Venture Loan and Security Agreement dated April 5, 2007



 Exhibit 10.27 
 VENTURE LOAN AND SECURITY AGREEMENT 
 Dated as of April 5, 2007 
 by and between 
 HORIZON TECHNOLOGY FUNDING
COMPANY LLC, 
 a Delaware limited liability company 
 76 Batterson Park Road 
 Farmington, CT 06032 
 as a Lender 
 and 
 SILICON VALLEY BANK, 
 a California bank 
 2400 Geng Road, Suite 200 
 Palo Alto,
California 94303 
 as a Lender 
 and 
 ENTROPIC COMMUNICATIONS, INC. 
 a Delaware corporation 
 9276 Scranton Road, Suite 200 
 San Diego, CA 92121 
 as Borrower 
  

				
	 Commitment Amount Loan A (Horizon):
	  	$	1,000,000
	 Commitment Amount Loan B (Horizon):
	  	$	3,000,000
	 Commitment Amount Loan B (Silicon):
	  	$	1,000,000
	 Commitment Amount Loan C (Horizon):
	  	$	2,000,000
	 Commitment Amount Loan C (Silicon):
	  	$	1,000,000

  

			
	 Commitment Termination Date Loan A:
	  	April 5, 2007
	 Commitment Termination Date Loan B:
	  	August 31, 2007
	 Commitment Termination Date Loan C:
	  	December 31, 2007








 The Lenders and Borrower hereby agree as follows: 
 AGREEMENT 
 1. Definitions and Construction. 
 1.1 Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: 
 “Account Control Agreement” means an agreement acceptable to Lenders which perfects via control Lenders’ security interest in
Borrower’s deposit accounts and/or accounts holding securities. 
 “Affiliate” means any Person that owns or controls
directly or indirectly ten percent (10%) or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons and each of such Person’s officers,
directors, joint venturers or partners. 
 “Agreement” means this certain Venture Loan and Security Agreement by and between
Borrower and Lenders dated as of the date on the cover page hereto (as it may from time to time be amended or supplemented in writing signed by the Borrower and Lender). 
 “Arabella Merger” means the stock purchase transaction, pursuant to which Borrower has acquired or will acquire all of the stock of Arabella Software, Inc under the provisions of the Arabella Purchase
Agreement. 
 “Arabella Purchase Agreement” means that certain stock purchase agreement by and between Borrower and Arabella
Software, Inc, as seller, together with any and all amendments, modifications, and supplements thereto, restatements thereof, and substitutes therefor. 
 “Borrower” means the Borrower as set forth on the cover page of this Agreement. 
 “Borrower’s Home State” means California. 
 “Business Day” means any day that is not a
Saturday, Sunday, or other day on which banking institutions are authorized or required to close in Connecticut or Borrower’s Home State. 
 “Claim” has the meaning given such term in Section 10.3 of this Agreement 
 “Code”
means the Uniform Commercial Code as adopted and in effect in the State of Connecticut, as amended from time to time; provided that if by reason of mandatory provisions of law, the creation and/or perfection or the effect of perfection
or non-perfection of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Connecticut, the term “Code” shall also mean the Uniform Commercial Code as in effect from
time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection. 
  

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 “Collateral” has the meaning given such term in Section 4.1 of this
Agreement. 
 “Commitment Amount” means each of Commitment Amount Loan A (Horizon), Commitment Amount Loan B (Horizon),
Commitment Amount Loan B (Silicon), Commitment Amount Loan C (Horizon) and Commitment Amount Loan C (Silicon). 
 “Commitment Amount
Loan A (Horizon)”, “Commitment Amount Loan B (Horizon)”, “Commitment Amount Loan B (Silicon)”, “Commitment Amount Loan C (Horizon)” and “Commitment Amount Loan C (Silicon)”
each have the respective meanings as set forth on the cover page of this Agreement. 
 “Commitment Fee” has the meaning
given such term in Section 2.6(c) of this Agreement. 
 “Commitment Termination Date” means collectively,
Commitment Termination Date Loan A, Commitment Termination Date Loan B and Commitment Termination Date Loan C. 
 “Commitment
Termination Date Loan A”, “Commitment Termination Date Loan B” and “Commitment Termination Date Loan C” each have the respective meanings as set forth on the cover page of this Agreement. 
 “Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.

 “Default Rate” means the per annum rate of interest equal to five percent (5%) over the Loan Rate, but such rate
shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans in a default situation. 
 “Disclosure Schedule” means Exhibit A attached hereto. 
 “Domestic Subsidiary” means any
Subsidiary organized under the laws of the United States or a state hereof. 
 “Environmental Laws” means all foreign,
federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972,
the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community Right-to-Know Act. 
 “Equity Securities” of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests,
membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing. 
 “ERISA” has the meaning given to such term in Section 7.12 of this Agreement. 
  

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 “Event of Default” has the meaning given to such term in Section 8 of this
Agreement. 
 “Foreign Subsidiary” means any Subsidiary not organized under the laws of the United States or a state hereof.

 “Funding Certificate” means a certificate executed by a Responsible Officer of Borrower substantially in the form of
Exhibit B or such other form as Lenders may agree to accept. 
 “Funding Date” means any date on which a Loan is made
to or on account of Borrower under this Agreement. 
 “GAAP” means generally accepted accounting principles as in effect in
the United States of America from time to time, consistently applied. 
 “Good Faith Deposit” has the meaning given such
term in Section 2.6(a) of this Agreement. 
 “Governmental Authority” means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative
tribunal, or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented. 
 “Guaranty” means a Guaranty and Security Agreement now or hereafter executed by a Subsidiary of Borrower in favor of the Lender. 
 “Hazardous Materials” means all those substances which are regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste. 
 “Horizon” means Horizon Technology Funding Company LLC, or its successors and/or
assigns. 
 “Indebtedness” means, with respect to Borrower or any Subsidiary, the aggregate amount of, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations of such Person, (e) all obligations or liabilities of others secured by a Lien on any asset of such
Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by such Person, and (g) any other obligations or liabilities which are required by GAAP to be shown as debt on the
balance sheet of such Person. Unless otherwise indicated, the term “Indebtedness” shall include all Indebtedness of Borrower and the Subsidiaries. 
  

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 “Indemnified Person” has the meaning given such term in Section 10.3 of this
Agreement. 
 “Intellectual Property” means all of Borrower’s right, title and interest in and to patents, patent
rights (and applications and registrations therefor), trademarks and service marks (and applications and registrations therefor), licenses, inventions, copyrights, mask works (and applications and registrations therefor), trade names, trade styles,
software and computer programs, source code, object code, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with respect to any research and development, all whether now owned
or subsequently acquired or developed by Borrower and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media (but not including embedded computer programs and supporting
information included within the definition of “goods” under the Code). 
 “Investment” means the purchase or
acquisition of any capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or
deposit with, any Person. 
 “Landlord Agreement” means a landlord agreement substantially in the form provided by Lenders
to Borrower or such other form as Lenders may agree to accept. 
 “Lender” means individually, each of Horizon and Silicon.

 “Lenders” means collectively, Horizon and Silicon. 
 “Lenders’ Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in
connection with the preparation, negotiation, documentation, administration and funding of the Loan Documents; and Lenders’ reasonable attorneys’ fees, costs and expenses incurred in amending, modifying, enforcing or defending the Loan
Documents (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including
without limitation all fees and costs incurred by Lenders in connection with Lenders’ enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower or its Property. 
 “Lien” means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and
title retention agreement, encumbrance or other lien with respect to any Property in favor of any Person. 
 “Loan A” means
the advance of credit to Borrower under this Agreement in the Commitment Amount Loan A (Horizon). 
 “Loan A (Horizon)”
means the advance of credit to Borrower under this Agreement in the Commitment Amount Loan A (Horizon). 
  

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 “Loan B” means each advance of credit to Borrower this Agreement pursuant to
Section 2.1(a)(ii) hereof. 
 “Loan C” means each advance of credit to Borrower this Agreement pursuant to
Section 2.1(a)(iii) hereof. 
 “Loan” means each advance of credit by Lenders to Borrower under this Agreement, and,
“Loans” means, collectively all such advances of credit 
 “Loan Documents” means, collectively, this
Agreement, the Notes, the Warrants, any Landlord Agreement, any Account Control Agreement and all other documents, instruments and agreements entered into in connection with this Agreement, all as amended or extended from time to time. 

“Loan Rate” means, with respect to each Loan, the per annum rate of interest (based on a year of twelve 30-day months) equal to the
greater of (a) eleven and eighty five hundredths of one percent (11.85%) or (b) eleven and eighty five hundredths of one percent (11.85%) plus the difference between (i) the one month LIBOR Rate (rounded to the
nearest one hundredth percent), as reported in the Wall Street Journal, on the date which is three (3) Business Days before the Funding Date for such Loan (or, if the Wall Street Journal is not published on such date, the next
earlier date on which it is published) and (ii) five and thirty two hundredths of one percent (5.32%). 
 “Maturity
Date” means, with respect to each Loan, September 1, 2010, or if earlier, the date of acceleration of such Loan following an Event of Default or the date of prepayment, whichever is applicable. 
 “Note” means each promissory note executed in connection with a Loan, or a separate draw under Loan B, in substantially the form of
Exhibit C attached hereto, and, collectively, “Notes” means all such promissory notes. 
 “Obligations” means all debt, principal, interest, fees, charges, expenses and attorneys’ fees and costs and other amounts, obligations, covenants, and duties owing by Borrower to Lenders of any kind and description
(whether pursuant to or evidenced by the Loan Documents (other than the Warrants and the SVB Loan Documents), or by any other agreement between Lenders and Borrower, and whether or not for the payment of money), whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, including all Lenders’ Expenses. 
 “Officer’s
Certificate” means a certificate executed by a Responsible Officer substantially in the form of Exhibit E or such other form as Lenders may agree to accept. 
 “Permitted Indebtedness” means and includes: 
 (a) Indebtedness of Borrower to Lenders; 
  

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 (b) Indebtedness of Borrower secured by Liens permitted under clause (e) of the definition of
Permitted Liens; 
 (c) Indebtedness arising from the endorsement of instruments in the ordinary course of business; 
 (d) Indebtedness existing on the date hereof and set forth on the Disclosure Schedule; and 
 (e) Indebtedness to Silicon in an aggregate principal amount not exceeding Ten Million Dollars ($10,00,000) pursuant to that certain Loan and Security
Agreement by and between Silicon and Borrower dated as of April 5, 2007 (as amended, the “SVB Loan Agreement”), which provides that advances will not exceed eighty percent (80%) of receivables: 
 (f) Subordinated Indebtedness; and 
 (g)
capital lease obligations in the ordinary course of business. 
 “Permitted Investments” means and includes any of the
following Investments as to which Lenders have a perfected security interest: 
 (a) Deposits and deposit accounts with commercial banks
organized under the laws of the United States or a state thereof to the extent: (i) the deposit accounts of each such institution are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such
institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000). 
 (b) Investments in
marketable obligations issued or fully guaranteed by the United States and maturing not more than one (1) year from the date of issuance. 
 (c) Investments in open market commercial paper rated at least “A1” or “P1” or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof. 
 (d) Investments pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary course of business.

 (e) Investments which are otherwise consistent with the investment policy of Borrower as provided to Lenders prior to the date hereof.

 (f) Investments in connection with the Arabella Merger. 
 (g) Other Investments aggregating not in excess of Two Hundred Fifty Thousand Dollars ($250,000) at any time. 
 “Permitted Liens” means and includes: 
 (a) the Lien created by this Agreement and the SVB Loan Agreement;

  

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 (b) Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are
not yet delinquent or which are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or
loss of any material item of Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower); 
 (c) Liens identified on the Disclosure Schedule; 
 (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business and which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate proceedings (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in
the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower); 
 (e) Liens upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such
equipment or other personal property, or (ii) lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided that (A) such Liens are
confined solely to the equipment or other personal property so acquired and the amount secured does not exceed the acquisition price thereof, and (B) no such Lien shall be created, incurred, assumed or suffered to exist in favor of
Borrower’s officers, directors or stockholders holding five percent (5%) or more of Borrower’s Equity Securities; and 
 (f)
non-exclusive licenses of Intellectual Property entered into in the ordinary course of business. 
 “Person” means and
includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local
government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing. 
 “Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible. 
 “Responsible Officer” has the meaning given such term in Section 6.3 of this Agreement. 
 “Scheduled Payments” has the meaning given such term in Section 2.2(a) of this Agreement. 
 “Silicon” means Silicon Valley Bank. 
  

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 “Solvent” has the meaning given such term in Section 5.11 of this Agreement.

 “Stock Pledge” means a Pledge, Assignment and Security Agreement executed by a Borrower or a Subsidiary of Borrower in
favor of the Lender. 
 “Subordinated Indebtedness” means Indebtedness subordinated to the Obligations on terms and
conditions acceptable to Lenders in their sole and absolute discretion. 
 “Subsidiary” means any corporation or other
entity of which a majority of the outstanding Equity Securities entitled to vote for the election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.

 “SVB Loan Agreement” has the meaning given such term in the definition of “Permitted Indebtedness” hereof.

 “SVB Loan Documents” means the Loan Documents (as defined in the SVB Loan Agreement). 
 “Third Party Equipment” has the meaning given such term in Section 4.8 of this Agreement. 
 “Transfer” has the meaning given such term in Section 7.4 of this Agreement. 
 “Warrants” means the separate warrants dated on or about the date hereof in favor of the Lenders or their designees to purchase
securities of Borrower. 
 1.2 Construction. References in this Agreement to “Articles,” “Sections,”
“Exhibits,” “Schedules” and “Annexes” are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents
to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document,
instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case
may be. The words “include” and “including” and words of similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or
any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, and all terms
describing Collateral shall be construed in accordance with the Code. The terms and information set forth on the cover page of this Agreement are incorporated into this Agreement. 
  

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 2. Loans; Repayment. 
 2.1 Commitment. 
 (a) The Commitment Amount. 
 (i) The Commitment Amount Loan A. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein
set forth as and when made or deemed to be made, Horizon agrees to lend to Borrower on the Commitment Termination Date Loan A, Loan A (Horizon) in an amount equal to Commitment Amount Loan A (Horizon). 
 (ii) The Commitment Amount Loan B. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties
herein set forth as and when made or deemed to be made, Horizon agrees to lend to Borrower prior to the Commitment Termination Date Loan B, an amount not to exceed the Commitment Amount Loan B (Horizon). Subject to the terms and conditions of this
Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Silicon agrees to lend to Borrower prior to the Commitment Termination Date Loan B, an amount not to exceed the Commitment Amount
Loan B (Silicon). Subject to the terms and conditions set forth herein, Borrower may request the Lenders fund Loan B in up to two (2) draws, provided that each draw from Horizon will be in an amount equal to seventy-five percent (75%) of
the aggregate amount drawn and each draw from Silicon will be in an amount equal to twenty-five percent (25%) of the aggregate amount drawn. In addition the aggregate amount of the first draw under Loan B shall be in an amount not less than Two
Million Dollars ($2,000,000). 
 (iii) The Commitment Amount Loan C. Subject to the terms and conditions of this Agreement and
relying upon the representations and warranties herein set forth as and when made or deemed to be made, Horizon agrees to lend to Borrower on or after September 1, 2007 and prior to the Commitment Termination Date Loan C, one draw in an amount
not to exceed the Commitment Amount Loan C (Horizon) or be less than Six Hundred Sixty Six Thousand Six Hundred and Sixty Seven Dollars ($666,667). Subject to the terms and conditions of this Agreement and relying upon the representations and
warranties herein set forth as and when made or deemed to be made, Silicon agrees to lend to Borrower on or after September 1, 2007 and prior to the Commitment Termination Date Loan C, one (1) draw in an amount not to exceed the Commitment
Amount Loan C (Silicon) or be less than Three Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars ($333,333). Notwithstanding the foregoing, the obligation of Lenders to make Loan C is subject to Borrower’s delivery to Lenders of
evidence satisfactory to Lenders in their sole discretion, including without limitation an opinion of Borrower’s counsel upon the request of Lenders, that the maximum number of Shares (as defined in the Warrants) issuable pursuant to exercise
or conversion of the Warrants have been duly authorized and reserved for issuance by Borrower and, when issued in accordance with the terms thereof, will be validly issued, fully paid and nonassessable. 
 (b) The Loans and the Notes. The obligation of Borrower to repay the unpaid principal amount of and interest on each Loan and, if there is more
than one (1) draw under Loan B, each draw under Loan B shall be evidenced by a Note issued to the applicable Lender or Lenders. 
  

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 (c) Use of Proceeds. The proceeds of each Loan shall be used solely for working capital or
general corporate purposes of Borrower. 
 (d) Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents,
Lenders’ obligation to lend the undisbursed portion of any Commitment Amount to Borrower hereunder shall terminate on the earlier of (i) at Lenders’ sole election, the occurrence of any Default or Event of Default hereunder which has
not been waived in writing by Lenders, and (ii) the Commitment Termination Date for such Commitment Amount. Notwithstanding the foregoing, Lenders’ obligation to lend the undisbursed portion of the Commitment Amount to Borrower shall
terminate if, in Lenders’ reasonable judgment, there has been a material adverse change in the general affairs, management, results of operations or condition (financial or otherwise) of Borrower, or there has been any material adverse
deviation by Borrower from the business plan of Borrower presented to Lenders on or before the date of this Agreement. 
 2.2
Payments. 
 (a) Scheduled Payments. Borrower shall make payments of accrued interest only on the outstanding principal amounts
of Loan A, Loan B, and Loan C on the monthly payment dates specified in the Note applicable to such Loan through and including March 1, 2008. Thereafter, Borrower shall make thirty (30) equal payments of principal plus accrued interest on
the outstanding principal amount of each Loan. A payment shall be made on each subsequent monthly payment date as set forth in the Note applicable to such Loan (collectively, the “Scheduled Payments”) through the Maturity Date. In
any event, all unpaid principal and accrued interest shall be due and payable in full on the Maturity Date. 
 (b) Interim Payment.
Unless the Funding Date for a Loan is the first day of a calendar month, Borrower shall pay the per diem interest (accruing at the Loan Rate from the Funding Date through the last day of that month) payable with respect to such Loan on the first
Business Day of the next calendar month. 
 (c) Payment of Interest. Borrower shall pay interest on each Loan at a per annum rate of
interest equal to the Loan Rate. All computations of interest (including interest at the Default Rate, if applicable) shall be based on a year of twelve (12) 30-day months. Notwithstanding any other provision hereof, the amount of interest
payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans. 
 (d) Application of Payments. All payments received by Lenders when no Event of Default has occurred and is continuing shall be applied as follows: (1) first, to Lenders’ Expenses then due and owing; and (2) second to
all Scheduled Payments then due and owing (provided, however, if such payments are not sufficient to pay the whole amount then due, such payments shall be applied first to unpaid interest at the Loan Rate, then to the remaining amount
then due). While an Event of Default has occurred and is continuing, all payments and application of proceeds shall be made as set forth in Section 9.7. 
  

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 (e) Late Payment Fee. Borrower shall pay to Lenders a late payment fee equal to five percent
(5%) of any Scheduled Payment not paid when due. 
 (f) Default Rate. Borrower shall pay interest at a per annum rate equal to
the Default Rate on any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including Scheduled Payments), payable with respect to any Loan, accrued and unpaid interest, and any fees or other amounts which
remain unpaid after such amounts are due (after giving effect to any applicable grace or cure periods). If an Event of Default has occurred and the Obligations have been accelerated (whether automatically or by Lenders’ election), Borrower
shall pay interest on the aggregate, outstanding accelerated balance hereunder from the date of the Event of Default until all Events of Default are cured, at a per annum rate equal to the Default Rate. 
 2.3 Prepayments. 
 (a) Mandatory
Prepayment Upon an Acceleration. If the Loans are accelerated following the occurrence of an Event of Default pursuant to Section 9.1(a) hereof, then Borrower, in addition to any other amounts which may be due and owing hereunder, shall
immediately pay to Lenders the amount set forth in Section 2.3(b) below, as if the Borrower had opted to prepay on the date of such acceleration. 
 (b) Optional Prepayment. Upon three (3) Business Days’ prior written notice to Lenders, Borrower may, at its option, at any time, prepay all of the Loans by paying to Lenders an amount equal to
(i) any accrued and unpaid interest on the outstanding principal balance of the Loans; (ii) for each Loan an amount equal to (A) if the Loan is prepaid on or before December 31, 2007, three (3%) percent of the then
outstanding principal balance of the Loan, (B) if the Loan is prepaid on or after January 1, 2008 and before January 1, 2009, two (2%) percent of the then outstanding principal balance of the Loan, or (C) if the Loan is
prepaid on or after January 1, 2009, one (1%) percent of the then outstanding principal balance of the Loan; (iii) the outstanding principal balance of the Loan; and (iv) all other sums, if any, that shall have become due and
payable hereunder. Notwithstanding the foregoing, if Borrower (x) completes the sale of its Equity Securities in an initial public offering in which the Lenders and holders of the Warrants have been offered the right to register and sell their
shares and such initial public offering results in the Lenders or the holders of the Warrants receiving net cash proceeds per share equal to at least two (2) times the Warrant Price (as defined in the Warrants) or would have resulted in the
Lenders or the holders of the Warrants receiving net cash proceeds per share equal to at least two (2) times the Warrant Price had the Lenders or holders exercised their right to register and sell their shares in the offering or (y) is
sold for an amount which results in the Lenders or the holders of the Warrants receiving net cash proceeds per share equal to at least two (2) times the Warrant Price (as defined in the Warrants), then Lenders shall waive payment of the amount
set forth in Section 2.3(b)(ii) above, if the Loan is prepaid in connection with or after such initial public offering or sale. 
  

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 2.4 Other Payment Terms. 
 (a) Place and Manner. Borrower shall make all payments due to Lenders in lawful money of the United States. All payments of principal, interest,
fees and other amounts payable by Borrower hereunder shall be made, in immediately available funds, not later than 10:00 a.m. Central time, on the date on which such payment is due. Borrower shall make such payments to Lenders via wire transfer
as follows: 
  

			
	Payment via wire transfer:	  	
	 Credit:
	  	Horizon Technology Funding Company LLC
	 Bank Name:
	  	ABN Amro/LaSalle Bank NA CDO Trust Services
	 Bank Address:
	  	 135 South LaSalle Street, Suite 1625
 Chicago,
Illinois 60603
 Attn: Greg Meyers, 312-904-0283

	 Account No.:
	  	2090067 – Trust GL
	 FFCT-Reference Account Number
	  	721771.1
	 ABA Routing No.:
	  	071000505
	 Reference:
	  	Entropic Communications Invoice
#                        

 (b) Date. Whenever any payment is due hereunder on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be. 
 2.5 Procedure for Making the Loans. 
 (a) Notice. Borrower shall notify Lenders of the date on
which Borrower desires Lenders to make any Loan at least five (5) Business Days in advance of the desired Funding Date, unless Lenders elects at their sole discretion to allow the Funding Date to be within three (3) Business Days of
Borrower’s notice. Borrower’s execution and delivery to Lenders of a Note shall be Borrower’s agreement to the terms and calculations thereunder with respect to the Loan. Lenders’ obligation to make any Loan shall be expressly
subject to the satisfaction of the conditions set forth in Section 3. 
 (b) Loan Rate Calculation. Prior to each Funding
Date, Lenders shall establish the Loan Rate with respect to such Loan, which shall be set forth in the Note to be executed by Borrower with respect to such Loan and shall be conclusive in the absence of a manifest error. 
 (c) Disbursement. Lenders shall disburse the proceeds of each Loan by wire transfer to Borrower at the account specified in the Funding
Certificate for the Loan. 
  

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 2.6 Good Faith Deposit; Legal and Closing Expenses; and Commitment Fee. 
 (a) Good Faith Deposit. Borrower has delivered to Lenders a good faith deposit in the amount of Twenty Five Thousand Dollars ($25,000) (the
“Good Faith Deposit”). The Good Faith Deposit will be utilized to pay the Commitment Fee. 
 (b) Legal, Due Diligence
and Documentation Expenses. Concurrently with its execution and delivery of this Agreement, Borrower shall pay to Lenders such Lenders’ legal, due diligence and documentation expenses for one (1) counsel in the aggregate (not including
in-house counsel) in connection with the negotiation and documentation of this Agreement and the Loan Documents, which amount shall not exceed Twelve Thousand Dollars ($12,000) without the prior consent of Borrower. 
 (c) Commitment Fee. Borrower shall pay Lenders concurrently with its execution and delivery of this Agreement a commitment fee in the amount of
Forty Thousand Dollars ($40,000) (the “Commitment Fee”). The Commitment Fee shall be retained by Lenders and be deemed fully earned upon receipt. 
 3. Conditions of Loan. 
 3.1 Conditions Precedent to Closing. At the time of the execution and
delivery of this Agreement, Lenders shall have received, in form and substance reasonably satisfactory to Lenders, all of the following (unless Lenders have agreed to waive such condition or document, in which case such condition or document shall
be a condition precedent to the making of any Loan and shall be deemed added to Section 3.2): 
 (a) Loan Agreement. This
Agreement duly executed by Borrower and Lenders. 
 (b) Warrants. The Warrants duly executed by Borrower. 
 (c) Secretary’s Certificate. A certificate of the secretary or assistant secretary of Borrower with copies of the following documents
attached: (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being complete and in full force and effect on the date thereof, (ii) incumbency and representative signatures, and (iii) resolutions
authorizing the execution and delivery of this Agreement and each of the other Loan Documents. 
 (d) Good Standing Certificates. A
good standing certificate from Borrower’s state of incorporation and the state in which Borrower’s principal place of business is located, each dated as of a recent date. 
 (e) Certificate of Insurance. Evidence of the insurance coverage required by Section 6.8 of this Agreement. 
 (f) Consents. All necessary consents of stockholders and other third parties with respect to the execution, delivery and performance of this
Agreement, the Warrants and the other Loan Documents. 
  

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 (g) Legal Opinion. A legal opinion of Borrower’s counsel covering the matters set forth in
Exhibit D hereto. 
 (h) Account Control Agreements. Account Control Agreements for all of Borrower’s deposit
accounts and accounts holding securities duly executed by all of the parties thereto, in the forms provided by Lenders. 
 (i)
Intercreditor Agreement. An Intercreditor Agreement by and among Silicon and the Lenders. 
 (j) Other Documents. Such other
documents and completion of such other matters, as Lenders may reasonably deem necessary or appropriate. 
 3.2 Conditions Precedent to
Making a Loan. The obligation of Lenders to make each Loan is further subject to the following conditions: 
 (a) No Default. No
Default or Event of Default shall have occurred and be continuing. 
 (b) Landlord Agreements. Borrower shall have provided Lenders
with a Landlord Agreement for each location where Borrower’s books and records and the Collateral is located (unless Borrower is the fee owner thereof). 
 (c) Notes. Borrower shall have duly executed and delivered to each Lender a Note in the amount of such Loan. 
 (d) UCC Financing Statements. Lenders shall have received such documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements, as Lenders shall reasonably
request to evidence the perfection and priority of the security interests granted to Lenders pursuant to Section 4. Borrower authorizes Lenders to file any UCC financing statements, continuations of or amendments to UCC financing
statements it deems necessary to perfect its security interest in the Collateral. 
 (e) Funding Certificate. Borrower shall have
duly executed and delivered to Lenders a Funding Certificate for such Loan. 
 (f) Other Documents. Such other documents and
completion of such other matters, as Lenders may reasonably deem necessary or appropriate. 
 3.3 Covenant to Deliver. Borrower agrees
(not as a condition but as a covenant) to deliver to Lenders each item required to be delivered to Lenders as a condition to each Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by
Lenders of any such item shall not constitute a waiver by Lenders of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in Lenders’ sole discretion. 
  

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 4. Creation of Security Interest. 
 4.1 Grant of Security Interest. Borrower grants to Lenders a valid, continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents
(other than the Warrants). The “Collateral” shall mean and include all right, title, interest, claims and demands of Borrower in and to all personal property of Borrower, including without limitation, all of the following:

 (a) All goods (and embedded computer programs and supporting information included within the definition of “goods” under the
Code) and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 
 (b) All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above, and Borrower’s books relating to any of the foregoing; 
 (c) All contract rights
and general intangibles (except to the extent included within the definition of Intellectual Property), now owned or hereafter acquired, including, without limitation, goodwill, license agreements, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments
of insurance and rights to payment of any kind; 
 (d) All now existing and hereafter arising accounts, contract rights, royalties, license
rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third
parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or
reclaimed by Borrower and Borrower’s books relating to any of the foregoing; 
 (e) All documents, cash, deposit accounts, letters of
credit (whether or not the letter of credit is evidenced by a writing), certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including, without limitation, all securities,
whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired
and Borrower’s books relating to the foregoing; 
  

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 (f) Any and all claims, rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property to the extent such proceeds no longer constitute
Intellectual Property; but 
 (g) Notwithstanding the foregoing, the Collateral shall not include any Intellectual Property;
provided, however, that the Collateral shall include all accounts receivables, accounts, and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in,
the foregoing (the “Rights to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a
security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the date hereof, include the Intellectual Property to the extent necessary to permit perfection of Lenders’ security interest in the Rights
to Payment. 
 4.2 After-Acquired Property. If Borrower shall at any time acquire a commercial tort claim, as defined in the Code,
Borrower shall immediately notify Lenders in writing signed by Borrower of the brief details thereof and grant to Lenders in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to Lenders. 
 4.3 Duration of Security Interest. Lenders’ security interest in
the Collateral shall continue until the payment in full and the satisfaction of all Obligations and termination of Lenders’ commitment to fund the Loans, whereupon such security interest shall terminate. Lenders shall, at Borrower’s sole
cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the release contemplated by this Section 4.3, including duly executing and delivering termination statements
for filing in all relevant jurisdictions under the Code. 
 4.4 Location and Possession of Collateral. The Collateral is and shall
remain in the possession of Borrower at its location listed on the cover page hereof or as set forth in the Disclosure Schedule. Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise
required by Lenders for perfection of its security interest therein) and so long as no Event of Default has occurred, and is continuing shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises
appertaining thereto; provided that the possession, enjoyment, control and use of the Collateral shall at all time be subject to the observance and performance of the terms of this Agreement. 
 4.5 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Lenders, at the request of Lenders, all
financing statements and other documents Lenders may reasonably request, in form satisfactory to Lenders, to perfect and continue Lenders’ perfected security interests in the Collateral and in order to consummate fully all of the transactions
contemplated under the Loan Documents. 
  

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 4.6 Right to Inspect. Lenders (through any of their officers, employees, or agents) shall have the
right, upon reasonable prior notice, from time to time during Borrower’s usual business hours, to inspect Borrower’s books and records and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify
Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral; provided that such inspections shall occur no more often than twice per calendar year, unless an Event of Default has occurred and is
continuing. 
 4.7 Protection of Intellectual Property. Borrower shall (i) use commercially reasonable efforts to protect, defend
and maintain the validity and enforceability of its Intellectual Property and promptly advise Lenders in writing of material infringements, and (ii) not allow any Intellectual Property necessary to Borrower’s business to be abandoned,
forfeited or dedicated to the public without Lenders’ written consent. 
 4.8 Lien Subordination. Lenders agree that the Liens
granted to them hereunder shall be subordinate to the Liens to secure the Indebtedness permitted under clause (e) of the definition of Permitted Indebtedness. Lenders agree that the Liens granted to them hereunder in Third Party Equipment shall
be subordinate to the Liens of existing and future lenders providing equipment financing and equipment lessors for equipment and other personal property now existing acquired by Borrower after the date hereof (“Third Party
Equipment”); provided that such Liens are confined solely to the equipment so financed and the proceeds thereof and are Permitted Liens. Notwithstanding the foregoing, the Obligations hereunder shall not be subordinate in
right of payment to any obligations to other lenders, equipment lenders or equipment lessors and Lenders’ rights and remedies hereunder shall not in any way be subordinate to the rights and remedies of any such lenders or equipment lessors. So
long as no Event of Default has occurred, Lenders agree to execute and deliver such agreements and documents as may be reasonably requested by Borrower from time to time which set forth the lien subordination described in this
Section 4.8 and are reasonably acceptable to Lenders. Lenders shall have no obligation to execute any agreement or document which would impose obligations, restrictions or lien priority on Lenders which are less favorable to Lenders than
those described in this Section 4.8. 
 5. Representations and Warranties. Except as set forth in the Disclosure Schedule,
Borrower represents and warrants as follows: 
 5.1 Organization and Qualification. Borrower is a corporation duly organized and
validly existing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or
in which the Collateral is located, except for such states as to which any failure to so qualify would not have a material adverse effect on Borrower. 
 5.2 Authority. Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan Documents to which it is a party. Borrower has all requisite power
and authority to own and operate its Property and to carry on its businesses as now conducted. 
  

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 5.3 Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document
to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the
certificate of incorporation, the by-laws, or any other organizational documents of Borrower or any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to
which Borrower is a party or by which it or any of its Property is bound or to which it or any of its Property is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens, to the
extent that any of the foregoing would reasonably be expected to have a material adverse effect on Borrower’s business. 
 5.4
Authorization; Enforceability. The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a
party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower. No authorization, consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or filing with, or notice to, any Person is, was or will be necessary to (i) the valid execution and delivery of any Loan Document to which Borrower is a party, (ii) the performance of
Borrower’s obligations under any Loan Document, or (iii) the granting of the security interest in the Collateral, except for filings in connection with the perfection of the security interest in any of the Collateral or the issuance of the
Warrants. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity. 
 5.5 No Prior Encumbrances. Borrower has good and marketable title to the Collateral, free and clear of Liens except for Permitted Liens. Borrower has good title and ownership of, or is licensed under, all of
Borrower’s current Intellectual Property which is necessary for the conduct of Borrower’s business. Borrower has not received any communications alleging that Borrower has violated, or by conducting its business as proposed, would violate
any proprietary rights of any other Person. Borrower has no knowledge of any infringement or violation by it of the intellectual property rights of any third party and has no knowledge of any violation or infringement by a third party of any of its
Intellectual Property. The Collateral and the Intellectual Property constitute substantially all of the assets and property of Borrower. 
 5.6 Name; Location of Chief Executive Office, Principal Place of Business and Collateral. Borrower has not done business under any name other than that specified on the signature page hereof. Borrower’s jurisdiction of
incorporation, chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located in the state and at the address set forth on the cover page of this Agreement. The
Collateral is presently located at the address set forth on the cover page hereof or as set forth in the Disclosure Schedule. 
  

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 5.7 Litigation. There are no actions or proceedings pending by or against Borrower before any
court or administrative agency in which an adverse decision could reasonably be expected to have a material adverse effect on Borrower or the aggregate value of the Collateral. Borrower does not have knowledge of any such pending or threatened
actions or proceedings. 
 5.8 Financial Statements. All financial statements relating to Borrower that have been or may hereafter be
delivered by Borrower to Lenders present fairly in all material respects Borrower’s financial condition as of the date thereof and Borrower’s results of operations for the period then ended. 
 5.9 No Material Adverse Effect. No event has occurred and no condition exists which could reasonably be expected to have a material adverse effect
on the financial condition, business or operations of Borrower since December 31, 2006. 
 5.10 Full Disclosure. No
representation, warranty or other statement made by Borrower in any Loan Document (including the Disclosure Schedule), certificate or written statement furnished to Lenders contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such certificates or statements not misleading. There is no fact known to Borrower which materially adversely affects, or which could in the future be reasonably expected to
materially adversely affect, its ability to perform its obligations under this Agreement. 
 5.11 Solvency, Etc. Borrower is
Solvent (as defined below) and, after the execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby, Borrower will be Solvent. “Solvent” means, with respect to any Person on any date,
that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including, without limitation, contingent liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital. 
 5.12 Subsidiaries. Borrower has no Subsidiaries other than Entropic
Communications (Hong Kong) Limited. 
 5.13 Catastrophic Events; Labor Disputes. Neither Borrower nor its properties is or has
been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or other casualty that could reasonably be expected to have a material adverse effect on the financial
condition, business or operations of Borrower. There are no disputes presently subject to grievance procedure, arbitration or litigation under any of the collective bargaining agreements, employment contracts or employee welfare or incentive plans
to which Borrower is a party, and there are no strikes, lockouts, work stoppages or slowdowns, or, to the knowledge of Borrower, jurisdictional disputes or organizing activity occurring or threatened which could reasonably be expected to have a
material adverse effect on the financial condition, business or operations of Borrower. 
  

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 5.14 Certain Agreements of Officers, Employees and Consultants. 
 (a) No Violation. To the knowledge of Borrower, no officer, employee or consultant of Borrower is, or is now expected to be, in violation of any
term of any employment contract, proprietary information agreement, nondisclosure agreement, noncompetition agreement or any other material contract or agreement or any restrictive covenant relating to the right of any such officer, employee or
consultant to be employed by Borrower because of the nature of the business conducted or to be conducted by Borrower or relating to the use of trade secrets or proprietary information of others, and to Borrower’s knowledge, the continued
employment of Borrower’s officers, employees and consultants does not subject Borrower to any material liability for any claim or claims arising out of or in connection with any such contract, agreement, or covenant. 
 (b) No Present Intention to Terminate. To the knowledge of Borrower, no officer of Borrower, and no employee or consultant of Borrower whose
termination, either individually or in the aggregate, could reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower, has any present intention of terminating his or her employment or
consulting relationship with Borrower. 
 6. Affirmative Covenants. Borrower, until the full and complete payment of the Obligations,
covenants and agrees that: 
 6.1 Good Standing. Borrower shall maintain its corporate existence and its good standing in its
jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a material adverse effect on the financial condition, operations or business of Borrower. Borrower
shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a material adverse effect on its financial condition, operations or business. 
 6.2 Government Compliance. Borrower shall comply with all statutes, laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to materially adversely affect the financial condition, operations or business of Borrower. 
 6.3 Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (a) as soon as available, but in any event within thirty (30) days after the end of each month, a company prepared balance sheet, income
statement and cash flow statement covering Borrower’s operations during such period, certified by Borrower’s president, treasurer or chief financial officer or vice president of finance (each, a “Responsible Officer”);
(b) as soon as available, but in any event within one hundred eighty (180) days after the end of Borrower’s fiscal year, audited financial statements of Borrower prepared in accordance with GAAP, together with an unqualified opinion
on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to Lender; and (c) as soon as available, but in any event within ninety (90) days after the end of Borrower’s
fiscal year or the 

  

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date of Borrower’s board of directors’ adoption, Borrower’s operating budget and plan for the next fiscal year; and (d) such other
financial information as Lenders may reasonably request from time to time. From and after such time as Borrower becomes a publicly reporting company, promptly as they are available and in any event: (x) at the time of filing of Borrower’s
Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; and (y) at the time of filing of Borrower’s Form 10-Q with
the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q. In addition, Borrower shall deliver to Lenders (i) promptly upon
becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; and (ii) immediately upon receipt of notice thereof, a report of any material legal actions pending or
threatened against Borrower or the commencement of any action, proceeding or governmental investigation involving Borrower is commenced that is reasonably expected to result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars
($250,000). 
 6.4 Certificates of Compliance. Each time financial statements are furnished pursuant to Section 6.3 above,
Borrower shall deliver to Lenders an Officer’s Certificate signed by a Responsible Officer in the form of, and certifying to the matters set forth in Exhibit E hereto. 
 6.5 Notice of Defaults. As soon as possible, and in any event within five (5) Business Days after the discovery of a Default or an Event of
Default, Borrower shall provide Lenders with an Officer’s Certificate setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto. 
 6.6 Taxes. Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of
it by law or imposed upon any Property belonging to it, and will execute and deliver to Lenders, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments
and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Lenders with proof satisfactory to Lenders
indicating that Borrower has made such payments or deposits; provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection
thereof (provided that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has
adequately bonded such amounts or reserves sufficient to discharge such amounts have been provided on the books of Borrower). 
 6.7 Use;
Maintenance. Borrower shall keep and maintain all items of equipment and other similar types of personal property that form any significant portion or portions of the Collateral in good operating condition and repair and shall make all necessary
replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times 

  

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be maintained and preserved. Borrower shall not permit any such material item of Collateral to become a fixture to real estate or an accession to other
personal property, without the prior written consent of Lenders. Borrower shall not permit any such material item of Collateral to be operated or maintained in violation of any applicable law, statute, rule or regulation. With respect to items of
leased equipment (to the extent Lenders have any security interest in any residual Borrower’s interest in such equipment under the lease), Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance with the
terms of the applicable lease. 
 6.8 Insurance. Borrower shall keep its business and the Collateral insured for risks and in amounts,
and as Lenders may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Lenders. All property policies shall have a lender’s loss payable endorsement showing each Lender as an
additional loss payee and all liability policies shall show each Lender as an additional insured and all policies shall provide that the insurer must give each Lender at least thirty (30) days notice before canceling its policy. At
Lenders’ request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Lenders’ option, be payable to each Lender on account of the Obligations.
Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy, toward the replacement or repair of destroyed or damaged property; provided
that (i) any such replaced or repaired property (a) shall be of equal or like value as the replaced or repaired Collateral and (b) shall be deemed Collateral in which Lenders have been granted a first priority security interest and
(ii) after the occurrence and during the continuation of an Event of Default all proceeds payable under such casualty policy shall, at the option of Lenders, be payable to Lenders, on account of the Obligations. If Borrower fails to obtain
insurance as required under Section 6.8 or to pay any amount or furnish any required proof of payment to third persons and Lenders, Lenders may make all or part of such payment or obtain such insurance policies required in Section 6.8, and
take any action under the policies Lenders deem prudent. On or prior to the first Funding Date and prior to each policy renewal, Borrower shall furnish to Lenders certificates of insurance or other evidence satisfactory to Lenders that insurance
complying with all of the above requirements is in effect. 
 6.9 Security Interest. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or local authorities, the security interests in the Collateral granted to Lenders pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any Permitted Liens may have a superior priority to Lenders’ Lien under this Agreement) and (ii) are and will continue to be superior and prior to the rights of all other creditors of
Borrower (except to the extent of such Permitted Liens). 
 6.10 Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may reasonably be requested by Lenders to make effective the purposes of this Agreement, including without limitation, the continued perfection and priority of
Lenders’ security interest in the Collateral. 
  

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 6.11 Equity Investment. Borrower shall permit Lenders or their assignees, at Lenders’ option,
to purchase up to an aggregate of Two Hundred Fifty Thousand ($250,000) of the securities sold in Borrower’s next round of private equity financing at the same price and on the same terms as paid and received by the lead investor of the equity
financing. Lenders agree that they shall not have rights under this Section 6.11 with respect to any public offering of the equity securities of Borrower. Borrower agrees that it shall notify Lenders promptly upon the execution by Borrower of a
term sheet or letter of intent setting forth the terms and conditions of such financing and in any event within five (5) days of such execution. 
 6.12 Guarantor Subsidiary. If Lenders determine in their sole discretion that, if liquidated, the value of the Collateral would not be sufficient to repay the Obligations in full, Borrower shall, at
Borrower’s expense and within twenty (20) days of Lenders’ request, either (a) execute and deliver, or cause any Subsidiary or Subsidiaries of Borrower to execute and deliver, as directed by Lenders, a Stock Pledge, Guaranty and
such other documentation in form and substance satisfactory to Lenders as Lenders may request, including without limitation, original stock certificates, an opinion of foreign counsel, together with such additional documents as Lenders may require
to perfect a first priority lien on the assets described in the Stock Pledge and Guaranty, or (b) post a letter of credit or other credit enhancement from a source satisfactory to the Lenders and which Lenders deem adequate in their sole
discretion to eliminate any potential shortfall from the liquidation of the Collateral. Notwithstanding the foregoing, neither Borrower nor any Domestic Subsidiary of Borrower shall be required to pledge more than sixty five percent (65%) of
the outstanding voting stock of any Foreign Subsidiary. 
 6.13 Registration Rights. On the earliest of (a) the date that
Borrower sells shares of its Preferred Stock (as defined in the Warrants) to a new investor not already a party to Borrower’s Investor Rights Agreement (the “Investor Rights Agreement”) and in connection therewith amends the
Investor Rights Agreement to make such new investor a party, or (b) September 1, 2007, Borrower shall amend the Investor Rights Agreement to secure for each holder of the Warrants (the “Holders”) the registration rights of an
“Investor” under such agreement. In such case, Lenders agree to use their best efforts to cause such Holders, at the time of any exercise of such Warrants, to execute a joinder agreement to the Investor Rights Agreement described herein or
such other agreement as may be necessary to secure for the Holders the registration rights of an “Investor” thereunder. 
 7.
Negative Covenants. Borrower, until the full and complete payment of the Obligations, covenants and agrees that Borrower shall not: 
 7.1 Chief Executive Office. Change its name, jurisdiction of incorporation, chief executive office, principal place of business or any of the items set forth in Section 1 of the Disclosure Schedule without thirty (30) days
prior written notice to Lenders. 
 7.2 Collateral Control. Subject to its rights under Sections 4.4 and 7.4, remove any items
of Collateral from Borrower’s facility located at the address set forth on the cover page hereof or as set forth on the Disclosure Schedule. 
  

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 7.3 Liens. Create, incur, assume or suffer to exist any Lien of any kind upon any of
Borrower’s Property, whether now owned or hereafter acquired, except Permitted Liens. 
 7.4 Other Dispositions of Collateral.
Convey, sell, lease or otherwise dispose of all or any part of the Collateral to any Person (collectively, a “Transfer”), except for: (i) Transfers of inventory in the ordinary course of business; (ii) Transfers of
worn-out or obsolete equipment; or (iii) Transfers permitted under subclause (f) of the definition of Permitted Liens with respect to Collateral, (iv) Transfers consisting of Permitted Liens and Permitted Investments; and
(v) other Transfers not to exceed Fifty Thousand Dollars ($50,000) per year. 
 7.5 Distributions. (i) Pay any dividends or
make any distributions on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities (other than repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase in an aggregate amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000)); (iii) return any capital to any holder of its Equity Securities as such; (iv) make any distribution of assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such; or
(v) set apart any sum for any such purpose; provided, however, Borrower may pay dividends payable solely in Borrower’s common stock. 
 7.6 Mergers or Acquisitions. Merge or consolidate with or into any other Person other than the Arabella Merger. 
 7.7 Change in Ownership. Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change
in its ownership of greater than twenty five percent (25%) (other than by the sale by Borrower of Borrower’s Equity Securities in a public offering or to venture capital investors so long as Borrower identifies to Lenders the venture
capital investors prior to the closing of the investment). 
 7.8 Transactions With Affiliates. Enter into any contractual obligation
with any Affiliate or engage in any other transaction with any Affiliate except upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower. 
 7.9 Indebtedness Payments. (i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof
any Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Agreement or under any revolving credit agreement constituting Permitted Indebtedness under clause (e) of the definition of Permitted
Indebtedness) or lease obligations, (ii) amend, modify or otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers,
directors or stockholders. 
 7.10 Indebtedness. Create, incur, assume or permit to exist any Indebtedness except Permitted
Indebtedness. 
  

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 7.11 Investments. Make any Investment except for Permitted Investments. 
 7.12 Compliance. Become an “investment company” or a company controlled by an “investment company” under the Investment
Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Loan for that purpose; fail to meet the minimum funding requirements of the Employment Retirement
Income Security Act of 1974, and its regulations, as amended from time to time (“ERISA”), permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act
or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business or operations or could reasonably be expected to cause a material adverse change, or permit any of
its Subsidiaries to do so. 
 7.13 Maintenance of Accounts. (i) Maintain any deposit account or account holding securities owned
by Borrower except accounts with respect to which Lenders are able to take such actions as it deems necessary to obtain a perfected security interest in such accounts through one or more Account Control Agreements; or (ii) grant or allow any
other Person (other than Lenders) to perfect a security interest in, or enter into any agreements with any Persons (other than Lenders) accomplishing perfection via control as to, any of its deposit accounts or accounts holding securities.

 7.14 Negative Pledge Regarding Intellectual Property. Create, incur, assume or suffer to exist any Lien of any kind upon any
Intellectual Property or Transfer any Intellectual Property, whether now owned or hereafter acquired, other than non-exclusive licenses of Intellectual Property entered into in the ordinary course of business and the deposit of certain source codes
relating to Intellectual Property into escrow pursuant to arrangements entered into in the ordinary course of business. 
 8. Events of
Default. Any one or more of the following events shall constitute an “Event of Default” by Borrower under this Agreement: 
 8.1 Failure to Pay. If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents: (i) any Scheduled Payment within three (3) days of when due, or (ii) any other
portion of the Obligations within five (5) Business Days after receipt of written notice from Lenders that such payment is due. 
 8.2
Certain Covenant Defaults. If Borrower fails to perform any obligation under Sections 6.8, 6.12 or 6.13 or violates any of the covenants contained in Section 7 of this Agreement. 
 8.3 Other Covenant Defaults. If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant,
or agreement contained in this Agreement (other than as set forth in Sections 8.1, 8.2 or 8.5 through 8.13), in any of the other Loan Documents and Borrower has failed to cure such default within thirty (30) days of the occurrence of
such default. During this thirty (30) day period, the failure to cure the default is not an Event of Default (but no Loan will be made during the cure period). 
  

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 8.4 Intentionally Omitted. 
 8.5 Seizure of Assets, Etc. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed
or an adequate bond has been posted pending a good faith contest by Borrower. 
 8.6 Service of Process. The service of process upon
Lenders seeking to attach by a trustee or other process any funds of the Borrower on deposit or otherwise held by Lenders, or the delivery upon Lenders of a notice of foreclosure by any Person seeking to attach or foreclose on any funds of the
Borrower on deposit or otherwise held by Lenders, or the delivery of a notice of foreclosure or exclusive control to any entity holding or maintaining Borrower’s deposit accounts or accounts holding securities by any Person (other than Lenders)
seeking to foreclose or attach any such accounts or securities. 
 8.7 Default on Indebtedness. One or more defaults shall exist under
any agreement with any third party or parties which consists of the failure to pay any Indebtedness at maturity or which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness in an
aggregate amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or an event of default shall exist under any financing agreement with Lenders or any of their Affiliates. 
 8.8 Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty
Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days or more. 
 8.9 Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty, representation, statement, certification, or report made to Lenders by Borrower or any
officer, employee, agent, or director of Borrower. 
 8.10 Breach of Warrants. If Borrower shall breach any material term of the
Warrants and such breach is not cured within thirty (30) days. 
 8.11 Unenforceable Loan Document. If any Loan Document shall in
any material respect cease to be, or Borrower shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms. 
  

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 8.12 Involuntary Insolvency Proceeding. If a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its Property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a
period of forty-five (45) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding. 
 8.13 Voluntary Insolvency Proceeding. If Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its Property, or shall
make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing. 
 9. Lenders’ Rights and Remedies. 
 9.1 Rights and Remedies. Upon the occurrence of any Default or Event of Default, Lenders shall not have any further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence of
an Event of Default, Lenders shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lenders may, at their election, without notice of election and
without demand, do any one or more of the following, all of which are authorized by Borrower: 
 (a) Acceleration of Obligations.
Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, including (i) any accrued and unpaid interest, (ii) the amounts which would have otherwise come due under
Section 2.3(b)(ii) if the Loans had been voluntarily prepaid, (iii) the unpaid principal balance of the Loans and (iv) all other sums, if any, that shall have become due and payable hereunder, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section 8.12 or 8.13 all Obligations shall become immediately due and payable without any action by Lenders); 
 (b) Protection of Collateral. Make such payments and do such acts as Lenders consider necessary or reasonable to protect Lenders’ security
interest in the Collateral. Borrower agrees to assemble the Collateral if Lenders so require and to make the Collateral available to Lenders as Lenders may designate. Borrower authorizes Lenders and their designees and agents to enter the premises
where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Lenders’ determination appears or is claimed to be prior or superior to its
security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Lenders a license to enter into possession of such premises and to occupy the same, without
charge, for up to one hundred twenty (120) days in order to exercise any of Lenders’ rights or remedies provided herein, at law, in equity, or otherwise; 
  

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 (c) Preparation of Collateral for Sale. Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lenders and their agents and any purchasers at or after foreclosure are hereby granted a non-exclusive, irrevocable, perpetual, fully paid,
royalty-free license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s Intellectual Property, including without limitation, labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights;
provided that such license shall only be exercisable in connection with the disposition of Collateral upon Lenders’ exercise of its remedies hereunder; 
 (d) Sale of Collateral. Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower’s premises) as Lenders determine are commercially reasonable; and 
 (e) Purchase of Collateral. Credit bid and purchase all or any portion of the Collateral at any public sale. 
 Any deficiency that exists
after disposition of the Collateral as provided above will be paid immediately by Borrower. 
 9.2 Set Off Right. Lenders may set off
and apply to the Obligations any and all indebtedness at any time owing to or for the credit or the account of Borrower or any other assets of Borrower in Lenders’ possession or control. 
 9.3 Effect of Sale. Upon the occurrence of an Event of Default, to the extent permitted by law, Borrower covenants that it will not at any time
insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and, to the full extent legally
permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part
thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted
and delegated to Lenders, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted. Any sale, whether under any power of sale hereby given or by virtue of 

  

 28 








 
judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the
Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or
assigns. 
 9.4 Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint each Lender (which
appointment is coupled with an interest), the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name to file any notices of security interests, financing statements and continuations and amendments
thereof pursuant to the Code or federal law, as may be necessary to perfect, or to continue the perfection of Lenders’ security interests in the Collateral. Borrower does hereby irrevocably appoint each Lender (which appointment is coupled with
an interest) on the occurrence of an Event of Default, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give
acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder
as fully as if each Lender were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into any Lender’s
possession or under any Lender’s control; (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral; (d) in Lenders’ discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of Borrower or otherwise, which Lenders may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lenders in and to the Collateral; (e) endorse
Borrower’s name on any checks or other forms of payment or security; (f) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust all claims under
Borrower’s insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Lenders determine reasonable; (i) transfer the Collateral into the name of Lenders or
a third party as the Code permits; and (j) to otherwise act with respect thereto as though Lenders were the outright owners of the Collateral. 
 9.5 Lenders’ Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Lenders may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Lenders
deem prudent. Any amounts paid or deposited by Lenders shall constitute Lenders’ Expenses, shall be immediately due and payable, shall bear interest at the Default Rate and shall be secured by the Collateral. Any payments made by Lenders shall
not constitute an agreement by Lenders to make similar payments in the future or a waiver by Lenders of any Event of Default under this Agreement. Borrower shall pay all reasonable fees and expenses, including without limitation, Lenders’
Expenses, incurred by Lenders in the enforcement or attempt to enforce any of the Obligations hereunder not performed when due. 
  

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 9.6 Remedies Cumulative. Lenders’ rights and remedies under this Agreement, the Loan
Documents, and all other agreements shall be cumulative. Lenders shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lenders of one right or remedy shall be deemed an
election, and no waiver by Lenders of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Lenders shall constitute a waiver, election, or acquiescence by it. 
 9.7 Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lenders, at the time of or received by Lenders after the occurrence of an Event of Default hereunder) shall be paid to and applied as follows: 
 (a) First, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by
Lenders, including, without limitation, Lenders’ Expenses; 
 (b) Second, to the payment to Lenders of the amount then owing or
unpaid on the Loans for any accrued and unpaid interest, the amounts which would have otherwise come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, the principal balance of the Loans, and all other Obligations with
respect to the Loans (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest thereon, then to the amounts which would have otherwise
come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, then to the principal balance of the Loans, and then to the payment of other amounts then payable to Lenders under any of the Loan Documents); and 
 (c) Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to the Person lawfully entitled to receive the
same. 
 9.8 Reinstatement of Rights. If Lenders shall have proceeded to enforce any right under this Agreement or any other Loan
Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent
jurisdiction), Lenders shall be restored to their former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement. 
 10. Waivers; Indemnification. 
 10.1
Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees at any time held by Lenders on which Borrower may in any way be liable. 
  

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 10.2 Lenders’ Liability for Collateral. So long as Lenders complies with their obligations,
if any, under the Code, Lenders shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause other than
Lenders’ gross negligence or willful misconduct; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or
destruction of the Collateral shall be borne by Borrower. 
 10.3 Indemnification and Waiver. Whether or not the transactions
contemplated hereby shall be consummated: 
 (a) General Indemnity. Borrower agrees upon demand to pay or reimburse Lenders for all
liabilities, obligations and out-of-pocket expenses, including Lenders’ Expenses and reasonable fees and expenses of counsel for Lenders from time to time arising in connection with the enforcement or collection of sums due under the Loan
Documents, and in connection with any amendment or modification of the Loan Documents or any “work-out” in connection with the Loan Documents. Borrower shall indemnify, reimburse and hold Lenders, and each of its respective successors,
assigns, agents, attorneys, officers, directors, stockholders, servants, agents and employees (each an “Indemnified Person”) harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and
nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in connection therewith (including reasonable
attorneys’ fees and expenses), fines, penalties (and other charges of any applicable Governmental Authority), licensing fees relating to any item of Collateral, damage to or loss of use of property (including consequential or special damages to
third parties or damages to Borrower’s property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a “Claim”), directly or indirectly relating to or arising out of the use of the
proceeds of the Loans or otherwise, the falsity of any representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Agreement or any other Loan Document. The foregoing indemnity shall cover, without limitation,
(i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials on the premises owned, occupied or leased by Borrower, including any Claims
asserted or arising under any Environmental Law, (iv) any Claim for negligence or strict or absolute liability in tort, or (v) any Claim asserted as to or arising under any Account Control Agreement or any Landlord Agreement;
provided, however, Borrower shall not indemnify Lenders for any liability incurred by Lenders to the extent such liability results from Lenders’ gross negligence or willful misconduct. Such indemnities shall continue in full force
and effect, notwithstanding the expiration or termination of this Agreement. Upon Lenders’ written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Lenders, each of their partners, and
each of their respective, agents, employees, directors, officers, stockholders, successors and assigns against any indemnified Claim described in this Section 10.3(a). Borrower shall not settle or compromise any Claim against or
involving Lenders without first obtaining Lenders’ written consent thereto, which consent shall not be unreasonably withheld. 
  

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 (b) Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE
ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDERS UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES. 
 (c) Survival; Defense. The obligations in this Section 10.3 shall survive payment of all other Obligations pursuant to
Section 12.8. At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person’s reasonable discretion, at the sole cost and expense
of Borrower. All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand. 
 11.
Notices. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, by prepaid nationally recognized overnight courier, or by prepaid
facsimile to Borrower or to Lenders, as the case may be, at their respective addresses set forth below: 
  

			
	 If to Borrower:
	  	Entropic Communications, inc.
		  	9276 Scranton Road, Suite 200
		  	San Diego, CA 92121
		  	Attention:
		  	Fax:                         
		  	Ph:                          
		
	 If to Horizon:
	  	Horizon Technology Funding Company LLC
		  	76 Batterson Park Road
		  	Farmington, CT 06032
		  	Attention: Legal Department
		  	Fax: (860) 676-8655
		  	Ph: (860) 676-8654
		
	 If to Silicon:
	  	Silicon Valley Bank
		  	4445 Eastgate Mall Suite 110
		  	San Diego, California 92121
		  	Attention: Frederick Kreppel
		  	Fax: (858) 622-1492
		  	Ph: (858) 784-3321

 The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other. 
  

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 12. General Provisions. 
 12.1 Successors and Assigns. This Agreement and the Loan Documents shall bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties; provided, however, neither this Agreement nor any rights hereunder may be assigned by Borrower without Lenders’ prior written consent, which consent may be granted or withheld in Lenders’ sole
discretion. Lenders shall have the right without the consent of or notice to Borrower to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in Lenders’ rights and benefits hereunder. Lenders may
disclose the Loan Documents and any other financial or other information relating to Borrower or any Subsidiary to any potential participant or assignee of any of the Loans, provided that such participant or assignee agrees to protect
the confidentiality of such documents and information using the same measures that it uses to protect its own confidential information. 
 12.2 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement. 
 12.3
Severability of Provisions. Each provision of this Agreement shall be several from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 
 12.4 Entire Agreement; Construction; Amendments and Waivers. 
 (a) Entire Agreement. This Agreement and each of the other Loan Documents dated as of the date hereof, taken together, constitute and contain the entire agreement between Borrower and Lenders and supersede any
and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof. Borrower acknowledges that it is not relying on any representation or
agreement made by Lenders or any employee, attorney or agent thereof, other than the specific agreements set forth in this Agreement and the Loan Documents. 
 (b) Construction. This Agreement is the result of negotiations between and has been reviewed by each of Borrower and Lenders executing this Agreement as of the date hereof and their respective counsel;
accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lenders. Borrower and Lenders agree that they intend the literal words of this Agreement and
the other Loan Documents and that no parol evidence shall be necessary or appropriate to establish Borrower’s or Lenders’ actual intentions. 
 (c) Amendments and Waivers. Any and all discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the
written consent of Lenders. Any and all amendments and modifications of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of Lenders and Borrower. Any waiver or consent with respect to any
provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, waiver or consent affected in accordance with this Section 12.4 shall be binding upon Lenders and on Borrower. 
  

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 12.5 Reliance by Lenders. All covenants, agreements, representations and warranties made herein by
Borrower shall be deemed to be material to and to have been relied upon by Lenders, notwithstanding any investigation by Lenders. 
 12.6
No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any
manner whatsoever. 
 12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 
 12.8 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any
Obligations or commitment to fund remain outstanding. The obligations of Borrower to indemnify Lenders with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought against Lenders have run. 
 13. Relationship of Parties.
Borrower and Lenders acknowledge, understand and agree that the relationship between Borrower, on the one hand, and Lenders, on the other, is, and at all time shall remain solely that of a borrower and lender. Lenders shall not under any
circumstances be construed to be a partner or a joint venturer of Borrower or any of its Affiliates; nor shall Lenders under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any
of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates. Lenders do not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or
otherwise inform Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lenders or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely
on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lenders in connection with such matters is solely for the protection of Lenders and
neither Borrower nor any Affiliate is entitled to rely thereon. 
 14. Confidentiality. All information (other than periodic reports
filed by Borrower with the Securities and Exchange Commission) disclosed by Borrower to Lenders in writing or through inspection pursuant to this Agreement that is marked confidential shall be considered confidential. Lenders agree to use the same
degree of care to safeguard and prevent disclosure of such confidential information as Lenders use with their own confidential information, but in any event no less than a reasonable degree of care. Lenders shall not disclose such information to any
third party (other than to Lenders’ partners, attorneys, governmental regulators, or auditors, or to Lenders’ subsidiaries and affiliates and prospective transferees and purchasers of the Loans, 

  

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all subject to the same confidentiality obligation set forth herein or as required by law, regulation, subpoena or other order to be disclosed) and shall use
such information only for purposes of evaluation of its investment in Borrower and the exercise of Lenders’ rights and the enforcement of its remedies under this Agreement and the other Loan Documents. The obligations of confidentiality shall
not apply to any information that (a) was known to the public prior to disclosure by Borrower under this Agreement, (b) becomes known to the public through no fault of Lenders, (c) is disclosed to Lenders by a third party having a
legal right to make such disclosure, or (d) is independently developed by Lenders. Notwithstanding the foregoing, Lenders’ agreement of confidentiality shall not apply if Lenders have acquired indefeasible title to any Collateral or in
connection with any enforcement or exercise of Lenders’ rights and remedies under this Agreement following an Event of Default, including the enforcement of Lenders’ security interest in the Collateral. 
 15. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CONNECTICUT. BORROWER AND LENDERS HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 
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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first
above written. 
  

					
	 BORROWER:
	 	
		
	 ENTROPIC COMMUNICATIONS, INC.
	 	
			
	 By:
	 	 /s/ Kurt Noyes
	 	
	 Name:
	 	Kurt Noyes	 	
	 Title:
	 	VP Finance	 	
		
	 LENDERS:
	 	
		
	HORIZON TECHNOLOGY FUNDING COMPANY LLC	 	
	By: Horizon Technology Finance, LLC, its sole member	 	
			
	 By:
	 	 /s/ Gerald A. Michaud
	 	
	 Name:
	 	Gerald A. Michaud	 	
	 Title:
	 	Managing Member	 	
		
	 SILICON VALLEY BANK
	 	
			
	 By:
	 	 /s/ Derek R. Brunelle
	 	
	 Name:
	 	Derek R. Brunelle	 	
	 Title:
	 	Vice President