Document:

rmgn_Ex10_1

		
			Exhibit 10.1
		

		
			AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
		

		
			THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated effective as of October 13, 2017 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation (“Bank”), and RMG NETWORKS, INC., a Delaware corporation, RMG NETWORKS HOLDING CORPORATION, a Delaware corporation, RMG ENTERPRISE SOLUTIONS, INC., a Delaware corporation, RMG NETWORKS LIMITED, a corporation formed under the laws of the United Kingdom (“RMG Ltd.”), and RMG NETWORKS MIDDLE EAST, LLC, a Nevada limited liability company (collectively, “Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank.  
		

		
			RECITALS
		

		
			WHEREAS, Borrower and Bank previously entered into that certain Loan and Security Agreement dated as of October 13, 2015 (as amended, modified or supplemented from time to time, the “Existing Loan Agreement”), pursuant to which Bank made available to Borrower a revolving line of credit in the maximum principal amount of $7,500,000 (the “Existing Revolving Line”); and 
		

		
			WHEREAS, Borrower has requested that Bank amend the Existing Loan Agreement to (i) renew and extend the maturity of the Existing Revolving Line to March 31, 2019, and (ii) make certain other revisions to the Existing Loan Agreement as more fully set forth herein.
		

		
			WHEREAS, Borrower and Bank have agreed to amend and restate the Existing Loan Agreement in its entirety.
		

		
			NOW, THEREFORE, 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.
		

		
			2.2         Revolving Line.
		

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

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

		
			2.3          Overadvances.  If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall within three (3) days of notice pay to Bank in cash the amount of such excess (such excess, the “Overadvance”). Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at a per annum rate equal to the Default Rate.
		

		
			
		

		
			

		 

 

		

		
			2.4         Payment of Interest on the Credit Extensions.
		

		
			(a)         Interest Rate.  Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) four and one half percent (4.50%), and (ii) (A)during any Streamline Period, one and three quarter percentage points (1.75%) above the Prime Rate; and (B) during any Non-Streamline Period, two and three quarter percentage points (2.75%) above the Prime Rate.  Interest shall be payable monthly in accordance with Section 2.4(e) 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 percent (5.0%) above the rate that is otherwise applicable thereto (the “Default Rate”).  Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations.  Payment or acceptance of the increased interest rate provided in this Section 2.4(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)         [Intentionally Omitted].
		

		
			(e)         Payment; Interest Computation.  Interest is payable monthly on the Payment Date of each month and shall be computed on the basis of a 360-day year for the actual number of days elapsed.  In computing interest, (i) all payments received after 12:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension. 
		

		
			(f)         Spreading of Interest.  Due to irregular periodic balances of principal, the variable nature of the interest rate, or prepayment, the total interest that will accrue under this Agreement cannot be determined in advance.  Bank does not intend to contract for, charge or receive more than the maximum rate permitted by applicable state or federal law (the “Maximum Lawful Rate”) or the maximum amount permitted by applicable state or federal law (the “Maximum Lawful Amount”), and to prevent such an occurrence Bank and Borrower agree that all amounts of interest, whenever contracted for, charged or received by Bank, with respect to the Obligations, will be spread, prorated or allocated over the full period of time the Obligations are unpaid, including the period of any renewal or extension thereof.  If the maturity of the Obligations is accelerated for any reason whether as a result of an Event of Default or otherwise prior to the full stated term, the total amount of interest contracted for, charged or received to the time of such demand shall be spread, prorated or allocated along with any interest thereafter accruing over the full period of time that the Obligations thereafter remain unpaid for the purpose of determining if such interest exceeds the Maximum Lawful Amount.
		

		
			(g)         Excess Interest.  At maturity (whether by acceleration or otherwise) or on earlier final payment of the Obligations, Bank shall compute the total amount of interest that has been contracted for, charged or received by Bank or payable by Borrower hereunder and compare such amount to the Maximum Lawful Amount that could have been contracted for, charged or received by Bank.  If such computation reflects that the total amount of interest that has been contracted for, charged, received by Bank, or payable by Borrower exceeds the Maximum Lawful Amount, then Bank shall apply such excess to the reduction of the principal balance, and any such excess remaining thereafter shall be refunded to Borrower.  This provision concerning the crediting or refund of excess interest shall control and take precedence over all other agreements between Borrower and Bank so that under no circumstances shall the total interest contracted for, charged or received by Bank exceed the Maximum Lawful Amount. 
		

		
			
		

		
			

		 

		

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			2.5         Fees.  Borrower shall pay to Bank:  
		

		
			(a)         Revolving Line Commitment Fee.  A fully earned, non-refundable commitment fee of Thirty-Seven Thousand Five Hundred Dollars ($37,500), on the Effective Date;
		

		
			(b)         Anniversary Fee.  A fully earned, non-refundable anniversary fee of Seventeen Thousand Five Hundred Dollars ($17,500) (the “Anniversary Fee”) is earned as of the Effective Date and is due and payable on the earlier to occur of (i) the one (1) year anniversary of the Effective Date, (ii) the termination of this Agreement, or (iii) the occurrence of an Event of Default;
		

		
			(c)         Termination Fee.  Upon termination of this Agreement or the termination of the Revolving Line for any reason prior to the first anniversary of the Effective Date, in addition to the payment of any other amounts then-owing, a termination fee in an amount equal to one percent (1.0%) of the Revolving Line; provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from Bank;
		

		
			(d)         Collateral Monitoring Fee.  A monthly collateral monitoring fee of One Thousand Dollars ($1,000), payable in arrears on the last day of each month (prorated for any partial month at the beginning and upon termination of this Agreement) during any Non-Streamline Period.  For the sake of clarity, during any Streamline Period, the monthly collateral monitoring fee shall be $0.00; 
		

		
			(e)         Bank Expenses.  All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).
		

		
			(f)         Fees Fully Earned.  Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder.  Bank may deduct amounts owing by Borrower under the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c).  Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.
		

		
			2.6         Payments; Application of Payments; Debit of Accounts.  
		

		
			(a)         All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Eastern time on the date when due.  Payments of principal and/or interest received after 12:00 p.m. Eastern time are considered received at the opening of business on the next Business Day.  When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.  
		

		
			(b)         Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied.  Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.
		

		
			(c)         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.
		

		
			2.7         Withholding.  Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto).  Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal
		

		
			
		

		
			

		 

		

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			to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority.  Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower.  The agreements and obligations of Borrower contained in this Section 2.8 shall survive the termination of this Agreement.
		

		
			3            CONDITIONS OF LOANS
		

		
			3.1         Conditions Precedent to Initial Credit Extension.  Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that 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)         duly executed original signatures to the Loan Documents;
		

		
			(b)         the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the Effective Date;
		

		
			(c)         a secretary’s certificate of Borrower with respect to such Borrower’s Operating Documents, incumbency, specimen signatures and resolutions authorizing the execution and delivery of this Agreement and the other Loan Documents to which it is a party;
		

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

		
			(e)         certified copies, dated as of a recent date, of financing statement searches, as Bank may 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 Credit Extension, will be terminated or released;
		

		
			(f)         the Perfection Certificate(s) of each Borrower, together with the duly executed original signatures thereto;
		

		
			(g)         Intellectual Property search results and completed exhibits to the IP Agreement;
		

		
			(h)         the insurance policies and/or endorsements required pursuant to Section 6.7 hereof;
		

		
			(i)         with respect to the initial Advance, a completed Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts); and
		

		
			(j)         payment of the fees and Bank Expenses then due as specified in Section 2.5 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 conditions precedent:
		

		
			(a)         timely receipt of (i) during the Transition Period, a Loan Advance Request Form, substantially in the form set forth in Exhibit C hereto, and (ii) at all other times, the Credit Extension request, and in any case any materials and documents required by Section 3.4; 
		

		
			
		

		
			

		 

		

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			(b)         the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the proposed Credit Extension and/or of the Payment/Advance Form, as applicable, 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 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 this Agreement remain true, accurate, and complete 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)         Bank determines to its satisfaction that there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, nor any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.
		

		
			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 precedent to any Credit Extension.  Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit 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, Borrower (via an individual duly authorized by an Administrator) shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Eastern time on the Funding Date of the Advance.  Such notice shall be made by Borrower through Bank’s online banking program, provided, however, during the Transition Period or if Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank that is executed by an Authorized Signer.  Bank shall have received satisfactory evidence that the Board has approved that such Authorized Signer may provide such notices and request Advances.  In connection with any such notification, Borrower must promptly deliver to Bank by electronic mail or through Bank’s online banking program such reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in its sole discretion.  Bank shall credit proceeds of an Advance to the Designated Deposit Account.  Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which have become due.
		

		
			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 acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank.  Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien in this Agreement).
		

		
			If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash.  Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower.  In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any.
		

		
			
		

		
			

		 

		

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			In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent 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 business judgment), to secure all of the Obligations relating  to such  Letters of Credit.
		

		
			4.2         Priority of Security Interest.  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 are permitted pursuant to the terms of this Agreement to 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.
		

		
			4.3         Authorization to File Financing Statements.  Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.   Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.
		

		
			5            REPRESENTATIONS AND WARRANTIES
		

		
			Borrower represents and warrants as follows: 
		

		
			5.1         Due Organization, Authorization; Power and Authority.  Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business.  In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by each Borrower, entitled “Perfection Certificate” (the “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 in all material respects (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement).  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.
		

		
			The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound, except in the case of the foregoing clauses (ii), (iv) and (v) where the same could not reasonably be expected to have a Material Adverse Effect.  Borrower is not in default under any
		

		
			
		

		
			

		 

		

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			agreement to which it is a party or by which it is bound which default could reasonably be expected to have a Material Adverse Effect.  
		

		
			5.2         Collateral.  Borrower has good title to, 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 Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the terms of Section 6.8(b), other than the Collateral Accounts that are included in the Excluded Property.  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 permitted pursuant to Section 7.2.
		

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

		
			Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate.  Each Patent which Borrower owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part.  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 would 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 it bound by, any Restricted License.
		

		
			5.3         Accounts Receivable; Inventory.  
		

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

		
			(b)         All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible 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 shall comply in all material respects with all applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing Base Report.  To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.  
		

		
			5.4         Litigation.  There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, One Hundred Thousand Dollars ($100,000).
		

		
			5.5         Financial Statements; Financial Condition.  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 consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s 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 of 1940, as amended.  Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law 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 Governmental Authorities that are necessary to continue their respective businesses as currently conducted.
		

		
			5.8         Subsidiaries; Investments.  Borrower does not own any stock, partnership, or other ownership 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 except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed $50,000).  
		

		
			To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take 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 representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).
		

		
			5.12       Definition of “Knowledge.”  For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.
		

		
			
		

		
			

		 

		

			8

		

 

		

		
			6           AFFIRMATIVE COVENANTS
		

		
			Borrower shall do all of the following:
		

		
			6.1         Government Compliance.  
		

		
			(a)         Subject to transactions permitted pursuant to Section 7.3 hereof, 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.  Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.
		

		
			(b)         Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in the Collateral.  Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.
		

		
			6.2         Financial Statements, Reports, Certificates.  Provide Bank with the following:
		

		
			(a)         a Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts) (i) no later than Friday of each week when a Streamline Period is not in effect and (ii) within thirty (30) days after the end of each month when a Streamline Period is in effect;
		

		
			(b)         within twenty (20) days after the end of each month with regard to all Borrowers, except RMG Ltd., (i) monthly accounts receivable agings, aged by invoice date, (ii) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (iii) monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, Deferred Revenue report, and general ledger;  
		

		
			(c)         within twenty (20) days after the end of each month with regard to RMG Ltd., (i) monthly accounts receivable agings, aged by invoice date, (ii) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (iii) monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, Deferred Revenue report, and general ledger;
		

		
			(d)         as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated and, upon Bank’s request, consolidating balance sheet and income statement covering Borrower’s consolidated operations and Borrower’s and each of its Subsidiaries operations (subject to the absence of footnotes and subject to year-end adjustments) for such month certified by a Responsible Officer and in a form acceptable to Bank (the “Monthly Financial Statements”);
		

		
			(e)         within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement that at the end of such month there were no held checks; 
		

		
			(f)         within forty-five (45) days after the end of each fiscal year of Borrower, and promptly upon any subsequent modification thereof, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a quarterly basis) as approved by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial projections;
		

		
			(g)        as soon as available, and in any event within one hundred fifty (150) days following the end of Borrower’s fiscal year, audited consolidated 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;
		

		
			(h)         within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the
		

		
			
		

		
			

		 

		

			9

		

 

		

		
			functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be.  Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the Internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;
		

		
			(i)         within five (5) days of delivery, copies of all statements, reports and notices made available to any holders of Subordinated Debt;
		

		
			(j)         prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, One Hundred Thousand Dollars ($100,000) or more; 
		

		
			(k)         a prompt report of any complaints filed with the Texas Workforce Commission against Borrower in the aggregate of Twenty-Five Thousand Dollars ($25,000) or more; and
		

		
			(l)         promptly, from time to time, such other information regarding Borrower or compliance with the terms of any Loan Documents as reasonably requested by Bank.
		

		
			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 indorsements, and copies of all credit memos.  
		

		
			(b)         Disputes.  Borrower shall promptly notify Bank of all disputes or claims relating to Accounts involving amounts relative to single Accounts in excess of Twenty-Five Thousand Dollars ($25,000) or involving aggregate amounts relative to all Accounts in excess of One Hundred Thousand Dollars ($100,000).  Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no 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.  
		

		
			(i)         Except as set forth below regarding RMG Ltd., Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into lockbox accounts, or via electronic deposit capture into “blocked accounts” as specified by Bank (collectively, all such accounts, the “Cash Collateral Account”).  Accounts of RMG Ltd. shall be delivered to one or more blocked accounts established with Bank’s United Kingdom branch or one or more accounts that Bank controls in the United Kingdom (the “Blocked UK Account”).  
		

		
			(ii)         Whether or not an Event of Default has occurred and is continuing, except as set forth below regarding RMG Ltd., Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account, and RMG Ltd. shall immediately deliver all payments on and proceeds of its Accounts to the Blocked UK Account.  
		

		
			
		

		
			

		 

		

			10

		

 

		

		
			(iii)         Provided that no Event of Default has occurred and is continuing, all amounts received in the Cash Collateral Account (A) will be applied to immediately reduce the Obligations when a Streamline Period is not in effect, and (B) will be transferred on a daily basis to Borrower’s operating account with Bank when a Streamline Period is in effect. Bank may in its sole and absolute discretion apply amounts received in the Blocked Account to reduce the Obligations under the Revolving Line, whether or not an Event of Default exists.  This Clause 6.3(c) does not impose any affirmative duty on Bank to perform any act in respect of the Accounts or otherwise.  
		

		
			(iv)         Notwithstanding any terms in this Agreement to the contrary, Bank shall have absolute discretion as to the sums (if any) it permits Borrower, on a case-by-case basis, to withdraw from the Blocked UK Account (and Borrower shall not draw money from the Blocked UK Account except to the extent permitted in writing by Bank), and Bank shall have no obligation to turn over to Borrower any sums in the Blocked UK Account.  RMG Ltd. shall not at any time without the prior written consent of Bank deal with its Accounts (or the proceeds of its Accounts) otherwise than by collecting the same and paying them into the Blocked UK Account.
		

		
			(d)         Reserves.  Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default exists, Bank may hold any proceeds of the Accounts and any amounts in the Cash Collateral Account that are not applied to the Obligations pursuant to Section 6.3(c) above as a reserve to be applied to any Obligations regardless of whether such Obligations are then due and payable.
		

		
			(e)         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.  
		

		
			(f)         Verifications; Confirmations; Credit Quality; Notifications.  Bank may, from time to time, (i) verify and confirm 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, and notify any Account Debtor of Bank’s security interest in such Account and/or (ii) conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit.
		

		
			(g)         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 (a) prior to an Event of Default, pursuant to the terms of Section 2.5(b) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided that, if no 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 $100,000 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, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand,
		

		
			
		

		
			

		 

		

			11

		

 

		

		
			appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.
		

		
			6.6         Access to Collateral; Books and Records.  At reasonable times, on one (1) Business Day’s notice (provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books.  The foregoing inspections and audits shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Bank shall determine is necessary.  The foregoing inspections and audits shall be conducted at Borrower’s expense and the charge therefor shall be One Thousand Dollars ($1,000.00) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses.  In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to or 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 One Thousand Dollars ($1,000.00) 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.  
		

		
			(a)         Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location.  Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, 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.  All liability policies shall show, or have endorsements showing, Bank as an additional insured.  Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral. 
		

		
			(b)         Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.    
		

		
			(c)         At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments.  Each provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled.  If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.
		

		
			6.8         Accounts.
		

		
			(a)         Except as set forth below, maintain all of its and all of its Subsidiaries’ operating and other deposit accounts and securities accounts with Bank and Bank’s Affiliates.  Notwithstanding the foregoing, or the requirements of Section 6.8(b) below, RMG Ltd. through its Subsidiary RMG Media Networks Limited may maintain a deposit account with  Mashreq Bank (accounts XXXXX3300 and XXXXX3301) in Abu Dhabi, UAE  without the delivery of a Control Agreement, so long as the balance therein shall at no time exceed $20,000; provided, that if Bank shall require a Control Agreement for such account at a later date, Borrower shall 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.
		

		
			 
		

		
			(b)         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 which Control Agreement may not be terminated without the prior written consent of Bank.  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.
		

		
			
		

		
			

		 

		

			12

		

 

		

		
			6.9         Financial Covenants.  Maintain at all times, subject to periodic reporting as determined of the last day of each month, unless otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:
		

		
			(a)         EBITDA.  As measured as of the end of each fiscal month as indicated below for the three (3) month period then ending, EBITDA, plus the amount of (a) non-cash stock compensation expense, (b) non-cash warrant adjustments, (c) non-cash gain or loss from discontinued operations, (d) non-cash long term contract adjustments, and (e) plus non-cash foreign exchanges, gains or losses, each as determined by Bank, of at least the following:
		

			
					
						

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Period

					
					
						    

					
					
						Minimum EBITDA

					
					
						 

				
	
					
						September 30, 2017

					
					
						 

					
					
						($1,000,000)

					
					
						 

				
	
					
						October 31, 2017

					
					
						 

					
					
						($1,000,000)

					
					
						 

				
	
					
						November 30, 2017

					
					
						 

					
					
						($800,000)

					
					
						 

				
	
					
						December 31, 2017

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						January 31, 2018

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						February 28, 2018

					
					
						 

					
					
						($750,000)

					
					
						 

				
	
					
						March 31, 2018

					
					
						 

					
					
						($1,200,000)

					
					
						 

				
	
					
						April 30, 2018

					
					
						 

					
					
						($1,050,000)

					
					
						 

				
	
					
						May 31, 2018

					
					
						 

					
					
						($800,000)

					
					
						 

				
	
					
						June 30, 2018

					
					
						 

					
					
						($700,000)

					
					
						 

				
	
					
						July 31, 2018

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						August 31, 2018

					
					
						 

					
					
						($400,000)

					
					
						 

				
	
					
						September 30, 2018

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						October 31, 2018

					
					
						 

					
					
						$0.00

					
					
						 

				
	
					
						November 30, 2018

					
					
						 

					
					
						$300,000

					
					
						 

				
	
					
						December 31, 2018 

					
					
						 

					
					
						$600,000

					
					
						 

				
	
					
						January 31, 2019

					
					
						 

					
					
						$400,000

					
					
						 

				
	
					
						February 28, 2019

					
					
						 

					
					
						$250,000

					
					
						 

				
	
					
						March 31, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						April 30, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						May 31, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						June 30, 2019

					
					
						 

					
					
						$0.00

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			13

		

 

		

		
			Notwithstanding the foregoing, in the event Borrower fails to satisfy the covenant set forth above but the sum of (i) Borrower’s cash on deposit with Bank, plus (ii) the Availability Amount exceeds $7,500,000 as of the date of testing and at all times during the thirty (30) day period preceding such testing date, such failure to satisfy the covenant shall not constitute an Event of Default hereunder.
		

		
			6.10         Protection and Registration of Intellectual Property Rights.  
		

		
			(a)         (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property material to the conduct of its business; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.
		

		
			(b)         To the extent not already disclosed in writing to Bank, if Borrower (i) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise material to the conduct of its business, or (ii) applies for any Patent or the registration of any Trademark, then Borrower shall promptly but in no event later than fifteen (15) days thereafter provide written notice thereof to Bank and shall execute such intellectual property security agreements and other documents and take such other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in such property.  If Borrower decides to register any Copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Bank with at least fifteen (15) days prior written notice of Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office.  Borrower shall promptly provide to Bank copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement required for Bank to perfect and maintain a first priority perfected security interest in such property.
		

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

		
			6.12         Online Banking.    
		

		
			(a)         As soon as possible, and in any event no later than the end of the Transition Period, utilize Bank’s online banking platform for all matters requested by Bank which shall include, without limitation (and without request by Bank for the following matters), uploading information pertaining to Accounts and Account Debtors, requesting approval for exceptions, requesting Credit Extensions, and uploading financial statements and other reports required to be delivered by this Agreement (including, without limitation, those described in Section 6.2 of this Agreement).
		

		
			(b)         Comply with the terms of the “Banking Terms and Conditions” and ensure that all persons utilizing the online banking platform are duly authorized to do so by an Administrator.  Bank shall be entitled to assume the authenticity, accuracy and completeness on any information, instruction or request for a Credit Extension submitted via the online banking platform and to further assume that any submissions or requests made via the online banking platform have been duly authorized by an Administrator.
		

		
			6.13         Formation or Acquisition of Subsidiaries.  Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower shall (a) in the case of the formation or acquisition of a Domestic Subsidiary, cause such new Domestic Subsidiary to provide to Bank a joinder to the Loan
		

		
			
		

		
			

		 

		

			14

		

 

		

		
			Agreement to cause such Domestic Subsidiary to become a co-borrower hereunder, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Domestic Subsidiary), (b) subject to the last sentence of this Section 6.12, provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance reasonably satisfactory to Bank, and (c) provide to Bank all other documentation in form and substance reasonably satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above.  Any document, agreement, or instrument executed or issued pursuant to this Section 6.12 shall be a Loan Document.  Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower forms any direct or indirect Foreign Subsidiary or acquires any direct or indirect Foreign Subsidiary after the Effective Date, Borrower shall pledge sixty-five percent (65%) of the outstanding voting equity interests and one hundred percent (100%) of outstanding non-voting equity interests of each Foreign Subsidiary directly owned by a Borrower or Subsidiary, in each instance, to Bank to secure the Obligations, promptly after formation or acquisition of such Foreign Subsidiary.
		

		
			6.14         Further Assurances.  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.  Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.
		

		
			7         NEGATIVE COVENANTS
		

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

		
			7.1         Dispositions.  Convey, sell, lease, transfer, assign, 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 that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in the ordinary course of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) consisting of non-exclusive license of Intellectual Property.
		

		
			7.2         Changes in Business, Management, 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) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within five (5) days after their departure from Borrower.
		

		
			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 Twenty-Five Thousand Dollars ($25,000), individually, or One Hundred Thousand Dollars ($100,000), in the aggregate, in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Fifty Thousand Dollars ($50,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (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.  If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Fifty Thousand Dollars ($50,000) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank.  Notwithstanding the foregoing, Borrower shall be permitted to deliver assets or property to a bailee or to a location for which Borrower has not delivered a bailee agreement as required above if such delivery is temporary in nature and conducted in the ordinary course of business.
		

		
			
		

		
			

		 

		

			15

		

 

		

		
			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 (including, without limitation, by the formation of any Subsidiary).  A Borrower may merge or consolidate into another Borrower, and a Subsidiary may merge or consolidate into another Subsidiary or into a Borrower.
		

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

		
			7.5         Encumbrance.  Create, incur, allow, or suffer any Lien on any of 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.
		

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

		
			7.7         Distributions; Investments.  (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock; provided, that 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 that the aggregate amount of all such repurchases does not exceed Two Hundred Fifty Thousand Dollars ($250,000) per fiscal year; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.
		

		
			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, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.
		

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

		
			8         EVENTS OF DEFAULT
		

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

		
			8.1         Payment Default.  Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line 
		

		
			
		

		
			

		 

		

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			Maturity Date.  During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);
		

		
			8.2         Covenant Default.    
		

		
			(a)         Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 or violates any covenant in Section 7; or
		

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

		
			8.3         Material Adverse Change.  A Material Adverse Change occurs;
		

		
			8.4         Attachment; Levy; Restraint on Business.  
		

		
			(a)         (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or 
		

		
			(b)          (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;
		

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

		
			8.6         Other Agreements.  There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Hundred Thousand Dollars ($100,000); or (b) any breach or default by Borrower or Guarantor, the result of which could reasonably be expected to have a Material Adverse Effect; 
		

		
			8.7         Judgments; Penalties.  One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000)(not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within thirty (30) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);
		

		
			
		

		
			

		 

		

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			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.  Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement or any applicable subordination or intercreditor agreement; or
		

		
			8.10         Governmental Approvals.  Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) causes, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.
		

		
			9         BANK’S RIGHTS AND REMEDIES
		

		
			9.1         Rights and Remedies.  Upon the occurrence and during the continuance of an Event of Default, 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 at least (A) one hundred five percent (105.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn (plus, in each case, 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 such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;
		

		
			(d)         terminate any FX Contracts;
		

		
			(e)         verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds.  Borrower shall collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the Account Debtor, with proper endorsements for deposit;
		

		
			(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
		

		
			
		

		
			

		 

		

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			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) 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, 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 9.1, 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 following the occurrence and during the continuance of an Event of Default, to:  (a) endorse Borrower’s name on any checks, payment instruments, 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) demand, collect, sue, and give releases to any Account Debtor for monies due, settle and adjust disputes and claims about the Accounts directly with Account Debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s name, as Bank chooses); (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits.  Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and the Loan Documents have been terminated.  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 the Loan Documents have been terminated.
		

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

		
			9.4         Application of Payments and Proceeds.  If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order 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.  Bank shall pay any surplus 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, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral,
		

		
			
		

		
			

		 

		

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			Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.
		

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

		
			9.6         No Waiver; Remedies Cumulative.  Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith.  No waiver hereunder shall be effective unless signed by the party granting the waiver 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 shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.  
		

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

		
			9.8         Borrower Liability.  Any Borrower may, acting singly, request Credit Extensions hereunder.  Each Borrower hereby appoints each other as agent for the other for all purposes hereunder, including with respect to requesting Credit Extensions hereunder.  Each Borrower hereunder shall be jointly and severally obligated to repay all Credit Extensions made hereunder, regardless of which Borrower actually receives said Credit Extension, as if each Borrower hereunder directly received all Credit Extensions.  Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, and (b) any right to require Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy.  Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability.  Notwithstanding any other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek contribution, indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise.  Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section 9.8 shall be null and void.  If any payment is made to a Borrower in contravention of this Section 9.8, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.
		

		
			10         NOTICES
		

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

		
			
		

		

		 

		

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						          If to Borrower:

					
					
						RMG Networks Holding Corporation

				
	
					
						 

					
					
						15301 N. Dallas Parkway, Suite 500

				
	
					
						 

					
					
						Dallas, Texas 75001

				
	
					
						 

					
					
						Attn:  Jana Bell

				
	
					
						 

					
					
						Email:  jana.bell@rmgnetworks.com

				
	
					
						 

					
					
						 

				
	
					
						          If to Bank:

					
					
						Silicon Valley Bank

				
	
					
						 

					
					
						14185 North Dallas Parkway, Suite 780

				
	
					
						 

					
					
						Dallas, TX  75254

				
	
					
						 

					
					
						Attn: Brian Brown

				
	
					
						 

					
					
						E-mail:  bbrown@svb.com

				

		
			 
		

		
			11           CHOICE OF LAW, VENUE, JURY TRIAL WAIVER
		

		
			Except as otherwise expressly provided in any of the Loan Documents, Texas 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 Dallas County, Texas; 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, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.
		

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

		
			This Section 11 shall survive the termination of this Agreement.
		

		
			12            GENERAL PROVISIONS
		

		
			12.1         Termination Prior to Maturity Date; Survival.  All covenants, representations and warranties made in this Agreement shall continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied.  So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank.  Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination. 
		

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

		
			
		

		
			

		 

		

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			12.3         Indemnification.   Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against:  (a) all OBLIGATIONS, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.  THE FOREGOING INDEMNITY BINDS BORROWER TO INDEMNIFY BANK AND ITS OFFICERS, EMPLOYEES AND AGENTS FOR ITS OWN NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR OTHERWISE, BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) AND THAT OF ITS OFFICERS, EMPLOYEES, AGENTS AND CONTRACTORS, AS WELL AS ANY LIABILITY ARISING BY VIRTUE OF ANY SUCH PERSON’S STRICT LIABILITY.
		

		
			This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.
		

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

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

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

		
			12.7         Amendments in Writing; Waiver; Integration.  No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought.  Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document.  Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver.  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 the Loan Documents merge into the Loan Documents.
		

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

		
			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 (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein.  Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.
		

		
			Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower.  The provisions of the immediately preceding sentence shall survive the termination of this Agreement.
		

		
			12.10         Electronic Execution of Documents.  The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the 

		 

		

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same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
		

		
			12.11         Right of Setoff.   Borrower hereby grants to Bank a Lien and a right of setoff as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a subsidiary of Bank) or in transit to any of them.  At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may setoff the same or any part thereof and apply the same to any liability or Obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
		

		
			12.12         Captions.  The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
		

		
			12.13         Construction of Agreement.  The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement.  In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.
		

		
			12.14         Relationship.  The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement.  The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.
		

		
			12.15         Third Parties.  Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.
		

		
			13            DEFINITIONS
		

		
			13.1         Definitions.  As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative.  As used in this Agreement, the following capitalized terms have the following meanings:
		

		
			“Account” is, as to any Person, any “account” of such Person as “account” is 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 such Person.
		

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

		
			
		

		
			

		 

		

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			“Administrator” is an individual that is named:
		

		
			(a)          as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in the “Banking Terms and Conditions”) on behalf of Borrower; and 
		

		
			(b)          as an Authorized Signer.
		

		
			“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.
		

		
			“Affiliate” is, with respect to any Person, each other 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.  For purposes of the definition of Eligible Accounts, Affiliate shall include a Specified Affiliate.
		

		
			“Agreement” is defined in the preamble hereof.
		

		
			“Anniversary Fee” is defined in Section 2.5(b).
		

		
			“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including making (and executing if applicable) any Credit Extension request, on behalf of Borrower.
		

		
			“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.
		

		
			“Bank” is defined in the preamble hereof.
		

		
			“Bank Entities” is defined in Section 12.9. 
		

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

		
			“Bank Services”  are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).
		

		
			“Bank Services Agreement” is defined in the definition of Bank Services.
		

		
			“Board” is Borrower’s board of directors.
		

		
			“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.
		

		
			
		

		
			

		 

		

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			“Borrowing Base” is the sum of (a) eighty percent (80%) of Eligible Accounts, plus (b) the lesser of (i) seventy percent (70%) of Eligible Foreign Accounts, or (ii) Five Hundred Thousand Dollars ($500,000), all as determined by Bank from Borrower’s most recent Borrowing Base Report; provided, however, that Bank has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value; any such change to be effective not earlier than five (5) Business Days following written notice by Bank to Borrower describing the reduction and reason(s) therefor.  
		

		
			“Borrowing Base Report” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from time to time.
		

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

		
			“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed in the State of Texas.
		

		
			“Cash Collateral Account” is defined in Section 6.3(c).
		

		
			“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.
		

		
			“Change in Control” means (a) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or (b) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each subsidiary of Borrower free and clear of all Liens (except Liens created by this Agreement).
		

		
			 “Claims” is defined in Section 12.3.
		

		
			“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of Texas; 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 Texas, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
		

		
			
		

		
			

		 

		

			25

		

 

		

		
			provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
		

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

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

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

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

		
			“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, 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.
		

		
			“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
		

		
			“Credit Extension” is any Advance, any Overadvance, or any other extension of credit by Bank for Borrower’s benefit.
		

		
			“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.
		

		
			“Debenture”  is that certain Debenture between RMG Networks Limited and Bank dated as of February 2, 2016 and filed with the Registrar of Companies for England and Wales on of February 2, 2016, pursuant to which, among other things, RMG Networks Limited charges the deposit(s) held in the nominated deposit account(s) held by RMG Networks Limited at the UK Branch of Bank, as more particularly set forth therein.
		

		
			“Default Rate” is defined in Section 2.4(b).
		

		
			“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.
		

		
			“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 the account number ending xxxxxxx130 (last three digits) maintained by Borrower with Bank (provided, however, if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained with Bank as chosen by Bank).
		

		
			
		

		
			

		 

		

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			“Dollars,” “dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.
		

		
			“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of 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.
		

		
			“Domestic Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District of Columbia.
		

		
			“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense.
		

		
			“Effective Date” is defined in the preamble hereof.
		

		
			“Eligible Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance with Section 6.3(f) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its good faith business judgment.  Bank reserves the right at any 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 otherwise agrees in writing, Eligible Accounts shall not include:
		

		
			(a)         Accounts (i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii) that are intercompany Accounts;
		

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

		
			(c)         Accounts with credit balances over ninety (90) days from invoice date;
		

		
			(d)         Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within ninety (90) days of invoice date;
		

		
			(e)         Accounts owing from an Account Debtor which does not have its principal place of business in the United States, United Kingdom, Western Europe or the European Union;
		

		
			(f)         Accounts billed from and/or payable to Borrower outside of the United States or Western Europe unless Bank has a first priority, perfected security interest or other enforceable Lien in such Accounts under all applicable laws, including foreign laws (sometimes called foreign invoiced accounts);
		

		
			(g)         Accounts in which Bank does not have a first priority, perfected security interest under all applicable laws;
		

		
			(h)         Accounts billed and/or payable in a Currency other than Dollars, British Pounds, Euros, Arab Emirates Dirham, or other than the Currency required under any Eligible Foreign Account;
		

		
			(i)         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); 
		

		
			(j)         Accounts with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising and other similar marketing credits, unless otherwise approved by Bank in writing;
		

		
			
		

		
			

		 

		

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

		
			(l)         Accounts with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of such customer deposit and/or upfront payment;
		

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

		
			(n)         Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings), other than Maintenance Billing and under SaaS Contracts;
		

		
			(o)         Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts);
		

		
			(p)         Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);
		

		
			(q)         Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;
		

		
			(r)         Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);
		

		
			(s)         Accounts for which the Account Debtor has not been invoiced;
		

		
			(t)         Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;
		

		
			(u)         Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days (including Accounts with a due date that is more than ninety (90) days from invoice date);
		

		
			(v)         Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;
		

		
			(w)         Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);
		

		
			(x)         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 (whether voluntary or involuntary), or becomes insolvent, or goes out of business; 
		

		
			(y)         Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25.0%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; and
		

		
			
		

		
			

		 

		

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			(z)         Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by “refreshed” or “recycled” invoices.
		

		
			“Eligible Foreign Accounts” is an Account owing from any Eligible Foreign Account Debtor which, but for the fact that such Account Debtor does not have its principal place of business in the United States or Western Europe, otherwise is an Eligible Account and is billed from and/or payable to Borrower in the United States or Western Europe.
		

		
			“Eligible Foreign Account Debtor” is an Account Debtor located in any of the following countries: the United Arab Emirates, Singapore, India, the Philippines, Saudi Arabia, Australia and Hong Kong. 
		

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

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

		
			“European Union” any of the following countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia,  Spain, Sweden, and United Kingdom.
		

		
			“Event of Default” is defined in Section 8.
		

		
			“Exchange Act” is the Securities Exchange Act of 1934, as amended.
		

		
			“Excluded Foreign Equity Interests” means the equity interests of a Foreign Subsidiary (other than the equity interests of RMG Ltd.) in excess of 65% of the voting power of such Foreign Subsidiary to the extent the pledge to lender in excess of 65% of such equity interests would result in adverse tax consequences to the Borrower.
		

		
			“Excluded Property” means the following:
		

		
			(a)         any asset subject to any rule of law, statute or regulation or any agreement contractual obligation or any general intangible (including a contract, any license, permit or franchise) held by any Borrower (i) that validly prohibits the creation by such Borrower of a security interest therein or thereon or (ii) to the extent that applicable law prohibits the creation of a security interest therein or thereon or (iii) would invalidate or constitute a breach or violation of, or results in the termination of or requires any consent not obtained under the provisions of, any such rule of law, statute, regulation, agreement, contractual obligation or general intangible, or agreements;
		

		
			(b)         any Intellectual Property for which the creation by any Borrower of a security interest therein is prohibited without the consent of third party or by applicable law or that would be forfeited, abandoned, canceled, voided or invalidated by the grant of a security interest therein, including, without limitation, intent-to-use trademark applications prior to the filing and acceptance by the United States Patent and Trademark Office of a “Statement of Use” or “Amendment to Allege Use” with respect thereto;
		

		
			(c)         the Excluded Foreign Equity Interests; and
		

		
			(d)         cash collateral held in a deposit account maintained at First Republic Bank and/or certificates of deposit issued by First Republic Bank securing reimbursement obligations of the Borrower in connection with letters of credit issued by First Republic Bank in favor of certain beneficiaries as more specifically described on Schedule 13.1; provided, that in no event shall the balance of such account exceed 105% of the aggregate face amount of all such letters of credit remaining issued and enforceable, but undrawn.
		

		
			
		

		
			

		 

		

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			provided,  however, that in each case described in clauses (a) and (b) of this definition, such property shall constitute “Excluded Property” only to the extent and for so long as such license, permit, or applicable law validly prohibits the creation of a Lien on such property in favor of the Bank and, upon the termination of such prohibition (howsoever occurring), such property shall cease to constitute “Excluded Property”.
		

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

		
			“Foreign Subsidiary” means a Subsidiary which is a controlled foreign corporation (as defined in Section 957 of the Internal Revenue Code of 1986, as amended).
		

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

		
			“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 in the Code, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.
		

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

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

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

		
			“Indemnified Person” is defined in Section 12.3.
		

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

		
			“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:
		

		
			(a)         its Copyrights, Trademarks and Patents; 
		

		
			(b)         any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how and operating manuals;
		

		
			(c)         any and all source code;
		

		
			
		

		
			

		 

		

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			(d)         any and all design rights which may be available to such Person;
		

		
			(e)         any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and
		

		
			(f)         all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
		

		
			“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 in the Code, 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.
		

		
			“IP Agreement” is that certain Intellectual Property Security Agreement between Borrower and Bank dated as of the Effective Date, as may be amended, modified or restated from time to time.
		

		
			“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Robert Michelson as of the Effective Date, and (b) Chief Financial Officer, who is Jana Bell as of the Effective Date.
		

		
			“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement.
		

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

		
			“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Debenture, the IP Agreement, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank, all as amended, restated, or otherwise modified.
		

		
			“Maintenance Billing” means Accounts owing from the billings of contractual software maintenance and technical support services to be rendered to the Account Debtor.
		

		
			“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 all entities included within Borrower taken as a whole; (c) a material impairment of the prospect of repayment of any portion of the Obligations.
		

		
			“Monthly Financial Statements” is defined in Section 6.2(c).
		

		
			
		

		
			

		 

		

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			“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.
		

		
			“Non-Streamline Period” is any period during which Borrower fails to satisfy the requirements of a Streamline Period.
		

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

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

		
			“Overadvance” is defined in Section 2.2.
		

		
			“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
		

		
			“Perfection Certificate” is defined in Section 5.1.
		

		
			“Permitted Indebtedness” is:
		

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

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

		
			(c)         Subordinated Debt;
		

		
			(d)         unsecured Indebtedness to trade creditors 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 secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;
		

		
			(g)         Indebtedness in respect of judgments and awards which would not constitute an Event of Default hereunder; and
		

		
			(h)         extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (c) 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 (including, without limitation, Investments in Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;
		

		
			
		

		
			

		 

		

			32

		

 

		

		
			(b)         Investments consisting of 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 consisting of the creation of a Subsidiary for the purpose of consummating a merger transaction permitted by Section 7.3 of this Agreement, which is otherwise a Permitted Investment;
		

		
			(g)         Investments (i) by any Borrower in another Borrower, (ii) by Borrower in Subsidiaries that is not a Borrower not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year; and (iii) by Subsidiaries in another Subsidiary that is not a Borrower not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year;
		

		
			(h)         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;
		

		
			(i)         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
		

		
			(j)         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 (j) 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 (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;
		

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

		
			(d)         Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 
		

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

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

		
			 
		

		
			(g)         leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein;
		

		
			

		 

		

			33

		

 

		

		
			(h)         non-exclusive license of Intellectual Property granted to third parties in the ordinary course of business; and
		

		
			(i)         Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections 8.4 and 8.7.
		

		
			“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 the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).
		

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

		
			“Regulatory Change” means, with respect to Bank, any change on or after the date of this Agreement in United States federal, state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or under any United States federal or state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.
		

		
			“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
		

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

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

		
			“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.
		

		
			“Revolving Line” is an aggregate principal amount equal to Seven Million Five Hundred Thousand Dollars ($7,500,000).
		

		
			“Revolving Line Maturity Date” is March 31, 2019.
		

		
			“SAAS Contracts” are software as a service contracts by and between Borrower and its customers arising in the ordinary course of Borrower’s business.
		

		
			“SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.
		

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

		
			“Specified Affiliate” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower, 

		 

		

			34

		

 

and/or (ii) whose equity or ownership securities or interests representing more than ten percent (10.0%) of such Person’s total outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.
		

		
			“Streamline Period” is on and after the Effective Date the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for the most-recently ended calendar month unrestricted cash and Cash Equivalents held at such time by Borrowers in Deposit Accounts or Securities Accounts maintained with Bank or its Affiliates, as determined by Bank in its discretion, minus the Obligations in an amount at all times greater than $1.00 (the “Streamline Balance”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Balance, as determined by Bank in its discretion.  Upon the termination of a Streamline Period, Borrower must maintain the Streamline Balance each consecutive day for three (3) calendar months as determined by Bank in its discretion, prior to entering into a subsequent Streamline Period unless Borrower pays the entire outstanding principal balance under the Revolving Line so that the balance is zero dollars, at the time Borrower shall enter into a Streamline Period.  Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period.
		

		
			“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.
		

		
			“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.
		

		
			“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
		

		
			“Transfer” is defined in Section 7.1. 
		

		
			“Transition Period” is the period from the Effective Date to the date which is sixty (60) days after the Effective Date.
		

		
			“Western Europe” is, collectively, the United Kingdom, Ireland, Spain, Italy, France, Germany, Switzerland, Belgium, the Netherlands, Norway, Sweden, Finland, Luxembourg, Portugal, Monaco, Austria, and Denmark.
		

		
			[Signature page follows.]
		

		
			 
		

		
			 
		

		
			

		 

		

			35

		

 

		

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

		
			BORROWER:
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						RMG NETWORKS, INC.,  

					
					
						 

				
	
					
						a Delaware corporation

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Jana A. Bell

					
					
						 

				
	
					
						Name: Jana A. Bell

					
					
						 

				
	
					
						Title:   Chief Financial Officer

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						RMG NETWORKS HOLDING CORPORATION,  

					
					
						 

				
	
					
						a Delaware corporation

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Jana A. Bell

					
					
						 

				
	
					
						Name: Jana A. Bell

					
					
						 

				
	
					
						Title:   Executive Vice President and Chief Financial Officer

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						RMG ENTERPRISE SOLUTIONS, INC.,  

					
					
						 

				
	
					
						a Delaware corporation

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Jana A. Bell

					
					
						 

				
	
					
						Name: Jana A. Bell

					
					
						 

				
	
					
						Title:   Chief Financial Officer

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						RMG NETWORKS MIDDLE EAST, LLC, 

					
					
						 

				
	
					
						a Nevada limited liability company

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Jana A. Bell

					
					
						 

				
	
					
						Name: Jana A. Bell

					
					
						 

				
	
					
						Title:   Chief Financial Officer

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						RMG NETWORKS LIMITED,  

					
					
						 

				
	
					
						a corporation formed under the laws of the United Kingdom

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Jana A. Bell

					
					
						 

				
	
					
						Name: Jana A. Bell

					
					
						 

				
	
					
						Title:   Director

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						BANK:

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						SILICON VALLEY BANK

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By: 

					
					
						/s/ Brian K. Brown

					
					
						 

				
	
					
						Name: 

					
					
						 Brian K. Brown

					
					
						 

				
	
					
						Title: 

					
					
						 Managing Director

					
					
						 

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			Signature Page to Loan and Security Agreement
		

		
			
		

		
			

		 

 

		

		
			EXHIBIT A - COLLATERAL DESCRIPTION
		

		
			 
		

		
			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; provided that the Collateral shall not include the Excluded Property.
		

		
			
		

		
			

		 

		

			 

		

 

		

		
			EXHIBIT B
		

		
			COMPLIANCE CERTIFICATE
		

		
			 
		

		
			TO:         SILICON VALLEY BANK                                                                                                                                         Date:
		

		
			FROM:   RMG NETWORKS HOLDING CORPORATION
		

		
			 
		

		
			The undersigned, solely in his or her capacity as an authorized officer of RMG Networks Holding Corporation, certifies on behalf of RMG Networks Holding Corporation and the other borrower entities (collectively, the “Borrower”) from time to time a party to that certain of the Amended and Restated Loan and Security Agreement between Borrower and Bank dated October ___, 2017 (the “Agreement”) as follows:
		

		
			 
		

		
			(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 certifications.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
		

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

			
					
						Reporting Covenants

					
					
						Required

					
					
						Complies

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Monthly financial statements with 
Compliance Certificate

					
					
						Monthly within 30 days

					
					
						Yes   No

				
	
					
						Monthly financial statements with Compliance Certificate 

					
					
						Monthly within 30 days

					
					
						Yes   No

				
	
					
						Annual financial statement (CPA Audited) + CC

					
					
						FYE within 150 days

					
					
						Yes   No

				
	
					
						10‐Q, 10‐K and 8-K

					
					
						Within 5 days after filing with SEC

					
					
						Yes   No

				
	
					
						Borrowing Base Reports

					
					
						Weekly (Non-Streamline) 
Monthly within 30 days (Streamline)

					
					
						Yes   No

				
	
					
						Board approved projections

					
					
						FYE within 45 days

					
					
						Yes   No

				
	
					
						 

				
	
					
						 

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

				
	
					
						 

					
					
						 

				
	
					
						 

				

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Financial Covenant

					
					
						Required

					
					
						Actual

					
					
						Complies

				
	
					
						EBITDA

					
					
						See attached worksheet

					
					
						$_______

					
					
						Yes   No

				

		
			 
		

		
			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.”)
		

		
			--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						RMG NETWORKS HOLDING CORPORATION,

					
					
						 

					
					
						BANK USE ONLY

				
	
					
						a Delaware corporation

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Received by:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						AUTHORIZED SIGNER

				
	
					
						By:

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						 

					
					
						 

					
					
						Date:

					
					
						 

				
	
					
						Title:

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Verified:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						AUTHORIZED SIGNER

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Date:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Compliance Status:        Yes     No

				

		
			
		

		
			

		 

		

			 

		

 

		

		
			Schedule 1 to Compliance Certificate
		

		
			 
		

		
			Financial Covenants of Borrower
		

		
			 
		

		
			In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.
		

		
			 
		

		
			Dated:         ____________________
		

		
			 
		

		
			I.            EBITDA (Section 6.9(a))
		

		
			 
		

		
			As measured as of the end of each fiscal month as indicated below for the three (3) month period then ending, EBITDA, plus the amount of (a) non-cash stock compensation expense, (b) non-cash warrant adjustments, (c) non-cash gain or loss from discontinued operations, (d) non-cash long term contract adjustments, and (e) plus non-cash foreign exchanges, gains or losses, each as determined by Bank, of at least the following:
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Period

					
					
						    

					
					
						Minimum EBITDA

					
					
						 

				
	
					
						September 30, 2017

					
					
						 

					
					
						($1,000,000)

					
					
						 

				
	
					
						October 31, 2017

					
					
						 

					
					
						($1,000,000)

					
					
						 

				
	
					
						November 30, 2017

					
					
						 

					
					
						($800,000)

					
					
						 

				
	
					
						December 31, 2017

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						January 31, 2018

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						February 28, 2018

					
					
						 

					
					
						($750,000)

					
					
						 

				
	
					
						March 31, 2018

					
					
						 

					
					
						($1,200,000)

					
					
						 

				
	
					
						April 30, 2018

					
					
						 

					
					
						($1,050,000)

					
					
						 

				
	
					
						May 31, 2018

					
					
						 

					
					
						($800,000)

					
					
						 

				
	
					
						June 30, 2018

					
					
						 

					
					
						($700,000)

					
					
						 

				
	
					
						July 31, 2018

					
					
						 

					
					
						($500,000)

					
					
						 

				
	
					
						August 31, 2018

					
					
						 

					
					
						($400,000)

					
					
						 

				
	
					
						September 30, 2018

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						October 31, 2018

					
					
						 

					
					
						$0.00

					
					
						 

				
	
					
						November 30, 2018

					
					
						 

					
					
						$300,000

					
					
						 

				
	
					
						December 31, 2018 

					
					
						 

					
					
						$600,000

					
					
						 

				
	
					
						January 31, 2019

					
					
						 

					
					
						$400,000

					
					
						 

				
	
					
						February 28, 2019

					
					
						 

					
					
						$250,000

					
					
						 

				
	
					
						March 31, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						April 30, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						May 31, 2019

					
					
						 

					
					
						($250,000)

					
					
						 

				
	
					
						June 30, 2019

					
					
						 

					
					
						$0.00

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

		

		
			Actual:
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
						 

				
	
					
						A.

					
					
						Net Income [Line III.A]

					
					
						$         

					
						 

				
	
					
						B.

					
					
						To the extent included in the determination of Net Income

					
					
						 

					
						 

				
	
					
						 

					
					
						1.         The provision for income taxes

					
					
						$         

					
						 

				
	
					
						 

					
					
						2.         Depreciation expense

					
					
						$         

					
						 

				
	
					
						 

					
					
						3.         Amortization expense

					
					
						$         

					
						 

				
	
					
						 

					
					
						4.         Net Interest Expense

					
					
						$         

					
						 

				
	
					
						 

					
					
						5.         Non-Cash Stock Compensation

					
					
						$         

					
						 

				
	
					
						 

					
					
						6.         Non-Cash Warrant Adjustments

					
					
						$         

					
						 

				
	
					
						 

					
					
						7.         Non-Cash Gain or Loss from Discontinued Operations

					
					
						$         

					
						 

				
	
					
						 

					
					
						8.         Non-Cash Long Term Contract Adjustments

					
					
						$         

					
						 

				
	
					
						 

					
						 

					
					
						9.         Non-Cash, Foreign Exchange, Gains or Losses

					
					
						$         

					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
						 

					
					
						10.       EBITDA Adjustments (sum of lines 1 through 9)

					
					
						$         

					
						 

				
	
					
						C.

					
					
						EBITDA (line A plus line B.9)

					
					
						           

					
						 

				

		
			 
		

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

		
			 
		

		
			                    No, not in compliance                                                                                 Yes, in compliance
		

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

		

		
			EXHIBIT C
		

		
			 
		

		
			LOAN PAYMENT/ADVANCE REQUEST FORM
		

		
			 
		

		
			DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Fax To:

					
					
						 

					
					
						 

					
					
						Date: _____________________

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Loan Payment:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						RMG NETWORKS, INC.

				
	
					
						 

				
	
					
						From Account #

					
					
						 

					
					
						 

					
					
						To Account #

					
					
						 

				
	
					
						 

					
					
						(Deposit Account #)

					
					
						 

					
					
						 

					
					
						(Loan Account #)

				
	
					
						Principal $

					
					
						 

					
					
						 

					
					
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						Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

				
	
					
						 

				
	
					
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						All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; 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:

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
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						Complete only if all or a portion of funds from the loan advance above is to be wired.

				
	
					
						Deadline for same day processing is noon, Eastern Time

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
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						By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
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						Telephone #:Exhibit

GLOBAL RESTRICTED STOCK UNIT AGREEMENT 
PURSUANT TO THE 
TAKE-TWO INTERACTIVE SOFTWARE, INC. 
2017 STOCK INCENTIVE PLAN
THIS AGREEMENT (the “Agreement”) is made effective as of the Grant Date (as defined below) by and between Take-Two Interactive Software, Inc. (the “Company”) and «Participant name» (the “Participant”).  
W I T N E S S E T H:
WHEREAS, the Company has adopted the Take-Two Interactive Software, Inc. 2017 Stock Incentive Plan (as amended from time to time, the “Plan”), a copy of which has been delivered to the Participant, which is administered by a committee appointed by the Company’s Board of Directors (the “Committee”);
WHEREAS, pursuant to Section 7 of the Plan, the Committee may grant Restricted Stock Units to Eligible Persons under the Plan in respect of Stock (also referred to herein as the “Shares”); and
WHEREAS, the Participant is an Eligible Persons under the Plan.
NOW, THEREFORE, for and in consideration of the mutual promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows.
1.   Grant of Restricted Stock Units.  Subject to the restrictions and other conditions set forth herein, the Committee has authorized this grant of Restricted Stock Units to the Participant on <<grant date>> (the “Grant Date”), each representing the right to receive, upon vesting, an amount equal to one (1) share of Stock.  
2.       Vesting and Payment.
(a)       <<Number of awards granted>> Restricted Stock Units shall be subject to time-based vesting (the “Time-Based RSUs”) in accordance with the schedule set forth at the appendix to this Agreement (the “Appendix”), subject to the Plan and provided that, in accordance with Section 3, the Participant has not incurred a Termination any time prior to any vesting date (“Vesting Date”) applicable to the Time-Based RSUs. 
(b)       Notwithstanding anything herein to the contrary, the Restricted Stock Units shall become vested at such earlier times, if any, as provided in the Plan, any written equity award side letter between the Company and the Participant, or Participant Agreement that is in effect on the Grant Date and that is applicable to the Restricted Stock Units granted herein.
(c)       Upon the vesting of each Restricted Stock Unit (but no later than 60 days following the Vesting Date), the Participant shall receive one share of Stock. Notwithstanding anything in this Agreement to the contrary, the Company may, in its sole discretion, settle all or a portion of the Restricted Stock Units in an amount in cash equal to (x) the number of Restricted Stock Units subject to vesting multiplied by (y) the closing price of the Stock on such Vesting Date on the principal national securities exchange on which the Stock is traded (or, if such Vesting Date is not a trading 

date, the immediately preceding trading date).  Alternatively, the Company may, in its sole discretion, settle all or a portion of the Restricted Stock Units in the form of Shares but require an immediate sale of such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Participant’s behalf).
3.       Termination.  Unless otherwise provided in a written equity award side letter between the Participant and the Company or Participant Agreement in effect on the Grant Date, in the event of a Termination, the Participant shall forfeit to the Company, without compensation, any and all Restricted Stock Units (but no Shares or cash delivered to the Participant prior to such Termination upon settlement of a vested Restricted Stock Unit) and dividends credited to such Restricted Stock Units in accordance with Section 4.  Notwithstanding anything to the contrary in the Plan and unless otherwise determined by the Company in its sole discretion, the Participant’s date of Termination shall be the date on which the Participant’s active employment with the Service Recipient ceases and shall not be extended by any statutory or common law notice of termination period unless otherwise required by applicable law.  Notwithstanding anything to the contrary in this Agreement, in the event of the Participant’s Termination by reason of the Participant’s death or Disability prior to any Vesting Date, any then-unvested Restricted Stock Units shall vest in full as of the date of such Termination.
4.       Dividend Equivalents.  Cash dividends shall be credited to a dividend book entry account on behalf of each Participant with respect to each Restricted Stock Unit granted to a Participant as if shares of Stock had been issued, provided that such cash dividends shall not be deemed to be reinvested in shares of Stock and will be held un-invested and without interest and paid in cash if and when the Restricted Stock Unit vests and settles.  Stock dividends shall be credited to a dividend book entry account on behalf of each Participant with respect to each Restricted Stock Unit granted to a Participant as if shares of Stock had been issued, provided that the Participant shall not be entitled to such dividend unless and until the Restricted Stock Unit vests and settles.
5.       Rights as a Stockholder.  The Participant shall have no rights as a stockholder with respect to any Shares covered by any Restricted Stock Unit unless and until the Participant has become the holder of record of the Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in this Agreement or the Plan.
6.       Withholding of Tax-Related Items.  Regardless of any action the Company or the Service Recipient takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility, and the Company and the Service Recipient (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units and the release of such Shares to the Participant or the payment of cash underlying the Restricted Stock Units to the Participant, the subsequent sale of any Shares and the receipt of any dividends or dividend equivalents; and (b) do not commit to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.  Further, if the Participant becomes subject to taxation in more than one country between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges 

2

that the Company or the Service Recipient may be required to withhold or account for Tax-Related Items in more than one country.
If the Participant’s country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may withhold any Shares otherwise issuable upon vesting that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld (or an equivalent cash amount, where the Restricted Stock Units are settled in cash).  For purposes of the foregoing, no fractional Shares will be withheld or issued pursuant to the grant of the Restricted Stock Units.  If the obligation for Tax-Related Items is satisfied by withholding Shares or a portion of the cash proceeds (where the Restricted Stock Units are settled in cash), for tax purposes, the Participant shall be deemed to have been issued the full number of Shares (or the gross amount of the cash payment), notwithstanding that a number of Shares ( or a portion of cash proceeds) are withheld solely for the purpose of satisfying any withholding obligations for the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.  In addition, where the Restricted Stock Units are settled in Shares, the Company may, on behalf of the Participant, sell a sufficient number of whole Shares issued upon vesting of the Restricted Stock Units having an aggregate Fair Market Value that would satisfy the withholding amount.  Alternatively, the Company or the Service Recipient may, in its discretion and subject to applicable law, withhold any amount necessary to pay the Tax-Related Items from the Participant’s regular salary/wages or other amounts payable to the Participant, with no withholding of Shares or cash proceeds payable upon vesting, or may require the Participant to submit payment equivalent to the minimum Tax-Related Items required to be withheld by means of certified check, cashier’s check or wire transfer.  In the event the withholding requirements for Tax-Related Items are not satisfied through one of the foregoing methods, no Shares will be released to the Participant (or the Participant’s estate) upon vesting of the Restricted Stock Units (or no cash payment will be made where the Restricted Stock Units are settled in cash) unless and until satisfactory arrangements (as determined by the Company in its sole discretion) have been made by the Participant with respect to the payment of any such Tax-Related Items.  By accepting the Restricted Stock Units, the Participant expressly consents to the withholding methods for Tax-Related Items as provided hereunder and/or any other methods of withholding that the Company or the Service Recipient may take and are permitted under the Plan to meet the withholding and/or other requirements as provided under applicable laws, rules and regulations.  All other Tax-Related Items related to the Restricted Stock Units shall be the sole responsibility of the Participant.
Notwithstanding the above, if the Participant has entered into in a 10b5-1 trading plan, withholding of the Tax-Related Items may be satisfied as provided for under such 10b5-1 trading plan.
To the extent the Company or the Service Recipient pays any Tax-Related Items that are the Participant’s responsibility (“Advanced Tax Payments”), the Company or the Service Recipient, as applicable, shall be entitled to recover such Advanced Tax Payments from the Participant in any and all manner that the Company or the Service Recipient determines appropriate in its sole discretion, subject to applicable law.  For purposes of the foregoing, the manner of recovery of the Advanced Tax Payments shall include (but is not limited to) offsetting the Advanced Tax Payments against any and all amounts that may be otherwise owed to the Participant by the Company or the Service Recipient (including regular salary/wages, bonuses, incentive payments and Shares acquired by the Participant 

3

pursuant to any equity compensation plan that are otherwise held by the Company for the Participant’s benefit).
7.       Provisions of Plan Control.  This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time.  The Plan is incorporated herein by reference.  By signing and returning this Agreement, the Participant acknowledges having received and read a copy of the Plan and agrees to comply with it, this Agreement and all applicable laws and regulations.  Capitalized terms in this Agreement that are not otherwise defined shall have the same meaning as set forth in the Plan.  If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior agreements between the Company and the Participant with respect to the subject matter hereof. 
8.       Amendment.  To the extent applicable, the Board or the Committee may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Agreement to comply with applicable law and may also amend, suspend or terminate this Agreement subject to the terms of the Plan.  Except as otherwise provided in the Plan, no modification or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the party against whom it is sought to be enforced. 
9.       Notices.  Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or by regular mail, first class and prepaid, to the appropriate party at the address set forth below (or such other address as the party shall from time to time specify):  
If to the Company, to: 
 
Take-Two Interactive Software, Inc. 
622 Broadway 
New York, New York 10012 
Attention: General Counsel
If to the Participant, to the address on file with the Company.
10.       Legend.  The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing Shares issued pursuant to this Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section.
11.       Securities Representations.  The grant of the Restricted Stock Units and issuance of Shares upon vesting of the Restricted Stock Units shall be subject to, and in compliance with, all applicable requirements of U.S. federal, state or local securities laws, rules, and regulations.  No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable U.S. federal, state or local securities laws or other laws, rules, or regulations of any stock exchange or market system upon which the Shares may then be listed.  As a condition to the settlement 

4

of the Restricted Stock Units, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation.
The Shares are being issued to the Participant and this Agreement is being made by the Company in reliance upon the following express representations and warranties of the Participant.  The Participant acknowledges, represents and warrants that:
(a)       He or she has been advised that he or she may be an “affiliate” within the meaning of Rule 144 under the Securities Act, currently or at the time he or she desires to sell the Shares following the vesting of the Restricted Stock, and in this connection the Company is relying in part on his or her representations set forth in this section.
(b)       If he or she is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Shares must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such Shares and the Company is under no obligation to register the Shares (or to file a “re-offer prospectus”).
(c)       If he or she is deemed an affiliate within the meaning of Rule 144 of the Securities Act, he or she understands that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Stock of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions.
12.       Termination Indemnities.  The value of the Restricted Stock Units is an extraordinary item of compensation outside the scope of Participant’s basic employment compensation.  As such, the Restricted Stock Units are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments to which the Participant may be otherwise entitled.  
13.       Discretionary Nature of Plan; No Vested Rights.  The Participant acknowledges and agrees that the Plan is discretionary in nature and limited in duration, and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time.  The grant of the Restricted Stock Units under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of Restricted Stock Units or other award or benefits in lieu of the Restricted Stock Units in the future.  Future awards, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the form of award, the number of Shares subject to an award and the vesting provisions.
14.       Commercial Relationship.  The Participant expressly recognizes that participation in the Plan and the Company’s grant of the Restricted Stock Units does not create an employment relationship between the Participant and the Company.  The Participant has been granted the Restricted Stock Units as a consequence of the commercial relationship between the Company and the Service Recipient, and the Service Recipient is the Participant’s sole employer.  Based on the foregoing, the Participant expressly recognizes (a) the Plan and the benefits derived from participation in the Plan do not establish any rights between the Participant and the Service Recipient, (b) the Plan and the benefits derived from participation in the Plan are not part of the employment conditions and/or benefits provided by the Service Recipient, (c) any modifications or amendments of the Plan by the 

5

Company, or a termination of the Plan by the Company, shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Service Recipient, and (d) the grant of the Restricted Stock Units and this Agreement do not give the Participant the right to continue in employment with the Service Recipient and shall not adversely affect the rights of the Service Recipient to terminate the Participant’s employment with the Service Recipient, with or without cause, at any time.
15.       Compliance With Age Discrimination Rules.  For purposes of this Agreement, if the Participant is a local national of and employed in a country that is a member of the European Union, the grant of the Restricted Stock Units and the terms and conditions governing the Restricted Stock Units are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “Age Discrimination Rules”).  To the extent a court or tribunal of competent jurisdiction determines that any provision of the Restricted Stock Units is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.  
16.       Private Placement.  The grant of the Restricted Stock Units is not intended to be a public offering of securities in the Participant’s country of residence (and country of employment, if different) but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and the grant of the Restricted Stock Units is not subject to the supervision of the local securities authorities. 
17.       Repatriation and Legal/Tax Compliance Requirements.  If the Participant is a resident of or employed in a country other than the United States, the Participant agrees, as a condition of the Restricted Stock Units, to repatriate all payments attributable to the Shares and/or cash acquired under the Plan (including, but not limited to, dividends, dividend equivalents and any proceeds derived from the sale of the Shares acquired pursuant to the Restricted Stock Units) in accordance with local foreign exchange rules and regulations in the Participant’s country of residence (and country of employment, if different).  In addition, the Participant agrees to take any and all actions, and consent to any and all actions taken by the Company, as may be required to allow the Company to comply with local laws, rules and regulations in the Participant’s country of residence (and country of employment, if different).  Finally, the Participant agrees to take any and all actions that may be required to comply with the Participant’s personal legal and tax obligations under local laws, rules and regulations in the Participant’s country of residence (and country of employment, if different). 
18.       Consent to Collection, Processing and Transfer of Personal Data.  Pursuant to applicable personal data protection laws, the Company and the Service Recipient hereby notify the Participant of the following in relation to the Participant’s personal data and the collection, processing and transfer of such data in relation to the Company’s grant of the Restricted Stock Units and the Participant’s participation in the Plan.  The collection, processing and transfer of the Participant’s personal data are necessary for the Company’s administration of the Plan and the Participant’s participation in the Plan.  The Participant’s denial and/or objection to the collection, processing and transfer of personal data may affect the Participant’s participation in the Plan.  As such, the Participant voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.

6

The Company and the Service Recipient hold certain personal information about the Participant, including the Participant’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in Participants’ favor, for the purpose of managing and administering the Plan (“Data”).  The Data may be provided by the Participant or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.  The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Participant’s participation in the Plan.
The Company and the Service Recipient will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of the Participant’s participation in the Plan, and the Company and the Service Recipient may each further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States.  The Participant hereby authorizes (where required under applicable law) them to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Participant’s behalf to a broker or other third party with whom the Participant may elect to deposit any Shares acquired pursuant to the Plan.
19.       Miscellaneous.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.
(a)       This Agreement shall be governed and construed in accordance with the laws of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
(b)       This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.
(c)       The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.
20.       Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units granted to the Participant under the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees 

7

to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
21.       English Language.  The Participant acknowledges and agrees that it is the Participant’s express intent that this Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Restricted Stock Units be drawn up in English.  If the Participant has received this Agreement, the Plan or any other documents related to the Restricted Stock Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version shall control.
22.       Addendum.  Notwithstanding any provision of this Agreement to the contrary, the Restricted Stock Units shall be subject to any special terms and conditions for the Participant’s country of residence (and country of employment, if different) as are forth in the applicable addendum to the Agreement (the “Addendum”).  Further, if the Participant transfers residency and/or employment to another country reflected in an Addendum to the Agreement, the special terms and conditions for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law, rules and regulations, or to facilitate the operation and administration of the Restricted Stock Units and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer).  Any applicable Addendum shall constitute part of this Agreement.
23.       Additional Requirements.  The Company reserves the right to impose other requirements on the Restricted Stock Units, any Shares acquired pursuant to the Restricted Stock Units, and the Participant’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Award and the Plan.  Such requirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
24.       Section 409A.  It is the intention of the parties that the provisions of this Agreement shall comply with the requirements of the short-term deferral exception to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations Section 1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of section 409A of the Code applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of section 409A of the Code and the Treasury Regulations thereunder that apply to such exception.  If, and only to the extent that, (i) the Restricted Stock Units constitute “deferred compensation” within the meaning of section 409A of the Code and (ii) the Participant is deemed to be a “specified employee” (as such term is defined in section 409A of the Code and as determined by the Company), the payment of Restricted Stock Units on the Participant’s Termination shall not be made until the first business day of the seventh month following the Participant’s Termination or, if earlier, the date of the Participant’s death.  For purposes of section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment.  All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under section 409A of the Code, to the extent applicable.  With respect to any payments that are subject to section 409A of the 

8

Code, in no event shall the Participant, directly or indirectly, designate the calendar year of payment.  The Participant will be solely responsible for any tax imposed under section 409A of the Code and in no event will the Company or the Service Recipient have any liability with respect to any tax, interest or other penalty imposed under section 409A of the Code.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below.
TAKE-TWO INTERACTIVE SOFTWARE, INC.

By:       
    Name: 
    Title: 
    Date:

 
    (Participant)
Date:      

TAKE-TWO INTERACTIVE SOFTWARE, INC.  
2017 STOCK INCENTIVE PLAN 

ADDENDUM TO
GLOBAL RESTRICTED STOCK UNIT AGREEMENT

In addition to the terms of the Take-Two Interactive Software, Inc. 2017 Stock Incentive Plan (as amended from time to time, the “Plan”) and the Global Restricted Stock Unit Agreement (the “Agreement”), the Restricted Stock Units are subject to the following additional terms and conditions as set forth in this addendum to the extent the Participant resides and/or is employed in one of the countries addressed herein (the “Addendum”).  All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement. To the extent the Participant transfers residence and/or employment to another country, the special terms and conditions for such country as reflected in this Addendum (if any) will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Restricted Stock Units and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer).

Australia

1.    Restricted Stock Units Conditioned on Satisfaction of Regulatory Obligations.  If the Participant is (a) a director of an Affiliate incorporated in Australia, or (b) a person who is a management-level executive of an Affiliate incorporated in Australia and who also is a director of an Affiliate incorporated outside of Australia, the grant of the Restricted Stock Units are conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

Canada

1.    Settlement in Shares Only.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Plan, the Restricted Stock Units shall be settled only in Shares (and may not be settled via a cash payment).

2.    Language.  The following provisions shall apply if the Participant is a resident of Quebec: 

The parties acknowledge that it is their express wish that the Agreement, including this Addendum, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée.  Les parties reconnaissent avoir expressément souhaité que la convention («Agreement») ainsi que cette Annexe, ainsi que tous les documents, avis et procédures judiciares, éxécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention, soient rédigés en langue anglaise.

France

1.    English Language. The Participant acknowledges and agrees that it is the Participant’s express intent that the Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Restricted Stock Units, be drawn up in English.  If the Participant has received the Agreement, the Plan or any other documents related to the Restricted Stock Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.  
Langue anglaise. Le Support reconnaît et consent que c’est l’intention de Support expresse que le Grant Accord, le Projet et tous les autres documents, les notifications et l’événement légal est entré dans, compte tenu de ou institué conformément à l’Restricted Stock Units, est formulé dans l’anglais. Si le Support a reçu le Grant Accord, le Projet ou aucuns autres documents liés à l’Units a traduit dans une langue autrement que l’anglais, et si le sens de la version traduite est différent de la version anglaise, la version anglaise contrôlera.

Netherlands

1.    Waiver of Termination Rights.  In consideration of the grant of the Restricted Stock Units, the Participant waives any and all rights to compensation or damages as a result of any Termination for any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Restricted Stock Units, or (b) the Participant ceases to have rights under, or ceasing to be entitled to Restricted Stock Units as a result of such termination.

Russia

1.    No Offering of Securities in Russia.  The grant of the Restricted Stock Units is not intended to be an offering of securities within the territory of the Russian Federation, and the Participant acknowledges and understands that the Participant will be unable to sell any Shares acquired pursuant to the Restricted Stock Units within the Russian Federation.

Singapore

1.     Qualifying Person Exemption.  The grant of Restricted Stock Units under the Plan is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289) (“SFA”).  The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.  The Participant should note that, as a result, the Restricted Stock Units are subject to section 257 of the SFA and the Participant will be unable to make (a) any subsequent sale of the Shares acquired pursuant to the Restricted Stock Units in Singapore or (b) any offer for sale of the Shares acquired pursuant to the Restricted Stock Units in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289).

Spain

1.    Severance for Cause.  Notwithstanding anything to the contrary in the Plan or the Agreement, “Cause” shall be defined in the Plan, irrespective of whether the Termination is or is not considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

2.    Acknowledgement of Discretionary Nature of the Restricted Stock Units; No Vested Rights.  In accepting the Restricted Stock Units, the Participant acknowledges that the Participant consents to participate in the Plan and has received a copy of the Plan. The Participant understands that the Company has unilaterally, gratuitously and in its sole discretion granted the Restricted Stock Units under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis.  Consequently, the Participant understands that the Restricted Stock Units are granted on the assumption and condition that the Restricted Stock Units and the Shares acquired upon vesting of the Restricted Stock Units shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Participant understands that this grant would not be made to the Participant but for the assumptions and conditions referenced above. Thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the grant of the Restricted Stock Units under the Agreement shall be null and void.

The Participant understands and agrees that, as a condition of the grant of the Restricted Stock Units and unless otherwise provided in the Agreement, the unvested portion of the Restricted Stock Units as of the date of the Participant’s Termination will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, (i) material modification of the terms of employment under Article 41 of the Workers’ Statute or (ii) relocation under Article 40 of the Workers’ Statute. The Participant acknowledges that the Participant has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a termination on the Participant’s Restricted Stock Units.

United Kingdom

1.    Income Tax and Social Insurance Contribution Withholding.  The following provision shall replace Section 6 of the Agreement:

Withholding of Tax-Related Items.  Regardless of any action the Company or the Service Recipient takes with respect to any or all income tax, primary and secondary Class 1 National Insurance Contributions, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility, and the Company and the Service Recipient (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units and the release of such Shares to the Participant or the payment of cash underlying the Restricted Stock Units to the Participant, the subsequent sale of any Shares and the receipt of any dividends or dividend equivalents; and (b) do not commit to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.  Further, if the Participant becomes subject to taxation in more than one country between the date of grant and the date of any relevant taxable or tax withholding event, as applicable (a “Chargeable Event”), the Participant acknowledges that the Company or the Service Recipient may be required to withhold or account for Tax-Related Items in more than one country.  The Participant also agrees that the Company and the Service Recipient may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which the Participant may have to recover any overpayment from the relevant tax authorities.
As a condition of the issuance of Shares or the payment of cash upon vesting of the Restricted Stock Units, the Company and the Service Recipient shall be entitled to withhold and the Participant agrees to pay, or make adequate arrangements satisfactory to the Company or the Service Recipient to satisfy, all obligations of the Company or the Service Recipient to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items.  For purposes of the foregoing, the Company may withhold a whole number of the Shares otherwise issuable upon vesting or a portion of cash proceeds (where the Restricted Stock Units are settled in cash) that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the Shares. If the obligation for Tax-Related Items is satisfied by withholding Shares (or a portion of the cash proceeds where the Restricted Stock Units are settled in cash), for tax purposes, the Participant shall be deemed to have been issued the full number of Shares (or the gross amount of the cash payment), notwithstanding that a number of Shares (or a portion of the cash proceeds) are withheld solely for the purpose of satisfying any withholding obligations for the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.  In addition, where the Restricted Stock Units are settled in Shares, the Company may, on behalf of the Participant, sell a sufficient number of whole Shares issued upon vesting of the Restricted Stock Units having an aggregate Fair Market Value that would satisfy the withholding amount.  Alternatively, the Company or the Service Recipient may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from the Participant’s regular salary/wages or other amounts payable to the Participant, with no withholding of Shares or cash proceeds payable upon vesting, or may require the Participant to submit payment equivalent to the minimum Tax-Related Items required to be withheld by means of certified check, cashier’s check or wire transfer.  In the event the withholding requirements for Tax-Related Items are not satisfied through one of the foregoing methods, no Shares will be released to the Participant (or the Participant’s estate) upon vesting of the Restricted Stock Units (or no cash payment will be made where the Restricted Stock Units are settled in cash) unless and until satisfactory arrangements (as determined by the Company in its sole discretion) have been made by the Participant with respect to the payment of any such Tax-Related Items.  By accepting the Restricted Stock Units, the Participant expressly consents to the withholding methods for Tax-Related Items as provided hereunder and/or any other methods of withholding that the Company or the Service Recipient may take and are permitted under the Plan to meet the withholding and/or other requirements as provided under applicable laws, rules and regulations.  All other Tax-Related Items related to the Restricted Stock Units shall be the sole responsibility of the Participant.

Notwithstanding the above, if the Participant has entered into in a 10b5-1 trading plan, withholding of the Tax-Related Items may be satisfied as provided for under such 10b5-1 trading plan.
To the extent the Company or the Service Recipient pays any Tax-Related Items that are the Participant’s responsibility (“Advanced Tax Payments”), the Company or the Service Recipient, as applicable, shall be entitled to recover such Advanced Tax Payments from the Participant in any and all manner that the Company or the Service Recipient determines appropriate in its sole discretion.  For purposes of the foregoing, the manner of recovery of the Advanced Tax Payments shall include (but is not limited to) offsetting the Advanced Tax Payments against any and all amounts that may be otherwise owed to the Participant by the Company or the Service Recipient (including regular salary/wages, bonuses, incentive payments and Shares acquired by the Participant pursuant to any equity compensation plan that are otherwise held by the Company for the Participant’s benefit).  If the Restricted Stock Units are settled in Shares and payment or withholding is not made within 90 days of the Chargeable Event or such other period as required under U.K. law (the “Due Date”), the Participant agrees that the amount of any uncollected income tax shall (assuming the Participant is not a director or executive officer of the Company within the meaning of Section 13(k) of the Exchange Act), constitute a loan owed by the Participant to the Service Recipient, effective on the Due Date.  The Participant agrees that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company and/or the Service Recipient may recover it at any time thereafter by any of the means referred to above. 
2.    Exclusion of Claim. The Participant acknowledges and agrees that the Participant will have no entitlement to compensation or damages in consequence of the Participant’s Termination for any reason whatsoever and whether or not in breach of contract, insofar as such entitlement arises or may arise from the Participant’s ceasing to have rights under or to be entitled to vesting in the Restricted Stock Units as a result of such Termination, or from the loss or diminution in value of the Restricted Stock Units.  Upon the grant of the Restricted Stock Units, the Participant shall be deemed irrevocably to have waived any such entitlement.

United States

1.    Section 16 of the Agreement is inapplicable.

2.    All disputes and claims of any nature that the Participant (or the Participant’s transferee or estate) may have against the Company arising out of or in any way related to the Plan or this Agreement must be submitted solely and exclusively to binding arbitration in accordance with the then-current employment arbitration rules and procedures of the American Arbitration Association (AAA) to be held in New York, New York.  All information regarding the dispute or claim and arbitration proceedings, including any settlement, shall not be disclosed by the Participant or any arbitrator to any third party without the written consent of the Company, except with respect to judicial enforcement of any arbitration award.  Any arbitration claim must be brought solely in the Participant’s (or the Participant’s transferee’s or estate’s) individual capacity and not as a claimant or class member (or similar capacity) in any purported multiple-claimant, class, collective, representative or similar proceeding, and the arbitrator may not permit joinder of any multiple claimants and their claims without the express written consent of the Company.  Any arbitrator selected to adjudicate the claim must be knowledgeable in the industry standards and practices, and, by signing this Agreement, the Participant will be deemed to agree that any claims pursuant to the Plan or this Agreement is inherently a matter involving interstate commerce and thus, notwithstanding the choice of law provision included herein, the Federal Arbitration Act shall govern the interpretation and enforcement of this arbitration provision.  The arbitrator shall not be permitted to award any punitive or similar damages, but may award attorney’s fees and expenses to the prevailing party in any arbitration.  Any decision by the arbitrator shall be binding on all parties to the arbitration.

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