Exhibit 10.8


 


FACTORING AGREEMENT


 


This
Factoring Agreement (the “Agreement”) is made as of June 3, 2015, by and between CSNK Working Capital Finance Corp.
d/b/a Bay View Funding (“Buyer”) having a place of business at. 2933 Bunker Hill Lane, Suite 210, Santa Clara, CA 95054-1152,
and SDJ Technologies, Inc., a Delaware corporation (“Seller”) having its principal place of business and chief executive
office at 2655 Park Center Drive, Suite C, Simi Valley, CA 93065-6277.


 


Section
1. DEFINITIONS. When used herein, the following terms shall have the following meanings:


 


		1.1.	“Account
                                         Balance” shall mean, on any given day, the gross amount of all Purchased
                                         Receivables unpaid on that day.



 


		1.2.	“Account Debtor”
                                         shall have the meaning set forth in the Uniform Commercial Code as enacted in the State
                                         of California (“UCC”) and shall include any person liable on any Receivable,
                                         including without limitation, any guarantor of the Receivable and any issuer of a letter
                                         of credit or banker’s acceptance.



 


		1.3.	“ACH” shall
                                         mean the Automated Clearing House.



 


		1.4.	“ACH Fee”
                                         shall mean $7.00 for all ACH charges incurred by Buyer.



 


		1.5.	“Adjustments”
                                         shall mean all discounts, allowances, returns, disputes, counterclaims, offsets, defenses,
                                         rights of recoupment, rights of return, warranty claims, or short payments, asserted
                                         by or on behalf of any Account Debtor with respect to any Purchased Receivable.



 


		1.6.	“Advance”
                                         shall have that meaning as set forth in Section 2.1 herein.



 


		1.7.	“Advance Percentage”
                                         shall be eighty percent (80%), which may be adjusted by Buyer, in it sole discretion.



 


		1.8.	“Avoidance Claim”
                                         shall mean the assertion, complaint, judgment or otherwise against Buyer, that any payment
                                         Buyer received with respect to any Receivable, whether the amount related thereto was
                                         paid by the Account Debtor, the Seller, or on behalf of Seller or for its benefit, or
                                         any lien granted to Buyer is avoidable (or recoverable from Buyer) under the United States
                                         Bankruptcy Code, any other debtor relief statute, including but not limited to, preference
                                         claims, fraudulent transfer claims, or through receivership, assignment for the benefit
                                         of creditors or any equivalent recovery law, rule or regulation which relates to the
                                         adjustment of debtor and creditor relations.



 


		1.9.	“Collections”
                                         shall mean all good funds received by Buyer from or on behalf of an Account Debtor with
                                         respect to Purchased Receivables.



 


		1.10.	“Dispute”
                                         shall mean a dispute, claim, or defense of any kind whatsoever, whether valid or invalid,
                                         asserted by an Account Debtor, that may reduce the amount collectible by Buyer from an
                                         Account Debtor. Buyer is under no obligation to investigate the merits of any Dispute.



 


		1.11.	“Early Termination
                                         Fee” shall have that meaning as set forth in Section 10 herein.



 


		1.12.	“Event
                                         of Default” shall have that meaning as set forth in Section 9 herein.



 


		1.13.	“Factoring Fee”
                                         shall have that meaning as set forth in Section 3.5 herein.



 


		1.14.	"Initial Funding Date”
                                         shall mean the date in which Buyer makes the first purchase of any Receivable pursuant
                                         to this Agreement.



 


		1.15.	“Insolvent.”
                                         shall mean with respect to an Account Debtor that such Account Debtor has filed, or has
                                         had filed against it, any bankruptcy case, or has made an assignment for the benefit
                                         of creditors.



 


		1.16.	“Invalid Invoice Fee”
                                         shall be Ten Percent (10%) of the face amount of any Purchased Receivable which violates
                                         Seller’s warranty in Section 6.1 herein.



 


		1.17.	“Maximum Credit”
                                         shall have that meaning as set forth in Section 2.1 herein.



 


		1.18.	“Misdirected Payment
                                         Fee” shall be Ten Percent (10%) of the face amount of any Purchased Receivable
                                         for which Seller violates the warranty set forth in Section 3.3 herein.



 


		1.19.	“Missing Notation
                                         Fee” shall be Ten Percent (10%) of the face amount of any Purchased Receivable
                                         for which Seller violates the warranty set forth in Section 2.5 herein.



 


		1.20.	“Obligations”
                                         shall mean the obligation to pay and perform when due all debts and all obligations,
                                         liabilities, covenants, agreements, guarantees, warranties and representations of Seller
                                         to Buyer, of any and every kind and nature, whether heretofore, now or hereafter owing,
                                         arising, due or payable from Seller to Buyer; howsoever created, incurred, acquired,
                                         arising or evidenced; whether primary, secondary, direct, absolute, contingent, fixed,
                                         secured, unsecured, or otherwise; whether as principal or guarantor; acquired by assignment,
                                         liquidated or unliquidated; certain or uncertain; determined or undetermined; due or
                                         to become due; as a result of present or future advances or otherwise; joint or individual;
                                         pursuant to or caused by Seller’s breach of this Agreement, or any other present
                                         or future agreement or instrument, or created by operation of law or otherwise; evidenced
                                         by a written instrument or oral; created directly between Buyer and Seller or restitution
                                         claims owed by Seller to a third party and acquired by Buyer from such third party, monetary
                                         or nonmonetary.



 


		1.21.	“Online Reporting
                                         Service” shall mean the system set up on buyer's website where Seller provides
                                         Buyer with the pertinent data necessary for Buyer to purchase Receivables under this
                                         Agreement and otherwise administer this Agreement.



 


		1.22.	“Online Statement
                                         Account” shall have that meaning as set forth in Section 3.1 herein.



 


		1.23.	“Payment
                                         Period” shall be ninety (90) calendar days from an invoice date.



 


		1.24.	“Purchased Receivables”
                                         shall mean all Receivables arising out of the invoices and other agreements identified
                                         on or delivered with any Schedule of Accounts delivered by Seller to Buyer which Buyer
                                         elects to purchase and for which Buyer makes an Advance.



 


		1.25.	“Receivable”
                                         shall mean accounts, chattel paper, instruments, contract rights, documents, general
                                         intangibles, letters of credit, drafts, banker’s acceptances, and rights to payment,
                                         and all proceeds thereof.



 


		1.26.	“Reconciliation Period”
                                         shall, unless otherwise notified by Buyer to Seller, mean a weekly calendar period.



 


		1.27.	“Repurchased Receivable”
                                         shall refer to a Purchased Receivable which the Seller has become obligated to Repurchase
                                         under Section 4.1 hereof.



 


		1.28.	“Reserve”
                                         shall have that, meaning as set forth in Section 2.4 herein.



 


		1.29.	“Returned Check Fee.”
                                         Seller shall pay to Buyer a fee in the amount of $30.00 in the event a notice is received
                                         of a returned check for any payment processed on behalf of Seller.



 


		1.30.	“Schedule of Accounts”
                                         shall mean a Bill of Sale signed by a representative of Seller which accurately identifies
                                         the Receivables which Buyer, at its election, may purchase, and includes for each such
                                         Receivable the correct amount owed by the Account Debtor, the name and address of the
                                         Account Debtor, the invoice number, and the invoice date.



 




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		1.31.	“Wire Fee”
                                         $15.95 for all domestic wire charges and $50.00 for all foreign wire charges incurred
                                         by Buyer.



 


		1.32.	“Write Off Period”
                                         shall mean twelve (12) calendar months from the date Buyer purchases a Receivable.



 


		1.33.	UCC Definitions: all
                                         other capitalized terms not otherwise defined herein shall have that meaning as set forth
                                         in the UCC as enacted in the State of California.



 


Section
2. PURCHASE AND SALE OF RECEIVABLES


 


		2.1.	Acceptance of Receivables.
                                         Buyer shall have no obligation to purchase any Receivable listed on a Schedule of Accounts.
                                         Upon acceptance, Buyer shall pay to Seller the Advance Percentage of the face amount
                                         of each Receivable Buyer desires to purchase minus ACTI Fee, Wire Fee, Repurchased Receivables,
                                         Adjustments and other Obligations which are currently due under the Factoring Agreement.
                                         Such payment shall be the " Advance" with respect to such Receivable. The purchase
                                         price of any Receivables purchased hereunder shall be the sum of the Advance, plus any
                                         Reserve payable by Buyer to Seller relating to such Receivable. The aggregate amount
                                         of all outstanding Advances shall not at any time exceed the lesser of Four Million Dollars
                                         ($4,000,000) (the Maximum Credit) or an amount equal to the sum of all undisputed Purchased
                                         Receivables multiplied by the Advance Percentage. Seller shall not request and Buyer
                                         shall not make an Advance that would cause the resulting total of all Advances to exceed
                                         the foregoing limitation. In the event the aggregate outstanding Obligations shall at
                                         any time exceed the foregoing limitation, Seller shall immediately repay the Advances
                                         in the amount of such excess.



 


		2.2.	ACH Authorization. In
                                         order to facilitate the purchase of Receivables under this Agreement, and the payment
                                         of the Obligations, Seller irrevocably authorizes Buyer to initiate debits or credits
                                         through the ACH or any other wire transfer system in effect.



 


		2.3.	Effectiveness of Sale to
                                         Buyer. Effective upon Buyer's payment of an Advance, and in consideration of the
                                         covenants of this Agreement, Seller will have absolutely sold, transferred and assigned
                                         to Buyer, all of Seller's right, title and interest in and to each Purchased Receivable
                                         and all proceeds thereof.



 


		2.4.	Establishment of a Reserve.
                                         Upon the purchase by Buyer of each Purchased Receivable, Buyer shall, unless waived by
                                         Buyer in its sole discretion, establish a Reserve. The Reserve shall be the amount by
                                         which the face amount of the Purchased Receivable exceeds the Advance or the Reserve
                                         may be established from collections which Buyer may receive on any Account, Purchased
                                         Receivable, or Proceeds of any other Collateral (the "Reserve"). The Reserve
                                         shall be a book balance maintained on the records of Buyer and shall not be a segregated
                                         fund, and may be accumulated by Buyer, or released to Seller, in any amount, in Buyer's
                                         sole discretion. In order to facilitate the payment and performance of all Obligations,
                                         Buyer may, at any time, in its sole discretion: (a) adjust the Reserve upward or downward;
                                         or (b) pay into the Reserve collections received on any Account, Purchased Receivable,
                                         or the Proceeds of any other Collateral. Buyer’s maintenance of the Reserve shall
                                         not vest the Seller with any right title, or interest therein as it is understood that
                                         the Reserve is an account established to facilitate the payment and performance of all
                                         Obligations. Buyer in its discretion may increase the Reserve, to account for any potential
                                         Avoidance Claim.



 


		2.5.	Offer to Sell Receivables.
                                         Seller may, on the terms provided herein, from time to time factor, sell and assign to
                                         Buyer, Receivables acceptable to Buyer, in its sole, discretion, at a discount below
                                         face value. Seller will notify each' Account. Debtor of a Receivable, purchased by Buyer
                                         that all payments thereon must be made only to Buyer. Seller shall deliver to Buyer a
                                         signed Schedule of Accounts along with copies of invoices and purchase orders, contracts,
                                         and proof of delivery or completion of service, in a form acceptable to Buyer, in its
                                         sole discretion, with respect to any Receivable for which a request for purchase is made.
                                         Buyer shall be. entitled to rely on all of the information provided by Seller to Buyer
                                         on the Schedule of Accounts and to rely on the signature on any Schedule of Accounts
                                         as an authorized authentication by Seller. Each invoice, shall bear a notice, in form
                                         satisfactory to Buyer, that it has been sold and assigned to and is payable only to Buyer.
                                         Seller’s failure to include such notice on the invoice shall result in the payment
                                         of the Missing Notation Fee as liquidated damages, as such damages shall be difficult
                                         to calculate or ascertain.



 


Section
3. COLLECTIONS, CHARGES AND REMITTANCES


 


		3.1	Accounting. Seller shall
                                         immediately upon sale of Receivables to Buyer, make proper entries on its books and records
                                         disclosing the sale thereof to Buyer. Seller will immediately furnish Buyer financial
                                         statements, tax records and all other information as requested by Buyer. Buyer shall
                                         post all of Seller’s account activity on Buyer’s website, which shall constitute
                                         Seller’s Online Statement of Account Buyer will not likely send Seller any hard
                                         copies of any of the activities which constitute Seller’s Online Statement of Account.
                                         Provided that there is no Event of Default, Buyer shall provide Seller with continuous
                                         access to Seller to view the Online Statement of Account. Seller shall be solely responsible
                                         for checking its Online Statement of Account, If Seller disputes any entry on the Online
                                         Statement of Account it shall, within thirty (30) days after the first posting of the
                                         event, send to Buyer a written exception to such event. Unless Buyer receives a timely
                                         written exception to the activity posted to the Online Statement of Account, within thirty
                                         (30) days after it is first posted, the Online Statement of Account shall become an account
                                         stated and be deemed accepted by Seller and shall be conclusive and binding upon the
                                         Seller.



 


		3.2	Audit Fees. Buyer or its
                                         designee may conduct examinations of the Collateral and Seller's operations, unless an
                                         Event of Default has occurred and is continuing, in which event the number of audits
                                         conducted will be in Buyer's reasonable discretion. Seller shall pay Buyer audit fees
                                         not to exceed $1,000.00 per day plus expenses per audit. Audit fees shall be payable
                                         upon demand by Buyer.



 


		3.3	Collections. All Collections
                                         will go directly to Buyer and Buyer shall apply all Collections to Seller's Obligations
                                         hereunder in such order and manner as Buyer may determine in its sole discretion. Seller
                                         will hold in trust and safekeeping, as the sole property of Buyer, and immediately turn
                                         over to Buyer, in identical form received, any payment on a Purchased Receivable, or
                                         Receivable assigned to Buyer under this Agreement, that comes into Seller's possession.
                                         In the event Seller comes into possession of a remittance comprising payments of both
                                         a Purchased Receivable and Receivable which has not been purchased by Buyer, Seller shall
                                         hold same in accordance with the provisions set forth above and immediately turn same
                                         over to Buyer, in identical form received. Upon collection of such item and provided
                                         there is no Event of Default, Buyer shall remit to Seller its portion thereof. Seller’s
                                         failure to comply with its duties under this Section shall result in the imposition of
                                         the Misdirected Payment Fee as liquidated damages, as such damages shall be difficult
                                         to calculate or ascertain. Seller agrees to indemnify and save Buyer harmless from and
                                         against any and all claims, loss, costs and expenses caused by or arising out: of the
                                         Receivables or any attempt by Buyer to collect same or resolve any Dispute.



 




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		3.4	Crediting of payments.
                                         For purposes of determining availability under this Agreement, payments on Purchased
                                         Receivables and other payments with respect to the collateral and Obligations will be
                                         credited to the Purchased Receivables of Seller upon the dale of Buyer's receipt of
                                         advice from Buyer's bank that such payments have been credited to Buyer's account or
                                         in the case of payments received directly in kind by Buyer, upon the date of Buyer's
                                         deposit thereof at Buyer's bank, subject, in either case to final payment and collection.
                                         Solely for the purpose of calculating fees under this Agreement, payments on Purchased
                                         Receivables and other payments with respect to collateral and Obligations shall be deemed
                                         received by Buyer three (3) business days after the date of Buyer's receipt of advice
                                         from Buyer’s bank that such payments have been credited to Buyer's account or in
                                         the case of payments received directly in kind by Buyer, three (3) business days after
                                         the date of Buyer's deposit thereof at Buyer's bank, subject in either ease to final
                                         payment and collection.



 


		3.5	Factoring Fee. Seller
                                         shall pay to Buyer upon purchase of Receivables by Buyer, a Factoring Fee ("Factoring
                                         Fee"), calculated by taking one and thirty five hundredths of one percent (1.35%)
                                         of the gross face value of a Purchased Receivable for the first thirty (30) day period
                                         from the date said Purchased Receivable is first: purchased by Buyer, and a Factoring
                                         Fee of forty five hundredths of one percent (0.45%) per ten (10) days thereafter (“Fee
                                         Period”) until the date said Purchased Receivable is paid in lull or otherwise
                                         repurchased by Seller or otherwise written off by Buyer within the Write Off Period.



 


		3.6	Invalid Invoice Fee. Seller
                                         shall pay Buyer the Invalid Invoice Fee immediately upon its accrual.



 


		3.7	Misdirected Payment Fee.
                                         Seller shall pay Buyer the Misdirected Payment Fee immediately upon its accrual.



 


		3.8	Missing Notation Fee.
                                         Seller shall pay Buyer the Missing Notation Fee immediately upon its accrual.



 


		3.9	Refund to Seller. Provided
                                         that there does not then exist an Event of Default, as defined in Section 9, or any event
                                         or condition that with notice, lapse of time or otherwise would constitute an Event of
                                         Default, Buyer shall refund to Seller, the amount, if any, which Buyer owes to Seller
                                         at the end of the Reconciliation Period according to the accounting prepared by Buyer
                                         for that Reconciliation Period (the "Refund"). The Refund shall be an amount
                                         equal to:



 


		3.9.1.	The Reserve as of the beginning
                                         of that Reconciliation Period, plus



 


		3.9.2.	The Reserve created for each
                                         Purchased Receivable paid during that Reconciliation Period, minus



 


		3.9.3.	The Reserve created for each
                                         Repurchased Receivable, minus



 


		3.9.4.	The total for that Reconciliation
                                         Period of:



 


		3.9.4.1.	Factoring Fee;



 


		3.9.4.2.	Adjustments and/or reserves
                                         for Avoidance Claims;



 


		3.9.4.3.	Repurchased Receivables, to
                                         the extent Buyer has agreed to accept payment thereof by deduction from the Refund; and



 


		3.9.4.4.	The Reserve for the Account
                                         Balance as of the first day of the following Reconciliation Period.



 


		3.9.4.5.	In the event the formula set
                                         forth in this Section results in an amount due to Buyer from Seller, Seller shall immediately
                                         make such payment to Buyer or, in Buyer’s sole discretion, assign additional Receivables
                                         to Buyer.



 


		3.10	Standards Regarding Collections.
                                         Buyer’s collection activities with respect to any Receivable, whether or not a
                                         Dispute exists, does not obligate Buyer to engage a collection agency or commence a legal
                                         action to collect any Receivable. Seller acknowledges that Buyer is not a collection
                                         agency and does not provide debt, collection services to Seller. If a Receivable is not
                                         paid, for any reason, Buyer, in its sole discretion may engage a collection agency, attorney
                                         or other service provider to collect the Receivable and any fees and costs associated
                                         therewith shall constitute part of the Obligations. Any actions which Buyer may take
                                         pursuant to this section, in its sole discretion, shall not alter Seller’s Obligations
                                         to repurchase any Receivable pursuant to Section 4 herein.



 


Section 4. RECOURSE AND
REPURCHASE OBLIGATIONS


 


		4.1.	Seller's Agreement to Repurchase.
                                         Seller agrees to pay to Buyer on demand, and repurchase in the full face amount, or
                                         any unpaid portion of, any Purchased Receivable:



 


		4.1.1.	Which remains unpaid for the
                                         Payment Period; or



 


		4.1.2.	With respect to which there has
                                         been any breach of warranty or representation set forth in Section 6 hereof or any breach
                                         of any covenant contained in this Agreement; or:



 


		4.1.3.	With respect to which the
                                         Account Debtor asserts any Dispute.



 




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Section
5. POWER OF ATORNEY. Seller grants to Buyer an irrevocable power of attorney coupled with an interest authorizing and
permitting Buyer (acting through any of its employees, attorneys or agents) at any time, at its option but without obligation,
with or without notice to Seller, and at Seller's sole expense, to do any or all of the following, in Seller's name or otherwise:
(a) Execute on behalf of Seller any document that Buyer may, in its sole discretion, deem advisable in order to perfect, maintain
or improve Buyer's security interests in the Collateral or other real or personal property intended to constitute Collateral,
or in order to exercise a right of Seller or Buyer, or in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) At any time after the occurrence of an Event of Default, execute on
behalf of Seller any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or to
lease (as lessor or lessee) any real or personal property; (e) Execute on behalf of Seller, any invoices relating to any Receivable,
any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, voting rights in
any bankruptcy case, any Notice of Lien, claim of mechanic's, material man's or other lien, or assignment of satisfaction of mechanic’s,
material man's or other lien; (d) Take control in any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of Seller upon any instruments, notes, acceptances, checks, drafts, money orders, bills of lading, freight bills,
chattel paper or other documents, evidence of payment or Collateral that may come into Buyer's possession; (e) Upon the occurrence
of any Event of Default, to receive and open all mail addressed to Seller; and, in the exercise of such right, Buyer shall have
the right, in the name of Seller, to notify the Post Office authorities to change the address for the delivery of mail addressed
to Seller to such other address as Buyer may designate including, but not limited to, Buyer's own address; Buyer shall turn over
to Seller all of such mail not relating to the Collateral; such right to redirect (nail granted to Buyer is irrevocable and Seller
shall not have the right to notify the Post Office to change the address for delivery after Buyer has exercised such right; (f)
Upon the occurrence of any Event of Default, to direct any financial institution which is a participant with Buyer in extensions
of credit to or for the benefit of Seller, or which is the institution with which any deposit account is maintained, to pay to
Buyer all monies on deposit by Seller with said financial institution which are payable by said financial institution to Seller,
regardless of any loss of interest, charge or penalty as a result of payment before maturity; (g) Endorse all checks and other
forms of remittances received by Buyer “Pay to the Order of Bay View Funding,” or in such other manner as Buyer may
designate; (h) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral,
or any judgment based thereon, or otherwise rake any action to terminate or discharge the same; (i) Grant extensions of time to
pay, compromise claims and settle Receivables and the like for less than face value and execute all releases and other documents
in connection therewith; (j) Pay any sums required on account, of Seller's taxes or to secure the release of any liens there fore,
or both; (k) Settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment
therefore, and make all determinations and decisions with respect to any such policy of insurance and endorse Seller's name on
any check, draft, instrument or other item of payment or the proceeds of such policies of insurance; (I) Instruct any accountant
or other third party having custody or control of any books or records belonging to, or relating to, Seller to give Buyer the
same rights of access and other rights with respect thereto as Buyer has under Section 6.2.9 of this Agreement; and (m) Take any
action or pay any sum required of Seller pursuant to this Agreement, and any other present or future agreements. Any and all sums
paid and any and all costs expenses, liabilities, obligations and attorneys' fees incurred by Buyer with respect to the foregoing
shall be added to and become part of the Obligations and shall be payable on demand. In no event shall Buyer's rights under the
foregoing power of attorney or any of Buyer's other rights under this Agreement be deemed to indicate that Buyer is in control
of the business, management, of properties of Seller.


 


Section
6. SELLER’S WARRANTIES, REPRESENTATIONS AND COVENANTS


 


		6.1.	Receivables' Warranties.
                                         Representations and Covenants. To induce Buyer to buy Receivables and to render its
                                         services to Seller, and with full knowledge that the truth and accuracy of the following
                                         are being relied upon by the Buyer in determining whether to accept Receivables as Purchased
                                         Receivables, Seller represents, warrants, covenants and agrees, with respect to each
                                         Schedule of Accounts delivered to Buyer and each Receivable described therein, that:



 


		6.1.1.	Seller is the absolute owner
                                         of each Receivable set forth in the Schedule of Accounts and has full legal right to
                                         sell, transfer and assign such Receivables;



 


		6.1.2.	The correct face amount of
                                         each Receivable is as set forth in the Schedule of Accounts and is not in Dispute;



 


		6.1.3.	The payment of each Receivable
                                         is not contingent upon the fulfillment of any obligation or contract, past or future,
                                         and any and all obligations required of the Seller have been fulfilled as of the date
                                         of the Schedule of Accounts;



 


		6.1.4.	Each Receivable set forth
                                         on the Schedule of Accounts is based on the actual sale and delivery of goods and/or
                                         services actually rendered on terms not to exceed seventy-five (75) days, does not represent
                                         a sale to a parent, subsidiary or affiliate of Seller, is presently due and owing to
                                         Seller, is not past due or in default, has not been previously sold, assigned, transferred,
                                         or pledged, is not a consignment sale or bill and hold transaction, and is free, of any
                                         and all liens, security interests and encumbrances other than liens, security interests
                                         or encumbrances in favor of Buyer or any other division of or affiliate of Buyer;



 


		6.1.5.	There are no defenses, offsets,
                                         or counterclaims against any of the Purchased Receivables, and no agreement has been
                                         made under which the Account Debtor may claim any deduction or discount, except as otherwise
                                         stated in the Schedule of Accounts;



 


		6.1.6.	At the time that Buyer makes
                                         an Advance relating to a Receivable, the Account Debtors set forth in the Schedule of
                                         Accounts, are then not insolvent and Seller has no knowledge that the Account Debtors
                                         are insolvent or may become insolvent within the Payment Period;



 


		6.1.7.	Seller shall not take or permit
                                         any action to countermand notification to Account Debtors of Buyer's ownership of Purchased
                                         Receivables.



 


		6.1.8.	Each Receivable shall be set
                                         forth in an invoice or written agreement subject to Buyer’s approval, and all contractual
                                         terms between Seller and the Account Debtor have been fully disclosed to Buyer.



 


		6.1.9.	Seller’s failure to
                                         comply with the warranty in this Section shall result in the imposition of the Invalid
                                         Invoice Fee as liquidated damages as such damages shall be difficult to calculate or
                                         ascertain.



 


		6.2.	Additional Warranties, Representations
                                         and Covenants. In addition to the foregoing warranties, representations and covenants,
                                         to induce Buyer to buy Receivables and to render its services to Seller, Seller hereby
                                         represents, warrants, covenants and agrees that:



 


		6.2.1.	Seller will not assign, transfer,
                                         sell or grant any security interest in any Collateral to any other party, without Buyer's
                                         prior written consent;



 


		6.2.2.	The Seller’s name, form
                                         of organization, place of business and the place where the records concerning all receivables
                                         herein referred to are kept is set forth at the beginning of this Agreement, and Seller
                                         will give Buyer thirty (30) days advance notice in writing if such name, organization,
                                         place of business or record keeping is to be changed or a new place of business or record
                                         keeping is to be added and shall execute any documents necessary to perfect Buyer's interest
                                         in Purchased Receivables and the Collateral;



 


		6.2.3.	Seller shall pay all of its
                                         gross payroll for employees, and all federal and state taxes, as and when due, including,
                                         without limitation, all payroll and withholding taxes and state sales taxes;



 


		6.2.4.	Seller has not, as of the
                                         time Seller delivers to Buyer a Schedule of Accounts, or as of the time Seller accepts
                                         any Advance from Buyer, filed a voluntary petition for relief under the United States
                                         Bankruptcy Code or had filed against it an involuntary petition for relief;



 


		6.2.5.	Seller, if a corporation,
is duly incorporated and, at all times, in good standing under the laws of the State of Delaware and California and is duly qualified
in all States where such qualification is required. Seller has all required licenses to operate its business and transacts business
under no trade names or trade styles other than Monster Digital; SDJ Technologies Inc; SDJ Technologies;
SDJ Tech.



 


		6.2.6.	Seller is duly authorized
                                         to enter into this Agreement and to grant the security interest in the Collateral.



 


		6.2.7.	Seller is now, and at all
                                         times hereafter, the sole and lawful owner of the Collateral, and with the security interest
                                         granted to Buyer, the Collateral shall be free and clear of any claims, liens, encumbrances
                                         or other interests therein.



 


		6.2.8.	All documents, reports, or
                                         other writings submitted to Buyer in connection with this Agreement shall be true and
                                         correct.



 


		6.2.9.	Seller shall provide immediate
                                         access to Buyer to its business premises or any location where any of the Collateral
                                         is stored, in order to inspect the Seller’s business operations, Collateral or
                                         any books, records or computer data which relates to or contains any information concerning
                                         the Collateral.



 




    	 	Page 4 of 11	 



     


    




 


		6.2.10.	There is no fact which Seller has not disclosed to Buyer
in writing which could materially adversely affect the Collateral, or business or financial condition of the Seller, or which are
necessary to disclose in order to keep the foregoing representations from being misleading.



 


		6.2.11.	Seller is not in violation of any federal, state or
local law.



 


		6.2.12.	Seller shall within five (5) business days notify Buyer
in writing of any issue which may materially affect the Collateral or Seller’s business.



 


		6.2.13.	Seller shall not sell any of the Collateral or its assets
outside the ordinary course of its business.



 


		6.2.14.	Any change in control or ownership of Seller shall require
Buyer’s written consent.



 


 Section 7. NOTICE OF ADJUSTMENTS. In the event of a breach of
any of the representations, warranties, or covenants set forth in Section 6, or in the event any Dispute is asserted by any Account
Debtor, Seller shall promptly advise Buyer and shall, subject to the Buyer's approval, resolve such disputes and advise Buyer of
an Adjustment. Until the disputed Purchased Receivable is repurchased by Seller and the full amount of the Purchased Receivable
is paid, Buyer shall remain the absolute owner of any Purchased Receivable which is subject to Adjustment or repurchase under Section
4.1 hereof, and any rejected, returned, or recovered personal property, with the right to take possession thereof at any time.


 


Section 8. SECURITY INTEREST. As security and collateral for
the Obligations, Seller hereby grants Buyer a continuing security interest in, and assigns to Buyer, all of Seller's right, title
and interest in, all now owned and after acquired Accounts, Equipment, Inventory, Financial Assets, Chattel Paper, Electronic Chattel
Paper, Letters of Credit, Letters of Credit Rights, General Intangibles, Investment Property, Deposit Accounts, Documents, Instruments,
Supporting Obligations, Commercial Tort Claims, the Reserve, motor vehicles, all books, records, files and computer data relating
to the foregoing, and all proceeds (including insurance proceeds) of the foregoing (the “Collateral”). Seller hereby
authorizes Buyer to file any document it deems necessary to perfect its security interest in the Collateral, including but not
limited to UCC-1 financing statements and any applicable amendments or continuation statements.


 


Section 9. DEFAULT AND REMEDIES UPON DEFAULT.


 


		9.1.	Events of Default. If any one or more of the following
events shall occur, any such event shall constitute an Event of Default by Seller: (a) Any warranty, representation, statement,
report or certificate made or delivered to Buyer by Seller or any of Seller's officers, members, employees or agents now or hereafter
is incorrect, false, untrue or misleading in any respect whatever; (b) Seller shall fail to perform or comply with or otherwise
shall breach, any other term or condition contained in this Agreement, or any other agreement whether now or hereafter existing
between Buyer and Seller; (c) Seller shall fail to pay or perform any other Obligation when due; (d) A material impairment of the
prospect of payment or performance of the Obligations or a material impairment of the value of the Collateral or any impairment
in the priority of Buyer's security interests; (e) Any event shall arise which may result or actually result in the acceleration
of the maturity of the indebtedness of Seller to others under any loan or other agreement or undertaking now or hereafter existing;
(f) Seller shall fail promptly to perform or comply with any term or condition of any agreement now or hereafter existing with
any third party resulting in an actual or potential material adverse effect on Seller's business; (g) Any levy, assessment, attachment,
seizure, lien or encumbrance for any cause or reason whatsoever, upon all or any part of the Collateral or any other asset of Seller
(unless discharged by payment, release or fully bonded against not more than ten (10) days after such event has occurred); (h)
Dissolution, termination of existence, insolvency or business failure of Seller; or appointment of a receiver, trustee or custodian,
for all or any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by or
against Seller under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, now or hereafter in effect; or entry of a court order which enjoins, restrains or in any way
prevents Seller from conducting all or any part of its business; or failure to pay any foreign, federal, state or local tax or
other debt of Seller; (i) A notice of lien, levy or assessment is filed of record with respect to any of Seller's assets by the
United States or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency,
or if any taxes or debts now or hereafter owing to any one or more of them becomes a lien, whether choate or otherwise, upon all
or any of the Collateral or any other assets of Seller (other than a lien for real property taxes which are not yet due and payable);
(j) Death or insolvency or incompetency of any validity indemnitor of any or all of the Obligations; appointment of a conservator
or guardian of the person of any such validity indemnitor ; appointment of a conservator, guardian; trustee, custodian or receiver
of all or any part of the assets, property or estate of, any such validity indemnitor revocation or termination of, or limitation
of liability upon, any guaranty of any or all of the Obligations; or commencement of proceedings by or against any validity indemnitor
or surety for Seller under any bankruptcy or insolvency law; or the breach by the Guarantor of any Obligation or any other agreement
with Buyer; (k) Seller makes any payment on account of any indebtedness or obligation which has been subordinated to the Obligations
or if any person who has subordinated such indebtedness or obligation terminates or in any way limits his subordination agreement;
(l) Seller shall generally not pay its debts as they become due or shall enter into any agreement (whether written or oral), or
offer to enter into any such agreement, with all or a significant number of its creditors regarding any moratorium or other indulgence
with respect to its debts or the participation of such creditors or their representatives in the supervision, management or control
of the business of Seller; (m) Seller shall conceal, remove or permit to be concealed or removed any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law, or shall make any transfer of its property to or for the benefit of
any creditor at a time when other creditors similarly situated have not been paid; (n) any change in ownership or control of Seller;
or (o) Buyer at any time, acting in good faith and in a commercially reasonable manner, deems itself insecure. Notwithstanding
anything to the contrary, an initial public offering, an opportunity for additional shareholders to purchase equity or issuance
of employee stock options shall not be considered a change in ownership or control for purposes of this Agreement.



 


		 	Remedies. Upon the occurrence of any Event of Default,
and at any time thereafter, Buyer, at its option, and without notice or demand of any kind (all of which are hereby expressly waived
by Seller) may do any one or more of the following: (a) Cease advancing money or extending credit to or for the benefit of Seller
under this Agreement, and any other document or agreement; (b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing
or relating to any Obligation; (c) Take possession of any or all of the Collateral wherever it may be found, and for that purpose
Seller hereby authorizes Buyer without judicial process to enter onto any of the Seller's premises without hindrance to search
for, take possession of, keep, store, or remove any of the Collateral and remain on such premises or cause a custodian to remain
thereon in exclusive control thereof without charge for so long as Buyer deems necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that should Buyer seek to take possession of any or
all of the Collateral by Court process or through a receiver, Seller hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the












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commencement
of any suit, or action to recover possession thereof; and (iii) any requirement that Buyer retain possession of and not dispose,
of any such Collateral until after trial or final judgment; (d) Require Seller to assemble any or all of the Collateral and make
it available to Buyer at a place or places to be designated by Buyer which is reasonably convenient to Buyer and Seller, and to
remove the Collateral to such locations as Buyer may deem advisable; (e) place a receiver in exclusive control of Seller’s
business and/or any or all of the Collateral, in order to assist Buyer in enforcing its rights and remedies; (f) Sell, ship, reclaim,
lease or otherwise dispose of all or any portion of the Collateral in its condition at the time Buyer obtains possession or after
further manufacturing, processing or repair; at any one or more public and/or private sale(s) (including execution sales); in
lots or in bulk; for cash, exchange for other property or on credit; and to adjourn any such sale, from time to time without:
notice other than oral announcement at. the time scheduled for sale. Buyer shall have the right to conduct such disposition on
Seller’s premises without, charge for such time or times as Buyer deems fit, or on Buyer's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Buyer may directly or through any affiliated company purchase or lease
any Collateral at any such public disposition and, if permissible under applicable law, at any private disposition. Any sale'
or other disposition of Collateral shall not relieve Seller of any liability Seller may have if any Collateral is defective as
to title or physical condition at the time of sale; (g) Demand payment of, and collect, any Accounts, Instruments, Chattel Paper,
Supporting Obligations and General Intangibles comprising part or all of the Collateral; or (h) Demand and receive possession
of any of Seller's federal and state income tax returns and the books, records and accounts utilized in the preparation thereof
or referring thereto. Any and all attorneys' fees, expenses, costs, liabilities and obligations incurred by Buyer with respect
to the foregoing shall be added to and become part of the Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.



 


		9.2.	Application of Proceeds.
                                         The proceeds received by Buyer from the disposition of or collection of any of the Collateral
                                         shall be applied to such extent and in such manner as Buyer shall determine, in its sole
                                         discretion. If any deficiency shall arise, Seller shall remain liable to Buyer therefore.
                                         In the event, that., as a result of the disposition of any of the Collateral, Buyer directly
                                         or indirectly enters into a credit, transaction with any third party, Buyer shall have
                                         the option, exercisable, at any time, in its sole discretion, of either reducing the
                                         Obligations by the principal amount of such credit transaction or deferring the reduction
                                         thereof until the actual receipt by Buyer of good funds therefore from such third party.



 


		9.3.	Online Access. Upon an
                                         Event of Default, all of Seller’s rights and access to any online internet services
                                         that Buyer makes available to Seller shall be provisional pending Seller’s curing
                                         of all such Events of Default. During such period of time, Buyer may limit or terminate
                                         Seller’s access to online services. Seller acknowledges that the information Buyer
                                         makes available to Seller through online internet access, both before and after an Event
                                         of Default, constitutes and satisfies any duty to respond to a request for accounting
                                         or request regarding a statement of account that is referenced in the UCC.



 


		9.4.	Standards of Commercial Reasonableness.
                                         Buyer shall use commercial reasonable efforts to collect Accounts provided that there
                                         is no Dispute with respect to the Account which Buyer seeks to collect. Furthermore,
                                         in the event. Buyer undertakes to collect or enforce an obligation of an Account Debtor
                                         or any other person obligated on the Collateral and ascertains that the possibility of
                                         collection is outweighed by the likely costs and expenses that will be incurred, Buyer
                                         may at any such time cease any further collection efforts and such action shall be considered
                                         commercially reasonable. Before Seller may, under any circumstances, seek to hold Buyer
                                         responsible for taking any uncommercially reasonable action, Seller shall first notify
                                         Buyer in writing, of all of the reasons why Seller believes Buyer has acted in any uncommercially
                                         reasonable manner and advise Buyer of the action that Seller believes Buyer should take.



 


		9.5.	Formation of New Entity.
                                         In the event Seller or any one or more of its principals, officers or directors during
                                         the term of this Agreement or while Seller remains liable to Buyer for any of the Obligations,
                                         (i) forms a new entity; or (ii) has failed to disclose to Buyer at the time of the Effective
                                         Date of this Agreement an existing entity, that does business similar to that of Seller,
                                         whether in the form of a corporation, partnership, limited liability company or otherwise,
                                         such entity shall be deemed to have expressly assumed the obligations due Buyer by Seller
                                         under the Agreement. Upon the formation of any such entity, Buyer, in addition to all
                                         of its available remedies, shall be deemed to have been granted an irrevocable power
                                         of attorney with authority to file a new financing statement with the appropriate secretary
                                         of state or UCC filing office naming the newly formed successor business or undisclosed
                                         existing business, as a debtor or new debtor. Buyer shall have the right to notify the
                                         successor entity’s or undisclosed existing entity’s Account Debtors of Buyer’s
                                         security interest, its right to collect all Accounts, and to notify any new secured party
                                         who has sought to obtain a competing security interest of Buyer’s right in such
                                         entity’s assets. Seller shall indemnify Buyer, pursuant to Section 13.3 herein,
                                         from any claims against Buyer which arises out of Buyer exercising any of its rights
                                         hereunder.



 


		9.6.	Remedies
                                         Cumulative. In addition to the rights and remedies set forth in this Agreement, Buyer
                                         shall have all the other rights and remedies accorded a secured party under the UCC and
                                         under any and all other applicable laws and in any other instrument or agreement now
                                         or hereafter entered into between Buyer and Seller and all of such rights and remedies
                                         are cumulative and none is exclusive. Exercise or partial exercise by Buyer of one or
                                         more of its rights of remedies shall not be deemed an election, nor bar Buyer from subsequent
                                         exercise or partial exercise of any other rights or remedies. The failure or delay of
                                         Buyer to exercise any rights or remedies shall not operate as a waiver thereof, but all
                                         rights and remedies shall continue in full force and effect until all of the Obligations
                                         have been fully paid and performed.



  




    	 	Page 6 of 11	 



     


    

 


Section
10. EFFECTIVENESS TERM. This Agreement shall only become effective upon execution and delivery by Seller and acceptance
by Buyer and, unless earlier terminated as provided in this Agreement, shall continue in full force and effect for an initial
term of eighteen (18) months from the Initial Funding Date and shall be deemed automatically renewed for successive twelve (12)
month periods. Unless earlier terminated as provided in this Agreement, all Obligations shall be due and payable in full at the
expiration of the last renewal term. This Agreement may be terminated prior to the end of the Initial Term or any renewal term
(each, a “Term") as follows: (a) Seller may terminate this Agreement at the end of the Term without, payment of an
Early Termination Fee, provided Seller gives at. least thirty (30) days written notice prior to the end of the Initial Term or
any renewal term; (b) Seller may terminate this Agreement at any time after giving Buyer at least thirty (30) days prior written
notice and paying Buyer an Early Termination Fee equal to one half of one percent (0.50) of the Maximum Credit multiplied by the
number of months remaining in the then-current Term (the "Early Termination Fee"). Any partial month remaining in such
Term shall constitute a full month for the purpose of calculating the Early Termination Fee. Any such termination shall be effective
upon payment to Buyer in full of all Obligations, including the Early Termination Fee; and (c) This Agreement shall automatically
terminate following the occurrence of an Event of Default under Section 9. Upon any such termination following an Event of Default,
all Obligations, including the Early Termination Fee, shall in full of all Obligations, including the Early Termination Fee; and
(c) This Agreement shall automatically terminate following the occurrence of an Event of Default, under Section 9. Upon any such
termination following an Event of Default, all Obligations, including the Early Termination Fee, shall be due and payable in full.
In recognition of the Buyer's right to have its attorneys' fees and other expenses incurred in connection with this Agreement
secured by the Collateral, notwithstanding payment in full of all Obligations by Seller, Buyer shall not be required to Record
any terminations or satisfactions of any of Buyer's liens on the Collateral unless and until Seller has executed and delivered
to Buyer a general release in a form acceptable to Buyer. Seller understands that this Section constitutes a waiver of its rights
under Section 9-513 of the UCC.


 


Notwithstanding
the foregoing, any termination of this Agreement shall not affect Buyer's security interest in the Collateral, Buyer's (ownership
of the Purchased Receivables, Buyer’s Indemnity portion of the Obligations, any other rights granted to Buyer or Seller’s
Obligations, and this Agreement shall continue to be effective, and Buyer's rights and remedies hereunder, including rights granted
under this Agreement, the UCC, at law or in equity shall survive such termination, until all Indemnity Obligations, and other
Obligations incurred under this Agreement or in connection herewith have been completed and satisfied in full


 


Section
11. PARTICIPATIONS; ASSIGNMENTS. Seller understands that Buyer may from time to time transfer and assign its right
under this Agreement to one or more assignees. Seller hereby consents to these transfers and assignments by Buyer to one or more
assignees. Seller hereby consents that any such assignee may exercise the rights of the Buyer hereunder. Seller further hereby
consents and acknowledges that any and all defenses, claims or counterclaims that it may have, against the Buyer shall be limited
to, and may only be brought: against Buyer and may not extend to any assignee, including, but not limited to, any claims which
pertain to this Agreement. Seller consents to Buyer releasing any and all information regarding Seller and any guarantors to any
assignee or potential assignee and waives any and all claims pertaining to the release of such information. Seller and Buyer intend
that any and ail direct or indirect assignees of the Buyer of the type set forth above shall be the third party beneficiaries
of this Agreement.


 


Section
12. ONLINE USER STANDARDS.


 


		12.1.	Online Conducting of
                                         Business. Buyer and Seller intend to conduct virtually all of the transactions
                                         contemplated by this Agreement via email and Buyer’s Online Reporting Service.
                                         Buyer is the sole and exclusive owner of the Online Reporting Service. Seller hereby
                                         accepts a non-exclusive, non-transferable right to access the Online Reporting Service,
                                         upon the terms and subject to the conditions contained herein.



 


		12.2.	Standards Regarding Conducting
                                         Business Online. Seller and Buyer agree as follows:



 


		12.2.1.	Buyer shall have the right to
                                         terminate Seller’s access to the Online Reporting Service upon the occurrence
                                         of an Event of Default.



 


		12.2.2.	Seller shall not: (i) copy
                                         the Online Reporting Service nor otherwise reproduce the same other than for normal
                                         system operation backup; (ii) translate, adapt, vary, or modify the Online Reporting
                                         Service; or (iii) disassemble, decompile or reverse engineer the Online Reporting Service.



 


		12.2.3.	Buyer shall not be liable to
                                         Seller for any loss or damage whatsoever or howsoever caused, whether caused by tort
                                          (including negligence), breach of contract, or otherwise arising directly or indirectly
                                         in connection with the use of the Online Reporting Service.



 


		12.2.4.	Buyer expressly excludes liability
                                         for any indirect, special, incidental or consequential loss or damage whether caused
                                         by tort (including negligence), breach of contract or otherwise, which may arise in respect
                                         of the Online Reporting Service, its use, or in respect of equipment or property, or
                                         for loss of profit, business, revenue, goodwill or anticipated savings)



 


		12.2.5.	Seller acknowledges that any
                                         and all of the copyright, trademarks, trade names, patents, trade secrets and other intellectual
                                         property rights subsisting in or used in connection with the Online Reporting Service,
                                         including ail documentation and manuals relating thereto, are, and shall remain, the
                                         sole property of the Buyer. Seller shall not, during or at any time after the expiry
                                         or termination of its use of the Online Reporting Service, in any way question or dispute,
                                         the ownership by Buyer thereof.



 


		12.2.6.	To the extent permitted by
                                         applicable law, Buyer excludes all warranties with respect to the Online Reporting Service,
                                         either express or implied, including, but not limited to, any implied warranties of satisfactory
                                         quality or fitness for any particular purpose.



 


		12.2.7.	Seller
                                         is solely responsible for virus scanning the Online. Reporting Service, and Buyer makes
                                         no representations or warranties regarding any virus associated with the Online. Reporting
                                         Services.



 


		12.2.8.	All information, data, drawings,
                                         specifications, documentation, software listings, source or object code which Buyer may
                                         have imparted and may from time, to time impart to the Seller relating to the Online
                                         Reporting Service is proprietary and confidential. Seller hereby agrees that it shall
                                         use the same solely in accordance, with the provisions of this Agreement and that it
                                         shall not, at any time during or after expiry or termination of this Agreement, disclose
                                         the same, whether directly or indirectly, to any third party.



 


Section
13. GENERAL.


 


		13.1	Notices. Any Written
                                         Notice to be given under this Agreement will be in writing addressed to the respective
                                         party as set forth in the heading to this Agreement and will be personally served, telecopied
                                         or sent by overnight courier service, or United States mail and will be deemed to have
                                         been given: (a) it delivered in person, when delivered; (b) if delivered by telecopy
                                         or e-mail, on the date of transmission if transmitted on a Business Day before 4:00 p.m.
                                         (Pacific Time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight
                                         courier, two (2) days after delivery to such courier properly addressed; or (d) if by
                                         U.S. Mail, four (4) Business Days after depositing in the United States mail, with postage
                                         prepaid and properly addressed. If there is more than one Seller, notice to any shall
                                         constitute notice to all; if Seller is a corporation, partnership or limited liability
                                         company, the service upon any member of the Board of Directors, general partner, managing
                                         member, officer, employee or agent shall constitute service upon Seller.



 


		13.2	Payments in Full Checks.
                                         Seller authorizes Buyer to accept, endorse and deposit on behalf of Seller any checks
                                         tendered by an Account Debtor “in full payment” of its obligation to Seller. Seller
                                         shall not assert against Buyer any claim arising therefrom, irrespective of whether
                                         such action by Buyer affects an accord and satisfaction of Seller's claims, under Section
                                         3-311 of the UCC.



 




    	 	Page 7 of 11	 



     


    

 


		13.3	Indemnity. Seller shall
                                         indemnify and hold Buyer harmless from and against any and all Avoidance Actions, claims,
                                         debts, losses, demands, actions, causes of action, lawsuits, damages, penalties, judgments,
                                         liabilities, costs and expenses (including, without limitation, attorneys’ fees),
                                         of any kind or nature which Buyer may sustain or incur in connection with, or arising
                                         from, this Agreement, any other present or future agreement, or the breach by Seller
                                         of any representation, warranty, covenant or provision contained herein or therein, or
                                         any other transaction contemplated hereby or thereby or relating hereto or thereto, or
                                         any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
                                         done by Buyer relating in any way to Seller. Notwithstanding any other provision of this
                                         Agreement to the contrary, the indemnity agreement set forth in this Section shall survive
                                         termination of this Agreement and if Seller refuses to honor its obligation to indemnity
                                         Buyer, Buyer shall be entitled to all rights and remedies under this Agreement, the UCC,
                                         at law or in equity.



 


		13.4	Attorneys’ Fees and
                                         Costs. Seller shall forthwith pay to Buyer the amount of all actual attorneys’
                                         fees and all filing, recording, publication, search and other costs incurred by Buyer
                                         under and pursuant to this Agreement, or any other present or future agreement, or in
                                         connection with any transaction contemplated hereby or thereby, or with respect to the
                                         Collateral or the defense or enforcement of Buyer’s interests (whether or not Buyer
                                         files a lawsuit against Seller), including, without limitation, charges of auditors,
                                         set-up charges, bank charges, and all office and other expenses and costs. Without limiting
                                         the generality of the foregoing, Seller shall, with respect to each and all of the foregoing,
                                         pay all actual attorneys' fees and costs Buyer incuts in order to: obtain legal advice,
                                         enforce, or seek to enforce, any of its rights; prosecute actions against, or defend
                                         actions by, Account Debtors; commence, intervene in, respond to, or defend any action
                                         or proceeding; initiate any complaint to be relieved of the effect of the automatic stay
                                         in bankruptcy in order to commence or continue any foreclosure or other disposition of
                                         the Collateral or to commence or continue any action or other proceeding against Seller
                                         for relating to the Collateral; file or prosecute a claim or right in any action or
                                         proceeding, including, but not limited to, any probate claim, bankruptcy claim, third-party
                                         claim, secured creditor claim or reclamation complaint, examine, audit, count, test,
                                         copy, or otherwise inspect any of the Collateral or any of Seller’s books and records;
                                         or protect, obtain possession of, lease, dispose of, or otherwise enforce any security
                                         interest in or lien on the Collateral or represent Buyer in any litigation with respect
                                         to Seller’s affairs. In the event Buyer brings any lawsuit against Seller predicated
                                         on a breach of this Agreement, or in any manner relates to this Agreement, Buyer shall
                                         be entitled to recover its costs and attorneys’ fees, including, but not limited to,
                                         attorneys' fees and costs incurred in the enforcement of, execution upon or defense of
                                         any order, decree, award or judgment. All attorneys’ fees and costs to which Buyer may
                                         be entitled pursuant to this Section shall immediately become part of Seller’s Obligations
                                         and shall be due on demand.



 


		13.5	Benefit of Agreement.
                                         The provisions of this Agreement shall be binding upon and inure to the benefit of the
                                         respective successors, assigns, heirs, beneficiaries and representatives of the parties
                                         hereto; provided, however, that Seller may not assign or transfer any of its rights under
                                         this Agreement without the prior written consent of Buyer, and any prohibited assignment
                                         shall be void. No consent by Buyer to any assignment shall relieve Seller or any guarantor
                                         from its liability for the Obligations. Without limiting the generality of the foregoing,
                                         all rights and benefits of Buyer under this Agreement may be exercised by any institution
                                         with which Buyer maintains any rediscount, factoring or other relationship and by any
                                         other person or entity designated by Buyer.



 


		13.6	Joint
                                         and Several Liability. The liability of each Seller shall be joint and several and
                                         the compromise of any claim with, or the release of, any Seller shall not constitute
                                         a compromise, with, or a release of, any other Seller.



 


		13.7	General Waivers. The
                                         failure of Buyer at any time or times hereafter to require Seller strictly to comply
                                         with any of the provisions, warranties, terms or conditions of this Agreement or any
                                         other present or future instrument or agreement between Seller and Buyer shall not waive
                                         or diminish any right of Buyer thereafter to demand and receive strict compliance therewith
                                         and with any other provision warranty, term and condition; and any waiver of any default
                                         shall not waive or affect any other default, whether prior or subsequent thereto and
                                         whether of the same or of a different type. None of the provisions, warranties, terms
                                         or conditions of this Agreement or other instrument or agreement now or hereafter executed
                                         by Seller and delivered to Buyer shall be deemed to have been waived by any act or knowledge
                                         of Buyer or its agents or employees, but only by a specific written waiver signed by
                                         an officer of Buyer and delivered to Seller. Seller waives any and all notices or demands
                                         which Seller might be entitled to receive with respect to this Agreement, or any other
                                         agreement by virtue of any applicable law. Seller hereby waives demand, protest, notice
                                         of protest and notice of default or dishonor, notice of payment and nonpayment, release,
                                         compromise, settlement, extension or renewal of any commercial paper, instrument, Account,
                                         general intangible, document or guaranty at any time held by Buyer on which Seller is
                                         or may in any way be liable, and notice of any action taken by Buyer unless expressly
                                         required by this Agreement. Seller hereby ratifies and confirms whatever Buyer may do
                                         pursuant to this Agreement and agrees that Buyer shall not be liable for the safekeeping
                                         of the Collateral or any loss or damage thereto, or diminution in value thereof, from
                                         any cause whatsoever, any act or omission of any carrier, warehouseman, bailee, forwarding
                                         agent or other person, or any act of commission or any omission by Buyer or its officers,
                                         employees, agents, or attorneys, or any of its or their errors of judgment or mistakes
                                         of fact or of law.



 


		13.8	Electronic
                                         Signature. The parties intend to conduct, the business contemplated by this Agreement
                                         by electronic means. Each document, which is the subject of this Agreement, that a party
                                         has transmitted electronically to the other shall be intended as and constitute an original
                                         and deemed to contain a valid signature of the party for all purposes acknowledging,
                                         consenting to, authorizing and approving the terms of this Agreement or any subject matter
                                         applicable thereto. In furtherance of the above, Seller hereby authorizes Buyer to regard
                                         the Seller’s printed name or electronic approval for any document, agreement, assignment
                                         schedule or invoice as the equivalent of a manual signature by one of the Seller’s
                                         authorized officers or agents. Seller’s failure to promptly deliver to Buyer any
                                         schedule, report, statement or other information required by this Agreement or any document
                                         related thereto shall not affect, diminish, modify or otherwise limit Buyer’s security
                                         interests in the Collateral or rights and remedies under this Agreement. Buyer may rely
                                         upon, and assume the authenticity of, any such approval and material applicable to such
                                         approval as the duly confirmed, authorized and approved signature of Seller by the person
                                         approving same which constitute an Authenticated Record for purposes of the UCC and shall
                                         satisfy the requirements of any applicable statute of frauds.



 


		13.9	Section Headings Construction.
                                         Section headings are used herein for convenience only. Seller acknowledges that the same
                                         may not. describe completely the subject matter of the applicable Section, and the same
                                         shall not be used in any manner to construe, limit, define or interpret any term or provision
                                         hereof. This Agreement has been fully reviewed and negotiated between the parties and
                                         no uncertainty or ambiguity in any term or provision of this Agreement shall be construed
                                         strictly against Buyer or Seller under any rule of construction or otherwise.



 




    	 	Page 8 of 11	 



     


    

 


		13.10	Limitation of Actions.
                                         Seller agrees that any claim or cause of action by Seller against Buyer, its directors,
                                         officers, employees, agents, accountants or attorneys, based upon, arising from, or relating
                                         to this Agreement, or any other present or future agreement, or any other transaction
                                         contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause
                                         or thing whatsoever, occurred, done, omitted or suffered to be done by Buyer, its directors,
                                         officers, employees, agents, accountants, or attorneys, relating in any way to Seller,
                                         shall be barred unless asserted by Seller by the commencement of an action or proceeding
                                         in a court of competent jurisdiction by the filing of a complaint within six (6) months
                                         after the first, act, occurrence or omission upon which such claim or cause of action,
                                         or any part thereof, is based, and the service of a summons and complaint on an officer
                                         of Buyer, or on any other person authorized to accept service on behalf of Buyer, within
                                         thirty (30) days thereafter. Seller agrees that such six-month period provided herein
                                         shall not be waived, tolled, or extended except by the written consent of Buyer, in its
                                         sole and absolute discretion. This provision shall survive any termination, however arising,
                                         of this Agreement and any other present or future agreement.



 


		13.11	Severability. Should
                                         any provision, clause or condition of this Agreement be held by any court of competent
                                         jurisdiction to be void, invalid, inoperative, or otherwise unenforceable, such defect
                                         shall not affect any other provision, clause or condition, and the remainder of this
                                         Agreement shall be effective as though such defective provision, clause or condition
                                         had not been a part hereof.



 


		13.12	Integration. This Agreement
                                         and such other written agreements, documents and instruments as may be executed in connection
                                         herewith shall be construed together and constitute the entire, only and complete agreement
                                         between Seller and Buyer, and all representations, warranties, agreements, and undertakings
                                         heretofore or contemporaneously made, which are not set forth herein or therein, are
                                         superseded hereby.



 


		13.13	Amendment. The terms
                                         and provisions of this Agreement may not be waived, altered, modified or amended except
                                         in a writing executed by Seller and a duly authorized officer of Buyer.



 


		13.14	Time of Essence. Time
                                         is of the essence in the performance by Seller of each and every obligation under this
                                         Agreement.



 


		13.15	Governing Laws jurisdiction:
                                         Venue. This Agreement and all acts and transactions hereunder and thereunder and
                                         all rights and obligations of buyer and Seller shall be governed, construed and interpreted
                                         in accordance with the internal laws of the State of California. Seller: (i) agrees that,
                                         all actions or proceedings relating directly or indirectly this Agreement or any of the
                                         Obligations shall, at the sole option of Buyer, be litigated in courts located within
                                         said state, and that, at the sole option of Buyer, the exclusive venue therefore shall
                                         be Santa Clara County, California; (ii) consents to the jurisdiction and venue of any
                                         such court and consents to service of process in any such action or proceeding by personal
                                         delivery or any other method permitted by law; and (iii) waives any and all rights Seller
                                         may have to object to the jurisdiction of any such court, or to transfer or change the
                                         venue of any such action or proceeding.



 


		13.16	Waiver of Right to any Trial/
                                         Judicial Reference/ Arbitration.



 


		13.16.1  	Jury Waiver.
                                         To the fullest extent permitted by applicable law, Buyer and Seller each hereby irrevocably
                                         and expressly waive all right to a trial by jury in any action, proceeding, or cross-complaint
                                         (whether based upon contract, tort, or otherwise) arising out of or relating to this
                                         Agreement, the obligations or any of the transactions contemplated hereby or thereby
                                         or the parties’ actions in the negotiation, administration, or enforcement hereof or
                                         thereof. Buyer and Seller each acknowledges that such waiver is made with full knowledge
                                         and understanding of the nature of the rights and benefits waived hereby, and with the
                                         benefit of advice of counsel of its choosing.



 


		13.16.2  	Judicial Reference.
                                         Buyer and Seller each prefer that any dispute between them be resolved in litigation
                                         subject to the jury trial waiver set forth herein, but the California Supreme Court has
                                         held that such pre-dispute jury trial waivers are unenforceable. This section will be
                                         applicable until: (a) the California Supreme Court holds that a pre-dispute jury trail
                                         waiver provision similar to that contained herein is valid or enforceable; or (b) the
                                         California legislature passes legislation and the governor of the State of California
                                         signs into law a statute authorizing pre-dispute jury trial waivers and as a result such
                                         waivers become enforceable.



 


Accordingly,
Buyer and Seller each knowingly and voluntarily agree that any civil action or proceeding involving a dispute arising out of or
relating to this Agreement, shall be tried solely through a judicial reference as provided in sections 638 through 645.2 of the
California Code of Civil Procedure ("CCP") and as described herein (the “Judicial Reference”). Buyer and
Seller further realize that by agreeing to Judicial Reference as provided in CCP sections 638 through 645.2, the parties will
have waived their rights to trial by jury.


 


Buyer
and Seller each further agree that the referee shall be a retired Judge or justice selected by mutual written agreement of the
parties. If the parties do not agree, the referee shall be selected by the Trial Court. Buyer and Seller further agree that the
filing of any law and motion hearings or the initiation of any hearings to obtain any form of a pre-judgment remedy shall not
operate as a waiver of the parties’ right to trial solely through a Judicial Reference.


 


A
request for appointment of a referee may be heard on an ex parte or expedited basis, and Buyer and Seller agree that irreparable
harm would result if ex parte relief is not granted. The referee shall be appointed to sit with all the powers provided by law.
The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State
of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well as legal relief, provide all temporary or provisional remedies,
enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a trial, including
without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision pursuant to CCP
section 644 and the referee's decision shall be entered by the Court as a judgment or an order in the same manner as if the action
had been tried by the Court. The final judgment or order entered by the referee shall be fully appealable as provided by law.
Buyer and Seller reserve the right to receive findings of fact, conclusions of laws, a written statement of decision, and the
right to move for a new trial, which new trial, if granted, is also to be a reference proceeding under this provision.


 


		13.16.3	Arbitration. Although
                                         Buyer and Seller each prefer that any dispute between them be resolved solely through
                                         a bench trial or the Judicial Reference as set forth in this section, the California
                                         Supreme Court has held that a trial court may refuse to enforce a Judicial Reference
                                         agreement, and deny a motion for appointment of a referee under CCP section 638, where
                                         there is a possibility of conflicting rulings on a common issue of law or fact, or based
                                         on considerations of judicial economy specifically, the duplication of efforts, increased
                                         costs, potential delays in resolution, and an unmitigated burden on the Superior Court.



 




    	 	Page 9 of 11	 



     


    

 


Accordingly,
if the trial court refuses to enforce the appointment of a judicial referee (and no successor statute is enacted) Buyer and Seller
knowingly and voluntarily agree to submit and settle any dispute, controversy or claim arising out of relating to this Agreement
to arbitration. This Agreement to submit to arbitration is presently effective but shall be enforced only in the event that the
Jury Waiver and the Judicial Reference provision as set forth above and as provided in CCP sections 638 through 645.1, is held
unenforceable. The arbitration shall be conducted in Santa Clara, County, in the State of California and administered by a retired
Judge or Justice selected by mutual written agreement of the parties who shall be governed by the same procedure as if the parties
were proceeding by the above Judicial Reference procedure. Buyer and Seller further agree that the filing of any law and motion
hearings or the initiation of any hearings to obtain any form of a pre-judgment remedy shall not operate as a waiver of the parties’
right to submit and settle any dispute, controversy or claim arising out of relating to this Agreement to arbitration.


 


The
arbitration procedure shall be governed by the substantive and procedural laws of the State of California, including all aspects
of its arbitration law pursuant to the California Arbitration Act (“CAA”), sections 1280 through 1294.2 of the Code
of Civil Procedure as amended from time to time. If a conflict exists between the provisions of the CAA and this Agreement, the
language of this Agreement shall control. Buyer and Seller shall have all rights of discovery and remedies as they would in a
California civil action pursuant to CCP section 1283.05, and the arbitration shall be governed by all of the applicable rules
set forth in the Civil Discovery Act, CCP sections 2016.010 through 2036.050. All rules of evidence applicable to proceedings
at law in the State of California will be applicable to the arbitration proceeding and the arbitrator is at all times required
to strictly conform to these rules. The arbitrator shall prepare in writing and provide to the parties an award including factual
findings explaining the reasons on which their decision is based.


 


The
arbitrator shall not have the power to commit (a) errors of law or legal reasoning, (b) errors of fact, or (c) errors with regards
to mixed questions of law and fact. In addition, the arbitrator shall not reach factual conclusions unsupported by substantial
evidence. Furthermore, the arbitrator shall not have the power to render an award (a) not based on proper admissible evidence,
(b) based on evidence not presented at the hearing, or (c) not in conformity with the substantive and procedural law of the State
of California.


 


In
any arbitration arising out of or related to this Agreement, the arbitrator is not empowered to award punitive or exemplary damages,
except where permitted by statute, and Buyer and Seller waive any right to recover any such damages.


 


If
the arbitrator exceeds any of the foregoing specific powers, the award may be vacated or corrected by filing a petition pursuant
to the CAA in the time frame provided in CCP sections 1280 through 1294.2 in the Superior Court for the County of Los Angeles,
in the State, of California. The award is subject to review for legal error, factual error, confirmation, correction or vacatur
only in a California State Court of competent jurisdiction and only pursuant to the CAA.


 


In
reviewing the award, the Superior Court shall sit as if it were an Appellate Court, in all respects, including but not limited
to the scope of review. The decision of the Superior Court is, itself, subject to review by the California Appellate Courts. The
supervising Court shall have the power to review (a) whether the findings of fact rendered by the arbitrators are supported by
substantial evidence and (b) whether, as a matter of law based on such findings of fact the award should be confirmed, corrected
or vacated. Upon such determination, judgment shall be entered in favor of either party consistent therewith.


 


If
any portion of this arbitration provision is held invalid or unenforceable, the remainder shall still be valid and enforceable
and the arbitrator and/or supervising Court as applicable shall have the power to amend the arbitration procedures set forth herein
so that this Agreement shall remain enforceable and binding.


 


Buyer
and Seller each acknowledge that the judicial referee or arbitrator will charge fees and costs to conduct the Judicial Reference
or arbitration. Buyer and Seller each agree to initially divide equally all Judicial Reference or arbitration fees and the compensation
of the judicial referee or arbitrator. Notwithstanding the foregoing, the parties each further acknowledge that the judicial
referee or arbitrator may decide that one party or the other is the prevailing party in which event the non-prevailing party will
be obligated to reimburse the prevailing party for all of the fees and costs imposed in connection with the Judicial Reference
or the arbitration.


 


THE
REST OF THIS PAGE IS INTENTIONALLY BLANK


 


SIGNATURE
PAGE FOLLOWS


 




    	 	Page 10 of 11	 



     


    

 





IN WITNESS
WHEREOF, Seller has executed and delivered this Agreement for acceptance by Buyer as of the day and year above written. If this
Agreement is not witnessed by an authorized employee of Buyer, Seller must have their signature acknowledged by a Notary Public.


 





	SELLER	 
	 	 
	SDJ TECHNOLOGIES, INC.	 
	 	 	 
	By:	/s/ Jawahar
    Lal     Tandon	 



 


	Name/Title:	JAWAHAR
    LAL TANDON, CEO	 



 


	Signer's Driver's License No.	A0800643	 







 





	BUYER	 
	 	 
	CSNK WORKING CAPITAL FINANCE CORP. D/B/A BAY VIEW FUNDING
	 	 	 
	By:	/s/ [ILLEGIBLE]	 
	 	 	 
	Title:	Executive Vice President	 
	 	 	 
	Date:	6/08/15	 







 


NOTARY
ACKNOWLEDGMENT


 





A notary public or other officer
completing this certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.


 





	State
    of	California	)
	 	 	)
	County of	Ventura	)







 


On June 5, 2015 before me,
Jessica Danai, Notary public personally appeared


Date                                 Print
Name of Notary







 


 


JAWAHAR
LAL TANDON, CEO


Name
and Title of  signer


 


who
proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity
upon behalf of  which the person acted, executed the instrument.


 


I
certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.


 


WITNESS my hand and official seal


 


	Signature 	/s/
    Jessica Danai	(Seal) 	
	 	 	 	 
	 	 	 	 


 



    	 	Page 11 of 11