Exhibit 10.2

LOAN AND SECURITY AGREEMENT

Dated as of February 8, 2017

between

IDENTIV, INC.,

a Delaware corporation,

as “Borrower”,

and

VENTURE LENDING & LEASING VII, INC.,

a Maryland corporation,

and

VENTURE LENDING & LEASING VIII, INC.,

a Maryland corporation,

each, as “Lender”

--------------------------------------------------------------------------------

LOAN AND SECURITY AGREEMENT

Borrower and each of Venture Lending & Leasing VII, Inc. (“VLL7”) and Venture
Lending & Leasing VIII, Inc. (“VLL8”) have entered or anticipate entering into
one or more transactions pursuant to which each Lender severally and not jointly
agrees to make available to Borrower a loan facility governed by the terms and
conditions set forth in this document and one or more Supplements executed by
Borrower and Lender which incorporate this document by reference. Each
Supplement constitutes a supplement to and forms part of this document, and will
be read and construed as one with this document, so that this document and the
Supplement constitute a single agreement between the parties (collectively
referred to as this “Agreement”).

Accordingly, the parties agree as follows:

 

ARTICLE 1 - INTERPRETATION

1.1 Definitions. The terms defined in Article 10 and in the Supplement will have
the meanings therein specified for purposes of this Agreement.

1.2 Inconsistency. In the event of any inconsistency between the provisions of
any Supplement and this document, the provisions of the Supplement will be
controlling for the purpose of all relevant transactions.

1.3 Several Obligations of Lender. The parties are entering into this single
Agreement for convenience, and this Agreement is and shall be interpreted for
all purposes as separate and distinct agreements between Borrower and VLL7, on
the one hand, and Borrower and VLL8, on the other hand, and nothing in this
Agreement shall be deemed a joint venture, partnership or other association
between VLL7 and VLL8. Each reference in this Agreement to “Lender” shall mean
and refer to each of VLL7 and VLL8, singly and independent of one another.
Without limiting the generality of the foregoing, the Commitment, covenants and
other obligations of “Lender” under this Agreement are several and not joint
obligations of VLL7 and VLL8, and all rights and remedies of “Lender” under this
Agreement may be exercised by VLL7 and/or VLL8 independently of one another.

ARTICLE 2 - THE COMMITMENT AND LOANS

2.1 The Commitment. Subject to the terms and conditions of this Agreement,
Lender agrees to make term loans to Borrower from time to time from the Closing
Date and to and including the Termination Date in an aggregate principal amount
not exceeding the Commitment. The Commitment is not a revolving credit
commitment, and Borrower does not have the right to repay and reborrow
hereunder. Each Loan requested by Borrower to be made on a single Business

Day shall be for a minimum principal amount set forth in the Supplement, except
to the extent the remaining Commitment is a lesser amount.

2.2 Notes Evidencing Loans; Repayment. Each Loan shall be evidenced by a
separate Note payable to the order of Lender, in the total principal amount of
the Loan. Principal and interest of each Loan shall be payable at the times and
in the manner set forth in the Note and regularly scheduled payments thereof
shall be effected by automatic debit of the appropriate funds from Borrower’s
Primary Operating Account as specified in the Supplement hereto. Repayment of
the Loans and payment of all other amounts owed to Lender will be paid by
Borrower in the currency in which the same has been provided (i.e., United
States Dollars).

2.3 Procedures for Borrowing.

(a) At least five (5) Business Days’ prior to a proposed Borrowing Date (or such
lesser period of time as may be agreed upon by Lender in its sole discretion),
Lender shall have received from Borrower a written request for a borrowing
hereunder (a “Borrowing Request”). Each Borrowing Request shall be in
substantially the form of Exhibit “B” to the Supplement, shall be executed by a
responsible executive or financial officer of Borrower, and shall state how much
is requested, and shall be accompanied by such other information and
documentation as Lender may reasonably request, including the original executed
Note(s) for the Loan(s) covered by the Borrowing Request.

(b) No later than 1:00 p.m. Pacific Standard Time on the Borrowing Date, if
Borrower has satisfied the conditions precedent in Article 4 by 9:00 a.m.
Pacific Standard Time on such Borrowing Date, Lender shall make the Loan
available to Borrower in immediately available funds.

 

 

1

--------------------------------------------------------------------------------

2.4 Interest. Except as otherwise specified in the applicable Note and/or
Supplement, Basic Interest on the outstanding principal balance of each Loan
shall accrue daily at the Designated Rate from the Borrowing Date. If the
outstanding principal balance of such Loan is not paid at maturity, interest
shall accrue at the Default Rate until paid in full, as further set forth
herein.

2.5 Intentionally Omitted.

2.6 Interest Rate Calculation. Basic Interest, along with charges and fees under
this Agreement and any Loan Document, shall be calculated for actual days
elapsed on the basis of a 360-day year, which results in higher interest, charge
or fee payments than if a 365-day year were used. In no event shall Borrower be
obligated to pay Lender interest, charges or fees at a rate in excess of the
highest rate permitted by applicable law from time to time in effect.

2.7 Default Interest. Any unpaid payments in respect of the Obligations shall
bear interest from their respective maturities, whether scheduled or
accelerated, at the Default Rate, compounded monthly (instead of the Designated
Rate). Borrower shall pay such interest on demand.

2.8 Late Charges. If Borrower is late in making any payment in respect of the
Obligations by more than five (5) days, then Borrower agrees to pay a late
charge of five percent (5%) of the payment due, but not less than fifty dollars
($50.00) for any one such delinquent payment. This late charge may be charged by
Lender for the purpose of defraying the expenses incidental to the handling of
such delinquent amounts. Borrower acknowledges that such late charge represents
a reasonable sum considering all of the circumstances existing on the date of
this Agreement and represents a fair and reasonable estimate of the costs that
will be sustained by Lender due to the failure of Borrower to make timely
payments. Borrower further agrees that proof of actual damages would be costly
and inconvenient. Such late charge shall be paid without prejudice to the right
of Lender to collect any other amounts provided to be paid or to declare a
default under this Agreement or any of the other Loan Documents or from
exercising any other rights and remedies of Lender.

2.9 Lender’s Records. Principal, Basic Interest and all other sums owed under
any Loan Document shall be evidenced by entries in records maintained by Lender
for such purpose. Each payment on and any other credits with respect to
principal, Basic Interest

and all other sums outstanding under any Loan Document shall be evidenced by
entries in such records. Absent manifest error, Lender’s records shall be
conclusive evidence thereof.

2.10 Grant of Security Interests; Filing of Financing Statements.

(a) To secure the timely payment and performance of all of Borrower’s
Obligations, Borrower hereby grants to Lender continuing security interests in
all of the Collateral. In connection with the foregoing, Borrower authorizes
Lender to prepare and file any financing statements describing the Collateral
without otherwise obtaining Borrower’s signature or consent with respect to the
filing of such financing statements.

(b) In furtherance of Borrower’s grant of the security interests in the
Collateral pursuant to Section 2.10(a) above, Borrower hereby pledges and grants
to Lender a security interest in all the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing,
as security for the performance of the Obligations. On the Closing Date or at
any time thereafter following Lender’s request, the certificate or certificates
for the Shares will be delivered to Lender, accompanied by an instrument of
assignment duly executed in blank by Borrower, unless such Shares have not been
certificated. To the extent required by the terms and conditions governing the
Shares, Borrower shall cause the books of each entity whose Shares are part of
the Collateral and any transfer agent to reflect the pledge of the Shares. Upon
the occurrence and during the continuance of an Event of Default hereunder,
Lender may effect the transfer of any securities included in the Collateral
(including but not limited to the Shares) into the name of Lender and cause new
certificates representing such securities to be issued in the name of Lender or
its transferee(s). Borrower will execute and deliver such documents, and take or
cause to be taken such actions, as Lender may reasonably request to perfect or
continue the perfection of Lender’s security interest in the Shares. Unless an
Event of Default shall have occurred and be continuing, Borrower shall be
entitled to exercise any voting rights with respect to the Shares and to give
consents, waivers and ratifications in respect thereof, provided that no vote
shall be cast or consent, waiver or ratification given or action taken which
would be inconsistent with any of the terms of this Agreement or which would

 

 

2

--------------------------------------------------------------------------------

constitute or create any violation of any of such terms. All such rights to vote
and give consents, waivers and ratifications shall terminate upon the occurrence
and continuance of an Event of Default.

(c) Borrower is and shall remain absolutely and unconditionally liable for the
performance of its Obligations, including, without limitation, any deficiency by
reason of the failure of the Collateral to satisfy all amounts due Lender under
any of the Loan Documents.

(d) All Collateral pledged by Borrower under this Agreement and any Supplement
shall secure the timely payment and performance of all Obligations. Except as
expressly provided in this Agreement, no Collateral pledged under this Agreement
or any Supplement shall be released until such time as all Obligations have been
satisfied and paid in full.

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that, except as set forth in the Supplement or
the Schedule of Exceptions hereto, if any, as of the Closing Date and each
Borrowing Date:

3.1 Due Organization. Borrower is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to conduct business and is in good standing
in each other jurisdiction in which its business is conducted or its properties
are located, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.

3.2 Authorization, Validity and Enforceability. The execution, delivery and
performance of all Loan Documents executed by Borrower are within Borrower’s
powers, have been duly authorized, and are not in conflict with Borrower’s
Certificate of Incorporation or Bylaws, or the terms of any charter or other
organizational document of Borrower, as amended from time to time; and all such
Loan Documents constitute valid and binding obligations of Borrower, enforceable
in accordance with their terms (except as may be limited by bankruptcy,
insolvency and similar laws affecting the enforcement of creditors’ rights in
general, and subject to general principles of equity).

3.3 Compliance with Applicable Laws. Borrower has complied with all licensing,
permit and fictitious name requirements necessary to lawfully conduct the
business in which it is engaged, and to any sales, leases or the furnishing of
services by Borrower, including without limitation those requiring consumer or
other disclosures, the noncompliance with which would have a Material Adverse
Effect.

3.4 No Conflict. The execution, delivery, and performance by Borrower of all
Loan Documents are not in conflict with any law, rule, regulation, order or
directive, or any indenture, agreement, or undertaking to which Borrower is a
party or by which Borrower may be bound or affected, unless such conflict would
not reasonably be expected to have a Material Adverse Effect. Without limiting
the generality of the foregoing, the issuance of the Warrants and the grant of
registration rights in connection therewith do not violate any agreement or
instrument by which Borrower is bound or require the consent of any holders of
Borrower’s securities other than consents which have been obtained prior to the
Closing Date.

3.5 No Litigation, Claims or Proceedings. Except as otherwise disclosed in
writing by the Borrower prior to the Closing Date, there is no litigation, tax
claim, proceeding or dispute pending, or, to the knowledge of Borrower,
threatened against or affecting Borrower, its property or the conduct of its
business.

3.6 Correctness of Financial Statements. Borrower’s financial statements which
have been delivered to Lender fairly and accurately reflect Borrower’s financial
condition in accordance with GAAP as of the latest date of such financial
statements; and, since that date there has been no Material Adverse Change.

3.7 Subsidiaries. Except for the Scheduled Subsidiaries, Borrower is not a
majority owner of or in a control relationship with any other business entity.
Except for the Direct Subsidiaries, Borrower is not a majority owner of any
other business entity.

3.8 Environmental Matters. To its knowledge after reasonable inquiry, Borrower
has concluded that Borrower is in compliance with Environmental Laws, except to
the extent a failure to be in such compliance would not reasonably be expected
to have a Material Adverse Effect.

3.9 No Event of Default. No Default or Event of Default has occurred and is
continuing.

 

 

3

--------------------------------------------------------------------------------

3.10 Full Disclosure. None of the representations or warranties made by Borrower
in the Loan Documents as of the date such representations and warranties are
made or deemed made, and none of the statements contained in any exhibit,
report, statement or certificate furnished by or on behalf of Borrower in
connection with the Loan Documents (including disclosure materials delivered by
or on behalf of Borrower to Lender prior to the Closing Date or pursuant to
Section 5.2 hereof), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered (it being recognized
by Lender that any projections and forecasts provided by Borrower in good faith
shall not be viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).

3.11 Specific Representations Regarding Collateral.

(a) Title. Except for the security interests created by this Agreement and
Permitted Liens, (i) Borrower is and will be the unconditional legal and
beneficial owner of the Collateral (other than Excluded Intellectual Property),
and (ii) the Collateral (other than Excluded Intellectual Property) is genuine
and subject to no Liens, rights or defenses of others. There exist no prior
assignments or encumbrances of record with the U.S. Patent and Trademark Office
or U.S. Copyright Office affecting any Collateral (other than Excluded
Intellectual Property) in favor of any third party, other than Permitted Liens.

(b) Rights to Payment. The names of the obligors, amount owing to Borrower, due
dates and all other information with respect to the Rights to Payment are and
will be correctly stated in all material respects in all Records relating to the
Rights to Payment. Borrower further represents and warrants, to its knowledge,
that each Person appearing to be obligated on a Right to Payment has authority
and capacity to contract and is bound as it appears to be.

(c) Location of Collateral. Borrower’s chief executive office, Inventory,
Records, Equipment, and any other offices or places of business are located at
the address(es) shown on the Supplement.

(d) Business Names. Other than its full corporate name, Borrower has not
conducted business using any trade names or fictitious business names except as
shown on the Supplement.

3.12 Copyrights, Patents, Trademarks and Licenses.

(a) Borrower owns or is licensed or otherwise has the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other similar rights that are reasonably
necessary for the operation of its business, without conflict with the rights of
any other Person.

(b) To Borrower’s actual knowledge, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrower infringes upon any rights held by any
other Person.

(c) No claim or litigation regarding any of the foregoing is pending or, to
Borrower’s actual knowledge, threatened, and to Borrower’s knowledge no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or proposed which, in either case, could reasonably
be expected to have a Material Adverse Effect.

3.13 Regulatory Compliance. Borrower has met the minimum funding requirements of
ERISA with respect to any employee benefit plans subject to ERISA. No event has
occurred resulting from Borrower’s failure to comply with ERISA that is
reasonably likely to result in Borrower’s incurring any liability that could
have a Material Adverse Effect. Borrower is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations T and
U of the Board of Governors of the Federal Reserve System). Borrower has
complied in all material respects with all the provisions of the Federal Fair
Labor Standards Act.

3.14 Shares. Borrower has full power and authority to create a first priority
Lien on the Shares and no disability or contractual obligation exists that would
prohibit Borrower from pledging the Shares pursuant to this Agreement. To
Borrower’s knowledge, there are no subscriptions, warrants,

 

 

4

--------------------------------------------------------------------------------

rights of first refusal or other restrictions on transfer relative to, or
options exercisable with respect to the Shares. The Shares have been and will be
duly authorized and validly issued, and are fully paid and non-assessable. To
Borrower’s knowledge, the Shares are not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding, and
Borrower knows of no reasonable grounds for the institution of any such
proceedings.

3.15 Compliance with Anti-Corruption Laws. Borrower has not taken any action
that would cause a violation of any anti-corruption law, including but not
limited to, the Foreign Corrupt Practices Act, the United Kingdom Bribery Act,
and all other applicable anti-corruption laws. Borrower, its employees, agents
and representatives have not, directly or indirectly, offered, paid, given,
promised or authorized the payment of any money, gift or anything of value to
any person acting in an official capacity for any government department, agency
or instrumentality, including state-owned or controlled companies or entities,
and public international organizations, as well as a political party or official
thereof or candidate for political office. None of Borrower’s principals or
staff are officers, employees or representatives of governments, government
agencies, or government-owned or controlled enterprises.

3.16 Survival. The representations and warranties of Borrower as set forth in
this Agreement survive the execution and delivery of this Agreement.

ARTICLE 4 - CONDITIONS PRECEDENT

4.1 Conditions to First Loan. The obligation of Lender to make its first Loan
hereunder is, in addition to the conditions precedent specified in Section 4.2
and in any Supplement, subject to the fulfillment of the following conditions
and to the receipt by Lender of the documents described below, duly executed and
in form and substance satisfactory to Lender and its counsel:

(a) Resolutions. A certified copy of the resolutions of the Board of Directors
of Borrower authorizing the execution, delivery and performance by Borrower of
the Loan Documents.

(b) Incumbency and Signatures. A certificate of the secretary of Borrower
certifying the names of the officer or officers of Borrower authorized to sign
the Loan Documents, together with a sample of the true signature of each such
officer.

(c) Legal Opinion. The opinion of legal counsel for Borrower as to such matters
as Lender may reasonably request, in form and substance satisfactory to Lender.

(d) Charter Documents. Copies of the organizational and charter documents of
Borrower (e.g., Articles or Certificate of Incorporation and Bylaws), as amended
through the Closing Date, certified by an officer of Borrower as being true,
correct and complete.

(e) This Agreement. Original counterparts of this Agreement and the initial
Supplement, with all schedules completed and attached thereto, and disclosing
such information as is acceptable to Lender.

(f) Financing Statements. Filing copies (or other evidence of filing
satisfactory to Lender and its counsel) of such UCC financing statements,
collateral assignments, account control agreements, and termination statements,
with respect to the Collateral as Lender shall request.

(g) Intellectual Property Security Agreement. An Intellectual Property Security
Agreement executed by Borrower in form and substance satisfactory to Lender.

(h) Lien Searches. UCC lien, judgment, bankruptcy and tax lien searches of
Borrower from such jurisdictions or offices as Lender may reasonably request,
all as of a date reasonably satisfactory to Lender and its counsel.

(i) Good Standing Certificate. A certificate of status or good standing of
Borrower as of a date acceptable to Lender from the jurisdiction of Borrower’s
organization and any foreign jurisdictions where Borrower is qualified to do
business.

(j) Warrants. Original Warrants issued by Borrower exercisable for such number,
type and class of shares of Borrower’s capital stock, and for an initial
exercise price as is specified therein.

(k) Insurance Certificates. Insurance certificates showing Lender as a loss
payee or an additional insured.

(l) Intercreditor Agreement. Lender and EWB shall have entered into a written
intercreditor agreement (the “Intercreditor Agreement”) acceptable to Lender
with respect to Lender’s and EWB’s respective rights and priorities of their
Liens in the Collateral as security for Borrower’s Indebtedness to EWB under the
EWB Working Capital Facility.

 

 

5

--------------------------------------------------------------------------------

(m) Other Documents. Such other documents and instruments as Lender may
reasonably request to effectuate the intents and purposes of this Agreement.

4.2 Conditions to All Loans. The obligation of Lender to make its initial Loan
and each subsequent Loan is subject to the following further conditions
precedent that:

(a) No Default. No Default or Event of Default has occurred and is continuing or
will result from the making of any such Loan, and the representations and
warranties of Borrower contained in Article 3 of this Agreement and Part 3 of
the Supplement are true and correct as of the Borrowing Date of such Loan.

(b) No Material Adverse Change. No event has occurred that has had or could
reasonably be expected to have a Material Adverse Change.

(c) Borrowing Request. Borrower shall have delivered to Lender a Borrowing
Request for such Loan.

(d) Note. Borrower shall have delivered an original executed Note evidencing
such Loan, substantially in the form attached to the Supplement as an exhibit.

(e) Supplemental Lien Filings. Borrower shall have executed and delivered such
amendments or supplements to this Agreement and additional Security Documents,
financing statements and third party waivers as Lender may reasonably request in
connection with the proposed Loan, in order to create, protect or perfect or to
maintain the perfection of Lender’s Liens on the Collateral.

(f) Intentionally Omitted.

(g) Financial Projections. Borrower shall have delivered to Lender Borrower’s
business plan and/or financial projections or forecasts as most recently
approved by Borrower’s Board of Directors.

ARTICLE 5 - AFFIRMATIVE COVENANTS

During the term of this Agreement and until its performance of all Obligations,
Borrower will:

5.1 Notice to Lender. Promptly give written notice to Lender of:

(a) Any litigation or administrative or regulatory proceeding affecting Borrower
where the amount claimed against Borrower is at the Threshold Amount or more, or
where the granting of the relief requested could have a Material Adverse Effect;
or of the acquisition by Borrower of any commercial tort claim involving
monetary damages in excess of the Threshold Amount, including brief details of
such claim and such other information as Lender may reasonably request to enable
Lender to better perfect its Lien in such commercial tort claim as Collateral.

(b) Any substantial dispute which may exist between Borrower and any
governmental or regulatory authority which could be reasonably expected to have
a Material Adverse Effect.

(c) The occurrence of any Default or any Event of Default.

(d) Any change in the location of any of Borrower’s places of business or
Collateral at least thirty (30) days in advance of such change, or of the
establishment of any new, or the discontinuance of any existing, place of
business.

(e) Any dispute or default by Borrower or any other party under any joint
venture, partnering, distribution, cross-licensing, strategic alliance,
collaborative research or manufacturing, license or similar agreement which
could reasonably be expected to have a Material Adverse Effect.

(f) Any other matter which has resulted or might reasonably result in a Material
Adverse Change.

(g) Any Subsidiary Borrower intends to acquire or create.

(h) The occurrence of any default or event of default (howsoever defined) under
any document evidencing or executed or delivered in connection with Borrower’s
Indebtedness and obligations to EWB.

5.2 Financial Statements. Deliver to Lender or cause to be delivered to Lender,
in form and detail reasonably satisfactory to Lender the following financial and
other information, which Borrower warrants shall be accurate and complete in all
material respects:

 

 

6

--------------------------------------------------------------------------------

(a) Monthly Financial Statements. As soon as available but no later than thirty
(30) days after the end of each month, Borrower’s unaudited balance sheet as of
the end of such period, and Borrower’s unaudited income statement and Borrower’s
unaudited cash flow statement for such period and for that portion of Borrower’s
financial reporting year ending with such period, prepared in accordance with
Borrower’s past practices applied on a consistent basis and attested by a
responsible financial officer of Borrower as being complete and correct and
fairly presenting Borrower’s financial condition and the results of Borrower’s
operations.

(b) Year-End Financial Statements. As soon as available but no later than one
hundred eighty (180) days after and as of the end of each financial reporting
year, a complete copy of Borrower’s audit report, which shall include balance
sheet, income statement, statement of changes in equity and statement of cash
flows for such year, prepared in accordance with GAAP and certified by an
independent certified public accountant selected by Borrower (the “Accountant”).
The Accountant’s certification shall not be qualified or limited due to a
restricted or limited examination by the Accountant of any material portion of
Borrower’s records or otherwise.

(c) Compliance Certificates. Simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b) above, a certificate
of the chief financial officer of Borrower (or other executive officer)
substantially in the form of Exhibit “C” to the Supplement (a “Compliance
Certificate”) stating, among other things, whether any Default or Event of
Default exists on the date of such certificate, and if so, setting forth the
details thereof and the action which Borrower is taking or proposes to take with
respect thereto. A pro-forma Compliance Certificate also shall be delivered to
Lender on the Closing Date.

(d) Government Required Reports; Press Releases. Promptly after sending,
issuing, making available, or filing, copies of all statements released to any
news media for publication, all reports, proxy statements, and financial
statements that Borrower sends or makes available to its stockholders, and, not
later than five (5) days after actual filing or the date such filing was first
due, all registration statements and reports that Borrower files or is required
to file with the Securities and Exchange Commission (other than reports on Form
10-K or 10-Q, but including reports on Form 8-K), or any other governmental or
regulatory authority.

(e) Other Information. Such other statements, lists of property and accounts,
budgets (as updated), sales projections, forecasts, reports, operating plans,
financial exhibits, capitalization tables (as updated) and information relating
to equity and debt financings consummated after the Closing Date (including
post-closing capitalization table(s)), or other information as Lender may from
time to time reasonably request. In addition, Borrower agrees to provide Lender
with copies of all information furnished to EWB under the EWB Working Capital
Facility to the extent such information is not duplicative of information
furnished to Lender under this Agreement and the other Loan Documents.

(f) Board Reports. In addition to the foregoing, Borrower will promptly provide
Lender with copies of all notices, minutes, consents and other materials,
financial or otherwise, which Borrower provides to its Board of Directors
(collectively, “Board Reports”); provided, however, such Board Reports may be
redacted to the extent that (i) based on the advice of counsel, Borrower’s Board
of Directors determines such redaction is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information, or for other similar reasons or (ii) such redacted material relates
to Lender (or Borrower’s strategy regarding the Loans or Lender).

5.3 Intentionally Omitted.

5.4 Existence. Maintain and preserve Borrower’s existence, present form of
business, and (except to the extent consistent with commercially reasonable
practice) all rights and privileges necessary or desirable in the normal course
of its business; and keep all Borrower’s property in good working order and
condition, ordinary wear and tear excepted.

5.5 Insurance. Obtain and keep in force insurance in such amounts and types as
is usual in the type of business conducted by Borrower, with insurance carriers
having a policyholder rating of not less than “A” and financial category rating
of Class VII in “Best’s Insurance Guide,” unless otherwise approved by Lender.
Such insurance policies must be in form and substance reasonably satisfactory to
Lender, and shall list Lender as an additional insured or loss payee, as
applicable, on endorsement(s) in form reasonably acceptable to Lender. Borrower
shall furnish to Lender such endorsements, and upon Lender’s request, copies of
any or all such policies.

 

 

7

--------------------------------------------------------------------------------

5.6 Accounting Records. Maintain adequate books, accounts and records, and
prepare all financial statements in accordance with GAAP, and in compliance with
the regulations of any governmental or regulatory authority having jurisdiction
over Borrower or Borrower’s business; and permit employees or agents of Lender
at such reasonable times as Lender may request, at Borrower’s expense, to
inspect Borrower’s properties, and to examine, review and audit, and make copies
and memoranda of Borrower’s books, accounts and records.

5.7 Compliance with Laws. Comply with all laws (including Environmental Laws),
rules, regulations applicable to, and all orders and directives of any
governmental or regulatory authority having jurisdiction over, Borrower or
Borrower’s business, and with all material agreements to which Borrower is a
party, except where the failure to so comply would not have a Material Adverse
Effect.

5.8 Taxes and Other Liabilities. Pay all Borrower’s Indebtedness when due; pay
all taxes and other governmental or regulatory assessments before delinquency or
before any penalty attaches thereto, except as may be contested in good faith by
the appropriate procedures and for which Borrower shall maintain appropriate
reserves; and timely file all required tax returns.

5.9 Special Collateral Covenants.

(a) Maintenance of Collateral; Inspection. Do all things reasonably necessary to
maintain, preserve, protect and keep all Collateral in good working order and
salable condition, ordinary wear and tear excepted, deal with the Collateral in
all ways as are considered good practice by owners of like property, and use the
Collateral lawfully and, to the extent applicable, only as permitted by
Borrower’s insurance policies. Maintain, or cause to be maintained, complete and
accurate Records relating to the Collateral. Upon reasonable prior notice at
reasonable times during normal business hours, Borrower hereby authorizes
Lender’s officers, employees, representatives and agents to inspect the
Collateral and to discuss the Collateral and the Records relating thereto with
Borrower’s officers and employees, and, in the case of any Right to Payment,
with any Person which is or may be obligated thereon.

(b) Documents of Title. Not sign or authorize the signing of any financing
statement or other document naming Borrower as debtor or obligor, or acquiesce
or cooperate in the issuance of any bill of lading, warehouse receipt or other
document or

instrument of title with respect to any Collateral, except those negotiated to
Lender, or those naming Lender as secured party, or if solely to create, perfect
or maintain a Permitted Lien.

(c) Change in Location or Name. Without at least 30 days’ prior written notice
to Lender: (a) not relocate any Collateral or Records, its chief executive
office, or establish a place of business at a location other than as specified
in the Supplement; and (b) not change its name, mailing address, location of
Collateral, jurisdiction of incorporation or its legal structure; provided,
however, that Collateral may be relocated in connection with permitted
Transfers.

(d) Decals, Markings. At the request of Lender, firmly affix a decal, stencil or
other marking to designated items of Equipment, indicating thereon the security
interest of Lender.

(e) Agreement with Persons in Possession of Collateral. Obtain and maintain such
acknowledgments, consents, waivers and agreements (each a “Waiver”) from the
owner, operator, lienholder, mortgagee, landlord or any Person in possession of
tangible Collateral in excess of $10,000 per location as Lender may require, all
in form and substance satisfactory to Lender. Lender hereby waives the
requirements of this Section 5.9(e) and agrees that Borrower shall not be
required to deliver a Waiver for the tangible Collateral located in Fremont, CA
based on Borrower’s representation that the net book value of such Collateral is
approximately no greater than $50,000.

(f) Certain Agreements on Rights to Payment. Other than in the ordinary course
of business, not make any material discount, credit, rebate or other reduction
in the original amount owing on a Right to Payment or accept in satisfaction of
a Right to Payment less than the original amount thereof.

5.10 Authorization for Automated Clearinghouse Funds Transfer. (i) Authorize
Lender to initiate debit entries to Borrower’s Primary Operating Account,
specified in the Supplement hereto, through Automated Clearinghouse (“ACH”)
transfers, in order to satisfy the regularly scheduled payments of principal and
interest; (ii) provide Lender at least thirty (30) days’ notice of any change in
Borrower’s Primary Operating Account; and (iii) grant Lender any additional
authorizations necessary to begin ACH debits from a new account which becomes
the Primary Operating Account.

 

 

8

--------------------------------------------------------------------------------

5.11 Anti-Corruption Laws. Provide true, accurate and complete information in
all product orders, reimbursement requests and other communications relating to
Borrower and its products.

ARTICLE 6 - NEGATIVE COVENANTS

During the term of this Agreement and until the performance of all Obligations,
Borrower will not:

6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase price of
property, or leases which would be capitalized in accordance with GAAP; or
become liable as a surety, guarantor, accommodation party or otherwise for or
upon the obligation of any other Person, except:

(a) Indebtedness incurred for the acquisition of supplies or inventory on normal
trade credit;

(b) Indebtedness incurred pursuant to one or more transactions permitted under
Section 6.4;

(c) Indebtedness of Borrower under this Agreement;

(d) Subordinated Debt;

(e) Indebtedness of Borrower to EWB incurred under the EWB Working Capital
Facility, provided that (i) such Indebtedness shall not exceed Ten Million
Dollars ($10,000,000) in aggregate principal amount outstanding at any time,
(ii) there remains in effect an intercreditor agreement in form and substance
acceptable to Lender (the “ICA”) and (iii) the loan documents memorializing the
EWB Working Capital Facility shall not be modified without Lender’s prior
written consent, which consent shall not be unreasonably withheld or
conditioned;

(f) Indebtedness approved by Lender prior to the Closing Date as shown on
Schedule 6.1;

(g) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

(h) Indebtedness in connection with the issuance of surety bonds, performance
bonds, cash-collateralized letters of credit and similar obligations incurred in
the ordinary course of business;

(i) Pre-Existing Intercompany Balances;

(j) Ordinary Course Subsidiary Invoices;

(k) other unsecured Indebtedness not consisting of indebtedness for borrowed
money, which when added to the obligations described Section 6.15, does not
exceed $750,000 in aggregate debt service, lease or similar installment payments
coming due in the rolling 12-month period succeeding any date of determination;
and

(l) Extensions, refinancings and renewals of any items of any of the above,
provided that the principal amount is not increased or the terms modified to
impose more burdensome terms upon Borrower.

6.2 Liens. Create, incur, assume or permit to exist any Lien, or grant any other
Person a negative pledge, on any of Borrower’s property, except Permitted Liens.
Borrower and Lender agree that this covenant is not intended to constitute a
lien, deed of trust, equitable mortgage, or security interest of any kind on any
of Borrower’s real property, and this Agreement shall not be recorded or
recordable. Notwithstanding the foregoing, however, violation of this covenant
by Borrower shall constitute an Event of Default.

6.3 Dividends. Pay any dividends or purchase, redeem or otherwise acquire or
make any other distribution with respect to any of Borrower’s capital stock,
except (a) dividends or other distributions solely of capital stock of Borrower,
(b) conversion of its convertible securities into other securities pursuant to
the terms of such convertible securities or otherwise in exchange thereof,
(c) de minimis amounts of cash in lieu of fractional shares upon conversion of
convertible securities or upon any stock split or consolidation, and (d) so long
as no Event of Default has occurred and is continuing, repurchases of stock from
employees, officers, directors or consultants upon termination of employment
under reverse vesting or similar repurchase plans not to exceed $100,000 in any
calendar year.

6.4 Fundamental Changes. (a) Liquidate or dissolve; (b) enter into, or permit
any of Borrower’s Subsidiaries to enter into, any Change of Control; or
(c) acquire, or permit any of Borrower’s Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
Notwithstanding anything to the contrary in this Section 6.4, (i) a Subsidiary
may merge or consolidate into another Subsidiary, (ii) Borrower may consolidate
or merge with any of Borrower’s Subsidiaries provided that Borrower is the
continuing or surviving Person, (iii) Borrower may enter into, or permit any of
Borrower’s Subsidiaries to

 

 

9

--------------------------------------------------------------------------------

enter into, any Change of Control, provided that the credit risk to Lender, in
its sole discretion, with respect to the Obligations and the Collateral shall
not be increased, and (iv) Borrower may acquire, whether by purchase, merger or
otherwise, all or substantially all of the assets of, all of the equity
interests of, or a business line or unit or a division of, any Person (an
“Acquisition”), provided that (I) no Event of Default has occurred, is
continuing, or would exist after giving effect to such Acquisition, (II) such
Acquisition does not result in a Change of Control, (III) Borrower is the
surviving entity following such Acquisition, (IV) the total consideration paid
in connection with any Acquisition(s) (including assumption of liabilities or
incurrence of any Indebtedness) does not exceed $25,000,000 individually or in
the aggregate (for the fiscal year including the Closing Date) or $50,000,000
individually or in the aggregate (in any subsequent fiscal year), (V) any cash
consideration payable in connection with such Acquisition shall be funded solely
from the cash proceeds received by Borrower from the sale and issuance of its
equity securities substantially concurrent with the closing of such Acquisition,
(VI) Borrower has given Lender at least ten Business Days’ notice prior to the
consummation of such Acquisition and provided such other information as Lender
may reasonably request with respect to the foregoing, (VII) any Acquisition is
Accretive (hereinafter defined), (VIII) Borrower has been operating to the
business plan or otherwise in accordance with information previously provided to
Lender in a corresponding Board Report and (IX) following any such Acquisition
Borrower shall have a balance of cash of at least $9,000,000 in aggregate
amount. “Accretive” means that following the Acquisition, Borrower and the
acquired Person have increased net income and increased cash flow.

6.5 Sales of Assets. Sell, transfer, lease, license or otherwise dispose of (a
“Transfer”) any of Borrower’s assets except (i) non-exclusive licenses of
Intellectual Property in the ordinary course of business consistent with
industry practice, provided that such licenses of Intellectual Property neither
result in a legal transfer of title of the licensed Intellectual Property nor
have the same effect as a sale of such Intellectual Property; (ii) Transfers of
worn-out, obsolete or surplus property (each as determined by Borrower in its
reasonable judgment); (iii) Transfers of Inventory in the ordinary course of
business; (iv) Transfers constituting Permitted Liens; (v) Transfers permitted
in Section 6.6 hereunder; (vi) Transfers consisting of Borrower’s use or
transfer of money or cash equivalents in a manner that is not prohibited by the
terms of this Agreement, (vii)

Transfers of Collateral (other than Intellectual Property) for fair
consideration and in the ordinary course of its business and (viii) other
Transfers not otherwise permitted by this Section 6.5 in an amount to exceed Two
Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year.

6.6 Loans/Investments. Make or suffer to exist any loans, guaranties, advances,
or investments, except:

(a) accounts receivable in the ordinary course of Borrower’s business;

(b) investments in domestic certificates of deposit issued by, and other
domestic investments with, financial institutions organized under the laws of
the United States or a state thereof, having at least One Hundred Million
Dollars ($100,000,000) in capital and a rating of at least “investment grade” or
“A” by Moody’s or any successor rating agency;

(c) investments in marketable obligations of the United States of America and in
open market commercial paper given the highest credit rating by a national
credit agency and maturing not more than one year from the creation thereof;

(d) temporary advances to cover incidental expenses to be incurred in the
ordinary course of business;

(e) investments in joint ventures, strategic alliances, licensing and similar
arrangements customary in Borrower’s industry and which do not require Borrower
to assume or otherwise become liable for the obligations of any third party not
directly related to or arising out of such arrangement or, without the prior
written consent of Lender, require Borrower to transfer ownership of non-cash
assets to such joint venture or other entity;

(f) investments in one or more wholly-owned direct or indirect Subsidiaries of
Borrower, consisting of (a) Pre-Existing Intercompany Balances or (b) other
investments made in the ordinary course of Borrower’s business not to exceed
$400,000 in aggregate amount in any calendar year;

(g) investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower’s business;

 

 

10

--------------------------------------------------------------------------------

(h) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower’s board of directors;

(i) 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;

(j) investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates; and

(k) other investments in an amount not to exceed $400,000 during any calendar
year.

6.7 Transactions with Related Persons. Directly or indirectly enter into any
transaction with or for the benefit of a Related Person on terms more favorable
to the Related Person than would have been obtainable in an “arms’ length”
dealing.

6.8 Other Business. Engage in any material line of business other than the
business Borrower conducts as of the Closing Date and business reasonably
related thereto.

6.9 Financing Statements and Other Actions. Fail to execute and deliver to
Lender all financing statements, notices and other documents (including, without
limitation, any filings with the United States Patent and Trademark Office and
the United States Copyright Office) from time to time reasonably requested by
Lender to maintain a perfected first priority security interest in the
Collateral in favor of Lender, subject to Permitted Liens; perform such other
acts, and execute and deliver to Lender such additional conveyances,
assignments, agreements and instruments, as Lender may at any time request in
connection with the administration and enforcement of this Agreement or Lender’s
rights, powers and remedies hereunder.

6.10 Compliance. Become an “investment company” or controlled by an “investment
company,” within the meaning of the Investment Company Act of 1940, or become
principally engaged in, or undertake as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying margin
stock, or use the proceeds of any Loan for such purpose. Fail to meet the
minimum funding

requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur, fail to comply with the Federal Fair Labor Standards
Act or violate any law or regulation, which violation could have a Material
Adverse Effect or a material adverse effect on the Collateral or the priority of
Lender’s Lien on the Collateral, or permit any of its subsidiaries to do any of
the foregoing.

6.11 Other Deposit and Securities Accounts. Maintain any Deposit Accounts or
accounts holding securities owned by Borrower except (i) Deposit Accounts and
investment/securities accounts as set forth in the Supplement, and (ii) other
Deposit Accounts and securities/investment accounts, in each case, with respect
to which Borrower and Lender shall have taken such action as Lender reasonably
deems necessary to obtain a perfected first priority security interest therein,
subject to Permitted Liens. The provisions of the previous sentence shall not
apply to Deposit Accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower’s employees
and identified to Lender as such.

6.12 Prepayment of Indebtedness. Prepay, redeem or otherwise satisfy in any
manner prior to the scheduled repayment thereof any Indebtedness (other than the
Loans and ordinary course (unaccelerated) payments and permitted pre-payments of
principal of, and interest on, or fees payable in connection with, any revolving
loan advances under the EWB Working Capital Facility). Notwithstanding the
foregoing, Lender agrees that the conversion or exchange into Borrower’s equity
securities of any Indebtedness (other than the Loans) shall not be prohibited by
this Section 6.12.

6.13 Repayment of Subordinated Debt. Repay, prepay, redeem or otherwise satisfy
in any manner any Subordinated Debt, except in accordance with the terms of any
subordination agreement among Borrower, Lender and the holder(s) of such
Subordinated Debt. Notwithstanding the foregoing, Lender agrees that the
conversion or exchange into Borrower’s equity securities of any Subordinated
Debt and the payment of cash in lieu of fractional shares shall not be
prohibited by this Section 6.13.

6.14 Subsidiaries.

(a) Acquire or create any Subsidiary, unless such Subsidiary becomes, at
Lender’s option, either a co-borrower hereunder or executes and delivers to
Lender one or more agreements, in form and substance

 

 

11

--------------------------------------------------------------------------------

reasonably satisfactory to Lender, containing a guaranty of the Obligations that
is secured by first priority Liens on such Person’s assets. For clarity, the
parties acknowledge and agree that Lender shall have the exclusive right to
determine whether any such Person will be made a co-borrower hereunder or a
guarantor of the Obligations. Prior to the acquisition or creation of any such
Subsidiary, Borrower shall notify Lender thereof in writing, which notice shall
contain the jurisdiction of such Person’s formation and include a description of
such Person’s fully diluted capitalization and Borrower’s purpose for its
acquisition or creation of such Subsidiary.

(b) Sell, transfer, encumber or otherwise dispose of Borrower’s ownership
interest in any Subsidiary other than Permitted Liens.

(c) Cause or permit a Subsidiary to do any of the following: (i) grant Liens on
such Subsidiary’s assets, except for Liens that would constitute Permitted Liens
if incurred by Borrower and Liens on any property held or acquired by such
Subsidiary in the ordinary course of its business securing Indebtedness incurred
or assumed for the purpose of financing all or any part of the cost of acquiring
such property; provided, that such Lien attaches solely to the property acquired
with such Indebtedness and that the principal amount of such Indebtedness does
not exceed one hundred percent (100%) of the cost of such property; and
(ii) issue any additional Shares.

6.15 Leases. Create, incur, assume, or suffer to exist any obligation as lessee
for the rental or hire of any personal property, except that Borrower may enter
into and maintain obligations under such leases which when added to Indebtedness
permitted under Sections 6.1(j), do not exceed $750,000 in aggregate debt
service, lease or similar installment payments coming due in the rolling
12-month period succeeding any date of determination.

6.16 Anti-Corruption Laws.

(a) Take any action that would cause a violation of any anti-corruption law,
including but not limited to, the Foreign Corrupt Practices Act, the United
Kingdom Bribery Act, and all other applicable anti-corruption laws.

(b) Directly or indirectly, offer, pay, give, promise or authorize the payment
of any money, gift, or anything of value to any person acting in an official
capacity for any government department, agency, or instrumentality, including
state-owned or controlled

companies or entities, and public international organizations, as well as a
political party or official thereof or candidates for political office.

ARTICLE 7 - EVENTS OF DEFAULT

7.1 Events of Default; Acceleration. Upon the occurrence and during the
continuation of any Default, the obligation of Lender to make any additional
Loan shall be suspended. The occurrence of any of the following (each, an “Event
of Default”) shall terminate any obligation of Lender to make any additional
Loan; and shall, at the option of Lender (1) make all sums of Basic Interest and
principal, as well as any other Obligations and amounts owing under any Loan
Documents, immediately due and payable without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor or any other
notices or demands, and (2) give Lender the right to exercise any other right or
remedy provided by contract or applicable law:

(a) Borrower shall fail to pay any principal or interest under this Agreement or
any Note, or fail to pay any fees or other charges when due under any Loan
Document, and such failure continues for three (3) Business Days or more after
the same first becomes due; or an Event of Default as defined in any other Loan
Document shall have occurred.

(b) Any representation or warranty made, or financial statement, certificate or
other document provided, by Borrower under any Loan Document shall prove to have
been false or misleading in any material respect when made or deemed made
herein.

(c) (i) Borrower shall fail to pay its debts generally as they become due; or
(ii) Borrower shall commence any Insolvency Proceeding with respect to itself,
an involuntary Insolvency Proceeding shall be filed against Borrower, or a
custodian, receiver, trustee, assignee for the benefit of creditors, or other
similar official, shall be appointed to take possession, custody or control of
the properties of Borrower, and such involuntary Insolvency Proceeding, petition
or appointment is acquiesced to by Borrower or is not dismissed within forty
five (45) days; or (iii) the dissolution, winding up, or termination of the
business or cessation of operations of Borrower (including any transaction or
series of related transactions deemed to be a liquidation, dissolution or
winding up of Borrower pursuant to the provisions of Borrower’s charter
documents); or (iv) Borrower shall take any corporate action for the purpose of
effecting, approving, or consenting to any of the foregoing.

 

 

12

--------------------------------------------------------------------------------

(d) Borrower shall be in default beyond any applicable period of grace or cure
under any other agreement involving the borrowing of money, the purchase of
property, the advance of credit or any other monetary liability of any kind to
Lender or to any Person in an amount in excess of the Threshold Amount.

(e) Any governmental or regulatory authority shall take any judicial or
administrative action, or any defined benefit pension plan maintained by
Borrower shall have any unfunded liabilities, any of which, in the reasonable
judgment of Lender, might have a Material Adverse Effect.

(f) Except as permitted under Section 6.5, any sale, transfer or other
disposition of all or a substantial or material part of the assets of Borrower,
including without limitation to any trust or similar entity, shall occur.

(g) Any judgment(s) singly or in the aggregate in excess of the Threshold Amount
shall be entered against Borrower which remain unsatisfied, unvacated or
unstayed pending appeal for ten (10) or more days after entry thereof.

(h) Borrower shall fail to perform or observe any covenant contained in Article
6 of this Agreement.

(i) Borrower shall fail to perform or observe any covenant contained in Article
5 or elsewhere in this Agreement or any other Loan Document (other than a
covenant which is dealt with specifically elsewhere in this Article 7) and, if
capable of being cured, the breach of such covenant is not cured within 30 days
after the sooner to occur of Borrower’s receipt of notice of such breach from
Lender or the date on which such breach first becomes known to any officer of
Borrower; provided, however that if such breach is not capable of being cured
within such 30-day period and Borrower timely notifies Lender of such fact and
Borrower diligently pursues such cure, then the cure period shall be extended to
the date requested in Borrower’s notice but in no event more than 90 days from
the initial breach; provided, further, that such additional 60-day opportunity
to cure shall not apply in the case of any failure to perform or observe any
covenant which has been the subject of a prior failure within the preceding 180
days or which is a willful and knowing breach by Borrower.

(j) The occurrence of any default or event of default (however defined) under
any document evidencing or executed or delivered in connection with Borrower’s
Indebtedness and obligations to EWB under the EWB Working Capital Facility;
provided, however, that if EWB has not previously accelerated Borrower’s
Indebtedness and obligations to EWB then a breach by Borrower of a covenant
applicable to the EWB Working Capital Facility shall not be deemed to constitute
an Event of Default under this Section 7.1(j).

(k) Steve Humphreys shall cease for any reason to serve as Borrower’s Chief
Executive Officer, whether by reason of death, disability, resignation, action
by Borrower’s Board of Directors or stockholders, or otherwise.

7.2 Remedies upon Default. Upon the occurrence and during the continuance of an
Event of Default, Lender shall be entitled to, at its option, exercise any or
all of the rights and remedies available to a secured party under the UCC or any
other applicable law, and exercise any or all of its rights and remedies
provided for in this Agreement and in any other Loan Document. The obligations
of Borrower under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Obligations is
rescinded or must otherwise be returned by Lender upon, on account of, or in
connection with, the insolvency, bankruptcy or reorganization of Borrower or
otherwise, all as though such payment had not been made. In addition, Borrower
agrees that Borrower will allow Lender commercially reasonable opportunity to
meet and confer with members of Borrower’s Board of Directors if an Event of
Default has occurred under Section 7.1(k) hereof.

7.3 Sale of Collateral. Upon the occurrence and during the continuance of an
Event of Default, Lender may sell all or any part of the Collateral, at public
or private sales, to itself, a wholesaler, retailer or investor, for cash, upon
credit or for future delivery, and at such price or prices as Lender may deem
commercially reasonable. To the extent permitted by law, Borrower hereby
specifically waives all rights of redemption and any rights of stay or appraisal
which it has or may have under any applicable law in effect from time to time.
Any such public or private sales shall be held at such times and at such
place(s) as Lender may determine. In case of the sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by Lender until the selling price is paid by the purchaser, but Lender
shall not incur any liability in case of the failure of such purchaser to pay
for the Collateral and, in case of any such failure, such Collateral may be
resold. Lender may, instead of

 

 

13

--------------------------------------------------------------------------------

exercising its power of sale, proceed to enforce its security interest in the
Collateral by seeking a judgment or decree of a court of competent jurisdiction.
Without limiting the generality of the foregoing, if an Event of Default is in
existence,

(1) Subject to the rights of any third parties, Lender may license, or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Copyrights, Patents or Trademarks included in the
Collateral throughout the world for such term or terms, on such conditions and
in such manner as Lender shall in its sole discretion determine;

(2) Lender may (without assuming any obligations or liability thereunder), at
any time and from time to time, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and remedies of Borrower
in, to and under any Copyright Licenses, Patent Licenses or Trademark Licenses
and take or refrain from taking any action under any thereof, and Borrower
hereby releases Lender from, and agrees to hold Lender free and harmless from
and against any claims arising out of, any lawful action so taken or omitted to
be taken with respect thereto other than claims arising out of Lender’s gross
negligence or willful misconduct; and

(3) Upon request by Lender, Borrower will execute and deliver to Lender a power
of attorney, in form and substance reasonably satisfactory to Lender for the
implementation of any lease, assignment, license, sublicense, grant of option,
sale or other disposition of a Copyright, Patent or Trademark. In the event of
any such disposition pursuant to this clause 3, Borrower shall supply its
know-how and expertise relating to the products or services made or rendered in
connection with Patents, the manufacture and sale of the products bearing
Trademarks, and its customer lists and other records relating to such
Copyrights, Patents or Trademarks and to the distribution of said products, to
Lender.

(4) If, at any time when Lender shall determine to exercise its right to sell
the whole or any part of the Shares hereunder, such Shares or the part thereof
to be sold shall not, for any reason whatsoever, be effectively registered under
the Securities Act (or any similar statute), then Lender may, in its discretion
(subject only to applicable requirements of law), sell such Shares or part
thereof by private sale in such manner and under such circumstances as Lender
may deem necessary or advisable, but subject to the other requirements of this
Article 7, and shall not be

required to effect such registration or to cause the same to be effected.
Without limiting the generality of the foregoing, in any such event, Lender in
its discretion may (i) in accordance with applicable securities laws proceed to
make such private sale notwithstanding that a registration statement for the
purpose of registering such Shares or part thereof could be or shall have been
filed under the Securities Act (or similar statute), (ii) approach and negotiate
with a single possible purchaser to effect such sale, and (iii) restrict such
sale to a purchaser who is an accredited investor under the Securities Act and
who will represent and agree that such purchaser is purchasing for its own
account, for investment and not with a view to the distribution or sale of such
Shares or any part thereof. In addition to a private sale as provided above in
this Article 7, if any of the Shares shall not be freely distributable to the
public without registration under the Securities Act (or similar statute) at the
time of any proposed sale pursuant to this Article 7, then Lender shall not be
required to effect such registration or cause the same to be effected but, in
its discretion (subject only to applicable requirements of law), may require
that any sale hereunder (including a sale at auction) be conducted subject to
restrictions:

(A) as to the financial sophistication and ability of any Person permitted to
bid or purchase at any such sale;

(B) as to the content of legends to be placed upon any certificates representing
the Shares sold in such sale, including restrictions on future transfer thereof;

(C) as to the representations required to be made by each Person bidding or
purchasing at such sale relating to such Person’s access to financial
information about Borrower or any of its Subsidiaries and such Person’s
intentions as to the holding of the Shares so sold for investment for its own
account and not with a view to the distribution thereof; and

(D) as to such other matters as Lender may, in its discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to register)
may be effected in compliance with the Bankruptcy Code and other laws affecting
the enforcement of creditors’ rights and the Securities Act and all applicable
state securities laws.

 

 

14

--------------------------------------------------------------------------------

(5) Borrower recognizes that Lender may be unable to effect a public sale of any
or all the Shares and may be compelled to resort to one or more private sales
thereof in accordance with clause (4) above. Borrower also acknowledges that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not be deemed to have
been made in a commercially unreasonable manner solely by virtue of such sale
being private. Lender shall be under no obligation to delay a sale of any of the
Shares for the period of time necessary to permit the applicable Subsidiary to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if Borrower and/or the Subsidiary would
agree to do so.

7.4 Borrower’s Obligations upon Default. Upon the request of Lender after the
occurrence and during the continuance of an Event of Default, Borrower will:

(a) Assemble and make available to Lender the Collateral at such place(s) as
Lender shall reasonably designate, segregating all Collateral so that each item
is capable of identification; and

(b) Subject to the rights of any lessor, permit Lender, by Lender’s officers,
employees, agents and representatives, to enter any premises where any
Collateral is located, to take possession of the Collateral, to complete the
processing, manufacture or repair of any Collateral, and to remove the
Collateral, or to conduct any public or private sale of the Collateral, all
without any liability of Lender for rent or other compensation for the use of
Borrower’s premises.

ARTICLE 8 - SPECIAL COLLATERAL PROVISIONS

8.1 Compromise and Collection. Borrower and Lender recognize that setoffs,
counterclaims, defenses and other claims may be asserted by obligors with
respect to certain of the Rights to Payment; that certain of the Rights to
Payment may be or become uncollectible in whole or in part; and that the expense
and probability of success of litigating a disputed Right to Payment may exceed
the amount that reasonably may be expected to be recovered with respect to such
Right to Payment. Borrower hereby authorizes Lender, after and during the
continuance of an Event of Default, to compromise with the obligor, accept in
full payment of any Right to Payment such amount as Lender shall

negotiate with the obligor, or abandon any Right to Payment. Any such action by
Lender shall be considered commercially reasonable so long as Lender acts in
good faith based on information known to it at the time it takes any such
action.

8.2 Performance of Borrower’s Obligations. Without having any obligation to do
so, upon reasonable prior notice to Borrower, Lender may perform or pay any
obligation which Borrower has agreed to perform or pay under this Agreement,
including, without limitation, the payment or discharge of taxes or Liens levied
or placed on or threatened against the Collateral. In so performing or paying,
Lender shall determine the action to be taken and the amount necessary to
discharge such obligations. Borrower shall reimburse Lender on demand for any
amounts paid by Lender pursuant to this Section, which amounts shall constitute
Obligations secured by the Collateral and shall bear interest from the date of
demand at the Default Rate.

8.3 Power of Attorney. For the purpose of protecting and preserving the
Collateral and Lender’s rights under this Agreement, Borrower hereby irrevocably
appoints Lender, with full power of substitution, as its attorney-in-fact with
full power and authority, after the occurrence and during the continuance of an
Event of Default, to do any act which Borrower is obligated to do hereunder; to
exercise such rights with respect to the Collateral as Borrower might exercise;
to use such Inventory, Equipment, Fixtures or other property as Borrower might
use; to enter Borrower’s premises; to give notice of Lender’s security interest
in, and to collect the Collateral; and before or after Default, to execute and
file in Borrower’s name any financing statements, amendments and continuation
statements, account control agreements or other Security Documents necessary or
desirable to create, maintain, perfect or continue the perfection of Lender’s
security interests in the Collateral. Borrower hereby ratifies all that Lender
shall lawfully do or cause to be done by virtue of this appointment.

8.4 Authorization for Lender to Take Certain Action. The power of attorney
created in Section 8.3 is a power coupled with an interest and shall be
irrevocable. The powers conferred on Lender hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon Lender to
exercise such powers. Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and in no event
shall Lender or any of its directors, officers, employees,

 

 

15

--------------------------------------------------------------------------------

agents or representatives be responsible to Borrower for any act or failure to
act, except for gross negligence or willful misconduct. After the occurrence and
during the continuance of an Event of Default, Lender may exercise this power of
attorney without notice to or assent of Borrower, in the name of Borrower, or in
Lender’s own name, from time to time in Lender’s sole discretion and at
Borrower’s expense. To further carry out the terms of this Agreement, after the
occurrence and during the continuance of an Event of Default, Lender may:

(a) Execute any statements or documents or take possession of, and endorse and
collect and receive delivery or payment of, any checks, drafts, notes,
acceptances or other instruments and documents constituting Collateral, or
constituting the payment of amounts due and to become due or any performance to
be rendered with respect to the Collateral.

(b) Sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts; drafts, certificates and statements under any
commercial or standby letter of credit relating to Collateral; assignments,
verifications and notices in connection with Accounts; or any other documents
relating to the Collateral, including without limitation the Records.

(c) Use or operate Collateral or any other property of Borrower for the purpose
of preserving or liquidating Collateral.

(d) File any claim or take any other action or proceeding in any court of law or
equity or as otherwise deemed appropriate by Lender for the purpose of
collecting any and all monies due or securing any performance to be rendered
with respect to the Collateral.

(e) Commence, prosecute or defend any suits, actions or proceedings or as
otherwise deemed appropriate by Lender for the purpose of protecting or
collecting the Collateral. In furtherance of this right, upon the occurrence and
during the continuance of an Event of Default, Lender may apply for the
appointment of a receiver or similar official to operate Borrower’s business.

(f) Prepare, adjust, execute, deliver and receive payment under insurance
claims, and collect and receive payment of and endorse any instrument in payment
of loss or returned premiums or any other insurance refund or return, and apply
such amounts at Lender’s sole discretion, toward repayment of the Obligations or
replacement of the Collateral.

8.5 Application of Proceeds. Any Proceeds and other monies or property received
by Lender pursuant to the terms of this Agreement or any Loan Document may be
applied by Lender first to the payment of expenses of collection, including
without limitation reasonable attorneys’ fees, and then to the payment of the
Obligations in such order of application as Lender may elect.

8.6 Deficiency. If the Proceeds of any disposition of the Collateral are
insufficient to cover all costs and expenses of such sale and the payment in
full of all the Obligations, plus all other sums required to be expended or
distributed by Lender, then Borrower shall be liable for any such deficiency.

8.7 Lender Transfer. Upon the transfer of all or any part of the Obligations,
Lender may transfer all or part of the Collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such Collateral
so transferred, and the transferee shall be vested with all the rights and
powers of Lender hereunder with respect to such Collateral so transferred, but
with respect to any Collateral not so transferred, Lender shall retain all
rights and powers hereby given.

8.8 Lender’s Duties.

(a) Lender shall use reasonable care in the custody and preservation of any
Collateral in its possession. Without limitation on other conduct which may be
considered the exercise of reasonable care, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of such Collateral if
such Collateral is accorded treatment substantially equal to that which Lender
accords its own property, it being understood that Lender shall not have any
responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, declining value, tenders or other matters
relative to any Collateral, regardless of whether Lender has or is deemed to
have knowledge of such matters; or taking any necessary steps to preserve any
rights against any Person with respect to any Collateral. Under no circumstances
shall Lender be responsible for any injury or loss to the Collateral, or any
part thereof, arising from any cause beyond the reasonable control of Lender.

 

 

16

--------------------------------------------------------------------------------

(b) Lender may at any time deliver the Collateral or any part thereof to
Borrower and the receipt of Borrower shall be a complete and full acquittance
for the Collateral so delivered, and Lender shall thereafter be discharged from
any liability or responsibility therefor.

(c) Neither Lender, nor any of its directors, officers, employees, agents,
attorneys or any other person affiliated with or representing Lender shall be
liable for any claims, demands, losses or damages, of any kind whatsoever, made,
claimed, incurred or suffered by Borrower or any other party through the
ordinary negligence of Lender, or any of its directors, officers, employees,
agents, attorneys or any other person affiliated with or representing Lender.

8.9 Termination of Security Interests. Upon the payment in full of the
Obligations and satisfaction of all Borrower’s obligations under this Agreement
and the other Loan Documents, and if Lender has no further obligations under its
Commitment, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to Borrower. Upon any such termination, Lender
shall, at Borrower’s expense, execute and deliver to Borrower such documents as
Borrower shall reasonably request to evidence such termination.

ARTICLE 9 - GENERAL PROVISIONS

9.1 Notices. Any notice given by any party under any Loan Document shall be in
writing and personally delivered, sent by overnight courier, or United States
mail, postage prepaid, or sent by facsimile, or other authenticated message,
charges prepaid, to the other party’s or parties’ addresses shown on the
Supplement. Each party may change the address or facsimile number to which
notices, requests and other communications are to be sent by giving written
notice of such change to each other party. Notice given by hand delivery shall
be deemed received on the date delivered; if sent by overnight courier, on the
next Business Day after delivery to the courier service; if by first class mail,
on the third Business Day after deposit in the U.S. Mail; and if by facsimile,
on the date of transmission.

9.2 Binding Effect. The Loan Documents shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer Borrower’s rights or
obligations under any Loan Document. Lender reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Lender’s rights and obligations under the Loan Documents. In
connection

with any of the foregoing, Lender may disclose all documents and information
which Lender now or hereafter may have relating to the Loans, Borrower, or its
business, provided that any Person who receives such information shall have
agreed in writing in advance to maintain the confidentiality of such information
on terms no less favorable to Borrower than are set forth in Section 9.13
hereof.

9.3 No Waiver. Any waiver, consent or approval by Lender of any Event of Default
or breach of any provision, condition, or covenant of any Loan Document must be
in writing and shall be effective only to the extent set forth in writing. No
waiver of any breach or default shall be deemed a waiver of any later breach or
default of the same or any other provision of any Loan Document. No failure or
delay on the part of Lender in exercising any power, right, or privilege under
any Loan Document shall operate as a waiver thereof, and no single or partial
exercise of any such power, right, or privilege shall preclude any further
exercise thereof or the exercise of any other power, right or privilege. Lender
has the right at its sole option to continue to accept interest and/or principal
payments due under the Loan Documents after default, and such acceptance shall
not constitute a waiver of said default or an extension of the maturity of any
Loan unless Lender agrees otherwise in writing.

9.4 Rights Cumulative. All rights and remedies existing under the Loan Documents
are cumulative to, and not exclusive of, any other rights or remedies available
under contract or applicable law.

9.5 Unenforceable Provisions. Any provision of any Loan Document executed by
Borrower which is prohibited or unenforceable in any jurisdiction, shall be so
only as to such jurisdiction and only to the extent of such prohibition or
unenforceability, but all the remaining provisions of any such Loan Document
shall remain valid and enforceable.

9.6 Accounting Terms. Except as otherwise provided in this Agreement, accounting
terms and financial covenants and information shall be determined and prepared
in accordance with GAAP.

9.7 Indemnification; Exculpation. Borrower shall pay and protect, defend and
indemnify Lender and Lender’s employees, officers, directors, shareholders,
affiliates, correspondents, agents and representatives (other than Lender,
collectively “Agents”) against, and hold Lender and each such Agent harmless
from, all claims, actions, proceedings, liabilities, damages, losses, expenses
(including, without limitation,

 

 

17

--------------------------------------------------------------------------------

attorneys’ fees and costs) and other amounts incurred by Lender and each such
Agent, arising from (i) the matters contemplated by this Agreement or any other
Loan Documents, (ii) any dispute between Borrower and a third party, or
(iii) any contention that Borrower has failed to comply with any law, rule,
regulation, order or directive applicable to Borrower’s business; provided,
however, that this indemnification shall not apply to any of the foregoing
incurred solely as the result of Lender’s or any Agent’s gross negligence or
willful misconduct. This indemnification shall survive the payment and
satisfaction of all of Borrower’s Obligations to Lender.

9.8 Reimbursement. Borrower shall reimburse Lender for all costs and expenses,
including without limitation reasonable attorneys’ fees and disbursements
expended or incurred by Lender in any arbitration, mediation, judicial
reference, legal action or otherwise in connection with (a) the preparation and
negotiation of the Loan Documents, (b) the amendment and enforcement of the Loan
Documents, including without limitation during any workout, attempted workout,
and/or in connection with the rendering of legal advice as to Lender’s rights,
remedies and obligations under the Loan Documents, (c) collecting any sum which
becomes due Lender under any Loan Document, (d) any proceeding for declaratory
relief, any counterclaim to any proceeding, or any appeal, or (e) the
protection, preservation or enforcement of any rights of Lender. For the
purposes of this section, attorneys’ fees shall include, without limitation,
fees incurred in connection with the following: (1) contempt proceedings;
(2) discovery; (3) any motion, proceeding or other activity of any kind in
connection with an Insolvency Proceeding; (4) garnishment, levy, and debtor and
third party examinations; and (5) postjudgment motions and proceedings of any
kind, including without limitation any activity taken to collect or enforce any
judgment. All of the foregoing costs and expenses shall be payable upon demand
by Lender, and if not paid within forty-five (45) days of presentation of
invoices shall bear interest at the Default Rate.

9.9 Execution in Counterparts. This Agreement and the other Loan Documents may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Any party may execute this Agreement and the other Loan Documents by facsimile
signature or scanned signature in PDF (or like) format, and any such facsimile
signature or scanned signature shall be deemed an original signature and each of
the parties is hereby authorized to rely thereon.

9.10 Entire Agreement. The Loan Documents are intended by the parties as the
final expression of their agreement and therefore contain the entire agreement
between the parties and supersede all prior understandings or agreements
concerning the subject matter hereof. This Agreement may be amended only in a
writing signed by Borrower and Lender.

9.11 Governing Law and Jurisdiction.

(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF BORROWER AND LENDER CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. BORROWER AND LENDER EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.

9.12 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW,
BORROWER AND LENDER EACH WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY

 

 

18

--------------------------------------------------------------------------------

OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER AND LENDER
EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEMS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

9.13 Confidentiality. Lender agrees to hold in confidence all confidential
information that it receives from Borrower pursuant to the Loan Documents,
except for disclosure as shall be reasonably required: (a) to legal counsel and
accountants for Lender; (b) to other professional advisors to Lender; (c) to
regulatory officials having jurisdiction over Lender to the extent required by
law; (d) to Lender’s investors and prospective investors, and in Lender’s SEC
filings; (e) as required by law or legal process or in connection with any legal
proceeding to which Lender and Borrower are adverse parties; (f) in connection
with a disposition or proposed disposition of any or all of Lender’s rights
hereunder; (g) to Lender’s subsidiaries or Affiliates in connection with their
business with Borrower (subject to the same confidentiality obligation set forth
herein); (h) as required by valid order of a court of competent jurisdiction,
administrative agency or governmental body, or by any applicable law, rule,
regulation, subpoena, or any other administrative or legal process, or by
applicable regulatory or professional standards, including in connection with
any judicial or other proceeding involving Lender relating to this Agreement and
the transactions contemplated hereby; and (i) as required in connection with
Lender’s examination or audit. For purposes of this section, Lender and Borrower
agree that “confidential information” shall mean any information regarding or
relating to Borrower other than: (i) information which is or becomes generally
available to the public other than as result of a disclosure by Lender in
violation of this section, (ii)

information which becomes available to Lender from any other source (other than
Borrower) which Lender does not know is bound by a confidentiality agreement
with respect to the information made available, and (iii) information that
Lender knows on a non-confidential basis prior to Borrower disclosing it to
Lender. In addition, Borrower agrees that Lender may use Borrower’s name, logo
and/or trademark in connection with certain promotional materials that Lender
may disseminate to the public, including, but are not limited to, brochures,
internet website, press releases and any other materials relating to the fact
that Lender has a financing relationship with Borrower.

ARTICLE 10 - DEFINITIONS

The definitions appearing in this Agreement or any Supplement shall be
applicable to both the singular and plural forms of the defined terms:

“Account” means any “account,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest and, in any event, shall include, without limitation, all
accounts receivable, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper, Documents or Instruments) now owned
or hereafter received or acquired by or belonging or owing to Borrower
(including, without limitation, under any trade name, style or division thereof)
whether arising out of goods sold or services rendered by Borrower or from any
other transaction, whether or not the same involves the sale of goods or
services by Borrower (including, without limitation, any such obligation that
may be characterized as an account or contract right under the UCC) and all of
Borrower’s rights in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, and all of Borrower’s rights to
any goods represented by any of the foregoing (including, without limitation,
unpaid seller’s rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), and all monies
due or to become due to Borrower under all purchase orders and contracts for the
sale of goods or the performance of services or both by Borrower or in
connection with any other transaction (whether or not yet earned by performance
on the part of Borrower), now in existence or hereafter occurring, including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts, and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.

 

 

19

--------------------------------------------------------------------------------

“Affiliate” means any Person which directly or indirectly controls, is
controlled by, or is under common control with Borrower. “Control,” “controlled
by” and “under common control with” mean direct or indirect possession of the
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise); provided,
that control shall be conclusively presumed when any Person or affiliated group
directly or indirectly owns five percent (5%) or more of the securities having
ordinary voting power for the election of directors of a corporation.

“Agreement” means this Loan and Security Agreement and each Supplement thereto,
as each may be amended or supplemented from time to time.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended.

“Basic Interest” means the fixed rate of interest payable on the outstanding
balance of each Loan at the applicable Designated Rate.

“Borrowing Date” means the Business Day on which the proceeds of a Loan are
disbursed by Lender.

“Borrowing Request” means a written request from Borrower in substantially the
form of Exhibit “B” to the Supplement, requesting the funding of one or more
Loans on a particular Borrowing Date.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York City or San Francisco are authorized or required by
law to close.

“Change of Control” has the meaning specified in the Supplement.

“Chattel Paper” means any “chattel paper,” as such term is defined in the UCC,
now owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.

“Closing Date” means the date of this Agreement.

“Collateral” means all of Borrower’s right, title and interest in and to the
following property, whether now owned or hereafter acquired and wherever
located: (a) all Receivables; (b) all Equipment; (c) all Fixtures; (d) all
General Intangibles; (e) all Inventory;

(f) all Investment Property; (g) all Deposit Accounts; (h) all Shares; (i) all
other Goods and personal property of Borrower, whether tangible or intangible
and whether now or hereafter owned or existing, leased, consigned by or to, or
acquired by, Borrower and wherever located; (j) all Records; and (k) all
Proceeds of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of each of the foregoing.

Notwithstanding the foregoing the term “Collateral” shall not include: (i) more
than sixty-five percent (65%) of the issued and outstanding capital stock,
membership units or other securities entitled to vote owned or held of record by
Borrower in any Subsidiary that is a controlled foreign corporation (as defined
in the Internal Revenue Code), provided that the Collateral shall include one
hundred percent (100%) of the issued and outstanding non-voting capital stock of
such Subsidiary; (ii) “intent-to-use” trademarks at all times prior to the first
use thereof, whether by the actual use thereof in commerce, the recording of a
statement of use with the United States Patent and Trademark Office or
otherwise, but only to the extent the granting of a security interest in such
“intent to use” trademarks would be contrary to applicable law; and (iii) any
contract, Instrument or Chattel Paper in which Borrower has any right, title or
interest if and to the extent such contract, Instrument or Chattel Paper
includes a provision containing a restriction on assignment such that the
creation of a security interest in the right, title or interest of Borrower
therein would be prohibited and would, in and of itself, cause or result in a
default thereunder enabling another person party to such contract, Instrument or
Chattel Paper to enforce any remedy with respect thereto; provided, however,
that the foregoing exclusion shall not apply if (A) such prohibition has been
waived or such other person has otherwise consented to the creation hereunder of
a security interest in such contract, Instrument or Chattel Paper, or (B) such
prohibition would be rendered ineffective pursuant to Sections 9-407(a) or
9-408(a) of the UCC, as applicable and as then in effect in any relevant
jurisdiction, or any other applicable law (including the Bankruptcy Code or
principles of equity); provided further that immediately upon the
ineffectiveness, lapse or termination of any such provision, the term
“Collateral” shall include, and Borrower shall be deemed to have granted a
security interest in, all its rights, title and interests in and to such
contract, Instrument or Chattel Paper as if such provision had never been in
effect; and provided further that the foregoing exclusion shall in no way be
construed so

 

 

20

--------------------------------------------------------------------------------

as to limit, impair or otherwise affect Lender’s unconditional continuing
security interest in and to all rights, title and interests of Borrower in or to
any payment obligations or other rights to receive monies due or to become due
under any such contract, Instrument or Chattel Paper and in any such monies and
other proceeds of such contract, Instrument or Chattel Paper.

“Commitment” means the obligation of Lender to make Loans to Borrower up to the
aggregate principal amount set forth in the Supplement.

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all of the following now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest:
(i) all copyrights, whether registered or unregistered, held pursuant to the
laws of the United States, any State thereof or of any other country; (ii) all
registrations, applications and recordings in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof or
any other country; (iii) all continuations, renewals or extensions thereof; and
(iv) any registrations to be issued under any pending applications.

“Default” means an event which with the giving of notice, passage of time, or
both would constitute an Event of Default.

“Default Rate” means eighteen percent (18%) per annum.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds
or hereafter acquires any interest.

“Designated Rate” means the rate of interest per annum described in the
Supplement as being applicable to an outstanding Loan from time to time.

“Direct Subsidiary” means any entity listed on Schedule 3.7 as a direct
subsidiary of Borrower.

“Documents” means any “documents,” as such term is defined in the UCC, now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

“Dollars” or “$” means lawful currency of the United States.

“Environmental Laws” means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authorities, in each case
relating to environmental, health, or safety matters.

“Equipment” means any “equipment,” as such term is defined in the UCC, now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest and any and all additions, substitutions and replacements
of any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.

“Excluded Intellectual Property” has the meaning set forth in the Intellectual
Property Security Agreement.

“Event of Default” means any event described in Section 7.1.

“EWB” means East West Bank.

“EWB Working Capital Facility” means the working capital loan facility provided
to Borrower by EWB in which EWB has committed to make formula-based advances to
Borrower up to $10,000,000 in aggregate principal amount outstanding at any time
on a revolving basis, secured by first priority Liens on Borrower’s, cash,
Accounts, the proceeds traceable of such Accounts and Inventory.

“Fixtures” means any “fixtures,” as such term is defined in the UCC, now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

“GAAP” means generally accepted accounting principles and practices consistent
with those principles and practices promulgated or adopted by the Financial
Accounting Standards Board and the Board of the American Institute of Certified
Public Accountants, their respective predecessors and successors. Each
accounting term used but not otherwise expressly defined herein shall have the
meaning given it by GAAP.

 

 

21

--------------------------------------------------------------------------------

“General Intangibles” means any “general intangibles,” as such term is defined
in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest and, in any event, shall include,
without limitation, all right, title and interest that Borrower may now or
hereafter have in or under any contract, all customer lists, Copyrights,
Trademarks, Patents, websites, domain names, and all applications therefor and
reissues, extensions, or renewals thereof, other items of, and rights to,
Intellectual Property, interests in partnerships, joint ventures and other
business associations, Licenses, permits, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, recipes, experience, processes, models, drawings,
materials and records, goodwill (including, without limitation, the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark License), claims in or under insurance policies, including
unearned premiums, uncertificated securities, money, cash or cash equivalents,
deposit, checking and other bank accounts, rights to sue for past, present and
future infringement of Copyrights, Trademarks and Patents, rights to receive tax
refunds and other payments and rights of indemnification.

“Goods” means any “goods,” as such term is defined in the UCC, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

“Indebtedness” of any Person means at any date, without duplication and without
regard to whether matured or unmatured, absolute or contingent: (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker’s
acceptance, or similar instrument, whether drawn or undrawn; (vi) all
obligations of such Person to purchase securities which arise out of or in
connection with the sale of the same or substantially similar securities;
(vii) all obligations of such Person to purchase, redeem, exchange, convert or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital

stock, now or hereafter outstanding, except to the extent that such obligations
remain performable solely at the option of such Person; (viii) all obligations
to repurchase assets previously sold (including any obligation to repurchase any
accounts or chattel paper under any factoring, receivables purchase, or similar
arrangement); (ix) obligations of such Person under interest rate swap, cap,
collar or similar hedging arrangements; and (x) all obligations of others of any
type described in clause (i) through clause (ix) above guaranteed by such
Person.

“Insolvency Proceeding” means with respect to a Person (a) any case, action or
proceeding before any court or other governmental authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors with respect to such Person, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of such Person’s creditors
generally or any substantial portion of its creditors, undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code, but in each case,
excluding any avoidance or similar action against such Person commenced by an
assignee for the benefit of creditors, bankruptcy trustee, debtor in possession,
or other representative of another Person or such other Person’s estate.

“Instruments” means any “instrument,” as such term is defined in the UCC, now
owned or hereafter acquired by Borrower or in which Borrower now holds or
hereafter acquires any interest.

“Intellectual Property” means all of Borrower’s Copyrights, Trademarks, Patents,
Licenses, trade secrets, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, skill, expertise, experience, processes, models, drawings, materials,
records and goodwill associated with the foregoing.

“Intellectual Property Security Agreement” means any Intellectual Property
Security Agreement executed and delivered by Borrower in favor of Lender, as the
same may be amended, supplemented, or restated from time to time.

“Inventory” means any “inventory,” as such term is defined in the UCC, wherever
located, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest, and, in

 

 

22

--------------------------------------------------------------------------------

any event, shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of Borrower for sale or lease or
are furnished or are to be furnished under a contract of service or that
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in Borrower’s business, or the processing, packaging,
promotion, delivery or shipping of the same, and all finished goods, whether or
not the same is in transit or in the constructive, actual or exclusive
possession of Borrower or is held by others for Borrower’s account, including,
without limitation, all goods covered by purchase orders and contracts with
suppliers and all goods billed and held by suppliers and all such property that
may be in the possession or custody of any carriers, forwarding agents,
truckers, warehousemen, vendors, selling agents or other Persons.

“Investment Property” means any “investment property,” as such term is defined
in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.

“Letter of Credit Rights” means any “letter of credit rights,” as such term is
defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest, including any right to
payment under any letter of credit.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest and any
renewals or extensions thereof.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, levy, lien, charge or similar encumbrance of any
kind, whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
any lease in the nature of a security interest, and the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any applicable jurisdiction.

“Loan” means an extension of credit by Lender under this Agreement.

“Loan Documents” means, individually and collectively, this Loan and Security
Agreement, each Supplement, each Note, the Intellectual Property Security
Agreement, and any other security or pledge agreement(s), any Warrants issued by
Borrower in connection with this Agreement, and all other contracts,
instruments, addenda and documents executed in connection with this Agreement or
the extensions of credit which are the subject of this Agreement.

“Material Adverse Effect” or “Material Adverse Change” means (a) a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, or condition (financial or otherwise) of Borrower; (b) a material
impairment of the ability of Borrower to perform under any Loan Document; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against Borrower of any Loan Document.

“Note” means a promissory note substantially in the form attached to the
Supplement as Exhibit “A”, executed by Borrower evidencing each Loan.

“Obligations” means all debts, obligations and liabilities of Borrower to Lender
currently existing or now or hereafter made, incurred or created under, pursuant
to or in connection with this Agreement or any other Loan Document, whether
voluntary or involuntary and however arising or evidenced, whether direct or
acquired by Lender by assignment or succession, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
whether Borrower may be liable individually or jointly, or whether recovery upon
such debt may be or become barred by any statute of limitations or otherwise
unenforceable; and all renewals, extensions and modifications thereof; and all
attorneys’ fees and costs incurred by Lender in connection with the collection
and enforcement thereof as provided for in any Loan Document.

“Ordinary Course Subsidiary Invoices” means invoiced amounts or other amounts
payable by the Borrower to its direct or indirect international Subsidiaries in
return for goods and services provided by such Subsidiaries in the ordinary
course.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

 

23

--------------------------------------------------------------------------------

“Patents” means all of the following property now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest:
(a) all letters patent of, or rights corresponding thereto in, the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of, or rights corresponding thereto in, the
United States or any other country, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals,
and patents of addition; and (d) all patents to be issued under any such
applications.

“Permitted Lien” means:

(a) involuntary Liens which, in the aggregate, would not have a Material Adverse
Effect and which in any event would not exceed, in the aggregate, the Threshold
Amount;

(b) Liens for current taxes or other governmental or regulatory assessments
which are not delinquent, or which are contested in good faith by the
appropriate procedures and for which appropriate reserves are maintained;

(c) security interests on any property held or acquired by Borrower in the
ordinary course of business securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property;
provided, that such Lien attaches solely to the property acquired with such
Indebtedness and that the principal amount of such Indebtedness does not exceed
one hundred percent (100%) of the cost of such property;

(d) Liens in favor of Lender;

(e) bankers’ liens, rights of setoff and similar Liens incurred on deposits made
in the ordinary course of business as long as an account control agreement (or
equivalent) for each account in which such deposits are held in a form
acceptable to Lender has been executed and delivered to Lender;

(f) materialmen’s, mechanics’, repairmen’s, employees’ or other like Liens
arising in the ordinary course of business and which are not delinquent for more
than 45 days or are being contested in good faith by appropriate proceedings;

(g) any judgment, attachment or similar Lien, unless the judgment it secures has
not been discharged or execution thereof effectively stayed and bonded against
pending appeal within 30 days of the entry thereof;

(h) licenses or sublicenses of Intellectual Property in accordance with the
terms of Section 6.5 hereof;

(i) Liens securing Subordinated Debt;

(j) Liens granted to EWB securing the EWB Working Capital Facility and permitted
under the ICA; and

(k) Liens which have been approved by Lender in writing prior to the Closing
Date, as shown on Schedule 6.2 hereto.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

“Pre-Existing Intercompany Balances” means any de minimis Indebtedness among
Borrower and its domestic subsidiaries incurred prior to, and in existence on,
the Closing Date.

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any
event, shall include, without limitation, (a) any and all Accounts, Chattel
Paper, Instruments, cash or other forms of money or currency or other proceeds
payable to Borrower from time to time in respect of the Collateral, (b) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to
Borrower from time to time with respect to any of the Collateral, (c) any and
all payments (in any form whatsoever) made or due and payable to Borrower from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
authority (or any Person acting under color of governmental authority), (d) any
claim of Borrower against third parties (i) for past, present or future
infringement of any Copyright, Patent or Patent License or (ii) for past,
present or future infringement or dilution of any Trademark or Trademark License
or for injury to the goodwill associated with any Trademark, Trademark

 

 

24

--------------------------------------------------------------------------------

registration or Trademark licensed under any Trademark License and (e) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.

“Receivables” means all of Borrower’s Accounts, Instruments, Documents, Chattel
Paper, Supporting Obligations, and letters of credit and Letter of Credit
Rights.

“Records” means all Borrower’s computer programs, software, hardware, source
codes and data processing information, all written documents, books, invoices,
ledger sheets, financial information and statements, and all other writings
concerning Borrower’s business.

“Related Person” means any Affiliate of Borrower, or any officer, employee,
director or equity security holder of Borrower or any Affiliate.

“Rights to Payment” means all Borrower’s accounts, instruments, contract rights,
documents, chattel paper and all other rights to payment, including, without
limitation, the Accounts, all negotiable certificates of deposit and all rights
to payment under any Patent License, any Trademark License, or any commercial or
standby letter of credit.

“Scheduled Subsidiary” means any entity listed on Schedule 3.7 as a subsidiary
of Borrower.

“Security Documents” means this Loan and Security Agreement, the Supplement
hereto, the Intellectual Property Security Agreement, and any and all account
control agreements, collateral assignments, chattel mortgages, financing
statements, amendments to any of the foregoing and other documents from time to
time executed or filed to create, perfect or maintain the perfection of Lender’s
Liens on the Collateral.

“Shares” means: (a) one hundred percent (100%) of the issued and outstanding
capital stock, membership units or other securities owned or held of record by
Borrower in any Direct Subsidiary that is not a controlled foreign corporation
(as defined in the Internal Revenue Code), and (b) 65% of the issued and
outstanding capital stock, membership units or other securities entitled to vote
owned or held of record by Borrower in any Direct Subsidiary that is a
controlled foreign corporation (as defined in the Internal Revenue Code).

“Subordinated Debt” means Indebtedness (other than Indebtedness to EWB related
to the EWB Working Capital Facility) (i) approved by Lender;

and (ii) where the holder’s right to payment of such Indebtedness, the priority
of any Lien securing the same, and the rights of the holder thereof to enforce
remedies against Borrower following default have been made subordinate to the
Liens of Lender and to the prior payment to Lender of the Obligations, either
(A) pursuant to a written subordination agreement approved by Lender in its sole
but reasonable discretion or (B) on terms otherwise approved by Lender in its
sole but reasonable discretion.

“Subsidiary” means any Person a majority of the equity ownership or voting stock
of which is directly or indirectly now owned or hereafter acquired by Borrower
or by one or more Scheduled Subsidiaries, or in which Borrower or one or more
Scheduled Subsidiaries directly or indirectly now holds or hereafter acquires
any interest.

“Supplement” means that certain supplement to the Loan and Security Agreement,
as the same may be amended or restated from time to time, and any other
supplements entered into between Borrower and Lender, as the same may be amended
or restated from time to time.

“Supporting Obligations” means any “supporting obligations,” as such term is
defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

“Termination Date” has the meaning specified in the Supplement.

“Threshold Amount” has the meaning specified in the Supplement.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Trademarks” means all of the following property now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest:
(a) all trademarks, tradenames, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on
which any of the foregoing have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and any applications in connection
therewith, including, without

 

 

25

--------------------------------------------------------------------------------

limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof and (b) reissues, extensions or renewals thereof.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of California; provided, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of, or remedies with respect to, Lender’s Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of California, the term “UCC” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions. Unless otherwise defined herein, terms that are defined in the UCC
and used herein shall have the meanings given to them in the UCC.

“Warrants” has the meaning specified in the Supplement.

[Signature page follows]

    

 

 

26

--------------------------------------------------------------------------------

[Signature page to Loan and Security Agreement]

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

 

BORROWER: IDENTIV, INC. By:  

/s/ STEVEN FINNEY

Name:  

STEVEN FINNEY

Title:  

INTERIM CFO

LENDER: VENTURE LENDING & LEASING VII, INC. By:  

/s/ JAY COHAN

Name:  

JAY COHAN

Title:  

VICE PRESIDENT

LENDER: VENTURE LENDING & LEASING VIII, INC. By:  

/s/ JAY COHAN

Name:  

JAY COHAN

Title:  

VICE PRESIDENT

[Schedules to Loan and Security Agreement follow]

    

 

--------------------------------------------------------------------------------

Schedules to

Loan and Security Agreement

dated as of February 8, 2017

between

Identiv, Inc.

and

Venture Lending & Leasing VII, Inc.

and

Venture Lending & Leasing VIII, Inc.

 

 

Schedule of Exceptions

None

Schedule 3.7. Scheduled Subsidiaries

Direct Subsidiaries

idOnDemand.Inc (US)*

Identiv GmbH (Germany)

SCM Microsystems Group Limited (UK)

Microtech International Inc. (US)*

SCM Microsystems Inc. (US)*

Dazzle Multimedia Inc. (US)*

SCM Micro-systems Private Ltd (Singapore)

Identiv KK (Japan)

Bluehill ID AG (Switzerland)

ACiG Technology Corp. (US)*

 

* Borrower represents and warrants to Lender that none of such above-described
Direct Subsidiaries has any material assets or operations.

Other Scheduled Subsidiaries

Identiv Pte. Ltd. (Singapore)

Identiv Pvt Ltd. (India)

SCM Microsystems Limited (UK)

Multicard Pty. Limited (Australia)

Shuttle Technology Inc. (US)*

SCM Microsystems Private Ltd (India)

Intermart Systems Inc. (US)

Identive Services AG (Switzerland)

Identive Technologies AG (Germany)

4446691 Canada, Inc. (Canada)

 

* Borrower represents and warrants to Lender that such above-described Other
Schedule Subsidiary does not have any material assets or operations.

Schedule 6.1. Permitted Indebtedness

Indebtedness payable to Secure Keyboards, Ltd. under an Amended and Restated
Settlement Agreement dated as of April 8, 2009.

Permitted Investments

Equity investment of 19.9% in Rockwest Technology Group, d/b/a Multicard US

Schedule 6.2. Permitted Liens

None