fax, and shall be deemed
received within five (5) Business Days from the date of posting if sent by mail,
one Business Day after delivery thereto if sent by overnight courier service, or
on the day of transmission if sent by fax with a confirmation receipt obtained,
or if such day is not a Business Day, then on the following Business Day. All
such notices, consents, requests, instructions, approvals and communications
shall be sent to a party at the address set forth for such party on the first
page hereof, or to such other address as such party may designate in writing.

 

8.7. Governing Law; Consent to Jurisdiction and Service of Process. THIS
AGREEMENT SHALL BE SUBJECT TO AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF THAT WOULD RESULT IN
THE APPLICATION OF ANY LAWS OTHER THAN THE LAWS OF SUCH STATE). IN THE EVENT
THAT LENDER INITIATES AGAINST BORROWER ANY DISPUTE, CLAIM, OR SUIT WHETHER
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
RELATED ASSIGNMENT OR ANY OF BORROWER’S OBLIGATIONS OR INDEBTEDNESS HEREUNDER,
EACH PARTY DOES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION AND VENUE OF ANY
COURTS (FEDERAL, STATE OR LOCAL) HAVING A LOCATION IN THE STATE OF DELAWARE. IN
THE EVENT THAT BORROWER INITIATES AGAINST LENDER ANY DISPUTE, CLAIM, OR SUIT
WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR
ANY RELATED ASSIGNMENT OR ANY OF BORROWER’S OBLIGATIONS OR INDEBTEDNESS
HEREUNDER, EACH PARTY DOES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION AND
VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING A LOCATION IN THE STATE OF
DELAWARE. EACH PARTY EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS
TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO ITS LAST KNOWN
ADDRESS WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN FIVE (5) DAYS AFTER THE
DATE OF MAILING THEREOF. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE
STATE OF DELAWARE IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF
VENUE AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH
ACTION OR PROCEEDING, ONCE COMMENCED TO ANOTHER COURT ON THE GROUNDS OF FORUM
NON CONVENIENS OR OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN
SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY EITHER PARTY OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION BY SUCH PARTY TO ENFORCE THE
SAME IN ANY OTHER APPROPRIATE JURISDICTION.

 

8.8. Other Documents. Borrower shall execute such other documents and shall
otherwise cooperate with Lender as Lender reasonably requires to effectuate the
transactions contemplated hereby.

 

8.9. Severability. If any part of this Agreement shall be contrary to any law
which a party might seek to apply or enforce or should otherwise be defective,
the other provisions hereof shall not be affected thereby but shall continue in
full force and effect, to which end they are hereby declared severable.

 

8.10. Entirety; Amendments. This Agreement and the Exhibits referred to herein
constitute the entire agreement between Lender and Borrower as to the subject
matter contemplated herein, and supersedes all prior agreements and
understandings relating thereto. Each of the parties hereto acknowledges that no
party hereto nor any agent of any other party whomsoever has made any promise,
representation or warranty whatsoever, express or implied, not contained herein,
concerning the subject matter hereof, to induce it to execute this Agreement. No
other agreements will be effective to change, modify or terminate this Agreement
in whole or in part unless such agreement is in writing and duly executed by the
party to be charged except as expressly set forth herein.

 

30

 

 

8.11. Jury Trial. EACH PARTY HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS AGREEMENT, ANY RELATED DOCUMENTS, ANY DEALINGS BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED BY THE PARTIES. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT (INCLUDING, WITHOUT LIMITATION, TRANSACTION CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS
WAIVER IS IRREVOCABLE AND MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS AND MODIFICATIONS TO
THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO TRIAL BY THE COURT.

 

8.12. Portfolio Client Announcements. Lender will have the right to disclose to
others and to include on or in its website, brochures and other marketing
materials information consisting of “tombstone-like” statements about the loan
transaction contemplated by this Agreement without mention of Borrower. Lender
may not use Borrower’s logo and the amount of the Loan funding provided by
Lender to Borrower together without Borrower’s express permission. Such
information shall not include any proprietary or confidential information of
Borrower.

 

8.13. Demand Waiver. Borrower waives, to the fullest extent permitted by law,
demand, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by the Lender on which Borrower or any Subsidiary is liable.

 

8.14. 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, is an original, and all taken together, constitute one Agreement.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

 

8.15. Right of Set Off. Borrower hereby grants to Lender, a lien, security
interest and right of set off as security for all Obligations to Lender
hereunder, whether now existing or hereafter arising upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Lenders or any entity under the control
of the Lender (including a Lender affiliate) or in transit to any of them. At
any time after the occurrence and during the continuance of an Event of Default,
without demand or notice, the Lender may set off the same or any part thereof
and apply the same to any liability or obligation of Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the
Obligations. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED BY BORROWER.

 

[SIGNATURES ON FOLLOWING PAGE]

 

31

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security
Agreement to be duly executed as of the day and year first above written.

 

LENDER:       TRINITY CAPITAL FUND III, L.P., a Delaware limited partnership    
  By: TRINITY SBIC PARTNERS III, LLC, a Delaware limited liability company  
Its: General Partner       By: TRINITY SBIC MANAGEMENT, INC., a Delaware
corporation   Its: Manager       By: /s/ Steven L. Brown     Steven L. Brown  
Its: President       BORROWER:       AUGMEDIX, INC., a Delaware corporation    
  By: /s/ Ian Shakil   Name:  Ian Shakil   Its: Chief Executive Officer  

 

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

 

32

 

 

EXHIBIT A

 

FORM OF PROMISSORY NOTE

 

$10,000,000 May 31, 2017

 

FOR VALUE RECEIVED, AUGMEDIX, INC., a Delaware corporation (the “Maker”), having
an office at 1161 Mission Street, Suite 210, San Francisco, California 94103,
hereby promises to pay to the order of TRINITY CAPITAL FUND III, L.P., a
Delaware limited partnership (the “Payee”), at 3075 West Ray Road, Suite 525,
Chandler, Arizona 85226, or at such other place as the holder may, from time to
time, designate, the sum of $10,000,000 or such other principal amount as Payee
has advanced to Maker, together with interest at a rate set forth in the Loan
Agreement.

 

This Note is issued pursuant to a certain Loan and Security Agreement between
Maker and Payee dated as of May 31, 2017 (as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”) and is subject to all of the terms thereof. All defined terms used
herein shall have the meanings ascribed to them in the Loan Agreement.

 

This Note is secured by the Collateral described in the Loan Agreement. This
Note is cross-defaulted with all other Notes issued by Maker pursuant to the
Loan Agreement.

 

The Maker waives demand, presentment, protest and notice of any kind and
consents to the extension of time of payments, the release, surrender or
substitution of any and all security or guarantees for the obligations evidenced
hereby or other indulgence with respect to this Note, all without notice.

 

This Note may not be changed, modified or terminated orally, except only by an
agreement in writing, signed by the party to be charged. The Maker hereby
authorizes the Payee to complete this Note and any particulars relating thereto
according to the terms of the indebtedness evidenced hereby.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Delaware. The Maker hereby irrevocably consents to the jurisdiction of
any state or federal court located in the State of Delaware with respect to any
action brought in respect of this Note.

 

Maker hereby WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and to
interpose permissive counterclaims and cross claims by any such actions. Maker
further agrees to pay to holder the costs and expenses of enforcement and
collection of this Note, including attorneys’ fees and expenses and court costs.

 

This Note shall be binding upon the successors, assigns and legal
representatives of the Maker and inure to the benefit of the Payee, any holder
and their successors, endorsees, assigns and legal representatives.

 

  AUGMEDIX, INC., a Delaware corporation         By:       Ian Shakil   Its:
Chief Executive Officer

 

A-1

 

 

EXHIBIT B

 

AMORTIZATION SCHEDULE

 

Period  Dates  Monthly Pmt   Principal   Interest   Principal Balance       
 12,827,767.30    (10,000,000.00)   (2,827,767.30)   (10,000,000.00)           
              1  6/1/2017   3,333.33    -    (3,333.33)   (10,000,000.00) 2 
7/1/2017   100,000.00    -    (100,000.00)   (10,000,000.00) 3  8/1/2017 
 100,000.00    -    (100,000.00)   (10,000,000.00) 4  9/1/2017   100,000.00  
 -    (100,000.00)   (10,000,000.00) 5  10/1/2017   100,000.00    -  
 (100,000.00)   (10,000,000.00) 6  11/1/2017   100,000.00    -    (100,000.00) 
 (10,000,000.00) 7  12/1/2017   100,000.00    -    (100,000.00) 
 (10,000,000.00) 8  1/1/2018   100,000.00    -    (100,000.00)   (10,000,000.00)
9  2/1/2018   100,000.00    -    (100,000.00)   (10,000,000.00) 10  3/1/2018 
 100,000.00    -    (100,000.00)   (10,000,000.00) 11  4/1/2018   100,000.00  
 -    (100,000.00)   (10,000,000.00) 12  5/1/2018   100,000.00    -  
 (100,000.00)   (10,000,000.00) 13  6/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 14  7/1/2018   387,481.13    (287,481.13)   (100,000.00) 
 (9,712,518.87) 15  8/1/2018   387,481.13    (290,355.94)   (97,125.19) 
 (9,422,162.92) 16  9/1/2018   387,481.13    (293,259.50)   (94,221.63) 
 (9,128,903.42) 17  10/1/2018   387,481.13    (296,192.10)   (91,289.03) 
 (8,832,711.32) 18  11/1/2018   387,481.13    (299,154.02)   (88,327.11) 
 (8,533,557.30) 19  12/1/2018   387,481.13    (302,145.56)   (85,335.57) 
 (8,231,411.75) 20  1/1/2019   387,481.13    (305,167.01)   (82,314.12) 
 (7,926,244.73) 21  2/1/2019   387,481.13    (308,218.68)   (79,262.45) 
 (7,618,026.05) 22  3/1/2019   387,481.13    (311,300.87)   (76,180.26) 
 (7,306,725.17) 23  4/1/2019   387,481.13    (314,413.88)   (73,067.25) 
 (6,992,311.29) 24  5/1/2019   387,481.13    (317,558.02)   (69,923.11) 
 (6,674,753.27) 25  6/1/2019   387,481.13    (320,733.60)   (66,747.53) 
 (6,354,019.68) 26  7/1/2019   387,481.13    (323,940.94)   (63,540.20) 
 (6,030,078.74) 27  8/1/2019   387,481.13    (327,180.34)   (60,300.79) 
 (5,702,898.39) 28  9/1/2019   387,481.13    (330,452.15)   (57,028.98) 
 (5,372,446.25) 29  10/1/2019   387,481.13    (333,756.67)   (53,724.46) 
 (5,038,689.58) 30  11/1/2019   387,481.13    (337,094.24)   (50,386.90) 
 (4,701,595.34) 31  12/1/2019   387,481.13    (340,465.18)   (47,015.95) 
 (4,361,130.16) 32  1/1/2020   387,481.13    (343,869.83)   (43,611.30) 
 (4,017,260.33) 33  2/1/2020   387,481.13    (347,308.53)   (40,172.60) 
 (3,669,951.80) 34  3/1/2020   387,481.13    (350,781.61)   (36,699.52) 
 (3,319,170.19) 35  4/1/2020   387,481.13    (354,289.43)   (33,191.70) 
 (2,964,880.76) 36  5/1/2020   387,481.13    (357,832.32)   (29,648.81) 
 (2,607,048.43) 37  6/1/2020   387,481.13    (361,410.65)   (26,070.48) 
 (2,245,637.79) 38  7/1/2020   387,481.13    (365,024.75)   (22,456.38) 
 (1,880,613.03) 39  8/1/2020   387,481.13    (368,675.00)   (18,806.13) 
 (1,511,938.03) 40  9/1/2020   387,481.13    (372,361.75)   (15,119.38) 
 (1,139,576.28) 41  10/1/2020   387,481.13    (376,085.37)   (11,395.76) 
 (763,490.91) 42  11/1/2020   387,481.13    (379,846.22)   (7,634.91) 
 (383,644.69) 43  12/1/2020   387,481.13    (383,644.69)   (3,836.45)   (0.00)

 

B-1

 

 

EXHIBIT C

 

SECRETARY’S CERTIFICATE

WITH RESPECT TO RESOLUTIONS

 

C-1

 

 

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

TO:Trinity Capital Fund III, L.P., as Lender

 

FROM:Augmedix, Inc., as Borrower

 

The undersigned authorized officer (“Officer”) of Augmedix, Inc. (“Borrower”),
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement dated as of May 31, 2017, by and among Borrower and
Lender (the “Loan Agreement;” capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Loan Agreement),

 

(a) Borrower is in complete compliance for the period ending March 31, 2017 with
all required covenants except as noted below;

 

(b) There are no Potential Events of Default or Events of Default, except as
noted below;

 

(c) Except as noted below, all representations and warranties of Borrower stated
in the Loan Documents are true and correct in all material respects on this date
and for the period described in (a), above; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

 

(d) Borrower and each Subsidiary has filed all federal, state and other tax
returns that are required to be filed and has paid all taxes shown thereon to be
due, together with applicable interest and penalties, and all other taxes, fees
or other charges imposed on it or any of its property by any governmental or
regulatory authority. No tax liens have been filed, and, to the Knowledge of
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.

 

(e) No liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Lender.

 

Attached are the required documents, if any, supporting our certification(s).
The Officer, on behalf of Borrower, further certifies that the attached
financial statements are prepared in accordance with generally accepted
accounting principles applied on a consistent basis from one period to the next
except as explained in an accompanying letter or footnotes and except, in the
case of unaudited financial statements, for the absence of footnotes and subject
to year-end audit adjustments as to the interim financial statements.

 

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

    Reporting Covenant   Requirement   Actual   Complies                        
  1)   Monthly financial statements   If requested by Lender, monthly within 30
days       Yes   No   N/A                           2)   Quarterly financial
statements   Within 45 days of quarter end       Yes   No   N/A                
          3)   Annual (CPA Audited)   statements Within 180 days after FYE, as
set forth in Section 4.2(iii)(B)       Yes   No   N/A

 

D-1

 

 

4)   Annual Financial Projections   Annually (no later than 30 days after each
fiscal year) & quarterly within 45 days of quarter end       Yes   No   N/A    
                      5)   8-K, 10-K and 10-Q Filings   At time of filing      
Yes   No   N/A                           6)   Compliance Certificate  
Concurrently with items 1), 2), and 3) above       Yes   No   N/A              
            7)   IP Report   Concurrently with Compliance Certificate       Yes
  No   N/A                           8)   Total amount of Borrower’s cash and
cash equivalents at the last day of the measurement period       $_______   Yes
  No   N/A                           9)   Total amount of Borrower’s
Subsidiaries’ cash and cash equivalents at the last day of the measurement
period       $_______   Yes   No   N/A

 

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)

 

Institution Name   Account Number   New Account?   Account Control
Agreement in place?                       1)       Yes   No   Yes   No          
            2)       Yes   No   Yes   No                       3)       Yes   No
  Yes   No                       4)       Yes   No   Yes   No

 

Other Matters

 

1)   Have there been any changes in Key Persons since the last Compliance
Certificate?   Yes   No               2)   Have there been any
transfers/sales/disposals/retirement of Collateral or IP prohibited by the Loan
Agreement?   Yes   No               3)   Have there been any new or pending
material claims or causes of action against Borrower?   Yes   No              
4)   Have there been any amendments of or other changes to the capitalization
table of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Certificate.   Yes   No               5)   Has Borrower or any
Subsidiary entered into or amended any Material Agreement? If yes, please
explain and provide a copy of the Material Agreement(s) and/or amendment(s).  
Yes   No               6)   Has Borrower provided the Lender with all notices
required to be delivered under Sections 3.2, 3.7, 3.8(c), 4.2 and 4.3 of the
Loan Agreement?   Yes   Yes               7)   Have there been any material
updates to the contents of the Perfection Certificate last delivered? If yes,
please explain.   Yes   No

 

D-2

 

 

Exceptions

 

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

AUGMEDIX, INC.       By:                                     Name:      Title:  
 

 

Date:

 

  LENDER USE ONLY       Received by: _________________ Date: ________      
Verified by: __________________ Date: ________       Compliance Status:
         Yes                      No

 

D-3

 

 

EXHIBIT E

 

Loan Payment Request Form

 

Fax To: Date: _______________________

 

Loan Payment:

AUGMEDIX, INC.

 

From Account # ___________________________________   To Account #
________________________________________________ (Deposit Account #)   (Loan
Account #)       Principal $_______________________________________   and/or
Interest $ ______________________________________________       Authorized
Signature: ______________________________   Phone Number:
______________________________________ Print Name/Title:
__________________________________    

 

Loan Advance:

 

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

 

From Account # ___________________________________   To Account #
_________________________________________________ (Loan Account #)   (Deposit
Account #)       Amount of Advance $_______________________________          
All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:  

 

Authorized Signature: _______________________________   Phone Number:
______________________________________ Print Name/Title:
__________________________________    

 

Outgoing Wire Request:

Complete only if all or a portion of funds from the loan advance above is to be
wired.

 

Beneficiary Name: __________________________________   Amount of Wire:
$_____________________________________________ Beneficiary Bank:
__________________________________   Account Number:
_____________________________________________ City and State:
_____________________________________           Beneficiary Bank Transit (ABA)
#: _____________________   Beneficiary Bank Code (Swift, Sort, Chip, etc.):
_____________________     (For International Wire Only) Intermediary Bank:
__________________________________   Transit (ABA) #:
______________________________________________ For Further Credit to:
_____________________________________________________________________________________________

 

Special Instruction:
_______________________________________________________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

Authorized Signature: _______________________________   2nd Signature (if
required): _______________________________________ Print Name/Title:
___________________________________   Print Name/Title:
______________________________________________ Telephone #:
______________________________________   Telephone #:
__________________________________________________

 

 

E-1

 

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of May 31, 2018 (the “First Amendment Effective Date”), is made among AUGMEDIX,
INC., a Delaware corporation (“Borrower”) and Trinity Capital Fund III, L.P. a
Delaware limited partnership (“Lender”).

 

Borrower and Lender are parties to a Loan and Security Agreement dated as of May
31, 2017 (as amended, restated or modified from time to time, the “Loan and
Security Agreement”). Borrower has requested that Lender agree to certain
amendments to the Loan and Security Agreement. Lender has agreed to such
request, subject to the terms and conditions hereof.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Loan and Security Agreement. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

 

(b) Interpretation. The rules of interpretation set forth in Article 1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

 

SECTION 2 Amendments to the Loan and Security Agreement.

 

(a) The Loan and Security Agreement shall be amended as follows effective as of
the First Amendment Effective Date:

 

(i) New Definition. The following definition is added to Article 1 of the Loan
and Security Agreement in its proper alphabetical order:

 

“First Amendment” means that certain First Amendment to Loan and Security
Agreement dated as of May 31, 2018, among Borrower and Lender.

 

“First Amendment Effective Date” means May 31, 2018.

 

(ii) Amended Definitions. The following definitions are hereby amended as
follows:

 

“Loan Documents”. The definition of “Loan Documents” is hereby amended by
adding, “and the First Amendment” immediately after the phrase “this Agreement”
therein.

 

1

 

 

(iii) Section 2.1(a). Section 2.1(a) is hereby amended and restated in its
entirety as follows:

 

“(a) Subject to the terms and conditions of this Agreement, Lender hereby agrees
to make term loans (“Term Loan”) in a principal amount not to exceed the Maximum
Credit Limit. The Obligations of Borrower under this Agreement shall at all
times be absolute and unconditional. Borrower acknowledges and agrees that any
obligation of Lender to make any Advances hereunder is strictly contingent upon
the satisfaction of the conditions set forth in Section 2.3. Borrower shall make
monthly payments of interest only in arrears at the Interest Rate of such Term
Loan on each payment date commencing with June 1, 2017 through and including
March 1, 2019 (“Interest Only Period”), and beginning on April 1, 2019 (the
“Amortization Period”), Borrower shall make equal monthly payments on each
subsequent Payment Date in an amount determined through a calculation fully
amortizing the outstanding principal balance due under such Term Loan at the
Interest Rate for the remaining term of such loan. Following the completion of
the Interest Only Period, the remaining balance of the Term Loan represented by
Promissory Note 1-1 dated May 31, 2017 (“Note 1-1”) shall be paid over a thirty
(30) month Amortization Period. For clarity, the Amortization Schedule for Note
1-1 as of the First Amendment Effective Date is reflected in Exhibit A attached
to the First Amendment. Lender may update the amortization schedules from time
to time in accordance with the terms of the Loan Documents (as further amended
from time to time, the “Amortization Schedules”). In the event of any
inconsistency between the Amortization Schedule and the terms of the Loan
Documents (including this Section 2.1), the terms of the Loan Documents shall
prevail. Borrower shall continue to comply with all of the terms and provisions
hereof until all of the Obligations are paid and satisfied in full. After the
Loan Termination Date, no further loans shall be available from Lender.”

 

(iv) Section 2.4. Section 2.4 is hereby amended and restated in its entirety as
follows:

 

“2.4 Voluntary Prepayment. Borrower may prepay the Term Loans at any time,
subject to payment of the premium set forth below (“Prepayment Premium”). The
calculated pre-payment amount shall include the outstanding principal due under
each Term Loan at the time of retirement, any partially accrued interest
thereon, and a Prepayment Premium based on the following schedule with respect
to each Term Loan:

 

(a) On or before the last day of the Interest Only Period, the Prepayment
Premium shall be equal to three percent (3.0%) of the principal on such Term
Loan repaid at such time.

 

(b) After the last day of the Interest Only Period, and on or before the date
that falls twelve (12) months after the last day of the Interest Only Period,
the Prepayment Premium shall be equal to two percent (2.0%) of the principal on
such Term Loan repaid at such time.

 

(c) After the date that falls twelve (12) months after the last date of the
Interest Only Period, and on or before the date that falls twenty-four (24)
months after the last day of the Interest Only period, the Prepayment Premium
shall be equal to one percent (1.0%) of the principal on such Term Loan repaid
at such time.

 

(v) Section 2.6. Section 2.6 is hereby amended and restated in its entirety as
follows:

 

“2.6 End of Term Payment. On the Maturity Date or on the date of the earlier
prepayment of the Loan by Borrower pursuant to Section 2.4 or Section 2.5 or
acceleration of the balance of the Loan by Lender pursuant to Section 7.1,
Borrower shall pay to Lender the amount equal to six and 50/100 percent (6.5%)
of the original principal amount of the Loan in addition to all sums payable
hereunder.

 

2

 

 

(b) References Within Loan and Security Agreement. Each reference in the Loan
and Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

 

SECTION 3 Conditions of Effectiveness. The effectiveness of this Amendment shall
be subject to the satisfaction by Lender in Lender’s sole discretion, that
Borrower has completed each of the following conditions precedent:

 

(a) Equity Event. The Borrower shall receive net cash proceeds (not subject to
any clawback, redemption, escrow or similar contractual restriction), before
transaction costs and fees, from the issuance and sale by Borrower of its
preferred or common stock or Subordinated Debt, in each case, to investors and
on terms and conditions acceptable to Lender (collectively, the “Equity Event”),
in the minimum amounts of: (i) at least $9,000,000 in aggregate, after March 1,
2018 and prior to the First Amendment Effective Date; and (ii) at least
$15,000,000 in aggregate (inclusive of the $9,000,000 referenced in this Section
3(a)(i)), after March 1, 2018 and prior to October 1, 2018; provided however
that if Borrower has not received at least $15,000,000 in aggregate net proceeds
from the Equity Event on or before October 1, 2018, then the Interest Only
Period will automatically terminate on December 1, 2018, and the Amortization
Period will commence on January 1, 2019.

 

(b) Warrant. It is agreed and acknowledged that as of the First Amendment
Effective Date, the existing Warrant to Purchase Stock, executed on May 31, 2017
(the “Series A-2 Warrant”), is terminated in full and rendered null and void,
and all past, current or future obligations of the Parties under the Series A-2
Warrant shall be extinguished. Lender will return the original of the Series A-2
Warrant for cancellation by the Borrower as of First Amendment Effective Date.
Borrower and Lender shall have entered into that certain Warrant of even date
herewith in the form attached hereto as Exhibit B (the “Series B Warrant”).

 

(c) Fees and Expenses. The Borrower shall have paid all Documentation and
Funding Fees and all other fees, costs and expenses, if any, due and payable as
of the First Amendment Effective Date under the Loan and Security Agreement.

 

(d) Representations and Warranties; No Default. On the First Amendment Effective
Date, after giving effect to the amendment of the Loan and Security Agreement
contemplated hereby:

 

(i) The execution, delivery and performance of this Amendment (i) are not in
contravention of any material agreement or indenture which Borrower is bound, or
by which its properties may be affected, (ii) do not require any shareholder
approval, or any approval or consent of, or filing or registration with, any
governmental body or regulatory authority or agency, or any approval or consent
of any trustees or holders of any of its indebtedness or obligations, unless
such approval or consent has been obtained; and (iii) do not contravene any law,
regulation, judgment or decree applicable to it or its certificate of
incorporation or bylaws;

 

(ii) The representations and warranties contained in Section 4 shall be true and
correct on and as of the First Amendment Effective Date as though made on and as
of such date; and

 

(iii) There exist no Events of Default.

 

3

 

 

SECTION 4 Representations and Warranties. To induce Lender to enter into this
Amendment, Borrower hereby confirms, as of the date hereof, (a) that the
representations and warranties made by it in Article 4 of the Loan and Security
Agreement and in the other Loan Documents are true and correct in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; (b) that there has not been and
there does not exist a Material Adverse Change; and (c) that the information
included in the perfection certificate delivered to Lender on the Effective Date
remains true and correct in all material respects. For the purposes of this
Section 4, (i) each reference in Articles 3 and 4 of the Loan and Security
Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or
words of like import in such Section, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment, and (ii) any
representations and warranties which relate solely to an earlier date shall not
be deemed confirmed and restated as of the date hereof (provided that such
representations and warranties shall be true, correct and complete as of such
earlier date).

 

SECTION 5 Miscellaneous.

 

(a) Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects. Lender’s execution and
delivery of, or acceptance of, this Amendment shall not be deemed to create a
course of dealing or otherwise create any express or implied duty by any of them
to provide any other or further amendments, consents or waivers in the future.
The Borrower hereby reaffirms the grant of security under Article 3 of the Loan
and Security Agreement and hereby reaffirms that such grant of security in the
Collateral secures all Obligations under the Loan and Security Agreement.

 

(b) Release. In consideration of the agreements of Lender contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower, on behalf of itself and its successors,
assigns, and other legal representatives, hereby fully, absolutely,
unconditionally and irrevocably releases, remises and forever discharges Lender,
and its successors and assigns, and its present and former shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives (Lender and all such
other persons being hereinafter referred to collectively as the “Releasees” and
individually as a “Releasee”), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
of every name and nature, both at law and in equity, which Borrower, or any of
its successors, assigns, or other legal representatives may now own, hold, have
or claim to have against the Releasees or any of them for, upon, or by reason of
any circumstance, action, cause or thing whatsoever which arises at any time on
or prior to the day and date of this Amendment, for or on account of, or in
relation to, or in any way in connection with the Loan Agreement, or any of the
other Loan Documents or transactions thereunder or related thereto. Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. Borrower
agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or which may hereafter be discovered shall affect in any manner
the final, absolute and unconditional nature of the release set forth above.

 

(c) No Reliance. The Borrower hereby acknowledges and confirms to Lender that
the Borrower is executing this Amendment on the basis of its own investigation
and for its own reasons without reliance upon any agreement, representation,
understanding or communication by or on behalf of any other Person.

 

4

 

 

(d) Costs and Expenses. The Borrower agrees to pay to Lender within ten (10)
days of its receipt of an invoice (or ten (10) days following the First
Amendment Effective Date to the extent invoiced on or prior to the First
Amendment Effective Date), the reasonable out-of-pocket costs and expenses of
Lender, and the reasonable fees and disbursements of counsel to Lender party
hereto, in connection with the negotiation, preparation, execution and delivery
of this Amendment and any other documents to be delivered in connection herewith
on the First Amendment Effective Date or after such date.

 

(e) Binding Effect. This Amendment binds and is for the benefit of the
successors and permitted assigns of each party.

 

(f) Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE
LAWS OF THE STATE OF DELAWARE).

 

(g) Complete Agreement; Amendments. This Amendment and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements with respect to such subject matter. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Amendment and the Loan
Documents merge into this Amendment and the Loan Documents.

 

(h) Severability of Provisions. Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

 

(i) Counterparts. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Amendment.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

 

(j) Loan Documents. This Amendment and the documents related thereto shall
constitute Loan Documents.

 

[Balance of Page Intentionally Left Blank; Signature Pages Follow]

 

5

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment,
as of the date first above written.

 

  BORROWER:       AUGMEDIX, INC.         By: /s/ Ian Shakil   Name:  Ian Shakil
  Title: Chief Executive Officer

 

  LENDER:       TRINITY CAPITAL FUND III, L.P.         By: /s/ Gerald T. Harder
    Gerald T. Harder   Its: Managing Director

 

[Signature Page to First Amendment to Loan and Security Agreement]

 

 

 

 

EXHIBIT A

 

Promissory Note 1-1 - Revised Amortization Schedule

 

Period  Dates  Monthly Pmt   Principal   Interest   Principal Balance       
 13,727,767.30    (10,000,000.00)   (3,727,767.30)   (10,000,000.00)           
              0  6/1/2017   3,333.33    -    (3,333.33)   (10,000,000.00) 1 
7/1/2017   100,000.00    -    (100,000.00)   (10,000,000.00) 2  8/1/2017 
 100,000.00    -    (100,000.00)   (10,000,000.00) 3  9/1/2017   100,000.00  
 -    (100,000.00)   (10,000,000.00) 4  10/1/2017   100,000.00    -  
 (100,000.00)   (10,000,000.00) 5  11/1/2017   100,000.00    -    (100,000.00) 
 (10,000,000.00) 6  12/1/2017   100,000.00    -    (100,000.00) 
 (10,000,000.00) 7  1/1/2018   100,000.00    -    (100,000.00)   (10,000,000.00)
8  2/1/2018   100,000.00    -    (100,000.00)   (10,000,000.00) 9  3/1/2018 
 100,000.00    -    (100,000.00)   (10,000,000.00) 10  4/1/2018   100,000.00  
 -    (100,000.00)   (10,000,000.00) 11  5/1/2018   100,000.00    -  
 (100,000.00)   (10,000,000.00) 12  6/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 13  7/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 14  8/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 15  9/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 16  10/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 17  11/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 18  12/1/2018   100,000.00    -    (100,000.00) 
 (10,000,000.00) 19  1/1/2019   100,000.00    -    (100,000.00) 
 (10,000,000.00) 20  2/1/2019   100,000.00    -    (100,000.00) 
 (10,000,000.00) 21  3/1/2019   100,000.00    -    (100,000.00) 
 (10,000,000.00) 22  4/1/2019   387,481.13    (287,481.13)   (100,000.00) 
 (9,712,518.87) 23  5/1/2019   387,481.13    (290,355.94)   (97,125.19) 
 (9,422,162.92) 24  6/1/2019   387,481.13    (293,259.50)   (94,221.63) 
 (9,128,903.42) 25  7/1/2019   387,481.13    (296,192.10)   (91,289.03) 
 (8,832,711.32) 26  8/1/2019   387,481.13    (299,154.02)   (88,327.11) 
 (8,533,557.30) 27  9/1/2019   387,481.13    (302,145.56)   (85,335.57) 
 (8,231,411.75) 28  10/1/2019   387,481.13    (305,167.01)   (82,314.12) 
 (7,926,244.73) 29  11/1/2019   387,481.13    (308,218.68)   (79,262.45) 
 (7,618,026.05) 30  12/1/2019   387,481.13    (311,300.87)   (76,180.26) 
 (7,306,725.17) 31  1/1/2020   387,481.13    (314,413.88)   (73,067.25) 
 (6,992,311.29) 32  2/1/2020   387,481.13    (317,558.02)   (69,923.11) 
 (6,674,753.27) 33  3/1/2020   387,481.13    (320,733.60)   (66,747.53) 
 (6,354,019.68) 34  4/1/2020   387,481.13    (323,940.94)   (63,540.20) 
 (6,030,078.74) 35  5/1/2020   387,481.13    (327,180.34)   (60,300.79) 
 (5,702,898.39) 36  6/1/2020   387,481.13    (330,452.15)   (57,028.98) 
 (5,372,446.25) 37  7/1/2020   387,481.13    (333,756.67)   (53,724.46) 
 (5,038,689.58) 38  8/1/2020   387,481.13    (337,094.24)   (50,386.90) 
 (4,701,595.34) 39  9/1/2020   387,481.13    (340,465.18)   (47,015.95) 
 (4,361,130.16) 40  10/1/2020   387,481.13    (343,869.83)   (43,611.30) 
 (4,017,260.33) 41  11/1/2020   387,481.13    (347,308.53)   (40,172.60) 
 (3,669,951.80) 42  12/1/2020   387,481.13    (350,781.61)   (36,699.52) 
 (3,319,170.19) 43  1/1/2021   387,481.13    (354,289.43)   (33,191.70) 
 (2,964,880.76) 44  2/1/2021   387,481.13    (357,832.32)   (29,648.81) 
 (2,607,048.43) 45  3/1/2021   387,481.13    (361,410.65)   (26,070.48) 
 (2,245,637.79) 46  4/1/2021   387,481.13    (365,024.75)   (22,456.38) 
 (1,880,613.03) 47  5/1/2021   387,481.13    (368,675.00)   (18,806.13) 
 (1,511,938.03) 48  6/1/2021   387,481.13    (372,361.75)   (15,119.38) 
 (1,139,576.28) 49  7/1/2021   387,481.13    (376,085.37)   (11,395.76) 
 (763,490.91) 50  8/1/2021   387,481.13    (379,846.22)   (7,634.91) 
 (383,644.69) 51  9/1/2021   387,481.13    (383,644.69)   (3,836.45)   (0.00)

 

A-1

 

 

EXHIBIT B

 

Series B Warrant

 

B-1

 

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated
as of October 15, 2018 (the “Second Amendment Effective Date”), is made among
AUGMEDIX, INC., a Delaware corporation (“Borrower”) and Trinity Capital Fund
III, L.P. a Delaware limited partnership (“Lender”).

 

Borrower and Lender are parties to a Loan and Security Agreement dated as of May
31, 2017 as amended by that certain First Amendment to Loan and Security
Agreement dated May 31, 2018 (collectively, as amended, restated or modified
from time to time, the “Loan and Security Agreement”). Borrower has requested
that Lender agree to certain amendments to the Loan and Security Agreement.
Lender has agreed to such request, subject to the terms and conditions hereof.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Loan and Security Agreement. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

 

(b) Interpretation. The rules of interpretation set forth in Article 1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

 

SECTION 2 Amendments to the Loan and Security Agreement.

 

(a) The Loan and Security Agreement shall be amended as follows effective as of
the Second Amendment Effective Date:

 

(i) New Definition. The following definition is added to Article 1 of the Loan
and Security Agreement in its proper alphabetical order:

 

“Second Amendment” means that certain Second Amendment to Loan and Security
Agreement dated as of October 15, 2018, among Borrower and Lender.

 

“Second Amendment Effective Date” means October 15, 2018.

 

(ii) Amended Definitions. The following definitions are hereby amended as
follows:

 

“Loan Documents”. The definition of “Loan Documents” is hereby amended by
adding, “, the First Amendment, and the Second Amendment” immediately after the
phrase “this Agreement” therein.

 

1

 

 

(iii) Section 2.1(a). Section 2.1(a) is hereby amended and restated in its
entirety as follows:

 

“(a) Subject to the terms and conditions of this Agreement, Lender hereby agrees
to make term loans (“Term Loan”) in a principal amount not to exceed the Maximum
Credit Limit. The Obligations of Borrower under this Agreement shall at all
times be absolute and unconditional. Borrower acknowledges and agrees that any
obligation of Lender to make any Advances hereunder is strictly contingent upon
the satisfaction of the conditions set forth in Section 2.3. Borrower shall make
monthly payments of interest only in arrears at the Interest Rate of such Term
Loan on each payment date commencing with June 1, 2017 through and including
June 1, 2019 (“Interest Only Period”), and beginning on July 1, 2019 (the
“Amortization Period”), Borrower shall make equal monthly payments on each
subsequent Payment Date in an amount determined through a calculation fully
amortizing the outstanding principal balance due under such Term Loan at the
Interest Rate for the remaining term of such loan. Following the completion of
the Interest Only Period, the remaining balance of the Term Loan represented by
Promissory Note 1-1 dated May 31, 2017 (“Note 1-1”) shall be paid over a thirty
(30) month Amortization Period. For clarity, the Amortization Schedule for Note
1-1 as of the Second Amendment Effective Date is reflected in Exhibit A attached
to this Second Amendment. Lender may update the amortization schedules from time
to time in accordance with the terms of the Loan Documents (as further amended
from time to time, the “Amortization Schedules”). In the event of any
inconsistency between the Amortization Schedule and the terms of the Loan
Documents (including this Section 2.1), the terms of the Loan Documents shall
prevail. Borrower shall continue to comply with all of the terms and provisions
hereof until all of the Obligations are paid and satisfied in full. After the
Loan Termination Date, no further loans shall be available from Lender.”

 

(b) References Within Loan and Security Agreement. Each reference in the Loan
and Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

 

SECTION 3 Conditions of Effectiveness. The effectiveness of this Amendment shall
be subject to the satisfaction by Lender in Lender’s sole discretion, that
Borrower has completed each of the following conditions precedent:

 

(a) Equity Event. The Borrower shall receive net cash proceeds (not subject to
any clawback, redemption, escrow or similar contractual restriction), before
transaction costs and fees, from the issuance and sale by Borrower of its
preferred or common stock or Subordinated Debt, in each case, to investors and
on terms and conditions acceptable to Lender, in the minimum amounts of at least

$11,950,000 in aggregate, after August 1, 2018 and prior to the Second Amendment
Effective Date.

 

(b) Warrant. It is agreed and acknowledged that as of the Second Amendment
Effective Date, the existing Series B Warrant, executed on May 31, 2018 (the
“Series B Warrant”), is terminated in full and rendered null and void, and all
past, current or future obligations of the Parties under the Series B Warrant
shall be extinguished. Lender will return the original of the Series B Warrant
for cancellation by the Borrower as of Second Amendment Effective Date. Borrower
and Lender shall have entered into that certain Warrant of even date herewith in
the form attached hereto as Exhibit B (the “New Series A-1 Warrant”).

 

(c) Fees and Expenses. The Borrower shall have paid all Documentation and
Funding Fees and all other fees, costs and expenses, if any, due and payable as
of the Second Amendment Effective Date under the Loan and Security Agreement.

 

(d) Representations and Warranties; No Default. On the Second Amendment
Effective Date, after giving effect to the amendment of the Loan and Security
Agreement contemplated hereby:

 

(i) The execution, delivery and performance of this Amendment: (i) are not in
contravention of any material agreement or indenture which Borrower is bound, or
by which its properties may be affected; (ii) do not require any shareholder
approval, or any approval or consent of, or filing or registration with, any
governmental body or regulatory authority or agency, or any approval or consent
of any trustees or holders of any of its indebtedness or obligations, unless
such approval or consent has been obtained; and (iii) do not contravene any law,
regulation, judgment or decree applicable to it or its certificate of
incorporation or bylaws;

 

2

 

 

(ii) The representations and warranties contained in Section 4 shall be true and
correct on and as of the Second Amendment Effective Date as though made on and
as of such date; and

 

(iii) There exist no Events of Default.

 

SECTION 4 Representations and Warranties. To induce Lender to enter into this
Amendment, Borrower hereby confirms, as of the date hereof, (a) that the
representations and warranties made by it in Article 4 of the Loan and Security
Agreement and in the other Loan Documents are true and correct in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; (b) that there has not been and
there does not exist a Material Adverse Change; and (c) that the information
included in the perfection certificate delivered to Lender on the Effective Date
remains true and correct in all material respects. For the purposes of this
Section 4, (i) each reference in Articles 3 and 4 of the Loan and Security
Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or
words of like import in such Section, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment, and (ii) any
representations and warranties which relate solely to an earlier date shall not
be deemed confirmed and restated as of the date hereof (provided that such
representations and warranties shall be true, correct and complete as of such
earlier date).

 

SECTION 5 Miscellaneous.

 

(a) Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects. Lender’s execution and
delivery of, or acceptance of, this Amendment shall not be deemed to create a
course of dealing or otherwise create any express or implied duty by any of them
to provide any other or further amendments, consents or waivers in the future.
The Borrower hereby reaffirms the grant of security under Article 3 of the Loan
and Security Agreement and hereby reaffirms that such grant of security in the
Collateral secures all Obligations under the Loan and Security Agreement.

 

(b) Release. In consideration of the agreements of Lender contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower, on behalf of itself and its successors,
assigns, and other legal representatives, hereby fully, absolutely,
unconditionally and irrevocably releases, remises and forever discharges Lender,
and its successors and assigns, and its present and former shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives (Lender and all such
other persons being hereinafter referred to collectively as the “Releasees” and
individually as a “Releasee”), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
of every name and nature, both at law and in equity, which Borrower, or any of
its successors, assigns, or other legal representatives may now own, hold, have
or claim to have against the Releasees or any of them for, upon, or by reason of
any circumstance, action, cause or thing whatsoever which arises at any time on
or prior to the day and date of this Amendment, for or on account of, or in
relation to, or in any way in connection with the Loan Agreement, or any of the
other Loan Documents or transactions thereunder or related thereto. Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. Borrower
agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or which may hereafter be discovered shall affect in any manner
the final, absolute and unconditional nature of the release set forth above.

 

3

 

 

(c) No Reliance. The Borrower hereby acknowledges and confirms to Lender that
the Borrower is executing this Amendment on the basis of its own investigation
and for its own reasons without reliance upon any agreement, representation,
understanding or communication by or on behalf of any other Person.

 

(d) Costs and Expenses. The Borrower agrees to pay to Lender within ten (10)
days of its receipt of an invoice (or ten (10) days following the Second
Amendment Effective Date to the extent invoiced on or prior to the Second
Amendment Effective Date), the reasonable out-of-pocket costs and expenses of
Lender, and the reasonable fees and disbursements of counsel to Lender party
hereto, in connection with the negotiation, preparation, execution and delivery
of this Amendment and any other documents to be delivered in connection herewith
on the Second Amendment Effective Date or after such date.

 

(e) Binding Effect. This Amendment binds and is for the benefit of the
successors and permitted assigns of each party.

 

(f) Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE
LAWS OF THE STATE OF DELAWARE).

 

(g) Complete Agreement; Amendments. This Amendment and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements with respect to such subject matter. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Amendment and the Loan
Documents merge into this Amendment and the Loan Documents.

 

(h) Severability of Provisions. Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

 

(i) Counterparts. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Amendment.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

 

(j) Loan Documents. This Amendment and the documents related thereto shall
constitute Loan Documents.

 

[Balance of Page Intentionally Left Blank; Signature Pages Follow]

 

4

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Second Amendment,
as of the date first above written.

 

  BORROWER:       AUGMEDIX, INC.       By: /s/ Manny Krakaris   Name:  Manny
Krakaris   Title: Chief Executive Officer

 

  LENDER:       TRINITY CAPITAL FUND III, L.P.         By: /s/ Gerald T. Harder
    Gerald T. Harder   Its: Operating Partner

 

[Signature Page to Second Amendment to Loan and Security Agreement]

 

 

 

 

EXHIBIT A

 

Promissory Note 1-1 - Revised Amortization Schedule

 

Period  Dates  Monthly Pmt   Principal   Interest   Principal Balance       
$14,027,767.30   $(10,000,000.00)  $(4,027,767.30)  $(10,000,000.00)           
              0  6/1/2017  $3,333.33   $0.00   $(3,333.33)  $(10,000,000.00) 1 
7/1/2017  $100,000.00   $0.00   $(100,000.00)  $(10,000,000.00) 2  8/1/2017 
$100,000.00   $0.00   $(100,000.00)  $(10,000,000.00) 3  9/1/2017  $100,000.00  
$0.00   $(100,000.00)  $(10,000,000.00) 4  10/1/2017  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 5  11/1/2017  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 6  12/1/2017  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 7  1/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 8  2/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 9  3/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 10  4/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 11  5/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 12  6/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 13  7/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 14  8/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 15  9/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 16  10/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 17  11/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 18  12/1/2018  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 19  1/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 20  2/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 21  3/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 22  4/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 23  5/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 24  6/1/2019  $100,000.00   $0.00  
$(100,000.00)  $(10,000,000.00) 25  7/1/2019  $387,481.13   $(287,481.13) 
$(100,000.00)  $(9,712,518.87) 26  8/1/2019  $387,481.13   $(290,355.94) 
$(97,125.19)  $(9,422,162.92) 27  9/1/2019  $387,481.13   $(293,259.50) 
$(94,221.63)  $(9,128,903.42) 28  10/1/2019  $387,481.13   $(296,192.10) 
$(91,289.03)  $(8,832,711.32) 29  11/1/2019  $387,481.13   $(299,154.02) 
$(88,327.11)  $(8,533,557.30) 30  12/1/2019  $387,481.13   $(302,145.56) 
$(85,335.57)  $(8,231,411.75) 31  1/1/2020  $387,481.13   $(305,167.01) 
$(82,314.12)  $(7,926,244.73) 32  2/1/2020  $387,481.13   $(308,218.68) 
$(79,262.45)  $(7,618,026.05) 33  3/1/2020  $387,481.13   $(311,300.87) 
$(76,180.26)  $(7,306,725.17) 34  4/1/2020  $387,481.13   $(314,413.88) 
$(73,067.25)  $(6,992,311.29) 35  5/1/2020  $387,481.13   $(317,558.02) 
$(69,923.11)  $(6,674,753.27) 36  6/1/2020  $387,481.13   $(320,733.60) 
$(66,747.53)  $(6,354,019.68) 37  7/1/2020  $387,481.13   $(323,940.94) 
$(63,540.20)  $(6,030,078.74) 38  8/1/2020  $387,481.13   $(327,180.34) 
$(60,300.79)  $(5,702,898.39) 39  9/1/2020  $387,481.13   $(330,452.15) 
$(57,028.98)  $(5,372,446.25) 40  10/1/2020  $387,481.13   $(333,756.67) 
$(53,724.46)  $(5,038,689.58) 41  11/1/2020  $387,481.13   $(337,094.24) 
$(50,386.90)  $(4,701,595.34) 42  12/1/2020  $387,481.13   $(340,465.18) 
$(47,015.95)  $(4,361,130.16) 43  1/1/2021  $387,481.13   $(343,869.83) 
$(43,611.30)  $(4,017,260.33) 44  2/1/2021  $387,481.13   $(347,308.53) 
$(40,172.60)  $(3,669,951.80) 45  3/1/2021  $387,481.13   $(350,781.61) 
$(36,699.52)  $(3,319,170.19) 46  4/1/2021  $387,481.13   $(354,289.43) 
$(33,191.70)  $(2,964,880.76) 47  5/1/2021  $387,481.13   $(357,832.32) 
$(29,648.81)  $(2,607,048.43) 48  6/1/2021  $387,481.13   $(361,410.65) 
$(26,070.48)  $(2,245,637.79) 49  7/1/2021  $387,481.13   $(365,024.75) 
$(22,456.38)  $(1,880,613.03) 50  8/1/2021  $387,481.13   $(368,675.00) 
$(18,806.13)  $(1,511,938.03) 51  9/1/2021  $387,481.13   $(372,361.75) 
$(15,119.38)  $(1,139,576.28) 52  10/1/2021  $387,481.13   $(376,085.37) 
$(11,395.76)  $(763,490.91) 53  11/1/2021  $387,481.13   $(379,846.22) 
$(7,634.91)  $(383,644.69) 54  12/1/2021  $387,481.13   $(383,644.69) 
$(3,836.45)  $(0.00)

 

A-1

 

 

EXHIBIT B

 

New Series A-1 Warrant

 

B-1

 

 

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of August 29, 2019 (the “Third Amendment Effective Date”), is made among
AUGMEDIX, INC., a Delaware corporation (“Borrower”) and TRINITY CAPITAL FUND
III, L.P. a Delaware limited partnership (“Lender”).

 

Borrower and Lender are parties to a Loan and Security Agreement dated as of May
31, 2017 as amended by that certain First Amendment to Loan and Security
Agreement dated May 31, 2018, and Second Amendment to Loan and Security
Agreement dated October 15, 2018 (collectively, as amended, restated or modified
from time to time, the “Loan and Security Agreement”). Borrower has requested
that Lender agree to certain amendments to the Loan and Security Agreement.
Lender has agreed to such request, subject to the terms and conditions hereof.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Loan and Security Agreement. All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

 

(b) Interpretation. The rules of interpretation set forth in Article 1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

 

SECTION 2 Amendments to the Loan and Security Agreement.

 

(a) The Loan and Security Agreement shall be amended as follows effective as of
the Third Amendment Effective Date:

 

(i) New Definition. The following definition is added to Article 1 of the Loan
and Security Agreement in its proper alphabetical order:

 

“Third Amendment” means that certain Third Amendment to Loan and Security
Agreement dated as of August 29, 2019, among Borrower and Lender.

 

“Third Amendment Effective Date” means August 29, 2019.

 

(ii) Amended Definitions. The following definitions are hereby amended as
follows:

 

“Loan Documents”. The definition of “Loan Documents” is hereby amended by
adding, “, the First Amendment, the Second Amendment, and the Third Amendment”
immediately after the phrase “this Agreement” therein.

 

“Maturity Date”. The definition of “Maturity Date” is hereby amended to April 1,
2023.

 

1

 

 

(iii) Section 2.1(a). Section 2.1(a) is hereby amended and restated in its
entirety as follows:

 

“(a) Subject to the terms and conditions of this Agreement, Lender hereby agrees
to make term loans (“Term Loan”) in a principal amount not to exceed the Maximum
Credit Limit. The Obligations of Borrower under this Agreement shall at all
times be absolute and unconditional. Borrower acknowledges and agrees that any
obligation of Lender to make any Advances hereunder is strictly contingent upon
the satisfaction of the conditions set forth in Section 2.3. As of the Third
Amendment Effective Date, Borrower shall make monthly payments in the amounts
set forth in the Amortization Schedule for Note 1-1 attached to the Third
Amendment as Exhibit A, which Lender may update from time to time in accordance
with the terms of the Loan Documents (as further amended from time to time, the
“Amortization Schedules”). In the event of any inconsistency between the
Amortization Schedule and the terms of the Loan Documents (including this
Section 2.1), the terms of the Loan Documents shall prevail. Borrower shall
continue to comply with all of the terms and provisions hereof until all of the
Obligations are paid and satisfied in full. After the Loan Termination Date, no
further loans shall be available from Lender.”

 

(b) References Within Loan and Security Agreement. Each reference in the Loan
and Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

 

SECTION 3 Conditions of Effectiveness. The effectiveness of this Amendment shall
be subject to the satisfaction by Lender in Lender’s sole discretion, that
Borrower has completed each of the following conditions precedent:

 

(a) Warrant. It is agreed and acknowledged that as of the Third Amendment
Effective Date, that certain Warrant to Purchase Stock, executed on October 15,
2018 (the “New Series A-1 Warrant”), is terminated in full and rendered null and
void, and all past, current or future obligations of the Parties under the New
Series A-1 Warrant shall be extinguished. Lender will return the original of the
New Series A-1 Warrant for cancellation by the Borrower as of Third Amendment
Effective Date. Borrower and Lender shall have entered into that certain Warrant
to Purchase Stock of even date herewith in the form attached hereto as Exhibit B
(the “New Series B Warrant”).

 

(b) Fees and Expenses. The Borrower shall have paid all Documentation and
Funding Fees and all other fees, costs and expenses, if any, due and payable as
of the Third Amendment Effective Date under the Loan and Security Agreement.

 

(c) Representations and Warranties; No Default. On the Third Amendment Effective
Date, after giving effect to the amendment of the Loan and Security Agreement
contemplated hereby:

 

(i) The execution, delivery and performance of this Amendment (i) are not in
contravention of any material agreement or indenture which Borrower is bound, or
by which its properties may be affected, (ii) do not require any shareholder
approval, or any approval or consent of, or filing or registration with, any
governmental body or regulatory authority or agency, or any approval or consent
of any trustees or holders of any of its indebtedness or obligations, unless
such approval or consent has been obtained; and (iii) do not contravene any law,
regulation, judgment or decree applicable to it or its certificate of
incorporation or bylaws;

 

(ii) The representations and warranties contained in Section 4 shall be true and
correct in all material respects on and as of the Third Amendment Effective Date
as though made on and as of such date; provided, however, that any
representations and warranties which expressly relate to an earlier date or time
period shall be true and correct as of such date or with respect to such time
period; and

 

(iii) There exist no Events of Default.

 

2

 

 

SECTION 4 Representations and Warranties. To induce Lender to enter into this
Amendment, Borrower hereby confirms, as of the date hereof, (a) that the
representations and warranties made by it in Article 4 of the Loan and Security
Agreement and in the other Loan Documents are true and correct in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; (b) that there has not been and
there does not exist a Material Adverse Change; and (c) that the information
included in the perfection certificate delivered to Lender on the Effective Date
remains true and correct in all material respects, subject to any written
updates provided to Lender since the Effective Date. For the purposes of this
Section 4, (i) each reference in Articles 3 and 4 of the Loan and Security
Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or
words of like import in such Section, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment, and (ii) any
representations and warranties which relate solely to an earlier date or time
period shall not be deemed confirmed and restated as of the date hereof
(provided that such representations and warranties shall be true, correct and
complete as of such earlier date or time period).

 

SECTION 5 Miscellaneous.

 

(a) Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects. Lender’s execution and
delivery of, or acceptance of, this Amendment shall not be deemed to create a
course of dealing or otherwise create any express or implied duty by any of them
to provide any other or further amendments, consents or waivers in the future.
The Borrower hereby reaffirms the grant of security under Article 3 of the Loan
and Security Agreement and hereby reaffirms that such grant of security in the
Collateral secures all Obligations under the Loan and Security Agreement.

 

(b) Release. In consideration of the agreements of Lender contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower, on behalf of itself and its successors,
assigns, and other legal representatives, hereby fully, absolutely,
unconditionally and irrevocably releases, remises and forever discharges Lender,
and its successors and assigns, and its present and former shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives (Lender and all such
other persons being hereinafter referred to collectively as the “Releasees” and
individually as a “Releasee”), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
of every name and nature, both at law and in equity, which Borrower, or any of
its successors, assigns, or other legal representatives may now own, hold, have
or claim to have against the Releasees or any of them for, upon, or by reason of
any circumstance, action, cause or thing whatsoever which arises at any time on
or prior to the day and date of this Amendment, for or on account of, or in
relation to, or in any way in connection with the Loan Agreement, or any of the
other Loan Documents or transactions thereunder or related thereto. Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. Borrower
agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or which may hereafter be discovered shall affect in any manner
the final, absolute and unconditional nature of the release set forth above.

 

(c) No Reliance. The Borrower hereby acknowledges and confirms to Lender that
the Borrower is executing this Amendment on the basis of its own investigation
and for its own reasons without reliance upon any agreement, representation,
understanding or communication by or on behalf of any other Person.

 

3

 

 

(d) Costs and Expenses. The Borrower agrees to pay to Lender within ten (10)
days of its receipt of an invoice (or ten (10) days following the Third
Amendment Effective Date to the extent invoiced on or prior to the Third
Amendment Effective Date), the reasonable out-of-pocket costs and expenses of
Lender, and the reasonable fees and disbursements of counsel to Lender party
hereto, in connection with the negotiation, preparation, execution and delivery
of this Amendment and any other documents to be delivered in connection herewith
on the Third Amendment Effective Date or after such date.

 

(e) Binding Effect. This Amendment binds and is for the benefit of the
successors and permitted assigns of each party.

 

(f) Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE
LAWS OF THE STATE OF DELAWARE).

 

(g) Complete Agreement; Amendments. This Amendment and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements with respect to such subject matter. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Amendment and the Loan
Documents merge into this Amendment and the Loan Documents.

 

(h) Severability of Provisions. Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

 

(i) Counterparts. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Amendment.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile, portable document format (.pdf) or other electronic transmission will
be as effective as delivery of a manually executed counterpart hereof.

 

(j) Loan Documents. This Amendment and the documents related thereto shall
constitute Loan Documents.

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE ON FOLLOWING PAGE]

 

4

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Third Amendment,
as of the date first above written.

 

  BORROWER:       AUGMEDIX, INC.         By:     Name:      Title: Chief
Executive Officer         LENDER:       TRINITY CAPITAL FUND III, L.P.

        By:     Gerald T. Harder   Its: Operating Partner

 

[SIGNATURE PAGE TO THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT]

 

 

 

 

EXHIBIT A

 

PROMISSORY NOTE 1-1 - REVISED AMORTIZATION SCHEDULE

 

Period  Dates  Monthly Payments   Total Principal   Total Interest   Loan
Principal Balance                       0  5/31/2017   (10,000,000.00)      
      (10,000,000.00) 1  6/1/2017   3,333.33    0.00    (3,333.33) 
 (10,000,000.00) 2  7/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 3  8/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 4  9/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 5  10/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 6  11/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 7  12/1/2017   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 8  1/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 9  2/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 10  3/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 11  4/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 12  5/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 13  6/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 14  7/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 15  8/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 16  9/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 17  10/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 18  11/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 19  12/1/2018   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 20  1/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 21  2/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 22  3/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 23  4/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 24  5/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 25  6/1/2019   100,000.00    0.00    (100,000.00) 
 (10,000,000.00) 26  7/1/2019   387,481.13    (287,481.13)   (100,000.00) 
 (9,712,518.87) 27  8/1/2019   387,481.13    (290,355.94)   (97,125.19) 
 (9,422,162.92) 28  9/1/2019   94,221.63    0.00    (94,221.63)   (9,422,162.92)
29  10/1/2019   94,221.63    0.00    (94,221.63)   (9,422,162.92) 30  11/1/2019 
 94,221.63    0.00    (94,221.63)   (9,422,162.92) 31  12/1/2019   94,221.63  
 0.00    (94,221.63)   (9,422,162.92) 32  1/1/2020   94,221.63    0.00  
 (94,221.63)   (9,422,162.92) 33  2/1/2020   94,221.63    0.00    (94,221.63) 
 (9,422,162.92) 34  3/1/2020   94,221.63    0.00    (94,221.63)   (9,422,162.92)

 

A-1

 

 

35  4/1/2020   94,221.63    0.00    (94,221.63)   (9,422,162.92) 36  5/1/2020 
 94,221.63    0.00    (94,221.63)   (9,422,162.92) 37  6/1/2020   94,221.63  
 0.00    (94,221.63)   (9,422,162.92) 38  7/1/2020   94,221.63    0.00  
 (94,221.63)   (9,422,162.92) 39  8/1/2020   94,221.63    0.00    (94,221.63) 
 (9,422,162.91) 40  9/1/2020   94,221.63    0.00    (94,221.63)   (9,422,162.91)
41  10/1/2020   94,221.63    0.00    (94,221.63)   (9,422,162.91) 42  11/1/2020 
 94,221.63    0.00    (94,221.63)   (9,422,162.91) 43  12/1/2020   94,221.63  
 0.00    (94,221.63)   (9,422,162.91) 44  1/1/2021   387,481.13    293,259.50  
 (94,221.63)   (9,128,903.41) 45  2/1/2021   387,481.13    296,192.10  
 (91,289.03)   (8,832,711.31) 46  3/1/2021   387,481.13    299,154.02  
 (88,327.11)   (8,533,557.30) 47  4/1/2021   387,481.13    302,145.56  
 (85,335.57)   (8,231,411.74) 48  5/1/2021   387,481.13    305,167.01  
 (82,314.12)   (7,926,244.73) 49  6/1/2021   387,481.13    308,218.68  
 (79,262.45)   (7,618,026.05) 50  7/1/2021   387,481.13    311,300.87  
 (76,180.26)   (7,306,725.18) 51  8/1/2021   387,481.13    314,413.88  
 (73,067.25)   (6,992,311.30) 52  9/1/2021   387,481.13    317,558.02  
 (69,923.11)   (6,674,753.28) 53  10/1/2021   387,481.13    320,733.60  
 (66,747.53)   (6,354,019.68) 54  11/1/2021   387,481.13    323,940.93  
 (63,540.20)   (6,030,078.75) 55  12/1/2021   387,481.13    327,180.34  
 (60,300.79)   (5,702,898.41) 56  1/1/2022   387,481.13    330,452.15  
 (57,028.98)   (5,372,446.26) 57  2/1/2022   387,481.13    333,756.67  
 (53,724.46)   (5,038,689.59) 58  3/1/2022   387,481.13    337,094.23  
 (50,386.90)   (4,701,595.36) 59  4/1/2022   387,481.13    340,465.18  
 (47,015.95)   (4,361,130.18) 60  5/1/2022   387,481.13    343,869.83  
 (43,611.30)   (4,017,260.36) 61  6/1/2022   387,481.13    347,308.53  
 (40,172.60)   (3,669,951.83) 62  7/1/2022   387,481.13    350,781.61  
 (36,699.52)   (3,319,170.22) 63  8/1/2022   387,481.13    354,289.43  
 (33,191.70)   (2,964,880.79) 64  9/1/2022   387,481.13    357,832.32  
 (29,648.81)   (2,607,048.47) 65  10/1/2022   387,481.13    361,410.65  
 (26,070.48)   (2,245,637.82) 66  11/1/2022   387,481.13    365,024.75  
 (22,456.38)   (1,880,613.07) 67  12/1/2022   387,481.13    368,675.00  
 (18,806.13)   (1,511,938.07) 68  1/1/2023   387,481.13    372,361.75  
 (15,119.38)   (1,139,576.32) 69  2/1/2023   387,481.13    376,085.37  
 (11,395.76)   (763,490.96) 70  3/1/2023   387,481.13    379,846.22  
 (7,634.91)   (383,644.73) 71  4/1/2023   1,037,481.18    383,644.73  
 (3,836.45)   (0.00)

 

A-2

 

 

EXHIBIT B

 

NEW SERIES B WARRANT

 

 

B-1