##### 



CREDIT AND SECURITY AGREEMENT
 BY AND BETWEEN
 HEI, INC.
 AND
 WELLS FARGO BANK, NATIONAL ASSOCIATION
Acting through its Wells Fargo Business Credit operating division
 May 15, 2007




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Table of Contents
 PageARTICLE I DEFINITIONS
    
    
    1Section 1.1 Definitions
    
    
    1Section 1.2 Other Definitional Terms; Rules of Interpretation
    
    
    12ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY
    
    
    13Section 2.1 Revolving Advances
    
    
    13Section 2.2 Procedures for Requesting Advances
    
    
    13Section 2.3 Term Advance
    
    
    13Section 2.4 Payment of Term Note
    
    
    14Section 2.5 Interest; Minimum Interest Charge;Default Interest Rate; Application of Payments; Participations; Usury
    
    
    14Section 2.6 Fees
    
    
    15Section 2.7 Time for Interest Payments; Payment on Non-Business Days; Computation of Interest and Fees
    
    
    17Section 2.8 Lockbox and Collateral Account; Sweep of Funds
    
    
    17Section 2.9 Voluntary Prepayment; Reduction of the Maximum Line Amount; Termination of the
Credit Facility by the Borrower
    
    
    18Section 2.10 Mandatory Prepayment
    
    
    18Section 2.11 Revolving Advances to Pay Indebtedness
    
    
    18Section 2.12 Use of Proceeds
    
    
    18Section 2.13 Liability Records
    
    
    18ARTICLE III SECURITY INTEREST; OCCUPANCY; SETOFF
    
    
    19Section 3.1 Grant of Security Interest
    
    
    19Section 3.2 Notification of Account Debtors and Other Obligors
    
    
    19Section 3.3 Assignment of Insurance
    
    
    19Section 3.4 Occupancy
    
    
    20Section 3.5 License
    
    
    20Section 3.6 Financing Statement
    
    
    21Section 3.7 Setoff
    
    
    21Section 3.8 Collateral
    
    
    21ARTICLE IV CONDITIONS OF LENDING
    
    
    22Section 4.1 Conditions Precedent to the Initial Advances
    
    
    22Section 4.2 Conditions Precedent to All Advances
    
    
    24ARTICLE V REPRESENTATIONS AND WARRANTIES
    
    
    24Section 5.1 Existence and Power; Name; Chief Executive Office; Inventory and Equipment
Locations; Federal Employer Identification Number and Organizational Identification Number
    
    
    24




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PageSection 5.2 Capitalization
    
    
    24Section 5.3 Authorization of Borrowing; No Conflict as to Law or Agreements
    
    
    25Section 5.4 Legal Agreements
    
    
    25Section 5.5 Subsidiaries and Affiliates
    
    
    25Section 5.6 Financial Condition; No Adverse Change
    
    
    25Section 5.7 Litigation
    
    
    25Section 5.8 Regulation U
    
    
    25Section 5.9 Taxes
    
    
    26Section 5.10 Titles and Liens
    
    
    26Section 5.11 Intellectual Property Rights
    
    
    26Section 5.12 Plans
    
    
    27Section 5.13 Default
    
    
    27Section 5.14 Environmental Matters
    
    
    27Section 5.15 Submissions to the Lender
    
    
    28Section 5.16 Financing Statements
    
    
    28Section 5.17 Rights to Payment
    
    
    29ARTICLE VI COVENANTS
    
    
    29Section 6.1 Reporting Requirements
    
    
    29Section 6.2 Financial Covenants
    
    
    32Section 6.3 Permitted Liens; Financing Statements
    
    
    33Section 6.4 Indebtedness
    
    
    33Section 6.5 Guaranties
    
    
    34Section 6.6 Investments and Subsidiaries
    
    
    34Section 6.7 Dividends and Distributions
    
    
    34Section 6.8 Salaries
    
    
    35Section 6.9 Books and Records; Collateral Examination, Inspection and Appraisals
    
    
    35Section 6.10 Account Verification
    
    
    35Section 6.11 Compliance with Laws
    
    
    35Section 6.12 Payment of Taxes and Other Claims
    
    
    36Section 6.13 Maintenance of Properties
    
    
    36Section 6.14 Insurance
    
    
    37Section 6.15 Preservation of Existence
    
    
    37Section 6.16 Delivery of Instruments, etc
    
    
    37Section 6.17 Sale or Transfer of Assets; Suspension of Business Operations
    
    
    37Section 6.18 Consolidation and Merger; Asset Acquisitions
    
    
    37Section 6.19 Sale and Leaseback
    
    
    38Section 6.20 Restrictions on Nature of Business
    
    
    38Section 6.21 Accounting
    
    
    38Section 6.22 Discounts, etc.
    
    
    38Section 6.23 Plans
    
    
    38Section 6.24 Place of Business; Name
    
    
    38Section 6.25 Constituent Documents; S Corporation Status
    
    
    38Section 6.26 Performance by the Lender
    
    
    38ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES
    
    
    39
 ii




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PageSection 7.1 Events of Default
    
    
    39Section 7.2 Rights and Remedies
    
    
    41Section 7.3 Certain Notices
    
    
    42ARTICLE VIII MISCELLANEOUS
    
    
    42Section 8.1 No Waiver; Cumulative Remedies; Compliance with Laws
    
    
    42Section 8.2 Amendments, Etc
    
    
    43Section 8.3 Notices; Communication of Confidential Information; Requests for Accounting
    
    
    43Section 8.4 Further Documents
    
    
    43Section 8.5 Costs and Expenses
    
    
    44Section 8.6 Indemnity
    
    
    44Section 8.7 Participants
    
    
    45Section 8.8 Execution in Counterparts; Telefacsimile Execution
    
    
    45Section 8.9 Retention of the Borrowers Records
    
    
    45Section 8.10 Binding Effect; Assignment; Complete Agreement; Sharing Information
    
    
    45Section 8.11 Severability of Provisions
    
    
    46Section 8.12 Headings
    
    
    46Section 8.13 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial
    
    
    46Section 8.14 Attorneys Fees
    
    
    46
 iii




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CREDIT AND SECURITY AGREEMENT
  ARTICLE I
 DEFINITIONS
 Definitions
 Accounts
 Accounts Advance Rate ;
 Advance
 Affiliate Affiliates
 Agreement
 Availability
 Bond Advance Rate
 Borrowing Base




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Borrowing Base Reserve
 Business Day
 Capital Expenditures
 Collateral
 Collateral Account
 2




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Commitment
 Constituent Documents
 Control Agreement
 Credit Facility
 Cut-off Time
 Debt
 Debt Service Coverage Ratio
 Default
 Default Period
 Default Rate
 Dilution
 3




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Director
 Earnings Before Taxes
 Eligible Accounts
         4




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Eligible Equipment
 Eligible Finished Goods
 Eligible Inventory
   5




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Eligible Marketable Bonds
 Eligible Raw Materials
 Environmental Law
 Equipment
 ERISA
 ERISA Affiliate
 Event of Default
 6




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Ex-Im Accounts
 Ex-Im Agreement
 Ex-Im Amount
 Ex-Im Borrowing Base
 Ex-Im Credit Facility
 Ex-Im Documents
 Ex-Im Inventory
 Ex-Im Reserve
 Financial Covenants
 Floating Rate
 Floating Rate Advance
 Funding Date
 Funds from Operations
 GAAP
 General Intangibles
 Guarantor
 7




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Guaranty
 Hazardous Substances
 Indebtedness
 Indemnified Liabilities
 Indemnitees
 Infringement Infringing
 Insolvency Event
 Intangible Assets
 Intellectual Property Rights
 Interest Expense
 Interest Payment Date
 8




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Inventory
 Inventory Advance Rate
 Investment Property
 IRC
 Leahy Pledge Agreement
 Lender
 Licensed Intellectual Property
 Lien
 Loan Documents
 Loan Year
 Lockbox Lockbox
 Material Adverse Effect
    9




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Maturity Date
 Maximum Line Amount
 Minimum Interest Charge
 Mortgagees Disclaimer and Consent
 Multiemployer Plan
 Net Forced Liquidation Value
 Note
 OFAC
 Officer
 Overadvance
 Owned Intellectual Property
 Owner
 Patent and Trademark Security Agreement
 10




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Pension Plan
 Permitted Lien Permitted Liens
 Person
 Plan
 Premises
 Prime Rate
 Reportable Event
 Revolving Advance
 Revolving Note
 Securities Account
 Security Documents
 Security Interest
 Subordinated Creditor
 Subsidiary
 11




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Term Advance
 Term Note
 Termination Date
 Trademark Security Agreement
 UCC
 Unused Amount
 Wholesale Lockbox and Collection Account Agreement
 Other Definitional Terms; Rules of Interpretation
 12




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ARTICLE II
 AMOUNT AND TERMS OF THE CREDIT FACILITY
 Revolving Advances
 Procedures for Requesting Advances
 Time for Requests
 Disbursement
 Term Advance
  13




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Payment of Term Note
     Interest; Minimum Interest Charge; Default Interest Rate; Application of
Payments; Participations; Usury.
 Interest
 Minimum Interest Charge
 Default Interest Rate
 14




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Application of Payments
 Participations
 Usury
 Fees
 Closing Fee
 Unused Line Fee
 15




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Collateral Exam Fees
 Termination and Line Reduction Fees
 Waiver of Termination and Prepayment Fees
 Overadvance Fees
 Ex-Im Fees
 Other Fees and Charges
 16




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Time for Interest Payments; Payment on Non-Business Days; Computation of
Interest and Fees
 Time For Interest Payments
 Payment on Non Business Days
 Computation of Interest and Fees
 Lockbox and Collateral Account; Sweep of Funds
 Lockbox and Collateral Account.
   17




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Sweep of Funds
 Voluntary Prepayment; Reduction of the Maximum Line Amount; Termination of the
Credit Facility by the Borrower
 Mandatory Prepayment
 Revolving Advances to Pay Indebtedness
 Use of Proceeds
 Liability Records
 18




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ARTICLE III
 SECURITY INTEREST; OCCUPANCY; SETOFF
 Grant of Security Interest . ,
 Notification of Account Debtors and Other Obligors
 Assignment of Insurance
 19




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Occupancy
    provided however Section
3.4.
 License
 20




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Financing Statement
 
 Setoff
 Collateral
 21




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ARTICLE IV
 CONDITIONS OF LENDING
 Conditions Precedent to the Initial Advances
             22




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,
     23




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Conditions Precedent to All Advances
   ARTICLE V
 REPRESENTATIONS AND WARRANTIES
  Existence and Power; Name; Chief Executive Office; Inventory and Equipment
Locations; Federal Employer Identification Number and Organizational Identification Number
 Capitalization
 24




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Authorization of Borrowing; No Conflict as to Law or Agreements
 Legal Agreements
 Subsidiaries and Affiliates
 Financial Condition; No Adverse Change
 Litigation
 Regulation U
 25




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Taxes
 Titles and Liens
 Intellectual Property Rights
 Owned Intellectual Property
 Agreements with Employees and Contractors
 Intellectual Property Rights Licensed from Others
 26




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Other Intellectual Property Needed for Business
 Infringement
 Plans
 Default
 Environmental Matters
  27




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Submissions to the Lender
 Financing Statements
 28




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Rights to Payment
 ARTICLE VI
 COVENANTS
  Reporting Requirements
 Annual Financial Statements
 Monthly Financial Statements
 29




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Accounts Inventory
 Collateral Reports
 Projections
 Supplemental Reports
 Litigation
 Defaults
 Plans
 30




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Disputes
 Officers and Directors
 Collateral
 Commercial Tort Claims
 Intellectual Property.
    31




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Reports to Owners
 SEC Filings
 Tax Returns of the Borrower
 Violations of Law
 Other Reports
 Financial Covenants
 Minimum Earnings Before Taxes
 Period to Date PretaxPeriod
    
    ProfitApril, 2007
    
    $(875,000)April through May, 2007
    
    $(1,325,000)April through June, 2007
    
    $(1,575,000)April through July, 2007
    
    $(1,725,000)April through August, 2007
    
    $(1,775,000)Fiscal Year 2008 through:September, 2007
    
    $0October, 2007
    
    $0November, 2007
    
    $300,000December, 2007
    
    $400,000January, 2008
    
    $500,000February, 2008
    
    $600,000
 32




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Minimum Debt Service Coverage Ratio
 Minimum Debt ServicePeriod
    
    Coverage RatioThrough August, 2008
    

    1.1 to 1.00Through August, 2009

    
1.1 to 1.00Through August, 2010
    
1.1 to 1.00
 Capital Expenditures
 Permitted Liens; Financing Statements
       Indebtedness
 33




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Guaranties
   Investments and Subsidiaries
     Dividends and Distributions
 34




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Salaries
 Books and Records; Collateral Examination, Inspection and Appraisals
     Account Verification
   Compliance with Laws
 35




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Payment of Taxes and Other Claims
 Maintenance of Properties
   36




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Insurance
 Preservation of Existence
 Delivery of Instruments, etc.
 Sale or Transfer of Assets; Suspension of Business Operations
 Consolidation and Merger; Asset Acquisitions
 37




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Sale and Leaseback
 Restrictions on Nature of Business
 Accounting
 Discounts, etc.
 Plans
 Place of Business; Name
 Constituent Documents; S Corporation Status
 Performance by the Lender
 38




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ARTICLE VII
 EVENTS OF DEFAULT, RIGHTS AND REMEDIES
 Events of Default
      39




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Insolvency Event
      40




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Rights and Remedies
   41




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Certain Notices
 ARTICLE VIII
 MISCELLANEOUS
 No Waiver; Cumulative Remedies; Compliance with Laws
 42




---



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Amendments, Etc
 Notices; Communication of Confidential Information; Requests for
Accounting
 Further Documents
 43




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Costs and Expenses
 Indemnity
     44




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##### 



Participants
 Execution in Counterparts; Telefacsimile Execution
 Retention of the Borrowers Records
 Binding Effect; Assignment; Complete Agreement; Sharing Information
 45




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Severability of Provisions
 Headings
 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial
 Attorneys Fees
 [The remainder of this page intentionally left blank.]
 46




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THE BORROWER AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY
OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
 Borrowers
Initials /s/ MT ; Lenders Initials /s/ MG.
   
 HEI, INC.By:
    
    /s/ Mark ThomasName: Mark ThomasIts: Chief Executive OfficerWELLS FARGO BANK, NATIONALASSOCIATIONBy:
    
    /s/ Michael L. GuillouName: Michael L. GuillouIts: Relationship Manager/s/ Thomas F. LeahyThomas F. Leahy




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Table of Exhibits and Schedules
 Exhibit A
    
    Form of Revolving NoteExhibit B
    
    Form of Term NoteExhibit C
    
    Compliance CertificateExhibit D
    
    PremisesSchedule 5.1
    
    Trade Names, Chief Executive Office, Principal Place of Business, and Locations of CollateralSchedule 5.2
    
    Capitalization and Organizational ChartSchedule 5.5
    
    SubsidiariesSchedule 5.7
    
    Litigation MattersSchedule 5.11
    
    Intellectual Property DisclosuresSchedule 5.14
    
    Environmental MattersSchedule 6.3
    
    Permitted LiensSchedule 6.4
    
    Permitted IndebtednessSchedule 6.5
    
    Guaranties




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Exhibit A to Credit and Security Agreement
 REVOLVING NOTE
 $8,000,000.00
    
    May , 2007
     HEI, INC.By:Name:
    
    Mark ThomasIts:
    
    Chief Executive Officer and Chief
Financial Officer
 A-1




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Exhibit B to Credit and Security Agreement
 TERM NOTE
 $340,000.00
    
    May , 2007
 ,
    By:Name:
    
    Mark ThomasIts:
    
    Chief Executive Officer and Chief
Financial Officer
 B-1




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Exhibit C to Credit and Security Agreement
 COMPLIANCE CERTIFICATE
 To:
    
    Wells Fargo Bank, National AssociationAttn:
    
    Michael L. GuillouDate:
    
    ___, 200___Subject:
    
    Financial Statements
 [___]
   o
    
    The undersigned does not have knowledge of the occurrence of a Default or Event of
Default under the Credit Agreement except as previously reported in writing to the
Lender.o
    
    The undersigned has knowledge of the occurrence of a Default or Event of Default
under the Credit Agreement not previously reported in writing to the Lender and
attached hereto is a statement of the facts with respect to thereto. The Borrower
acknowledges that pursuant to Section 2.5(c) of the Credit
Agreement, the Lender may impose the Default Rate at any time during the resulting
Default Period.
  o
    
    The undersigned has no knowledge of any material adverse change to the litigation
exposure of the Borrower or any of its Affiliates or of any Guarantor.o
    
    The undersigned has knowledge of material adverse changes to the litigation exposure
of the Borrower or any of its Affiliates or of any Guarantor not previously
disclosed in Schedule 5.7. Attached to this Certificate is a
statement of the facts with respect thereto.
  Minimum Earnings Before Taxes [  ] o o :
 C-1




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Minimum Earnings BeforePeriod
    
    
    TaxesApril, 2007
    
    
    $ (875,000)April through May, 2007
    
    
    $ (1,325,000)April through June, 2007
    
    
    $ (1,575,000)April through July, 2007
    
    
    $ (1,725,000)April through August, 2007
    
    
    $ (1,775,000)Fiscal Year 2008 through:September, 2007
    
    
    $ 0October, 2007
    
    
    $ 0November, 2007
    
    
    $ 300,000December, 2007
    
    
    $ 400,000January, 2008
    
    
    $ 500,000February, 2008
    
    
    $ 600,000
 Minimum
Debt Service Coverage Ratio [___] o o
 Minimum Debt ServicePeriod
    
    Coverage RatioThrough August, 2008
    
    1.1 to 1.00Through August, 2009
    
    1.1 to 1.00Through August, 2010
    
    1.1 to 1.00
 Capital
Expenditures o o
 Salaries o o




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By:Name:Its:
    
    Chief Financial Officer




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Exhibit D to Credit and Security Agreement
 PREMISES
    rd
  D-1




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Schedule 5.1 to Credit and Security Agreement
 TRADE NAMES, CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF BUSINESS,  AND LOCATIONS OF COLLATERAL  TRADE NAMES
  CHIEF EXECUTIVE OFFICE/PRINCIPAL PLACE OF BUSINESS
  OTHER INVENTORY AND EQUIPMENT LOCATIONS
 rd
 D-2




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Schedule 5.2 to Credit and Security Agreement
 CAPITALIZATION AND ORGANIZATIONAL CHART
  No. of shares (afterexercise of all rights
    
    Percent interest on aHolder
    
    Type of Rights/Stock
    
    to acquire shares)
    
    fully diluted basisThomas F. Leahy
    
    Common and Preferred Stock
    
    
    1,128,054
    
    
    
    11.8
    %Minneapolis
Portfolio
Management Group
LLC
    
    Common Stock
    
    
    905,246
    
    
    
    9.5
    %Perkins Capital
Management, Inc.
    
    Common Stock
    
    
    748,350
    
    
    
    7.8
    %




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Schedule 5.5 to Credit and Security Agreement
 SUBSIDIARIES




---



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Schedule 5.7 to Credit and Security Agreement
 LITIGATION MATTERS




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Schedule 5.11 to Credit and Security Agreement
 INTELLECTUAL PROPERTY DISCLOSURES
  Patents
 Docket No.
    
    Title
    
    Serial/Patent No.
    
    Status14605.113
    
    Information Technology System for Health
Care Environments (fka Information
Technology System that is Suitable for
Medical Applications)
    
    10/161, 168 (formerly
Provisions #60/295,181)
    
    B  Pending10139.007-CA-01
    
    Document Reading Apparatus
    
    1,245,765
    
    A  Issued10139-0008-CA-01
    
    Photo-Optic Transducing Head Assembly
    
    1,265,547
    
    A  Issued10139.0016-US-01
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    6,646,521
    
    A  Issued10139.0016-TA-01
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    194018
    
    A  Issued10139.0016-EP-WO
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    1,968,674
    
    B  Pending10139.0016-JP-WO
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    2527567
    
    B  Pending10139.0016-KS-WO
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    37003802
    
    B  Pending10139.0016-MY-01
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and packaging
    
    14267
    
    B  Pending10139.0016-TH-01
    
    Method of Mount DC Block Capacitor for
Microwave Circuit and Packaging
    
    68354
    
    B  Pending10139.0017-US-01
    
    Interconnection Device and Method
    
    6,294,966
    
    A  Issued10139.0017-US-C1
    
    Interconnection Device and Method
    
    6,469,592
    
    A  Issued10139.0017-TA-01
    
    Interconnection Device and Method
    
    156859
    
    A  Issued10139.0017-CC-WO
    
    Interconnection Device and Method
    
    8186499
    
    B  Pending10139.0017-EP-WO
    
    Interconnection Device and Method
    
    986661.7
    
    B  Pending10139.0017-IN-WO
    
    Interconnection Device and Method
    
    2702
    
    B  Pending10139.0017-JP-WO
    
    Interconnection Device and Method
    
    1550811
    
    B  Pending10139.0017-KS-WO
    
    Interconnection Device and Method
    
    27008541
    
    B  Pending10139.0017-MY-01
    
    Interconnection Device and Method
    
    6125
    
    B  Pending10139.0017-PH-01
    
    Interconnection Device and Method
    
    10003580
    
    B  Pending101039.0017-TH-01
    
    Interconnection Device and Method
    
    62789
    
    B  Pending10139.0017-US-C2
    
    interconnection Device and Method
    
    10/228,587
    
    B   Pending10139.0022-US-01
    
    Integrated Mem Switch
    
    10/014,987
    
    B  Pending10139.0022-US-D1
    
    Low Voltage Mem Switch
    
    10/409,742
    
    B  Pending10139.0027-TA-01
    
    Test Methods, Systems, and Probes for
High-Frequency Wireless Communications
Devices
    
    189906
    
    A  Issued10139.0027-CC-WO
    
    Test Methods, Systems, and Probes for
High-Frequency Wireless Communications
Devices
    
    18149812
    
    A  Issued10139.0027-EP-WO
    
    Test Methods, Systems, and Probes for
high-Frequency Wireless Communications
Devices
    
    1959300.3
    
    B  Pending10139.0027-IN-WO
    
    Test Methods, Systems, and Probes for
High-Frequency Wireless Communications
Devices
    
    10503
    
    B  Pending




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##### 



Docket No.
    
    Title
    
    Serial/Patent No.
    
    Status10139.0027-JP-WO
    
    Test Methods, Systems, and Probes for
High-Frequency Wireless Communications
Device
    
    2516659
    
    B  Pending10139.0027-US-C1
    
    Test Methods, Systems, and Probes for
High-Frequency Wireless Communications
Device
    
    09/725,646
    
    B -Pending10139.0031-US-01
    
    Flexible Circuit Board having an
Integrally Formed Battery
    
    10/789,108
    
    B  Pending116.002US1
    
    EDGE TERMINALS FOR ELECTRONIC CIRCUIT
MODULES
    
    08/542896
    
    A  Issued116.002CA1
    
    EDGE TERMINALS FOR ELECTRONIC CIRCUIT
MODULES
    
    2187582
    
    B  Pending116.006US1
    
    HIGH DENSITY STACKED CIRCUIT MODULE
    
    09/050318
    
    A  Issued116.006CA1
    
    HIGH DENSITY STACKED CIRCUIT MODULE
    
    2266980
    
    B  Pending116.010US1
    
    HEARING-AID ASSEMBLY USING FOLDED FLEX
CIRCUITS
    
    09/792700
    
    A   Issued116.010US2
    
    HEARING-AID ASSEMBLY USING FOLDED FLEX
CIRCUITS
    
    10/752414
    
    B  Pending116.012US1
    
    STRUCTURES AND ASSEMBLY METHODS FOR
RADIO-FREQUENCY-IDENTIFICATION MODULES
    
    09/922245
    
    A  Issued116.012TH1
    
    STRUCTURES AND ASSEMBLY METHODS FOR
RADIO-FREQUENCY-IDENTIFICATION MODULES AND METHODS
    
    67473
    
    B  Pending116.012US2
    
    STRUCTURES AND ASSEMBLY METHODS FOR
RADIO-FREQUENCY-IDENTIFICATION MODULES
    
    10/785928
    
    B  Pending116.015CA1
    
    CODELOCK Design
    
    547638
    
    B  Pending14605-125P
(provisions) 
50611-292864
(Utility)
    
    Collaboration Among Health Care Instruments
    
    60/384,902 (provisional) 10/453,442
(utility)
    
    B  PendingDriving and Clamping Power Regulation
Technique for Continuous, In-Phase,
Full-Duration, Switch-Mode Resonant
Converter Power Supply
    
    5,267,138
    
    A  IssuedSystem and Method for Coupling a Plurality
of Medical Devices in a Serverless Grid
    
    
    
    B  Pending
 Trademarks
 Trademark name
    
    Trademark Number
    
    Reference #Lin iT
    
    76/518,141
    
    File No. 50611-292862OneSource OutSource
    
    2569474
    
    14605.096FRESH AIR
    
    75/830,817
    
    14605.09ID-iT
    
    76/518,124
    
    50611.2930219999GridView
    
    78/510068
    
    40424.4US01
 S-5.11-2




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Schedule 5.14 to Credit and Security Agreement
 ENVIRONMENTAL MATTERS




---



##### 



Schedule 6.3 to Credit and Security Agreement
 PERMITTED LIENS
 
 Valid UCC Filings :
  File Date
    

File No.
    
    Type
    
    Description if needed
    
    Additional Information
    
    Status5/21/2003
    
    20037526134
    
    UCC-1
    
    
    
    Beacon Bank
    
    To be released with the SBA Revolver Payoff at Closing10/15/2003
    
    2003909557
    
    AMEND
    
    Amendment of 20037526134
    
    Beacon Bank
    
    To be released with the SBA Revolver Payoff at Closing7/21/2003
    
    20038148897
    
    UCC-1
    
    
    
    US Bancorp
    
    Active Operating Lease6/8/2004
    
    200412104045
    
    UCC-1
    
    
    
    CNC Associates Inc.
    
    Active Operating Lease12/14/2004
    
    200414358590
    
    UCC-1
    
    
    
    Commerce Financial Group
    
    To be released with Tempe Equipment Lease Payoff at Closing3/10/2005
    
    200515537094
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease9/12/2005
    
    20051793347
    
    ASSIGN
    
    Assingment of 200515537094
    
    First Minnetonka City Bank
    
    Active Capital Lease4/7/2005
    
    200515938368
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease9/12/2005
    
    20051793426
    
    AMEND
    
    Expaned Collateral Description of
200515938368
    
    Lease Finance Group
    
    Active Capital Lease9/12/2005
    
    20051793433
    
    ASSIGN
    
    Assingment of 200515938368
    
    First Minnetonka City Bank
    
    Active Capital Lease4/7/2005
    
    200515938673
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease8/16/2005
    
    200517630189
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease9/19/2005
    
    20051802403
    
    AMEND
    
    Expaned Collateral Description of 2005176030189
    
    Lease Finance Group
    
    Active Capital Lease9/23/2005
    
    20051810670
    
    AMEND
    
    Addition of Secured Party of 2005176030189
    
    Kevin Roberg
    
    Active Capital Lease8/16/2005
    
    200517630468
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease12/21/2005
    
    20051922206
    
    AMEND
    
    Expaned Collateral Description of  200517630468
    
    Lease Finance Group
    
    Active Capital Lease12/21/2005
    
    20051922224
    
    AMEND
    
    Addition of Secured Party of 200517630468
    
    Kevin Robert
    
    Active Capital Lease12/21/2005
    
    20051922236
    
    AMEND
    
    Correction of Secured Party of 200517630468
    
    Kevin Roberg
    
    Active Capital Lease8/16/2005
    
    200517630711
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Active Capital Lease11/29/2005
    
    20051892061
    
    AMEND
    
    Addition of Secured Party of 200517630711
    
    Kevin Roberg
    
    Active Capital Lease11/29/2005
    
    20051892084
    
    AMEND
    
    Expaned Collateral Description of
200517630711
    
    Kevin Roberg
    
    Active Capital Lease12/30/2005
    
    200519347755
    
    UCC-1
    
    
    
    Farnam Street Financial Inc
    
    Active Operating Lease1/17/2006
    
    200610221439
    
    UCC-1
    
    This is now a Commerce Financial Capital Lease, but no filing was made by Commerce
    
    Orbotech Inc
    
    Not filed by Commerce Financial when they paid off Orbotech and look over the lease  Active Capital Lease1/30/2006
    
    200610390897
    
    UCC-1
    
    
    
    Lease Finance Group
    
    Lease taken over by Allegiant and not refilled  Active Capital Lease3/20/2006
    
    200611076803
    
    UCC-1
    
    Believed to be the same as filed for under 200610390897
    
    Lease Finance Group
    
    Believed to be the same as filed for under 2006103908973/28/2006
    
    200611204728
    
    UCC-1
    
    
    
    Key Equipment Finance Inc
    
    Active Operating Lease7/3/2006
    
    200612598015
    
    UCC-1
    
    
    
    Telogy. Inc.
    
    Active Operating Lease8/1/2006
    
    200612953559
    
    UCC-1
    
    
    
    Telogy. Inc.
    
    Active Operating Lease9/1/2006
    
    200613366278
    
    UCC-1
    
    
    
    Telogy. Inc.
    
    Active Operating LeaseInvalid UCC Filings:11/2/1998
    
    2080454
    
    UCC-1
    
    
    
    Norwest Equipment Finance Inc
    
    No Balance Due at 05-01-07  Needs to be released9/8/2003
    
    2003866929
    
    CONT
    
    
    
    Norwest Equipment Finance Inc
    
    No Balance Due at 05-01-07  Needs to be released12/11/1998
    
    2090125
    
    UCC-1
    
    
    
    Norwest Equipment Finance Inc
    
    No Balance Due at 05-01-07  Needs to be released9/19/2003
    
    2003880308
    
    CONT
    
    
    
    Norwest Equipment Finance Inc
    
    No Balance Due at 05-01-07  Needs to be released6/2/2003
    
    20037625319
    
    UCC-1
    
    
    
    Luther & Maelzer Inc
    
    No Balance Due at 05-01-07  Needs to be released12/22/2005
    
    200519252218
    
    UCC-1
    
    
    
    Orbotech Inc
    
    Not believed to be active  no balance is shown on our records




---



##### 



Schedule 6.4 to Credit and Security Agreement
 PERMITTED INDEBTEDNESS
 Capital Leases and Mortgage
 Creditor
    
    Name
    
    Original Amount
    
    Security
    
    PMY Res
    
    Location
    
    Origination Date
    
    Last Pymt Date
    
    Monthly Payment
    
    Balance 03-31-071
    
    Lease Finance Group
    
    LFG 5 CNC Associates
    
    
    22,926.73
    
    
    
    
    LFG 5
    
    Victoria
    
    3/15/2005
    
    3/15/2008
    
    
    564.51
    
    
    
    14,142.712
    
    Lease Finance Group
    
    MyData
    
    
    212,150.00
    
    
    Mydata my Hydra speedmount
    
    LFG 5
    
    Victoria
    
    3/15/2005
    
    3/15/2008
    
    
    7,910.00
    
    
    
    105,812.643
    
    Lease Finance Group
    
    Ekra
    
    
    183,165.68
    
    
    EKRA x5 in line screen printer, Ekra x5 inline screen printer
    
    LFG 5
    
    Victoria
    
    3/15/2005
    
    7/1/2008
    
    
    6,829.32
    
    
    
    91,358.024
    
    Lease Finance Group
    
    Sikama
    
    
    28,154.30
    
    
    Sikama Falseen S/c Solder Rodow Furance
    
    LFG 2
    
    Victoria
    
    9/5/2005
    
    9/5/2008
    
    
    1,119.04
    
    
    
    11,843.195
    
    Lease Finance Group
    
    CyberOptics
    
    
    120,600.00
    
    
    CyberOptics DEMO SE 300 inspection system
    
    LFG 4
    
    Victoria
    
    10/1/2005
    
    10/1/2008
    
    
    4,170.53
    
    
    
    64,643.366
    
    Lease Finance Group
    
    K&S
    
    
    21,990.00
    
    
    Kulcke & Soffa Model 4524 Bad Bonder
    
    LFG 1
    
    Victoria
    
    12/1/2005
    
    12/1/2008
    
    
    760.45
    
    
    
    12,968.457
    
    Lease Finance Group
    
    Nu Clean
    
    
    82,400.00
    
    
    Technical Devices Nu/Clean 31Bxf
    
    LFG 3
    
    Victoria
    
    2/1/2006
    
    2/1/2009
    
    
    2,849.51
    
    
    
    52,905.408
    
    HMP Allegiant
    
    Allegiant Partn HMP_AL
    
    
    
    
    
    Infinity 2-2c 2.0 megapixel CCD Camera
    
    
    
    Victoria
    
    5/1/2006
    
    2/23/2009
    
    
    880.42
    
    
    
    17,368.969
    
    OGP Allegiant
    
    OGP_AL
    
    
    
    
    
    OGP Flash 300 Digital Coord measur system & HMP Infinity 2.0 Megapixesl CCD Camera
    
    
    
    Victoria
    
    3/1/2006
    
    3/1/2009
    
    
    1,782.83
    
    
    
    38,014.3410
    
    Commerce Financial
    
    CF_01Orbotech
    
    
    875,000.00
    
    
    Orbotech paragon 8000 imaging system
    
    87,500
    
    Tempe
    
    2/15/2006
    
    2/15/2009
    
    
    21,272.00
    
    
    
    689,127.9711
    
    Commerce Financial
    
    CF_02Datacon
    
    
    295,730.00
    
    
    Datacon 2200 Malti-Chip Die Bonder
    
    29,573
    
    Victoria
    
    3/15/2006
    
    3/15/2009
    
    
    8,612.00
    
    
    
    232,544.0812
    
    Commerce Financial
    
    CF_03Hirox
    
    
    52,851.00
    
    
    HIROX Microscope System & TechCut 4 Prec Saw & Polshing System
    
    5,285
    
    Victoria
    
    5/15/2006
    
    5/15/2009
    
    
    1,547.00
    
    
    
    41,961.5113
    
    Commerce Financial
    
    CF_04MicroCraft
    
    
    257,250.00
    
    
    MicroCraft EMX-6151 Moving Probe Tester
    
    25,725
    
    Tempe
    
    5/15/2006
    
    5/15/2009
    
    
    6,406.00
    
    
    
    215,919.8314
    
    Commerce Financial
    
    CF_05ESI
    
    
    355,608.00
    
    
    Two ESI Mdl 5200 UV YagLaser Dells
    
    35,561
    
    Tempe
    
    4/15/2006
    
    4/15/2009
    
    
    10,036.00
    
    
    
    285,434.0115
    
    Commerce Financial
    
    CF_06Asymtek
    
    
    112,625.00
    
    
    Asymtek Spectrum S-820 Batch Disperser
    
    11,263
    
    Victoria
    
    6/15/2006
    
    6/15/2009
    
    
    3,296.00
    
    
    
    91,157.6616
    
    Key Leasing
    
    Key - Cubes
    
    
    62,848.00
    
    
    
    
    
    
    Tempe
    
    3/6/2006
    
    3/6/2009
    
    
    1,822.94
    
    
    
    43,058.1917
    
    Pitney Bowes
    
    Copier Lease-Boulder
    
    
    33,610.51
    
    
    Toshiba Copier
    
    
    
    Boulder
    
    
    
    
    
    
    681.50
    
    
    
    15,068.3318
    
    Commerce Bank
    
    Building Mortgage
    
    
    1,200,000.00
    
    
    Corporate Office & Vic Plant Lot 2. Block 1, Point Victoria
    
    $100,000.00
    
    Victoria
    
    10/14/2003
    
    11/1/2009
    
    
    8,318.68
    
    
    
    1,110,686.14
 Operating Leases
 Account
    
    Start
    
    EndingName
    
    Item
    
    Location
    
    Number
    
    Date
    
    Date
    
    Deposit
    
    PaymentBuilding Rent
Monk Properties
    
    1546 Lake Drive West
    
    Chanhassen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,591.67
    
    
    
    12,971.00Boulder Dev. Corp.
    
    4801 N. 63rd Drive
    
    Boulder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230,000.00
    
    
    
    120,222.00Reynolds Property
    
    610 S Rockford Drive
    
    Tempe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,260.00
    
    
    
    7,582.85Cutler Commercial
    
    326 South Siesta Lane
    
    Tempe office
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000.00
    
    
    
    2,614.34Equipment
Farnam Street Financial  CTS
    
    Clara view & ClearCube
    
    Tempe
    
    HE122205-001
    
    
    8/1/2006
    
    
    
    
    
    
    
    
    
    
    
    2,184.32Key Leases
    
    Orbotech Discovery
    
    Tempe
    
    
    
    
    
    
    3/6/2006
    
    
    
    3/6/2009
    
    
    
    
    
    
    
    6,906.39Mobile Mini
    
    40 Cargo & DLX Tri Doors
    
    
    
    
    
    
    
    
    
    
    
    Monthly
    
    
    
    
    
    
    145.94Pitney Bowes Global Financial
    
    Mailing scale A57z
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Quarterly
    
    
    185.31Pitney Bowes Global Financial
    
    Mailing System
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Quarterly
    
    
    1,166.18CNC Associates, Inc.
    
    HAAS Tool room mill
    
    Chanhassen
    
    
    20361001
    
    
    
    6/4/2004
    
    
    
    6/4/2009
    
    
    
    
    
    
    
    564.51Computer Equipment
Toshiba Business Solutions
    
    Boulder Copier
    
    Boulder
    
    
    39120896
    
    
    
    5/31/2002
    
    
    
    6/4/2007
    
    
    
    
    
    
    
    845.68Hewlett-Packard Financial Services
    
    
    
    
    
    50020650-01
    
    
    
    10/11/2004
    
    
    
    
    
    
    
    
    
    
    
    140.22Hewlett-Packard Financial Services
    
    
    
    
    
    5002064C-001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    534.08US Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8/1/2007
    
    
    
    
    
    
    
    759.64Pitney Bowes INC
    
    DLCQ Copier
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    812.35LFG  Marlin Leasing Corporation
    
    HP Compaq Notebook
    
    
    
    001-0295999-001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    725.24LFG  Marlin Leasing Corporation
    
    Computer System
    
    
    
    001-0295999-002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    785.65DeLage Landen
    
    Misc Equipment
    
    Victoria, Tempe & Boulder
    
    
    24705927
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,272.69DeLage Landen
    
    Boulder Copiers
    
    
    
    
    534057
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    737.10Miscellaneous
DeLage Laden
    
    Forklift
    
    Chanhassen
    
    270266-476532
    
    
    
    11/4/2004
    
    
    
    11/4/2009
    
    
    
    
    
    
    
    292.27




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##### 



HEI Inc
Schedule of Commitments & Contingencies (Operating Leases)
Telogy
 Account
    
    
    Start
    
    
    EndingName
    
    Item
    
    Location
    
    Number
    
    
    Date
    
    
    Date
    
    
    PaymentLeases1 Telogy
    
    KEI 2410
    
    
    
    
    501428
    
    
    
    6/7/2006
    
    
    
    6/7/2007
    
    
    
    1,028.002 Telogy
    
    KEI25 10AT
    
    
    
    
    503485
    
    
    
    11/3/2006
    
    
    
    11/3/2007
    
    
    
    448.003 Telogy
    
    KEI 2001
    
    
    
    
    507431
    
    
    
    11/6/2006
    
    
    
    11/6/2007
    
    
    
    282.00Rental  Month to Month4 Telogy
    
    Various Equipment
    
    
    
    
    487478
    
    
    
    10/19/2005
    
    
    
    
    
    
    
    476.005 Telogy
    
    KEI (6485)
    
    
    
    
    515172
    
    
    
    2/5/2007
    
    
    
    
    
    
    
    100.00




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##### 



Schedule 6.5 to Credit and Security Agreement
 GUARANTIES