EX-10.8



 Exhibit 10.8 

BUSINESS LOAN AGREEMENT 
  

															
	Principal	  	Loan
Date
05-06-2015	  	Maturity	  	Loan No
MASTER	  	Call / Coll	  	Account
1060681133	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	 		 	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	 		 		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	 		 		  	4180 La Jolla Village Drive, Suite 405
		  		 		 		  	La Jolla, CA 92037

  
  

 
 THIS BUSINESS LOAN AGREEMENT dated May 6,
2015, is made and executed between ONE STOP SYSTEMS, INC. (“Borrower”) and BANK OF THE WEST (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan,
Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement. 
 TERM. This Agreement
shall be effective as of May 6, 2015, and shall continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees,
and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement. 
 CONDITIONS PRECEDENT TO EACH
ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in
the Related Documents. 
 Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the
Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below;
(5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel. 

Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified
resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may
require. 
 Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are
then due and payable as specified in this Agreement or any Related Document. 
 Representations and Warranties. The
representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct. 

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default
under this Agreement or under any Related Document. 
 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the
date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: 

Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in
good standing under and by virtue of the laws of the State of California. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and
approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 2235 ENTERPRISE ST STE
110, ESCONDIDO, CA 92029. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any
change in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities. 

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business
names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. 

Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been
duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or
(b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties. 

Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed
Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has
no material contingent obligations except as disclosed in such financial statements. 
 Legal Effect. This Agreement
constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

 Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or
in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at
least the last five (5) years. 
 Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (1) During 
  









					
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 the period of Borrower’s ownership of the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been
(a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners
or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and
local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on
the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby
(1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the
Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. 

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing. 
 Taxes. To the best of Borrower’s knowledge, all of Borrower’s
tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the
ordinary course of business and for which adequate reserves have been provided. 
 Lien Priority. Unless otherwise previously
disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of
Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral. 

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the
signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: 

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s
financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor. 
 Financial Records. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times. 

Financial Statements. Furnish Lender with the following: 

Additional Requirements. Comply with financial reporting as follows: 

Annual Financial Statements. Not later than 120 days after the end of each Borrower’s fiscal year, a copy of the annual audited
financial report of each Borrower for such year, prepared by a firm of certified public accountants acceptable to the Lender and accompanied by an unqualified opinion of such firm, beginning December 31, 2014. 

Interim Financial Statements. Not later than 45 days after the end of each quarter, a copy of the Borrower’s financial
statement as of the end of such period, beginning June 30, 2015. 
 Accounts Receivable and Accounts Payable Agings. Not
later than 45 days after the end of each quarter, an aging of accounts payable and accounts receivable, beginning June 30, 2015. 

Inventory Reports. Not later than 45 days after the end of each quarter, a schedule of inventory specifying the value, cost and
quantity thereof and such other information as the Lender may reasonably request, beginning June 30, 2015. 
 Inventory
Turnover. No more than 145 days through September 30, 2015 and 130 days thereafter, Borrower’s Inventory Turnover as of the end of such quarter, beginning June 30, 2015. 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis,
and certified by Borrower as being true and correct. 
 Additional Information. Furnish such additional information and
statements, as Lender may request from time to time. 
 Financial Covenants and Ratios. Comply with the following covenants and
ratios: 
 Minimum Income and Cash flow Requirements. Other Cash Flow requirements are as follows: 

Cash Flow to Current Portion of Long Term Debt. Maintain a ratio of Cash Flow to Current Portion of Long-Term Debt of not less
than 1.25 to 1, measured at each fiscal year-end, beginning December 31, 2015. 
 Tangible
Net Worth Requirements. Other Net Worth requirements are as follows: 
 Effective Tangible Net Worth. Maintain a
minimum Effective Tangible Net Worth of at least $2,500,000.00 quarterly increasing by 100% of net profit after tax at each fiscal year end, measured at each fiscal quarter-end, beginning June 30, 2015.

 Debt to Effective Tangible Net Worth. Maintain a ratio of Debt to Effective Tangible Net Worth of not more than 2.00 to 1
through September 30, 2015, and 1.75 to 1 thereafter, measured at each fiscal quarter-end, this covenant should be tested beginning June 30, 2015. 









					
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 Additional Requirements. Comply with the following additional requirements:

 Deposit Relationship. Maintain its primary business depository relationship with the Lender, including general operating and
administrative deposit accounts and cash management services. 
 Notification of Default. Immediately upon becoming aware of
the existence of any condition or event which constitutes an Event of Default, or any condition or event which would upon notice or lapse of time, or both, constitute an Event of Default, Borrower shall give Lender written notice thereof specifying
the nature and duration thereof and the action being or proposed to be taken with respect thereto. 
 Material Notices. Give
the Lender prompt written notice of any and all (1) litigation, arbitration or administrative proceedings to which the Borrower is a party or which affects the Collateral; (2) other matters which have resulted in, or might result in a
material adverse change in the Collateral or the financial condition or business operations of the Borrower, and (3) any enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the
Borrower or any of its properties. 
 Net Income. The Borrower shall maintain a minimum Net Income after tax of at least
$500,000.00 at each fiscal year-end, beginning December 31, 2015. 
 Quarterly
Losses. The Borrower shall maintain profitability by not allowing any consecutive quarterly loss(es), beginning June 30, 2015. 

Keyman Life Insurance. Maintain a minimum level of keyman life insurance of not less than $1,000,000.00 upon the life of STEPHEN
COOPER, naming Borrower as beneficiary thereunder and concurrently with the execution of this Agreement. Borrower shall grant, execute and deliver to Lender an Assignment of Life Insurance Policy as collateral, in form and substance satisfactory to
Lender in its sole discretion. 
 Except as provided above, all computations made to determine compliance with the requirements contained in
this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct. 

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require
with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for
the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require. 
 Insurance
Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer;
(2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the
expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any
Collateral. The cost of such appraisal shall be paid by Borrower. 
 Guaranties. Prior to disbursement of any Loan proceeds,
furnish executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties. 

 

			
	 Names of Guarantors
	  	Amounts
	STEPHEN D COOPER, Individually	  	Unlimited
	 STEPHEN D COOPER and LORI COOPER, Trustees of

    COOPER REVOCABLE TRUST
	  	Unlimited

 Other Agreements. Comply with all terms and conditions of all other agreements, whether now or
hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements. 

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the
contrary by Lender in writing. 
 Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations,
including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful
claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as
(1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy,
lien, or claim in accordance with GAAP. 
 Performance. Perform and comply, in a timely manner, with all terms, conditions, and
provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement. 

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner. 

Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and
testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal,
state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. 

Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in
good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion,
Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest. 









					
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 Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense. 

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or
permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on
Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. 

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests. 

Additional Definitions. The following capitalized words and terms shall have the following meanings when used in this Agreement:

 Cash Flow. The words “Cash Flow’ shall mean the sum of Net Income after tax and exclusive of extraordinary gains
plus depreciation and amortization expense minus dividends and distributions. 
 Current Assets. The words “Current
Assets” shall mean current assets as determined in accordance with GAAP, less all amounts due from affiliates, officers or employees. 

Current Liabilities. The words “Current Liabilities” shall mean current liabilities as determined in accordance with
GAAP, including any negative cash balance on the Borrower’s financial statements. 
 Current Portion of Long-Term Debt.
The words “Current Portion of Long-Term Debt” shall mean, for any period, the current scheduled principal or capital lease payments required to be paid during the applicable period. 

Debt. The words “Debt” shall mean all liabilities of the Borrowers, or any Borrower, as applicable, less Subordinated
Liabilities, if any. 
 Effective Tangible Net Worth. The words “Effective Tangible Net Worth” shall mean the
Borrower’s stated net worth plus Subordinated Liabilities but less all intangible assets of the Borrower (i.e. goodwill, trademarks, patents, copyrights, organization expense, covenants not to compete and other similar intangible items
including, but not limited to, investments and/or advances in all amounts due from affiliates, officers or employees). 
 Equipment
Value. The words “Equipment Value” mean the lesser of: the invoice cost of the equipment (including seller premiums or commissions, plus sales tax, freight, installation, and other reasonable costs.); or the book value of the
equipment or the liquidation value of the equipment as determined by the Lender. 
 GAAP. “GAAP” shall mean generally
accepted accounting principles in effect from time to time in the United States. 
 Inventory Turnover. The words
“Inventory Turnover” shall mean inventory as stated on the balance sheet of the Borrower divided by the cost of sales as stated on the Borrower’s income statement, multiplied by the number of days reflected in the income statement.

 Liabilities. The word “Liabilities” shall mean (1) all indebtedness for borrowed money or for the deferred
purchase price of property or services, and all obligations under leases which are or should be, under GAAP, recorded as capital leases, in respect of which a person is directly or contingently liable as borrower, guarantor, endorser or otherwise,
or in respect of which a person otherwise assures a creditor against loss, (2) all obligations for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder has an existing right, contingent
or otherwise, to be secured by) any lien upon property (including without limitation accounts receivable and contract rights) owned by a person, whether or not such person has assumed or become liable for the payment thereof, and (3) all other
liabilities and obligations which would be classified in accordance with GAAP as liabilities on a balance sheet or to which reference should be made in footnotes thereto. 

Liquid Assets. The words “Liquid Assets” shall mean, as of the date of determination thereof, cash on hand, plus the
value of Marketable Securities, minus the value of restricted retirement assets and minus the amount of any margined loans. 
 Marketable
Securities. The words “Marketable Securities” shall mean stocks, bonds and mutual fund shares that can be readily sold for cash on stock exchanges or
over-the-counter markets. 
 Net Income. The
words “Net Income” shall mean, for any period, net income (or net loss, expressed as a negative number) after taxes actually paid in cash or accrued and all expenses and other charges for such period, determined in accordance with GAAP.

 Permitted Liens. The words “Permitted Liens” shall mean: (1) liens and security interests securing Total
Funded Indebtedness owed by the Borrowers to the Lender; (2) liens for taxes, assessments or similar charges not yet due; (3) liens of materialmen, mechanics, warehousemen, or carriers or other like liens arising in the ordinary course of
business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by any of the Borrowers in the ordinary course of business to secure Senior
Funded Indebtedness outstanding on the date hereof or permitted to be incurred herein; (5) liens and security interests which, as of the date hereof, have been disclosed to and approved by the Lender in writing; and (6) those liens and
security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of the Borrowers’ assets. 

Senior Funded Indebtedness. The words “Senior Funded Indebtedness” shall mean, as of the date of determination thereof,
all borrowed money as reflected in the most recent financial statements in the form required by this Agreement, if any, excluding all such borrowed money that has been subordinated to the satisfaction of Lender. 

Subordinated Liabilities. The words “Subordinated Liabilities” shall mean as of the date of determination thereof, all
Liabilities that have been subordinated in writing to the obligations owing to the Lender on terms and conditions acceptable to the Lender. 

Total Funded Indebtedness. The words “Total Funded Indebtedness” shall mean, as of the date of determination thereof,
all borrowed money as reflected in the most recent financial statements in the form required by this Agreement, if any. 

Unencumbered. The words “Unencumbered” shall mean subject to no restriction, pledge, lien, claim or other encumbrance.










					
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 Value. The word “Value” means the lesser of the Borrower’s cost
of Eligible Inventory or the book value thereof or the wholesale market value thereof in such quantities and on such terms as the Lender in its sole discretion may deem appropriate. 

Working Capital. The words “Working Capital” shall mean the sum of Current Assets minus the sum of Current Liabilities.

 RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or
application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender’s capital as a consequence of Lender’s obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender’s written demand for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error. 

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if
Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or
any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged
under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance
of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon
payment which will be due and payable at the Note’s maturity. 
 CESSATION OF ADVANCES. If Lender has made any commitment to make any
Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is
adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred. 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. 

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: 

Payment Default. Borrower fails to make any payment when due under the Loan. 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or
perform their respective obligations under this Agreement or any of the Related Documents. 
 False Statements. Any warranty,
representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter. 
 Insolvency. The dissolution or termination of Borrower’s existence as a
going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy
or insolvency laws by or against Borrower. 
 Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any
Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. 

Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. 

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of
payment or performance of the Loan is impaired. 
 Insecurity. Lender in good faith believes itself insecure. 

Judgment Default. A judgment or judgments for the payment of money shall be rendered against the Borrower or any guarantor of the
Obligations, and any such judgment shall remain unsatisfied and in effect for any period of thirty (30) consecutive days without a stay of 









					
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 execution. 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all
indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and
remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies. 
 NEGATIVE COVENANTS.
Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will comply with the following: 
 Limitations on
Senior Funded Indebtedness. Borrower shall not after the date hereof, create, incur or assume, directly or indirectly, any additional Senior Funded Indebtedness other than Senior Funded Indebtedness owed or to be owed to Lender. 

Liens and Encumbrances. Not create, assume or permit to exist any security interest, encumbrance, mortgage, deed of trust, or other lien (including,
but not limited to, a lien of attachment, judgment or execution) affecting any of the Borrower’s properties, or execute or allow to be filed any financing statement or continuation thereof affecting any of such properties, except for Permitted
Liens or as otherwise provided in this Agreement. 
 Capital Expenditures. Borrower shall not, directly or indirectly, make or commit to make capital
expenditures by lease, purchase, or otherwise, except in the ordinary and usual course of business for the purpose of replacing machinery, equipment or other personal property which, as a consequence of wear, duplication or obsolescence, is no
longer used or necessary in the Borrower’s business. 
 Mergers. Borrower shall not liquidate or dissolve, merge or consolidate with or into, or
acquire any other business organization, provided however, that this requirement shall not apply to transactions in which Borrower is the surviving entity. 

Loans or Advances. Borrower shall not make any loans or advances to any individual, partnership, corporation, limited liability company, trust, or
other organization or person, including without limitation its officers and employees; provided, however, that Borrower may make advances to its employees, including its officers, with respect to expenses incurred or to be incurred by such employees
in the ordinary course of business which expenses are reimbursable by Borrower; and provided further, however, that Borrower may extend credit in the ordinary course of business in accordance with customary trade practices. 

Sale of Assets. Borrower shall not sell, lease or otherwise dispose of any of its assets, except in the ordinary course of business and except for the
purpose of replacing machinery, equipment or other personal property which, as a consequence of wear, duplication or obsolescence, is no longer used or necessary in the Borrower’s business, provided that full, fair and reasonable consideration
is received therefor; provided, however, in no event shall the Borrower sell, lease or otherwise dispose of any equipment purchased with the proceeds of any loans made by the Lender. 

Stock Redemption/Repurchase. Not redeem or repurchase any class of the Borrower’s stock now or hereafter outstanding. 

Investments. Borrower shall not make investments in, or advances to, any individual, partnership, corporation, limited liability company, trust or
other organization or person other than as previously specifically consented to in writing by the Lender. The Borrower will not purchase or otherwise invest in or hold securities, non-operating real estate or
other non-operating assets or purchase all or substantially all the assets of any entity other than as previously specifically consented to in writing by the Lender. 

Line Cleanup. Borrower shall not permit to be outstanding any Advances under the line of credit in excess of $1,500,000.00 for a period of time equal
to at least 30 consecutive calendar days in any line year, beginning June 30, 2016. 
 MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions are a part of this Agreement: 
 Amendments. This Agreement, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by
the alteration or amendment. 
 Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and
expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court. 

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement. 
 Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer,
whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any
and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of
such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or
later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any
holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. 

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws
of the State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California. 

Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of San
Diego County, State of California. 









					
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 No Waiver by Lender. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement
shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower,
or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of
Lender. 
 Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when
actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the
purpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is more than one
Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers. 
 Severability. If a court of
competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law,
the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including
without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates. 

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents
shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein,
without the prior written consent of Lender. 
 Survival of Representations and Warranties. Borrower understands and agrees that in
extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in
nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur. 
 Time is of the Essence. Time is of the essence in the performance of
this Agreement. 
 Jury Waiver. To the extent permitted by applicable law, all parties to this Agreement hereby waive the right to
any jury trial in any action, proceeding, or counterclaim brought by any party against any other party. 
 Judicial Reference
Provision. In the event the above Jury Waiver is unenforceable, the parties elect to proceed under this Judicial Reference Provision. With the exception of the items specified below, any controversy, dispute or claim between the parties relating
to (1) the instrument, document or other agreement in which this Judicial Reference Provision appears or (2) any related documents, instruments or transactions between the parties (each, a “Claim”), will be resolved by a
reference proceeding in California pursuant to Sections 638 et seq. of the California Code of Civil Procedure, or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to reference. Venue for the reference will be the Superior Court in the County where real property involved in the action, if any, is located, or in a County where venue is otherwise appropriate under law (the “Court”). The
following matters shall not be subject to reference: (1) nonjudicial foreclosure of any security interests in real or personal property, (2) exercise of self-help remedies (including without limitation
set-off), (3) appointment of a receiver, and (4) temporary, provisional or ancillary remedies (including without limitation writs of attachment, writs of possession, temporary restraining orders or
preliminary injunctions). The exercise of, or opposition to, any of the above does not waive the right to a reference hereunder. 
 The
referee shall be selected by agreement of the parties. If the parties do not agree, upon request of any party a referee shall be selected by the Presiding Judge of the Court. The referee shall determine all issues in accordance with existing case
law and statutory law of the State of California, including without limitation the rules of evidence applicable to proceedings at law. The referee is empowered to enter equitable and legal relief, and rule on any motion which would be authorized in
a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision, and pursuant to CCP §644 the referee’s decision shall be entered by the Court as a judgment or order
in the same manner as if tried by the Court. The final judgment or order from any decision or order entered by the referee shall be fully appealable as provided by law. The parties reserve the right to findings of fact, conclusions of law, a written
statement of decision, and the right to move for a new trial or a different judgment, which new trial if granted will be a reference hereunder. AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES
THAT ALL CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT A JURY. 
 DEFINITIONS. The following capitalized words
and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code.
Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement: 

Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf
on a line of credit or multiple advance basis under the terms and conditions of this Agreement. 
 Agreement. The word
“Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. 

Borrower. The word “Borrower” means ONE STOP SYSTEMS, INC. and includes all co-signers
and co-makers signing the Note and all their successors and assigns. 









					
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 Collateral. The word “Collateral” means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust,
assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. 
 Environmental
Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L.
No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters
6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. 

Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default
section of this Agreement. 
 GAAP. The word “GAAP” means generally accepted accounting principles. 

Grantor. The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for
the Loan, including without limitation all Borrowers granting such a Security Interest. 
 Guarantor. The word “Guarantor”
means any guarantor, surety, or accommodation party of any or all of the Loan. 
 Guaranty. The word “Guaranty” means the
guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. 
 Hazardous Substances. The
words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic
substances, materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos. 
 Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or
Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. 

Lender. The word “Lender” means BANK OF THE WEST, its successors and assigns. 

Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. 

Note. The word “Note” means and includes without limitation all of the Borrower’s promissory notes and/or credit
agreements, whether now or hereafter existing, evidencing Borrower’s loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for promissory notes
and/or credit agreements. 
 Related Documents. The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in
connection with the Loan. 
 Security Agreement. The words “Security Agreement” mean and include without limitation any
agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. 

Security Interest. The words “Security Interest” mean, without limitation, any and all types of collateral security, present
and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED MAY 6, 2015. 
 BORROWER: 
 ONE STOP
SYSTEMS, INC. 
  

			
	By:	 	/s/ Stephen Cooper
		 	 STEPHEN COOPER, President/Chief Exe. Officer of

ONE STOP SYSTEMS, INC.











					
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 LENDER: 
  

			
	BANK OF THE WEST
		
	By:	 	 
		 	KENNETH PICKLE, Senior Vice President


  
  

 
 LaserPro, Ver 15.1.0.023 Copr D+H USA
Corporation 1997, 2015 All Rights Reserved. - CA P:\CFI\LPL\C40.FC TR-147523 PR-86 








 PROMISSORY NOTE 
  

															
	 Principal

$2,500,000.00
	  	Loan
Date
05-06-2015	  	
Maturity
 06-01-2016
	  	 Loan
No
 0000000026
	  	Call / Coll	  	
Account

1060681133
	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	 		 	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	 		 		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	 		 		  	4180 La Jolla Village Drive, Suite 405
		  		 		 		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $2,500,000.00	  	Date of Note: May 6, 2015

 PROMISE TO PAY. ONE STOP SYSTEMS, INC. (“Borrower”) promises to pay to BANK OF THE WEST (“Lender”), or
order, in lawful money of the United States of America, the principal amount of Two Million Five Hundred Thousand & 00/100 Dollars ($2,500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. 
 PAYMENT. Borrower will pay
this loan in one payment of all outstanding principal plus all accrued unpaid interest on June 1, 2016. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning June 1,
2015, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any
unpaid collection costs; and then to any late charges. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing. 

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is
the fixed rate quoted by the Lender for successive 1 day LIBOR Interest Periods. “LIBOR Interest Periods” means a period of 1 day, determined and adjusted by Lender in accordance with the custom and practice for transactions in Eurodollars
conducted in London, England. Such interest rate shall be equivalent to Lender’s LIBOR Rate which is that rate determined by Lender’s Treasury Desk to be the rate for deposits in U.S. Dollars for such period which appears on the Bloomberg
Screen B TMM Page under the heading “LIBOR Fix BBAM<GO>” as of 11:00 a.m. (London time) (the “LIBOR Rate” or the “Index”) (the “Index”). The Index is not necessarily the lowest rate charged by Lender on
its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will
not occur more often than each day. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 0.120% per annum. Interest on the unpaid principal balance of this Note will be calculated as described
in the “INTEREST CALCULATION METHOD” paragraph using a rate of 2.750 percentage points over the Index, resulting in an initial rate of 2.870%. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law. 
 INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the
interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. 

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be
subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to
send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: BANK OF THE WEST, SME BBC San Diego #00181, 4180 La Jolla Village Drive, Suite 405, La Jolla, CA 92037.

 LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly
scheduled payment. 
 INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law,
immediately increase by adding an additional 5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. 

DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note: 

Payment Default. Borrower fails to make any payment when due under this Note. 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or
in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any
of the related documents. 
 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on
Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 









					
	Loan No: 0000000026	  	 PROMISSORY NOTE

(Continued)
	  	Page 2

  
  

 
  

 Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 

Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. 

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of
payment or performance of this Note is impaired. 
 Insecurity. Lender in good faith believes itself insecure. 

LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount. 
 ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. 

JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. 
 JUDICIAL REFERENCE PROVISION. In the event the above Jury Waiver
is unenforceable, the parties elect to proceed under this Judicial Reference Provision. With the exception of the items specified below, any controversy, dispute or claim between the parties relating to (1) the instrument, document or other
agreement in which this Judicial Reference Provision appears or (2) any related documents, instruments or transactions between the parties (each, a “Claim”), will be resolved by a reference proceeding in California pursuant to
Sections 638 et seq. of the California Code of Civil Procedure, or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to reference. Venue for the reference
will be the Superior Court in the County where real property involved in the action, if any, is located, or in a County where venue is otherwise appropriate under law (the “Court”). The following matters shall not be subject to reference:
(1) nonjudicial foreclosure of any security interests in real or personal property, (2) exercise of self-help remedies (including without limitation set-off), (3) appointment of a receiver, and
(4) temporary, provisional or ancillary remedies (including without limitation writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). The exercise of, or opposition to, any of the above does not
waive the right to a reference hereunder. 
 The referee shall be selected by agreement of the parties. If the parties do not agree, upon request of any
party a referee shall be selected by the Presiding Judge of the Court. The referee shall determine all issues in accordance with existing case law and statutory law of the State of California, including without limitation the rules of evidence
applicable to proceedings at law. The referee is empowered to enter equitable and legal relief, and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision, and pursuant to CCP §644 the referee’s decision shall be entered by the Court as a judgment or order in the same manner as if tried by the Court. The final judgment or order from any
decision or order entered by the referee shall be fully appealable as provided by law. The parties reserve the right to findings of fact, conclusions of law, a written statement of decision, and the right to move for a new trial or a different
judgment, which new trial if granted will be a reference hereunder. AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES THAT ALL CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A
REFEREE AND NOT A JURY. 
 GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law,
the laws of the State of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California. 

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of San Diego
County, State of California. 
 RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or
Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and,
at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. 

COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein: 

(A) a life insurance policy described in an Assignment of Life Insurance Policy dated May 6, 2015. 

(B) inventory, chattel paper, accounts, equipment and general intangibles described in a Commercial Security Agreement dated May 6, 2015. 

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note, as well as directions for payment from Borrower’s
accounts, may be requested orally or in writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in
accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by
Lender’s internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or
any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor’s guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith
believes itself insecure. 
 FEES FOR PAYMENT OF LENDER’S
OUT-OF-POCKET EXPENSES. As a condition precedent to the effectiveness of the Note, Borrower agrees to pay all of the Lender’s out-of-pocket expenses in connection with the preparation and negotiation of this Note. 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its successors and assigns. 
 GENERAL PROVISIONS. If any part of this Note cannot
be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the
extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend 









					
	Loan No: 0000000026	  	 PROMISSORY NOTE

(Continued)
	  	Page 3

  
  

 
  

 (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without
the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES
TO THE TERMS OF THE NOTE. 
 BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. 

BORROWER: 
  

			
	ONE STOP SYSTEMS, INC.
		
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.


  
  

 
 LaserPro, Ver 15.1.0.023 Copr D+H USA
Corporation 1997, 2015. All Rights Reserved. - CA P:\CFI\LPL\D20.FC TR-147516 PR-86 








 CHANGE IN TERMS AGREEMENT 

 

															
	 Principal

$3,000,000.00
	  	
Loan Date
 05-06-2015
	  	
Maturity
 07-31-2017
	  	
Loan No

0000000026
	  	Call / Coll	  	Account
1060681133	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $3,000,000.00	  	Date of Agreement: July 14, 2016

 DESCRIPTION OF EXISTING INDEBTEDNESS. Promissory Note dated May 6, 2015 in the original principal amount of
$2,500,000.00, as amended and Business Loan Agreement (Master) dated May 6, 2015. 
 DESCRIPTION OF COLLATERAL. A Commercial Security
Agreement dated May 6, 2015 and an Assignment of Life Insurance Policy as Collateral dated May 6, 2015. 
 DESCRIPTION OF CHANGE IN
TERMS. 
 1. Extension of Maturity Date. The Maturity Date provided for in the Promissory Note shall be extended to July 31,
2017. 
 2. Modification of PRINCIPAL AMOUNT. The Principal Amount provided for in the Promissory Note shall be changed to $3,000,000.00. 

3. Modification of PROMISE TO PAY. The heading captioned “PROMISE TO PAY” provided for in the Promissory Note is deleted in its entirety and
the following is substituted in lieu thereof: 
 PROMISE TO PAY. ONE STOP SYSTEMS, INC. (“Borrower”) promises to pay to BANK
OF THE WEST (“Lender”), or order, in lawful money of the United States of America, the principal amount of Three Million and 00/100 Dollars ($3,000,000.00) or so much as may be outstanding, together with interest of the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. 
 4. Modification of
PAYMENT. The first sentence of the heading captioned “PAYMENT” provided for in the Promissory Note is deleted in its entirety and the following is substituted in lieu thereof: 

Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on July 31, 2017. 

5. Modification of VARIABLE INTEREST RATE. The interest rate provided for in the heading captioned “VARIABLE INTEREST RATE” provided for in
the Promissory Note is amended to a rate of 2.500 percentage points over the Index. 
 CONTINUING VALIDITY. Except as expressly changed by this
Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right
to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all
such subsequent actions. 
 PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE
TERMS OF THE AGREEMENT. 
 BORROWER: 
  

			
	ONE STOP SYSTEMS, INC.
		
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.

  
  

 
 LaserPro, Ver. 16.1.10.003 Copr. D+H USA
Corporation 1997, 2016. All Rights Reserved. - CA P:\CFI\LPL\D20C.FC TR-147516 PR-86 







 CHANGE IN TERMS AGREEMENT 

 

															
	Principal
$4,675,000.00	  	Loan
Date
05-06-2015	  	Maturity	  	Loan No
MASTER	  	Call / Coll	  	Account
1060681133	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $4,675,000.00	  	Date of Agreement: July 14, 2016

 DESCRIPTION OF EXISTING INDEBTEDNESS. For existing Indebtedness, refer to the definition of “Note” provided
for in the Business Loan Agreement (Master) dated May 6, 2015. 
 DESCRIPTION OF CHANGE IN TERMS. 

1. Modification of Inventory Turnover, Cash Flow to Current Portion of Long Term Debt, Effective Tangible Net Worth, Debt to Effective tangible Net Worth
and Line Cleanup. The headings captioned “Inventory Turnover”, “Cash Flow to Current Portion of Long Term Debt”, “Effective Tangible Net Worth”, “Debt to Effective tangible Net Worth” and “Line
Cleanup” provided for in the Business Loan Agreement (Master) are deleted in their entirety and the following are substituted in lieu thereof: 

Inventory Turnover. Beginning June 30, 2016, maintain Inventory Turnover of less than 145 days through December 30, 2016 and
135 days thereafter, measured at the end of each quarter. 
 Fixed Charge Coverage (EBITDA). The Borrower shall maintain a Fixed
Charge Coverage (EBITDA) of not less than 1.25 to 1 for any fiscal year. 
 Effective Tangible Net Worth. Maintain a minimum
Effective Tangible Net Worth of at least $3,500,000.00, measured at each quarter-end. 
 Debt to
Effective Tangible Net Worth. Maintain a ratio of Debt to Effective Tangible Net Worth of not more than 1.75 to 1, measured at each quarter-end. 

Line Cleandown. Borrower shall not permit to be outstanding any Advances under the line of credit in excess of $1,800,000.00 for a
period of time equal to at least 30 consecutive calendar days in any one fiscal year. 
 2. Additional Provision for Debt Subordination Agreement. A
new heading captioned “Debt Subordination Agreement” is added to the Business Loan Agreement (Master) under Financial Covenants and Ratios which reads as follows: 

Debt Subordination Agreement. Scheduled payment of principal and interest allowed for the subordinated debt of $600,000.00 at 11% with 30-month full amortization. 
 3. Additional Provisions for Annual Debt Service, CAPEX, Distributions, EBITDA, Fixed
Charge Coverage (EBITDA), Interest Expense, Rent Expense and Unfinanced CAPEX. Eight new headings captioned “Annual Debt Service”, “CAPEX” “Distributions”, “EBITDA”, “Fixed Charge Coverage
(EBITDA)”, “Interest Expense”, “Rent Expense” and “Unfinanced CAPEX” are added to the Business Loan Agreement (Master) under Additional Definitions which read as follows: 

Annual Debt Service. The words “Annual Debt Service” shall mean principal and interest payments made on Total Funded
Indebtedness, including payments on bank loans and leases and subordinated debt during the calendar year plus all amounts paid to owners as a loan or an advance. 

CAPEX. “CAPEX” shall mean capital expenditures for any period, all acquisitions of machinery, equipment, land,
leaseholds, buildings, improvements and all other expenditures considered to be for fixed assets under GAAP, consistently applied. Where an asset is acquired under a capital lease, the amount required to be capitalized shall be considered a capital
expenditure during the first year of the lease. 
 Distributions. The word “Distributions” shall mean all cash dividends to
shareholders, and all cash distributions to shareholders of Subchapter S corporations, to partners of partnerships, to members of limited liability companies or to beneficiaries of trusts. 

EBITDA. “EBITDA” shall mean, for any period, Earnings from continuing operations before payment of federal, state and local
income taxes, plus Interest Expense, depreciation expense and amortization expense, in each case for such period, computed and calculated in accordance to GAAP. 

Fixed Charge Coverage (EBITDA). The words “Fixed Charge Coverage (EBITDA)” shall mean, for any period, EBITDA less Unfinanced
CAPEX less Distributions (but not preferred dividends) plus Rent Expense and operating lease payments plus other defined fixed charges divided by Current Portion of Long-Term Debt plus Interest Expense plus Rent Expense and operating lease payments
plus preferred dividends plus other defined fixed charges. 
 Interest Expense. The words “Interest Expense” shall mean,
for any period, ordinary, regular, recurring and continuing expenses for interest on all borrowed money. 
 Rent Expense. The words
“Rent Expense” shall mean rental payments made for real and personal property. 
 Unfinanced CAPEX. The words
“Unfinanced CAPEX” shall mean, for any period, CAPEX less new long-term Senior Funded Indebtedness issued during such period to fund the CAPEX. 

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements
evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties,
unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below,
then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement
or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. 









					
	Loan No: MASTER	  	 CHANGE IN TERMS AGREEMENT

(Continued)
	  	Page 2

  
  

 
  

 PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT.
BORROWER AGREES TO THE TERMS OF THE AGREEMENT. 
  

			
	CHANGE IN TERMS SIGNERS:
	
	ONE STOP SYSTEMS, INC.
		
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.

  

			
	BANK OF THE WEST
		
	By:	 	  

		 	KENNETH PICKLE, Senior Vice President of BANK
		 	OF THE WEST

  
  

 
 LaserPro, Ver. 16.1.10.003 Copr. D+H USA
Corporation 1997, 2016. All Rights Reserved. - CA P:\CFI\LPL\D20C.FC TR-147523 PR-86 







 PROMISSORY NOTE 
  

															
	Principal
$1,250,000.00	  	Loan
Date
05-06-2015	  	Maturity
05-15-2018
	  	Loan No
0000000034	  	Call / Coll	  	Account
1060681133	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.



 

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $1,250,000.00	  	Date of Note: May 6, 2015

 PROMISE TO PAY. ONE STOP SYSTEMS, INC. (“Borrower”) promises to pay to BANK OF THE WEST (“Lender”), or
order, in lawful money of the United States of America, the principal amount of One Million Two Hundred Fifty Thousand & 00/100 Dollars ($1,250,000.00), together with interest on the unpaid principal balance from May 6, 2015,
calculated as described in the “INTEREST CALCULATION METHOD” paragraph using an interest rate of 3.600%, until paid in full. The interest rate may change under the terms and conditions of the “INTEREST AFTER DEFAULT” section.

 PAYMENT. Borrower will pay this loan in 35 payments of $36,749.53 each payment and an irregular last payment estimated at $36,749.59.
Borrower’s first payment is due June 15, 2015, and all subsequent payments are due on the same day of each month after that. Borrower’s final payment will be due on May 15, 2018, and will be for all principal and all accrued
interest not yet paid. Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to
any late charges. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing. 

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. 

PREPAYMENT FEE. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be
subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Upon prepayment of this Note, Lender is entitled to the following prepayment fee: The undersigned may upon at least ten (10)
“Business Days” notice to Lender, prepay this Note in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, provided that on the date of prepayment the undersigned also pay to Lender an amount equal
to one percent (1%) of the principal amount of the Note prepaid, provided however, Borrower may pay up to 20% of the aggregate annual principal amount without incurring the fee. Lender’s failure to collect the prepayment fee at the time of
prepayment does not excuse the prepayment fee and Lender has the right to collect that fee at any time by notifying the undersigned of the amount owing. For purposes of this Note, the term “Business Days” shall mean any day which is not a
Saturday, Sunday, or other day on which commercial banks are by law authorized or required to close. Each partial prepayment shall be applied to the outstanding principal amount of this Note in inverse order of maturity. Except for the foregoing,
Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be
mailed or delivered to: BANK OF THE WEST, SME BBC San Diego #00181, 4180 La Jolla Village Drive, Suite 405, La Jolla, CA 92037. 
 LATE CHARGE.
If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment. 
 INTEREST
AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law, immediately increase by 5.000 percentage points. 

DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note: 

Payment Default. Borrower fails to make any payment when due under this Note. 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or
in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any
of the related documents. 
 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on
Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party
of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 









					
	Loan No: 0000000034	  	 PROMISSORY NOTE

(Continued)
	  	Page 2

  
  

 
  

 Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of
the common stock of Borrower. 
 Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of this Note is impaired. 
 Insecurity. Lender in good faith believes itself
insecure. 
 LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount. 
 ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. 

JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. 
 JUDICIAL REFERENCE PROVISION. In the event the above Jury Waiver is
unenforceable, the parties elect to proceed under this Judicial Reference Provision. With the exception of the items specified below, any controversy, dispute or claim between the parties relating to (1) the instrument, document or other
agreement in which this Judicial Reference Provision appears or (2) any related documents, instruments or transactions between the parties (each, a “Claim”), will be resolved by a reference proceeding in California pursuant to
Sections 638 et seq. of the California Code of Civil Procedure, or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to reference. Venue for the reference
will be the Superior Court in the County where real property involved in the action, if any, is located, or in a County where venue is otherwise appropriate under law (the “Court”). The following matters shall not be subject to reference:
(1) nonjudicial foreclosure of any security interests in real or personal property, (2) exercise of self-help remedies (including without limitation set-off), (3) appointment of a receiver, and
(4) temporary, provisional or ancillary remedies (including without limitation writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). The exercise of, or opposition to, any of the above does not
waive the right to a reference hereunder. 
 The referee shall be selected by agreement of the parties. If the parties do not agree, upon request of any
party a referee shall be selected by the Presiding Judge of the Court. The referee shall determine all issues in accordance with existing case law and statutory law of the State of California, including without limitation the rules of evidence
applicable to proceedings at law. The referee is empowered to enter equitable and legal relief, and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision, and pursuant to CCP §644 the referee’s decision shall be entered by the Court as a judgment or order in the same manner as if tried by the Court. The final judgment or order from any
decision or order entered by the referee shall be fully appealable as provided by law. The parties reserve the right to findings of fact, conclusions of law, a written statement of decision, and the right to move for a new trial or a different
judgment, which new trial if granted will be a reference hereunder. AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES THAT ALL CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A
REFEREE AND NOT A JURY. 
 GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law,
the laws of the State of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California. 

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of San Diego County,
State of California. 
 RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts
with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. 

COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein: 

(A) a life insurance policy described in an Assignment of Life Insurance Policy dated May 6, 2015. 

(B) inventory, chattel paper, accounts, equipment and general intangibles described in a Commercial Security Agreement dated May 6,
2015. 
 FEES FOR PAYMENT OF LENDER’S OUT-OF-POCKET EXPENSES. As
a condition precedent to the effectiveness of the Note, Borrower agrees to pay all of the Lender’s out-of-pocket expenses in connection with the preparation and
negotiation of this Note. 
 SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal
representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. 
 GENERAL PROVISIONS. If any part
of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who
signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. 









					
	Loan No: 0000000034	  	 PROMISSORY NOTE

(Continued)
	  	Page 3

  
  

 
  

 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES
TO THE TERMS OF THE NOTE. 
 BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. 

BORROWER: 
 ONE STOP SYSTEMS, INC. 

 

			
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.

  
  

 
 LaserPro, Ver 15.1.0.023 Copr. D+H USA
Corporation 1997, 2015. All Rights Reserved. - CA P:\CFI\LPL\D20.FC TR-147569 PR-86 







 PROMISSORY NOTE 
  

															
	Principal
$1,600,000.00	  	
Loan Date
 07-14-2016
	  	Maturity
07-31-2019
	  	
Loan No
 NEW
	  	Call / Coll	  	Account
1060681133	  	
Officer
 ***
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $1,600,000.00	  	Date of Note: July 14, 2016

 PROMISE TO PAY. ONE STOP SYSTEMS, INC. (“Borrower”) promises to pay to BANK OF THE WEST (“Lender”), or
order, in lawful money of the United States of America, the principal amount of One Million Six Hundred Thousand & 00/100 Dollars ($1,600,000.00), together with interest on the unpaid principal balance from July 14, 2016, calculated as
described in the “INTEREST CALCULATION METHOD” paragraph using an interest rate of 3.800%, until paid in full. The interest rate may change under the terms and conditions of the “INTEREST AFTER DEFAULT” section. 

PAYMENT. Borrower will pay this loan in 35 payments of $47,218.60 each payment and an irregular last payment estimated at $47,218.71. Borrower’s first
payment is due August 31, 2016, and all subsequent payments are due on the last day of each month after that. Borrower’s final payment will be due on July 31, 2019, and will be for all principal and all accrued interest not yet paid.
Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.
Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing. 
 INTEREST CALCULATION
METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance
is outstanding. All interest payable under this Note is computed using this method. 
 PREPAYMENT FEE. Borrower agrees that all loan fees
and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Upon prepayment of this Note,
Lender is entitled to the following prepayment fee: The undersigned may upon at least ten (10) “Business Days” notice to Lender, prepay this Note in whole or in part with accrued interest to the date of such prepayment on the amount
prepaid, provided that on the date of prepayment the undersigned also pay to Lender an amount equal to one percent (1%) of the principal amount of the Note prepaid for the first three years, and none thereafter. Lender’s failure to collect the
prepayment fee at the time of prepayment does not excuse the prepayment fee and Lender has the right to collect that fee at any time by notifying the undersigned of the amount owing. For purposes of this Note, the term “Business Days”
shall mean any day which is not a Saturday, Sunday, or other day on which commercial banks are by law authorized or required to close. Each partial prepayment shall be applied to the outstanding principal amount of this Note in inverse order of
maturity. Except for the foregoing, Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make
payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”, “without
recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as
full satisfaction of a disputed amount must be mailed or delivered to: BANK OF THE WEST, SME BBC San Diego #00181, 4180 La Jolla Village Drive, Suite 405, La Jolla, CA 92037. 

LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment. 

INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law, immediately increase by 5.000 percentage
points. 
 DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note: 

Payment Default. Borrower fails to make any payment when due under this Note. 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or
in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any
of the related documents. 
 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on
Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party
of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 









					
	Loan No: NEW	  	 PROMISSORY NOTE

(Continued)
	  	Page 2

  
  

 
  

 Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of
the common stock of Borrower. 
 Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of this Note is impaired. 
 Insecurity. Lender in good faith believes itself
insecure. 
 LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount. 
 ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. 

JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. 
 JUDICIAL REFERENCE PROVISION. In the event the above Jury Waiver is
unenforceable, the parties elect to proceed under this Judicial Reference Provision. With the exception of the items specified below, any controversy, dispute or claim between the parties relating to (1) the instrument, document or other
agreement in which this Judicial Reference Provision appears or (2) any related documents, instruments or transactions between the parties (each, a “Claim”), will be resolved by a reference proceeding in California pursuant to
Sections 638 et seq. of the California Code of Civil Procedure, or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to reference. Venue for the reference
will be the Superior Court in the County where real property involved in the action, if any, is located, or in a County where venue is otherwise appropriate under law (the “Court”). The following matters shall not be subject to reference:
(1) nonjudicial foreclosure of any security interests in real or personal property, (2) exercise of self-help remedies (including without limitation set-off), (3) appointment of a receiver, and (4) temporary, provisional or ancillary
remedies (including without limitation writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). The exercise of, or opposition to, any of the above does not waive the right to a reference hereunder. 

The referee shall be selected by agreement of the parties. If the parties do not agree, upon request of any party a referee shall be selected by the Presiding
Judge of the Court. The referee shall determine all issues in accordance with existing case law and statutory law of the State of California, including without limitation the rules of evidence applicable to proceedings at law. The referee is
empowered to enter equitable and legal relief, and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision, and
pursuant to CCP §644 the referee’s decision shall be entered by the Court as a judgment or order in the same manner as if tried by the Court. The final judgment or order from any decision or order entered by the referee shall be fully
appealable as provided by law. The parties reserve the right to findings of fact, conclusions of law, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial if granted will be a reference
hereunder. AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES THAT ALL CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT A JURY. 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California. 
 CHOICE OF
VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of San Diego County, State of California. 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether
checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. 

COLLATERAL. Borrower acknowledges this Note is secured by: 

(A) Commercial Security Agreement dated July 14, 2016 
 (B)
Assignment of Life Insurance Policy dated May 6, 2015. 
 FEES FOR PAYMENT OF LENDER’S OUT-OF-POCKET
EXPENSES. As a condition precedent to the effectiveness of the Note, Borrower agrees to pay all of the Lender’s out-of-pocket expenses in connection with the
preparation and negotiation of this Note. 
 PRIOR NOTE. Promissory Note dated May 6, 2015 in the original principal amount of $1,250,000.00. 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and
assigns, and shall inure to the benefit of Lender and its successors and assigns. 
 GENERAL PROVISIONS. If any part of this Note cannot be enforced,
this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed
by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without
the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. 









					
	Loan No: NEW	  	 PROMISSORY NOTE

(Continued)
	  	Page 3

  
  

 
  

 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES
TO THE TERMS OF THE NOTE. 
 BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. 

BORROWER: 
 ONE STOP SYSTEMS, INC. 

 

			
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.

  
  

 
 LaserPro, Ver. 16.1.10.003 Copr. D+H USA
Corporation 1997, 2016. All Rights Reserved. - CA P:\CFI\LPL\D20.FC TR-165347 PR-86 







 CHANGE IN TERMS AGREEMENT 

 

															
	Principal
$4,412,288.00	  	Loan
Date
05-06-2015	  	Maturity	  	Loan No
MASTER	  	Call / Coll	  	Account
1060681133	  	
Officer
 18106
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.



															
	 


									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $4,412,288.00	  	Date of Agreement: May 18, 2017

 DESCRIPTION OF EXISTING INDEBTEDNESS. 

For existing Indebtedness, refer to the definition of “Note” provided for in the Business Loan Agreement (Master) dated May 6, 2015. 

DESCRIPTION OF CHANGE IN TERMS. 
 1. The heading captioned
“Inventory Turnover” below the heading captioned “Financial Statements” is modified as follows: 
 Inventory
Turnover. Borrower shall maintain Inventory Turnover of less than 135 days, on a trailing three months basis, measured at the end of each quarter, beginning December 31, 2016. 

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements
evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties,
unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below,
then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement
or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. 

CHANGE IN TERMS SIGNERS: 
 ONE STOP SYSTEMS, INC.

  

			
	By:	 	/s/ Stephen
Cooper                                        
                    
		 	STEPHEN COOPER, President/Chief Exe. Officer of
		 	ONE STOP SYSTEMS, INC.

 BANK OF THE WEST 
  

			
	By:	 	                                     
                                         
              
		 	KENNETH PICKLE, Relationship Manager of          
		 	BANK OF THE WEST

  
  

 
 LaserPro, Ver. 16.4.0.017 Copr. D+H USA
Corporation 1997, 2017. All Rights Reserved. - CA C:\CFI\LPL\D20C.FC TR-147523 PR-86 







 CHANGE IN TERMS AGREEMENT 

 

															
	Principal
$3,500,000.00	  	Loan
Date
05-06-2015	  	Maturity
08-31-2018
	  	Loan No
0000000026	  	Call / Coll	  	Account
1060681133	  	
Officer
 18106
	  	Initials
	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or
item.
 Any item above containing “***” has been omitted due to text length limitations.


  

									
	Borrower:	  	ONE STOP SYSTEMS, INC.	  		  	Lender:	  	BANK OF THE WEST
		  	2235 ENTERPRISE ST STE 110	  		  		  	SME BBC San Diego #00181
		  	ESCONDIDO, CA 92029	  		  		  	4180 La Jolla Village Drive, Suite 405
		  		  		  		  	La Jolla, CA 92037

  
  

 
  

			
	Principal Amount: $3,500,000.00	  	Date of Agreement: October 5, 2017

 DESCRIPTION OF EXISTING INDEBTEDNESS. 

Promissory Note dated May 6, 2015 in the original principal amount of $2,500,000.00. 

DESCRIPTION OF COLLATERAL. 
 Commercial Security Agreement
dated May 6, 2015 and an Assignment of Life Insurance Policy dated May 6, 2015. 
 DESCRIPTION OF CHANGE IN TERMS. 

1. The heading captioned “PROMISE TO PAY” has been modified as follows: 

PROMISE TO PAY. ONE STOP SYSTEMS, INC. (“Borrower”) promises to pay to BANK OF THE WEST (“Lender”), or order, in lawful money of the
United States of America, the principal amount of Three Million Five Hundred Thousand & 00/100 Dollars ($3,500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance.
Interest shall be calculated from the date of each advance until repayment of each advance. 
 My Credit Limit has been increased by $500,000.00 

2. Extension of Maturity Date. Consistent with our existing periodic payment arrangement, the Maturity Date of the Promissory Note shall be extended to
August 31, 2018. 
 CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations,
including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor
obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s),
including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation
does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. 

BORROWER: 
 ONE STOP SYSTEMS, INC. 

 

			
	By:	 	 /s/ Stephen Cooper

		 	STEPHEN COOPER, President of ONE STOP
		 	SYSTEMS, INC.

  
  

 
 LaserPro, Ver. 17.2.10.037 Copr. D+H USA
Corporation 1997, 2017. All Rights Reserved. - CA C:\CFI\LPL\D20C.FC TR-147516 PR-86