Document:

Loan and Security Agreement

 Exhibit 10.15 
 LOAN AND SECURITY AGREEMENT 
 THIS LOAN AND SECURITY AGREEMENT (this
“Agreement”) dated as of the Effective Date between SILICON VALLEY BANK, a California corporation (“Bank”), and INTERLINK ELECTRONICS, INC., a Delaware corporation (“Borrower”), provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree 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. Borrower hereby 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, Bank shall make Advances not exceeding the Availability Amount.

 (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. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed the Letter of Credit Sublimit. Such aggregate amounts utilized hereunder
shall at all times reduce the amount otherwise available for Advances under the Revolving Line. 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. 
  

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 (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, an “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 not
to exceed 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. 
 2.1.4 Cash Management Services Sublimit. Borrower may use up to the amount of the Cash Management Services Sublimit for Bank’s cash management services which may include merchant services, direct deposit
of payroll, business credit cards, 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 or any
amounts that are not paid by 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 Credit Extensions under Section 2.1.1 exceed the lesser of either (a) the Revolving Line or
(b) the Borrowing Base (an “Overadvance”), Borrower shall immediately pay to Bank in cash such excess, without notice or demand. Without limiting Borrower’s obligation to repay to Bank the amount of any 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. Subject to Section 2.3(b), the principal amount outstanding under the Revolving
Line shall accrue interest at a floating per annum rate equal to 0.50 percentage points above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(f) below; provided however, at all times when the Alternate
Structure is in effect, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to 1.50 percentage points above the Prime Rate, which interest shall be payable monthly in accordance with
Section 2.3(f) below 
 (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 effective immediately before the Event of Default (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. 
  

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 (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. In addition, so long as any principal or interest with respect to any Credit Extension remains outstanding, Bank shall be entitled to charge Borrower a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate applicable to the Credit Extensions, on all Payments received by Bank. The float charge for each month shall be payable on the last day of the month. 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 $12,500 on the Effective Date; and 
 (b) Loan Fee. Upon transition to the Alternate Structure, a Loan Fee of $12,500. 
 (c) Target Financial Covenant Fee. If at any time during the term of this Agreement, Borrower’s Adjusted Quick Ratio falls below 1.00 to
1.00, a Target Financial Covenant Fee of $12,500. 
 (d) Unused Revolving Line Facility Fee. At all times when the Alternate Structure
is in effect, a fee (the “Unused Revolving Line Facility Fee”), which fee shall be paid monthly, in arrears, on a calendar year basis, in an amount equal to one half of one percent (0.50%) per annum of the average unused portion of
the Revolving Line, as determined by Bank. 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 this
Agreement, suspension of the Alternate Structure, or suspension or termination of Bank’s obligation to make loans and advances hereunder ; 
 (e) Termination Fee. At all times after the Alternate Structure has been put into effect for the first time, subject to the terms of Section 4.1, a termination fee; 
 (f) Collateral Handling Fee. At all times when the Alternate Structure is in effect, a monthly Collateral Handling Fee of $1,500, payable in
arrears on the lst day of each month (prorated for any partial month) at the beginning and upon termination of this Agreement; and 
 (g)
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 Advance. Bank’s obligation to make the initial Advance is subject to the condition precedent that Bank shall have received, 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: 
 (a) Borrower shall have delivered duly
executed original signatures to the Loan Documents to which it is a party; 
 (b) Borrower shall have delivered a duly executed Intellectual
Property Security Agreement; 
  

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 (c) Borrower shall have delivered its Operating Documents and a good standing certificate of Borrower
certified by the Secretary of State of the States of California and Delaware as of a date no earlier than thirty (30) days prior to the Effective Date; 
 (d) Borrower shall have delivered duly executed original signatures to the completed Borrowing Resolutions for Borrower; 
 (e) Bank shall have received 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; 
 (f) Borrower shall have delivered the Perfection Certificate executed by Borrower; 
 (g) Borrower shall have delivered evidence satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and
effect, together with appropriate evidence showing lender’s loss payable and/or additional insured clauses or endorsements in favor of Bank; 
 (h) Bank shall have conducted an audit of the Collateral to Bank’s satisfaction; and 
 (i) Borrower shall have paid the fees
and Bank Expenses then due as specified in Section 2.4 hereof. 
 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 Payment/Advance Form; 
 (b) the representations and warranties in Section 5
shall be true in all material respects on the date of the Payment/Advance Form 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 the extension of a Credit Extension 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 extension in the absence of a required item shall be 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 

  

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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. 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. 
 This Agreement may be terminated prior to the
Revolving Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank or if Bank’s obligation to fund Credit Extensions terminates pursuant to the terms of Section 2.1.1(b).
Notwithstanding any such termination, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations. If such termination is at Borrower’s election after the Alternate Structure is put
into effect for the first time 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 $50,000 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. Upon payment in full of the 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 and security interests 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 by any other Person, shall be deemed to violate the rights of Bank under the
Code. 
 5 REPRESENTATIONS AND WARRANTIES 
 Borrower represents and warrants as follows: 
 5.1 Due Organization and Authorization. Borrower and
each of its Subsidiaries are duly existing and in good standing in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their
ownership of property requires that they 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 substantially in the form attached hereto as Exhibit C 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. 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. 
  

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 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.
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. The Accounts are bona fide, existing obligations of the Account Debtors. 
 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 Borrower has given Bank notice 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. 
 All Inventory is in all material respects of good and marketable quality, free from material defects. 
 Borrower is the sole owner of its intellectual property, except for non-exclusive licenses granted to its customers in the ordinary course of business.
Each patent is valid and enforceable, and no part of the intellectual property has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower’s knowledge, no claim has been made that any part of the intellectual
property violates the rights of any third-party except to the extent such claim could not reasonably be expected to have a material adverse effect on Borrower’s business. Except as noted on the Perfection Certificate, Borrower is not a party
to, nor is bound by, any material license or other agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or
any other property. Borrower shall provide written notice to Bank within thirty (30) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for all
such licenses or contract rights to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement (such consent or
authorization may include a licensor’s agreement to a contingent assignment of the license to Bank if Bank determines that is necessary in its good faith judgment), whether now existing or entered into in the future. 
 5.3 Accounts Receivable. For any Eligible Account and Eligible Foreign Account in any Transaction Report, all statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing such Eligible Accounts and Eligible Foreign 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. All sales and other transactions underlying or giving rise to each Eligible Account and Eligible Foreign 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 an Eligible Account and Eligible Foreign Account 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 and Eligible Foreign Accounts are genuine, and all such documents, instruments and agreements are legally
enforceable in accordance with their terms. 
 5.4 Litigation. 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 $50,000. 
 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. 
  

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 5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and 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. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all
material respects with the Federal Fair Labor Standards Act. 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 its
business 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,
(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 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 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 representations, warranties, or other statements were 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. 
  

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 6.2 Financial Statements, Reports, Certificates. 
 (a) Deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared
consolidated and consolidating balance sheet and income statement covering Borrower’s and each of its Subsidiary’s operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as
available, but no later than one hundred fifty (150) days after the last day of Borrower’s fiscal year, audited consolidated and consolidating financial statements prepared under GAAP, consistently applied, together with an unqualified
opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion; (iii) within five (5) days of delivery, copies of all statements, reports and notices made available
to Borrower’s security holders or to any holders of Subordinated Debt; (iv) the earlier or forty-five (45) days after each quarter end, or five (5) days of the filing due date, 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 (provided however Borrower’s Form 10-Q dated September 30, 2006 shall be due by December 31, 2006); (iv) a prompt
report of any legal actions pending or threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of Fifty Thousand Dollars ($50,000) or more; (v) prompt notice of an
event that materially and adversely affects the value of the intellectual property; and (vi) budgets, sales projections, operating plans and other financial information reasonably requested by Bank, including annual Board of Directors-approved
financial projections no later than 30 days after the start of each fiscal year. 
 (b) Within thirty (30) days after the last day of
each month, a Transaction Report; provided however if the Alternate Structure is in effect and the outstanding Obligations exceed fifty percent (50%) of all Eligible Accounts (after applying advance rate and deducting reserves), a Transaction
Report shall be delivered the more frequent of (i) weekly and (ii) with each Advance request; 
 (c) within twenty (20) days
after the last day of each month, aged listings of accounts receivable and accounts payable (both aged by invoice date); provided however if the Alternate Structure is in effect aged listings of accounts receivable and accounts payable (both aged by
invoice date) shall be delivered within fifteen (15) days of the last day of each month along with a schedule of Accrued Rebates; 
 (d)
Within thirty (30) days after the last day of each month, deliver to Bank with the monthly financial statements, a duly completed Compliance Certificate signed by a Responsible Officer setting forth calculations showing compliance with the
financial covenants set forth in this Agreement. 
 (e) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such
audits shall be conducted no more often than once every six (6) months unless a Default or an Event of Default has occurred and is continuing; provided however if the Alternate Structure is in effect, such audits shall be conducted no more
often than once every calendar quarter unless a Default or an Event of Default has occurred and is continuing 
 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. 
  

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 (b) Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts.
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 lesser of the Revolving Line or the Borrowing Base. 
 (c) Collection of Accounts. All proceeds of Accounts be deposited by Borrower into 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. Whether or not an Event of Default has occurred and is continuing, 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, to be applied to the Obligations pursuant to the terms of Section 9.5 hereof. 
 (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. 
 (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 9.5 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 worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of $25,000 or less (for all such transactions in any fiscal year). 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 all required tax
returns and reports and timely pay all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, 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 

  

 -9- 

 
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 lender 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, amending, 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. 
 6.8 Operating Accounts. 
 (a) Maintain its and its Subsidiaries’ primary depository and operating accounts and securities accounts with Bank and Bank’s affiliates which
accounts shall represent at least 85% of the dollar value of Borrower’s and such Subsidiaries’ domestic accounts at all financial institutions. 
 (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 its Affiliates. In addition, 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: 
  

	 	•	 	 Adjusted Quick Ratio. A ratio of Quick Assets to Current Liabilities of at least 1.30 to 1.00. 

 The above financial covenant shall constitute the “Target Financial Covenant” and its violation alone shall not result in an Event of
Default hereunder, provided that a violation of the Target Financial Covenant shall cause the Alternate Terms to become effective, all as more fully set forth in Section 12.11 below. During all periods in which the Alternate Terms are in
effect, Borrower shall comply with the following financial covenant at all times during the term of this Agreement, measured on a monthly basis, and, monthly and otherwise at the request of Bank from time to time, Borrower shall provide evidence of
compliance therewith. 
  

	 	•	 	 Tangible Net Worth. A Tangible Net Worth of at least $15,000,000, increasing by 50% of Net Income and 100% of issuances of equity after the Effective Date.

 6.10 Protection and Registration of Intellectual Property Rights. Borrower shall: (a) protect, defend and
maintain the validity and enforceability of its intellectual property; (b) promptly advise Bank in writing of material infringements of its intellectual property; and (c) not allow any intellectual property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s written consent. 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 its intent to 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 or such other documents as Bank may 

  

 -10- 

 
reasonably request to maintain the perfection and priority of Bank’s security interest 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 a copy of the application(s) filed with the United States Copyright Office together with evidence of the recording of the intellectual property security agreement necessary for Bank to maintain the
perfection and priority of its security interest in such copyrights or mask works. Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent and Trademark Office for a patent or to register a
trademark or service mark within 30 days after any such filing. 
 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 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.

 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 worn-out or obsolete Equipment; and (c) in connection with Permitted Liens and Permitted Investments. 
 7.2
Changes in Business, Management, Ownership, Control, 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) have a change in management 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 Ten Thousand Dollars ($10,000) 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. 
 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. 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, or allow any Lien on any of its property, 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. 
  

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 7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the
terms of Section 6.6(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, provided such repurchase does not exceed in the aggregate
of $50,000 per fiscal year. 
 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 under the terms of the subordination, intercreditor, or other similar agreement 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 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 three (3) Business Days after such Obligations are due and payable. 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 Section 6 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, any Loan Documents, and as to any default (other than those specified in Section 8 below) 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 

  

 -12- 

 
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. (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 Bank seeking to attach, by trustee or similar process, any funds of Borrower or of any entity
under control of Borrower (including subsidiary) 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 $50,000 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. 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 thirty (30) 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 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 Fifty Thousand Dollars ($50,000) or that
could have a material adverse effect on Borrower’s business; 
 8.7 Judgments. A judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent third-party insurance) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten
(10) days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); 
 8.8 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; 
 8.9 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, or any creditor that has signed
such an agreement with Bank breaches any terms of such agreement; or 
 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; 
  

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 (d) terminate any FX 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 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 any security interest 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 Accounts Verification; Collection. Whether or not an Event of Default has occurred and is continuing, Bank may notify any
Person owing Borrower money of Bank’s security interest in such funds and verify the amount of such account. After the occurrence of an Event of Default, any amounts received by Borrower shall be held in trust by Borrower for Bank, and, if
requested by Bank, Borrower shall immediately deliver such receipts to Bank in the form received from the Account Debtor, with proper endorsements for deposit. 
  

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 9.4 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5
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. 
 9.5 Application of Payments and Proceeds. Unless an Event of Default has occurred and is continuing and only while the Alternate Structure is in
effect and the outstanding Obligations exceed fifty percent (50%) of all Eligible Accounts (after applying advance rate and deducting reserves), Bank shall apply any funds in its possession, whether from Borrower account balances, payments, or
proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, first, to the principal of the Obligations; second, 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; third, to the interest due upon any of the Obligations; and finally, to any applicable fees and other charges, in such order as Bank shall
determine in its sole discretion. Any surplus shall be paid to Borrower by credit to the Designated Deposit Account or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. In all other cases when no Event
of Default has occurred and is continuing, the proceeds of collections shall be deposited in Designated Deposit Account. 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 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. 
 9.6 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 
 9.7 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. 
 9.8 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. 
 10 NOTICES 
 All notices,
consents, requests, approvals, demands, or other communication (collectively, “Communication”), other than Advance requests made pursuant to Section 3.4, by any party to this Agreement or any other Loan Document must be in
writing and be delivered or sent by facsimile at the addresses or facsimile 

  

 -15- 

 
numbers listed below. Bank or Borrower may change its notice address by giving the other party written notice thereof. Each such Communication 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, registered or certified mail, return receipt requested, with proper postage
prepaid; (b) upon transmission, when sent by facsimile transmission (with such facsimile promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 10); (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 or
facsimile number 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
address, facsimile number, or electronic mail address by giving the other party written notice thereof in accordance with the terms of this Section 10. 
  

			
	 If to Borrower:
	  	Interlink Electronics, Inc.
		  	546 Flynn Road
		  	Camarillo, CA 93012
		  	Attn: Chief Financial Officer
		  	Fax: (805) 484-8989
		  	Email: cbest@interlinkelec.com
		
	 If to Bank:
	  	Silicon Valley Bank
		  	5820 Canoga Ave., Suite 210
		  	Woodland Hills, CA 91367
		  	Attn: Kurt Miklinski
		  	Fax: (949) 789-1907
		  	Email: kmiklinski@svb.com

 11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 
 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. 
 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. 
  

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 12 GENERAL PROVISIONS 
 12.1 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. 
 12.2 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 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 Bank 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 Bank’s gross negligence or willful misconduct. 
 12.3 Limitation of Actions. Any claim or cause of action by Borrower
against Bank, its directors, officers, employees, agents, accountants, attorneys, or any other Person affiliated with or representing Bank based upon, arising from, or relating to this Loan Agreement or any other Loan Document, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Bank, its directors, officers, employees, agents, accountants or attorneys,
shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by the filing of a complaint within one year after the first act, occurrence or omission upon which such claim or cause
of action, or any part thereof, is based, and the service of a summons and complaint on an officer of Bank, or on any other person authorized to accept service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such
one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of Bank in its
sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document. 
 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 Amendments
in Writing; Integration. All amendments to this Agreement must be in writing 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. 
 12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute one Agreement. 
 12.8 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.

 12.9 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 

  

 -17- 

 
(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; and (e) as Bank considers appropriate in
exercising remedies under this Agreement. 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. 
 12.10 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. 
 12.11 Alternate Structure. If, at any time, there is a breach of the Target Financial Covenant, an alternate set of terms with respect to certain provisions of the Loan Documents (the “Alternate Structure”) shall be deemed
immediately effective upon written notice from the Bank to Borrower (with it being recognized that as such financial covenant is to be satisfied as of certain dates during the term of this Agreement, Borrower is not able to cure, on a retroactive
basis, any breach of the Target Financial Covenant as of a particular date). Upon receipt of the notice referred to above, Borrower shall cooperate fully with Bank in order to implement the Alternate Structure and shall take such actions as Bank
shall deem reasonably necessary or advisable in connection therewith, pursuant to the general further assurances covenant set forth in Section 6.10 of this Agreement. Once the Alternate Structure is in place, if the Target Financial Covenant is
met for three consecutive calendar months, upon Borrower’s receipt of notice thereof from Bank, the Alternate Structure shall no longer be in effect for so long as the Target Financial Covenant continues to be met. 
 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. 
 “Alternate Structure” is defined in Section 12.11. 
 “Availability
Amount” is (a) the lesser of (i) the Revolving Line or (ii) 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 Reserves, minus (c) the FX Reserve, and minus (d) the outstanding principal balance of any Advances (including any amounts used for Cash Management Services); provided, however, that the first $500,000 of Advances shall be
available without regard to the Borrowing Base for so long as the Alternate Structure is not in effect; provided further, however, that once Advances and utilizations under the sublimits exceed $500,000 or while the Alternate Structure is in effect,
all Advances and sublimit utilizations shall be subject to the Borrowing Base. 
 “Bank” is defined in the preamble hereof.

  

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 “Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, 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. 
 “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 (a) 80% of Eligible Accounts, as determined by Bank from Borrower’s most recent Transaction Report;
provided, however, that Bank may decrease the foregoing percentages 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 substantially in the form attached hereto as
Exhibit D. 
 “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 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. 
 “Cash Management
Services Sublimit” means $1,000,000 (based upon product commitments, not actual usage), minus (a) all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit
Reserves, minus (b) the FX Reserve. 
 “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 twenty-five percent (25%) 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. 
  

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 “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. 
 “Communication” is defined in Section 10. 
 “Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit E. 
 “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. 
 “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. 
 “Current Liabilities” are all obligations and liabilities of
Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year. 
 “Default” means any event which with notice or passage of time or both, would constitute an Event of Default. 
 “Default Rate” is defined in Section 2.3(b). 
 “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                     , maintained with Bank. 
 “Dollars,” “dollars” and “$” each mean lawful money of the United States. 
 “Effective Date” is the date Bank executes this Agreement and as indicated on the signature page hereof. 
 “Eligible Accounts” are Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s
representations and warranties in Section 5.3. Bank reserves the right, upon prior written notice to Borrower 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 (120 days in the case of Ingram Micro and Tech Data); 
  

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 (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 (120 days in the
case of Ingram Micro and Tech Data); 
 (d) Accounts owing from an Account Debtor, including Affiliates, whose total obligations to Borrower
exceed twenty-five (25%) of Eligible Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; 
 (e)
Accounts owing from an Account Debtor which does not have its principal place of business in the United States or Canada except for Eligible Foreign Accounts; 
 (f) Accounts owing from an Account Debtor which is a federal, state or local government entity or any department, agency, or instrumentality thereof except for Accounts of the United States if Borrower has assigned
its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940 (31 U.S.C. 3727); 
 (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. 
 “Eligible Foreign Accounts” are Accounts for which the Account Debtor does not have its principal place of business in the United States
but are otherwise Eligible Accounts that are (a) covered by credit insurance satisfactory to Bank, less any deductible; (b) supported by letter(s) of credit acceptable to Bank; or (c) that Bank approves in writing. 
 “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 Employment 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. 
  

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 “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 Reserve” means $1,000,000, minus (a) all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus
(b) any amounts used for Cash Management Services. 
 “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 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. 
 “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. 
 “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. 
 “Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the
relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts, or
related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred
payment obligation (including leases of all types). 
 “Inventory” is all “inventory” 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 merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. 
 “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. 
  

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 “IP Agreement” is that certain Intellectual Property Security Agreement executed and
delivered by Borrower to Bank dated as of the Effective Date. 
 “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). 
 “Letter of Credit Sublimit” means
$1,000,000, minus (a) all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves, minus (b) the FX Reserve, and minus (c) any amounts used for Cash
Management Services. 
 “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

 “Loan Documents” are, collectively, this Agreement, the Perfection Certificate, the IP 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; (c) a material impairment of the prospect of repayment of any portion of the Obligations or
(d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period. 
 “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. 
 “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, 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. 
 “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; 

  

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 (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 $50,000 secured by Permitted Liens; and

 (g) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through
(f) 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 to exceed $750,000 in the
aggregate in any fiscal year; 
 (g) Investments 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; 
 (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; and 
 (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. 
 “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
$50,000 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; 
  

 -24- 

 (d) statutory Liens securing claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other Persons imposed without action of such parties, provided, they have no priority over any of Bank’s Lien and the aggregate amount of such Liens does not at any time exceed $50,000; 
 (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, provided, they have no priority over any of Bank’s Liens and the aggregate amount of the Indebtedness secured by such Liens does not at any time exceed $50,000; 
 (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; 
 (i) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7; and 
 (j) Subject to Section 6.6 hereof, 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. 
 “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. 
 “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate. 
 “Quick Assets” is, on any date, Borrower’s unrestricted cash and Cash Equivalents maintained with Bank, plus
Borrower’s net trade Accounts receivable (all as determined according to GAAP). 
 “Registered Organization” is any
“registered organization” as defined in the Code with such additions to such term as may hereafter be made. 
 “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 $5,000,000 outstanding at any time. 
 “Revolving Line
Maturity Date” is 364 days from the Effective Date. 
 “Securities Account” is any “securities account”
as defined in the Code with such additions to such term as may hereafter be made. 
 “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. 
  

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 “Subsidiary” means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or indirectly, by such Person or one or more Affiliates of such Person. 
 “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (a) any amounts attributable to (i) goodwill, (ii) intangible items including unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, (iii) notes, accounts receivable and other obligations owing to Borrower from its officers or other
Affiliates, and (iv) reserves not already deducted from assets, minus (b) Total Liabilities. 
 “Target Financial
Covenant” is defined in Section 6.9 
 “Total Liabilities” is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt. 
 “Transaction Report” is that certain report of transactions and schedule of collections in the form attached hereto as Exhibit B.

 “Transfer” is defined in Section 7.1. 
 “Unused Revolving Line Facility Fee” is defined in Section 2.4(d). 
 [Signature page
follows.] 
  

 -26- 

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

			
	 BORROWER:

	
	INTERLINK ELECTRONICS, INC.
		
	By	 	 /s/ Charles Best

	Name:	 	Charles Best
	Title:	 	CFO
	
	 BANK:

	
	SILICON VALLEY BANK
		
	By	 	 /s/ Kurt Miklinski

	Name:	 	Kurt Miklinski
	Title:	 	Vice President

  

			
	Effective Date:	 	12/19/06

 [Signature Page to 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. 
  

 1 

 EXHIBIT B 
 TRANSACTION REPORT 
  

 2 

 EXHIBIT C 
 PERFECTION CERTIFICATE 
  

 3 

 EXHIBIT D 
 BORROWING RESOLUTIONS 
 

 
 CORPORATE BORROWING CERTIFICATE 
  

							
	BORROWER:	 	INTERLINK ELECTRONICS, INC.	  	DATE:	  	December 18, 2006
	BANK:	 	Silicon Valley Bank	  		  	

 I hereby certify as follows, as of the date set forth above: 
 1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set forth below. 
 2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware. 
 3. Attached hereto are true, correct and complete copies of Borrower’s Articles/Certificate of Incorporation (including amendments), as filed with the Secretary of
State of the state in which Borrower is incorporated as set forth in paragraph 1 above. Such Articles/Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the
date hereof. 
 4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or
pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on
them until Bank receives written notice of revocation from Borrower. 
 RESOLVED, that any one of
the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower: 
  

							
	 Name
	 	 Title
	 	 Signature
	 	 Authorized to
 Add or Remove
 Signatories

				
	 Charles Best
	 	 CFO
	 	 /s/ Charles Best
	 	x
				
	 E. Michael Thoben
	 	 CEO/Chairman
	 	 /s/ E Michael Thoben
	 	x
				
	 Louann Negrete
	 	 Controller
	 	 /s/ Louann Negrete
	 	x
				
	  
	 	  
	 	  
	 	 ̈

 RESOLVED FURTHER, that any one of the persons
designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. 
 RESOLVED FURTHER, that such individuals may, on behalf of Borrower: 
 Borrow Money. Borrow money from Silicon Valley Bank (“Bank”). 
 Execute Loan Documents. Execute any loan documents Bank requires. 
 Grant Security. Grant Bank a security interest in any of Borrower’s assets. 
  

 1 

 Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or other
indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds. 
 Letters of Credit. Apply for letters
of credit from Bank. 
 Foreign Exchange Contracts. Execute spot or forward foreign exchange contracts. 
 Further Acts. Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be necessary to effectuate such resolutions. 
 RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 
 5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names. 
  

			
	By:	 	 /s/ Charles Best

	Name:	 	Charles Best
	Title:	 	CFO

 *** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower. 
  

	
	 I, the Chief Executive Officer of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

	 [print title]

  

			
	By:	 	 /s/ E. Michael Thoben

	Name:	 	E. Michael Thoben
	Title:	 	CEO

  

 2 

 EXHIBIT E 
 COMPLIANCE CERTIFICATE 
  

											
	TO:	 	SILICON VALLEY BANK	  	Date:	 	  
	  	
	FROM:	 	INTERLINK ELECTRONICS, INC.	  		 		  	

 The undersigned authorized officer of Interlink Electronics, Inc. (“Borrower”) certifies
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 generally 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

	 	Monthly within 30 days	  	Yes    No
			
	Annual financial statement (CPA Audited)	 	FYE within 150 days	  	Yes    No
			
	10-Q, 10-K and 8-K	 	The earlier of 45 days after quarter end, or 5 days after filing due date with SEC (9/30/06 10-Q due by 12/31/06)	  	Yes    No
			
	Transaction Report	 	Monthly within 30 days, or if Alternate Structure and the outstanding Obligations exceed fifty percent (50%) of all Eligible Accounts (after applying advance rate and deducting reserves in
effect more frequent of (i) weekly or (ii) with each Advance request	  	Yes    No
			
	A/R & A/P Agings	 	Monthly within 20 days, or if Alternate Structure in effect Monthly within 15 days	  	Yes    No
			
	Annual Board Projections	 	Annually within 30 days from the beginning of each fiscal year	  	Yes    No
			
	Schedule of Accrued Rebates	 	When Alternate Structure in effect, Monthly within 15 days	  	Yes    No

  

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

  

							
	 Financial Covenant
	  	 Required
	  	Actual	  	Complies
	Maintain on a Monthly Basis:	  		  		  	
				
	Minimum Adjusted Quick Ratio	  	1:30 : 1.00	  	        :1.0	  	Yes    No
				
	Minimum Tangible Net Worth	  	 If Alternate Structure in effect,
 $15,000,000 plus 50%
of monthly
 Net Income and 100% of new equity
	  	$            	  	Yes    No

  

 1 

 The following financial covenant analyses 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.”) 
  

  

  

  

											
	INTERLINK ELECTRONICS, INC.	 		 	BANK USE ONLY	 	
						
		 		 		 	Received by:	 	  
	 	
	By:	 	  
	 		 	                                AUTHORIZED SIGNER	 	
	Name:	 		 		 		 		 	
	Title:	 		 		 	Date:	 	  
	 	
		 		 		 		 		 	
		 		 		 	Verified:	 	  
	 	
		 		 		 	                                AUTHORIZED SIGNER	 	
						
		 		 		 	Date:	 	  
	 	
					
		 		 		 	Compliance Status: Yes    No	 	
		 		 		 		 		 	

  

 2 

 Schedule 1 to Compliance Certificate 
 Financial Covenants of Borrower 
 Dated:
                     
  

	I.	Adjusted Quick Ratio (Section 6.7(a)) 

 Required: 1.30 :1.00

 Actual: 
  

						
	 A.
	  	Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries	  	$	            
			
	 B.
	  	Aggregate value of the net trade accounts receivable of Borrower and its Subsidiaries	  	$	            
			
	 C.
	  	Aggregate value of the Investments with maturities of fewer than 12 months of Borrower and it Subsidiaries	  	$	            
			
	 D.
	  	Quick Assets (the sum of lines A through C)	  	$	            
			
	 E.
	  	Aggregate value of Obligations to Bank	  	$	            
			
	 F.
	  	 Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness)
 that matures within one (1) year
	  	$	            
			
	 G.
	  	Current Liabilities (the sum of lines E and F)	  	$	            
			
	 H.
	  	Adjusted Quick Ratio (line D divided by line G)	  	 	______

 Is line H equal to or greater than 1.30:1:00 
  

			
	              No, not in compliance
	 	             Yes, in compliance

  

	II.	Tangible Net Worth (Section 6.7(b)) 

  

			
	 Required:
	  	$15,000,000 plus 50% of monthly Net Income and 100% of new equity

 Actual: 
  

						
	 A.
	  	Aggregate value of total assets of Borrower and its Subsidiaries	  	$	            
			
	 B.
	  	Aggregate value of goodwill of Borrower and its Subsidiaries	  	$	            
			
	 C.
	  	Aggregate value of intangible assets of Borrower and its Subsidiaries	  	$	            
			
	 D.
	  	Aggregate value of obligations owing from officers or Affiliates	  	$	            
			
	 E.
	  	Aggregate value of any reserves not already deducted from assets	  	$	            
			
	 F.
	  	Aggregated value of liabilities of Borrower and its Subsidiaries (including all Indebtedness) and current portion of Subordinated Debt permitted by Bank to be paid by Borrower (but no other
Subordinated Debt)	  	$	            

  

 3 

						
	 G.
	  	Tangible Net Worth (line A minus line B minus line C minus line D minus line E minus line F)	  	$	            
			
	 H.
	  	Monthly Net Income	  	$	            
			
	 I.
	  	50% of line H	  	$	            
			
	 J.
	  	Proceeds of New Equity	  	$	            

 Is line G equal to or greater than $15,000,000 plus lines I and J plus the amounts added in prior months as a
result of the addition thereto of the amounts reflected in lines I and J? 
  

			
	              No, not in compliance
	 	             Yes, in compliance

  

 4First Amendment to Loan and Security Agreement

 Exhibit 10.16 
 FIRST AMENDMENT 
 TO 
 LOAN AND SECURITY AGREEMENT 
 THIS FIRST AMENDMENT to Loan and Security
Agreement (this “Amendment”) is entered into this 6th day of April, 2007, by and between Silicon Valley Bank (“Bank”) and INTERLINK ELECTRONICS, INC., a Delaware corporation (“Borrower”) whose address is 546 Flynn Road,
Camarillo, CA 93012. 
 RECITALS 
 A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of December 19, 2006 (as the same may from time to time be further amended, modified, supplemented or restated, the
“Loan Agreement”). 
 B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement. 

C. Borrower has requested that Bank amend the Loan Agreement to (i) change certain covenants and (ii) make certain other revisions to
the Loan Agreement as more fully set forth herein. 
 D. Bank has agreed to so amend certain provisions of the Loan Agreement, but
only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below. 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the foregoing recitals
and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 
 1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement. 

2. Amendments to Loan Agreement. 
 2.1 Section 6.2 (iv) (Reports). Section 6.2(iv) is amended in its entirety and replaced with the following: 
 “(iv) five (5) days of the filing due date, all reports on Form 10-Q and 10-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or another website on the Internet).” 
 2.2 Section 6.9 (Financial Covenants). Section 6.9 is amended in its entirety and replaced with the following: 

 “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: 
 • Adjusted Quick Ratio. A ratio of
(a) Quick Assets to (b) Current Liabilities less up to Six Hundred Fifty Five Thousand Dollars ($655,000) in deferred revenue relating to that certain Interlink, Inc. Purchase Agreement by and between Borrower and Dealertrack, Inc. dated
as of March 30, 2004 of at least 1.30 to 1.00. 
 The above financial covenant shall constitute the “Target Financial
Covenant” and its violation alone shall not result in an Event of Default hereunder, provided that a violation of the Target Financial Covenant shall cause the Alternate Terms to become effective, all as more fully set forth in
Section 12.11 below. 
 Borrower shall comply with the following financial covenant at all times during the term of this Agreement,
measured on a monthly basis, and, monthly and otherwise at the request of Bank from time to time, Borrower shall provide evidence of compliance therewith. 
 • Tangible Net Worth. A Tangible Net Worth of at least Eleven Million Dollars ($11,000,000), increasing quarterly by 50% of trailing quarterly Net Income and monthly by 50% of issuances of equity or Subordinated
Debt after the Effective Date.” 
 2.3 Section 13 (Definitions). The following term and its definition set forth in
Section 13.1 is amended in its entirety and replaced with the following: 
 “Tangible Net Worth” is, on any date,
the GAAP net worth of Borrower and its Subsidiaries less intangible assets.” 
 2.4 Exhibit E is hereby replaced with Exhibit E
attached hereto. 
 3. Limitation of Amendments. 
 3.1 The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document. 

3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect. 
 4. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents
are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of
Default has occurred and is continuing; 
  

 2 

 4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its
obligations under the Loan Agreement, as amended by this Amendment; 
 4.3 The organizational documents of Borrower delivered to Bank
on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect; 
 4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; 
 4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower; 
 4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and 

4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’
rights. 
 5. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together
shall be deemed to constitute one and the same instrument. 
 6. Effectiveness. This Amendment shall be deemed effective upon
(a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment of an amendment fee in an amount equal to $1,500. 
  

 3 

 IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered as of the date first written above. 
  

											
	BANK	 		 	BORROWER	 	
				
	Silicon Valley Bank	 		 	Interlink Electronics, Inc.	 	
						
	By:	 	 /s/ Derek R. Brunelle
	 		 	By:	 	 /s/ Charles Best
	 	
	Name:	 	Derek R. Brunelle	 		 	Name:	 	Charles Best	 	
	Title:	 	Vice President	 		 	Title:	 	CFO	 	

  

 4

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