exv10w28



 




Exhibit
10.28



LOAN AND SECURITY AGREEMENT




         THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective Date between
SILICON VALLEY BANK, a California corporation (“Bank”), and Glu Mobile Inc., a California
corporation (“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower
shall repay Bank. The parties agree as follows:



1.     ACCOUNTING AND OTHER TERMS




         Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.



2.     LOAN AND TERMS OF PAYMENT




          2.1     Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding
principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due
in accordance with this Agreement.




                    2.1.1     Revolving Advances.



                                 (a)     Availability. Subject to the terms and conditions of this Agreement, Bank will
make Advances to Borrower up to an amount (“Net Borrowing Availability”) not to exceed the lesser
of the Revolving Line and the Borrowing Base.



                                 (b)     Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all
other Obligations relating to the Revolving Line shall be immediately due and payable.



          2.2     Overadvances. If at any time or for any reason the total of all outstanding Advances and
all other monetary Obligations exceeds Net Borrowing Availability (an “Overadvance”), Borrower
shall immediately pay the amount of the excess to Bank, without notice or demand. Without limiting
Borrower’s obligation to repay to Bank the amount of any Overadvance, Borrower agrees to pay Bank
interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.




          2.3     Payment of Interest on the Credit Extensions.




                                 (a)     Interest Rate; Advances. Subject to Section 2.3(b), the amounts
outstanding under the Revolving Line shall accrue interest at a per annum rate equal to one (1)
percentage point above the Prime Rate, floating, which interest shall be payable monthly. If, at
any time, Net Cash is less than $3,500,000, the interest rate on the Revolving Line will increase
to the Prime Rate plus 2.0%, floating, as of the first day of the month following the reporting
date for the financial statements that show the Borrower’s Net Cash has dropped below



 









 







$3,500,000. The interest rate on the Revolving Line will decrease to the Prime Rate plus 1.0%
floating, as of the first day of the month following the receipt of financial statements showing
the Borrower’s Net Cash is once again above $3,500,000.



                                 (b)     Default Rate. Immediately upon the occurrence and during the continuance of an
Event of Default, the Obligations shall bear interest at a rate per annum which is five percentage
points above the rate effective immediately before the Event of Default (the “Default Rate”).
Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a
permitted alternative to timely payment and shall not constitute a waiver of any Event of Default
or otherwise prejudice or limit any rights or remedies of Bank. For purposes of this Agreement, an
Event of Default shall be deemed to no longer continue upon Borrower’s receipt of Bank’s written
confirmation (which may be via email) that Bank considers that it no longer is continuing.



                                 (c)     Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension
based on changes to the Prime Rate shall be effective on the effective date of any change to the
Prime Rate and to the extent of any such change.



                                 (d)     360-Day Year. Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed.



                                 (e)     Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including
the Designated Deposit Account, for principal and interest payments or any other amounts Borrower
owes Bank when due. These debits shall not constitute a set-off.



                                 (f)     Payment; Interest Computation. Interest is payable monthly on the last calendar
day of each month. In computing interest on the Obligations, all Payments received after 12:00
p.m. Pacific time on any day shall be deemed received on the next Business Day. Bank shall not,
however, be required to credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrower’s
Designated Deposit Account for the amount of any item of payment which is returned to Bank unpaid.



          2.4 Fees.     Borrower shall pay to Bank:




                                 (a)     Commitment Fee. A commitment fee of .50% of the commitment per annum, payable on
the Effective Date and on the anniversary thereof, which fee is fully earned and non-refundable in
its entirety on the Effective Date;



                                 (b)     Termination Fee. Subject to the terms of Section 4.1, a termination fee;



                                 (c)     Collateral Monitoring Fee. During any period in which Net Cash is less than
$3,500,000, a monthly collateral monitoring fee of $1,000, payable in arrears on the last day of
each month (prorated for any partial month) and upon termination of this Agreement;



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                                 (d)     Liquidity Facility Fee. At such time as Net Cash becomes less than $3,500,000, a
facility fee of $50,000, payable with delivery of the financial statements required by Section 6.2
below; and



                                 (e)     Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses plus expenses, for documentation and negotiation of this Agreement) incurred through and
after the Effective Date, when due.



3.     CONDITIONS OF LOANS




          3.1     Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial
Credit Extension is subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:




                                 (a)     Borrower shall have delivered duly executed original signatures to the Loan Documents to
which it is a party;



                                 (b)      Borrower shall have delivered duly executed original signatures to the Control
Agreement[s];



                                 (c)      Borrower shall have delivered its Operating Documents and a good standing certificate of
Borrower certified by the Secretary of State of the State of California as of a date no earlier
than thirty (30) days prior to the Effective Date;



                                 (d)     Borrower shall have delivered duly executed original signatures to the completed Borrowing
Resolutions for Borrower;



                                 (e)     Borrower shall have delivered the Intercreditor Agreement duly executed by Pinnacle
Ventures in favor of Bank;



                                 (f)     Bank shall have received certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence (including any UCC
termination statements) that the Liens indicated in any such financing statements either constitute
Permitted Liens or have been or, in connection with the initial Advance, will be terminated or
released;



                                 (g)     Borrower shall have delivered the Perfection Certificate(s) executed by Borrower;



                                 (h)     Borrower shall have delivered the insurance policies and/or endorsements required pursuant
to Section 6.7 hereof evidence satisfactory to Bank that the insurance policies required by Section
6.7 hereof are in full force and effect, together with appropriate evidence showing loss payable
and/or additional insured clauses or endorsements in favor of Bank; and



                                 (i)     Borrower shall have paid the fees and Bank Expenses then due as specified in Section 2.4
hereof.



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          3.2     Conditions Precedent to all Credit Extensions. Bank’s obligation to make each Credit
Extension, including the initial Credit Extension, is subject to the following:




                                 (a)     timely receipt of an executed Payment/Advance Form;



                                 (b)     the representations and warranties in Section 5 shall be true in all material respects on
the date of the Payment/Advance Form and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof; and provided,
further that those representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no Default or Event of
Default shall have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the representations and
warranties in Section 5 remain true in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already
are qualified or modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be true, accurate and
complete in all material respects as of such date; and



                                 (c)     in Bank’s sole discretion, there has not been a Material Adverse Change.



          3.3     Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be
delivered to Bank under this Agreement as a condition to any Credit Extension. Borrower expressly
agrees that the extension of a Credit Extension prior to the receipt by Bank of any such item shall
not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and any such
extension in the absence of a required item shall be in Bank’s sole discretion.




          3.4     Procedures for Borrowing. Subject to the prior satisfaction of all other applicable
conditions to the making of an Advance set forth in this Agreement, to obtain an Advance, Borrower
shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone
by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with such notification if
Net Cash is less than $3,500,000, Borrower must promptly deliver to Bank by electronic mail or
facsimile a completed Transaction Report executed by a Responsible Officer or his or her designee.
Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become due. Bank may
rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or
designee.




4.     CREATION OF SECURITY INTEREST




          4.1     Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and
performance in full of all of the Obligations, a continuing security interest in, and pledges to
Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first priority

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perfected security interest in the Collateral (subject only to Permitted Liens that may have
superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial
tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general
details thereof and grant to Bank in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Bank.




         This Agreement may be terminated prior to the Revolving Maturity Date by Borrower, effective
three (3) Business Days after written notice of termination is given to Bank or if Bank’s
obligation to fund Credit Extensions terminates pursuant to the terms of Section 2.1.1(b).
Notwithstanding any such termination, Bank’s lien and security interest in the Collateral shall
continue until Borrower fully satisfies its Obligations. If such termination is at Borrower’s
election or at Bank’s election due to the occurrence and continuance of an Event of Default,
Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to one-half of one-percent (.50%) of the Revolving Line provided
that no termination fee shall be charged if the credit facility hereunder is replaced with a new
facility from another division of Silicon Valley Bank. Upon payment in full of the Obligations and
at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall release its
liens and security interests in the Collateral and all rights therein shall revert to Borrower.



          4.2     Authorization to File Financing Statements. Borrower hereby authorizes Bank to file
financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or
protect Bank’s interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.




5.     REPRESENTATIONS AND WARRANTIES




         Borrower represents and warrants as follows:



          5.1     Due Organization and Authorization. Borrower and each of its Subsidiaries are duly
existing and in good standing as Registered Organizations in their respective jurisdictions of
formation and are qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their business or their ownership of property requires that
they be qualified except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has
delivered to Bank a completed certificate signed by Borrower, entitled “Collateral Information
Certificate” (the “Perfection Certificate”). Borrower represents and warrants to Bank that (a)
Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature
page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set
forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth
Borrower’s organizational identification number or accurately states that Borrower has none; (d)
the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than
one, its chief executive office as well as Borrower’s mailing address (if different than its chief
executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years,
changed its jurisdiction of formation, organizational structure or type,

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or any organizational number assigned by its jurisdiction; and (f) all other information set
forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate
and complete. If Borrower is not now a Registered Organization but later becomes one, Borrower
shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.




         The execution, delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s organizational documents, nor constitute an event of default under
any material agreement by which Borrower is bound. Borrower is not in default under any agreement
to which it is a party or by which it is bound in which the default could reasonably be expected to
have a material adverse effect on Borrower’s business.



         5.2     Collateral. Borrower has good title to the Collateral, free of Liens except Permitted
Liens. Borrower has no deposit account other than the deposit accounts with Bank.



                    The Collateral is not in the possession of any third party bailee (such as a warehouse).
Except as hereafter disclosed to Bank in writing by Borrower, none of the components of the
Collateral shall be maintained at locations other than as provided in the Perfection Certificate.
In the event that Borrower, after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee, then Borrower will first receive the written consent of Bank
and such bailee must acknowledge in writing that the bailee is holding such Collateral for the
benefit of Bank.



                    All Inventory is in all material respects of good and marketable quality, free from material
defects.



                    Borrower and its Subsidiaries own, or possess the right to use, all of Intellectual Property
that is reasonably necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, except for such Intellectual Property for which the failure to
own or possess the right to use could not reasonably be expected to result in a Material Adverse
Change. To the best of Borrower’s knowledge, none of such Intellectual Property has been judged
invalid or unenforceable, in whole or in part, and no claim has been made that any part of such
Intellectual Property created or owned by Borrower violates the rights of any third party.



          5.3     Accounts Receivable.




                                 (a)     For each Account with respect to which Advances are requested, on the date each Advance is
requested and made, such Account shall meet the requirement for an Eligible Account set forth in
Section 13 below.



                                 (b)     All statements made and all unpaid balances appearing in all invoices, instruments and
other documents evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents, and all of Borrower’s Books are genuine and in all respects what
they purport to be. All sales and other transactions underlying or giving rise to each Account
shall comply in all material respects with all applicable laws and governmental rules and
regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any
Account Debtor whose accounts are an Eligible Account in any



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Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all Accounts are genuine,
and all such documents, instruments and agreements are legally enforceable in accordance with their
terms.




          5.4     Litigation. There are no actions or proceedings pending or, to the knowledge of the
Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries
involving more than $100,000.




          5.5     No Material Deviation in Financial Statements. All consolidated financial statements for
Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects
Borrower’s consolidated financial condition and Borrower’s consolidated results of operations.
There has not been any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.




          5.6     Solvency. Borrower is able to pay its debts (including trade debts) as they mature.




          5.7      Regulatory Compliance. Borrower is not an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its
important activities in extending credit for margin stock (under Regulations T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of
which could reasonably be expected to have a material adverse effect on its business. None of
Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than legally. Borrower and each
of its Subsidiaries have obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted.




          5.8      Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.




          5.9     Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in
writing of the commencement of, and any material development in, the proceedings, and (c) posts
bonds or takes any other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by Borrower. Borrower has
paid all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with




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their terms, and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.




          5.10     Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as
working capital and to fund its general business requirements and not for personal, family,
household or agricultural purposes.




          5.11     Full Disclosure. No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank, as of the date such representations,
warranties, or other statements were made, taken together with all such written certificates and
written statements given to Bank, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained in the certificates or statements
not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not 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).




6.     AFFIRMATIVE COVENANTS




          Borrower shall do all of the following:




          6.1     Government Compliance. Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower’s business.




          6.2     Financial Statements, Reports, Certificates.




                                 (a)     Borrower shall provide Bank with the following:



                                           (i)      within thirty (30) days after the end of each month, (A) monthly accounts receivable
agings, aged by invoice date, (B) monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, (C) monthly reconciliations of accounts receivable
agings (aged by invoice date), transaction reports, and general ledger, and (D) Borrowing Base
Certificate.



                                           (ii)      as soon as available, and in any event within thirty (30) days after the end of each
month, monthly unaudited consolidating financial statements;



                                           (iii)      within thirty (30) days after the end of each month a monthly Compliance Certificate
signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set



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forth in this Agreement and such other information as Bank shall reasonably request,
including, without limitation, for any Compliance Certificate delivered when a lockbox is required
under this Section 6.3(c) hereof, a statement that at the end of such month there were no held
checks;




                                           (iv)     within thirty (30) days after the end of each fiscal year of Borrower, (A) annual
operating budgets (including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower, and (B) annual consolidating financial projections for
the following fiscal year (on a quarterly basis) as approved by Borrower’s board of directors,
together with any related business forecasts used in the preparation of such annual financial
projections; and



                                           (v)      as soon as available, and in any event within 210 days following the end of Borrower’s
fiscal year, annual financial statements certified by, and with an unqualified opinion of,
independent certified public accountants acceptable to Bank.



                                 (b)     In the event that Borrower becomes subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended, within five (5) days after filing, all reports on Form
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto on
Borrower’s or another website on the Internet.



                                 (c)      Prompt written notice of (i) any material change in the composition of the Intellectual
Property, (ii) the registration of any Copyright, including any subsequent ownership right of
Borrower in or to any Copyright, Patent or Trademark not previously disclosed to Bank, or (iii)
Borrower’s knowledge of an event that materially adversely affects the value of the Intellectual
Property.



                                 (d)     In the event Net Cash is less than $3,500,000, Borrower shall provide Bank weekly and with
each Advance request, a transaction report with respect to sales, credit memoranda and other
adjustments to the value of Accounts, on Bank’s standard form.



          6.3     Accounts Receivable.




                                 (a)     Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank
transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard
forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect
or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein.
If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on
its request, the originals of all instruments, chattel paper, security agreements, guarantees and
other documents and property evidencing or securing any Accounts, in the same form as received,
with all necessary indorsements, and copies of all credit memos.



                                 (b)     Disputes. Borrower shall promptly notify Bank of each dispute or claim relating
to an Account if such dispute or claim is in excess of $50,000. Borrower may



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forgive (completely or partially), compromise, or settle any Account for less than payment in
full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions,
and reports the same to Bank in the regular reports provided to Bank; (ii) no Default or Event of
Default has occurred and is continuing; and (iii) after taking into account all such discounts,
settlements and forgiveness, the total outstanding Advances will not exceed the Net Borrowing
Availability.




                                 (c)      Collection of Accounts. Borrower shall have the right to collect all Accounts,
unless and until a Default or an Event of Default has occurred and is continuing. In the event
that Net Cash is less than $3,500,000, Borrower shall establish a lockbox account, or such other
“blocked account” as Bank may specify, pursuant to a blocked account agreement in such form as Bank
may specify in its good faith business judgment, into which all proceeds of Accounts shall be
deposited by Borrower. All payments and proceeds received by Bank shall be applied to the
Obligations pursuant to the terms of Section 9.4 hereof. Whether or not an Event of Default has
occurred and is continuing, if and to the extent that a lockbox is required under this Section
6.3(c), Borrower shall hold all payments on, and proceeds of, Accounts in trust for Bank, and
Borrower shall immediately deliver all such payments and proceeds to Bank in their original form,
duly endorsed.



                                 (d)      Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount,
and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event
any attempted return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank
of the return of the Inventory.



                                 (e)      Verification. Bank may, from time to time, verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts, either in the name
of Borrower or Bank or such other name as Bank may choose.



                                 (f)      No Liability. Bank shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of
which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any Account, or for settling
any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement giving rise to an
Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.



          6.4      Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind,
all proceeds arising from the disposition of any Collateral to Bank in the original form in which
received by Borrower not later than the following Business Day after receipt by Borrower, to be
applied to the Obligations pursuant to the terms of Section 9.4 hereof; provided that, if no
Default or Event of Default has occurred and is continuing, Borrower shall not be obligated to
remit to Bank the proceeds of the sale of unneeded, worn out




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or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for
an aggregate purchase price of $50,000 or less (for all such transactions in any fiscal year).
Except for the proceeds identified in the immediately preceding sentence, Borrower agrees that it
will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in an express trust
for Bank. Nothing in this Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.




          6.5      Taxes; Pensions. Timely file all required tax returns and reports and timely pay all
foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower
except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and
pay all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.




          6.6     Access to Collateral; Books and Records. At reasonable times, on one (1) Business Day’s
notice (provided no notice is required if an Event of Default has occurred and is continuing),
Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books. The foregoing inspections and audits shall be at Borrower’s expense, and the
charge therefor shall be $750 per person per day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event
Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or
seeks to reschedules the audit with less than ten (10) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses
of the cancellation or rescheduling.




          6.7      Insurance. Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All
property policies shall have a lender’s loss payable endorsement showing Bank as an additional loss
payee and waive subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured. All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer must give Bank at least twenty (20)
days notice before canceling, amending, or declining to renew its policy. At Bank’s request,
Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Bank’s option, be payable to Bank on account of the Obligations.
If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or
furnish any required proof of payment to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section 6.7, and take any action under
the policies Bank deems prudent.




          6.8      Operating Accounts.




                                 (a)      Maintain its primary deposit accounts and a securities account with Bank and Bank’s
Affiliates.



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     (b)      Provide Bank five (5) days prior written notice before establishing any Collateral Account
at or with any bank or financial institution other than Bank or its Affiliates. In addition, for
each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable
bank or financial institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate instrument with respect
to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the
terms hereunder. 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 Bank by Borrower as such.



          6.9      Financial Covenants.




                       Borrower shall maintain at all times, to be tested as of the last day of each month, unless
otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:



                       Tangible Net Worth. A Tangible Net Worth of at least $3,000,000 increasing by 50% of
issuances of equity raised after the Effective Date.



          6.10     Protection and Registration of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of its intellectual property; (b)
promptly advise Bank in writing of material infringements of its intellectual property; and (c) not
allow any intellectual property material to Borrower’s business to be abandoned, forfeited or
dedicated to the public without Bank’s written consent. If Borrower decides to register any
copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Bank
with at least fifteen (15) days prior written notice of its intent to register such copyrights or
mask works together with a copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security
agreement or such other documents as Bank may reasonably request to maintain the perfection and
priority of Bank’s security interest in the copyrights or mask works intended to be registered with
the United States Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank a
copy of the application(s) filed with the United States Copyright Office together with evidence of
the recording of the intellectual property security agreement necessary for Bank to maintain the
perfection and priority of its security interest in such copyrights or mask works. Borrower shall
provide written notice to Bank of any application filed by Borrower in the United States Patent and
Trademark Office for a patent or to register a trademark or service mark within 30 days after any
such filing.




          6.11      Litigation Cooperation. From the date hereof and continuing through the termination of
this Agreement, make available to Bank, without expense to Bank, Borrower and its officers,
employees and agents and Borrower’s books and records, to the extent that Bank may deem them
reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or
against Bank with respect to any Collateral or relating to Borrower.

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          6.12      Further Assurances. Borrower shall execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to
effect the purposes of this Agreement.




7.     NEGATIVE COVENANTS




         Borrower shall not do any of the following without Bank’s prior written consent:



          7.1     Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively,
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers of (a) of Inventory in the ordinary course of business; (b) of
unneeded, worn-out or obsolete Equipment; and (c) in connection with Permitted Liens and Permitted
Investments.




          7.2      Changes in Business, Management, or Business Locations. (a) Engage in or permit any of
its Subsidiaries to engage in any business other than the businesses currently engaged in by
Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) (i) if the Key Person ceases to hold such office with Borrower and replacements
satisfactory to Bank are not made within 60 days after his departure from Borrower or (ii) enter
into any transaction or series of related transactions in which the stockholders of Borrower
immediately prior to the first such transaction own less than 50% of the voting stock of Borrower
immediately after giving effect to such transaction or related series of such transactions (other
than by the sale of Borrower’s equity securities in a public offering or to venture capital
investors so long as Borrower identifies to Bank the venture capital investors prior to the closing
of the transaction. Borrower shall not, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses (unless such new offices
or business locations contain less than $50,000 in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal
name, or (5) change any organizational number (if any) assigned by its jurisdiction of
organization.




          7.3     Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of another Person except where (a) total
consideration including cash and the value of any non-cash consideration, for all such transactions
does not in the aggregate exceed $5,000,000 in any fiscal year of Borrower; (b) no Event of Default
has occurred and is continuing or would exist after giving effect to the transactions; and (c)
Borrower is the surviving legal entity. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.




          7.4     Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.




          7.5     Encumbrance. Create, incur, or allow any Lien on any of the Collateral or assign or
convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the
first priority security interest granted herein,or enter into any agreement, document,




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instrument or other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from
assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of
Borrower’s or any Subsidiary’s intellectual property, except as is otherwise permitted in Section
7.1 hereof and the definition of “Permitted Lien” herein].




          7.6     Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to
the terms of Section 6.8.(b) hereof.




          7.7     Investments; Distributions. (a) Directly or indirectly make any Investment other than
Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock provided that (i)
Borrower may convert any of its convertible securities into other securities pursuant to the terms
of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends
solely in common stock; and (iii) Borrower may repurchase the stock of former employees or
consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist
at the time of such repurchase and would not exist after giving effect to such repurchase, provided
such repurchase does not exceed in the aggregate of $250,000 per fiscal year.




          7.8      Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for transactions that are in the
ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.




          7.9      Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under
the terms of the subordination, intercreditor, or other similar agreement to which such
Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof or adversely affect the subordination
thereof to Obligations owed to Bank.




          7.10     Compliance. Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940 or undertake as one of its important activities
extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that
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 other law or regulation, if the violation could reasonably be expected
to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.




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8.     EVENTS OF DEFAULT




     Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:



          8.1     Payment Default. Borrower fails to (a) make any payment of principal or interest on any
Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days
after such Obligations are due and payable. During the cure period, the failure to cure the
payment default is not an Event of Default (but no Credit Extension will be made during the cure
period);




          8.2     Covenant Default.




                                 (a)     Borrower fails or neglects to perform any obligation in Sections 6.2, 6.8, 6.9, or 6.12,
or violates any covenant in Section 7; or



                                 (b)      Borrower fails or neglects to perform, keep, or observe any other term, provision,
condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to any
default (other than those specified in Section 8 below) under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure the default within ten (10)
days after the occurrence thereof; provided, however, that if the default cannot by its nature be
cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within
such ten (10) day period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure to cure the
default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such
cure period). Grace periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants set forth in subsection (a) above;



          8.3      Material Adverse Change. A Material Adverse Change occurs;




          8.4      Attachment. (a) Any material portion of Borrower’s assets is attached, seized, levied on,
or comes into possession of a trustee or receiver and the attachment, seizure or levy is not
removed in ten (10) days; (b) the service of process upon Borrower seeking to attach, by trustee or
similar process, any funds of Borrower on deposit with Bank, or any entity under control of Bank
(including a subsidiary); (c) Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business; (d) a judgment or other claim in excess of $100,000
becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or assessment is filed
against any of Borrower’s assets by any government agency and not paid within ten (10) days after
Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions shall be made during the cure period);




          8.5      Insolvency. Borrower is unable to pay its debts (including trade debts) as they become
due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against Borrower and not dismissed or stayed within




-15-









 




sixty (60) days (but no Credit Extensions shall be made while of any of the conditions
described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);




          8.6      Other Agreements. There is a default in any agreement to which Borrower or any Guarantor
is a party with a third party or parties resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of
$200,000 or that could have a material adverse effect on Borrower’s business: provided,
however, that the Event of Default under this Section 8.6 caused by the occurrence of a default
under such other agreement shall be cured or waived for purposes of this Agreement upon Bank
receiving written notice from the party asserting such default of such cure or waiver of the
default under such other agreement, if at the time of such cure or waiver under such other
agreement (a) Bank has not declared an Event of Default under this Agreement and/or exercised any
rights with respect thereto; (b) any such cure or waiver does not result in an Event of Default
under any other provision of this Agreement or any Loan Document; and (c) in connection with any
such cure or waiver under such other agreement, the terms of any agreement with such third party
are not modified or amended in any manner which could in the good faith judgment of Bank be
materially less advantageous to Borrower;




          8.7      Judgments. A judgment or judgments for the payment of money in an amount, individually or
in the aggregate, of at least $200,000 (not covered by independent third-party insurance) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days
after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction
or stay of such judgment); or




          8.8      Misrepresentations. Borrower or any Person acting for Borrower makes any representation,
warranty, or other statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made;




9.     BANK’S RIGHTS AND REMEDIES




          9.1      Rights and Remedies. While an Event of Default occurs and continues Bank may, without
notice or demand, do any or all of the following:




                                 (a)      declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);



                                 (b)      stop advancing money or extending credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Bank;



                                 (c)      settle or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank considers advisable, notify any Person owing Borrower money of Bank’s
security interest in such funds, and verify the amount of such account;



-16-









 





                                 (d)      make any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral
if Bank requests and make it available as Bank designates. Bank may enter premises where the
Collateral is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge, to exercise any of Bank’s rights or remedies;



                                 (e)      apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;



                                 (f)      ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or
any similar property as it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this
Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;



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



                                 (h)      demand and receive possession of Borrower’s Books; and



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



          9.2      Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)
sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the
Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an Event of Default has
occurred until all Obligations have been paid in full and Bank is under no further obligation to
make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and
all of Bank’s rights and powers, coupled with an interest, are




-17-









 




irrevocable until all Obligations have been fully paid and Bank’s obligation to provide Credit
Extensions terminates.




          9.3      Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7
or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to
pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such
payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral. Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to
make similar payments in the future or Bank’s waiver of any Event of Default.




          9.4      Application of Payments and Proceeds.




                                 (a)      Unless an Event of Default has occurred and is continuing, and so long as the Borrower’s
Net Cash is below $3,500,000, Bank shall apply payments, or proceeds realized as the result of any
collection of Accounts, first, to the principal of the Advances; second, to Bank Expenses,
including without limitation, the reasonable costs, expenses, liabilities, obligations and
attorneys’ fees incurred by Bank in the exercise of its rights under this Agreement; third, to the
interest due upon any of the Obligations; fourth, to any other Obligations, applicable fees and
other charges in such order as Bank shall determine in its sole discretion, and finally, to the
Designated Deposit Account.



                                 (b)      Unless an Event of Default has occurred and is continuing, and if the Borrower’s Net Cash
is above $3,500,000, payments, or proceeds realized as the result of any collection of Accounts,
shall be deposited in the Designated Deposit Account and repayment of principal of the Advances
shall be made at such times as Borrower may direct.



                                 (c)      If an Event of Default has occurred and is continuing, Bank may apply any funds in its
possession, whether from Borrower account balances, payments, proceeds realized as the result of
any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations
in such order as Bank shall determine in its sole discretion. Any surplus shall be paid to
Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency. If Bank, in its good faith business
judgment, directly or indirectly enters into a deferred payment or other credit transaction with
any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of
either reducing the Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor.



          9.5      Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under the control of
Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act
or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.

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          9.6      No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it is given. Bank’s rights and
remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is
not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s
delay in exercising any remedy is not a waiver, election, or acquiescence.




          9.7      Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by
Bank on which Borrower is liable.




10.     NOTICES




         All notices, consents, requests, approvals, demands, or other communication (collectively,
“Communication”), other than Advance requests made pursuant to Section 3.4, by any party to this
Agreement or any other Loan Document must be in writing and be delivered or sent by facsimile at
the addresses or facsimile numbers listed below. Bank or Borrower may change its notice address by
giving the other party written notice thereof. Each such Communication shall be deemed to have
been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the U.S. mail, registered or certified mail, return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission
(with such facsimile promptly confirmed by delivery of a copy by personal delivery or United States
mail as otherwise provided in this Section 10); (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address or
facsimile number indicated below. Advance requests made pursuant to Section 3.4 must be in writing
and may be in the form of electronic mail, delivered to Bank by Borrower at the e-mail address of
Bank provided below and shall be deemed to have been validly served, given, or delivered when sent
(with such electronic mail promptly confirmed by delivery of a copy by personal delivery or United
States mail as otherwise provided in this Section 10). Bank or Borrower may change its address,
facsimile number, or electronic mail address by giving the other party written notice thereof in
accordance with the terms of this Section 10.



-19-









 





	 	 	 	 	 
	 

	 	If to
	 	Glu Mobile Inc.
	 

	 	 Borrower:	 	1800 Gateway Dr, Second Floor
	 

	 	 	 	San Mateo, CA 94404
	 

	 	 	 	(650) 571-1550
	 

	 	 	 	Attn: Eric Ludwig, VP Finance
	 

	 	 	 	Fax: (650) 571-5698
	 

	 	 	 	Email: eric.ludwig@glumobile.com
	 
	 	 	 	 
	 

	 	If to Bank:
	 	Silicon Valley Bank
	 

	 	 	 	185 Berry Street, Suite 3000
	 

	 	 	 	San Francisco, CA 94107
	 

	 	 	 	Attn: Tim Walsh
	 

	 	 	 	Fax: (415) 856-0810
	 

	 	 	 	Email: twalsh@svb.com







11.     CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER




         California law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed
to operate to preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce
a judgment or other court order in favor of Bank. Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby
waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or
forum non conveniens and hereby consents to the granting of such legal or equitable relief as is
deemed appropriate by such court. Borrower hereby waives personal service of the summons,
complaints, and other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified mail addressed to
Borrower at the address set forth in Section 10 of this Agreement and that service so made shall be
deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.


BORROWERS AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING
CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH
PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties
hereto agree that any and all disputes or controversies of any nature between them arising at any
time shall be decided by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court)
appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to
comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the
federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby
submit to the

-20-









 








jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in
accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive. The private judge shall have the power, among others, to grant provisional relief,
including without limitation, entering temporary restraining orders, issuing preliminary and
permanent injunctions and appointing receivers. All such proceedings shall be closed to the public
and confidential and all records relating thereto shall be permanently sealed. If during the
course of any dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then such party may apply to
the Santa Clara County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a court under the rules
of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which
shall be conducted in the same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all
discovery rules and order applicable to judicial proceedings in the same manner as a trial court
judge. The parties agree that the selected or appointed private judge shall have the power to
decide all issues in the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing
in this paragraph shall limit the right of any party at any time to exercise self-help remedies,
foreclose against collateral, or obtain provisional remedies. The private judge shall also
determine all issues relating to the applicability, interpretation, and enforceability of this
paragraph.




12.     GENERAL PROVISIONS




          12.1     Successors and Assigns. This Agreement binds and is for the benefit of the successors
and permitted assigns of each party. Borrower may not assign this Agreement or any rights or
obligations under it without Bank’s prior written consent (which may be granted or withheld in
Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s
obligations, rights, and benefits under this Agreement and the other Loan Documents.




          12.2      Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors,
officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank
harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”)
asserted by any other party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising from
transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except
for Claims and/or losses directly caused by Bank’s gross negligence or willful misconduct.




          12.3      Intentionally Omitted.




          12.4      Time of Essence. Time is of the essence for the performance of all Obligations in this
Agreement.




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          12.5      Severability of Provisions. Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision.




          12.6      Amendments in Writing; Integration. All amendments to this Agreement must be in writing
signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.




          12.7      Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.




          12.8      Survival. All covenants, representations and warranties made in this Agreement continue
in full force until this Agreement has terminated pursuant to its terms and all Obligations (other
than inchoate indemnity obligations and any other obligations which, by their terms, are to survive
the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.




          12.9      Confidentiality. In handling any confidential information, Bank shall exercise the same
degree of care that it exercises for its own proprietary information, but disclosure of information
may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable
efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators
or as otherwise required in connection with Bank’s examination or audit; and (e) as Bank considers
appropriate in exercising remedies under this Agreement. Confidential information does not include
information that either: (i) is in the public domain or in Bank’s possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (ii) is disclosed to Bank
by a third party, if Bank does not know that the third party is prohibited from disclosing the
information.




          12.10      Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and
Bank arising out of or relating to the Loan Documents, the prevailing party shall be entitled to
recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any
other relief to which it may be entitled.




13.     DEFINITIONS




          13.1     Definitions. As used in this Agreement, the following terms have the following meanings:




                       “Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.



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                       “Account Debtor” is any “account debtor” as defined in the Code with such additions to such
term as may hereafter be made.



                       “Advance” or “Advances” means an advance (or advances) under the Revolving Line.



                       “Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.



                       “Agreement” is defined in the preamble hereof.



                       “Bank” is defined in the preamble hereof.



                       “Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing
the Loan Documents (including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.



                       “Bankruptcy-Related Defaults” is defined in Section 9.1.



                       “Borrower” is defined in the preamble hereof.



                       “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.



                       “Borrowing Base” is 80% of standard Eligible Accounts receivable as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may decrease the
foregoing percentages in its good faith business judgment based on events, conditions,
contingencies, or risks which, as determined by Bank, may adversely affect Collateral.



                       “Borrowing Base Certificate” is that certain certificate in the form attached hereto as
Exhibit C.



                       “Borrowing Resolutions” are, with respect to any Person, those resolutions substantially in
the form attached hereto as Exhibit F.



                       “Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.



                       “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency or any State thereof having maturities of not more
than one (1) year from the date of acquisition; (b) commercial paper



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maturing no more than one (1) year after its creation and having the highest rating from
either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (c) Bank’s certificates
of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at
least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds
described in clauses (a) through (c) of this definition.




                       “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of California; provided, that, to the extent that the Code is used to define
any term herein or in any Loan Document and such term is defined differently in different Articles
or Divisions of the Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, 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, Bank’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.



                       “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.



                       “Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.



                       “Commodity Account” is any “commodity account” as defined in the Code with such additions to
such term as may hereafter be made.



                       “Communication” is defined in Section 10.



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



                       “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.



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                       “Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.



                       “Copyright” means any of the following now owned or hereafter acquired or created (as a work
for hire for the benefit of Borrower) by Borrower or in which Borrower now holds or hereafter
acquires or receives any right or interest, in whole or in part: (a) any copyright, whether
registered or unregistered, held pursuant to the laws of the United States or of any other country
or foreign jurisdiction, (b) registration, application or recording in the United States Copyright
Office or in any similar office or agency of the United States or any other country or foreign
jurisdiction, (c) any continuation, renewal or extension thereof, and (d) any registration to be
issued in any pending application, and shall include any right or interest in and to work
protectable by any of the foregoing which are presently or in the future owned, created or
authorized (as a work for hire for the benefit of Borrower) or acquired by Borrower, in whole or in
part.



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



                       “Default Rate” is defined in Section 2.3(b).



                       “Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue.



                       “Deposit Account” is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.



                       “Designated Deposit Account” is Borrower’s deposit account, account number 3300421466,
maintained with Bank.



                       “Dollars,” “dollars” and “$” each mean lawful money of the United States.



                       “Effective Date” is the date Bank executes this Agreement and as indicated on the signature
page hereof.



                       “Eligible Accounts” are Accounts which arise in the ordinary course of Borrower’s business
that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at
any time and from time to time after the Effective Date, to adjust any of the criteria set forth
below and to establish new criteria in its good faith business judgment. Unless Bank agrees
otherwise in writing, Eligible Accounts shall not include:



                                 (a)     Accounts that the Account Debtor has not paid within ninety (90) days of invoice date;



                                 (b)      Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have
not been paid within ninety (90) days of invoice date;



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                                 (c)      Credit balances over ninety (90) days from invoice date;



                                 (d)     Accounts owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five (25%) of all Accounts to the extent such amounts owed by such Account
Debtor exceed twenty-five percent (25%) of Accounts of such Debtor that would otherwise be Eligible
Accounts, unless Bank approves in writing;



                                 (e)     Accounts owing from an Account Debtor which does not have its principal place of business
in the United States, except for Eligible Foreign Accounts.



                                 (f)     Accounts owing from an Account Debtor which is a federal, state or local government entity
or any department, agency, or instrumentality thereof except for Accounts of the United States if
Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;



                                 (g)     Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated
in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;



                                 (h)     Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other terms
if Account Debtor’s payment may be conditional;



                                 (i)      Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;



                                 (j)      Accounts in which the Account Debtor disputes liability or makes any claim (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,
or becomes insolvent, or goes out of business;



                                 (k)      Accounts owing from an Account Debtor with respect to which Borrower has received Deferred
Revenue (but only to the extent of such Deferred Revenue);



                                 (l)      Accounts for which Bank in its good faith business judgment determines collection to be
doubtful; and



                                 (m)      other Accounts Bank deems ineligible in the exercise of its good faith business judgment.



                       “Eligible Foreign Accounts” are accounts owing from an Account Debtor with its principal place
of business outside the United States, owed to Borrower, not in excess of $500,000 in the
aggregate.



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                       “Equipment” is all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.



                       “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.



                       “Event of Default” is defined in Section 8.



                       “Foreign Currency” means lawful money of a country other than the United States.



                       “Funding Date” is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.



                       “GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination.



                       “General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.



                       “Guarantor” is any present or future guarantor of the Obligations.



                       “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations, and (d) Contingent Obligations.



                       “Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.



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                       “Investment” is any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to any Person.



                       “Intellectual Property” means any intellectual property, in any medium, of any kind or nature
whatsoever, now or hereafter owned or acquired or received by Borrower or in which Borrower now
holds or hereafter acquires or receives any right or interest, and shall include, in any event, any
Copyright, Trademark, Patent, trade secret, customer list, Internet domain name (including any
right related to the registration thereof), proprietary or confidential information, mask work,
source, object or other programming code, invention (whether or not patented or patentable),
technical information, procedure, design, knowledge, know-how, software, data base, data, skill,
expertise, recipe, experience, process, model, drawing, material or record, all claims for damages
by way of past, present and future infringement of any of the rights included above and all
licenses or other rights to use any property or rights of a type described above.



                       “IP Agreement” is that certain Intellectual Property Security Agreement executed and delivered
by Borrower to Bank dated as of February 2, 2007.



                       “Key Person” is the Borrower’s Chief Executive Officer, who is, as of the Effective Date, Greg
Ballard.



                       “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.



                       “Loan Documents” are, collectively, this Agreement, the Perfection Certificate, the IP
Agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other
present or future agreement between Borrower any Guarantor and/or for the benefit of Bank in
connection with this Agreement, all as amended, restated, or otherwise modified.



                       “Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the
business, operations, or condition (financial or otherwise) of Borrower; or (c) a material
impairment of the prospect of repayment of any portion of the Obligations.



                       “Net Cash” means Borrower’s cash at Bank less amounts outstanding under the Revolving Line.



                       “Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after provision for
taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.



                       “Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations relating to letters of
credit, cash management services, and foreign exchange



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contracts, if any, and including interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Bank.




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



     “Patent” means any of the following now hereafter owned or acquired or received by Borrower or
in which Borrower now holds or hereafter acquires or receives any right or interest: (a) letters
patent and right corresponding thereto, of the United States or any other country or other foreign
jurisdiction, any registration and recording thereof, and any application for letters patent, and
rights corresponding thereto, of the United States or any other country or other foreign
jurisdiction, 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 or other foreign jurisdiction; (b) any reissue,
continuation, continuation-in-part or extension thereof; (c) any petty patent, divisional, and
patent of addition; and (d) any patent to issue in any such application.



     “Payment/Advance Form” is that certain form attached hereto as Exhibit B.



     “Perfection Certificate” is defined in Section 5.1.



     “Permitted Indebtedness” is:



                                 (a)     Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;



                                 (b)      Indebtedness existing on the Effective Date and shown on the Perfection Certificate;



                                 (c)      Subordinated Debt;



                                 (d)      unsecured Indebtedness to trade creditors and with respect to surety bonds and similar
obligations incurred in the ordinary course of business;



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



                                 (f)      Indebtedness in an aggregate principal amount not to exceed $1,000,000 secured by
Permitted Liens;



                                 (g)      Indebtedness of Borrower to any Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of Borrower (provided that the primary obligations are not prohibited
hereby), and Indebtedness of any Subsidiary to Borrower



-29-









 







or any other Subsidiary and Contingent Obligations of any Subsidiary with respect to
obligations of any other Subsidiary (provided that the primary obligations are not prohibited
hereby);



                                 (h)     Borrower guaranties of Subsidiaries’ obligations under real property leases;



                                 (i)      other Indebtedness not otherwise permitted by Section 7.4 not exceeding $50,000 in the
aggregate outstanding at any time; and



                                 (j)      extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (h) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be.



                       “Permitted Investments” are:



                                 (a)      Investments shown on the Perfection Certificate and existing on the Effective Date;



                                 (b)      (i) Cash Equivalents, and (ii) any Investments permitted by Borrower’s investment policy,
as amended from time to time, provided that such investment policy (and any such amendment thereto)
has been approved by Bank;



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



                                 (d)      Investments consisting of deposit accounts in which Bank has a perfected security
interest;



                                 (e)      Investments accepted in connection with Transfers permitted by Section 7.1;



                                 (f)      Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by
Borrower in Subsidiaries not to exceed $2,000,000 in the aggregate in any fiscal year;



                                 (g)      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;



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



-30-









 







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



                                 (k)      other Investments not otherwise permitted by Section 7.7 not exceeding $1,000,000 in the
aggregate outstanding at any time.



                       “Permitted Liens” are:



                                 (a)      Liens existing on the Effective Date and shown on the Perfection Certificate or arising
under this Agreement and the other Loan Documents;



                                 (b)      Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on
its Books, if they have no priority over any of Bank’s Liens;



                                 (c)      purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing
the acquisition of the Equipment securing no more than $1,000,000 in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;



                                 (d)      statutory Liens securing claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other Persons imposed without action of such parties, provided, they
have no priority over any of Bank’s Lien and the aggregate amount of such Liens does not at any
time exceed $350,000;



                                 (e)      Liens to secure payment of workers’ compensation, employment insurance, old-age pensions,
social security and other like obligations incurred in the ordinary course of business, provided,
they have no priority over any of Bank’s Liens and the aggregate amount of the Indebtedness secured
by such Liens does not at any time exceed $350,000;



                                 (f)      Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase;



                                 (g)      leases or subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or
intellectual property) granted in the ordinary course of Borrower’s business, if the
leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest;



                                 (h)      non-exclusive license of intellectual property granted to third parties in the ordinary
course of business and licenses of intellectual property that could not result in a legal transfer
of title of the licensed property that may be exclusive in respects other than territory and that
may be exclusive as to territory only as to discreet geographical areas outside of the United
States;



-31-









 





                                 (i)      Liens arising from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Section 8.4 or 8.7;



                                 (j)      Liens in favor of other financial institutions arising in connection with Borrower’s
deposit and/or securities accounts held at such institutions, provided that Bank has a perfected
security interest in the amounts held in such deposit and/or securities accounts;



                                 (k)      deposits with landlords to secure real property lease obligations; and



                                 (l)      other Liens not described above arising in the ordinary course of business and not having
or not reasonably likely to have a material adverse effect on Borrower and its Subsidiaries taken
as a whole and not having any priority over the Lien in favor of Bank.



                       “Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.



                       “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.



                       “Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made



                       “Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial
Officer and Controller of Borrower.



                       “Revolving Line” is an Advance or Advances in an aggregate amount of up to $8,000,000
outstanding at any time.



                       “Revolving Line Maturity Date” February 1, 2009.



                       “Securities Account” is any “securities account” as defined in the Code with such additions to
such term as may hereafter be made.



                       “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar
agreement in form and substance satisfactory to Bank entered into between Bank and the other
creditor), on terms acceptable to Bank.



                       “Subsidiary” means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.



                       “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its
Subsidiaries minus (a) any amounts attributable to (i) goodwill, (ii) intangible items



-32-









 







including unamortized debt discount and expense, patents, trade and service marks and names,
copyrights and research and development expenses except prepaid expenses, (iii) notes, accounts
receivable and other obligations owing to Borrower from its officers or other Affiliates, and (iv)
reserves not already deducted from assets, minus (b) Total Liabilities.



                       “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current
portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding (a) all other
Subordinated Debt, (b) redeemable preferred stock to the extent classified as a liability under
GAAP, and (c) liabilities arising from revaluation of warrants due to the application of FAS 150-5.



                       “Trademark” means any of the following now or hereafter owned or acquired or received by
Borrower or in which Borrower now holds or hereafter acquires or receives any right or interest:
(a) any trademark, trade name, corporate name, business name, trade style, service mark, logo,
other source or business identifier, print or label on which any of the foregoing have appeared or
appear, design or other general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in connection therewith,
including registration, recording and application 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
other foreign jurisdiction and (b) any reissue, extension or renewal of any of the foregoing.



                       “Transfer” is defined in Section 7.1.



[Signature page follows.]




-33-









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date.



BORROWER:




GLU MOBILE INC.





	 	 	 	 	 
	By:

	 	/s/ Albert Pimentel
	 	 
	 

	 	 	 	 
	Name:

	 	Albert Pimentel	 	 
	 

	 	 	 	 
	Title:

	 	EVP and CFO	 	 
	 

	 	 	 	 





BANK:




SILICON VALLEY BANK





	 	 	 	 	 
	By:

	 	/s/ Tim Walsh
	 	 
	 

	 	 	 	 
	Name:

	 	Tim Walsh	 	 
	 

	 	 	 	 
	Title:

	 	Senior Relationship Mgr	 	 
	 

	 	 	 	 






Effective Date: February 14, 2007




[Signature page to Loan and Security Agreement]









 








EXHIBIT A



The Collateral consists of all of Borrower’s right, title and interest in and to the following
personal property:




     All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights
or rights to payment of money, leases, license agreements, franchise agreements, General
Intangibles, commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and



     all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests
in any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.




1










 






EXHIBIT B




Loan Payment/Advance Request Form




Deadline for same day processing is Noon P.S.T.*




			
	Fax To:
	 	Date:                                        






LOAN PAYMENT:




Glu Mobile Inc.




	 	 	 	 	 	 	 
	From Account #

	 	 	 	To Account #	 	 
	 

	 	 
	 	 	 	 
	 

	 	(Deposit Account #)
	 	 	 	(Loan Account #)
	 
	 	 	 	 	 	 
	Principal $

	 	 	 	and/or Interest $	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Authorized Signature:

	 	 	 	Phone Number:	 	 
	 

	 	 
	 	 	 	 
	Print Name/Title:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 





Loan Advance:




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



	 	 	 	 	 	 	 
	From Account #

	 	 	 	To Account #	 	 
	 

	 	 
	 	 	 	 
	 

	 	(Loan Account #)
	 	 	 	(Deposit Account #)






Amount of Advance $  





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











			
	Authorized Signature:	 	
 







			
	Print Name/Title:	 	
 











			
	Phone Number:	 	
 










Outgoing Wire Request:




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

Deadline for same day processing is noon, P.S.T.





			
	Beneficiary Name:	 	
 





Amount of Wire: $





			
	Beneficiary Bank:	 	
 







			
	Account Number:	 	
 















			
	City and State:	 	
 








			
	Beneficiary Bank Transit (ABA) #:	 	
 










			
	Beneficiary Bank Code (Swift, Sort, Chip,
etc.):
(For International Wire Only)	 	
 
















1









 









			
	Transit (ABA) #:	 	
 











			
	Intermediary Bank:	 	
 













			
	For Further Credit to:	 	
 







			
	Special Instruction:	 	
 








 




			
	*	 	Unless otherwise provided for an Advance
bearing interest at LIBOR.





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



Authorized Signature:
                    
                                         2
nd Signature (if required):






 






			
	Print Name/Title:	 	
 







			
	Telephone #:	 	
 










			
	Print Name/Title:	 	
 







			
	Telephone #:	 	
 











2









 








EXHIBIT C




BORROWING BASE CERTIFICATE




Borrower: Glu Mobile Inc.

Lender: Silicon Valley Bank

Commitment Amount: $8,000,000




	 	 	 
	ACCOUNTS RECEIVABLE
	 	 
	Accounts Receivable Book Value as of                     

	 	$                    
	Additions (please explain on reverse)

	 	$                    
	TOTAL ACCOUNTS RECEIVABLE

	 	$                    
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
	 	 
	Amounts over 90 days due

	 	$                    
	Balance of 50% over 90 day accounts

	 	$                    
	Credit balances over 90 days

	 	$                    
	Concentration Limits

	 	$                    
	Foreign Accounts (other than Eligible Foreign Accounts)

	 	$                    
	Governmental Accounts

	 	$                    
	Contra Accounts

	 	$                    
	Promotion or Demo Accounts

	 	$                    
	Intercompany/Employee Accounts

	 	$                    
	Disputed Accounts

	 	$                    
	Deferred Revenue

	 	$                    
	Other (please explain on reverse)

	 	$                    
	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

	 	$                    
	Eligible Accounts (#3 minus #16)

	 	$                    
	ELIGIBLE AMOUNT OF ACCOUNTS ( ___% of #17)

	 	$                    
	BALANCES
	 	 
	Maximum Loan Amount

	 	$                    
	Total Funds Available [Lesser of #21 or (#18 plus #20)]

	 	$                    
	Present balance owing on Line of Credit

	 	$                    
	Outstanding under Sublimits

	 	$                    
	RESERVE POSITION (#22 minus #23 and #24)

	 	$                    






The undersigned represents and warrants that this is true, complete and correct, and that the
information in this Borrowing Base Certificate complies with the representations and warranties in
the Loan and Security Agreement between the undersigned and Silicon Valley Bank.



1









 








	 	 	 
	 

	 	                    BANK USE ONLY
	 
	 	 
	 

	 	Received by:
	 
	 	 
	 

	 	 
	 

	 	                    AUTHORIZED SIGNER
	 
	 	 
	 

	 	Date:                     
                    
                    
                    
	 
	 	 
	 

	 	 
	COMMENTS:

	 	Verified:
	 
	 	 
	 

	 	 
	By:                     
                    
                    
                    

	 	                    AUTHORIZED SIGNER

	                    AUTHORIZED SIGNER

	 	Date:                     
                    
                    
                    
	 
	 	 
	 

	 	 
	Date:                                                                      
           

	 	 







2









 





EXECUTION COPY




EXHIBIT D




COMPLIANCE CERTIFICATE




			
	TO:  SILICON VALLEY BANK
	 	Date: ______________________________





FROM:   Glu Mobile Inc.




     The undersigned authorized officer of Glu Mobile Inc. (“Borrower”) certifies that under the
terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (1) Borrower is in complete compliance for the period ending ___with all
required covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in all material
respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to
the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against
Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certifies that these are prepared in
accordance with generally GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date this certificate is
delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given
them in the Agreement.


Please indicate compliance status by circling Yes/No under “Complies” column.




	 	 	 	 	 	 	 	 	 
	 
	 	Reporting Covenant	 	 	Required	 	 	Complies	 
	 	 
	 	 	 	 	 	 	 
	 	Monthly financial statements with 

Compliance Certificate (Consolidating Financials)

	 	 	Monthly within 30 days
	 	 	Yes No	 
	 	Annual financial statement (CPA
Audited) + CC

	 	 	FYE within 210 days
	 	 	Yes No	 
	 	10-Q, 10-K and 8-K

	 	 	Within 5 days after
filing with SEC
	 	 	Yes No	 
	 	Borrowing Base Certificate, A/R & A/P Agings

	 	 	Monthly within 30 days
	 	 	Yes No	 
	 	Operating Budgets and Forecasts

	 	 	30 days prior to FYE
	 	 	Yes No	 
	 	The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)

____________________________________________________________________________________________	 
	 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Financial Covenant	 	 	Required	 	 	Actual	 	Complies	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Maintain on a Monthly Basis:
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Minimum Tangible Net Worth

	 	 	$3,000,000
increasing by 50%
of new equity
	 	 	$___
	 	 	Yes
	 	 	No	 
	 





1









 





     The following financial covenant analysis and information set forth in Schedule 1
attached hereto are true and accurate as of the date of this Certificate.



     The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)



      




      




      




      





	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Glu Mobile Inc.

	 	BANK USE ONLY
	 
	 

	 	 	 	Received by:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 
	 	authorized signer
	 

	 	 	 	Date:
	 	 
	 

	 	 	 	 	 	 
	

	 
	

	 	 	 	Verified:	 	 
	 

	 	 	 	 	 	 
	By:

	 	 	 	 	 	authorized signer
	 

	 	 	 	 	 	 
	Name:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Compliance Status: Yes No





2









 





     EXECUTION COPY



Schedule 1 to Compliance Certificate




Financial Covenants of Borrower




Dated:____________________



VII.     Tangible Net Worth (Section 6.9)



Required:          $3,000,000 plus 50% of new equity



Actual:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	A.

	 	Tangible Assets
	 	 	 	 	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	B.

	 	Liabilities
	 	 	 	 	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	C.

	 	Proceeds of New Equity since Effective Date ($___) x .50
	 	 	 	 	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	D.

	 	Line A less Line B plus Line C.
	 	 	 	 	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 





Is line D equal to or greater than $3,000,000 plus Line C?




			
	___ No, not in compliance
	 	___ Yes, in compliance






3









 








EXECUTION COPY




Exhibit E




Transaction Report




[EXCEL spreadsheet to be provided separately from lending officer.]





1









 





FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT




     THIS
FIRST AMENDMENT to Loan and Security Agreement (this
“Amendment”) is entered into this 1st
day of March, 2007, by and between SILICON VALLEY BANK (“Bank”) and GLU MOBILE INC., a
California corporation (“Borrower”).



Recitals




     A. Bank and Borrower are entering into that certain Loan and Security Agreement dated as of
February 14, 2007 (as the same may from time to time be further amended, modified, supplemented or
restated, the “Loan Agreement”).



     B. Pursuant
to the Agreement and Plan of Merger, dated as of March 1, 2007, Borrower and Glu
Mobile Inc., a Delaware corporation (“Glu Mobile Delaware”) are merging with the surviving entity
being Glu Mobile Delaware.



     C. Pursuant to Section 12.6 of the Loan Agreement, the Loan Agreement may be amended by
execution of an instrument in writing signed by Bank and Borrower.



Agreement




     Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:



     1. Definitions. Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement.



     2. Amendments to Loan Agreement. Effective as of the date hereof, all references to “Glu
Mobile Inc.” or to “Borrower” in the Loan Agreement shall be deemed to be references to Glu Mobile
Inc., a Delaware corporation.



     3. References to Loan Agreement in Loan Agreements. References to the Loan Agreement in each
of the Loan Documents shall be deemed to include a reference to this Amendment and the terms and
provisions contained herein.



     4. No Other Amendments. Except as expressly provided in this Amendment, all of the terms and
conditions of the Loan Agreement remain unchanged, and the terms and conditions of the Loan
Agreement hereby remain in full force and effect.



     5. Representations and Warranties. Glu Mobile Delaware represents and warrants that:



               (a) immediately upon giving effect to this Amendment (i) the representations and warranties
contained in the Loan Documents are true, accurate and



 









 




complete in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are true and correct
as of such date), and (ii) no Event of Default has occurred and is continuing;




               (b) Glu Mobile Delaware has the corporate power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;



               (c) the certificate of incorporation, bylaws and other organizational documents of Glu Mobile
Delaware delivered to Bank on the date hereof remain true, accurate and complete and have not been
amended, supplemented or restated and are and continue to be in full force and effect;



               (d) the execution and delivery by Glu Mobile Delaware of this Amendment and the performance by
Glu Mobile Delaware of its obligations under the Loan Agreement, as amended by this Amendment, have
been duly authorized by all necessary corporate action on the part of Glu Mobile Delaware; and



               (e) this Amendment has been duly executed and delivered by the Glu Mobile Delaware and is the
binding obligation of Glu Mobile Delaware, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and equitable principles
relating to or affecting creditors’ rights.



     6. Affirmative Covenants. Glu Mobile Delaware covenants that it shall succeed to and shall
possess all the assets, properties, rights, privileges, powers, franchises, immunities, and
purposes, and be subject to all the debts, liabilities, obligations, restrictions and duties of
Borrower, all without further act or deed.



     7. Execution in Counterparts. This Amendment may be executed in any number of counterparts
and by each party on a separate counterpart, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one instrument. In proving this Amendment,
it shall not be necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.



     8. Miscellaneous. This Amendment shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of California. The captions in this Amendment are for
convenience of reference only and shall not define or limit the provisions hereof.



[Signature page follows.]




 









 





     In Witness Whereof, the parties hereto have caused this Amendment to be duly executed
and delivered as of the date first written above.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	BANK:	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	SILICON VALLEY BANK	 	GLU MOBILE INC., a California Corporation.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Tim Walsh
	 	By:
	 	/s/ Albert A. Pimentel	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Tim Walsh
	 	Name:
	 	Albert A. Pimentel	 	 
	Title:

	 	SVP
	 	Title:
	 	Exec. VP & CFO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GLU MOBILE INC., a Delaware Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Albert A. Pimentel	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Albert A. Pimentel	 	 
	 

	 	 	 	Title:
	 	Exec. VP & CFO