Amended and Restated Loan and Security Agreement



 EXHIBIT 10.22 
 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 
 THIS AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of the Effective Date between SILICON VALLEY BANK, a California corporation (“Bank”), and INTERLINK ELECTRONICS, INC., a Delaware corporation
(“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. Bank and Borrower are parties to that certain Loan and Security Agreement dated as of December 19, 2006 as amended by that
certain First Amendment to Loan and Security Agreement dated as of April 6, 2007, that certain Second Amendment to Loan and Security Agreement dated as of July 18, 2007 and that certain Third Amendment to Loan and Security Agreement dated
as of August 13, 2007 (the “Original Agreement”). Bank and Borrower wish to amend and restate the Original Agreement in accordance with the terms hereof. 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 shall make Advances not exceeding the Availability Amount. Each Advance shall be in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000).

 (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. 
 2.1.2 Letters of Credit Sublimit. 
 (a) As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit for Borrower’s account. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed the Letter of Credit Sublimit. Such aggregate
amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. If, on the Revolving Line Maturity Date, there are any outstanding Letters of Credit, then on such date Borrower shall provide
to Bank cash collateral in an amount equal to one hundred and five percent (105%) of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good
faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of
Bank’s standard Application and Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request.
Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations of any Letter of Credit issued by Bank for
Borrower’s account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of
Credit or any modifications, amendments, or supplements thereto. 
  

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 (b) The obligation of Borrower to immediately reimburse Bank for drawings made under
Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application. 
 (c) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such
Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency. 
 (d) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in
an amount equal to ten percent (10%) of the face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds
under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding. 
 2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency
(each, an “FX Forward Contract”) on a specified date (the “Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX Business Day after the contract date and shall be subject
to a reserve of ten percent (10%) of each outstanding FX Forward Contract in a maximum aggregate amount not to exceed the FX Reserve. The aggregate amount of FX Forward Contracts at any one time may not exceed ten (10) times the amount of
the FX Reserve. 
 2.1.4 Cash Management Services Sublimit. Borrower may use up to the amount of the Cash Management Services
Sublimit for Bank’s cash management services which may include merchant services, direct deposit of payroll, business credit cards, and check cashing services identified in Bank’s various cash management services agreements (collectively,
the “Cash Management Services”). Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances. 
 2.2 Overadvances. If, at any time, the Credit Extensions under Sections 2.1.1,
2.1.2, 2.1.3 and 2.1.4 exceed the lesser of either (a) the Revolving Line or (b) the Borrowing Base (an “Overadvance”), Borrower shall immediately pay to Bank in cash such excess, 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. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal one quarter of one percentage point (0.25%)
above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(f) below. 
 (b) Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five (5) 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. 
  

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 (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; Float Charge. 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. In addition, so long as any principal or
interest with respect to any Credit Extension remains outstanding, Bank shall be entitled to charge Borrower a “float” charge in an amount equal to three (3) Business Days interest, at the interest rate applicable to the Credit
Extensions, on all Payments received by Bank. The float charge for each month shall be payable on the last day of the month. 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) Loan Fee. A fully earned, non-refundable commitment fee of Twelve Thousand Five Hundred Dollars ($12,500) on the Effective Date and on each anniversary of the Effective Date; and 
 (b) 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 Advance. Bank’s obligation to make the initial Advance 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 a duly executed Amended and Restated Intellectual Property Security Agreement; 
 (c) Borrower shall have delivered
its Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of the States of California and Delaware 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) 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; 
  

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

 (g) Borrower shall have delivered evidence satisfactory to Bank that the insurance policies required by Section 6.5
hereof are in full force and effect, together with appropriate evidence showing lender’s loss payable and/or additional insured clauses or endorsements in favor of Bank; and 
 (h) Borrower shall have paid the fees and Bank Expenses then due as specified in Section 2.4 hereof. 
 3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following: 
 (a) except as otherwise provided in Section 3.4, 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 (other than Advances under Sections 2.1.2 or 2.1.4), 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, 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 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 

  

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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. Upon payment in full of the Obligations and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, 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 by 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 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
substantially in the form attached hereto as Exhibit C signed by Borrower, entitled “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, 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, has rights in, and the power to transfer each item of the Collateral upon which
it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate
delivered to Bank in connection herewith. The Accounts are bona fide, existing obligations of the Account Debtors. 
 The Collateral is not
in the possession of any third-party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection
Certificate or as Borrower has given Bank notice pursuant to Section 7.2. 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 execute and deliver a bailee agreement in form and substance satisfactory to Bank in its sole discretion. 
  

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

 Borrower is the sole owner of its intellectual property, except for non-exclusive licenses granted to its customers in the ordinary course
of business. Each patent is valid and enforceable, and no part of the intellectual property has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower’s knowledge, no claim has been made that any part of the
intellectual property violates the rights of any third-party except to the extent such claim could not reasonably be expected to have a material adverse effect on Borrower’s business. Except as noted on the Perfection Certificate, Borrower is
not a party to, nor is bound by, any material license or other agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or
agreement or any other property. Borrower shall provide written notice to Bank within thirty (30) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower’s
business or financial condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for all such licenses or contract rights to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement (such
consent or authorization may include a licensor’s agreement to a contingent assignment of the license to Bank if Bank determines that is necessary in its good faith judgment), whether now existing or entered into in the future. 
 5.3 Accounts Receivable. For any Eligible Account and Eligible Foreign Account in any Transaction Report, all statements made and all
unpaid balances appearing in all invoices, instruments and other documents evidencing such Eligible Accounts and Eligible Foreign 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 Eligible Account and Eligible Foreign 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 and Eligible Foreign Account in any Transaction Report. To the best
of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts and Eligible Foreign 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 Fifty Thousand Dollars ($50,000). 
 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. The fair salable value of Borrower’s assets (including goodwill minus disposition
costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and 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. 
  

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 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, (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 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) Deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated and consolidating balance sheet and income statement
covering Borrower’s and each of its Subsidiary’s operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than one hundred fifty (150) days after
the last day of Borrower’s fiscal year, and only if Borrower is not publicly reporting, audited consolidated and consolidating financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion; (iii) within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s
security holders or to any holders of Subordinated Debt; (iv) five (5) days of the filing due date, all reports on Form 10-Q and 10-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or another website
on the Internet); (iv) a prompt report of any legal actions pending or threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of Fifty Thousand Dollars ($50,000) or
more; (v) prompt notice of an event that materially and adversely affects the value of the intellectual property; and (vi) budgets, sales projections, operating plans and other financial information 

  

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reasonably requested by Bank, including annual Board of Directors-approved financial projections no later than thirty (30) days after the start of each
fiscal year. 
 (b) Within thirty (30) days after the last day of each month, a Transaction Report; 
 (c) within twenty (20) days after the last day of each month, aged listings of accounts receivable and accounts payable (both aged by
invoice date); 
 (d) Within thirty (30) days after the last day of each month, deliver to Bank with the monthly
financial statements, a duly completed Compliance Certificate signed by a Responsible Officer setting forth calculations showing compliance with the financial covenants set forth in this Agreement. 
 (e) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits shall be conducted no more often than once
every six (6) months unless a Default or an Event of Default has occurred and is continuing. 
 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 endorsements, and copies of all credit memos. 
 (b) Disputes. Borrower shall promptly
notify Bank of all disputes or claims relating to Accounts. Borrower may 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 lesser of the Revolving Line or the Borrowing Base. 
 (c) Collection of Accounts. All proceeds of Accounts be deposited by Borrower into 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. Whether or not an Event of Default has occurred and is continuing, 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, to be applied to the Obligations pursuant to the terms of Section 9.5 hereof.

 (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. 
  

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 (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 9.5 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 worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of Twenty Five Thousand Dollars ($25,000) or less (for all such transactions in
any fiscal year). 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 Seven Hundred Fifty Dollars ($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 One Thousand Dollars ($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 lender 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. 
 6.8 Operating Accounts. 
 (a) Maintain its and its Subsidiaries’ primary depository and operating accounts and securities accounts with Bank and Bank’s
affiliates which accounts shall represent at least eighty five percent (85%) of the dollar value of Borrower’s and such Subsidiaries’ domestic accounts at all financial institutions. 
 (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 

  

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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, the following covenants: 
 (a) Adjusted Quick Ratio. A ratio of Quick Assets to Current Liabilities of at least 1.50 to 1.00. 
 (b)
Tangible Net Worth. A Tangible Net Worth of at least Ten Million Dollars ($10,000,000), increasing by fifty percent (50%) of issuances of equity 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. 
 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 (a) of Inventory in the ordinary course of business; (b) of worn-out
or obsolete Equipment; and (c) in connection with Permitted Liens and Permitted Investments. 
 7.2 Changes in Business,
Management, Ownership, Control, 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) have a 

  

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change in management or (ii) permit or suffer any Change in Control. 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 Ten Thousand Dollars ($10,000) 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. 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 its property, 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, 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 6.6(b) hereof.

 7.7 Distributions; Investments. (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 Fifty
Thousand Dollars ($50,000) 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 Section 6 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 Bank seeking to attach, by trustee or similar process, any funds of Borrower
or of any entity under control of Borrower (including subsidiary) 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 Fifty Thousand Dollars ($50,000) 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 thirty (30) 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 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
Fifty Thousand Dollars ($50,000) or that could have a material adverse effect on Borrower’s business; 
 8.7 Judgments. A
judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (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); 
  

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 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; 
 8.9 Subordinated Debt. A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such agreement; or 
  

	 	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) demand that Borrower (i) deposit cash with Bank in an amount equal to the aggregate amount of
any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter of Credit fees
scheduled to be paid or payable over the remaining term of any Letters of Credit; 
 (d) terminate any FX Contracts;

 (e) 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; 
 (f) 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; 
 (g) 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; 
 (h) 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; 
 (i) 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; 
 (j) demand and receive possession of Borrower’s Books; and 
  

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 (k) 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 satisfied 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 irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 
 9.3 Accounts Verification;
Collection. Whether or not an Event of Default has occurred and is continuing, Bank may notify any Person owing Borrower money of Bank’s security interest in such funds and verify the amount of such account. After the occurrence of an Event
of Default, any amounts received by Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank, Borrower shall immediately deliver such receipts to Bank in the form received from the Account Debtor, with proper endorsements for
deposit. 
 9.4 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5 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. 
 9.5 Application of Payments and Proceeds. Unless an Event of Default has occurred and is continuing, Bank shall apply any funds in its possession, whether from Borrower account balances, payments, or
proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, first, to the principal of the Obligations; 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; and finally, to any applicable fees and other charges, 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 other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. In all other cases when no Event
of Default has occurred and is continuing, the proceeds of collections shall be deposited in Designated Deposit Account. 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. 
 9.6 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 

  

 -14- 








 
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 
 9.7 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. 
 9.8 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. 
  

			
	 If to Borrower:
	  	 Interlink Electronics, Inc.
 546 Flynn Road

Camarillo, CA 93012
 Attn: Chief Financial Officer
 Fax: (805) 484-8989
 Email: cbest@interlinkelec.com

		
	 If to Bank:
	  	 Silicon Valley Bank
 5820 Canoga Ave., Suite
210
 Woodland Hills, CA 91367
 Attn: Vicky Regan
 Fax: (818) 340-0395
 Email: vregan@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 

  

 -15- 








 
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. 
 BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT,
BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
  

	 	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 Limitation of Actions. Any claim or cause of action by Borrower against Bank, its directors, officers, employees, agents, accountants, attorneys, or any other Person affiliated with or representing Bank
based upon, arising from, or relating to this Loan Agreement or any other Loan Document, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted
or suffered to be done by Bank, its directors, officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by the filing of a
complaint within one year after the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based, and the service of a summons and complaint on an officer of Bank, or on any other person authorized to
accept service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by the written consent of Bank in its sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document. 
 12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement. 
 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 

  

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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. 
 12.11 Effect of Amendment and Restatement. Except as otherwise set forth herein, this Agreement is intended to and does completely amend and
restate, without novation, the Original Agreement. All security interests granted under the Original Agreement are hereby confirmed and ratified and shall continue to secure all Obligations under this Agreement. 
  

	 	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. 
 “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. 
 “Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Base minus (b) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) plus an amount 

  

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equal to the Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the outstanding principal balance of any Advances (including any
amounts used for Cash Management Services); provided, however, that the first Five Hundred Thousand Dollars ($500,000) of Credit Extensions under the Revolving Line shall be available without regard to the Borrowing Base; provided further, however,
that once Advances and utilizations under the sublimits exceed Five Hundred Thousand Dollars ($500,000), all Advances and sublimit utilizations shall be subject to the Borrowing Base. 
 “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. 
 “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 (a) eighty percent (80%) of Eligible Accounts, as
determined by Bank from Borrower’s most recent Transaction Report; 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 Resolutions” are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit D. 
 “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 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. 
 “Cash Management Services” is defined in Section 2.1.4. 
 “Cash Management Services Sublimit” means One Million Dollars ($1,000,000) (based upon product commitments, not actual usage), minus
(a) all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus (b) the FX Reserve. 
 “Change in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is
defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or
becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing twenty-five percent (25%) or more of the combined voting power of Borrower’s
then outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the
Board of Directors of Borrower was approved by a vote of at least two-thirds of the directors then still in office who either were directions at the beginning of such period or whose election or nomination for election was previously so approved)
cease for any reason other than death or disability to constitute a majority of the directors then in office. 
  

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 “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 E. 
 “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. 
 “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. 
 “Credit Extension” is any Advance, Letter of Credit, FX Forward Contract,
amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit. 
 “Current
Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year. 
 “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). 
 “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 _____________, maintained with Bank. 
  

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 “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, upon prior written notice to Borrower 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 (120 days in the case of Ingram Micro and Tech Data); 
 (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; 
 (c) Credit balances over ninety (90) days from invoice date (120 days in the case of
Ingram Micro and Tech Data); 
 (d) Accounts owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five (25%) of Eligible Accounts, for the amounts that exceed that percentage, 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 or Canada 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 (31 U.S.C. 3727); 
 (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 related to RMA returns; 
 (j) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent; 
 (k) 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;

 (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 for which the Account Debtor does not have its principal place of business in the United States
but are otherwise Eligible Accounts that are (a) covered by credit insurance satisfactory to Bank, less any deductible; (b) supported by letter(s) of credit acceptable to Bank; or (c) that Bank approves in writing. 
  

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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. 
 “FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its normal business and (b) the Foreign Currency being purchased or sold by Borrower is available
to Bank from the entity from which Bank shall buy or sell such Foreign Currency. 
 “FX Forward Contract” is defined in
Section 2.1.3. 
 “FX Reserve” means One Million Dollars ($1,000,000), minus (a) all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus (b) any amounts used for Cash Management Services. 
 “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. 
 “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.

 “Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with
GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions,
discounts, or related amortization and other fees and charges with respect 

  

 -21- 








 
to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the
interest portion of any deferred payment obligation (including leases of all types). 
 “Inventory” is all
“inventory” 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 merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the
above. 
 “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. 
 “IP Agreement” is that certain Amended and
Restated Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the Effective Date. 
 “Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set forth in Section 2.1.2.

 “Letter of Credit Application” is defined in Section 2.1.2(a). 
 “Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d). 
 “Letter of Credit Sublimit” means One Million Dollars ($1,000,000), minus (a) all outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus (b) the FX Reserve, and minus (c) any amounts used for Cash Management Services. 
 “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; (c) a material impairment of the prospect of repayment of any portion of the Obligations or
(d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period. 
 “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 contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower’s duties under the Loan Documents. 
 “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. 
  

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 “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) unsecured Indebtedness to the PIPE Investors in an amount not to exceed Five Million
Dollars ($5,000,000); 
 (g) Indebtedness in an aggregate principal amount not to exceed Fifty Thousand Dollars ($50,000)
secured by Permitted Liens; and 
 (h) extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (f) 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) Cash Equivalents; 
 (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 Seven
Hundred Fifty Thousand Dollars ($750,000) 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; and 
  

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 (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. 
 “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 Fifty Thousand Dollars ($50,000) 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 Fifty Thousand Dollars ($50,000); 
 (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 Fifty Thousand Dollars ($50,000); 
 (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; 
 (i) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7; and 
 (j) Subject
to Section 6.6 hereof, 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. 
 “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. 
 “PIPE Investors” is Special Situations Fund, III Q.P., L.P., Special Situations Fund III, L.P., Special Situations Technology Fund,
L.P., Special Situations Technology Fund II, L.P., SRB Greenway Capital, L.P., SRB Greenway Capital (Q.P.), L.P. SRB Greenway Offshore Operating Fund, L.P., Harvest Small Capital Partners, L.P., Harvest Technology Partners, L.P., Potomac Capital
Partners, LP, Potomac Capital International Ltd. and Pleiades Investment Partners-R, LP. 
  

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 “Prime Rate” is Bank’s most recently announced “prime rate,” even if it
is not Bank’s lowest rate. 
 “Quick Assets” is, on any date, Borrower’s unrestricted cash at Bank (which must be
at least Six Million Dollars ($6,000,000) at all times) plus Cash Equivalents at Bank. 
 and Cash Equivalents maintained with Bank, plus
Borrower’s net trade Accounts receivable (all as determined according to GAAP). 
 “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 Five Million Dollars ($5,000,000) outstanding at any time. 
 “Revolving Line Maturity Date” is December 18, 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 fifty percent (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 net worth of Borrower and its Subsidiaries (determined in accordance with GAAP) minus
intangible assets. 
 “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 all other Subordinated Debt. 
 “Transaction Report” is that certain report of transactions and schedule of collections in the form attached hereto as Exhibit B.

 “Transfer” is defined in Section 7.1. 
 [Signature page follows.] 
  

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

			
	BORROWER:
	
	INTERLINK ELECTRONICS, INC.
		
	By	 	/s/ Charles Best
	Name:	 	Charles Best
	Title:	 	CFO

  

			
	BANK:
	
	SILICON VALLEY BANK
		
	By	 	/s/ Mark Turk
	Name:	 	Mark Turk
	Title:	 	Senior Relationship Manager

 Effective Date: November 8, 2007 
 [Signature Page to Amended and Restated 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 
 TRANSACTION REPORT 
  

 2 








 EXHIBIT C 
 PERFECTION CERTIFICATE 
  

 3 








 EXHIBIT D 
 BORROWING RESOLUTIONS 
 

 
 CORPORATE BORROWING CERTIFICATE 
  

					
	BORROWER:	  	INTERLINK ELECTRONICS, INC.	  	DATE:                                  
                      
	BANK:	  	Silicon Valley Bank	  	

 I hereby certify as follows, as of the date set forth above: 
 1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set forth below. 
 2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware. 
 3. Attached hereto are true, correct and complete copies of Borrower’s Articles/Certificate of Incorporation (including amendments), as filed with the Secretary of
State of the state in which Borrower is incorporated as set forth in paragraph 1 above. Such Articles/Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the
date hereof. 
 4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or
pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on
them until Bank receives written notice of revocation from Borrower. 
 RESOLVED, that any one of
the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower: 
  

							
	Name	  	Title	  	Signature	  	Authorized to
Add or Remove
Signatories
				
	____________________	  	________________	  	____________________	  	 ̈
				
	____________________	  	________________	  	____________________	  	 ̈
				
	____________________	  	________________	  	____________________	  	 ̈
				
	____________________	  	________________	  	____________________	  	 ̈

 RESOLVED FURTHER, that any one of the persons
designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. 
 RESOLVED FURTHER, that such individuals may, on behalf of Borrower: 
 Borrow Money. Borrow money from Silicon Valley Bank (“Bank”). 
 Execute Loan Documents. Execute any loan documents Bank requires. 
 Grant Security. Grant Bank a security interest in any of Borrower’s assets. 
 Negotiate
Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds. 
  

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 Letters of Credit. Apply for letters of credit from Bank. 
 Foreign Exchange Contracts. Execute spot or forward foreign exchange contracts. 
 Further Acts. Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be necessary to effectuate such resolutions. 
 RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 
 5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names. 
  

			
	By:	 	 
	Name:	 	 
	Title:	 	 


  

	***	If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing
officers, this Certificate must also be signed by a second authorized officer or director of Borrower. 

  

	
	 I, the
                                        
of Borrower, hereby certify as to paragraphs 1 through 5 above, as

	 [print title]

	of the date set forth above.

  

			
	By:	 	 
	Name:	 	 
	Title:	 	 


  

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 EXHIBIT E 
 COMPLIANCE CERTIFICATE 
  

					
	TO:	  	SILICON VALLEY BANK	  	Date:                                     
                   
	FROM:	  	INTERLINK ELECTRONICS, INC.	  	

 The undersigned authorized officer of Interlink Electronics, Inc. (“Borrower”) certifies
that under the terms and conditions of the Amended and Restated 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	  	Monthly within 30 days	  	Yes     No
	 Annual financial statement (CPA Audited)
	  	FYE within 150 days if not publicly reporting	  	Yes     No
	10-Q, 10-K and 8-K	  	5 days after filing due date with SEC	  	Yes     No
	Transaction Report	  	Monthly within 30 days	  	Yes     No
	A/R & A/P Agings	  	Monthly within 20 days	  	Yes     No
	Annual Board Projections	  	Annually within 30 days from the beginning of each fiscal year	  	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 Adjusted Quick Ratio
	  	1:50 : 1.00	  	 	        :1.00	  	Yes     No
	 Minimum Tangible Net Worth
	  	$10,000,000 plus 50% of new equity	  	$	            	  	Yes     No

  

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 The following financial covenant analyses 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.”) 
  

  

  

  

									
	INTERLINK ELECTRONICS, INC.	 		 	BANK USE ONLY
					
	By:	 	 	 		 	Received by:	 	 
	Name:	 	 	 		 		 	AUTHORIZED SIGNER
	Title:	 	 	 		 	Date:	 	 
					
		 		 		 	Verified:	 	 
		 		 		 		 	AUTHORIZED SIGNER
		 		 		 	Date:	 	 
				
		 		 		 	Compliance Status:        Yes    No

  

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 Schedule 1 to Compliance Certificate 
 Financial Covenants of Borrower 
 Dated:
                                        

  

	I.	Adjusted Quick Ratio (Section 6.7(a)) 

  

	Required:	1.50 :1.00 

 Actual: 
  

						
	 A.
	  	Aggregate value of the unrestricted cash at Bank (which must be at least $6,000,000 at all times) and Cash Equivalents of Borrower and its Subsidiaries held at Bank	  	$	        
			
	 B.
	  	Aggregate value of the net trade accounts receivable of Borrower and its Subsidiaries	  	$	        
			
	 C.
	  	Quick Assets (the sum of lines A and B)	  	$	        
			
	 D.
	  	Aggregate value of Obligations to Bank	  	$	        
			
	 E.
	  	 Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness)
 that matures within one (1) year
	  	$	        
			
	 F.
	  	Current Liabilities (the sum of lines D and E)	  	$	        
			
	 G.
	  	Adjusted Quick Ratio (line C divided by line F)	  		

 Is line G equal to or greater than 1.50:1:00 
             No, not in
compliance                                       
                      Yes, in compliance 
  

	II.	Tangible Net Worth (Section 6.7(b)) 

  

	Required:	$10,000,000 plus 50% of new equity 

 Actual: 
  

						
			
	 A.
	  	Aggregate GAAP Net Worth of Borrower and its Subsidiaries	  	$	        
			
	 B.
	  	Aggregate value of intangible assets of Borrower and its Subsidiaries	  	$	        
			
	 C.
	  	Tangible Net Worth (line A minus line B)	  	$	        
			
	 D.
	  	Proceeds of New Equity since Effective Date	  	$	        
			
	 E.
	  	50% of line D	  	$	        

 Is line C equal to or greater than $10,000,000 plus line E? 
             No, not in
compliance                                       
                      Yes, in compliance 
  

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