Document:

Standard Industrial/Commercial Multi-Tenant Lease-Net

					
	 	 	

	  	Exhibit 10.11

  
 STANDARD
INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET 
 AIR COMMERCIAL REAL ESTATE ASSOCIATION 
  
 1. Basic Provisions (“Basic Provisions”). 
  
 1.1      Parties: This Lease
(“Lease”), dated for reference purposes only February 2, 2005, is made by and between Richard E. Solomon (“Lessor”) and Alena, LLC, a Delaware limited liability company by Intermix Media, Inc., a Delaware
corporation, Managing Member (“Lessee”), (collectively the “Parties”, or individually a “Party”). 
  
 1.2(a) Premises: That certain portion of the Project (as defined below), including all improvements therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address of 8500 Higuera Street , located in the City of Culver City , County of Los Angeles , State of California , with zip code 90232 , as outlined on Exhibit A attached hereto
(“Premises”) and generally described as (describe briefly the nature of the Premises): an approximate 29,700 square foot concrete tilt-up building on approximately 49,600 square feet of land. In addition to Lessee’s
rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the any utility raceways of the building containing the Premises (“Building”) and to the common Areas (as defined in Paragraph
2.7 below), but shall not have any rights to the roof or exterior walls of the Building or to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the “Project.” (See also Paragraph 2) 
  
 1.2(b) Parking: 44 unreserved vehicle parking spaces, including handicapped spaces. (See also Paragraph 2.6). See addendum 1.2.

  
 1.3      Term: 4 years and 0
months (“Original Term”) commencing March 1, 2005 (“Commencement Date”) and ending February 28, 2009 (“Expiration Date”). (See also Paragraph 3) 
  
 1.4      Early Possession: N/A
(“Early Possession Date”). (See also Paragraphs 3.2 and 3.3) 
  
 1.5      Base Rent: $ 29,000.00 per month (“Base Rent”), payable on the first (1st) day of each month commencing March 1, 2005. (See also Paragraph 4) 
  
 þ If this box is checked, there are provisions in this
Lease for the Base Rent to be adjusted. 
  
 1.6      Lessee’s Share of Common Area Operating Expenses: one hundred percent (100%) (“Lessee’s Share”). Lessee’s Share has been calculated by dividing the approximate
square footage of the Premises by the approximate square footage of the Project. In the event that the size of the Premises and/or the Project are modified during the term of this Lease, Lessor shall recalculate Lessee’s Share to reflect such
modification. See Addendum 1.6. 
  
 1.7      Base Rent and Other Monies Paid Upon Execution: 
  

			
	(a)	  	Base Rent: $29,000.00 for the period March 2005. See Addendum 1.5.
		
	(b)	  	Common Area Operating Expenses: $4,910.08 for the period March 2005. See Addendum 1.7(b).
		
	(c)	  	Security Deposit: $63,378.00. (“Security Deposit”). (See also Paragraph 5)
		
	(d)	  	Other: $ N/A for _________________________________________________________________
	
	_________________________________________________________________________________
		
	(e)	  	Total Due Upon Execution of this Lease: $ See Addendum 1.7(e).

  
 1.8      Agreed Use: warehouse, distribution, and general offices/call center and all other related legal uses. See Addendum 1.8. (See also Paragraph 6) 
  
 1.9      Insuring Party. Lessor is the
“Insuring Party”. (See also Paragraph 8) 
  
 1.10    Real Estate Brokers: (See also Paragraph 15) 
  

			
		
	(a)	  	Representation: The following real estate brokers (the “Brokers”) and brokerage relationships exist in this transaction (check applicable
boxes):

  
 þ
The Klabin Company - F. Ronald Rader/Aleks Trifunovic represents Lessor exclusively ( “Lessor’s Broker” ); 
  

					
	 	  	 	  	 
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 þ CB Richard Ellis - Joe King represents Lessee exclusively ( “Lessee’s
Broker”); or 
  
  ̈ represents both Lessor and Lessee (“Dual Agency”). 
  
 (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the brokerage
fee agreed to in a separate written agreement (or if there is no such agreement, the sum of _______________ or % of the total Base Rent for the brokerage services rendered by the Brokers). 
  
 1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by Intermix Media, Inc., a Delaware corporation, Managing Member (“Guarantor”). (See also Paragraph 37) 
  
 1.12 Attachments. Attached hereto are the following, all of which constitute a part of this Lease: 
  

			
	þ	  	an Addendum consisting of Paragraphs 1.2 through 56;
		
	þ	  	a site plan depicting the Premises;
		
	þ	  	a site plan depicting the Project;
		
	 ̈	  	a current set of the Rules and Regulations for the Project;
		
	 ̈	  	a current set of the Rules and Regulations adopted by the owners’ association;
		
	 ̈	  	a Work Letter;
		
	 ̈	  	other (specify):                                   
                                        
                                        
                                        
                                        
                       

  
 2. Premises. See Addendum 1.2.

  
 2.1 Letting. Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this Lease, or that may have been
used in calculating Rent, is an approximation which the Parties agree is reasonable and any use and/or payments based thereon are not subject to revision whether or not the actual size is more or less. NOTE: Lessee is advised to verify the actual
size prior to executing this Lease. 
  
 2.2 Condition.
Lessor shall deliver that portion of the Premises contained within the Building (“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), and, so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other such elements in the Unit, other than those constructed by Lessee, shall be in good operating condition on said
date, that the structural elements of the roof, bearing walls and foundation of the Unit shall be free of material defects, and that the Unit does not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal
law. If a non-compliance with such warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to such
matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor’s expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other elements of the Unit. If Lessee does not give Lessor the required notice within the appropriate warranty period,
correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee’s sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph 7).

  
 2.3 Compliance. Lessor warrants that to the best of its
knowledge the improvements on the Premises and the Common Areas comply with the building codes that were in effect at the time that each such improvement, or portion thereof, was constructed, and also with all applicable laws, covenants or
restrictions of record, regulations, and ordinances in effect on the Start Date (“Applicable Requirements”) . Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the
Americans with Disabilities Act or any similar laws as a result of Lessee’s use (see Paragraph 49), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements and especially the zoning are appropriate for Lessee’s intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6 four (4) months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense. If the
Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Unit, Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement
or other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows: 
  
 (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific
and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure is required during the last 2 years of this Lease and
the cost thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months’ Base Rent. If Lessee elects termination, Lessee shall immediately 

  

					
	 	  	 	  	 
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cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days
thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure. 
  
 (b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee
(such as, governmentally mandated seismic modifications), then Lessor and Lessee shall allocate the obligation to pay for the portion of such costs reasonably attributable to the Premises pursuant to the formula set out in Paragraph 7.1(d);
provided, however, that if such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this
Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to finance Lessor’s share,
or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor. 
  
 (c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of
use, or modification to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure,
or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease. 
  
 2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor’s agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

  
 2.5 Lessee as Prior Owner/Occupant. The warranties made
by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work. 
  
 2.6 Vehicle Parking. Lessee shall be entitled to use the number of
parking spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by
vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles”. Lessor may regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph
2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor. In addition: 
  
 (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee’s employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities. 
  
 (b) Lessee shall not service or store any vehicles in the Common Areas. 
  
 (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then
Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

  
 2.7 Common Areas - Definition. The term “Common
Areas” is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas,
roadways, walkways, driveways and landscaped areas. 
  
 2.8
Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with
others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use
of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the
prior written consent of Lessor or Lessor’s designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to such other rights
and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. 
  

					
	 	  	 	  	 
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 2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint
shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations (“Rules and Regulations”) which shall become a
part of this Lease, for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the
Project and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project. 
  
 2.10 Common Areas - Changes. Lessor shall have the right, in Lessor’s sole discretion, from time to time: 
  
 (a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; 
  
 (b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains available; 
  
 (c) To designate other land outside the boundaries of the Project to be a part of the Common Areas; 
  
 (d) To add additional buildings and improvements to the
Common Areas; 
  
 (e) To use the Common Areas
while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and 
  
 (f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in
the exercise of sound business judgment, deem to be appropriate. 
  
 3.
Term. 
  
 3.1 Term. The Commencement Date,
Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3. 
  
 3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other
terms of this Lease (including but not limited to the obligations to pay Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such
early possession shall not affect the Expiration Date. 
  
 3.3
Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession as agreed, Lessor
shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers
possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of the delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed, but minus any
days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Date, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessee’s right to cancel shall terminate. Except as otherwise provided, if
possession is not tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered within 4 months after the Commencement Date, this
Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 
  
 3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to
provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold
possession until such conditions are satisfied. 
  
 4. Rent. See Addendum
1.5. 
  
 4.1 Rent Defined. All monetary obligations of
Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent (“Rent”). 
  

					
	 	  	 	  	 
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 4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition
to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions: 
  
 (a) “Common Area Operating Expenses” are
defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Project, including, but not limited to, the following: 
  

	 	(i)	The operation, repair and maintenance, in neat, clean, good order and condition, and if necessary the replacement, of the following: 

  
 (aa) The Common Areas and Common Area improvements, including parking
areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, and roof drainage systems. 
  
 (bb) Exterior signs and any tenant directories.

  
 (cc) Any fire sprinkler systems and related telephone
equipment. 
  

	 	(ii)	The cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered. 

  

	 	(iii)	Trash disposal, p Pest control services, property management, security services, owners’ association dues and fees, the cost to repaint the
exterior of any structures and the cost of any environmental inspections. 

  

	 	(iv)	Reserves set aside for maintenance, repair and/or replacement of Common Area improvements and equipment. 

  

	 	(v)	Real Property Taxes (as defined in Paragraph 10). 

  

	 	(vi)	The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8. 

  

	 	(vii)	Any deductible portion of an insured loss concerning the Building or the Common Areas. 

  

	 	(viii)	Auditors’, accountants’ and attorneys’ fees and costs related to the operation, maintenance, repair and replacement of the Project. 

  

	 	(ix)	The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any
such capital improvement over a 12 year period and Lessee shall not be required to pay more than Lessee’s Share of 1/144th of the cost of such capital improvement in any given month. 

  

	 	(x)	Any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense. 

  
 (b) Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Unit, the Building or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in
the Project. 
  
 (c) The inclusion of the
improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Project already has the same,
Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them. 
  
 (d) Lessee’s Share of Common Area Operating Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount
of such payments shall be based on Lessor’s estimate of the annual Common Area Operating Expenses. Within 60 days after written request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing
Lessee’s Share of the actual Common Area Operating Expenses incurred during the preceding year. If Lessee’s payments during such year exceed Lessee’s Share, Lessor shall credit the amount of such over-payment against Lessee’s
future payments. If Lessee’s payments during such year were less than Lessee’s Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement. 
  
 (e) Common Area Operating Expenses shall not include any
expenses paid by any tenant directly to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant, or insurance proceeds. 
  
 4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute
a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment
of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of
Lessor’s rights to the balance of such Rent, regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee
agrees to pay to Lessor the sum of $25 $100 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier’s check. Payments will be applied first to accrued late charges and
attorney’s fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs. 
  
 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for
Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount
due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after
written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base 
  

					
	 	  	 	  	 
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Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount
of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a
result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with
Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 14
days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. See Addendum
1.7(c). 
  
 6. Use. See Addendum 1.8. 
  
 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or
causes damage to neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its
consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the Building or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the
Project. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor’s objections to the change in the Agreed Use. 
  
 6.2 Hazardous Substances. 
  
 (a) Reportable Uses Require Consent. The term
“Hazardous Substance” as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee’s expense) with all Applicable
Requirements. “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable
Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal
course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as
Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration
or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit. 
  
 (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located
in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance. 
  
 (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and
shall promptly, at Lessee’s expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this
Lease, by or for Lessee, or any third party. 
  
 (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this
Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee). Lessee’s obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, 

  

					
	 	  	 	  	 
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restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into
by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement. 
  
 (e) Lessor Indemnification. Lessor and its successors
and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Substances
on the Premises prior to Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when required by the Applicable Requirements, shall include,
but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. 
  
 (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the Lessee taking possession, unless such remediation measure is required as
a result of Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request
of Lessor, including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor’s investigative and remedial responsibilities. 
  
 (g) Lessor Termination Option. If a Hazardous
Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and
this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of the date 60 days following the
date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor’s notice of termination. 
  
 6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense,
fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants which
relate in any manner to such Requirements, without regard to whether said Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessor’s written request, provide Lessor with
copies of all permits and other documents, and other information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written
notice to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the
Premises. 
  
 6.4 Inspection; Compliance. Lessor and
Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance condition (see
Paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is
reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of written request therefor. 
  
 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

  
 7.1 Lessee’s Obligations. See Addendum 7.1.

  
 (a) In General. Subject to the
provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and
skylights but excluding any items which are 

  

					
	 	  	 	  	 
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the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition and state of repair. 
  
 (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with copies to Lessor, in
customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers, and (iv) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon
demand, for the cost thereof. 
  
 (c) Failure
to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall
be required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof. 
  
 (d) Replacement. Subject to Lessee’s
indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month
during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie.
1/144th of the cost per month). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time. 
  
 7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6
(Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition
of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common
Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor
be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 
  
 7.3 Utility Installations; Trade Fixtures; Alterations. 
  
 (a) Definitions. The term “Utility
Installations” refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility Installations ” are defined as Alterations and/or Utility Installations made by
Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). 
  
 (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Utility Installations to the
interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to
utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent
shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with
all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month’s Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of
the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an additional Security Deposit with Lessor. 
  
 (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialman’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that 

  

					
	 	  	 	  	 
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may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount
of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs. 
  
 7.4 Ownership; Removal; Surrender; and Restoration. See Addendum 7.4.

  
 (a) Ownership. Subject to
Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in
writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration
or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. 
  
 (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent. 
  
 (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris,
and in good operating order, condition and state of repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall
also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Project)
even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the
Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. 
  
 8. Insurance; Indemnity. 
  
 8.1 Payment of Premiums. The cost of the premiums for the insurance policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b),
8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date. 

 
 8.2 Liability Insurance. 
  
 (a) Carried by Lessee. Lessee shall obtain and keep
in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000.
Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization’s “Additional Insured-Managers or Lessors of Premises” Endorsement and coverage shall also be extended
to include damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an
“insured contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee
shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. 

 
 (b) Carried by Lessor. Lessor shall maintain
liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. 
  
 8.3 Property Insurance - Building, Improvements and Rental Value.

  
 (a) Building and Improvements. Lessor
shall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the
full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations
and Utility Installations, Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under Paragraph 8.4. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of
direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction
or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in 

  

					
	 	  	 	  	 
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lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by
a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not
exceed $1,000 per occurrence. 
  
 (b) Rental
Value. Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180
days (“Rental Value insurance”). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by
Lessee, for the next 12 month period. 
  
 (c)
Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee’s acts, omissions, use or
occupancy of the Premises. 
  
 (d)
Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this
Lease. 
  
 8.4 Lessee’s Property; Business Interruption
Insurance. 
  
 (a) Property Damage.
Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to
exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force. 
  
 (b)
Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent
lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils. 
  
 (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee’s property, business operations or obligations under this Lease. 
  
 8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least A-, VI, as set forth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be required by
a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies
shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be
required to, procure and maintain the same. 
  
 8.6 Waiver of
Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or
incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby. 
  
 8.7 Indemnity. Except for Lessor’s gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens,
judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor
by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified. 
  
 8.8
Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places.
Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence or breach
of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom. 
  
 8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose
Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the required
insurance and/or does not provide Lessor 

  

					
	 	  	 	  	 
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with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any
requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs
that Lessor will incur by reason of Lessee’s failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to maintain such insurance,
prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease. 
  
 9. Damage or Destruction. 
  
 9.1 Definitions. 
  
 (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations, which can reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. Notwithstanding the foregoing, Premises Partial Damage shall not include damage to windows, doors, and/or other similar items
which Lessee has the responsibility to repair or replace pursuant to the provisions of Paragraph 7.1. 
  
 (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall
notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. 
  
 (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved. 
  
 (d) “Replacement Cost” shall mean the cost
to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation. 
  
 (e)
“Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises which
requires repair, remediation, or restoration. 
  
 9.2 Partial
Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as
soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less,
and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of
the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless
Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10
day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written
notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease
terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 
  
 9.3 Partial Damage - Uninsured Loss . If a Premises Partial Damage that is not an Insured Loss occurs, unless caused
by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage
without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed
to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 
  
 9.4 Total Destruction. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs, this Lease shall terminate 

  

					
	 	  	 	  	 
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60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the
right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6. 
  
 9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may
terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination
notice and Lessee’s option shall be extinguished. 
  
 9.6
Abatement of Rent; Lessee’s Remedies. 
  
 (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the
repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein. 
  
 (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence,
in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of
which Lessee has actual notice, of Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. 
  
 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

  
 9.8 Waive Statutes. Lessor and Lessee agree that the
terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

  
 10. Real Property Taxes. 
  
 10.1 Definition. As used herein, the term “Real Property
Taxes” shall include any form of gross receipt tax assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Project address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Project is located. The term “Real
Property Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the
Project, (ii) a change in the improvements thereon, and/or (iii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for
any real estate tax year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common. 
  
 10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3,
Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2. 
  
 10.3 Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee’s request or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties.

  

					
	 	  	 	  	 
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 10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated
to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the
assessor’s work sheets or such other information as may be reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive. 
  
 10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee
Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall pay Lessor
the taxes attributable to Lessee’s property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property. 
  
 11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities
and services supplied to the Premises, together with any taxes thereon. Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor determines that Lessee is using a disproportionate amount of water,
electricity or other commonly metered utilities, or that Lessee is generating such a large volume of trash as to require an increase in the size of the trash receptacle and/or an increase in the number of times per month that it is emptied, then
Lessor may increase Lessee’s Base Rent by an amount equal to such increased costs. There shall be no abatement of Rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor’s reasonable control or in cooperation with governmental request or directions. See Addendum 11. 
  
 12. Assignment and Subletting. See Addendum 12. 
  
 12.1 Lessor’s Consent Required. 
  
 (a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent. 
  
 (b) Unless Lessee is a corporation and its stock is publicly
traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for
this purpose. 
  
 (c) The
involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or
Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold
its consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. 
  
 (d) An assignment or subletting without consent shall, at Lessor’s option, be a Default curable after
notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or
(ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall
be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent. 

 
 (e) Lessee’s remedy for any breach of Paragraph 12.1
by Lessor shall be limited to compensatory damages and/or injunctive relief. 
  
 (f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested. 
  
 (g) Notwithstanding the foregoing, allowing a diminimus portion of the Premises, i.e. 20 square feet or
less, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting. 
  
 12.2 Terms and Conditions Applicable to Assignment and Subletting. 
  
 (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective without the
express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance
of any other obligations to be performed by Lessee. 
  
 (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance
of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach. 
  
 (c) Lessor’s consent to any assignment or subletting shall not constitute consent to any subsequent assignment or subletting.

  
 (d) In the event of any Default or Breach by
Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone 

  

					
	 	  	 	  	 
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else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting
Lessor’s remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor. 
  
 (e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s
determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of
$500 $1,000 as consideration for Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also
Paragraph 36) 
  
 (f) Any assignee of, or
sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and
every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease
to which Lessor has specifically consented to in writing. 
  
 (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by
Lessor in writing. (See Paragraph 39.2) 
  
 12.3 Additional
Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly
incorporated therein: 
  
 (a) Lessee hereby
assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur
in the performance of Lessee’s obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee’s then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by
reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.

  
 (b) In the event of a Breach by Lessee,
Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. 
  
 (c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of
Lessor. 
  
 (d) No sublessee shall further assign
or sublet all or any part of the Premises without Lessor’s prior written consent. 
  
 (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 
  
 13. Default; Breach; Remedies. 
  
 13.1 Default; Breach. A “Default” is defined as a
failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period: 
  
 (a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is
jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism. 
  
 (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee. 
  
 (c) The
commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. 
  
 (d) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 41, (viii) material data safety sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of 10 days following written notice to Lessee. 
  
 (e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or (d),
above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it 

  

					
	 	  	 	  	 
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shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.

  
 (f) The occurrence of any of the following
events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where
possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is
not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

  
 (g) The discovery that any financial
statement of Lessee or of any Guarantor given to Lessor was materially false. 
  
 (h) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other than in
accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an
anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 
  
 13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and
without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: 
  
 (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee
shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately
caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses
of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The
worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both
an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. 
  
 (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or
assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.

  
 (c) Pursue any other remedy now or hereafter
available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises. 
  
 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as “Inducement Provisions” , shall be deemed conditioned upon Lessee’s full and
faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any
rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by
Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the
time of such acceptance. 
  

					
	 	  	 	  	 
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 13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within three (3) 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor as
additional rent a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs
Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other
rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor’s option, become due and payable quarterly in advance. See Addendum 1.7. 
  
 13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest (“Interest”) charged shall be computed at the rate
of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4. 
  
 13.6 Breach by Lessor. 
  
 (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. 
  
 (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after
receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure,
provided however, that such offset shall not exceed an amount equal to the greater of one month’s Base Rent or the Security Deposit, reserving Lessee’s right to reimbursement from Lessor for any such expense in excess of such offset.
Lessee shall document the cost of said cure and supply said documentation to Lessor. 
  
 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as
to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than 25% of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee
may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business goodwill
and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises
caused by such Condemnation. 
  
 15. Brokerage Fees. 
  
 15.1 Additional Commission. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and
located within the Project, (c) if Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein,
then, Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers in effect at the time of the execution of this Lease separate agreement. 
  
 15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease shall be deemed to
have assumed Lessor’s obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this
Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay
such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to be a third party beneficiary of any commission agreement entered
into by and/or between Lessor and Lessor’s Broker for the limited purpose of collecting any brokerage fee owed. 
  

					
	 	  	 	  	 
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 15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finder’s fee
in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto. 
  
 16. Estoppel Certificates. 
  
 (a) Each Party (as “Responding Party”) shall within 10 days after written notice from the other Party (the
“Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published by the AIR Commercial Real Estate
Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. 
  
 (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate. 
  
 (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and
shall be used only for the purposes herein set forth. 
  
 17. Definition of
Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the
foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. 
  
 18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof. 
  
 19. Days. Unless otherwise specifically
indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days. 
  
 20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, or its partners, members, directors,
officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s partners, members,
directors, officers or shareholders, or any of their personal assets for such satisfaction. 
  
 21. Time of Essence . Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 
  
 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is
relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with
respect thereto or with respect to any default or breach hereof by either Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or performance by either Lessor or Lessee
under this Lease or any amendment or modification hereto shall be limited to an amount up to the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker. 
  
 23.
Notices. 
  
 23.1 Notice Requirements. All notices
required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by
facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing. 
  
 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after 

  

					
	 	  	 	  	 
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the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee
next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 
  
 24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying
statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

  
 25. Disclosures Regarding The Nature of a Real Estate Agency
Relationship. 
  
 (a) When entering into a
discussion with a realestate agent regarding a realestate transaction, a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee
acknowledge being advised by the Brokers in this transaction, as follows: 
  
 (i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative obligations: To
the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor : (a) Diligent exercise of reasonable skills and care in performance of the agent’s duties. (b) A
duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the
Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. 
  
 (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative
obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the
agent’s duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and
observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. 
  
 (iii) Agent Representing Both Lessor and Lessee. A
real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties to the
Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, disclose to the other Party that the Lessor will accept rent in an
amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect
their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice
is desired, consult a competent professional. 
  
 (b) Brokers have no responsibility with respect to any Default or Breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Lease may be
brought against Broker more than one year after the Start Date and that the liability (including court costs and attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such Broker. 
  
 (c) Buyer and Seller agree to identify to Brokers as
“Confidential” any communication or information given Brokers that is considered by such Party to be confidential. 
  
 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the
event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by
Lessee. 
  
 27. Cumulative Remedies. No remedy or election hereunder shall
be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 
  
 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles
are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 

  

					
	 	  	 	  	 
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 29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives,
successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 
  
 30. Subordination; Attornment; Non-Disturbance. 
  
 30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 
  
 30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be
relieved of any further obligations hereunder and such new owner shall assume all of Lessor’s obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for the return of any security deposit paid to
any prior lessor. 
  
 30.3 Non-Disturbance. With respect to
Security Devices entered into by Lessor after the execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement” )
from the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to
the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is
secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement. 
  
 30.4 Self-Executing. The
agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises,
Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein. 
  
 31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees.
Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or
Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be
computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation
and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services
and consultation). 
  
 32. Lessor’s Access; Showing Premises; Repairs.
Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers,
lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability to Lessee. 
  
 33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written
consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction. 
  
 34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at any time and ordinary “For Lease” signs during the last 6 months of
the term hereof. Except for ordinary “For Sublease” signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor’s prior written consent. All signs must comply with all Applicable
Requirements. 
  
 35. Termination; Merger. Unless specifically stated
otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser
estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within 10 days 

  

					
	 	  	 	  	 
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following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to
have such event constitute the termination of such interest. 
  
 36.
Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs
and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited
to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall
not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the
time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its
reasons in writing and in reasonable detail within 10 business days following such request. 
  
 37. Guarantor. 
  
 37.1
Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by the AIR Commercial Real Estate Association. 
  
 37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution
of the guaranty, including the authority of the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect. 
  
 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee’s part to be
observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. 
  
 39. Options. If Lessee is granted an option, as defined below, then the following provisions shall apply. 
  
 39.1 Definition. “Option” shall mean: (a) the right
to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase
or the right of first refusal to purchase the Premises or other property of Lessor. 
  
 39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only
while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting. 
  
 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later
Option cannot be exercised unless the prior Options have been validly exercised. 
  
 39.4 Effect of Default on Options. 
  
 (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is
unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured,
during the 12 month period immediately preceding the exercise of the Option. 
  
 (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a). 

 
 (c) An Option shall terminate and be of no further force
or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such
Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease. 
  
 40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures,
and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 
  
 41. Reservations. Lessor reserves the right: (i) to grant, without the consent or
joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such rights. 
  
 42. Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part
thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid “under protest” within 6 months shall be deemed to have
waived its right to protest such payment. 
  

					
	 	  	 	  	 
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	©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM MTN-4-8/04E

  

			
	PAGE 20 OF 23

 43. Authority; Multiple Parties; Execution. 
  
 (a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar
entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other
Party satisfactory evidence of such authority. 
  
 (b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute
any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document. 
  
 (c) This Lease may be executed by the Parties in
counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 
  
 44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions. 
  
 45. Offer. Preparation of this Lease by either
party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. 
  
 46. Amendments. This Lease may be modified only in writing, signed by the Parties in
interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in
connection with the obtaining of normal financing or refinancing of the Premises. 
  
 47. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 
  
 48. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or
the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease  ̈ is þ is not
attached to this Lease. 
  
 49. Americans with Disabilities Act. Since
compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the
event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s expense. 
  

					
	 	  	 	  	 
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	©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM MTN-4-8/04E

  

			
	PAGE 21 OF 23

 LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE
EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND
LESSEE WITH RESPECT TO THE PREMISES. 
  
 ATTENTION: NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 
  
 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 
  
 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.
SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE. 
  
 WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED. 
  
 The parties hereto have executed this Lease at the place and on the dates specified above
their respective signatures. 
  

									
					
	 Executed at:
	 	Los Angeles	 	 	 	 Executed at:
	 	Los Angeles
	 On:
	 	February      , 2005	 	 	 	 On:
	 	February      , 2005
					
	By LESSOR:	 	 	 	 	 	By LESSEE:	 	 
	 RICHARD E. SOLOMON
	 	 	 	ALENA, LLC, A DELAWARE LIMITED LIABILITY
	 	 	 	 	COMPANY BY INTERMIX MEDIA, INC., A DELAWARE
	 By:
	 	/s/ Richard E. Solomon	 	 	 	CORPORATION, MANAGING MEMBER
	 Name Printed:
	 	Richard E. Solomon	 	 	 	By:	 	/s/ Brett Brewer
	 Title:
	 	 	 	 	 	 Name Printed:
	 	Brett Brewer
	By:	 	 	 	 	 	 Title:
	 	President
	 Name Printed:
	 	 	 	 	 	By:	 	/s/ Richard Rosenblatt
	 Title:
	 	 	 	 	 	 Name Printed:
	 	Richard Rosenblatt
	Address:	 	8460 Higuera Street	 	 	 	 Title:
	 	Chief Executive Officer
	Culver City, CA 90232	 	 	 	Address:	 	6060 Center Drive, 3rd Floor
	 	 	 	 	 	 	Los Angeles, CA 90045
	Telephone:	 	(310) 280-3700	 	 	 	 
	Facsimile:	 	(310) 280-3805	 	 	 	Telephone:	 	(310) 215-1011
	Federal ID No.	 	Social Security: ###-##-####	 	 	 	Facsimile:	 	(310) 258-2758
	 	 	 	 	 	 	Federal ID No.	 	68-0490117
				
	BROKER:	 	 	 	 	 	BROKER:
	THE KLABIN COMPANY	 	 	 	 CB RICHARD ELLIS

	 	 	 	 	 
					
	Attn:	 	 	 	 	 	 Attn:
	 	 
	 	 	F. Ronald Rader, SIOR                Aleks Trifunovic	 	 	 	 	 	Joe King
	Title:	 	 	 	 	 	Title:	 	 
	Address:	 	6601 Center Drive West, #300	 	 	 	Address:	 	1840 Century Park East, #700
	 	 	Los Angeles, CA 90045	 	 	 	 Los Angeles, CA 90067

	Telephone:	 	(310 ) 337-7000	 	 	 	Telephone:	 	(310 ) 550-2607
	Facsimile:	 	(310 )337-0078	 	 	 	Facsimile:	 	(310 ) 203-9624
	Email:	 	rader@klabin.com	 	 	 	Email:	 	joe.king@cbre.com
	Federal ID No.	 	95-3630032	 	 	 	Federal ID No.	 	95-2743174

  
 These forms are often modified to
meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: AIR 
  
 COMMERCIAL REAL ESTATE ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. 
  
 (213) 687-8777. 
  
 ©Copyright 1999 By AIR Commercial Real Estate Association. 
  

					
	 	  	 	  	 
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	©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM MTN-4-8/04E

  

			
	PAGE 22 OF 23

  
 All rights reserved.

  
 No part of these works may be reproduced in any form
without permission in writing. 
  

					
	 	  	 	  	 
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	©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM MTN-4-8/04E

  

			
	PAGE 23 OF 23

  
 ADDENDUM TO STANDARD
INDUSTRIAL/COMMERCIAL 
 MULTI-TENANT LEASE-NET 
  
 BY AND BETWEEN RICHARD E. SOLOMON, LESSOR AND 
 ALENA, LLC, A DELAWARE LIMITED LIABILITY COMPANY BY INTERMIX MEDIA, INC., 
 A
DELAWARE CORPORATION, MANAGING MEMBER, LESSEE 
  
 8500
HIGUERA STREET 
 CULVER CITY, CA 90232 
  

	1.2	PREMISES: 

  
 PROPERTY SIZE: The building, land, office and all other square footage as represented by an agent of The Klabin Company, a cooperating agent, an
A.I.R. listing sheet, or such other listing information as may be circulated by a third party, shall be deemed to be a reasonable approximation of the actual square footage. Since interpretation of measurements vary, there may be a differential
between the represented number and the exact size. The quoted rent is an actual dollar figure independent of any variation that may exist in any building size. Neither The Klabin Company nor its agents shall be responsible for such variations if
they exist. 
  
 OTHER DIMENSIONS: All other sizes,
dimensions, and quantities are approximate and should be carefully measured by Lessee. 
  

	1.5	BASE RENT ADJUSTMENTS: The base monthly rent shall be as follows: 

  

					
	 	  	Months

	  	 Rate

	 March 1, 2005 – February 28, 2006
	  	12	  	$29,000 per month, net
	 March 1, 2006 – February 28, 2007
	  	12	  	$29,870 per month, net
	 March 1, 2007 – February 29, 2008
	  	12	  	$30,766 per month, net
	 March 1, 2008 – February 28, 2009
	  	12	  	$31,689 per month, net
	 	  	
	  	 
	 	  	48	  	 

  
 In the 2nd, 13th, and 25th months, there will be a $29,000 per month credit. Lessee will not pay taxes, insurance,
and CAM costs during the 2nd month, but will pay taxes, insurance, and CAM costs during the 13th and 25th month. 
  
 Notwithstanding anything to the
contrary herein contained, in the event of the termination of this Lease pursuant to Paragraph 6.2(g) and/or Paragraph 9, there shall be no credit or adjustment recognized or given for the base rent credit described in Paragraph 1.5. 
  

	1.6	LESSEE’S SHARE OF COMMON AREA EXPENSES: All expenses for 8500 Higuera Street are separate. All expenses for 8460 Higuera Street are separate. However, there may be some
shared expenses such as parking lot stripping and slurry coating, tree trimming, gate repair, etc. These expenses will be pro rated as appropriate to each event. 

  

	1.7	RENT: Rent is due on the first (1st) day of each
month and rent is late on the third (3rd) day of each month at 5:00 PM, regardless of weekends or holidays. Rent
checks shall be made payable to “Richard E. Solomon” and mailed to: 

  

					
	 Richard E. Solomon
	  	 Phone:
	  	 310-280-3700

	 8640 Higuera Street
	  	 Fax:
	  	 310-280-3805

	Culver City, CA 90238	  	 E-mail:
	  	 solomonrick@hotmail.com

  
 Since rent is due
on the first (1st) of the month, all rents received before the first (1st) are held uncashed until the first (1st). 
  
  

					
	 	  	 	  	 
	 Initials
	  	PAGE 1 OF 4	  	Initials

  
 ADDENDUM TO STANDARD
INDUSTRIAL/COMMERCIAL 
 MULTI-TENANT LEASE-NET 
  
 BY AND BETWEEN RICHARD E. SOLOMON, LESSOR AND 
 ALENA, LLC, A DELAWARE LIMITED LIABILITY COMPANY BY INTERMIX MEDIA, INC., 
 A
DELAWARE CORPORATION, MANAGING MEMBER, LESSEE 
  
 8500
HIGUERA STREET 
 CULVER CITY, CA 90232 
  
 (b) Common Area Maintenance (CAM), taxes, and insurance paid by Lessor and reimbursed by Lessee: 
  

				
	 Taxes:
	  	$	2,683.42
	 Insurance:
	  	$	916.66
	 HVAC Service Contract:
	  	$	40.00
	 Landscape Maintenance:
	  	$	533.33
	 Fire Sprinkler Monitor Service:
	  	$	45.00
	 Roof Maintenance Contract:
	  	$	191.67
	 Property Management:
	  	$	500.00

  
 (c) TOTAL DUE UPON
EXECUTION: Lessee shall pay $4,910.08. 
  

	1.8	AGREED USE: Warehouse, distribution, call center, and office, and all other related uses that would not cause excess damage to the building; and no other uses that would
require hazardous or toxic materials, create dust or odors, require excess distribution of power, or HVAC equipment, or otherwise cause more “wear and tear” on the property than the Agreed Use. 

  

	7.1	LESSEE’S OBLIGATION: Subject to the provisions of 7.1(b) hereof, Lessor shall procure and maintain, at Lessee’s expense, an air conditioning system maintenance
contract, providing for service every 60 days. Such maintenance service is currently $10.00 per HVAC unit per month and will be billed monthly. There are four (4) HVAC units for this Premises. In addition, the cost of repairs and service items shall
be billed to Lessee. 

  
 In the event of a failure
by Lessee to perform its obligations under the lease if the default is not cured within the appropriate cure period, Lessor reserves the right, upon not less than ten (10) days prior written notice to Lessee, to control and perform all or any part
of the inspection and maintenance of the Premises reasonably required of Lessee under this Lease, and to charge Lessee the reasonable cost thereof. 
  

	7.4	OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION: Notwithstanding anything to the contrary in Paragraph 7.4, upon termination of this Lease, Lessor shall require that Lessee
cause the following (which is not an exclusive list) to be true as of the date of surrender: 

  

	 	(a)	All interior lights including bulbs and ballasts are operational and burning. 

  

	 	(b)	All exhaust, ceiling, and overhead fans are operational. 

  

	 	(c)	Warehouse floor is broom swept and clean of all trash and materials. 

  

	 	(d)	Warehouse floor is reasonably cleaned of excessive oils, fluids and other foreign materials, including tape. 

  

	 	(e)	All electrical, plumbing, and other utilities, which are terminated by Lessee are disconnected, capped, and/or terminated according to applicable building codes and all other
governmental requirements. 

  

	 	(f)	All electrical conduit and wiring installed by Lessee specifically for Lessee’s equipment are removed to originating electrical panel. 

  

	 	(g)	Overhead interior and exterior doors are operational and in good condition, and are not dented or otherwise damaged. 

  

	 	(h)	Any bolts secured to floor are cut off flush and sealed with epoxy. 

  

	 	(i)	Warehouse fencing or partitions installed by Lessee are removed. 

  

	 	(j)	All furniture, trash, and debris are removed. 

  

					
	 	  	 	  	 
	 Initials
	  	PAGE 2 OF 4	  	Initials

  
 ADDENDUM TO STANDARD
INDUSTRIAL/COMMERCIAL 
 MULTI-TENANT LEASE-NET 
  
 BY AND BETWEEN RICHARD E. SOLOMON, LESSOR AND 
 ALENA, LLC, A DELAWARE LIMITED LIABILITY COMPANY BY INTERMIX MEDIA, INC., 
 A
DELAWARE CORPORATION, MANAGING MEMBER, LESSEE 
  
 8500
HIGUERA STREET 
 CULVER CITY, CA 90232 
  

	 	(k)	All pictures, posters, signage, stickers, and all similar items are removed from all walls, windows, doors and all other interior and exterior surfaces of the Premises, and the
surface is repaired. 

  

	 	(l)	Carpet areas are vacuumed, and all stains are removed. 

  

	 	(m)	All uncarpeted office floors are swept and any excess wax buildup on tile and vinyl floors is removed. 

  

	 	(n)	All Lessee installed computer cable, telephone and data, alarm, intercom, paging, video and any other wires, transformers, and equipment is removed to point of origin, and repair
any damage caused by such removal. 

  

	 	(o)	All doors, windows, and miscellaneous hardware are operational and there are no broken windows or other glass items. 

  

	 	(p)	All heating, air conditioning and mechanical equipment is operational and in good working condition. 

  

	 	(q)	Ceiling tiles, grid, light lenses, air grills and diffusers are in place and reasonably cleaned with no holes or stains 

  

	 	(r)	Bathroom walls, floors, and fixtures are reasonably clean. 

  

	 	(s)	All plumbing fixtures are intact and operational and do not leak. 

  

	 	(t)	All downspouts are undamaged and operational. 

  

	 	(u)	Inside walls are reasonably clean and any holes in the walls or roof which are caused by Lessee are properly and permanently patched. 

  

	11.	UTILITIES: Lessee shall contract directly with Southern California Edison for Lessee’s electric services to the Premises. 

  

	12.	ASSIGNMENT AND SUBLETTING: Any profit on subleasing shall be divided equally between Lessor and Lessee. “Profit” shall be defined as the difference between the
“base” rent provided for under the Lease and the “base rent provided for under the proposed sublease.”  

  
 The financial condition at the time of proposed sublease of both the Lessee and Guarantor under the Lease shall be used in determining whether the
proposed Sublessee is of comparable financial condition which is one standard to be evaluated by Master Lessor in determining the consent of proposed Sublessee. 
  

	50.	CONFLICT: Any conflict between the provisions of the Lease and the provisions of the Proposal to Lease shall be controlled by the Lease. 

  

	51.	LESSEE’S IMPROVEMENTS: Lessee, at Lessee’s sole cost and expense, shall complete the following: 

  

	 	50.1	Install Lessee’s telephone system and distribution. 

  

	 	50.2	Install Lessee’s computer/data system and distribution. 

  

	 	50.3	Install any special equipment required by Lessee.  

  

	52.	LESSEE’S ADDITIONAL IMPROVEMENTS: Lessee shall, at Lessee’s sole cost and expense, accomplish the following: 

  

	 	52.1	Reconfigure the First and Second Floor office area to Lessee’s reasonable specifications per a plan to be approved by Lessor before the execution of leases.

  

	 	52.2	Paint and carpet the entire office area. 

  

	 	52.3	Re-light the entire warehouse area. 

  

					
	 	  	 	  	 
	 Initials
	  	PAGE 3 OF 4	  	Initials

  
 ADDENDUM TO STANDARD
INDUSTRIAL/COMMERCIAL 
 MULTI-TENANT LEASE-NET 
  
 BY AND BETWEEN RICHARD E. SOLOMON, LESSOR AND 
 ALENA, LLC, A DELAWARE LIMITED LIABILITY COMPANY BY INTERMIX MEDIA, INC., 
 A
DELAWARE CORPORATION, MANAGING MEMBER, LESSEE 
  
 8500
HIGUERA STREET 
 CULVER CITY, CA 90232 
  

	53.	RACKS: Lessor grants to Lessee, the right to use all of the existing metal racking system under the following terms and conditions: 

  

	 	53.1	Lessee may disassemble and remove two (2) rows of racking. Lessor shall then remove these racks from the building at Lessor’s cost. 

  

	 	53.2	The remaining racks will stay in place. 

  

	 	53.3	Lessee shall satisfy itself that these racks are suitable for its use. 

  

	 	53.4	Lessor shall have no liability regarding the maintenance, replacement, and/or use of the racks. 

  

	54.	REFUSE: Lessee shall arrange for its own trash service. 

  

	55.	ANIMALS: No animals of any kind, including guard dogs, (except animals required by disabled people), are allowed on the Premises. 

  

	56.	EXHIBITS: The following Exhibits are attached hereto and made a part hereof: 

  
 Exhibit A – Site Plan 
  
 Exhibit B – Floor Plan 
  

			
	 LESSEE:
	  	ALENA, LLC, A DELAWARE LIMITED LIABILITY COMPANY
	 	  	BY INTERMIX MEDIA, INC., A DELAWARE CORPORATION, MANAGING MEMBER

									
					
	By:	 	 /s/ Brett Brewer
	 	 	 	 	 	 February                     ,
2005

	 	 	 Brett Brewer, President
	 	 	 	 	 	 
					
	By:	 	 /s/ Richard Rosenblatt
	 	 	 	 	 	 February                     ,
2005

	 	 	 Richard Rosenblatt, Chief Executive Officer
	 	 	 	 	 	 

  

			
	 LESSOR:
	  	RICHARD E. SOLOMON

									
					
	By:	 	 /s/ Richard E. Solomon
	 	 	 	 	 	 February                     ,
2005

	 	 	 Richard E. Solomon
	 	 	 	 	 	 

  

					
	 	  	 	  	 
	 Initials
	  	PAGE 4 OF 4	  	Initials

  
 

 
 OPTION(S) TO EXTEND 
 STANDARD LEASE ADDENDUM 
  

			
	Dated February 2, 2005	 	 
		
	By and Between (Lessor)	 	RICHARD E. SOLOMON
		
	By and Between (Lessee)	 	ALENA, LLC, A DELAWARE LIMITED LIABILITY
	 	 	COMPANY BY INTERMIX MEDIA, INC., A DELAWARE
	 	 	CORPORATION, MANAGING MEMBER

			
		
	Address of Premises:	 	8500 Higuera Street, Culver City, CA 90232

  
 Paragraph 57 
  

	A.	OPTION(S) TO EXTEND: 

  
 Lessor hereby grants to Lessee the option to extend the term of this Lease for one (1) additional 36 month period(s) commencing when the prior term expires upon each and all of the following terms and
conditions: 
  
 (i) In order to exercise an
option to extend, Lessee must give written notice of such election to Lessor and Lessor must receive the same at least 6 but not more than 12 months prior to the date that the option period would commence, time being of the essence. If proper
notification of the exercise of an option is not given and/or received, such option shall automatically expire. Options (if there are more than one) may only be exercised consecutively. 
  
 (ii) The provisions of paragraph 39, including those relating to Lessee’s Default set forth in
paragraph 39.4 of this Lease, are conditions of this Option. 
  
 (iii) Except for the provisions of this Lease granting an option or options to extend the term, all of the terms and conditions of this Lease except where specifically modified by this option shall apply. 

 
 (iv) This Option is personal to the original Lessee, and
cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and without the intention of thereafter assigning or subletting. 
  
 (v) The monthly rent for each month of the option period
shall be calculated as follows, using the method(s) indicated below: (Check Method(s) to be Used and Fill in Appropriately) 
  

	 ̈	I. Cost of Living Adjustment(s) (COLA)  

  
 a. On (Fill in COLA Dates):
                                    the Base Rent shall be
adjusted by the change, if any, from the Base Month specified below, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select one):  ̈ CPI W (Urban Wage Earners and Clerical Workers) or  ̈ CPI U (All Urban
Consumers), for (Fill in Urban Area): 
  
 ___________________________________________________________ All Items (1982-1984 = 100), herein referred to as “CPI”. 
  

					
	 	  	 	  	 
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	©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM OE-3-8/00E

  

					
	 	  	PAGE 1 OF 2	  	 

 b. The monthly rent payable in accordance with paragraph A.I.a. of this Addendum shall be calculated as
follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which shall be the CPI of the calendar month 2 months prior to the month(s) specified in paragraph A.I.a. above during which
the adjustment is to take effect, and the denominator of which shall be the CPI of the calendar month which is 2 months prior to (select one):  ̈
the first month of the term of this Lease as set forth in paragraph 1.3 (“Base Month”) or  ̈ (Fill in Other “Base Month”):

  
 __ The sum so calculated shall constitute the new monthly rent hereunder, but
in no event, shall any such new monthly rent be less than the rent payable for the month immediately preceding the rent adjustment. 
  
 c. In the event the compilation and/or publication of the CPI shall be transferred to any other governmental department or bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI shall be used to make such calculation. In the event that the Parties cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration
Association in accordance with the then rules of said Association and the decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall be paid equally by the Parties. 
  

	 ̈	II. Market Rental Value Adjustment(s) (MRV)  

  
 a. On (Fill in MRV Adjustment Date(s))                 the Base Rent
shall be adjusted to the “Market Rental Value” of the property as follows: 
  
 1) Four months prior to each Market Rental Value Adjustment Date described above, the Parties shall attempt to agree upon what the new MRV
will be on the adjustment date. If agreement cannot be reached, within thirty days, then: 
  
 (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to establish the new MRV within the next 30
days. Any associated costs will be split equally between the Parties, or 
  
 (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV and submit such determination, in writing, to arbitration in accordance with the following provisions: 
  
 (i) Within 15 days thereafter, Lessor and Lessee shall each
select an  ̈ appraiser or  ̈ broker
(“Consultant” - check one) of their choice to act as an arbitrator. The two arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as a third arbitrator. 
  
 (ii) The 3 arbitrators shall within 30 day of the
appointment of the third arbitrator reach a decision as to what the actual MRV for the Premises is, and whether Lessor’s or Lessee’s submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be binding on
the Parties. The submitted MRV which is determined to be the closest to the actual MRV shall thereafter be used by the Parties. 
  
 (iii) If either of the Parties fails to appoint an arbitrator within the specified 15 days, the arbitrator timely appointed by one of
them shall reach a decision on his or her own, and said decision shall be binding on the Parties. 
  
 (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not selected, i.e. the one that is NOT the
closest to the actual MRV. 
  
 2) Notwithstanding
the foregoing, the new MRV shall not be less than the rent payable for the month immediately preceding the rent adjustment. 
  
 b. Upon the establishment of each New Market Rental Value: 
  
 1) the new MRV will become the new “Base Rent” for the purpose of calculating any further Adjustments, and 
  
 2) the first month of each Market Rental Value term shall
become the new “Base Month” for the purpose of calculating any further Adjustments. 
  

	þ	III. Fixed Rental Adjustment(s) (FRA) 

  
 The Base Rent shall be increased to the following amounts on the dates set forth below: 
  

					
	 On (Fill in FRA Adjustment Date(s)):
	  	        The New Base Rent shall be:	  	 
	 May 1, 2009 - April 30, 2010
	  	 $32,640 per month, net
	  	 
	 May 1, 2010 - April 30, 2011
	  	 $33,619 per month, net
	  	 
	 May 1, 2011 - April 30, 2012
	  	 $34,628 per month, net
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 
	 ________________________
	  	 ________________________
	  	 

  

	B.	NOTICE: 

  
 Unless specified otherwise herein, notice of any rental adjustments, other than Fixed Rental Adjustments, shall be made as
specified in paragraph 23 of the Lease. 
  

	C.	BROKER’S FEE: 

  
 The Brokers shall be paid a Brokerage Fee for each adjustment specified above in accordance with paragraph 15 of the Lease. 
  
 NOTE: These forms are often modified to meet changing requirements of law and needs of the
industry. Always write or call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 90017 
  

					
	 	  	 	  	 
	INITIALS	  	 	  	INITIALS

  

			
	©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM OE-3-8/00E

  

					
	 	  	PAGE 2 OF 2	  	 

  
 

 
 AIR COMMERCIAL REAL ESTATE ASSOCIATION 
 GUARANTY OF LEASE 
  
 WHEREAS, Richard E. Solomon , hereinafter “Lessor”, and Alena, LLC, a Delaware limited liability company by Intermix Media, Inc., a Delaware corporation, Managing Member , hereinafter
“Lessee”, are about to execute a document entitled “Lease” dated February 2, 2005 concerning the premises commonly known as 8500 Higuera Street, Culver City, CA 90232 wherein Lessor will lease the premises to Lessee, and

  
 WHEREAS, Intermix Media, Inc., a Delaware corporation,
Managing Member hereinafter “Guarantors” have a financial interest in Lessee, and 
  
 WHEREAS, Lessor would not execute the Lease if Guarantors did not execute and deliver to Lessor this Guarantee of Lease. 
  
 NOW THEREFORE, in consideration of the execution of the foregoing Lease by Lessor and as a material inducement to Lessor to execute said Lease, Guarantors
hereby jointly, severally, unconditionally and irrevocably guarantee the prompt payment by Lessee of all rents and all other sums payable by Lessee under said Lease and the faithful and prompt performance by Lessee of each and every one of the
terms, conditions and covenants of said Lease to be kept and performed by Lessee. 
  
 It is specifically agreed that the terms of the foregoing Lease may be modified by agreement between Lessor and Lessee, or by a course of conduct, and said Lease may be assigned by Lessor or any assignee of Lessor
without consent or notice to Guarantors and that this Guaranty shall guarantee the performance of said Lease as so modified. 
  
 This Guaranty shall not be released, modified or affected by the failure or delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease, whether pursuant to the terms thereof or at law or in equity. 
  
 No notice of default need be given to Guarantors, it being specifically agreed that the guarantee of the undersigned is a continuing guarantee under which Lessor may proceed immediately against Lessee and/or against
Guarantors following any breach or default by Lessee or for the enforcement of any rights which Lessor may have as against Lessee under the terms of the Lease or at law or in equity. 
  
 Lessor shall have the right to proceed against Guarantors hereunder following any breach or default by Lessee without first
proceeding against Lessee and without previous notice to or demand upon either Lessee or Guarantors. 
  
 Guarantors hereby waive (a) notice of acceptance of this Guaranty. (b) demand of payment, presentation and protest, (c) all right to assert or plead any
statute of limitations relating to this Guaranty or the Lease, (d) any right to require the Lessor to proceed against the Lessee or any other Guarantor or any other person or entity liable to Lessor, (e) any right to require Lessor to apply to any
default any security deposit or other security it may hold under the Lease, (f) any right to require Lessor to proceed under any other remedy Lessor may have before proceeding against Guarantors, (g) any right of subrogation. 
  
 Guarantors do hereby subrogate all existing or future indebtedness of Lessee
to Guarantors to the obligations owed to Lessor under the Lease and this Guaranty. 
  
 If a Guarantor is married, such Guarantor expressly agrees that recourse may be had against his or her separate property for all of the obligations hereunder. 
  
 The obligations of Lessee under the Lease to execute and deliver estoppel
statements and financial statements, as therein provided, shall be deemed to also require the Guarantors hereunder to do and provide the same. 
  
 The term “Lessor” refers to and means the Lessor named in the Lease and also Lessor’s successors and assigns. So long as Lessor’s
interest in the Lease, the leased premises or the rents, issues and profits therefrom, are subject to any mortgage or deed of trust or assignment for security, no acquisition by Guarantors of the Lessor’s interest shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue in full force and effect for the benefit of the mortgagee, beneficiary, trustee or assignee under such mortgage, deed of trust or assignment and their successors and
assigns. 
  

			
	©1996 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM GR-1-12/96E

  

					
	 	  	PAGE 1 OF 2	  	 

 The term “Lessee” refers to and means the Lessee named in the Lease and also Lessee’s
successors and assigns. 
  
 In the event any action be brought by
said Lessor against Guarantors hereunder to enforce the obligation of Guarantors hereunder, the unsuccessful party in such action shall pay to the prevailing party therein a reasonable attorney’s fee which shall be fixed by the court.

  
 If this Form has been filled in, it has been prepared for
submission to your attorney for his approval. No representation or recommendation is made by the AIR Commercial Real Estate Association, the real estate broker or its agents or employees as to the legal sufficiency, legal effect, or tax consequences
of this Form or the transaction relating thereto. 
  
  
  

					
	Executed at: Los Angeles	  	 	  	 
	On: February             , 2005	  	Michael Mincieli	  	 Richard Rosenblatt

	Address: 6060 Center Drive, 3rd Floor	  	Vice President and Corporate Controller	  	 CEO

	Los Angeles, CA 90045	  	 	  	“GUARANTORS”

  

			
	©1996 - AIR COMMERCIAL REAL ESTATE ASSOCIATION	  	FORM GR-1-12/96E

  

					
	 	  	PAGE 2 OF 2Revolving Credit and Security Agreement

 Exhibit 10.1 
 REVOLVING CREDIT 
  
 AND

  
 SECURITY AGREEMENT 
  
 PNC BANK, NATIONAL ASSOCIATION 
  
 WITH 
  
 FRANKLIN ELECTRONIC PUBLISHERS, INC. 
 FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD. 
 FRANKLIN ELECTRONIC PUBLISHERS (DEUTSCHLAND) GMBH 

 
 December 7, 2004 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	Page

	 I
	  	DEFINITIONS	  	1
				
	 	  	1.1	  	 Accounting Terms
	  	1
				
	 	  	1.2	  	 General Terms
	  	1
				
	 	  	1.3	  	 Uniform Commercial Code Terms
	  	14
				
	 	  	1.4	  	 Certain Matters of Construction
	  	14
			
	 II
	  	ADVANCES, PAYMENTS	  	14
				
	 	  	2.1	  	 (a) Revolving Advances
	  	14
				
	 	  	2.2	  	 Procedure for Revolving Advances Borrowing
	  	15
				
	 	  	2.3	  	 Disbursement of Advance Proceeds
	  	16
				
	 	  	2.4	  	 Maximum Advances
	  	17
				
	 	  	2.5	  	 Repayment of Advances
	  	17
				
	 	  	2.9	  	 Repayment of Excess Advances
	  	19
				
	 	  	2.10	  	 Statement of Account
	  	20
				
	 	  	2.11	  	 Additional Payments
	  	20
				
	 	  	2.12	  	 Use of Proceeds
	  	20
			
	 III
	  	INTEREST AND FEES	  	20
				
	 	  	3.1	  	 Interest
	  	20
				
	 	  	3.3	  	 Computation of Interest and Fees
	  	21
				
	 	  	3.4	  	 Maximum Charges
	  	21
				
	 	  	3.5	  	 Increased Costs
	  	21
				
	 	  	3.6	  	 Basis For Determining Interest Rate Inadequate or Unfair
	  	22
				
	 	  	3.7	  	 Capital Adequacy
	  	23
			
	 IV
	  	COLLATERAL: GENERAL TERMS	  	23
				
	 	  	4.1	  	 Security Interest in the Collateral.
	  	23
				
	 	  	4.2	  	 Perfection of Security Interest.
	  	23
				
	 	  	4.3	  	 Disposition of Collateral.
	  	24
				
	 	  	4.4	  	 Ownership of Collateral.
	  	24
				
	 	  	4.5	  	 Defense of Lender’s Interests.
	  	24
				
	 	  	4.6	  	 Books and Records.
	  	25
				
	 	  	4.7	  	 Financial Disclosure.
	  	25

  

 -i- 

 TABLE OF CONTENTS 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	4.8	  	 Compliance with Laws.
	  	25
				
	 	  	4.9	  	 Inspection of Premises.
	  	25
				
	 	  	4.10	  	 Insurance.
	  	26
				
	 	  	4.11	  	 Failure to Pay Insurance.
	  	26
				
	 	  	4.12	  	 Payment of Taxes.
	  	26
				
	 	  	4.13	  	 Payment of Leasehold Obligations.
	  	27
				
	 	  	4.14	  	 Receivables
	  	27
				
	 	  	4.15	  	 Inventory.
	  	29
				
	 	  	4.16	  	 Maintenance of Equipment.
	  	29
				
	 	  	4.17	  	 Exculpation of Liability.
	  	29
				
	 	  	4.18	  	 Environmental Matters
	  	30
				
	 	  	4.19	  	 Financing Statements
	  	32
			
	 V
	  	REPRESENTATIONS AND WARRANTIES	  	32
				
	 	  	5.1	  	 Authority.
	  	32
				
	 	  	5.2	  	 Formation and Qualification.
	  	32
				
	 	  	5.3	  	 Survival of Representations and Warranties.
	  	32
				
	 	  	5.4	  	 Tax Returns.
	  	32
				
	 	  	5.5	  	 Financial Statements
	  	33
				
	 	  	5.6	  	 Corporate Name.
	  	33
				
	 	  	5.7	  	 O.S.H.A. and Environmental Compliance
	  	33
				
	 	  	5.8	  	 Solvency; No Litigation, Violation, Indebtedness or Default
	  	33
				
	 	  	5.9	  	 Patents, Trademarks, Copyrights and Licenses.
	  	35
				
	 	  	5.10	  	 Licenses and Permits.
	  	35
				
	 	  	5.11	  	 Default of Indebtedness.
	  	35
				
	 	  	5.12	  	 No Default.
	  	35
				
	 	  	5.13	  	 No Burdensome Restrictions.
	  	35
				
	 	  	5.14	  	 No Labor Disputes.
	  	35
				
	 	  	5.15	  	 Margin Regulations.
	  	36
				
	 	  	5.16	  	 Investment Company Act.
	  	36
				
	 	  	5.17	  	 Disclosure.
	  	36

  

 -ii- 

 TABLE OF CONTENTS 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	5.18	  	 Swaps
	  	36
				
	 	  	5.19	  	 Conflicting Agreements.
	  	36
				
	 	  	5.20	  	 Application of Certain Laws and Regulations.
	  	36
				
	 	  	5.21	  	 Business and Property of Borrower.
	  	36
				
	 	  	5.22	  	 Section 20 Subsidiaries.
	  	37
			
	 VI
	  	AFFIRMATIVE COVENANTS	  	38
				
	 	  	6.1	  	 Payment of Fees
	  	38
				
	 	  	6.2	  	 Conduct of Business and Maintenance of Existence and Assets.
	  	38
				
	 	  	6.3	  	 Violations.
	  	38
				
	 	  	6.4	  	 Government Receivables.
	  	38
				
	 	  	6.9	  	 Operating Accounts and Treasury Management Services.
	  	39
				
	 	  	6.10	  	 Execution of Supplemental Instruments.
	  	39
				
	 	  	6.11	  	 Payment of Indebtedness.
	  	39
				
	 	  	6.12	  	 Standards of Financial Statements.
	  	39
			
	 VII
	  	NEGATIVE COVENANTS	  	40
				
	 	  	7.1	  	 Merger, Consolidation, Acquisition and Sale of Assets
	  	40
				
	 	  	7.2	  	 Creation of Liens.
	  	40
				
	 	  	7.3	  	 Guarantees.
	  	40
				
	 	  	7.4	  	 Investments.
	  	40
				
	 	  	7.5	  	 Loans.
	  	40
				
	 	  	7.6	  	 Indebtedness.
	  	40
				
	 	  	7.7	  	 Nature of Business.
	  	40
				
	 	  	7.8	  	 Transactions with Affiliates.
	  	41
				
	 	  	7.9	  	 Subsidiaries
	  	41
				
	 	  	7.10	  	 Fiscal Year and Accounting Changes.
	  	41
				
	 	  	7.11	  	 Pledge of Credit.
	  	41
				
	 	  	7.12	  	 Amendment of Articles of Incorporation, By-Laws.
	  	41
				
	 	  	7.13	  	 Compliance with ERISA.
	  	41
				
	 	  	7.14	  	 Prepayment of Indebtedness.
	  	42
			
	 VIII
	  	CONDITIONS PRECEDENT.	  	42

  

 -iii- 

 TABLE OF CONTENTS 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	8.1	  	 Conditions to Initial Advances.
	  	42
				
	 	  	8.2	  	 Conditions to Each Advance.
	  	45
			
	IX	  	INFORMATION AS TO BORROWERS	  	45
				
	 	  	9.1	  	 Disclosure of Material Matters.
	  	45
				
	 	  	9.2	  	 Schedules.
	  	45
				
	 	  	9.3	  	 Environmental Reports.
	  	46
				
	 	  	9.4	  	 Litigation.
	  	46
				
	 	  	9.5	  	 Material Occurrences.
	  	46
				
	 	  	9.6	  	 Government Receivables.
	  	46
				
	 	  	9.7	  	 Annual Financial Statements.
	  	46
				
	 	  	9.9	  	 Quarterly Financial Statements.
	  	47
				
	 	  	9.10	  	 Additional Information.
	  	47
				
	 	  	9.11	  	 Notice of Suits, Adverse Events.
	  	48
				
	 	  	9.12	  	 ERISA Notices and Requests.
	  	48
				
	 	  	9.13	  	 Additional Documents.
	  	48
			
	X	  	EVENTS OF DEFAULT	  	49
			
	XI	  	LENDER’ RIGHTS AND REMEDIES AFTER DEFAULT	  	51
				
	 	  	11.1	  	 Rights and Remedies
	  	51
				
	 	  	11.2	  	 Lender’s Discretion
	  	51
				
	 	  	11.3	  	 Setoff
	  	52
				
	 	  	11.4	  	 Rights and Remedies not Exclusive
	  	52
			
	XII	  	WAIVERS AND JUDICIAL PROCEEDINGS	  	52
				
	 	  	12.1	  	 Waiver of Notice.
	  	52
				
	 	  	12.2	  	 Delay.
	  	52
				
	 	  	12.3	  	 Jury Waiver.
	  	52
			
	XIII	  	EFFECTIVE DATE AND TERMINATION	  	52
				
	 	  	13.1	  	 Term.
	  	52
				
	 	  	13.2	  	 Termination.
	  	52
			
	XIV	  	MISCELLANEOUS	  	53
				
	 	  	14.1	  	 Governing Law.
	  	53

  

 -iv- 

 TABLE OF CONTENTS 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	14.2	  	 Entire Understanding.
	  	53
				
	 	  	14.3	  	 Application of Payments.
	  	54
				
	 	  	14.4	  	 Indemnity.
	  	54
				
	 	  	14.5	  	 Notice.
	  	54
				
	 	  	14.6	  	 Survival.
	  	55
				
	 	  	14.7	  	 Severability.
	  	55
				
	 	  	14.8	  	 Expenses.
	  	55
				
	 	  	14.9	  	 Injunctive Relief.
	  	55
				
	 	  	14.10	  	 Consequential Damages.
	  	56
				
	 	  	14.11	  	 Captions.
	  	56
				
	 	  	14.12	  	 Counterparts; Telecopied Signatures.
	  	56
				
	 	  	14.13	  	 Construction.
	  	56
				
	 	  	14.14	  	 Confidentiality; Sharing Information
	  	56

  

 -v- 

 List of Exhibits and Schedules 
  
 Exhibits 
  

			
	 Exhibit 2.1(a)
	  	 Revolving Credit Note

		
	 Exhibit A
	  	 Borrowing Base Certificate

		
	 Schedules
	  	 
		
	 Schedule 1.2
	  	 Permitted Encumbrances

		
	 Schedule A
	  	 Property Description

		
	 Schedule 4.4
	  	 Equipment and Inventory Locations

		
	 Schedule 4.14(c)
	  	 Locations of Borrowers

		
	 Schedule 5.2
	  	 States of Qualification and Good Standing

		
	 Schedule 5.4
	  	 Federal tax identification number

		
	 Schedule 5.6
	  	 Prior Names

		
	 Schedule 5.7
	  	 Environmental

		
	 Schedule 5.8(b)
	  	 Litigation

		
	 Schedule 5.8(d)
	  	 Plans

		
	 Schedule 5.9
	  	 Intellectual Property

		
	 Schedule 5.10
	  	 Licenses and Permits

		
	 Schedule 5.14
	  	 Labor Disputes

		
	 Schedule 7.3
	  	 Guarantees

 REVOLVING CREDIT 
 AND 
 SECURITY AGREEMENT 
  
 Revolving Credit and Security Agreement dated December 7, 2004 among FRANKLIN ELECTRONIC PUBLISHERS, INC., a corporation
organized under the laws of the Commonwealth of Pennsylvania (“FRANKLIN INC.”), FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD., a corporation organized under the laws of the United Kingdom (“Franklin Ltd.”) and FRANKLIN ELECTRONIC
PUBLISHERS (DEUTSCHLAND) GMBH, a corporation organized under the laws of Germany (“Franklin GmbH”) (Franklin Inc., Franklin Ltd. And Franklin GmbH, each a “Borrower” and collectively, “Borrowers”) and PNC BANK, NATIONAL
ASSOCIATION (“PNC” or “Lender”). 
  
 IN
CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower and Lender hereby agree as follows: 
  
 I DEFINITIONS 
  
 1.1 Accounting Terms As used in this Agreement, the Note or any certificate, report or other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such
accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as to be applied in preparation of the audited financial statements of
Borrowers for the fiscal year ended March 31, 2005. 
  
 1.2
General Terms For purposes of this Agreement the following terms shall have the following meanings: 
  
 “Accountants” shall have the meaning set forth in Section 9.7 hereof. 
  
 “Advances” shall mean and include the Revolving Advances. 
  
 “Advance Rate” shall have the meaning set forth in Section
2.1(a) hereof. 
  
 “Affiliate” of any Person
shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the securities having ordinary voting power for the election of directors of
such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. 
  
 “Anti-Terrorism Laws” shall mean any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot
Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed,
extended, or replaced). 

 “Assignment of Security Interest in Borrower’s Patent Collateral” shall mean the
assignment dated the date hereof given by Franklin Inc. to Lender assigning its patent collateral. 
  
 “Assignment of Security Interest in Borrower’s Trademark Collateral” shall mean the assignment dated the date hereof given by
Franklin Inc. to Lender assigning its trademark collateral. 
  
 “Authority” shall have the meaning set forth in Section 4.19(d). 
  
 “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of
any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of customers of PNC. 
  
 “Blocked Accounts” shall have the meaning set forth in Section 4.15(h). 
  
 “Borrower” and “Borrowers” shall have the meaning set forth in the preamble to this Agreement and shall extend to all
permitted successors and assigns of such Person. 
  
 “Borrowing Agent” shall mean Franklin Electronic Publishers, Inc. 
  
 “Borrowing Base Certificate” shall mean a certificate duly executed by an officer of Borrowing Agent appropriately completed and in substantially the form of Exhibit A hereto. 
  
 “Borrower’s Account” shall have the meaning set forth
in Section 2.8. 
  
 “Business Day” shall mean any
day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any LIBOR Rate Loans, such day
must also be a day on which dealings are carried on in the London interbank market. 
  
 “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq. 
  
 “Charges” shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional
amounts, imposed by any taxing or other authority, domestic or foreign (including, without limitation, the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, Borrowers or any of their Affiliates.

  

 2 

 “Closing Date” shall mean December 7, 2004 or such other date as may be agreed to by the
parties hereto. 
  
 “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated thereunder. 
  
 “Collateral” shall mean and include: 
  
 (a) all Receivables; 
  
 (b) all Equipment; 
  
 (c) all General Intangibles; 
  
 (d) all Inventory; 
  
 (e) all Investment Property; 
  
 (f) all Real Property; 
  
 (g) the Leasehold Interests; 
  
 (h) all of each Borrower’s right, title and interest in and to (i) its respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit,
setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing this Agreement; (v)
all of each Borrower’s contract rights, rights of payment which have been earned under a contract right, instruments, documents, chattel paper, warehouse receipts, deposit accounts, money, securities and investment property; (vi) if and when
obtained by any Borrower, all real and personal property of third parties in which each Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; and (vii) any other goods, personal property or
real property now owned or hereafter acquired in which any Borrower has expressly granted a security interest or may in the future grant a security interest to Lender hereunder, or in any amendment or supplement hereto or thereto, or under any other
agreement between Lender and any Borrower; 
  
 (i) all of each
Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any Borrower or in which it has an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f), (g) or (h) of this Paragraph; and 
  

 3 

 (j) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h) and (i) in whatever form,
including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the
payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds. 
  
 “Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties, domestic or foreign, necessary to carry on such Borrower’s business, including, without limitation, any Consents required under all applicable federal, state or other applicable law. 

 
 “Controlled Group” shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with Borrowers, are treated as a single employer under Section 414 of the Code. 
  
 “Customer” shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with such Borrower,
pursuant to which such Borrower is to deliver any personal property or perform any services. 
  
 “Current Maturities” shall mean the scheduled payments of principal on all indebtedness of borrowed money having an original term of more than one year (including but not limited to amortization of
capitalized lease obligations), as shown on the Borrowers’ financial statements as of one year prior to the date of determination. 
  
 “Default” shall mean an event which, with the giving of notice or passage of time or both, would constitute an Event of Default.

  
 “Default Rate” shall have the meaning set
forth in Section 3.1 hereof. 
  
 “Depository
Accounts” shall have the meaning set forth in Section 4.15(h) hereof. 
  
 “Documents” shall have the meaning set forth in Section 8.1(c) hereof. 
  
 “Dollar” and the sign “$” shall mean lawful money of the United States of America. 
  
 “Domestic Rate Loan” shall mean any Advance or Equipment
Loan that bears interest based upon the Base Rate. 
  
 “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof. 
  
 “EBITDA” shall mean net income plus interest expense plus income tax expense plus depreciation plus
amortization. 
  

 4 

 “Eligible Inventory” shall mean all Inventory of Franklin Inc. which is on hand and all
Inventory in transit from vendors or to the third party assemblers and Inventory . Inventory shall not be deemed eligible unless such Inventory is subject to Lender’s first priority perfected security interest on no other Lien (other than
Permitted Encumbrances) and provided further the maximum Eligible Inventory cap shall be $10,000,000. The following shall be exceptions to Eligible Inventory: 
  

	 	(a)	discontinued product line (Ebookman); 

  

	 	(b)	damaged merchandise returned from Customers that is deemed unsaleable; 

  

	 	(c)	Hong Kong inventory; 

  

	 	(d)	inventory located in the Borrower’s Real Property that is undergoing inspection; 

  

	 	(e)	non-inventory materials included on the Borrowers’ perpetual inventory; 

  

	 	(f)	inventory in transit to third party assemblers per perpetual which is not located in the United States; 

  

	 	(g)	inventory at third party assemblers per perpetual/components which is not located in the United States; 

  

	 	(h)	merchandise returned from customers that is to be refurbished and placed back into stock (of this refurbished inventory,  1/2 shall be deemed ineligible and  1/2 shall be deemed eligible). 

  
 “Eligible Receivables” shall mean and include with respect to each Borrower, each Receivable of Borrower arising in the ordinary course of such Borrower’s business and which Lender, in its sole credit judgment, shall
deem to be an Eligible Receivable, based on such considerations as Lender may from time to time deem appropriate. A Receivable shall not be deemed eligible unless such Receivable is subject to Lender’s first priority perfected security interest
and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Lender. In addition, no Receivable shall be an Eligible Receivable if: 
  
 (a) it arises out of a sale made by such Borrower to an Affiliate of such
Borrower or to a Person controlled by an Affiliate of such Borrower; 
  
 (b) it is due or unpaid more than ninety (90) days after the original invoice date, except German Receivables that are unpaid more than one hundred twenty (120) days after the original invoice date and except for United States Receivables
that are seasonal exceptions from the following Customers: Office Max, Office Depot, Staples, Costco and Best Buy; 
  
 (c) thirty percent (30%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder. Upon reasonable notice to Borrowers,
such percentage may, in Lender’s sole discretion, be increased or decreased from time to time; 
  

 5 

 (d) any covenant, representation or warranty contained in this Agreement with respect to such Receivable
has been breached; 
  
 (e) the Customer shall (i) apply for,
suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; 
  
 (f) the sale is to a Customer outside the continental United States of America, unless the sale is on letter of credit, guaranty or acceptance terms, in
each case acceptable to Lender in its sole discretion and except as set forth in subsection (q) of this definition and except to sales to Seiko Instruments International (SII) Japan.; 
  
 (g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by chattel paper; 
  
 (h) Lender believes, in its sole judgment, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay; 
  
 (i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless such Borrower assigns its right to payment of such Receivable to Lender pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances; 
  
 (j) the goods giving rise to such Receivable have not been shipped to the Customer or the services giving rise to such Receivable have not been performed
by such Borrower or the Receivable otherwise does not represent a final sale; 
  
 (k) upon reasonable notice to Borrowers, the Receivables of the Customer exceed a credit limit determined by Lender, in its sole discretion, to the extent such Receivable exceeds such limit; 
  
 (l) to the extent of such offset, deduction, defense dispute or counterclaim,
the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim, the Customer is also a creditor or supplier of such Borrower or the Receivable is contingent in any respect or for any reason; 
  
 (m) Such Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the ordinary course of business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto; 

 

 6 

 (n) any return, rejection or repossession of the merchandise has occurred or the rendition of services
has been disputed; 
  
 (o) such Receivable is not payable to such
Borrower; 
  
 (p) such Receivable is not otherwise satisfactory to
Lender as determined in good faith by Lender in the exercise of its discretion in a reasonable manner; 
  
 (q) such Receivable, in the case of each Franklin Ltd. and Franklin GmbH, are in amounts not to exceed $ 3,000,000 in the aggregate; or 
  
 (r) or such other factors as determined by Lender’s due diligence.

  
 “Environmental Complaint” shall have the
meaning set forth in Section 4.19(d) hereof. 
  
 “Environmental Laws” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment
and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect thereto. 
  
 “Equipment” shall mean and include all of each Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including, without limitation, all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto. 
  
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and
the rules and regulations promulgated thereunder. 
  
 “Event of Default” shall mean the occurrence of any of the events set forth in Article X hereof. 
  
 “Fixed Charge Coverage Ratio” shall mean (i) EBITDA, divided by (ii) the sum of Current Maturities plus interest expense
plus cash taxes paid plus cash dividends plus Unfunded Capital Expenditures. 
  
 “Formula Amount” shall have the meaning set forth in Section 2.1(a). 
  
 “Funded Debt” shall mean all indebtedness for borrowed money including but not limited to capitalized lease
obligations, reimbursement obligations in respect of letters of credit and guarantees of any such indebtedness. 
  

 7 

 “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time. 
  
 “General
Intangibles” shall mean and include as to each Borrower all of such Borrower’s general intangibles, whether now owned or hereafter acquired including, without limitation, all choses in action, causes of action, corporate or other
business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, service marks, trade secrets, goodwill, copyrights, design rights, registrations,
licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Borrower to secure payment of any of the Receivables by a Customer
all rights of such indemnification and all other intangible property of every kind and nature (other than Receivables). 
  
 “Governmental Body” shall mean any nation or government, any state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining to a government. 
  
 “Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof. 
  
 “Hazardous Substance” shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related
materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New Jersey State Environmental Conservation Law or any other applicable Environmental Law and
in the regulations adopted pursuant thereto. 
  
 “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal. 
  
 “Indebtedness” of a Person at
a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason
of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness
secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets
subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred. 
  
 “Ineligible Security” shall mean any security which may not
be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended. 
  

 8 

 “Interest Period” shall mean the period provided for any LIBOR Rate Loan pursuant to
Section 2.2(b). 
  
 “Inventory” shall mean and
include as to each Borrower all of such Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower’s business or used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them. 
  
 “Investment Property” shall mean and include as to each Borrower, all of such Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities
entitlements, securities accounts, commodities contracts and commodities accounts. 
  
 “Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond, judgment, authorization or
approval, lien or award by or settlement agreement with any Governmental Body. 
  
 “Lender” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of Lender. 
  
 “LIBOR Rate” shall mean for any LIBOR Rate Loan for the then
current Interest Period relating thereto the interest rate per annum determined by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank offered rates for U.S. Dollars quoted by the British Bankers’ Association as set forth on Dow Jones
Markets Service (formerly known as Telrate) (or appropriate successor or, if British Banker’s Association or its successor ceases to provide such quotes, a comparable replacement determined by PNC) display page 3750 (or such other display page
on the Dow Jones Markets Service system as may replace display page 3750) two (2) Business Days prior to the first day of such Interest Period for an amount comparable to such LIBOR Rate Loan and having a borrowing date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage. The LIBOR Rate may also be expressed by the following formula: 
  

	
	Average of London interbank offered rates quoted by BBA as shown on LIBOR Rate =Dow Jones Markets Service display page 3750 or appropriate successor 1.00 - Reserve
Percentage]

  
 “LIBOR Rate
Loan” shall mean an Advance at any time that bears interest based on the Libor Rate. 
  
 “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or
other security agreement or preferential arrangement 

  

 9 

 
held or asserted in respect of any asset of any kind or nature whatsoever including, without limitation, any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction. 
  
 “Material Adverse Effect” shall mean a material adverse
effect (a) on the condition, operations, assets, business or prospects of the applicable Borrowers, (b) such Borrower’s ability to pay the Obligations in accordance with the terms thereof, (c) the material value of the Collateral in the
aggregate, or Lender’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Lender’s rights and remedies under this Agreement and the Other Documents. 
  
 “Maximum Revolving Advance Amount” shall mean $20,000,000
with a sublimit of $3,000,000 for acquisitions. 
  
 “Mortgage” shall mean the mortgage dated by the date hereof given by Franklin Inc. to Lender giving a first perfected mortgage on the Real Property. 
  
 “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and
4001(a)(3) of ERISA. 
  
 “Note” shall mean the
Revolving Credit Note. 
  
 “Obligations” shall
mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by each Borrower to Lender or to any other direct or indirect subsidiary or affiliate of Lender of any kind or nature, present or future
(including, without limitation, any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to each Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including, without limitation, this
Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option
or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Lender non-receipt of or
inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent,
joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument, including, but not limited to, any and all of each Borrower’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Lender and each
Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys’ fees and expenses and all obligations of each Borrower to Lender to perform acts or refrain from taking any action. 
  

 10 

 “Other Documents” shall mean the Note, Mortgage, the Environmental Indemnity Agreement,
the Assignment of Security Interest in Borrower’s Patent Collateral and the Assignment of Security Interest in Borrower’s Trademark Collateral and any and all other agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings heretofore, now or hereafter executed by any Borrower and/or delivered to Lender in respect of the transactions contemplated by this Agreement. 
  
 “Parent” of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such
Person. 
  
 “Payment Office” shall mean initially
Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Lender, if any, which it may designate by notice to Borrowing Agent to be the Payment Office. 
  
 “PBGC” shall mean the Pension Benefit Guaranty Corporation.

  
 “Permitted Encumbrances” shall mean (a) Liens
in favor of Lender; (b) Liens for taxes, assessments or other governmental charges not delinquent or being contested in good faith and by appropriate proceedings and with respect to which proper reserves have been taken by such Borrower; provided,
that, the Lien shall have no effect on the priority of the Liens in favor of Lender or the value of the assets in which Lender has such a Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens disclosed in the financial
statements referred to in Section 5.5, the existence of which Lender has consented to in writing; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance; (e)
deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of such
Borrower’s business; (f) judgment Liens that have been stayed or bonded and mechanics’, workers’, materialmen’s or other like Liens arising in the ordinary course of such Borrower’s business with respect to obligations which
are not due or which are being contested in good faith by such Borrower; (g) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property
of such Borrower and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6; and (h) Liens disclosed on Schedule
1.2. 
  
 “Person” shall mean any individual,
sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, institution, public benefit corporation, joint venture, entity or government (whether
Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof). 
  

 11 

 “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA,
maintained for employees of any Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees. 
  
 “RCRA” shall mean the Resource Conservation and Recovery
Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time. 
  
 “Real Property” shall mean all of Franklin Inc.’s right, title and interest in and to the owned premises located at One Franklin Plaza, Burlington, New Jersey, as more fully identified on
Schedule A hereto. 
  
 “Receivables” shall
mean and include, as to each Borrower, all of such Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper, general intangibles relating to
accounts, drafts and acceptances, and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory, the licensing of technology or the rendition of services, all guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Lender hereunder. 
  
 “Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof. 
  
 “Release” shall have the meaning set forth in Section
5.7(c)(i) hereof. 
  
 “Reportable Event” shall
mean a reportable event described in Section 4043(b) of ERISA or the regulations promulgated thereunder. 
  
 “Reserve Percentage” shall mean the maximum effective percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding. 
  
 “Revolving Advances” shall mean Advances made. 

 
 “Revolving Credit Note” shall mean the promissory note
referred to in Section 2.1(a) hereof. 
  
 “Revolving
Interest Rate” shall mean the interest rate determined on the pricing grid as follows (provided the Section 2.1(y)(iii) is not included in the Borrowing Base calculation): 
  

					
	 Funded Debt/EBITDA

	 	 LIBOR

	 	 PNC BASE RATE

	<1.0x	 	+100 bps	 	 -50 bps
	31.0x	 	+125 bps	 	 -50 bps
	31.5x	 	+150 bps	 	 -25 bps
	32.0x	 	+200 bps	 	+25 bps

  

 12 

 or, the interest rate determined on the pricing grid as follows when Section 2.1(y)(iii) (real estate as
collateral) availability is included in the Borrowing Base calculations: 
  

					
	 Funded Debt/EBITDA

	 	 LIBOR

	 	 PNC BASE RATE

	 <1.0x
	 	+125 bps	 	 -50 bps
	 31.0x
	 	+150 bps	 	 -25 bps
	 31.5x
	 	+175 bps	 	  + 0 bps
	 32.0x
	 	+225 bps	 	+50 bps

  
 “Section 20
Subsidiary” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities. 
  
 “Subsidiary” shall mean a corporation or other entity of
whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person. 
  
 “Tangible Net Worth” shall mean consolidated stockholder’s equity in the Borrowers less any advances to affiliated parties
less all items properly classified as intangibles (which shall not include advance royalties), in accordance with GAAP, plus Subordinated Debt. 
  
 “Term” shall have the meaning set forth in Section 13.1 hereof. 
  
 “Termination Event” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii)
the withdrawal of a Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan. 
  
 “Toxic Substance” shall mean and include any material present on the Real Property or the Leasehold
Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints. 
  

 13 

 “Unfunded Capitalized Expenditures” shall mean capital expenditures made from the
Borrowers’ funds other than funds borrowed to finance such capital expenditures. 
  
 1.3 Uniform Commercial Code Terms All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New Jersey shall have the meaning given therein unless otherwise defined herein.

  
 1.4 Certain Matters of Construction The terms
“herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders.
Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless
otherwise provided, all references to any instruments or agreements to which Lender is a party, including, without limitation, references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all
extensions or renewals thereof. 
  
 II
ADVANCES, PAYMENTS 
  
 2.1 (a) Revolving Advances
Subject to the terms and conditions set forth in this Agreement including, without limitation, Section 2.1(b), Lender, will make Revolving Advances to Borrower in aggregate amounts outstanding at any time equal to the lesser of (x) the Maximum
Revolving Advance Amount or (y) an amount equal to the sum of: 
  
 (i) up to 80%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance Rate”), of Eligible Receivables, plus 
  
 (ii) up to the lesser of (A) 65% of Eligible Inventory, subject to the provisions of Section 2.1(b) hereof
or (B) 85% of net orderly liquidation value of Eligible Inventory (with a maximum amount of $10,000,000), plus 
  
 (iii) up to the lesser of (A) 75% of the appraised fair market value of the Real Property or (B) $4,500,000 (subsections (i),(ii) and
(iii) shall constitute the “Advance Rate”), minus 
  
 (iv) such reserves as Lender may reasonably deem proper and necessary from time to time. 
  
 The amount derived from the sum of Sections 2.1(a)(y)(i),(ii) and (iii) minus Section 2.1 (a)(y)(iv) at any time and from time to time shall be referred
to as the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

  
 (b) Discretionary Rights The Advance Rate may be
increased or decreased by Lender at any time and from time to time in the exercise of its reasonable discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rate or increasing or imposing
reserves may limit or restrict Advances requested by Borrowers. Lender shall give Borrowers five (5) days prior written notice of its intention to decrease the Advance Rate. 
  

 14 

 2.2 Procedure for Revolving Advances Borrowing 
  
 (a) Borrowing Agent must notify Lender prior to 11:00 a.m. on a Business Day
of Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Lender, or with respect to any
other Obligation, become due, same shall be deemed a request for a Revolving Advance as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with
Lender, and such request shall be irrevocable. 
  
 (b)
Notwithstanding the provisions of subsection (a) above, in the event Borrowing Agent desires to obtain a LIBOR Rate Loan, Borrowing Agent shall give Lender at least three (3) Business Days’ prior written notice, specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in a minimum amount of $100,000 and in integral multiples of $50,000 thereafter, and
(iii) the duration of the first Interest Period therefor. Interest Periods for LIBOR Rate Loans shall be for 30, 60 or 90 days; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding
Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No LIBOR Rate Loan shall be made available to Borrowers during the continuance of a Default or
an Event of Default. 
  
 (c) Each Interest Period of a LIBOR Rate
Loan shall commence on the date such LIBOR Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance
with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term. 
  
 Borrowing Agent shall elect the initial Interest Period applicable to a LIBOR Rate Loan by its notice of LIBOR borrowing given to Lender pursuant to
Section 2.2(b) or by its notice of conversion given to Lender pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Lender of such duration
not less than three (3) Business Days prior to the last day of the then current Interest Period applicable to such LIBOR Rate Loan. If Lender does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be
deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow. 
  
 (d) Provided that no Event of Default shall have occurred and be continuing, Borrower may, on the last Business Day of the then current Interest Period
applicable to any outstanding LIBOR Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a LIBOR Rate Loan
shall be made only on the last Business Day of the then current Interest Period applicable to such LIBOR Rate Loan. If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Lender not less than three (3) Business 

  

 15 

 
Days’ prior written notice to convert from a Domestic Rate Loan to a LIBOR Rate Loan or one (1) Business Day’s prior written notice to convert from
a LIBOR Rate Loan to a Domestic Rate Loan, specifying the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.

  
 (e) At its option and upon three (3) Business Days’ prior
written notice, Borrowers may prepay the LIBOR Rate Loans in whole at any time or in part from time to time, without premium or penalty, but with accrued interest on the principal being prepaid to the date of such repayment. Borrowing Agent shall
specify the date of prepayment of Advances which are LIBOR Rate Loans and the amount of such prepayment. In the event that any prepayment of a LIBOR Rate Loan is required or permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, Borrowers shall indemnify Lender therefor in accordance with Section 2.2(f) hereof. 
  
 (f) Each Borrower shall indemnify Lender and hold Lender harmless from and against any and all losses or expenses that Lender may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any LIBOR Rate Loan or failure by Borrowers to complete a borrowing of, a prepayment of or conversion of or to a LIBOR Rate
Loan after notice thereof has been given, including, but not limited to, any interest payable by Lender to Lender of funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lender to Borrowers shall be conclusive absent manifest error. 
  
 (g) Notwithstanding any other provision hereof, if any applicable law, treaty, regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any LIBOR Rate Loans) to make or maintain its LIBOR Rate Loans, the obligation of Lender to make LIBOR Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected LIBOR Rate Loans are then outstanding,
promptly upon request from Lender, either pay all such affected LIBOR Rate Loans or convert such affected LIBOR Rate Loans into loans of another type. If any such payment or conversion of any LIBOR Rate Loan is made on a day that is not the last day
of the Interest Period applicable to such LIBOR Rate Loan, Borrowers shall pay Lender, upon Lender’s request, such amount or amounts as may be necessary to compensate Lender for any loss or expense sustained or incurred by Lender in respect of
such LIBOR Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lender to Lender of funds obtained by Lender in order to make or maintain such LIBOR Rate Loan. A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted by Lender to Borrowers shall be conclusive absent manifest error. 
  
 2.3 Disbursement of Advance Proceeds During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrowing Agent or deemed to have been requested by Borrowing Agent under Section 2.2(a) hereof shall, with 

  

 16 

 
respect to requested Revolving Advances to the extent Lender make such Revolving Advances, be made available to Borrowing Agent on the day so requested by
way of credit to Borrowing Agent’s operating account at the Lender, or such other bank as Borrowing Agent may designate following notification to Lender, in immediately available federal funds or other immediately available funds or, with
respect to Revolving Advances deemed to have been requested by Borrowing Agent, be disbursed to Lender to be applied to the outstanding Obligations giving rise to such deemed request. 
  
 2.4 Maximum Advances The aggregate balance of Revolving Advances outstanding at any time shall not exceed the lesser
of (a) the Maximum Revolving Advance Amount or (b) the Formula Amount. 
  
 2.5 Repayment of Advances 
  
 (a) The Revolving
Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided. 
  
 (b) Borrowers recognize that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may
not be collectible by Lender on the date received. Lender is not, however, required to credit Borrower’s Account for the amount of item of payment which is unsatisfactory to Lender and Lender may charge Borrower’s Account for the amount of
any item of payment which is returned to Lender unpaid. 
  
 (c)
All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Lender at the Payment Office not later than 1:00 P.M. (New York time) on the due date therefor in lawful money of the
United States of America in federal funds or other funds immediately available to Lender. Lender shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower’s Account or by making Advances
as provided in Section 2.2 hereof. 
  
 (d) Borrowers shall pay
principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim. 
  
 2.6 Letters of Credit and Acceptances. Subject to the terms and
conditions hereof, Lender shall (a) issue or cause the issuance of Letters of Credit (“Letters of Credit”) on behalf of any Borrower or (b) accept, or cause to be accepted Acceptances; provided, however, that Agent will not
be required to issue or cause to be issued any Letters of Credit or accept or cause to be accepted any Acceptances to the extent that the face amount of such Letters of Credit and Acceptances would then cause the sum of (i) the outstanding Revolving
Advances plus (ii) outstanding Letters of Credit plus (iii) outstanding Acceptances to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount. All disbursements or payments related to Letters of Credit
and Acceptances shall be deemed to be Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest. 
  

 17 

 2.7 Issuance of Letters of Credit; Creation of Acceptances. 
  
 (a) Borrowing Agent, may request Lender to issue or cause the issuance of a
Letter of Credit by delivering to Agent at the Payment Office, Agent’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Lender; and, such other certificates, documents and
other papers and information as Lender may reasonably request. Borrowing Agent, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable
letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any
Letter of Credit. 
  
 (b) Each Letter of Credit shall, among other
things, (i) provide for the payment of sight drafts or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not
later than six (6) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term. Each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or revision thereof adhered to by the Issuer and, to the extent not inconsistent therewith, the laws of the State of New Jersey. 
  
 (c) Lender shall have absolute discretion whether to accept any draft.
Without in any way limiting Lender’s absolute discretion whether to accept any draft, Borrowers will not present for acceptance any draft, and Lender will generally not accept any drafts (i) that arise out of transactions involving the sale of
goods by Borrowers not in the ordinary course of its business, (ii) that involve a sale to an Affiliate of Borrowers, (iii) that involve any purchase for which Lender has not received all related documents, instruments and forms requested by Lender,
(iv) for which Lender is unable to locate a purchaser in the ordinary course of business on standard terms, or (v) that is not eligible for discounting with Federal Reserve Banks pursuant to paragraph 7 of Section 13 of the Federal Reserve Act, as
amended. 
  
 (d) Subject to terms set by Lender from time to time
in its discretion with respect to the acceptance of drafts generally, Borrowing Agent may request Acceptances on any Business Day, by delivering to Lender a request for an Acceptance and, upon demand, copies of all invoices, delivery receipts and
related documents relating to that request that Lender might require. Provided that the request for Acceptance is received prior to 10:30 a.m. and approved by Lender, Lender shall make the net proceeds of the Acceptance available to the Borrowers by
crediting the net amount of the Acceptance in lawful money of the United States and in immediately available funds to the Borrower’s Account. The net amount of the Acceptance shall be calculated by discounting the Acceptance at the
Banker’s Acceptance Rate for the applicable maturity period upon the creation by Lender of an Acceptance. 
  
 (e) Borrowers shall pay to Lender the amount of any Acceptance on or before its maturity date. In addition, Lender is hereby irrevocably authorized, in
its sole discretion, to make Revolving Advances from time to time, or to charge any account of Borrowers, to pay any Acceptance for which payment is due, or at any time after the occurrence of an Event of Default to fund cash collateral for any
outstanding Acceptance. 
  

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 (f) Each Acceptance shall be payable in Dollars and shall be in the face amount of at least $50,000. The
maturity of each Acceptance shall be in any 30 day increment equal to or greater than 30 and less than or equal to 180 days or, if such day is not a Business Day, on the next succeeding Business Day and, in any event, no later than the day preceding
the expiration of the Term. This Section 2.09(g) will not apply to Acceptances created under Letters of Credit. 
  
 2.8 Requirements For Issuance of Letters of Credit and Acceptances. 
  
 (a) In connection with the issuance of any Letter of Credit or Acceptance, each Borrower shall indemnify, save and hold
Lender harmless from any loss, cost, expense or liability, including, without limitation, payments made by Lender and expenses and reasonable attorneys’ fees incurred by Lender arising out of, or in connection with, any Letter of Credit or
Acceptance to be issued or created for any Borrower. Each Borrower shall be bound by Lender’s regulations and good faith interpretations of any Letter of Credit or Acceptance issued or created for Borrower’s Account, although this
interpretation may be different from its own; and, neither Lender nor any of its correspondents shall be liable for any error, negligence, or mistakes, whether of omission or commission, in following Borrowing Agent’s instructions or those
contained in any Letter of Credit, Acceptance or of any modifications, amendments or supplements thereto or in issuing or paying any Letter of Credit or Acceptance, except for Lender’s or such correspondents’ willful misconduct 

 
 (b) Each Borrower shall authorize and direct any Issuer to name such
Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Lender is not the Issuer of any Letter of Credit, such Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and
other writings and property received by the Issuer pursuant to the Letter of Credit or any Acceptance related thereto and to accept and rely upon Lender’s instructions and agreements with respect to all matters arising in connection with the
Letter of Credit, the application therefor or any Acceptance therefor. 
  
 (c) In connection with all Letters of Credit and Acceptances issued or caused to be issued or created by Lender under this Agreement, Borrowers hereby appoint Lender, or its designee, as its attorney, with full power and authority if an
Event of Default or Default shall have occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances; (ii) to sign such Borrower’s name on bills of lading;
(iii) to clear Inventory through the United States of America Customs Department (“Customs”) in the name of such Borrower or Lender or Lender’s designee, and to sign and deliver to Customs officials powers of attorney in the name of
such Borrower for such purpose; and (iv) to complete in such Borrower’s name or Lender’s, or in the name of Lender’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the
proceeds thereof. Neither Lender nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Lender’s or its attorney’s willful misconduct or gross negligence. This power,
being coupled with an interest, is irrevocable as long as any Letters of Credit or Acceptances remain outstanding. 
  
 2.9 Repayment of Excess Advances The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred. 
  

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 2.10 Statement of Account Lender shall maintain, in accordance with its customary procedures, a
loan account (“Borrower’s Account”) in the name of Franklin Inc., on behalf of the Borrowers, in which shall be recorded the date and amount of each Advance made by Lender and the date and amount of each payment in respect thereof;
provided, however, the failure by Lender to record the date and amount of any Advance shall not adversely affect Lender. Each month, Lender shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or
credited in respect thereof, and other transactions between Lender and Borrowers, during such month. The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated
between Lender and Borrowers unless Lender receives a written statement of such Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Borrower. The records of Lender with respect to the loan account
shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto. 
  
 2.11 Additional Payments Any sums expended by Lender due to any Borrower’s failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower’s obligation under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s Account as a Revolving Advance and added to the Obligations.

  
 2.12 Use of Proceeds Borrowers shall apply the proceeds
of Advances to (i) repay existing indebtedness owed to Wells Fargo Foothill, Inc., (ii) pay fees and expenses relating to this transaction, (iii) to provide for its working capital needs and other reasonable needs for corporate purposes and (iv)
provide cash advance not to exceed $3,000,000 to be used for acquisitions. 
  
 III
INTEREST AND FEES 
  
 3.1 Interest Interest on
Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to LIBOR Rate Loans, at the end of each Interest Period. Interest charges shall be computed on the actual principal amount of
Advances outstanding during the month at a rate per annum equal to with respect to Revolving Advances, the applicable Revolving Interest Rate (as applicable, the “Contract Rate”). Whenever, subsequent to the date of this Agreement, the
Base Rate is increased or decreased, the applicable Contract Rate for Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Base Rate during the time such change or
changes remain in effect. The LIBOR Rate shall be adjusted with respect to LIBOR Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence
of an Event of Default, and during the continuation thereof, the Obligations shall bear interest at the applicable Contract Rate for Domestic Rate Loans plus three percent (3%) per annum. 
  

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 3.2 Letter of Credit and Acceptance Fees. Borrowers shall pay (x) to Lender, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, based on the fee schedule then in effect with the Lender and (y) to the Issuer, any and all fees and expenses as agreed
upon by the Issuer and the Borrowers in connection with any Letter of Credit, including, without limitation, in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse
Lender for any and all fees and expenses, if any, paid by Lender to the Issuer (all of the foregoing fees, the “Letter of Credit and Acceptance Fees”). All such charges shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees and Acceptance Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for any reason. 
  
 3.3 Computation of Interest and Fees Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due
and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate for Domestic Rate Loans during such extension.

  
 3.4 Maximum Charges In no event whatsoever shall
interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by Borrowers, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lender shall promptly refund such excess amount to Borrowers and the provisions hereof shall
be deemed amended to provide for such permissible rate. 
  
 3.5
Increased Costs In the event that any applicable law, treaty or governmental regulation, or any change therein or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.5, the term
“Lender” shall include any corporation or bank controlling Lender) with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall: 
  
 (a) subject Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of
Lender by the jurisdiction in which it maintains its principal office); 
  
 (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Lender,
including (without limitation) pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or 
  

 21 

 (c) impose on Lender any other condition with respect to this Agreement or any Other Document;

  
 and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining its Advances hereunder by an amount that Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Lender
deems to be material, then, in any case Borrowers shall promptly pay Lender, upon its demand, such additional amount as will compensate Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not
apply to increased costs which are reflected in the LIBOR Rate, as the case may be. Lender shall certify the amount of such additional cost or reduced amount to Borrowers, and such certification shall be conclusive absent manifest error. 

 
 3.6 Basis For Determining Interest Rate Inadequate or Unfair In the
event that Lender shall have determined that: 
  
 (a) reasonable
means do not exist for ascertaining the LIBOR Rate for any Interest Period; or 
  
 (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank LIBOR market, with respect to an outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a
proposed conversion of a Domestic Rate Loan into a LIBOR Rate Loan, 
  
 then
Lender shall give Borrowing Agent prompt written, telephonic or telegraphic notice of such determination. If such notice is given, (i) any such requested LIBOR Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify
Lender no later than 10:00 a.m. (New York City time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of LIBOR Rate Loan, (ii) any Domestic Rate
Loan or LIBOR Rate Loan which was to have been converted to an affected type of LIBOR Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Lender, no later than 10:00 a.m. (New York City time)
two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of LIBOR Rate Loan, and (iii) any outstanding affected LIBOR Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Lender, no later than 10:00 a.m. (New York City time) two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected LIBOR Rate Loan, shall be converted into an unaffected type of LIBOR
Rate Loan, on the last Business Day of the then current Interest Period for such affected LIBOR Rate Loans. Until such notice has been withdrawn, Lender shall have no obligation to make an affected type of LIBOR Rate Loan or maintain outstanding
affected LIBOR Rate Loans and Borrowing Agent shall not have the right to convert a Domestic Rate Loan or an unaffected type of LIBOR Rate Loan into an affected type of LIBOR Rate Loan. 
  

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 3.7 Capital Adequacy 
  
 (a) In the event that Lender shall have determined that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Lender (for
purposes of this Section 3.7, the term “Lender” shall include Lender and any corporation or bank controlling Lender) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by an amount deemed by Lender to be material, then, from time to time, Borrowers shall pay upon demand to Lender such additional amount or
amounts as will compensate Lender for such reduction. In determining such amount or amounts, Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.7 shall be available to Lender regardless of any possible
contention of invalidity or inapplicability with respect to the applicable law, regulation or condition. 
  
 (b) A certificate of Lender setting forth such amount or amounts as shall be necessary to compensate Lender with respect to Section 3.7(a) hereof when
delivered to Borrowers shall be conclusive absent manifest error. 
  
 IV
COLLATERAL: GENERAL TERMS 
  
 4.1 Security Interest in
the Collateral. To secure the prompt payment and performance to Lender of the Obligations, each Borrower hereby assigns, pledges and grants to Lender a continuing security interest in and to all of its Collateral, whether now owned or existing
or hereafter acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Lender’s security interest and shall cause its financial statements to
reflect such security interest. 
  
 4.2 Perfection of Security
Interest. Each Borrower shall take all action that may be necessary or desirable, or that Lender may request, so as at all times to maintain the validity, perfection, enforceability and priority of Lender’s security interest in the
Collateral or to enable Lender to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining landlords’ or
mortgagees’ lien waivers, (iii) delivering to Lender, endorsed or accompanied by such instruments of assignment as Lender may specify, and stamping or marking, in such manner as Lender may specify, any and all chattel paper, instruments,
letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Lender, and (v) executing and delivering financing
statements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Lender, relating to the creation, validity, perfection, maintenance or continuation of Lender’s security interest under
the Uniform Commercial Code or other applicable law. Lender is hereby authorized to file financing statements signed by Lender instead of such Borrower in accordance with Section 9-402(2) of the Uniform Commercial Code as adopted in the State of New
Jersey. All charges, expenses and fees Lender may incur in doing any of the foregoing, and any local taxes relating thereto, 

  

 23 

 
shall be charged to Borrower’s Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Lender’s option, shall
be paid to Lender immediately upon demand. 
  
 4.3 Disposition
of Collateral. Each Borrower will safeguard and protect all Collateral for Lender’s general account and make no disposition thereof whether by sale, lease or otherwise except (a) the sale of Inventory in the ordinary course of business and
(b) the disposition or transfer of obsolete and worn-out Equipment in the ordinary course of business and only to the extent that (i) the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Lender’s
first priority security interest or (ii) the proceeds of which are remitted to Lender to be applied pursuant to Section 2.6. 
  
 4.4 Ownership of Collateral. With respect to the Collateral, at the time the Collateral becomes subject to Lender’s security interest: (a)
each Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of the its respective Collateral to Lender; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b) each document and agreement executed by such Borrower or delivered to Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of each Borrower that appear on such documents and agreements shall be genuine and such Borrower shall have full capacity to execute same; and (d) such Borrower’s Equipment and Inventory shall be
located as set forth on Schedule 4.4 and shall not be removed from such location(s) without the prior written consent of Lender except with respect to the sale of Inventory in the ordinary course of business and Equipment to the extent
permitted in Section 4.3 hereof. 
  
 4.5 Defense of
Lender’s Interests. Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Lender’s interests in the Collateral shall continue in full force and effect. During such period Borrowers
shall not, without Lender’s prior written consent, pledge, sell (except Inventory in the ordinary course of business and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend Lender’s interests in the Collateral against any and all Persons whatsoever. At any time following
demand by Lender for payment of all Obligations, Lender shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Lender exercises this right to take possession of the Collateral, each Borrower shall, upon demand, assemble it in the best manner possible and make it available to Lender at a place reasonably convenient to
Lender. In addition, with respect to all Collateral, Lender shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other applicable law, including Law of Property Acts (UK law) and
German Civil Code. Each Borrower shall, and Lender may, at its option after reasonable notice to such Borrower, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or
instruments in which Lender holds a security interest to deliver same to Lender and/or subject to Lender’s order and if they shall come into Borrower’s possession, they, and each of them, shall be held by such Borrower in trust as
Lender’s trustee, and each Borrower will immediately deliver them to Lender in their original form together with any necessary endorsement. 
  

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 4.6 Books and Records. Each Borrower shall (a) keep proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; and (c) on a reasonably
current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including without limitation by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business. All determinations pursuant to this subsection shall be made in accordance
with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrowers. 
  
 4.7 Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by such Borrower at any
time during the Term to exhibit and deliver to Lender copies of any of such Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to Lender
any information such accountants may have concerning each Borrower’s financial status and business operations. Each Borrower hereby authorizes all federal, state and municipal authorities to furnish to Lender copies of reports or examinations
relating to such Borrower, whether made by such Borrower or otherwise; however, Lender will attempt to obtain such information or materials directly from such Borrower prior to obtaining such information or materials from such accountants or such
authorities. 
  
 4.8 Compliance with Laws. Each Borrower
shall comply in all material respects with all acts, rules, regulations and orders of any legislative, administrative or judicial body or official applicable to the Collateral or any part thereof or to the operation of such Borrower’s business
the non-compliance with which could reasonably be expected to have a Material Adverse Effect on such Borrower. Any Borrower may, however, contest or dispute any acts, rules, regulations, orders and directions of those bodies or officials in any
reasonable manner, provided that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable satisfaction of Lender to protect Lender’s Lien on or security interest in the Collateral. The Collateral at all
times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the Collateral so that such insurance shall remain in full force and effect. 
  
 4.9 Inspection of Premises. At all reasonable times Lender shall have
full access to and the right to audit, check, inspect and make abstracts and copies from each Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of such Borrower’s business
including an annual field exam, at Borrowers’ expense. At the Lender’s discretion, an inventory appraisal shall be performed annually, at Borrowers’ expense. Lender and its agents may enter upon any of each Borrower’s premises at
any time during business hours and at any other reasonable time, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Borrower’s business. 
  

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 4.10 Insurance. Borrowers shall bear the full risk of any loss of any nature whatsoever with
respect to the Collateral. At Borrowers’ own cost and expense in amounts and with carriers acceptable to Lender, Borrowers shall (a) keep all their insurable properties and properties in which Borrowers have an interest insured against the
hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to Borrowers’ including,
without limitation, business interruption insurance; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to Borrowers insuring against larceny, embezzlement or other criminal misappropriation of
insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of Borrowers either directly or through authority to draw upon such funds or to direct generally the disposition of
such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws
of any state or jurisdiction in which each Borrower is engaged in business; (f) furnish Lender with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration
date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Lender, naming Lender as a co-insured and loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a), and (c)
above, and providing (A) that all proceeds thereunder shall be payable to Lender, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Lender. In the event of any loss thereunder, the carriers named therein hereby are directed by Lender and Borrowers
to make payment for such loss to Lender and not to Borrowers and Lender jointly. If any insurance losses are paid by check, draft or other instrument payable to any Borrower and Lender jointly, Lender may endorse such Borrower’s name thereon
and do such other things as Lender may deem advisable to reduce the same to cash. Lender is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a), and (b) above. All loss recoveries received by Lender
upon any such insurance may be applied to the Obligations, in such order as Lender in its sole discretion shall determine. Any surplus shall be paid by Lender to Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall
be paid by Borrowers to Lender, on demand. 
  
 4.11 Failure to
Pay Insurance. If any Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Lender, if Lender so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrower, and charge
Borrower’s Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations. 
  
 4.12 Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including, without limitation, real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes. If any tax by any governmental authority is
or may be imposed on or as a result of any transaction between Borrowers and Lender which Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any

  

 26 

 
claim shall be made which, in Lender’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Lender may without notice to
Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and holds Lender harmless in respect thereof. Lender will not pay any taxes, assessments or Charges to the extent that such Borrower has contested or disputed
those taxes, assessments or Charges in good faith, by expeditious protest, administrative or judicial appeal or similar proceeding provided that any related tax lien is stayed and sufficient reserves are established to the reasonable satisfaction of
Lender to protect Lender’s security interest in or Lien on the Collateral. The amount of any payment by Lender under this Section 4.12 shall be charged to Borrower’s Account as a Revolving Advance of a Domestic Rate Loan and added to the
Obligations and, until such Borrower shall furnish Lender with an indemnity therefor (or supply Lender with evidence satisfactory to Lender that due provision for the payment thereof has been made), Lender may hold without interest any balance
standing to such Borrower’s credit and Lender shall retain its security interest in any and all Collateral held by Lender. 
  
 4.13 Payment of Leasehold Obligations. Each Borrower shall at all times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Lender’s request will provide evidence of having done so. 
  
 4.14 Receivables 
  
 (a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach
hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of such Borrower, or work, labor or services theretofore rendered by such Borrower as of the date each Receivable is created. Same shall be due and owing in
accordance with such Borrower’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by such Borrower to Lender. 
  
 (b) Solvency of Customers. Each Customer, to the best of each
Borrower’s knowledge, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of such Borrower who are not solvent
such Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables. 
  
 (c) Locations of Borrowers. Borrowers’ chief executive offices are located at the addresses set forth on Schedule 4.14(c). Until written
notice is given to Lender by Borrowers of any other office at which Borrowers keep their records pertaining to Receivables, all such records shall be kept at such executive offices. 
  
 (d) Collection of Receivables. Until Borrowers’ authority to do so is terminated by Lender (which notice Lender
may give at any time following the occurrence of an Event of Default or a Default or when Lender in its sole discretion deems it to be in Lender’ best interest to do so), each Borrower will, at such Borrower’s sole cost and expense, but on
Lender’s 

  

 27 

 
behalf and for Lender’s account, collect as Lender’s property and in trust for Lender all amounts received on Receivables, and shall not commingle
such collections with Borrowers’ funds or use the same except to pay Obligations. Borrowers shall, upon request, deliver to Lender, or deposit in the Blocked Account, in original form and on the date of receipt thereof, all checks, drafts,
notes, money orders, acceptances, cash and other evidences of Indebtedness. 
  
 (e) Power of Lender to Act on Borrower’s Behalf. In the event of a Default or an Event of Default, Lender shall have the right to receive, endorse, assign and/or deliver in the name of Lender or Borrowers
any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed. Each Borrower hereby constitutes
Lender or Lender’s designee as such Borrower’s attorney with power (i) to endorse such Borrower’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign such
Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign such
Borrower’s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Lender to preserve, protect, or perfect Lender’s interest in the Collateral and to file same; (v) to demand payment of the
Receivables; (vi) to enforce payment of the Receivables by legal proceedings or otherwise; (vii) to exercise all of such Borrower’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) to
settle, adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy or
similar document against any Customer; (xi) to prepare, file and sign such Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake
of fact or of law, unless done maliciously or with gross (not mere) negligence; this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Lender shall have the right at any time following the occurrence of
an Event of Default or Default, to change the address for delivery of mail addressed to such Borrower to such address as Lender may designate and to receive, open and dispose of all mail addressed to such Borrower. 
  
 (f) No Liability. Lender shall not, under any circumstances or in any
event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom.
Following the occurrence of an Event of Default or Default Lender may, without notice or consent from Borrowers, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. Lender is authorized and empowered to accept following the occurrence of an Event of Default or Default the return of the goods
represented by any of the Receivables, without notice to or consent by Borrowers, all without discharging or in any way affecting each Borrower’s liability hereunder. 
  

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 (g) Establishment of a Lockbox Account, Dominion Account. Following the occurrence and during the
continuance of an Event of Default, all proceeds of Collateral shall, at the direction of Lender, be deposited by Borrowers into a lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”) as Lender
may require pursuant to an arrangement with such bank as may be selected by Borrowers and be acceptable to Lender. Borrowers shall issue to any such bank, an irrevocable letter of instruction directing said bank to transfer such funds so deposited
to Lender, either to any account maintained by Lender at said bank or by wire transfer to appropriate account(s) of Lender. All funds deposited in such Blocked Accounts shall immediately become the property of Lender and Borrower shall obtain the
agreement by such bank to waive any offset rights against the funds so deposited. Lender shall not assume any responsibility for such Blocked Accounts arrangement, including without limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder. Alternatively, Lender may establish depository accounts (“Depository Accounts”) in the name of Lender at a bank or banks for the deposit of such funds and Borrowers shall deposit all
proceeds of Collateral or cause same to be deposited, in kind, in such Depository Accounts of Lender in lieu of depositing same to the Blocked Accounts. 
  
 (h) Adjustments. Following the occurrence of an Event of Default, Borrowers will not, without Lender’s consent, compromise or adjust any
material amount of the Receivables (or extend the time for payment thereof) or accept any material returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts,
credits and allowances as have been heretofore customary in the business of Borrowers. 
  
 4.15 Inventory. To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by any Borrower in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder. 
  
 4.16 Maintenance of Equipment. The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved. Borrowers shall not use or operate the Equipment in violation of any law, statute, ordinance, code, rule or regulation. Borrowers shall have the right to sell Equipment to the
extent set forth in Section 4.3 hereof. 
  
 4.17 Exculpation of
Liability. Nothing herein contained shall be construed to constitute Lender as any Borrower’s agent for any purpose whatsoever, nor shall Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part
of the Collateral wherever the same may be located and regardless of the cause thereof. Lender, whether by anything herein or in any assignment or otherwise, shall not assume any of any Borrower’s obligations under any contract or agreement
assigned to Lender, and Lender shall not be responsible in any way for the performance by such Borrower of any of the terms and conditions thereof. 
  

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 4.18 Environmental Matters 
  
 (a) Borrowers shall ensure that the Real Property remains in compliance with all Environmental Laws and they shall not place
or permit to be placed any Hazardous Substances on any Real Property except as permitted by applicable law or appropriate governmental authorities. 
  
 (b) Borrowers shall monitor continued compliance with all applicable Environmental Laws which shall include periodic reviews of such compliance.

  
 (c) Borrowers shall (i) employ in connection with the use of
the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid
permits under RCRA and any other applicable Environmental Laws. Borrowers shall use its best efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or
operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real Property. 
  
 (d) In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances
at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or Borrowers’ interest
therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located
or the United States Environmental Protection Agency (any such person or entity hereinafter the “Authority”), then Borrowers shall, within five (5) Business Days, give written notice of same to Lender detailing facts and circumstances of
which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Lender to protect its security interest in the Real Property and the Collateral and is not intended to create
nor shall it create any obligation upon Lender with respect thereto. 
  
 (e) Borrowers shall promptly forward to Lender copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by Borrowers to dispose of Hazardous Substances and shall continue to forward copies of correspondence between Borrower and the Authority regarding such claims to Lender until the claim is
settled. Borrowers shall promptly forward to Lender copies of all documents and reports concerning a Hazardous Discharge at the Real Property that Borrower is required to file under any Environmental Laws. Such information is to be provided solely
to allow Lender to protect Lender’s security interest in the Real Property and the Collateral. 
  
 (f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health
of any Person and to avoid subjecting the Collateral or Real Property to any Lien. If Borrowers shall 

  

 30 

 
fail to respond promptly to any Hazardous Discharge or Environmental Complaint or Borrowers shall fail to comply with any of the requirements of any
Environmental Laws, Lender on behalf of Lender may, but without the obligation to do so, for the sole purpose of protecting Lender’s interest in the Collateral: (A) give such notices or (B) enter onto the Real Property (or authorize third
parties to enter onto the Real Property) and take such actions as Lender (or such third parties as directed by Lender) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or
Environmental Complaint. All reasonable costs and expenses incurred by Lender (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines
and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other agreement between Lender, any Lender and Borrower. 
  
 (g) Promptly upon the written request of Lender at some time as Lender reasonably deems necessary, Borrowers shall provide Lender, at such Borrower’s
expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Lender, to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property which property is subject to the relevant environmental laws. Any report or investigation
of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Lender. If such estimates, individually or in the aggregate, exceed $100,000,
Lender shall have the right to require Borrower to post a bond, letter of credit or other security reasonably satisfactory to Lender to secure payment of these costs and expenses. 
  
 (h) Each Borrower shall defend and indemnify Lender and hold Lender, and its respective employees, Lender, directors and
officers harmless from and against all loss, liability, damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or incurred by Lender under or on account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder, with respect to Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real
estate, including any loss of value of the Real Property as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Lender. Each
Borrower’s obligations under this Section 4.18 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Each Borrower’s obligation and the indemnifications hereunder shall survive the termination of this Agreement. 
  
 (i) For purposes of Section 4.18 and 5.7, all references to Real Property shall be deemed to include all of each
Borrower’s right, title and interest in and to its owned and leased premises. 
  

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 4.19 Financing Statements Except as respects the financing statements filed by Lender and the
financing statements described on Schedule 1.2, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office. 
  
 V REPRESENTATIONS AND WARRANTIES 
  
 Each Borrower represents and warrants as follows: 
  
 5.1 Authority. Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents to which such Borrower
is a party and to perform all of its Obligations hereunder and thereunder. This Agreement and the Other Documents constitute the legal, valid and binding obligation of each Borrower to which such Borrower is a party enforceable in accordance with
their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally. The execution, delivery and performance of this Agreement and of the Other
Documents (a) are within each Borrower’s corporate powers, have been duly authorized, are not in contravention of law or the terms of such Borrower’s by-laws, certificate of incorporation or other applicable documents relating to such
Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which Borrower is a party or by which such Borrower is bound, and (b) will not conflict with nor result in any breach in any
of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement, charter document, instrument, by-law, or other instrument
to which such Borrower is a party or by which it or its property may be bound. 
  
 5.2 Formation and Qualification. Each Borrower is duly incorporated and in good standing under the laws of the State or country set forth in Schedule 5.2 and is qualified to do business and is in good
standing in the states listed on Schedule 5.2 which constitute all states in which qualification and good standing are necessary for such Borrower to conduct its respective business and own its respective property and where the failure to so
qualify could reasonably be expected to have a Material Adverse Effect on Borrowers. Each Borrower has delivered to Lender true and complete copies of its certificate of incorporation and by-laws and will promptly notify Lender of any amendment or
changes thereto. 
  
 5.3 Survival of Representations and
Warranties. All representations and warranties of Borrowers contained in this Agreement and the Other Documents shall be true at the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto. 
  
 5.4 Tax Returns. Borrowers’ federal tax identification number is set forth on Schedule 5.4. Borrowers’ have filed all federal,
state and local tax returns and other reports each is required by law to file and has paid all taxes, assessments, fees and other governmental charges that are due and payable. Federal, state and local income tax returns of Borrowers have been
examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ending March 31, 2000. The provision for taxes on the books of Borrowers is
adequate for all years not closed by applicable statutes, and for its current fiscal year, and Borrowers have no knowledge of any deficiency or additional assessment in connection therewith not provided for on its books. 
  

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 5.5 Financial Statements 
  
 (a) The balance sheets of Borrowers and such other Persons described therein as of March 31, 2004 and the related statements
of income, stockholder’s equity, and cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to
Lender, have been prepared in accordance with GAAP, consistently applied. Since March 31, 2004 there has been no material change in the condition, financial or otherwise, of Borrowers as shown on the balance sheet as of such date and no change in
the aggregate value of machinery, equipment and Real Property owned by Borrowers, except changes in the ordinary course of business, none of which individually or in the aggregate has been materially adverse. 
  
 5.6 Corporate Name. Borrowers have not been known by any other
corporate names in the past five years and do not sell Inventory under any other names except as set forth on Schedule 5.6, nor have Borrowers been the surviving corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years. 
  
 5.7 O.S.H.A. and Environmental Compliance 
  
 (a)
Except as disclosed in Schedule 5.7, Borrowers have duly complied with, and its facilities, business, assets, property, leaseholds and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational
Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders of non-compliance issued to Borrower or relating to its business, assets, property,
leaseholds or Equipment under any such laws, rules or regulations. 
  
 (b) Except as disclosed in Schedule 5.7, Borrowers have been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws. 
  
 (c) Except as disclosed in Schedule 5.7, (i) there are no visible
signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property or any premises leased by Borrowers; (ii) there are no underground
storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by Borrowers; (iii) neither the Real Property nor any premises leased by Borrowers has ever been used as a treatment, storage or disposal facility of Hazardous
Waste; and (iv) no Hazardous Substances are present on the Real Property or any premises leased by Borrowers, excepting such quantities as are handled in accordance with all applicable manufacturer’s instructions and governmental regulations
and in proper storage containers and as are necessary for the operation of the commercial business of Borrowers or of its tenants. 
  
 5.8 Solvency; No Litigation, Violation, Indebtedness or Default 
  
 (a) Borrowers are solvent, able to pay their debts as they mature, have capital sufficient to carry on their business and
all businesses in which they are about to engage, and (i) 

  

 33 

 
as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and
(ii) subsequent to the Closing Date, the fair saleable value of their assets (calculated on a going concern basis) will be in excess of the amount of their liabilities. 
  
 (b) Except as disclosed in Schedule 5.8(b), Borrowers have no (i) pending or threatened litigation, arbitration,
actions or proceedings which involve the possibility of having a Material Adverse Effect on Borrowers, and (ii) liabilities or indebtedness for borrowed money other than the Obligations. 
  
 (c) No Borrower is in violation of any applicable statute, regulation or ordinance in any respect which could reasonably be
expected to have a Material Adverse Effect on such Borrower, nor is such Borrower in violation of any order of any court, governmental authority or arbitration board or tribunal. 
  
 (d) Neither Borrowers nor any member of the Controlled Group maintains or contributes to any Plan other than those listed on
Schedule 5.8(d) hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived,
and Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code, (iii) neither Borrowers nor
any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at this time, the current value of the assets of each Plan exceeds the present value of the
accrued benefits and other liabilities of such Plan and neither Borrowers nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities,
(vi) neither Borrowers nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan, (vii) neither Borrowers nor any member of a Controlled Group has incurred
any liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability, (viii) neither Borrowers nor any member of the Controlled Group nor any fiduciary of, nor any trustee
to, any Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is
subject to ERISA, (ix) Borrowers and each member of the Controlled Group has made all contributions due and payable with respect to each Plan, (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice
period contained in 29 CFR §2615.3 has not been waived, (xi) neither Borrowers nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than
employees or former employees of any Borrower and any member of the Controlled Group, and (xii) neither Borrowers nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980. 
  

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 5.9 Patents, Trademarks, Copyrights and Licenses. All United States patents and all United States
trademarks (“Intellectual Property”) owned by Borrowers are set forth on Schedule 5.9, are valid and have been duly registered or filed with the appropriate governmental authorities. To each Borrower’s knowledge, there is no
objection to or pending challenge to the validity of any Intellectual Property, except for a generally plead defense/counterclaim of patent invalidity made by defendants in an ongoing patent infringement lawsuit brought by such Borrower. Borrowers
are not aware of any grounds for any challenge to the validity of its Intellectual Property. All Intellectual Property listed in Schedule 5.9 consists of original material or property developed by Borrowers or was, to Borrowers’
knowledge, lawfully acquired by Borrowers from the proper and lawful owner thereof. Each of such items has been maintained where possible so as to preserve the value thereof from the date of creation or acquisition thereof. With respect to all
software used by Borrowers, Borrowers are in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule
5.9 hereto. To the best of Borrowers’ knowledge, Borrowers are not aware of any Intellectual Property owned by a third party , other than the licenses Intellectual Property identified in Schedule 5.9, that is necessary for the
operation of Borrowers’ business as presently operates. 
  
 5.10 Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal,
state, or local law or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect on
Borrowers. 
  
 5.11 Default of Indebtedness. No Borrower is
in default in the payment of the principal of or interest on any Indebtedness or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event has occurred under the provisions of any such instrument or
agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder. 
  
 5.12 No Default. No Borrower is in default in the payment or performance of any of its contractual obligations and no Default has occurred.

  
 5.13 No Burdensome Restrictions. No Borrower is party
to any contract or agreement the performance of which could have a Material Adverse Effect on such Borrower. No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance. 
  
 5.14 No Labor Disputes. No Borrower is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower’s
employees threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto. 
  

 35 

 5.15 Margin Regulations. No Borrower is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of
such Board of Governors. 
  
 5.16 Investment Company Act.
No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company. 
  
 5.17 Disclosure. No representation or warranty made by any Borrower in this Agreement or in any financial statement,
report, certificate or any other document furnished in connection herewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known
to any Borrower or which reasonably should be known to any Borrower which such Borrower has not disclosed to Lender in writing with respect to the transactions contemplated by this Agreement which could reasonably be expected to have a Material
Adverse Effect on such Borrower. 
  
 5.18 Swaps. With the
exception of a swap agreement entered into with respect to this Agreement, no Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same
provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party. 
  
 5.19 Conflicting Agreements. No provision of any mortgage, indenture, contract, agreement, judgment, decree or order
binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other
Documents. 
  
 5.20 Application of Certain Laws and
Regulations. Neither any Borrower nor any Affiliate of any Borrower is subject to any statute, rule or regulation which regulates the incurrence of any Indebtedness, including without limitation, statutes or regulations relative to common or
interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services. 
  
 5.21 Business and Property of Borrower. Upon and after the Closing Date, Borrowers do not propose to engage in any business other than the design,
development and distribution of electronic products and the development and licensing of software and activities necessary to conduct the foregoing. On the Closing Date, Borrowers will own or have the right to use all the property and possess all of
the rights and Consents necessary for the conduct of the business of Borrowers. 
  

 36 

 5.22 Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any portion of the
proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary. 
  
 5.23 Anti-Terrorism Laws. 
  
 (a) General. None of the Borrowers nor or any Affiliate of any
Borrower, is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law. 
  
 (b) Executive Order No. 13224. To
the best knowledge of Borrowers, none of the Borrowers, nor or any Affiliate of any Borrower, or their respective agents acting or benefiting in any capacity in connection with the Revolving Advances, Letters of Credit or other transactions
hereunder, is any of the following (each a “Blocked Person”). 
  
 (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224; 
  
 (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to
the provisions of, the Executive Order No. 13224; 
  
 (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; 
  
 (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order
No. 13224; 
  
 (v) a Person or entity that is
named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of
such list, or 
  
 (vi) a person or entity who is
affiliated or associated with a person or entity listed above. 
  
 (c) No Borrower or to the knowledge of any Borrower, any of its agents acting in any capacity in connection with the Revolving Advances, Letters of Credit or other transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order
No. 13224. Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in 

  

 37 

 
any material respect, the each Borrower shall promptly provide the Lender in writing with such revisions or updates to such Schedule as may be necessary or
appropriate to update or correct same; provided, however, that no Schedule shall be deemed to have been amended, modified or superseded by any such correction or update, nor shall any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule be deemed to have been cured thereby, unless and until the Lender, in its sole and absolute discretion, shall have accepted in writing such revisions or updates to such Schedule. 
  
 VI AFFIRMATIVE COVENANTS 
  
 Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement: 
  
 6.1 Payment of Fees Pay
to Lender on demand all usual and customary fees and expenses which Lender incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Lender may, without making demand, charge Borrower’s Account for all such fees and expenses. 
  
 6.2 Conduct of Business and Maintenance of Existence and Assets. (a) Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement),
including, without limitation, all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right or other right included
in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material
Adverse Effect on Borrowers; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises
under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect on Borrowers. 
  
 6.3 Violations. Promptly notify Lender in writing of any violation of any law, statute, regulation or ordinance of
any Governmental Body, or of any agency thereof, applicable to Borrower which could reasonably be expected to have a Material Adverse Effect on Borrowers. 
  
 6.4 Government Receivables. Take all steps necessary to protect Lender’s interest in the Collateral under the Federal Assignment of Claims Act
or other applicable state or local statutes or ordinances and deliver to Lender appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, any state or
any department, agency or instrumentality of any of them. 
  
 6.5
Minimum Tangible Net Worth. Maintain at all times a minimum Tangible Net Worth of 80% of Tangible Net Worth as of March 31, 2004 plus 50% of positive net income adjusted at the last day of each fiscal year end thereafter. 
  

 38 

 6.6 Funded Debt to EBITDA. Maintain at the end of each fiscal quarter, on a rolling four quarter
basis, a maximum ratio of Funded Debt to EBITDA of no greater than 3.0 to 1. 
  
 6.7 Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter, on a rolling four quarter basis, a minimum Fixed Charge Coverage Ratio of no less than 1.25x to 1.0. 
  
 6.8 Clean Down Requirement. During each twelve month period, Borrowers
will be required to clean the Revolving Advances down to a minimum outstanding of $6,000,000 for a consecutive 30 day period. 
  
 6.9 Operating Accounts and Treasury Management Services. Franklin Inc. shall maintain substantially all of its domestic operating accounts and
Treasury Management Services with Lender. 
  
 6.10 Execution of
Supplemental Instruments. Execute and deliver to Lender from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as
Lender may request, in order that the full intent of this Agreement may be carried into effect. 
  
 6.11 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate proceedings and Borrowers shall have provided for such reserves as Lender may reasonably deem proper and necessary. 
  
 6.12 Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments)
and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).

  
 6.13 Dividends. Borrowers may declare, pay or make any
dividend or distribution on any shares of the common stock or preferred stock of Borrowers (including dividends or distributions payable in its stock, or split-ups or reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock of Borrowers so long as (a) a notice of termination with regard to this Agreement shall not be outstanding and (b) no Event of Default or Default shall have occurred,
provided, however, that after giving effect to the payment of such dividends there shall not exist any Event of Default or Default. 
  

 39 

 VII NEGATIVE COVENANTS 
  

Each Borrower shall not, until satisfaction in full of the Obligations and termination of this Agreement: 
  
 7.1 Merger, Consolidation, Acquisition and Sale of Assets 

 
 (a) Enter into any merger, consolidation or other reorganization with or
into any other Person or acquire all or a substantial portion of the assets or stock of any Person or permit any other Person to consolidate with or merge with it, without the prior written consent of the Lender. 
  
 (b) Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except in the ordinary course of its business and except as provided in Section 4.3. 
  
 7.2 Creation of Liens. Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances. 
  
 7.3 Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lender) except (a) as disclosed on Schedule 7.3, and (b) the endorsement of checks in the ordinary course of business. 
  
 7.4 Investments. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or
the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency,
(d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof and (e) acquisitions of subsidiary companies or minority interests for which the sole consideration is common
stock of Franklin Inc. or acquisitions of subsidiary companies or minority interests, in which cash is consideration provided cash does not exceed $3,000,000 and at no time shall the aggregate cash used in such acquisitions exceed $3,000,000 without
the prior written consent of the Lender. 
  
 7.5 Loans.
Make advances, loans or extensions of credit to any Person, including without limitation, any Parent, Subsidiary or Affiliate except with respect to the extension of commercial trade credit in connection with the sale of Inventory in the ordinary
course of its business and inter company loans in the ordinary course of business. 
  
 7.6 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of Indebtedness to Lender and Indebtedness with respect to Permitted Encumbrances.

  
 7.7 Nature of Business. Substantially change the nature
of the business in which it is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the ordinary course of business for assets or property which are useful
in, necessary for and are to be used in its business as presently conducted. 
  

 40 

 7.8 Transactions with Affiliates. Directly or indirectly, purchase, acquire or lease any property
from, or sell, transfer or lease any property to, or otherwise deal with, any Affiliate, except transactions in the ordinary course of business. 
  
 7.9 Subsidiaries 
  
 (a) Form any Subsidiary which generates greater than twenty percent (20%) of the total sales or holds greater than twenty percent (20%) of the assets of
Borrowers unless (i) such Subsidiary expressly joins in this Agreement as Borrower and becomes jointly and severally liable for the obligations of Borrowers hereunder, under the Notes, and under any other agreement between Borrowers and Lender and
(ii) Lender shall have received all documents, including legal opinions, it may reasonably require to establish compliance with each of the foregoing conditions. 
  
 (b) Enter into any partnership, joint venture or similar arrangement. 
  
 7.10 Fiscal Year and Accounting Changes. Change its fiscal year from
March 31 or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law. 
  
 7.11 Pledge of Credit. Now or hereafter pledge Lender’s credit on any purchases or for any purpose whatsoever or
use any portion of any Advance in or for any business other than Borrowers’ business as conducted on the date of this Agreement. 
  
 7.12 Amendment of Articles of Incorporation, By-Laws. Amend, modify or waive any term or material provision of their Articles of Incorporation or
By-Laws unless required by law. 
  
 7.13 Compliance with
ERISA. (i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans
disclosed on Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii)
incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan where such event could result in any liability of Borrowers or any member of the Controlled Group or the imposition of a lien on the property of Borrowers or any member of the Controlled Group pursuant to Section 4068 of ERISA,
(v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Lender of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or
other applicable laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group
to postpone or delay any funding requirement with respect of any Plan. 
  

 41 

 7.14 Prepayment of Indebtedness. At any time, directly or indirectly, prepay any Indebtedness
(other than to Lender), or repurchase, redeem, retire or otherwise acquire any Indebtedness of Borrowers. 
  
 VIII CONDITIONS PRECEDENT. 
  
 8.1 Conditions to Initial Advances. The agreement of Lender to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Lender, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent: 
  
 (a) Notes. Lender shall have received the Notes duly executed and delivered by authorized officer of Borrowers; 
  
 (b) Filings, Registrations and Recordings. Each document (including, without limitation, any Uniform Commercial Code financing statement) required
by this Agreement, any related agreement or under law or reasonably requested by the Lender to be filed, registered or recorded in order to create, in favor of Lender, a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Lender shall have received an acknowledgment copy, or other evidence satisfactory to it, and a
financing statement of UK and German Laws, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto; 
  
 (c) Corporate Proceedings of Borrowers. Lender shall have received a copy of the resolutions in form and substance
reasonably satisfactory to Lender, of the Board of Directors of Borrowers authorizing (i) the execution, delivery and performance of this Agreement, the Notes, the Other Documents and (ii) the granting by Borrowers of the security interests in and
liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate; 
  
 (d)
Incumbency Certificates of Borrowers. Lender shall have received a certificate of the Secretary or an Assistant Secretary of Borrowers, dated the Closing Date, as to the incumbency and signature of the officers of each Borrower executing this
Agreement, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary; 
  
 (e) Certificates. Lender shall have received a copy of the Articles or Certificate of Incorporation of Borrowers and
all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation together with copies of the By-Laws of Borrowers and all agreements of Borrowers’ shareholders certified as accurate
and complete by the Secretary of Borrowers; 
  
 (f) Good
Standing Certificates. Lender shall have received good standing certificates for Borrower dated not more than 15 days prior to the Closing Date, issued by the Secretary of State or other appropriate official of such Borrower’s jurisdiction
of incorporation and each jurisdiction where the conduct of such Borrower’s business activities or the ownership of its properties necessitates qualification; 
  

 42 

 (g) Legal Opinion Lender shall have received the executed legal opinion of Gregory Winsky, Esq. in
form and substance satisfactory to Lender which shall cover such matters incident to the transactions contemplated by this Agreement, the Notes, Other Documents and related agreements as Lender may reasonably require and Borrowers hereby authorizes
and directs such counsel to deliver such opinions to Lender; 
  
 (h) No Litigation. (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against Borrowers or against the officers or directors of Borrowers (A) in
connection with the Other Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Lender, is deemed material or (B) which could, in the reasonable opinion of Lender, have a Material Adverse Effect; and (ii)
no injunction, writ, restraining order or other order of any nature materially adverse to Borrowers or the conduct of its business shall have been issued by any Governmental Body; 
  
 (i) Financial Condition Certificates. Lender shall have received an executed Financial Condition Certificate in form
satisfactory to Lender. 
  
 (j) Collateral Examination.
Lender shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lender, of the Receivables, Inventory, General Intangibles, Real Property, Leasehold Interest and
Equipment of Borrowers and all books and records in connection therewith; 
  
 (k) Fees. Lender shall have received all fees payable to Lender on or prior to the Closing Date pursuant to Article III hereof; 
  
 (l) Insurance. Lender shall have received in form and substance satisfactory to Lender, certified copies of
Borrowers’ casualty insurance policies, together with loss payable endorsements on Lender’s standard form of loss payee endorsement naming Lender as loss payee, and certified copies of Borrowers’ liability insurance policies, together
with endorsements naming Lender as a co-insured; 
  
 (m)
Environmental Reports. Lender shall have received all environmental studies and reports prepared by independent environmental engineering firms with respect to all owned or leased property by Borrowers in the sole discretion of Lender;

  
 (n) Payment Instructions. Lender shall have received
written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this Agreement; 
  
 (o) Consents. Lender shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Lender shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Lender and its counsel shall deem necessary; 
  

 43 

 (p) No Adverse Material Change. (i) since June 30, 2004, there shall not have occurred any event,
condition or state of facts which could reason ably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Lender shall have been proven to be inaccurate or misleading in any material respect;

  
 (q) Title Insurance. Mortgage title insurance policy,
in form and content and with company satisfactory to Lender, in the amount of the mortgage satisfactory to Lender, the premium for which is payable by the Borrowers, insuring Lender’s interest as mortgagee to be a valid first lien on the Real
Property free and clear of all defects, liens, encumbrance and exceptions. 
  
 (r) Survey. An up-to-date metes and bounds survey showing the location of all proposed improvements, all easements, watercourses, street access and other matters affecting the Real Property and certified to and
Lender and to the approved title insurance company. The nature, location and wording of all easements shall be satisfactory to Lender. 
  
 (s) Flood Insurance. If, on the date the loan is closed or at any time during the loan term, the Real Property is in an area that has been
identified by the Secretary of Housing and Urban Development as having special flood or mudslide hazards, and in which the sale of flood insurance has been made available under the United States Disaster Act of 1973, the purchase by the Borrowers of
a flood insurance policy, satisfactory to Lender, will be required. The original policy for such insurance must be delivered prior to the closing 
  
 (t) Other Documents. Lender shall have received the executed Other Documents, all in form and substance satisfactory to Lender; 
  
 (u) Closing Certificate Lender shall have received a closing
certificate signed by the Chief Financial Officer of Borrowers dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii)
each Borrower is on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing; and 
  
 (v) Borrowing Base Lender shall have received evidence from Borrowers
that the aggregate amount of Eligible Receivables is sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date. 
  
 (w) Evidence of cancellations. Evidence of cancellation of all commitments from, and evidence of repayment in full of
all indebtedness to Wells Fargo Foothill, Inc. 
  
 (x) Evidence
of termination. Evidence of termination of all existing liens in favor of Wells Fargo Foothill, Inc. including delivery of a letter confirming the termination from Wells Fargo Foothill, Inc., if requested by Lender. 
  

 44 

 8.2 Conditions to Each Advance. The agreement of Lender to make any Advance requested to be made
on any date (including, without limitation, the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made: 
  
 (a) Representations and Warranties. Each of the representations and warranties made by Borrowers in or pursuant to
this Agreement and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement
or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date; 
  
 (b) No Default. No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that Lender, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and 
  
 (c)
Maximum Advances. In the case of any Revolving Advances requested to be made, after giving effect thereto, the aggregate Revolving Advances shall not exceed the maximum amount of Revolving Advances permitted under Section 2.1 hereof.

  
 Each request for an Advance by Borrowers hereunder shall constitute a
representation and warranty by Borrowers as of the date of such Advance that the conditions contained in this subsection shall have been satisfied. 
  
 IX INFORMATION AS TO BORROWERS 
  
 Each Borrower shall, until satisfaction in full of the Obligations and the termination of this Agreement: 
  
 9.1 Disclosure of Material Matters. Immediately upon learning thereof,
report to Lender all matters materially affecting the value, enforceability or collectibility of any portion of the Collateral including, without limitation, any Borrower’s reclamation or repossession of, or the return to such Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other obligor. 
  
 9.2 Schedules. Deliver to Lender on or before the twentieth (20th) day of each month as and for the prior month (a) accounts receivable ageings, (b) Inventory reports and (c) a Borrowing Base Certificate (which
shall be calculated as of the last day of the prior month and which shall not be binding upon Lender or restrictive of Lender’s rights under this Agreement). In addition, Borrowers will deliver to Lender at such intervals as Lender may require:
(i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery, and (iv) such further schedules, documents and/or information regarding the Collateral as Lender may require including, without
limitation, trial balances and test verifications. Lender shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its
interests hereunder. The items to be provided under this Section are to be 
  

 45 

 in form satisfactory to Lender and executed by Borrowers and delivered to Lender from time to time solely for
Lender’s convenience in maintaining records of the Collateral, and such Borrower’s failure to deliver any of such items to Lender shall not affect, terminate, modify or otherwise limit Lender’s Lien with respect to the Collateral.

  
 9.3 Environmental Reports. Furnish Lender, concurrently
with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with a certificate signed by an authorized officer of Borrowers stating, to the best of his knowledge, that each Borrower is in compliance in all material respects
with all federal, state and local laws relating to environmental protection and control and occupational safety and health. To the extent such Borrower is not in compliance with the foregoing laws, the certificate shall set forth with specificity
all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance. 
  
 9.4 Litigation. Promptly notify Lender in writing of any litigation, suit or administrative proceeding affecting Borrowers, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding, which in any such case could reasonably be expected to have a Material Adverse Effect on Borrowers. 
  
 9.5 Material Occurrences. Promptly notify Lender in writing upon the occurrence of (a) any Event of Default or
Default; (b) any event, development or circumstance whereby any financial statements or other reports furnished to Lender fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or
operating results of Borrowers as of the date of such statements; (e) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could
subject Borrowers to a tax imposed by Section 4971 of the Code; (f) each and every default by Borrowers which might result in the acceleration of the maturity of any Indebtedness, including the names and addresses of the holders of such Indebtedness
with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness; and (g) any other development in the business or affairs of Borrowers which could
reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto. 
  
 9.6 Government Receivables. Notify Lender immediately if any of its Receivables arise out of contracts between any
Borrower and the United States, any state, or any department, agency or instrumentality of any of them. 
  
 9.7 Annual Financial Statements. Furnish Lender within one hundred twenty (120) days after the end of each fiscal year of Borrowers, consolidated
financial statements of Borrowers including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of
such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified public accounting firm selected by Borrower and
satisfactory to Lender (the “Accountants”). The report of the Accountants shall be accompanied by a statement of the Accountants certifying that (i) they have caused this Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their 

  

 46 

 
attention which to their knowledge constituted an Event of Default or a Default under this Agreement or any related agreement or, if such information came to
their attention, specifying any such Default or Event of Default, its nature, when it occurred and whether it is continuing, and such report shall contain or have appended thereto calculations which set forth Borrower’s compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and 7.11 hereof. In addition, the reports shall be accompanied by a certificate of Borrower’s Chief Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of Default exists, or, if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken
by Borrowers with respect to such event, and such certificate shall have appended thereto calculations which set forth Borrower’s compliance with the requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and 7.11 hereof,
together with annual budget. 
  
 9.8 Annual Financial
Statements Prepared by Management. Furnish Lender within one hundred twenty (120) days after the end of each fiscal year of Borrowers, consolidating financial statements of Borrowers, all prepared in accordance with GAAP applied on a consistent
basis with prior practices, and in reasonable detail and prepared without qualification by Borrowers management. 
  
 9.9 Quarterly Financial Statements. Furnish Lender within 45 days after the end of each fiscal quarter, an unaudited consolidated and consolidating
balance sheet of Borrowers and unaudited consolidated and consolidating statements of income and stockholders’ equity and consolidated and consolidating cash flow of Borrowers reflecting results of operations from the beginning of the fiscal
year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments prepared by Borrowers’ management
or by the Accountants. The reports shall be accompanied by a certificate signed by the Chief Financial Officer of Borrowers, which shall state that, based on an examination sufficient to permit him to make an informed statement, no Default or Event
of Default exists, or, if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such default and, such certificate shall have
appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and 7.11 hereof. 
  
 9.10 Additional Information. Furnish Lender with such additional information as Lender shall reasonably request in
order to enable Lender to determine whether the terms, covenants, provisions and conditions of this Agreement and the Notes have been complied with by Borrowers including, without limitation and without the necessity of any request by Lender, (a)
copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing office or place of business, and
(c) promptly upon Borrower’s learning thereof, notice of any labor dispute to which such Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which
such Borrower is a party or by which such Borrower is bound. 
  

 47 

 9.11 Notice of Suits, Adverse Events. Furnish Lender with prompt notice of (i) any lapse or other
termination of any Consent issued to any Borrower by any Governmental Body or any other Person that is material to the operation of such Borrower’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any
such Consent; and (iii) copies of any periodic or special reports filed by any Borrower with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of such Borrower, or if
copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to Borrower. 
  
 9.12 ERISA Notices and Requests. Furnish Lender with immediate written notice in the event that (i) any Borrower or
any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower or any member of the Controlled
Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or any member of the Controlled
Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower or any member of the Controlled
Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which such Borrower or any member of the Controlled Group was not
previously contributing shall occur, (v) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such
notice, (vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with
copies of each such letter; (vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower or any member of the
Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (ix) any Borrower or any member of the Controlled Group knows that (a)
a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate
a Multiemployer Plan. 
  
 9.13 Additional Documents.
Execute and deliver to Lender, upon request, such documents and agreements as Lender may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement. 
  

 48 

 X EVENTS OF DEFAULT 
  
 The occurrence of any one or more of the following events shall constitute an “Event of Default”: 
  
 10.1 failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or
charge provided for herein when due or in any Other Document; 
  
 10.2 any representation or warranty made or deemed made by any Borrower in this Agreement or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith
shall prove to have been misleading in any material respect on the date when made or deemed to have been made; 
  
 10.3 failure by any Borrower to (i) furnish financial information when due or when requested which is unremedied for a period of fifteen (15) days, or
(ii) permit the inspection of its books or records; 
  
 10.4
issuance of a notice of Lien, levy, assessment, injunction or attachment against a material portion of any Borrower’s property which is not stayed or lifted within sixty (60) days; 
  
 10.5 except as otherwise provided for in Sections 10.1 and 10.3, failure or neglect of any Borrower to perform, keep or
observe any term, provision, condition, covenant herein contained, or contained in any other agreement or arrangement, now or hereafter entered into between any Borrower and Lender except for a failure or neglect of Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within 30 days from the occurrence of such failure or neglect; 
  
 10.6 any judgment or judgments are rendered or judgment liens filed against
any Borrower for an aggregate amount in excess of $100,000 which within sixty (60) days of such rendering or filing is not either satisfied, stayed or discharged of record; 
  
 10.7 any Borrower shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws
(as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing; 
  
 10.8 any Borrower shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present
business; 
  
 10.9 any Affiliate or any Subsidiary of any
Borrower, shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing
its 

  

 49 

 
inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing
for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the
foregoing; 
  
 10.10 any change in any Borrower’s condition
or affairs (financial or otherwise) which in Lender’s opinion has a Material Adverse Effect; 
  
 10.11 any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest; 
  
 10.12 a default of the
obligations of any Borrower under any other agreement to which it is a party shall occur which in Lender’s opinion has a Material Adverse Effect and which default is not cured within any applicable grace period; 
  
 10.13 any material provision of this Agreement shall, for any reason, cease
to be valid and binding on any Borrower, or any Borrower shall so claim in writing to Lender; 
  
 10.14 (i) any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent, trademark or tradename of any Borrower, the continuation of which is material to the continuation
of any Borrower’s business, or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days,
or (c) schedule or conduct a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the continuation of such Borrower’s business and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent; or (ii) any agreement which is necessary or material to the operation of any Borrower’s business shall be revoked or
terminated and not replaced by a substitute acceptable to Lender within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse
Effect on such Borrower; 
  
 10.15 any material portion of the
Collateral shall be seized or taken by a Governmental Body, or any Borrower or the title and rights of any Borrower shall have become the subject matter of litigation which might, in the opinion of Lender, upon final determination, result in
impairment or loss of the security provided by this Agreement or the Other Documents; or 
  
 10.16 an event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion of Lender be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Lender, would have a Material Adverse Effect on
such Borrower. 
  

 50 

 XI LENDER’ RIGHTS AND REMEDIES AFTER DEFAULT 
  
 11.1 Rights and Remedies Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation of Lender to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter (such default not having previously been
cured), at the option of Lender all Obligations shall be immediately due and payable and Lender shall have the right to terminate this Agreement and to terminate the obligation of Lender to make Advances. Upon the occurrence of any Event of Default,
Lender shall have the right to exercise any and all other rights and remedies provided for herein, under the Uniform Commercial Code Law of Property Acts and German Civil Code and at law or equity generally, including, without limitation, the right
to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process. Lender may enter any of
any Borrower’s premises or other premises without legal process and without incurring liability to such Borrower therefor, and Lender may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and
remove the same to such place as Lender may deem advisable and Lender may require Borrowers to make the Collateral available to Lender at a convenient place. With or without having the Collateral at the time or place of sale, Lender may sell the
Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Lender may elect. Except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrowers at least five (5) days prior to such sale or sales is reasonable notification. At any public sale Lender may bid for and become the purchaser, and Lender, any Lender or any other purchaser at any such sale thereafter shall
hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and such right and equity are hereby expressly waived and released by each Borrower. In connection with the exercise of the
foregoing remedies, Lender is granted permission to use all of each Borrower’s (a) trademarks, trade styles, trade names, patents, patent applications, licenses, franchises and other proprietary rights which are used in connection with
Inventory for the purpose of disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods. The proceeds realized from the sale of any Collateral shall be applied as follows: first, to the reasonable
costs, expenses and attorneys’ fees and expenses incurred by Lender for collection and for acquisition, completion, protection, removal, storage, sale and delivery of the Collateral; second, to interest due upon any of the Obligations and any
fees payable under this Agreement; and, third, to the principal of the Obligations. If any deficiency shall arise, each Borrower shall remain liable to Lender therefor. 
  
 11.2 Lender’s Discretion Lender shall have the right in its sole discretion to determine which rights, Liens,
security interests or remedies Lender may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Lender’s or Lender’ rights
hereunder. 
  

 51 

 11.3 Setoff In addition to any other rights which Lender may have under applicable law, upon the
occurrence of an Event of Default hereunder, Lender shall have a right to apply each Borrower’s property held by Lender to reduce the Obligations. 
  
 11.4 Rights and Remedies not Exclusive The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of
any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative. 
  
 XII WAIVERS AND JUDICIAL PROCEEDINGS 
  
 12.1 Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof
with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein. 
  
 12.2 Delay. No delay or omission on Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any default. 
  
 12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY
TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
  
 XIII EFFECTIVE DATE AND TERMINATION 
  
 13.1 Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of Borrowers, Lender, shall become effective on the date hereof and shall continue in full force and effect until December 7, 2007 and until termination of all outstanding
Obligations under this Agreement (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time. 
  
 13.2 Termination. The termination of the Agreement shall not affect any Borrower’s or Lender’s rights, or any of the Obligations having
their inception prior to the effective date of such 

  

 52 

 
termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations
have been fully disposed of, concluded or liquidated. The security interests, Liens and rights granted to Lender hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower’s Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of Borrowers have been paid or performed in full after the termination of this Agreement or Borrowers
have furnished Lender with an indemnification satisfactory to Lender with respect thereto. Accordingly, each Borrower waives any rights which it may have under Section 9-404(1) of the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Lender shall not be required to send such termination statements to Borrowers, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its
terms and all Obligations paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are paid or performed in full.

  
 XIV MISCELLANEOUS 
  
 14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey applied to contracts to be performed wholly within the State of New Jersey. Any judicial proceeding brought by or against Borrower with respect to any of the Obligations, this Agreement or any
related agreement may be brought in any court of competent jurisdiction in the State of New Jersey, United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to Borrowers at their address set forth in Section 14.5 and service so made shall be deemed completed five (5) days
after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Lender to bring proceedings against Borrower
in the courts of any other jurisdiction. Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. Any judicial proceeding by Borrowers against Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a
federal or state court located in the County of Middlesex, State of New Jersey. 
  
 14.2 Entire Understanding. This Agreement and the documents executed concurrently herewith contain the entire understanding between Borrowers and Lender supersedes all prior agreements and understandings, if
any, relating to the subject matter hereof. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by each Borrower’s, and Lender’s
respective officers. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be 

  

 53 

 
charged. Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not
relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement. 
  
 14.3 Application of Payments. Lender shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Lender receives any payment or proceeds of the Collateral for Borrowers’ benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof
intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Lender. 
  
 14.4 Indemnity. Each Borrower shall indemnify Lender and its respective officers, directors, Affiliates, employees and Lender from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against Lender in any litigation, proceeding or investigation instituted or conducted by any governmental agency or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or
referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Lender is a party thereto, except to the extent that any of the foregoing arises out of the gross negligence or willful misconduct of the party being
indemnified. 
  
 14.5 Notice. Any notice or request
hereunder may be given to Borrowers or to Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c) registered or certified mail, return receipt requested, (d) telex or telegram, subsequently confirmed by registered or certified mail, or (e) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated as a notice of change of address) with electronic confirmation of its receipt. Any notice or other communication required or permitted pursuant to this Agreement shall
be deemed given (a) when personally delivered to any officer of the party to whom it is addressed, (b) on the earlier of actual receipt thereof or three (3) days following posting thereof by certified or registered mail, postage prepaid, or (c) upon
actual receipt thereof when sent by a recognized overnight delivery service or (d) upon actual receipt thereof when sent by telecopier to the number set forth below with electronic confirmation of its receipt, in each case addressed to each party at
its address set forth below or at such other address as has been furnished in writing by a party to the other by like notice: 
  

					
	 (A)
	 	If to Lender	    	 PNC Bank, National Association
 Two Tower Center
Boulevard, Floor 16-8
 East Brunswick, New Jersey 08816
 Attention: Michael Raynor
 Telephone: (732) 220-3427
 Facsimile: (732) 220-2296

  

 54 

					
	 	  	with a copy to:	    	 Sills Cummis Zuckerman Radin Tischman
 Epstein &
Gross,
 The Legal Center, One Riverfront Plaza
 Newark, New
Jersey 07102-5400
 Attention: Diane M. Lavenda, Esq.
 Telephone:
(973) 643-7000
 Facsimile: (973) 643-6500

			
	 (B)
	  	If to Borrowers:	    	 Franklin Electronic Publishers, Inc.
 One Franklin
Plaza
 Burlington, New Jersey
 Attention: Arnold
Levitt
 Telephone: (609)386-2500, extension 6020
 And

Attention: Barbara Anderson
 Telephone: (609)386-2500, extension
4206
 Facsimile:

  
 14.6 Survival.
The obligations of Borrowers under Sections 2.2(f), 3.4, 3.5, 3.6, 4.19(h), and 14.5 shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations. 
  
 14.7 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible. 
  
 14.8 Expenses. All
costs and expenses including, without limitation, reasonable attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Lender (a) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement or any consents or waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Lender’s security interest in or Lien on any of the Collateral, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Lender’s transactions with Borrowers, or (e) in connection with any advice given to Lender with respect to its rights and obligations under this Agreement and all related agreements, may be charged to
Borrower’s Account and shall be part of the Obligations. 
  
 14.9 Injunctive Relief. Each Borrower recognizes that, in the event such Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy at law may prove to be inadequate relief
to Lender; therefore, Lender, if Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy. 
  

 55 

 14.10 Consequential Damages. Neither Lender, nor any agent or attorney for any of them, shall be
liable to any Borrower for consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations. 
  
 14.11 Captions. The captions at various places in this Agreement are intended for convenience only and do not
constitute and shall not be interpreted as part of this Agreement. 
  
 14.12 Counterparts; Telecopied Signatures. This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. 
  
 14.13 Construction. The parties acknowledge that each party and its counsel have reviewed this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto. 
  
 14.14 Confidentiality; Sharing Information 
  
 (a) Lender shall hold all non-public information obtained by Lender pursuant
to the requirements of this Agreement in confidence in accordance with Lender’s customary procedures for handling confidential information of this nature; provided, however, Lender may disclose such confidential information (a) to its
examiners, affiliates, outside auditors, counsel and other professional advisors, (b) to Lender and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless
specifically prohibited by applicable law or court order, Lender shall use its best efforts prior to disclosure thereof, to notify Borrowers of the applicable request for disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an examination of the financial condition of Lender by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Lender be obligated to return any
materials furnished by Borrowers other than those documents and instruments in possession of Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. 
  
 (b) Each Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to Borrowers or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and Borrowers
hereby authorizes each Lender to share any information delivered to such Lender by Borrowers and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or
Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provision of Section 14.14 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of this Agreement. 
  

 56 

 Each of the parties has signed this Agreement as of the day and year first above written. 
  

					
	 	 	FRANKLIN ELECTRONIC PUBLISHERS, INC.
			
	ATTEST:	 	 	 	 
			
	/s/ Barbara Anderson	 	By:	 	 /s/ Arnold Levitt

	 	 	Name:	 	 Arnold Levitt

	Barbara Anderson	 	Title:	 	 Senior Vice President

	Assistant Treasurer	 	 	 	 
		
	 	 	FRANKLIN ELECTRONIC PUBLISHERS
	 	 	(EUROPE) LTD.
			
	ATTEST:	 	 	 	 
			
	/s/ Barbara Anderson	 	By:	 	 /s/ Arnold Levitt

	 	 	Name:	 	Arnold Levitt
	Barbara Anderson	 	Title:	 	Director
	Assistant Treasurer	 	 	 	 
		
	 	 	FRANKLIN ELECTRONIC PUBLISHERS
	 	 	(DEUTSCHLAND) GMBH
			
	ATTEST:	 	 	 	 
			
	/s/ Barbara Anderson	 	By:	 	 /s/ Arnold Levitt

	 	 	Name:	 	Arnold Levitt
	Barbara Anderson	 	Title:	 	Director
	Assistant Treasurer	 	 	 	 
		
	 	 	PNC BANK, NATIONAL ASSOCIATION
			
	 	 	By:	 	/s/ Michael Raynor
	 	 	Name:	 	Michael Raynor
	 	 	Title:	 	Vice President

  
 REVOLVING CREDIT NOTE

  

			
	 $20,000,000.00
	  	Newark, New Jersey
	 	  	 December 7, 2004

  
 FOR VALUE RECEIVED,
the undersigned, FRANKLIN ELECTRONIC PUBLISHERS, INC., FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD. AND FRANKLIN ELECTRONIC PUBLISHERS (DEUTSCHLAND) GMBH (each a “Borrower” and collectively, the “Borrowers”), each
hereby unconditionally promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION, as Lender (as defined in the Credit Agreement, as defined below); any capitalized term used herein and not otherwise defined herein shall have the meaning
ascribed to such term in the Credit Agreement), at the Payment Office initially located at Two Tower Center Boulevard, East Brunswick, New Jersey 08816, in lawful money of the United States of America and in immediately available funds, on December
6, 2007, the principal sum of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00) or, if less, the unpaid principal amount of all Revolving Advances made pursuant to the Credit Agreement, payable at such times, in such amounts and in such manner as
set forth in the Credit Agreement. 
  
 Each Borrower further
agrees unconditionally promise to pay interest to the order of Lender at such Payment Office on the unpaid principal amount of the Revolving Advances made pursuant to the Credit Agreement from the date hereof until paid at the rates per annum, at
the times and in such manner as set forth in the Credit Agreement. 
  
 This Note (i) is the Revolving Credit Note referred to in the Revolving Credit and Security Agreement dated as of even date herewith (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Borrowers and Lender (ii) is subject to the terms and conditions of the Credit Agreement and the Other Documents – it being agreed that all the provisions of the Credit Agreement are incorporated herein by reference,
and (iii) without limiting the generality of the immediately preceding clause (ii), is secured as provided in the Credit Agreement. 
  
 Upon the occurrence and during the continuance of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, due and payable all as provided in the Credit Agreement. 
  
 Each Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note except such as are expressly provided for in the Credit Agreement. 
  
 This Note shall bind Borrowers and their successors and assigns, and the
benefits hereof shall inure to the benefit of Lender and its successors and assigns. 
  

 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. 
  

									
	ATTEST:	 	 	 	FRANKLIN ELECTRONIC PUBLISHERS, INC.
					
	 	 	/S/    BARBARA
ANDERSON        	 	 	 	By:	 	/S/    ARNOLD D.
LEVITT        
	 	 	Barbara Anderson	 	 	 	 Name:
	 	Arnold D. Levitt
	 	 	Assistant Treasurer	 	 	 	 Title:
	 	Senior Vice President
			
	ATTEST:	 	 	 	FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD.
					
	 	 	/S/    BARBARA
ANDERSON        	 	 	 	By:	 	/S/    ARNOLD D.
LEVITT        
	 	 	Barbara Anderson	 	 	 	 Name:
	 	Arnold D. Levitt
	 	 	Assistant Treasurer	 	 	 	 Title:
	 	Senior Vice President
			
	ATTEST:	 	 	 	FRANKLIN ELECTRONIC PUBLISHERS (DEUTSCHLAND) GMBH
					
	 	 	/S/    BARBARA
ANDERSON        	 	 	 	By:	 	/S/    ARNOLD D.
LEVITT        
	 	 	Barbara Anderson	 	 	 	 Name:
	 	Arnold D. Levitt
	 	 	Assistant Treasurer	 	 	 	 Title:
	 	Senior Vice President

  

 2 

 FRANKLIN ELECTRONIC PUBLISHERS, INC. 
 AVAILABILITY 
 AS OF                              
 (rounded to the nearest $000) 
  

															
	 	  	 	  	US

	 	 	UK

	 	 	GER

	 	 	TOTAL

	 
	 Gross A/R Agings
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Less: Ineligibles
	  	 	  	 	 	 	 	 	 	 	 	 	 	 
	 Over 60 Days Past Due Date&no > 120 days past invoice
	  	A	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Cross Aging @ 50%
	  	B	  	—  	 	 	 	 	 	 	 	 	—  	 
	 Credits in Prior
	  	C	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Customer Advances
	  	D	  	—  	 	 	 	 	 	 	 	 	 	 
	 Foreign
	  	E	  	—  	 	 	 	 	 	 	 	 	—  	 
	 Government
	  	F	  	—  	 	 	 	 	 	 	 	 	—  	 
	 Debit Memos / Chargebacks
	  	G	  	—  	 	 	 	 	 	 	 	 	—  	 
	 Reconciliation Reserve
	  	H	  	 	 	 	—  	 	 	 	 	 	—  	 
	 Concentration Reserve of > 30% of total A/R
	  	 	  	 	 	 	 	 	 	 	 	 	 	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Total Ineligibles
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Eligible A/R
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Advance Rate
	  	 	  	80	%	 	80	%	 	80	%	 	80	%
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Gross A/R Availability
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Dilution Reserve @ 6.2%
	  	I	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Net A/R Availability
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Maximum A/R Advance (“cap”)
	  	 	  	N/A	 	 	1,500,000	 	 	1,500,000	 	 	 	 
	 Inventory on hand per Perpetual
	  	 	  	 	 	 	 	 	 	 	 	 	—  	 
	 In-transit from vendors per Perpetual
	  	J	  	 	 	 	 	 	 	 	 	 	—  	 
	 Refurbished Inventory
	  	N	  	 	 	 	 	 	 	 	 	 	—  	 
	 	  	 	  	 	 	 	 	 	 	 	 	 	
	

	 In-transit to third party assemblers per Perpetual
	  	 	  	 	 	 	 	 	 	 	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Gross Inventory Perpetual
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Less: Ineligibles
	  	 	  	 	 	 	 	 	 	 	 	 	 	 
	 In transit to 3rd party outside of the U.S.
	  	K	  	 	 	 	 	 	 	 	 	 	—  	 
	 Components at 3rd party outside of the U.S.
	  	L	  	 	 	 	 	 	 	 	 	 	—  	 
	 Discontinued Product Line - Ebookman
	  	M	  	 	 	 	 	 	 	 	 	 	—  	 
	 Refurbished Inventory (50% ineligible)
	  	N	  	 	 	 	 	 	 	 	 	 	—  	 
	 Hong Kong Inventory
	  	O	  	 	 	 	 	 	 	 	 	 	—  	 
	 Inventory in Quality Control
	  	P	  	 	 	 	 	 	 	 	 	 	—  	 
	 Supplies / Packaging
	  	Q	  	 	 	 	 	 	 	 	 	 	—  	 
	 Slow Moving / Obsolescence Reserve
	  	R	  	 	 	 	 	 	 	 	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Total Ineligibles
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Eligible Inventory
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 Advance Rate (85% of NOLV) (85% of 63%=54%)
	  	 	  	54	%	 	0	%	 	0	%	 	54	%
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Inventory Availability
	  	 	  	—  	 	 	—  	 	 	—  	 	 	—  	 
	 	  	 	  	
	
	 	
	
	 	
	
	 	
	

	 Maximum Inventory Advance (“cap”)
	  	 	  	10,000,000	 	 	 	 	 	 	 	 	 	 
	 Burlington, NJ Real Estate - Available to Borrow
	  	 	  	4,500,000	 	 	 	 	 	 	 	 	4,500,000	 
	 Total Availability
	  	 	  	 	 	 	 	 	 	 	 	 	4,500,000	 
	 Less: Existing Revolver - under Current Asset Availability
	  	 	  	 	 	 	 	 	 	 	 	 	 	 
	 Less: Existing Revolver - under Real Estate Availability
	  	 	  	 	 	 	 	 	 	 	 	 	0	 
	 	  	 	  	 	 	 	 	 	 	 	 	 	
	

	 Net Availability
	  	 	  	 	 	 	 	 	 	 	 	 	4,500,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]