exv10w06






Exhibit 10.06




AMENDED AND RESTATED




LOAN AND SECURITY AGREEMENT




     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the
Effective Date between SILICON VALLEY BANK, a California corporation (“Bank”), and each of Glu
Mobile Inc., a Delaware corporation (“Glu Mobile”), Glu Games Inc., a Delaware
corporation (“Glu Games”), and Superscape inc., a Delaware corporation (“Superscape”,
together with Glu Mobile and Glu Games, each a “Borrower” and collectively, jointly and severally,
“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank.


WHEREAS, Bank and Borrower have entered into that certain Loan and Security Agreement dated as of
February 14, 2007 (as amended to date, the “Original Agreement”) pursuant to which the Bank has
agreed to extend and make available to Borrower certain advances of money;



WHEREAS, the parties hereto desire to amend, restate and modify, but not extinguish, the Original
Agreement in its entirety as hereinafter set forth;



NOW THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to
amend and restate the Original Agreement as follows:




     1 ACCOUNTING AND OTHER TERMS



     Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.



     2 LOAN AND TERMS OF PAYMENT



     2.1 Promise to Pay. Each Borrower hereby, jointly and severally, unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest
thereon as and when due in accordance with this Agreement.



     2.1.1 Revolving Advances.



          (a) Availability. Subject to the terms and conditions of this Agreement and to
deduction of Reserves, Bank shall make Advances not exceeding the Availability Amount. Amounts
borrowed hereunder may be repaid and, prior to the Revolving Line Maturity Date, reborrowed,
subject to the applicable terms and conditions precedent herein.




          (b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all
other Obligations relating to the Revolving Line shall be immediately due and payable.




     2.1.2 Letters of Credit Sublimit.



          (a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit for
Borrower’s account. Such aggregate amounts utilized hereunder shall at all times reduce the amount
otherwise available for Advances under the Revolving Line. The face amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may
not exceed Five Million Dollars ($5,000,000). The aggregate amount available to be used for the
issuance of Letters of Credit may not exceed (i)  the lesser of (A) the Revolving Line or (B) the
Borrowing Base, minus (ii) the outstanding principal amount of any Advances (including any amounts
used for Cash Management Services and the face amount of any outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) and minus
(iii) the FX Reserve. If, on the Revolving Line Maturity Date, there are any outstanding Letters
of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to
105% of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by




 









 




Bank in its good faith business judgment), to secure all of the Obligations relating to said
Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank’s standard Application and
Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees to execute any
further documentation in connection with the Letters of Credit as Bank may reasonably request.
Borrower further agrees to be bound by the regulations and interpretations of the issuer of any
Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations
of any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees
that Bank shall not be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.




          (b) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters
of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit
Application.




          (c) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If
a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an
Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.




          (d) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter
of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit
Reserve”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount of
such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from
time to time to account for fluctuations in the exchange rate. The availability of funds under the
Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such
Letter of Credit remains outstanding.




     2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into
foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date (the
“Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to $500,000 (the “FX Reserve”).
The aggregate amount of FX Forward Contracts at any one time may not exceed ten (10) times the
amount of the FX Reserve. The amount otherwise available for Credit Extensions under the Revolving
Line shall be reduced by an amount equal to ten percent (10%) of each outstanding FX Forward
Contract (the “FX Reduction Amount”).  Any amounts needed to fully reimburse Bank will be treated
as Advances under the Revolving Line and will accrue interest at the interest rate applicable to
Advances.



     2.1.4 Cash Management Services Sublimit. Borrower may use up to Five Million Dollars
($5,000,000) of the Revolving Line for Bank’s cash management services which may include merchant
services, direct deposit of payroll, business credit card, and check cashing services identified in
Bank’s various cash management services agreements (collectively, the “Cash Management Services”).
Any amounts Bank pays on behalf of Borrower for any Cash Management Services will be treated as
Advances under the Revolving Line and will accrue interest at the interest rate applicable to
Advances.



     2.2 Overadvances If, at any time, the sum of (a) the outstanding principal amount of any
Advances (including any amounts used for Cash Management Services), plus (b) the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve), plus (c) the FX Reduction Amount exceeds the lesser of either the Revolving Line
or the Borrowing Base (such sum being an “Overadvance”), Borrower shall immediately pay to Bank in
cash such Overadvance. Without limiting Borrower’s obligation to repay Bank any amount of the
Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.



     2.3 Payment of Interest on the Credit Extensions.



          (a) Interest Rate; Advances. Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at the greater of (a) the Prime Rate,
floating, plus one percent (1%), or (b) five percent (5%), which interest shall be payable monthly.




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          (b) Default Rate. Immediately upon the occurrence and during the continuance of an
Event of Default, Obligations shall bear interest at a rate per annum which is five percentage
points above the rate that is otherwise applicable thereto (the “Default Rate”). Payment or
acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank.




          (c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension
based on changes to the Prime Rate shall be effective on the effective date of any change to the
Prime Rate and to the extent of any such change.




          (d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed.




          (e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including
the Designated Deposit Account, for principal and interest payments or any other amounts Borrower
owes Bank when due. These debits shall not constitute a set-off.




          (f) Payment; Interest Computation; Float Charge. Interest is payable monthly on the
last calendar day of each month. In computing interest on the Obligations, all Payments received
after 12:00 p.m. Pacific time on any day shall be deemed received on the next Business Day. Bank
shall not, however, be required to credit Borrower’s account for the amount of any item of payment
which is unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrower’s
Designated Deposit Account for the amount of any item of payment which is returned to Bank unpaid.




     2.4 Fees. Borrower shall pay to Bank:



          (a) Commitment Fee. A fully earned, non-refundable commitment fee of $55,000 (or
0.6875% of the Commitment) per annum, payable on the Effective Date and again on the first
anniversary thereof, which fee is fully earned and non-refundable in its entirety on the Effective
Date;




          (b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or
renewal of Letters of Credit , including, without limitation, a Letter of Credit Fee of one
percentage point (1.00%) per annum of the face amount of each Letter of Credit issued, upon the
issuance, each anniversary of the issuance, and the renewal of such Letter of Credit by Bank;




          (c) Termination Fee. Subject to the terms of Section 12.1, a termination fee;




          (d) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), payable monthly, in arrears, on a calendar year basis, in an amount equal to 0.35% per annum
of the average unused portion of the Revolving Line, as determined by Bank. The unused portion of
the Revolving Line, for the purposes of this calculation, shall include amounts reserved under the
Cash Management Services Sublimit for products provided and under the Foreign Exchange Sublimit for
FX Forward Contracts. Borrower shall not be entitled to any credit, rebate or repayment of any
Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section
notwithstanding any termination of the Agreement, or suspension or termination of Bank’s obligation
to make loans and advances hereunder; and




          (f) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses, plus expenses, for documentation and negotiation of this Agreement) incurred through and
after the Effective Date, when due.




     3 CONDITIONS OF LOANS



     3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial
Credit Extension is subject to the condition precedent that Borrower shall consent to or have
delivered, in form and substance satisfactory to Bank, such documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:



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          (a) duly executed original signatures to (i) this Agreement executed by Bank and Borrower,
(ii) the Pledge Agreement, and (iii) the other fully executed Loan Documents to which it is a
party;




          (b) the certificates representing the shares of Capital Stock pledged pursuant to the Pledge
Agreement, together with an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof;




          (c) duly executed original signatures to the Control Agreements;




          (d) its Operating Documents and a good standing certificate of Borrower certified by the
Secretary of State of the State of Delaware as of a date no earlier than thirty (30) days prior to
the Effective Date;




          (e) duly executed original signatures to the completed Borrowing Resolutions for Borrower;




          (f) evidence satisfactory to Bank that Glu Mobile has entered into definitive agreements and
all relevant documentation for the restructuring of the remaining payments owed by Glu Mobile to
each of Wang Xin, an individual, Wang Bin, an individual, and the former shareholders of Awaken
Limited, a business company with limited liability incorporated under the laws of the British
Virgin Islands (together, the “MIG Shareholders”) pursuant to the Agreement and Plan of Merger (the
“Merger Agreement”) dated November 28, 2007 among Borrower, Maverick Acquisition Corp., a business
company incorporated under the laws of the British Virgin Islands, Awaken Limited, Awaken (Beijing)
Communications Technology Co. Ltd., a wholly foreign-owned enterprise organized under the laws of
the PRC, Beijing Zhangzhong MIG Information Technology Co. Ltd., a domestic limited liability
company organized under the laws of the PRC, Beijing Qinwang Technology Co. Ltd., a domestic
limited liability company organized under the laws of the PRC, each of Wang Bin, Wang Xin and You
Yanli, and Wang Xin, as the representative of (and on behalf of each of) the MIG Shareholders.




          (g) the Subordination Agreement duly executed by or on behalf of the MIG Shareholders in
favor of Bank;




          (h) certified copies, dated as of a recent date, of financing statement searches, as Bank
shall request, accompanied by written evidence (including any UCC termination statements) that the
Liens indicated in any such financing statements either constitute Permitted Liens or have been or,
in connection with the initial Advance, will be terminated or released;




          (i) each document (including Uniform Commercial Code financing statement) required by the
Pledge Agreement, the Guaranty and Pledge Agreement, or under law or reasonably requested by Bank
to be filed, registered or recorded in order to create in favor of Bank, for the benefit of the
Secured Parties, a perfected Lien on the Collateral described therein, prior to and superior in
right to any other Person (other than with respect to Permitted Liens) shall be in the proper form
for filing, registration or recordation;




          (j) the Perfection Certificate(s) executed by Borrower;




          (k) evidence satisfactory to Bank that the insurance policies required by Section 6.7 hereof
are in full force and effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of Bank;




          (l) the completion of the Initial Audit with results satisfactory to Bank in its sole and
absolute discretion;




          (m) all documentation and other information required by governmental authorities under
applicable “know your customer” and anti-money-laundering rules and regulations, including the
Patriot Act;




          (n) annual consolidating financial projections for each of fiscal years 2009 and 2010,
satisfactory to Bank, together with any related business forecasts used in the preparation thereof;
and




          (o) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof.




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     3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit
Extension, including the initial Credit Extension, is subject to the following:



          (a) except as otherwise provided in Section 3.4, timely receipt of an executed Transaction
Report, executed by a Responsible Officer;




          (b) the representations and warranties in Section 5 shall be true in all material respects on
the date of the Transaction Report and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof; and provided,
further that those representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no Default or Event of
Default shall have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the representations and
warranties in Section 5 remain true in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already
are qualified or modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be true, accurate and
complete in all material respects as of such date; and




          (c) in Bank’s sole discretion, there has not been a Material Adverse Change.




     3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be
delivered to Bank under this Agreement as a condition to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not
constitute a waiver by Bank of Borrower’s obligation to deliver such item, and any such Credit
Extension in the absence of a required item shall be made in Bank’s sole discretion.



     3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other applicable
conditions to the making of an Advance set forth in this Agreement, to obtain an Advance (other
than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding
Date of the Advance. Together with such notification, Borrower must promptly deliver to Bank by
electronic mail or facsimile a completed Transaction Report executed by a Responsible Officer or
his or her designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make
Advances under this Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet Obligations which have
become due. Bank may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee.



     4 CREATION OF SECURITY INTEREST



     4.1 Grant of Security Interest.



          (a) Borrower hereby grants Bank, to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower represents, warrants, and covenants that the security interest granted herein is and
shall at all times continue to be a first priority perfected security interest in the Collateral
(subject only to Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank
in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to Bank.




          (b) If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment
in full in cash of such Obligations and at such time as Bank’s obligation to make Credit Extensions
has terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in the
Collateral and all rights therein shall revert to Borrower.




     4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file
financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or
protect Bank’s interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person,



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shall be deemed to violate the rights of Bank under the Code. Such financing statements may
indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an
equal or lesser scope, or with greater detail, all in Bank’s discretion.




     5 REPRESENTATIONS AND WARRANTIES



          Borrower represents and warrants as follows:




     5.1 Due Organization, Authorization; Power and Authority.



          (a) Borrower is duly existing and in good standing as a Registered Organization in its
jurisdiction of formation and is qualified and licensed to do business and is in good standing in
any jurisdiction in which the conduct of its business or its ownership of property requires that it
be qualified except where the failure to do so could not reasonably be expected to have a material
adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower
represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the
type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office as well as
Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its jurisdiction; and
(f) all other information set forth on the Perfection Certificate pertaining to Borrower and each
of its Subsidiaries is accurate and complete as of the Effective Date (it being understood and
agreed that Borrower shall from time to time update certain information in the Perfection
Certificate after the Effective Date to the extent permitted by one or more specific provisions in
this Agreement and that any updated information in the Perfection Certificate pertaining to
Borrower and each of its Subsidiaries is accurate and complete as of the date provided). If
Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify
Bank of such occurrence and provide Bank with Borrower’s organizational identification number.




          (b) The execution, delivery and performance of the Loan Documents have been duly authorized,
and do not conflict with Borrower’s organizational documents, nor constitute an event of default
under any material agreement by which Borrower is bound. Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default could reasonably be
expected to have a material adverse effect on Borrower’s business.




     5.2 Collateral.



          (a) Except as otherwise provided in the Perfection Certificate, Borrower has good title to,
has rights in, and the power to transfer each item of the Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has
no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any,
described in the Perfection Certificate delivered to Bank in connection herewith, or of which
Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected
security interest therein. The Accounts are bona fide, existing obligations of the Account
Debtors.




          (b) The Collateral is not in the possession of any third party bailee (such as a warehouse)
except as otherwise provided in the Perfection Certificate. None of the components of the
Collateral shall be maintained at locations other than as provided in the Perfection Certificate or
as permitted pursuant to Section 7.2. In the event that Borrower, after the date hereof, intends
to store or otherwise deliver any portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Bank and such bailee must execute and deliver a bailee agreement in
form and substance satisfactory to Bank in its sole discretion.




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




          (d) Borrower and its Subsidiaries own, or possess the right to use, all of Intellectual
Property that is reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any




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other Person, except for such Intellectual Property for which the failure to own or possess
the right to use could not reasonably be expected to result in a Material Adverse Change. To the
best of Borrower’s knowledge, none of such Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of such Intellectual
Property created or owned by Borrower violates the rights of any third party.




     5.3 Accounts Receivable.



          (a) For each Account with respect to which Advances are requested, on the date each Advance is
requested and made, such Account shall be an Eligible Account.




          (b) All statements made and all unpaid balances appearing in all invoices, instruments and
other documents evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents, and all of Borrower’s Books are genuine and in all respects what
they purport to be. Whether or not an Event of Default has occurred and is continuing, Bank may
notify any Account Debtor owing Borrower money of Bank’s security interest in such funds and verify
the amount of such Eligible Account. All sales and other transactions underlying or giving rise to
each Eligible Account shall comply in all material respects with all applicable laws and
governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Transaction Report.
To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments,
and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments
and agreements are legally enforceable in accordance with their terms.




     5.4 Litigation. As of the date hereof, except as described in the Perfection Certificate,
there are no actions or proceedings pending or, to the knowledge of the Responsible Officers,
threatened in writing by or against Borrower or any of its Subsidiaries involving more than Five
Hundred Thousand Dollars ($500,000).



     5.5 No Material Deviation in Financial Statements. All consolidated financial statements for
Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects
Borrower’s consolidated financial condition and Borrower’s consolidated results of operations.
There has not been any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.



     5.6 Solvency. Borrower is able to pay its debts (including trade debts) as they mature.



     5.7 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not
engaged as one of its important activities in extending credit for margin stock (under Regulations
X, T and U of the Federal Reserve Board of Governors). Borrower has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries
is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a
“holding company” as each term is defined and used in the Public Utility Holding Company Act of
2005. Borrower has not violated any laws, ordinances or rules, the violation of which could
reasonably be expected to have a material adverse effect on its business. None of Borrower’s or
any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to
the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating,
or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries
have obtained all consents, approvals and authorizations of, made all declarations or filings with,
and given all notices to, all Government Authorities that are necessary to continue their
respective businesses as currently conducted.



     5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.



     5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in
writing of the commencement of, and any material development in, the proceedings, and (c) posts
bonds or takes any other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result



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in additional taxes becoming due and payable by Borrower. Borrower has
paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance with their
terms, and Borrower has not withdrawn from participation in, and has not permitted partial or
complete termination of, or permitted the occurrence of any other event with respect to, any such
plan which could reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.




     5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as
working capital and to fund its general business requirements and not for personal, family,
household or agricultural purposes.



     5.11 Designation of Indebtedness under this Agreement as Senior Indebtedness. All principal
of, interest (including all interest accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such
proceeding), and all fees, costs, expenses and other amounts accrued or due under this Agreement
shall constitute ‘Designated Senior Indebtedness’ (if applicable) under the terms of any indenture
to which it is a party relating to any Subordinated Debt.



     5.12 Full Disclosure. No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank, as of the date such representation, warranty,
or other statement was made, taken together with all such written certificates and written
statements given to Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not viewed as facts and that actual results
during the period or periods covered by such projections and forecasts may differ from the
projected or forecasted results).



     6 AFFIRMATIVE COVENANTS



     Borrower shall do all of the following:



     6.1 Government Compliance. Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower’s business.



     6.2 Financial Statements, Reports, Certificates.



          (a) Borrower shall provide Bank with the following:





          (i) within twenty (20) days after the end of each month, (A) monthly accounts
receivable agings, aged by invoice date, (B) monthly accounts payable agings, aged by
invoice date, and outstanding or held check registers, if any, (C) monthly reconciliations
of accounts receivable agings, aged by invoice date, transaction reports and general
ledger, and (D) Transaction Report, signed by a Responsible Officer or his or her designee,
and a Deferred Revenue report;




          (ii) as soon as available, and in any event within thirty (30) days after the end of
each month, monthly unaudited consolidating financial statements together with a Compliance
Certificate;




          (iii) (A) as soon as available, within five (5) days after filing, but in no event
later than 50 days after the end of each fiscal quarter and 95 days after each fiscal year
end (subject to any extensions pursuant to Rule 12b-25), all reports on Form 10-K, 10-Q and
8-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or
another website on the Internet; (B) a Compliance Certificate together with delivery of the
10-K and 10-Q reports; (C) within forty-five (45) days after the end of each fiscal year,
annual projections for the following fiscal year (on a quarterly basis) as approved by
Borrower’s board of directors, together with any related business forecasts used in the
preparation of such annual financial projections; (D) prompt report of any legal action
pending or threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of $200,000 or more; and (E) budgets, sales
projections, operating plans or other financial information, in each case as Bank
reasonably requests;



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          (iv) Allow Bank to audit Borrower’s Collateral at Borrower’s expense, such audits to
be conducted prior to the Initial Advance and no more than two times per year thereafter or
as conditions may warrant;




          (v) a monthly Compliance Certificate signed by a Responsible Officer, certifying that
as of the end of such month, Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance with the
financial covenants set forth in this Agreement and such other information as Bank shall
reasonably request, including, without limitation, a statement that at the end of such
month there were no held checks; and




          (vi) Prompt written notice of (x) the registration of any Copyright (including any
subsequent ownership right of Borrower in or to any Copyright) Patent or Trademark not
previously disclosed to the Bank, or (y) Borrower’s knowledge of an event that materially
adversely affects the value of the Intellectual Property.



          (b) During any period in which amounts are outstanding under the Revolving Line, Borrower
shall provide Bank weekly and with each Advance request, a transaction report with respect to
sales, credit memoranda and other adjustments to the value of Accounts, on Bank’s standard form




     6.3 Accounts Receivable.



          (a) Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank
transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard
forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect
or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein.
If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on
its request, the originals of all instruments, chattel paper, security agreements, guarantees and
other documents and property evidencing or securing any Accounts, in the same form as received,
with all necessary endorsements, and copies of all credit memos.




          (b) Disputes. Borrower shall promptly notify Bank of all disputes or claims relating
to Accounts if such disputes or claims are in excess of Fifty Thousand Dollars ($50,000). Borrower
may forgive (completely or partially), compromise, or settle any Account for less than payment in
full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions,
and reports the same to Bank in the regular reports provided to Bank; (ii) no Default or Event of
Default has occurred and is continuing; and (iii) after taking into account all such discounts,
settlements and forgiveness, the total outstanding Advances will not exceed the Availability
Amount.




          (c) Collection of Accounts. Borrower shall have the right to collect all Accounts,
unless and until a Default or an Event of Default has occurred and is continuing. During any
period in which amounts are outstanding under the Revolving Line, Borrower shall establish a
lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account
agreement in such form as Bank may specify in its good faith business judgment, into which all
proceeds of Accounts shall be deposited by Borrower. All payments and proceeds received by Bank
shall be applied on a daily basis to the Obligations pursuant to the terms of Section 9.4 hereof.
Whether or not an Event of Default has occurred and is continuing, if and to the extent that a
lockbox is required under this Section 6.3(c), Borrower shall hold all payments on, and proceeds
of, Accounts in trust for Bank and Borrower shall immediately deliver all such payments and
proceeds to Bank in their original form, duly endorsed.




          (d) Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount,
and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event
any attempted return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank
of the return of the Inventory.




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          (e) Verification. Bank may, from time to time, verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts, either in the name
of Borrower or Bank or such other name as Bank may choose.




          (f) No Liability. Bank shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of
which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any Account, or for settling
any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement giving rise to an
Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.




     6.4 Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind,
all proceeds arising from the disposition of any Collateral to Bank in the original form in which
received by Borrower not later than the following Business Day after receipt by Borrower, to be
applied to the Obligations pursuant to the terms of Section 9.4 hereof; provided that, if no
Default or Event of Default has occurred and is continuing, Borrower shall not be obligated to
remit to Bank the proceeds of the sale of unneeded, worn out or obsolete Equipment disposed of by
Borrower in good faith in an arm’s length transaction for an aggregate purchase price of $50,000 or
less (for all such transactions in any fiscal year). Except for the proceeds identified in the
immediately preceding sentence, Borrower agrees that it will not commingle proceeds of Collateral
with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from
such other funds and property and in an express trust for Bank. Nothing in this Section limits the
restrictions on disposition of Collateral set forth elsewhere in this Agreement.



     6.5 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all
required tax returns and reports and timely pay, and require each of its Subsidiaries to timely
file, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by
Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant
to the terms of Section 5.10 hereof, and shall deliver to Bank, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms.



     6.6 Access to Collateral; Books and Records. At reasonable times, on one (1) Business Day’s
notice (provided no notice is required if an Event of Default has occurred and is continuing),
Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books. The foregoing inspections and audits shall be at Borrower’s expense, and the
charge therefor shall be $750 per person per day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event
Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or
seeks to reschedules the audit with less than ten (10) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses
of the cancellation or rescheduling.



     6.7 Insurance. Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All
property policies shall have a lender’s loss payable endorsement showing Bank as an additional loss
payee and waive subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured. All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer must give Bank at least twenty (20)
days notice before canceling or declining to renew its policy. At Bank’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. Proceeds payable under
any policy shall, at Bank’s option, be payable to Bank on account of the Obligations. If Borrower
fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any
required proof of payment to third persons and Bank, Bank may make all or part of such payment or
obtain such insurance policies required in this Section 6.7, and take any action under the policies
Bank deems prudent.



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     6.8 Operating Accounts.


          (a) Maintain (except with regard to Superscape, who by February 22, 2009 shall maintain) its
primary domestic operating accounts and a securities account with Bank and Bank’s Affiliates.


          (b) Provide Bank five (5) days prior written notice before establishing any Collateral Account
at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each
Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or
financial institution (other than Bank) at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms
hereunder. The provisions of the previous sentence shall not apply to deposit accounts exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit
of Borrower’s employees and identified to Bank by Borrower as such.


     6.9 Financial Covenants.


          Borrower shall maintain at all times, to be tested as of the last day of each month, unless
otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:


          (a) EBITDA. Maintain, for the fiscal quarter ended December 31, 2008, EBITDA of at
least ($1,672,000), and for each of the following periods, measured as of the end of such period,
EBITDA of at least the following:



	 	 	 	 	 
	Period	 	Minimum EBITDA
	October 1, 2008 through March 31, 2009
	 	$	(2,382,000	)
	 
	 	 	 	 
	January 1, 2009 through June 30, 2009
	 	$	(812,000	)
	 
	 	 	 	 
	April 1, 2009 through September 30, 2009
	 	$	1,572,000	 
	 
	 	 	 	 
	July 1, 2009 through December 31, 2009
	 	$	4,263,000	 
	 
	 	 	 	 
	October 1, 2009 through March 31, 2010
	 	$	5,092,000	 
	 
	 	 	 	 
	January 1, 2010 through June 30, 2010
	 	$	5,257,000	 
	 
	 	 	 	 
	April 1, 2010 through September 30, 2010
	 	$	5,298,000	 
	 
	 	 	 	 
	July 1, 2010 through December 31, 2010
	 	$	6,073,000	 






          (b) Minimum Domestic Liquidity. Maintain at Bank or its Affiliates, an amount of cash, cash
equivalents and short-term investments of not less than the greater of: (a) 20% of Borrower’s total
consolidated unrestricted cash, cash equivalents and short-term investments, or (b) 15% of
outstanding Obligations.




     6.10 Protection and Registration of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of the intellectual property owned by
it and material to its business; (b) promptly advise Bank in writing of material infringements of
such intellectual property; and (c) not allow any such intellectual property material to
Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written
consent. If Borrower (i) obtains ownership of any patent, registered trademark or servicemark,
registered copyright, registered mask work, or any pending application for any of the foregoing,
whether as owner, licensee or otherwise, or (ii) applies for any patent or the registration of any
trademark or servicemark, then Borrower shall immediately provide written notice thereof to Bank
and shall execute such intellectual property security agreements and other documents and take such
other actions as Bank shall request in its good faith business judgment to perfect and maintain a
first priority perfected security interest in favor of Bank in such property. If Borrower decides
to register any copyrights or mask works in the United States Copyright Office, Borrower shall:
(x) provide Bank with at least fifteen (15) days prior written notice of Borrower’s intent to



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register such copyrights or mask works together with a copy of the application it intends to
file with the United States Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement and such other documents and take such other actions as
Bank may request in its good faith business judgment to perfect and maintain a first priority
perfected security interest in favor of Bank in the copyrights or mask works intended to be
registered with the United States Copyright Office; and (z) record such intellectual property
security agreement with the United States Copyright Office contemporaneously with filing the
copyright or mask work application(s) with the United States Copyright Office. Borrower shall
promptly provide to Bank copies of all applications that it files for patents or for the
registration of trademarks, servicemarks, copyrights or mask works, together with evidence of the
recording of the intellectual property security agreement necessary for Bank to perfect and
maintain a first priority perfected security interest in such property.




     6.11 Litigation Cooperation. From the date hereof and continuing through the termination of
this Agreement, make available to Bank, without expense to Bank, Borrower and its officers,
employees and agents and Borrower’s books and records, to the extent that Bank may deem them
reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or
against Bank with respect to any Collateral or relating to Borrower.



     6.12 Designated Senior Indebtedness. Borrower shall designate all principal of, interest
(including all interest accruing after the commencement of any bankruptcy or similar proceeding,
whether or not a claim for post-petition interest is allowable as a claim in any such proceeding),
and all fees, costs, expenses and other amounts accrued or due under this Agreement as ‘Designated
Senior Indebtedness’, or such similar term (if applicable), in any future Subordinated Debt
incurred by Borrower after the date hereof, if such Subordinated Debt contains such term or similar
term.



     6.13 Further Assurances. Borrower shall execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to
effect the purposes of this Agreement. Borrower shall deliver to Bank, within five (5) days after
the same are sent or received, copies of all correspondence, reports, documents and other filings
with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals
or Requirements of Law or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.



     7 NEGATIVE COVENANTS



     Borrower shall not do any of the following without Bank’s prior written consent:



     7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively,
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of
unneeded, worn-out or obsolete Equipment; (c) in connection with Permitted Liens and Permitted
Investments and (d) Transfers from any Loan Party to any other Loan Party, not otherwise prohibited
under any other Section of this Agreement.



     7.2 Changes in Business, Management, or Business Locations. (a) Engage in or permit any of
its Subsidiaries to engage in any business other than the businesses currently engaged in by
Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) (i) if the Key Person ceases to hold such office with Borrower and replacements
satisfactory to Bank are not made within 60 days after his departure from Borrower or (ii) permit
or suffer any Change in Control. Borrower shall not, without at least thirty (30) days prior
written notice to Bank: (1) add any new offices or business locations, including warehouses (unless
such new offices or business locations contain less than $150,000 in Borrower’s assets or
property), (2) change its jurisdiction of organization, (3) change its organizational structure or
type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its
jurisdiction of organization; provided however that the Perfection Certificate is deemed amended to
reflect such information upon Bank’s receipt of such written notice.



     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of another Person except where (a) total
consideration including cash and the value of any non-cash consideration, for all such transactions
does not in the aggregate exceed $1,000,000 in any fiscal year of Borrower; (b) no Event of Default
has occurred and is continuing or would exist after giving effect to the



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transactions; and (c) Borrower is the surviving legal entity. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.




     7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.



     7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of the Collateral, or assign
or convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the
first priority security interest granted herein, or enter into any agreement, document, instrument
or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly
prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging,
pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1 hereof and the
definition of “Permitted Lien” herein and except for customary restrictions on assignment of
licenses to intellectual property from third parties.



     7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to
the terms of Section 6.8(b) hereof.



     7.7 Distributions; Investments. (a) Directly or indirectly make any Investment other than
Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock; provided that
(i) Borrower may convert any of its convertible securities into other securities pursuant to the
terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay
dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees
or consultants pursuant to stock repurchase agreements so long as an Event of Default does not
exist at the time of such repurchase and would not exist after giving effect to such repurchase.



     7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for transactions that are in the
ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.



     7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except as
permitted under the terms of the subordination, intercreditor, or other similar agreement to which
a Borrower is a party and to which such Subordinated Debt is subject, or (b) amend any provision in
any document relating to the Subordinated Debt which would increase the amount thereof or adversely
affect the subordination thereof to Obligations owed to Bank.



     7.10 Compliance. Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940, as amended, or undertake as one of its
important activities extending credit to purchase or carry margin stock (as defined in Regulation U
of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit
Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect
to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.



     8 EVENTS OF DEFAULT



     Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:



     8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any
Credit Extension on its due date, or (b) pay any other Obligations within five (5) Business Days
after such Obligations are



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due and payable (which five (5) Business Day grace period shall not apply to payments due on
the Revolving Line Maturity Date). During the cure period, the failure to cure the payment default
is not an Event of Default (but no Credit Extension will be made during the cure period);




     8.2 Covenant Default.



          (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5, 6.7,
6.8, 6.9 or 6.12 or violates any covenant in Section 7; or




          (b) Borrower fails or neglects to perform, keep, or observe any other term, provision,
condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any
default (other than those specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within ten (10) days after
the occurrence thereof; provided, however, that if the default cannot by its nature be cured within
the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10)
day period, and such default is likely to be cured within a reasonable time, then Borrower shall
have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure
such default, and within such reasonable time period the failure to cure the default shall not be
deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Grace
periods provided under this section shall not apply, among other things, to financial covenants or
any other covenants set forth in subsection (a) above;




     8.3 Material Adverse Change. A Material Adverse Change occurs;



     8.4 Attachment; Levy; Restraint on Business. (a) Any material portion of Borrower’s assets is
attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in ten (10) days; (b) the service of process upon Borrower seeking
to attach, by trustee or similar process, any funds of Borrower on deposit with Bank, or any entity
under control of Bank (including a subsidiary); (c) Borrower is enjoined, restrained, or prevented
by court order from conducting a material part of its business; (d) a judgment or other claim in
excess of $100,000 becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency and not paid within
ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a
bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure
period);



     8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they
become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against Borrower and not dismissed or stayed within sixty (60) days
(but no Credit Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);



     8.6 Change of Control. A Change of Control occurs;



     8.7 Other Agreements. There is a default in any agreement to which Borrower is a party with a
third party or parties resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred
Thousand Dollars ($200,000) or that could have a material adverse effect on Borrower’s business;



     8.8 Judgments. One or more judgments, orders, or decrees for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Thousand Dollars ($200,000) (not
covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment, order, or decree); or



     8.9 Misrepresentations. Borrower or any Person acting for Borrower makes any representation,
warranty, or other statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made;



     8.10 Subordinated Debt. A default or breach occurs under any agreement between Borrower and
any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement
with Bank, and which



-14-









 




agreement governs or provides for the terms of Indebtedness to such creditor, or any creditor
that has signed such an agreement with Bank breaches any terms of such agreement.




     9 BANK’S RIGHTS AND REMEDIES



     9.1 Rights and Remedies. While an Event of Default occurs and continues Bank may, without
notice or demand, do any or all of the following:



          (a) declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);




          (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Bank;




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




          (d) terminate any FX Forward Contracts;




          (e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank considers advisable, notify any Person owing Borrower money of Bank’s
security interest in such funds, and verify the amount of such account;




          (f) make any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral
if Bank requests and make it available as Bank designates. Bank may enter premises where the
Collateral is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge, to exercise any of Bank’s rights or remedies;




          (g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;




          (h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or
any similar property as it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this
Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;




          (i) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;




          (j) demand and receive possession of Borrower’s Books; and




          (k) exercise all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of the Collateral
pursuant to the terms thereof).




     9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)
sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust



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all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the
Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Bank’s security interest in the Collateral regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full and Bank is under
no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as
Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are
irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to
provide Credit Extensions terminates.




     9.3 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7
or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to
pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such
payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral. Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to
make similar payments in the future or Bank’s waiver of any Event of Default.



     9.4 Application of Payments and Proceeds. Unless otherwise specified by this Agreement,
Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or
apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this
Agreement. Unless an Event of Default has occurred and is continuing, Bank shall apply any funds
in its possession, whether from Borrower or any Guarantor account balances, payments, or proceeds
realized as the result of any collection of Accounts or other disposition of the Collateral, first,
to Bank Expenses, including without limitation, the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by Bank in the exercise of its rights under this
Agreement; second, to the interest due upon any of the Obligations; and third, to the principal of
the Obligations and any applicable fees and other charges, in such order as Bank shall determine in
its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled
thereto; Borrower and Guarantors shall remain liable to Bank for any deficiency. If an Event of
Default has occurred and is continuing, Bank may apply any funds in its possession, whether from
Borrower account balances, payments, proceeds realized as the result of any collection of Accounts
or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank
shall determine in its sole discretion. Any surplus shall be paid daily to Borrower by credit to
the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain
liable to Bank for any deficiency. If Bank, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any purchaser at any
sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor.



     9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under the control of
Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act
or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.



     9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it is given. Bank’s rights and
remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is
not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s
delay in exercising any remedy is not a waiver, election, or acquiescence.



     9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by
Bank on which Borrower is liable.



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     10 NOTICES



     All notices, consents, requests, approvals, demands, or other communication by any party to
this Agreement or any other Loan Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier
with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall
be addressed to the party to be notified and sent to the address, facsimile number, or email
address indicated below. Advance requests made pursuant to Section 3.4 must be in writing and may
be in the form of electronic mail, delivered to Bank by Borrower at the e-mail address of Bank
provided below and shall be deemed to have been validly served, given, or delivered when sent (with
such electronic mail promptly confirmed by delivery of a copy by personal delivery or United States
mail as otherwise provided in this Section 10). Bank or Borrower may change its mailing or
electronic mail address or facsimile number by giving the other party written notice thereof in
accordance with the terms of this Section 10.



	 	 	 	 	 
	 

	 	If to Borrower:
	 	 Glu Mobile Inc.
	 

	 	 	 	2207 Bridgepoint Parkway, Suite 300
	 

	 	 	 	San Mateo, CA 94404
	 

	 	 	 	(650) 532-2436
	 

	 	 	 	Attn: Eric Ludwig, SVP and CFO
	 

	 	 	 	Fax: (650) 532-2493
	 

	 	 	 	Email: eric.ludwig@glu.com
	 
	 	 	 	 
	 

	 	If to Bank:
	 	Silicon Valley Bank
	 

	 	 	 	2400 Hanover Street
	 

	 	 	 	Palo Alto CA 94303
	 

	 	 	 	Attn: Tom Smith
	 

	 	 	 	Fax: (650) 320-0016
	 

	 	 	 	Email:  tsmith@svb.com






     11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE



     California law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed
to operate to preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce
a judgment or other court order in favor of Bank. Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby
waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or
forum non conveniens and hereby consents to the granting of such legal or equitable relief as is
deemed appropriate by such court. Borrower hereby waives personal service of the summons,
complaints, and other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified mail addressed to
Borrower at the address set forth in Section 10 of this Agreement and that service so made shall be
deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.



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



     WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the
parties hereto agree that any and all disputes or controversies of any nature between them arising
at any time shall be decided by a reference to a private judge, mutually selected by the parties
(or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior
Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to
comparable provisions of federal law if the dispute falls within the



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exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County,
California; and the parties hereby submit to the jurisdiction of such court. The reference
proceedings shall be conducted pursuant to and in accordance with the provisions of California Code
of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among
others, to grant provisional relief, including without limitation, entering temporary restraining
orders, issuing preliminary and permanent injunctions and appointing receivers. All such
proceedings shall be closed to the public and confidential and all records relating thereto shall
be permanently sealed. If during the course of any dispute, a party desires to seek provisional
relief, but a judge has not been appointed at that point pursuant to the judicial reference
procedures, then such party may apply to the Santa Clara County, California Superior Court for such
relief. The proceeding before the private judge shall be conducted in the same manner as it would
be before a court under the rules of evidence applicable to judicial proceedings. The parties
shall be entitled to discovery which shall be conducted in the same manner as it would be before a
court under the rules of discovery applicable to judicial proceedings. The private judge shall
oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings
in the same manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or proceeding, whether of
fact or of law, and shall report a statement of decision thereon pursuant to the California Code of
Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time
to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The
private judge shall also determine all issues relating to the applicability, interpretation, and
enforceability of this paragraph.




     12 GENERAL PROVISIONS



     12.1 Termination Prior to Revolving Line Maturity Date. This Agreement may be terminated
prior to the Revolving Line Maturity Date by Borrower, effective seven (7) Business Days after
written notice of termination is given to Bank. If such termination is at Borrower’s election or
at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay
to Bank, in addition to the payment of any other expenses or fees then-owing, a termination fee in
an amount equal to $80,000 (or one percent (1%) of the Revolving Line) provided that no termination
fee shall be charged if the credit facility hereunder is replaced with a new facility from another
division of Silicon Valley Bank.



     12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors
and permitted assigns of each party. Borrower may not assign this Agreement or any rights or
obligations under it without Bank’s prior written consent (which may be granted or withheld in
Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s
obligations, rights, and benefits under this Agreement and the other Loan Documents.



     12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors,
officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank
(each, an “Indemnified Person”) harmless against: (a) all obligations, demands, claims, and
liabilities (collectively, “Claims”) asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or
paid by such Indemnified Person from, following, or arising from transactions between Bank and
Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by such Indemnified Person’s gross negligence or willful misconduct.



     12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this
Agreement.



     12.5 Severability of Provisions. Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision.



     12.6 Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in
this Agreement and the other Loan Documents consistent with the agreement of the parties.



     12.7 Amendments in Writing; Integration. All amendments to this Agreement must be in writing
and signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.



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     12.8 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.



     12.9 Survival. All covenants, representations and warranties made in this Agreement continue
in full force until this Agreement has terminated pursuant to its terms and all Obligations (other
than inchoate indemnity obligations and any other obligations which, by their terms, are to survive
the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.



     12.10 Confidentiality. In handling any confidential information, Bank shall exercise the same
degree of care that it exercises for its own proprietary information, but disclosure of information
may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable
efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators
or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and (f) to third-party service
providers of Bank so long as such service providers have executed a confidentiality agreement with
Bank with terms no less restrictive than those contained herein. Confidential information does not
include information that either: (i) is in the public domain or in Bank’s possession when disclosed
to Bank, or becomes part of the public domain after disclosure to Bank; or (ii) is disclosed to
Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the
information.



     Bank may use confidential information for any purpose, including, without limitation, for the
development of client databases, reporting purposes, and market analysis, so long as Bank does not
disclose Borrower’s identity or the identity of any person associated with Borrower unless
otherwise expressly permitted by this Agreement. The provisions of this Section 12.10 shall
survive the termination of this Agreement.



     12.11 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and
Bank arising out of or relating to the Loan Documents, the prevailing party shall be entitled to
recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any
other relief to which it may be entitled.



     12.12 Waiver of Surety Defenses. To the extent permitted by applicable law, each Borrower
hereby waives any and all defenses and rights of discharge based upon suretyship or impairment of
collateral (including lack of attachment or perfection with respect thereto) that it may now have
or may hereafter acquire with respect to Bank or any of its Obligations hereunder, under any Loan
Document or under any other agreement that it may have or may hereafter enter into with Bank.



     12.13 Joint and Several Obligations and Related Matters. The obligations of each Borrower
hereunder and under the other Loan Documents shall be joint and several in nature notwithstanding
which Borrower actually or directly received the proceeds of any particular Credit Extension. Each
Borrower acknowledges that for purposes of the Loan Documents, Borrowers constitute a single
integrated financial entity or enterprise and that each receives a benefit from the availability of
the financing hereunder to all Borrowers. Each Borrower waives all defenses arising under the laws
of suretyship, to the extent that such laws are applicable, in connection with its joint and
several obligations under this Agreement and the other Loan Documents.



     12.14 Subordination of Claims. As further consideration for the Credit Extensions by the Bank
Borrowers and as a material inducement to Bank to make the Credit Extensions and accept this
Agreement, each Borrower hereby irrevocably subordinates in all respects all claims, whether based
in equity or law, whether by contract, statute or otherwise, that it might now or hereafter have
against other Borrower or that arise from the existence or performance of the Obligations under
this Agreement, including, but not limited to, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation, to any and all of the Obligations of
such Borrower to Bank hereunder and under the other Loan Documents.



     12.15 USA PATRIOT Act Notice. Bank hereby notifies Borrowers that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies
Borrowers, which information includes the name and address of Borrowers and other information that
will allow Bank to identify Borrowers in accordance with the Act.



-19-









 





     13 DEFINITIONS



     13.1 Definitions. As used in this Agreement, the following terms have the following meanings:



     “Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.



     “Account Debtor” is any “account debtor” as defined in the Code with such additions to such
term as may hereafter be made.



     “Advance” or “Advances” means an advance (or advances) under the Revolving Line.



     “Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.



     “Agreement” is defined in the preamble hereof.



     “Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available
under the Borrowing Base minus (b) the amount of all outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserve, minus (c)
the FX Reserve, minus (d) any amounts used for Cash Management Services, and minus (e) the
outstanding principal balance of any Advances.



     “Bank” is defined in the preamble hereof.



     “Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.



     “Bankruptcy-Related Defaults” is defined in Section 9.1.



     “Borrower” is defined in the preamble hereof.



     “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.



     “Borrowing Base” is 80% of Eligible Accounts; provided, however, that Bank may decrease the
foregoing percentage in its good faith business judgment based on events, conditions,
contingencies, or risks which, as determined by Bank, may adversely affect Collateral.



     “Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such
Person’s Board of Directors and delivered by such Person to Bank approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together with a certificate
executed by its secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the Loan Documents to
which it is a party, (b) that attached as an exhibit to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to which it is a party,
(c) the name(s) of the Person(s) authorized to execute the Loan Documents on behalf of such Person,
together with a sample of the true signature(s) of such Person(s), and (d) that Bank may
conclusively rely on such certificate unless and until such Person shall have delivered to Bank a
further certificate canceling or amending such prior certificate.



     “Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.



     “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency or any State thereof having maturities of not more
than one (1) year from the date of



-20-









 




acquisition; (b) commercial paper maturing no more than one (1) year after its creation and
having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service,
Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and
(d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this definition.




     “Cash Management Services” is defined in Section 2.1.4.



     “Change in Control” means any event, transaction, or occurrence as a result of which (a) any
“person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding
securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the
meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of
Borrower, representing thirty five (35%) or more of the combined voting power of Borrower’s then
outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals
who at the beginning of such period constituted the Board of Directors of Borrower (together with
any new directors whose election by the Board of Directors of Borrower was approved by a vote of at
least two-thirds of the directors then still in office who either were directions at the beginning
of such period or whose election or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a majority of the directors then in office.



     “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of California; provided, that, to the extent that the Code is used to define
any term herein or in any Loan Document and such term is defined differently in different Articles
or Divisions of the Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.



     “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.



     “Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.



     “Commodity Account” is any “commodity account” as defined in the Code with such additions to
such term as may hereafter be made.



     “Compliance Certificate” is that certain certificate in the form attached hereto as
Exhibit B.



     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.



     “Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.



     “Copyright” means any of the following now owned or hereafter acquired or created (as a work
for hire for the benefit of Borrower) by Borrower or in which Borrower now holds or hereafter
acquires or receives any right or interest, in whole or in part: (a) any copyright, whether
registered or unregistered, held pursuant to the laws of



-21-









 




the United States or of any other country or foreign jurisdiction, (b) registration,
application or recording in the United States Copyright Office or in any similar office or agency
of the United States or any other country or foreign jurisdiction, (c) any continuation, renewal or
extension thereof, and (d) any registration to be issued in any pending application, and shall
include any right or interest in and to work protectable by any of the foregoing which are
presently or in the future owned, created or authorized (as a work for hire for the benefit of
Borrower) or acquired by Borrower, in whole or in part.




     “Default” means any event which with notice or passage of time or both, would constitute an
Event of Default.



     “Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit.



     “Default Rate” is defined in Section 2.3(b).



     “Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue and recorded as deferred revenue, in accordance with
GAAP.



     “Deposit Account” is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.



     “Designated Deposit Account” is Borrower’s deposit account, account number 3300421466
maintained with Bank.



     “Dollars,” “dollars” and “$” each mean lawful money of the United States.



     “Domestic Subsidiary” means any subsidiary of Glu Mobile (other than a Borrower) organized
under the laws of any jurisdiction within the United States of America.



     “EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted
in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income
tax expense, plus (e) non-cash stock compensation expense, plus (f) non-cash, goodwill, other
intangible asset and royalty impairments, plus (g) non-cash foreign exchange translation charges,
minus (h) all non-cash income of Glu Mobile and its Subsidiaries for such period.



     “Effective Date” is the date Bank executes this Agreement as indicated on the signature page
hereof.



     “Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s business
that meet all Borrower’s representations and warranties in Section 5.3 and net of (c) herein. Bank
reserves the right at any time and from time to time after the Effective Date to adjust any of the
criteria set forth below and to establish new criteria in its good faith business judgment. Unless
Bank agrees otherwise in writing, Eligible Accounts shall not include:



     (a) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date
regardless of invoice payment period terms;



     (b) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have
not been paid within ninety (90) days of invoice date;



     (c) Credit balances over ninety (90) days from invoice date;



     (d) Accounts owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five percent (25%) of all Accounts (or in the case of Verizon Wireless,
fifty percent (50%) of all Accounts) to the extent such amounts owed by such Account Debtor exceed
twenty-five percent (25%) (or, 50% in the case of Verizon) of Accounts of such Debtor that would
otherwise be Eligible Accounts, unless Bank approves in writing;



-22-









 





     (e) Accounts billed in the United States and owing from an Account Debtor which does not have
its principal place of business in the United States or Canada (except for the province of Quebec)
unless such Accounts are otherwise Eligible Accounts and (i) covered in full by credit insurance
satisfactory to Bank, less any deductible, (ii) supported by letter(s) of credit acceptable to
Bank, (iii) supported by a guaranty from the Export-Import Bank of the United States, or (iv) that
Bank otherwise approves of in writing;



     (f) Accounts owing from an Account Debtor which is a United States government entity or any
department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to
Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940,
as amended;



     (g) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated
in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;



     (h) Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other terms
if Account Debtor’s payment may be conditional;



     (i) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;



     (j) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,
or becomes insolvent, or goes out of business;



     (k) Accounts for which Bank in its good faith business judgment determines collection to be
doubtful; and



     (l) other Accounts Bank deems ineligible in the exercise of its good faith business judgment.



     “Equipment” is all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.



     “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.



     “Event of Default” is defined in Section 8.



     “Foreign Currency” means lawful money of a country other than the United States.



     “Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.



     “Funding Date” is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.



     “FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign Currency.



     “FX Forward Contract” is defined in Section 2.1.3.



     “FX Reduction Amount” is defined in Section 2.1.3.



     “FX Reserve” is defined in Section 2.1.3.



     “GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as



-23-









 




may be approved by a significant segment of the accounting profession, which are applicable to
the circumstances as of the date of determination.




     “General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.



     “Governmental Approval” is any consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or
other act by or in respect of, any Governmental Authority.



     “Governmental Authority” is any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory organization.



     “Guarantor” is each of Superscape Group Limited, a company incorporated in England and Wales
with registered number 02869780, and Glu Mobile LLC, a Delaware limited liability company.



     “Guaranty” means that certain Unconditional Secured Guaranty of even date herewith by Glu
Mobile LLC in favor of Bank.



     “Guaranty and Pledge Agreement” means that certain Guaranty and Pledge Agreement of even date
herewith by Superscape Group Limited in favor of the Bank.



     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations, and (d) Contingent Obligations.



     “Indemnified Person” is defined in Section 12.3.



     “Initial Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s
Books.



     “Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.



     “Intellectual Property” means any intellectual property, in any medium, of any kind or nature
whatsoever, now or hereafter owned or acquired or received by Borrower or in which Borrower now
holds or hereafter acquires or receives any right or interest, and shall include, in any event, any
Copyright, Trademark, Patent, trade secret, customer list, Internet domain name (including any
right related to the registration thereof), proprietary or confidential information, mask work,
source, object or other programming code, invention (whether or not patented or patentable),
technical information, procedure, design, knowledge, know-how, software, data base, data, skill,
expertise, recipe, experience, process, model, drawing, material or record, all claims for damages
by way of past, present and future infringement of any of the rights included above and all
licenses or other rights to use any property or rights of a type described above.



     “IP Agreement” means collectively, that certain Intellectual Property Security Agreement
executed and delivered by Glu Mobile to Bank dated as of February 2, 2007, and that certain
Intellectual Property Security Agreement executed and delivered by Superscape to Bank of even date
herewith.



-24-









 





     “Investment” is any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to any Person.



     “Key Person” is Borrower’s Chief Executive Officer, who is, as of the Effective Date, Greg
Ballard.



     “Letter of Credit” means a standby letter of credit issued by Bank or another institution
based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set
forth in Section 2.1.2.



     “Letter of Credit Application” is defined in Section 2.1.2(a).



     “Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).



     “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise
against any property.



     “Loan Documents” are, collectively, this Agreement, the Perfection Certificate, the Pledge
Agreement, the Guaranty, the Guaranty and Pledge Agreement, the Subordination Agreement, any note,
or notes or guaranties executed by Borrower or any Guarantor, and any other present or future
agreement between Borrower, any Guarantor, and/or for the benefit of Bank in connection with this
Agreement, all as amended, restated, or otherwise modified.



     “Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the
business, operations, or condition (financial or otherwise) of Borrower; or (c) a material adverse
change in the prospect of repayment of any portion of the Obligations.



     “MIG Subordinated Debt” is an aggregate of $25 million in principal amount of notes issued to
Wang Bin, Wang Xin and the MIG Shareholders in satisfaction of earnout obligations pursuant to the
Merger Agreement and certain bonus obligations pursuant to certain employment agreements, and
guarantees thereof by Borrower..



     “Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after provision for
taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period,
determined according to GAAP.



     “Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations relating to letters of
credit (including reimbursement obligations for drawn and undrawn letters of credit), cash
management services, and foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank,
and the performance of Borrower’s duties under the Loan Documents.



     “Operating Documents” are, for any Person, such Person’s formation documents, as certified
with the Secretary of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in
current form, (b) if such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current amendments or
modifications thereto.



     “Overadvance” is defined in Section 2.2.



     “Patent” means any of the following now hereafter owned or acquired or received by Borrower or
in which Borrower now holds or hereafter acquires or receives any right or interest: (a) letters
patent and right corresponding thereto, of the United States or any other country or other foreign
jurisdiction, any registration and recording thereof, and any application for letters patent, and
rights corresponding thereto, of the United States or any other country or other foreign
jurisdiction, including, without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or other foreign jurisdiction; (b) any reissue,
continuation, continuation-in-part or extension thereof; (c) any petty patent, divisional, and
patent of addition; and (d) any patent to issue in any such application.



-25-









 





     “Patriot Act” is defined in Section 12.15.



     “Perfection Certificate” is defined in Section 5.1.



     “Permitted Indebtedness” is:



     (a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;



     (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;



     (c) Subordinated Debt;



     (d) unsecured Indebtedness to trade creditors and with respect to surety bonds and similar
obligations incurred in the ordinary course of business;



     (e) Indebtedness incurred as a result of endorsing negotiable instruments received in the
ordinary course of business;



     (f) Indebtedness in an aggregate principal amount not to exceed $500,000 secured by Permitted
Liens;



     (g) Indebtedness of Borrower to any Loan Party and Contingent Obligations of any Loan Party
with respect to obligations of Borrower (provided that the primary obligations are not prohibited
hereby), and Indebtedness of any Loan Party to Borrower or any other Loan Party and Contingent
Obligations of any Loan Party with respect to obligations of any other Loan Party (provided that
the primary obligations are not prohibited hereby);



     (h) Borrower guaranties of Loan Parties’ obligations under real property leases;



     (i) other Indebtedness not otherwise permitted by Section 7.4 not exceeding $100,000 in the
aggregate outstanding at any time; and



     (j) extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (i) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be.



     “Permitted Investments” are:



     (a) Investments shown on the Perfection Certificate and existing on the Effective Date;



     (b) Cash Equivalents;



     (c) Investments consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of Borrower;



     (d) Investments consisting of deposit accounts in which Bank has a perfected security
interest;



     (e) Investments accepted in connection with Transfers permitted by Section 7.1;



     (f) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by
Borrower in Subsidiaries, not otherwise included in Permitted Indebtedness, not to exceed $750,000
in the aggregate in any fiscal year;



     (g) Investments, not to exceed $100,000 in the aggregate in any fiscal year, consisting of (i)
travel advances and employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or
agreements approved by Borrower’s Board of Directors;



-26-









 





     (h) Investments (including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of business;



     (i) Investments consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;
provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary;



     (j) Investments in connection with acquisitions that are permitted by Section 7.3; and



     (k) other Investments not otherwise permitted by Section 7.7 not exceeding $100,000 in the
aggregate outstanding at any time.



     “Permitted Liens” are:



     (a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising
under this Agreement and the other Loan Documents;



     (b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on
its Books, if they have no priority over any of Bank’s Liens;



     (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing
the acquisition of the Equipment securing no more than $250,000 in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;



     (d) statutory Liens securing claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other Persons imposed without action of such parties;



     (e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions,
social security and other like obligations incurred in the ordinary course of business (other than
Liens imposed by ERISA);



     (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase;



     (g) leases or subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or
intellectual property) granted in the ordinary course of Borrower’s business, if the
leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest;



     (h) non-exclusive license of intellectual property granted to third parties in the ordinary
course of business and licenses of intellectual property that could not result in a legal transfer
of title of the licensed property that may be exclusive in respects other than territory and that
may be exclusive as to territory only as to discreet geographical areas outside of the United
States;



     (i) Liens arising from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Section 8.4 or 8.7;



     (j) the Lien held by The Royal Bank of Scotland Plc on Glu Mobile Limited account number
122029 6038743 at The Royal Bank of Scotland containing restricted cash in the approximate amount
of £302,000 in connection with that certain Lease by and among The Royal Bank of Scotland Plc, as
lessor, and Glu Mobile Limited, as lessess, and Glu Mobile Inc., as guarantor;



-27-









 





     (k) Liens in favor of other financial institutions arising in connection with Borrower’s
deposit and/or securities accounts held at such institutions, provided that Bank has a perfected
security interest in the amounts held in such deposit and/or securities accounts;



     (l) deposits with landlords to secure real property lease obligations; and



     (m) other Liens not described above arising in the ordinary course of business and not having
or not reasonably likely to have a material adverse effect on Borrower and its Subsidiaries taken
as a whole and not having any priority over the Lien in favor of Bank.



     “Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.



     “Pledge Agreement” means the Pledge Agreement of even date herewith by and among Bank and Glu
Mobile.



     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.



     “Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made.



     “Reserves” means, as of any date of determination, such amounts as Bank may from time to time
establish and revise in its good faith business judgment, reducing the amount of Advances and other
financial accommodations which would otherwise be available to Borrower (a) to reflect events,
conditions, contingencies or risks which, as determined by Bank in its good faith business
judgment, do or may adversely affect (i) the Collateral or any other property which is security for
the Obligations or its value (including without limitation any increase in delinquencies of
Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Bank in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Bank’s good faith belief that any collateral
report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is
or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of
any state of facts which Bank determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.



     “Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial
Officer and Controller of Borrower.



     “Revolving Line” is an Advance or Advances in an aggregate amount of up to Eight Million
Dollars ($8,000,000) outstanding at any time.



     “Revolving Line Maturity Date” is December 22, 2010.



     “Securities Account” is any “securities account” as defined in the Code with such additions to
such term as may hereafter be made.



     “Subordination Agreement” means the Subordination and Intercreditor Agreement dated December 29, 2009, by and among Bank and the MIG Shareholders.



     “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar
agreement in form and substance satisfactory to Bank entered into between Bank and the other
creditor), on terms acceptable to Bank, and includes the MIG Subordinated Debt.



     “Subsidiary” means, with respect to any Person, any Person of which more than 50.0% of the
voting stock or other equity interests (in the case of Persons other than corporations) is owned or
controlled directly or indirectly by such Person or one or more of Affiliates of such Person.



-28-









 





     “Trademark” means any of the following now or hereafter owned or acquired or received by
Borrower or in which Borrower now holds or hereafter acquires or receives any right or interest:
(a) any trademark, trade name, corporate name, business name, trade style, service mark, logo,
other source or business identifier, print or label on which any of the foregoing have appeared or
appear, design or other general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in connection therewith,
including registration, recording and application in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or any other country or
other foreign jurisdiction and (b) any reissue, extension or renewal of any of the foregoing.



     “Transaction Report” is that certain report of transactions and schedule of collections in the
customary form acceptable to Bank.



     “Transfer” is defined in Section 7.1.



     “Unused Revolving Line Facility Fee” is defined in Section 2.4(d).



[Signature page follows.]




-29-









 





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



BORROWER:




	 	 	 
	GLU MOBILE INC.
	 
	 	 
	By

	 	/s/ L. Gregory Ballard
	 

	 	 
	Name:

	 	L. Gregory Ballard
	Title:

	 	President & Chief Executive Officer
	 
	 	 
	GLU GAMES INC.
	 
	 	 
	By

	 	/s/ L. Gregory Ballard
	 

	 	 
	Name:

	 	L. Gregory Ballard
	Title:

	 	President & Chief Executive Officer
	 
	 	 
	SUPERSCAPE INC.
	 
	 	 
	By

	 	/s/ L. Gregory Ballard
	 

	 	 
	Name:

	 	L. Gregory Ballard
	Title:

	 	President & Chief Executive Officer
	 
	 	 
	BANK:
	 
	 	 
	SILICON VALLEY BANK
	 
	 	 
	By

	 	/s/ Tom Smith
	 

	 	 
	Name:

	 	Tom Smith
	Title:

	 	Managing Director
	Effective Date: 
	 







[Signature Page to Amended and Restated Loan and Security Agreement]




 









 





EXHIBIT A



The Collateral consists of all of Borrower’s right, title and interest in and to the following
personal property:




     All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights
or rights to payment of money, leases, license agreements, franchise agreements, General
Intangibles, commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and



     all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests
in any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.



     Notwithstanding the foregoing, the “Collateral” does not include more than 65% of the
presently existing and hereafter arising issued and outstanding shares of capital stock owned by
Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or
any other matter.



 









 





EXHIBIT B

COMPLIANCE CERTIFICATE




			
	 	 	 
	TO:     SILICON VALLEY BANK
	 	Date:                     
	 	 	 
	FROM: Glu Mobile Inc., Glu Games Inc. and Superscape Inc.	 	 






     The undersigned authorized officer[s] of Glu Mobile Inc., Glu Games Inc. and Superscape Inc.
(collectively “Borrower”) certif[ies][y] that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete
compliance for the period ending                      with all required covenants except as noted below,
(2) there are no Events of Default, (3) all representations and warranties in the Agreement are
true and correct in all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate
and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries,
has timely filed all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as
otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have
been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee
payroll or benefits of which Borrower has not previously provided written notification to Bank.
Attached are the required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period to the next except
as explained in an accompanying letter or footnotes. The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Agreement.



Please indicate compliance status by circling Yes/No under “Complies” column.




	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly financial statements with 

Compliance Certificate (Consolidating Financials)

	 	Monthly within 30 days
	 	Yes No
	 
	 	 	 	 
	Annual financial statement (CPA Audited) + CC

	 	FYE within 95 days
	 	Yes No
	 
	 	 	 	 
	10-Q, 10-K and 8-K + CC

	 	Within 5 days after filing with SEC,
but not later than 50 days after
quarter end,
and 95 days after FYE, subject to any
extensions pursuant to Rule 12b-25
	 	Yes No
	 
	 	 	 	 
	Transaction Report, A/R & A/P Agings, held check
list, reconciliations, transaction reports, GL
and Deferred Revenue report

	 	Monthly within 20 days
	 	Yes No
	 
	 	 	 	 
	Operating Budgets and Forecasts

	 	45 days after FYE
	 	Yes No
	 
	 	 	 	 
	Transaction Report

	 	For Advances and weekly when
Advances are outstanding
	 	Yes No






The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”):




1









 






	 	 	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	 	Actual	 	 	Complies
	EBITDA
	 	 	 	 	 	 	 	 	 	 
	Maintain on a Quarterly Basis:
	 	 	 	 	 	 	 	 	 	 
	10/1/08 through 12/31/08
	 	$(1,672,000)	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	10/1/08 through 3/31/09
	 	$(2,382,000)	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	1/1/09 through 6/30/09
	 	$(812,000)	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	4/1/09 through 9/30/09
	 	$1,572,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	7/1/09 through 12/31/09
	 	$4,263,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	10/1/09 through 3/31/10
	 	$5,092,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	1/1/10 through 6/30/10
	 	$5,257,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	4/1/10 through 9/30/10
	 	$5,298,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	7/1/10 through 12/31/10
	 	$6,073,000	 	 	$	 	 	 	Yes   No
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Minimum Domestic Liquidity
	 	Greater of (a) 20% consolidated
 cash, cash equivalents and
short-
term investments, and (b) 15% 
of outstanding Obligations	 	 	 	 	 	Yes   No






2








 




The following financial covenant analysis and information set forth in Schedule 1 attached hereto
are true and accurate as of the date of this Certificate.




     The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)



 




 




 







Glu Mobile Inc.



	 	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 








BANK USE ONLY




	 	 	 
	Received by:

	 	 
	
 

	 	 
	authorized signer
	 	 
	Date:
	 	 
	
 

	 	 
	Verified:
	 	 
	
 

	 	 
	authorized signer
	 	 
	Date:
	 	 
	
 

	 	 
	Compliance Status:     Yes   No
	 	 











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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower



Dated:                                         


I. EBITDA (Section 6.9 (a))


Required:    See chart below



	 	 	 	 	 
	Period	 	Minimum EBITDA
	October 1, 2008 through December 31, 2008
	 	$	(1,672,000	)
	October 1, 2008 through March 31, 2009
	 	$	(2,382,000	)
	January 1, 2009 through June 30, 2009
	 	$	(812,000	)
	April 1, 2009 through September 30, 2009
	 	$	1,572,00	 
	July 1, 2009 through December 31, 2009
	 	$	4,263,000	 
	October 1, 2009 through March 31, 2010
	 	$	5,092,000	 
	January 1, 2010 through June 30, 2010
	 	$	5,257,000	 
	April 1, 2010 through September 30, 2010
	 	$	5,298,000	 
	July 1, 2010 through December 31, 2010
	 	$	6,073,000	 






Actual:




	 	 	 	 	 
	A. Net Income
	 	$	 	 
	 
	 	 	 
	B. To the extent included in the determination of Net Income
	 	 	 	 
	1. The provision for income taxes
	 	$	 	 
	 
	 	 	 
	2. Depreciation expense
	 	$	 	 
	 
	 	 	 
	3. Amortization expense
	 	$	 	 
	 
	 	 	 
	4. Net Interest Expense
	 	$	 	 
	 
	 	 	 
	5. Non-cash stock compensation expense
	 	$	 	 
	 
	 	 	 
	6. Non-cash, goodwill, other intangible asset and royalty impairments
	 	$	 	 
	 
	 	 	 
	7. Non-cash foreign exchange translation charges
	 	$	 	 
	 
	 	 	 
	8. All non-cash income
	 	$	 	 
	 
	 	 	 
	9. The sum of lines 1 through 7 minus line 8
	 	$	 	 
	 
	 	 	 
	C. EBITDA (line A plus line B.7)
	 	$	 	 
	 
	 	 	 





Is line C equal to or greater than the required amount?




	 	 	 
	                       No, not in compliance

	 	                       Yes, in compliance






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II. Minimum Domestic Liquidity (Section 6.9(b))





			
	Required:   	 	Greater of (a) 20% of cash, cash equivalents and short-term investments, or (b) 15% of
outstanding Obligations





Actual:




	 	 	 	 	 
	A. 0.20 times aggregate value of cash, cash equivalents and short-term investments
	 	$	 	 
	 
	 	 	 
	B. 0.15 times total outstanding Obligations
	 	$	 	 
	 
	 	 	 





Does the amount on deposit with Bank or Bank Affiliates equal at least the greater of A or B?




	 	 	 
	                     No, not in compliance

	 	                     Yes, in compliance







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