Document:

Second Amended and Restated Loan and Security Agreement

 Exhibit 10.1 
  

					
	

	  	 SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 (ACCOUNTS AND INVENTORY)

			
	 OBLIGOR#
 1480177482
	  	     NOTE #
     75
	  	 AGREEMENT DATE
 March 8,
2006

			
	 CREDIT LIMIT
 $5,000,000
	  	     INTEREST RATE
     Base Rate
	  	OFFICER NO./INITIALS

 THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into on March 8, 2006, between
COMERICA BANK, a Michigan banking corporation, successor by merger to Comerica Bank-California (“Bank”) as secured party, whose Western Division headquarters office is 333 West Santa Clara Street, San Jose, California and the
undersigned (“Borrower”), whose sole place of business (if it has only one), chief executive office (if it has more than one place of business) or residence (if an individual) is located at the address set forth below its name on the
signature page to this Agreement. 
 WHEREAS, Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated
August 31, 2000 (as modified, amended, supplemented or revised from time to time, the “Prior Agreement”) pursuant to which Bank has made certain credit facilities available to Borrower. Borrower and Bank desire to amend and restate
the Prior Agreement in its entirety in accordance herewith. 
 NOW THEREFOR, in consideration of the mutual covenants and conditions hereof, the parties to
this Agreement hereby agree the Prior Agreement is hereby amended and restated in full as follows: 
 1. DEFINITIONS. 
 1.1 “Accounts” shall mean and includes all presently existing and hereafter arising accounts, including without limitation all accounts
receivable, contract rights and other forms of right to payment for monetary obligations or receivables for property sold or to be sold, leased, licensed, assigned or otherwise disposed of, or for services rendered or to be rendered (including
without limitation all health-care-insurance receivables and the licensing of software and other technology) owing to Borrower, and any supporting obligations, credit insurance, guaranties or security therefor, irrespective of whether earned by
performance. 
 1.2 “Agreement” shall mean and includes this Second Amended and Restated Loan and Security Agreement (Accounts and
Inventory), any concurrent or subsequent rider to this Second Amended and Restated Loan and Security Agreement (Accounts and Inventory) and any extensions, supplements, amendments or modifications to this Second Amended and Restated Loan and
Security Agreement (Accounts and Inventory) and/or to any such rider. 
 1.3 “Bank Expenses” shall mean and includes: all
reasonable costs or expenses required to be paid by Borrower under this Agreement which are paid or advanced by Bank; taxes and insurance premiums of every nature and kind of Borrower paid by Bank; filing, recording, publication and search fees,
appraiser fees, auditor fees and costs, and title insurance premiums paid or incurred by Bank in connection with Bank’s transactions with Borrower; costs and expenses incurred by Bank in collecting the Accounts (with or without suit) to correct
any default or enforce any provision of this Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, disposing of, preparing for sale and/or advertising to sell the Collateral, whether or not a sale is
consummated; costs and expenses of suit incurred by Bank in enforcing or defending this Agreement or any portion hereof, including, but not limited to, expenses incurred by Bank in attempting to obtain relief from any stay, restraining order,
injunction or similar process which prohibits Bank from exercising any of its rights or remedies; and reasonable attorneys’ fees and expenses incurred by Bank in advising, structuring, drafting, reviewing, amending, terminating, enforcing,
defending or concerning this Agreement, or any portion hereof or any agreement related hereto, whether or not suit is brought. Bank Expenses shall include Bank’s in-house legal charges at reasonable rates. 
 1.4 “Base Rate” shall mean that variable rate of interest so announced by Bank at its headquarters office in Detroit, Michigan as its
“Base Rate” from time to time and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. 
 1.5 “Borrower’s Books” shall mean and includes all of Borrower’s books and records including but not limited to minute books; ledgers; records indicating, summarizing or evidencing Borrower’s
assets (including, without limitation, the Accounts), liabilities, business operations or financial condition, and all information relating thereto, computer programs; computer disk or tape files; computer printouts; computer runs; and other
computer prepared information and equipment of any kind. 

					
		 		 	LOAN AND SECURITY AGREEMENT
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 1.6 “Collateral” shall mean the property described in Exhibit “A” attached
hereto. 
 1.7 “Copyrights” shall mean any and all copyright rights, copyright applications, copyright registrations and like
protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held. 
 1.8 “Credit” shall mean all Indebtedness, except that Indebtedness arising pursuant to any other separate contract, instrument, note, or other
separate agreement which, by its terms, provides for a specified interest rate and term. 
 1.9 “Credit Limit” shall mean Five
Million Dollars ($5,000,000). 
 1.10 “Current Liabilities” shall mean, in respect of a Person and as of any applicable date of
determination, all liabilities of such Person that should be classified as current in accordance with GAAP. 
 1.11 “Daily Balance”
shall mean the amount determined by taking the amount of the Credit owed at the beginning of a given day, adding any new Credit advanced or incurred on such date, and subtracting any payments or collections which are deemed to be paid and are
applied by Bank in reduction of the Credit on that date under the provisions of this Agreement. 
 1.12 “Debt” shall mean, as of
any applicable date of determination, all items of indebtedness, obligation or liability of a Person, whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, that should be classified
as liabilities in accordance with GAAP. In the case of Borrower, the term “Debt” shall include, without limitation, the Indebtedness. 
 1.13 “Exchange Contract” has the meaning set forth in Section 2.4. 
 1.14 “Exchange Contract Obligations”
shall mean the gross amount of all outstanding Exchange Contracts. 
 1.15 “Event of Default” shall mean one or more of those
events described in Section 7 contained herein below. 
 1.16 “GAAP” shall mean, as of any applicable period, generally
accepted accounting principles in effect during such period. 
 1.17 “General Intangibles” shall mean and includes all of
Borrower’s present and future general intangibles and other personal property (including without limitation all payment intangibles, electronic chattel paper, contract rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, plans, diagrams, schematics, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment
(including without limitation, rights to payment evidenced by chattel paper, documents or instruments) and other rights under any royalty or licensing agreements, infringement claims, software (including without limitation any computer program that
is embedded in goods that consist solely of the medium in which the program is embedded), information contained on computer disks or tapes, literature, reports, catalogs, insurance premium rebates, tax refunds, and tax refund claims), other than
goods, Accounts, Inventory, Negotiable Collateral, and Borrowers Books. 
 1.18 “Indebtedness” shall mean and includes any and all
loans, advances, Letter of Credit Obligations, Exchange Contract Obligations, overdrafts, debts, liabilities (including, without limitation, any and all amounts charged to Borrower’s loan account pursuant to any agreement authorizing Bank to
charge Borrower’s loan account), obligations, lease payments, guaranties, covenants and duties owing by Borrower to Bank of any kind and description whether advanced pursuant to or evidenced by this Agreement; by any note or other Instrument;
or by any other agreement between Bank and Borrower and whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due now existing or hereafter arising, including, without limitation, any interest,
fees, expenses, costs and other amounts owed to Bank that but for the provisions of the United States Bankruptcy Code would have accrued after the commencement of any Insolvency Proceeding, and including, without limitation, any debt, liability, or
obligations owing from Borrower to others which Bank may have obtained by assignment, participation, purchase or otherwise, and further including, without limitation, all interest not paid when due and all Bank Expenses which Borrower is required to
pay or reimburse by this Agreement, by law, or otherwise. 
 1.19 “Insolvency Proceeding” shall mean and includes any proceeding or
case commenced by or against Borrower, or any guarantor of Borrower’s Indebtedness, or any of Borrower’s account debtors, under any provisions of the Bankruptcy Code, as amended, or any other bankruptcy or insolvency law, including, but
not limited to assignments for the benefit of creditors, formal or informal moratoriums, composition or extensions with some or all creditors, any proceeding seeking a reorganization, arrangement or any other relief under the Bankruptcy Code, as
amended, or any other bankruptcy or insolvency law. 
  

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 1.20 “Intellectual Property” means all of Borrower’s right, title, and interest in and
to the following: 
 a. Copyrights, Trademarks and Patents; 
 b. Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held; 
 c. Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held; 
 d. Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above; 
 e. All
licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights; 
 f. All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and 
 g. All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect
of any of the foregoing. 
 1.21 “Inventory” shall mean and includes all present and future inventory in which Borrower has any
interest, including, but not limited to, goods held by Borrower for sale or lease or to be furnished under a contract of service and all of Borrower’s present and future raw materials, work in process, finished goods (including without
limitation any computer program embedded in any of the foregoing goods and any supporting information provided in connection therewith that (i) is associated with the goods in such a manner that the program customarily is considered part of the
goods or that (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods), together with any advertising materials and packing and shipping materials, wherever located and any documents of
title representing any of the above, and any equipment, fixtures or other property used in the storing, moving, preserving, identifying, accounting for and shipping or preparing for the shipping of inventory, and any and all other items hereafter
acquired by Borrower by way of substitution, replacement, return, repossession or otherwise, and all additions and accessions thereto, and the resulting product or mass, and any documents of title respecting any of the above. 
 1.22 “Judicial Officer or Assignee” shall mean and includes any trustee, receiver, controller, custodian, assignee for the benefit of creditors
or any other person or entity having powers or duties like or similar to the powers and duties of trustee, receiver, controller, custodian or assignee for the benefit of creditors. 
 1.23 “Letter of Credit Obligations” shall mean, as of any applicable date of determination, the sum of the undrawn amount of any letter(s) of
credit issued by Bank upon the application of and/or for the account of Borrower, plus any unpaid reimbursement obligations owing by Borrower to Bank in respect of any such letter(s) of credit. 
 1.24 “Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 
 1.25 “Liquidity Ratio” shall mean, as of the date of determination thereof, a ratio: (a) the numerator of which is the sum of all
unrestricted cash and cash equivalents deposited in accounts maintained at the Bank as of the date of such determination, and (b) the denominator of which is the Credit Limit. 
 1.26 “Negotiable Collateral” shall mean and include all of Borrower’s present and future letters of credit, advises of credit,
letter-of-credit rights, certificates of deposit, notes, drafts, money, documents (including without limitation all negotiable documents), instruments (including without limitation all promissory notes), tangible chattel paper or any other similar
property. 
 1.27 “Patents” means all patents, patent applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. 
 1.28 “Permitted Indebtedness”
means: 
 a. Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document; 
  

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 b. Indebtedness existing on the date of closing and disclosed in the Schedule; 
 c. Indebtedness secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not
exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness; and 
 d. Subordinated Debt; 

1.29 “Permitted Investment” means: 
 a. Investments existing on the date of closing disclosed in the Schedule; and 
 b. Investments made in accordance with
Borrower’s Investment Policy Guidelines, attached hereto as Exhibit “D”. Changes to the attached Investment Policy Guidelines are subject to the Bank’s prior written consent, which consent shall not be unreasonably withheld.

 1.30 “Permitted Liens” means the following: 
 a. Any Liens existing on the date of closing and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Advances) or arising under this Agreement or the other Loan Documents; 

b. Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves, provided the same have no priority over any of Bank’s security interests; 
 c. Liens (i) upon or in any equipment acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such
equipment, or (ii) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment; and 
 d. Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses
(a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not
increase. 
 1.31 “Person” or “person” shall mean and includes any individual, corporation, partnership, joint venture,
firm, association, trust, unincorporated association, joint stock company, government, municipality, political subdivision or agency or other entity. 
 1.32 “Quick Assets” shall mean, as of any applicable date of determination, unrestricted cash and cash equivalents, certificates of deposit or marketable securities with maturities not to exceed one year and
net accounts receivable arising from the sale of goods and services, and United States government securities and/or claims against the United States government of Borrower and its subsidiaries. 
 1.33 “Quick Ratio” shall mean, as of an applicable date of determination, Quick Assets divided by Current Liabilities, less deferred revenue.

 1.34 “Subordinated Debt” shall mean indebtedness of Borrower to third parties which has been subordinated to the Indebtedness
pursuant to a subordination agreement in form and content satisfactory to Bank. 
 1.35 “Subordination Agreement” shall mean a
subordination agreement in form satisfactory to Bank making all present and future indebtedness of Borrower to any Person who has entered into a Subordination Agreement in favor of Bank from time to time subordinate to the Indebtedness. 

1.36 “Tangible Effective Net Worth” shall mean, with respect to any Person and as of any applicable date of determination, Tangible Net
Worth plus Subordinated Debt. 
  

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 1.37 “Tangible Net Worth” shall mean, with respect to any Person and as of any applicable
date of determination, the excess of: 
 a. the net book value of all assets of such Person (excluding affiliate receivables, patents, patent
rights, trademarks, trade names, franchises, copyrights, licenses, goodwill, and all other intangible assets of such Person) after all appropriate deductions in accordance with GAAP (including, without limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization), over 
 b. all Debt of such Person at such time. 
 1.38 “Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same
and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks. 
 Any and all terms used in the
foregoing definitions and elsewhere in this Agreement shall be construed and defined in accordance with the meaning and definition of such terms under and pursuant to the California Uniform Commercial Code (hereinafter referred to as the
“Uniform Commercial Code”) as amended, revised or replaced from time to time. Notwithstanding the foregoing, the parties intend that the terms used herein which are defined in the Uniform Commercial Code have, at all times, the broadest
and most inclusive meanings possible. Accordingly, if the Uniform Commercial Code shall in the future be amended or held by a court to define any term used herein more broadly or inclusively than the Uniform Commercial Code in effect on the date of
this Agreement, then such term, as used herein, shall be given such broadened meaning. If the Uniform Commercial Code shall in the future be amended or held by a court to define any term used herein more narrowly, or less inclusively, than the
Uniform Commercial Code in effect on the date of this Agreement, such amendment or holding shall be disregarded in defining terms used in this Agreement. 
 2. LOAN AND TERMS OF PAYMENT. 
 For value received, Borrower promises to pay to the order of Bank such amount, as provided for below,
together with interest, as provided for below. 
 2.1 Upon the request of Borrower, made at any time and from time to time during the term
hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower an amount equal to the Credit Limit; provided, however, that the Daily Balance shall not exceed the Credit Limit, minus all Letter of Credit
Obligations and all Exchange Contract Obligations. If at any time for any reason, the amount of Indebtedness owed by Borrower to Bank pursuant to this Section 2.1 and Section 2.3 of this Agreement is greater than the
aggregate amount available to be drawn under this Section 2.1, Borrower shall immediately pay to Bank, in cash, the amount of such excess. 
 2.2 Except as hereinbelow provided, the Credit shall bear interest, on the Daily Balance owing, at a fluctuating rate of interest equal to the Base Rate. 
 All interest chargeable under this Agreement that is based upon a per annum calculation shall be computed on the basis of a three hundred sixty (360) day year for actual days elapsed. The Base Rate as of the date
of this Agreement is seven and one half percent (7.50%) per annum. In the event that the Base Rate announced is, from time to time hereafter, changed, adjustment in the Base Rate shall be made and based on the Base Rate in effect on the date of
such change. The Base Rate, as adjusted, shall apply to the Credit until the Base Rate is adjusted again. 
 All interest payable by Borrower under the
Credit shall be due and payable on the first day of each calendar month during the term of this Agreement. A late payment charge equal to five percent (5%) of each late payment may be charged on any payment not received by Bank within ten
(10) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Event of Default under this Agreement. Upon the occurrence of an Event of Default hereunder, and without constituting a waiver of any
such Event of Default, then during the continuation thereof, at Bank’s option, the Credit shall bear interest, on the Daily Balance owing, at a rate equal to three percent (3%) per year in excess of the rate applicable immediately prior to
the occurrence of the Event of Default, and such rate of interest shall fluctuate thereafter from time to time at the same time and in the same amount as any fluctuation in the rate of interest applicable immediately prior to any such occurrence.

 2.3 Subject to the terms and conditions of this Agreement, upon the request of Borrower, made at any time and from time to time during the
term hereof, and so long as no Event of Default has occurred, Bank agrees to issue or cause to be issued letters of credit for the account of Borrower during the term of this Agreement in the aggregate outstanding face amount not to exceed
(i) the Credit Limit, minus (ii) the then outstanding Daily Balance. All letters of credit shall be, in form and substance, acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form of
standard Letter of Credit Application and Agreement. 
  

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 The obligation of Borrower to immediately reimburse Bank for drawings made under letters of credit shall be absolute,
unconditional and irrevocable in accordance with the terms of this Agreement and the Letter of Credit Application and Agreement with respect to each such letter of credit. Borrower shall indemnify, defend, protect and hold Bank harmless from any
loss, cost, expense, or liability, including, without limitation, reasonable attorney’s fees incurred by Bank, whether in-house or outside counsel is used, arising out of or in connection with any letters of credit. 
 2.4 Subject to the terms of this Agreement, Borrower may utilize up to Three Million and 00/100 Dollars ($3,000,000.00) of the Credit for foreign
exchange contracts with Bank (the “Exchange Contracts”). Borrower shall execute all standard form applications and agreements of Bank in connection with the Exchange Contracts pursuant to which Bank shall sell to or purchase from Borrower
foreign currency on a spot or future basis and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees and charges of Bank in connection with the Exchange Contracts. No Exchange Contracts shall be
purchased or sold unless, on the date of the proposed sale or purchase, the advances available to Borrower under the Credit are equal to ten percent (10%) of the face amount of such Exchange Contracts. Except in Bank’s discretion, the
aggregate amount of Exchange Contract Obligations shall not at any time exceed Thirty Million and 00/100 Dollars ($30,000,000.00). 
 a. Bank
may, in its discretion, terminate the Exchange Contracts at any time (a) that an Event of Default occurs; or (b) that there is no sufficient availability under the Credit and Borrower does not have available funds in its bank account to
satisfy the Exchange Contract. If Bank terminates the Exchange Conti and without limitation of any applicable indemnities, Borrower agrees to reimburse Bank for any and all fees, costs and expenses relating thereto or arising in connection
therewith. 
 2.5 In addition to any other amounts due or to become due under this Agreement, Borrower shall pay to Bank the following fees:

 a. In connection with the financial accommodations provided to Borrower under this Agreement, on the date hereof, a commitment fee in an
amount equal to Eight Thousand Five Hundred Dollars ($8,500), which shall be fully earned and non-refundable on the date of payment thereof. 
 b. In connection with the financial accommodations provided to Borrower under this Agreement, an annual fee in the amount of Eight Thousand Five Hundred Dollars ($8,500), which shall be due and payable in arrears on the first anniversary
date of the date of this Agreement, and which shall be fully earned and non-refundable on the date of payment thereof. In the event that this Agreement is terminated prior to any such payment date, Borrower shall pay to Bank the ratable portion of
the annual fee accrued since the last payment date through any such termination date. 
 c. In addition to all Bank’s customary charges,
commissions, fees and costs payable to Bank in connection with the letters of credit in accordance with Letter of Credit Application and Agreement, Borrower shall pay Bank a fee equal to one and one half percentage points (1.50%) per annum (as
adjusted from time to time by Bank and separately agreed upon between Borrower and Bank), computed on the basis of a three hundred sixty (360) day year for actual days elapsed, of the aggregate amount of all Letter of Credit Obligations
outstanding hereunder. 
 3. TERM. 
 3.1
This Agreement shall remain in full force and effect until March 7, 2008, unless earlier terminated by notice by Borrower. Notice of such termination by Borrower shall be effectuated by mailing of a registered or certified letter not less than
thirty (30) days prior to the effective date of such termination, addressed to Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. 
 3.2 Notwithstanding the foregoing, should Borrower be in default of one or more of the provisions of this Agreement, Bank may terminate this Agreement at
any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this
Agreement at any time without notice. On the date of termination all Indebtedness shall become immediately due and payable without notice or demand; provided, however, that no such notice of termination by Borrower shall be effective
until the payment in full in cash of all Indebtedness to Bank (including without limitation the expiration or cash collateralization of all Letter of Credit Obligations and Exchange Contract Obligations in accordance with the terms and conditions of
this Agreement). Any notice of termination given by Borrower shall be irrevocable unless Bank otherwise agrees in writing, and Bank shall have no obligation to make any loans or issue any letters of credit on or after the termination date stated in
such notice. Borrower may elect to terminate this Agreement in its entirety only. No section of this Agreement or type of loan available hereunder may be terminated singly. 
  

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 3.3 All undertakings, agreements, covenants, warranties, and representations of Borrower contained in
this Agreement or any other document, instrument or agreement entered into with or in favor of Bank in connection herewith shall survive any such termination, and Bank shall retain its security interest in and to all existing Collateral and
Collateral arising thereafter, any and all liens thereon, and all of its rights and remedies under this Agreement or any other document, instrument or agreement entered into with or in favor of Bank in connection herewith notwithstanding such
termination until the payment in full in cash of all Indebtedness to Bank (including, without limitation, the expiration or cash collateralization of all Letter of Credit Obligations and Exchange Contract Obligations in accordance with the terms and
conditions of this Agreement and the payment in full of all applicable termination charges, if any). Notwithstanding the satisfaction in full of the Indebtedness, Bank shall not be required to terminate its security interests in the Collateral
unless, with respect to any loss or damage Bank may incur as a result of dishonored checks or other items of payment received by Bank and applied to the Indebtedness, Bank shall, at its option, (a) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in whole or in part to satisfy the Indebtedness, indemnifying Bank from any such loss or damage, or (b) have retained such monetary reserves and liens on the
Collateral for such period of time as Bank, in its reasonable discretion, may deem necessary to protect Bank from any such loss or damage. 
 3.4 After termination and when Bank has received either (i) payment in full of Borrower’s Indebtedness to Bank or (ii) a deposit of unencumbered cash (in form and subject to documentation reasonably acceptable to Bank) in an
amount equal to such Indebtedness as security for such Indebtedness and is readily available for payment of such Indebtedness, Bank shall reassign to Borrower all Collateral held by Bank, and shall execute a termination of all security agreements
and security interests given by Borrower to Bank. 
 4. CREATION OF SECURITY INTEREST. 
 4.1 Borrower hereby grants to Bank a continuing security interest in all presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Indebtedness owed by Borrower to Bank and in order to secure prompt performance by Borrower of each and all of its covenants and obligations under this Agreement and otherwise created. Bank’s security interest in the
Collateral shall attach to all Collateral without further act on the part of Bank or Borrower. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, Borrower, immediately upon the request of
Bank, shall (a) endorse or assign such Negotiable Collateral to Bank, (b) deliver actual physical possession of such Negotiable Collateral to Bank, and (c) mark conspicuously all of its records pertaining to such Negotiable Collateral
with a legend, in form and substance satisfactory to Bank (and in the case of Negotiable Collateral consisting of tangible chattel paper, immediately mark all such tangible chattel paper with a conspicuous legend in form and substance satisfactory
to Bank), indicating that the Negotiable Collateral is subject to the security interest granted to Bank hereunder. 
 4.2 Bank’s
security interest in the Accounts shall attach to all Accounts without further act on the part of Bank or Borrower. Upon request from Bank, Borrower shall provide Bank with schedules describing all Accounts created or acquired by Borrower (including
without limitation agings listing the names and addresses of, and amounts owing by date by account debtors), and shall execute and deliver written assignments of all Accounts to Bank all in a form acceptable to Bank; provided, however,
Borrower’s failure to execute and deliver such schedules and/or assignments shall not affect or limit Bank’s security interest and other rights in and to the Accounts. Together with each schedule, Borrower shall furnish Bank with copies of
Borrower’s customers’ invoices or the equivalent, and original shipping or delivery receipts for all merchandise sold, and Borrower warrants the genuineness thereof. Upon the occurrence of an Event of Default, Bank or Bank’s designee
may notify customers or account debtors of Bank’s security interest in the Collateral and direct such customers or account debtors to make payments directly to Bank, but unless and until Bank does so or gives Borrower other written
instructions, Borrower shall collect all Accounts for Bank, receive in trust all payments thereon as Bank’s trustee, and, if so requested to do so from Bank, Borrower shall immediately deliver said payments to Bank in their original form as
received from the account debtor and all letters of credit, advices of credit, instruments, documents, chattel paper or any similar property evidencing or constituting Collateral. Notwithstanding anything to the contrary contained herein, if sales
of Inventory are made for cash, Borrower shall immediately deliver to Bank, in identical form, all such cash, checks, or other forms of payment which Borrower receives. The receipt of any check or other item of payment by Bank shall not be
considered a payment on account until such check or other item of payment is honored when presented for payment, in which event, said check or other item of payment shall be deemed to have been paid to Bank two (2) calendar days after the date
Bank actually receives such check or other item of payment. 
 4.3 Bank’s security interest in Inventory shall attach to all Inventory
without further act on the part of Bank or Borrower. Borrower will at Borrower’s expense pledge, assemble and deliver such Inventory to Bank or to a third party as Bank’s bailee; or hold the same in trust for Bank’s account or store
the same in a warehouse in Bank’s name; or deliver to Bank documents of title representing said Inventory; or evidence of Bank’s security interest in some other manner acceptable to Bank. Until a default by Borrower under this Agreement or
any other Agreement between Borrower and Bank, Borrower may, subject to the provisions hereof and consistent herewith, sell the Inventory, but only in the ordinary course of Borrower’s business. A sale of Inventory in Borrower’s ordinary
course of business does not include an exchange or a transfer in partial or total satisfaction of a debt owing by Borrower. 
  

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		 		 	LOAN AND SECURITY AGREEMENT
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 4.4 Concurrently with Borrower’s execution of this Agreement, and at any time or times hereafter
at the request of Bank, Borrower shall (a) execute and deliver to Bank security agreements, mortgages, assignments, certificates of title, affidavits, reports, notices, schedules of accounts, letters of authority and all other documents that
Bank may reasonably request, in form satisfactory to Bank, to perfect and maintain perfected Bank’s security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this Agreement,
(b) cooperate with Bank in obtaining a control agreement in form and substance satisfactory to Bank with respect to all deposit accounts, electronic chattel paper, investment property, and letter-of-credit rights, and (c) in the event that
any Collateral is in the possession of a third party, Borrower shall join with Bank in notifying such third party of Bank’s security interest and obtaining an acknowledgment from such third party that it is holding such Collateral for the
benefit of Bank. By authenticating or becoming bound by this Agreement, Borrower authorizes the filing of initial financing statement(s), and any amendment(s) covering the Collateral to perfect and maintain perfected Bank’s security interest in
the Collateral. Upon the occurrence of an Event of Default, Borrower hereby irrevocably makes, constitutes and appoints Bank (and any of Bank’s officers, employees or agents designated by Bank) as Borrower’s true and lawful
attorney-in-fact with power to sign the name of Borrower on any security agreement, mortgage, assignment, certificate of title, affidavit, letter of authority, notice of other similar documents which must be executed and/or filed in order to perfect
or continue perfected Bank’s security interest in the Collateral, and to take such actions in its own name or in Borrower’s name as Bank, in its sole discretion, deems necessary or appropriate to establish exclusive possession or control
(as defined in the Uniform Commercial Code) over any Collateral of such nature that perfection of Bank’s security interest may be accomplished by possession or control. 
 4.5 Bank (through any of its officers, employees or agents) shall have the right at any time or times after the occurrence of an Event of Default,
provided that reasonable notice is provided, during Borrower’s usual business hours, or during the usual business hours of any third party having control over the records of Borrower, to inspect and verify Borrower’s Books in order to
verify the amount or condition of, or any other matter, relating to, said Collateral and Borrower’s financial condition. 
 4.6
Effective only upon the occurrence of an Event of Default, Borrower appoints Bank or any other person whom Bank may designate as Borrower’s attorney-in-fact, with power: to endorse Borrower’s name on any checks, notes, acceptances, money
order, drafts or other forms of payment or security that may come into Bank’s possession; to sign Borrower’s name on any invoice or bill of lading relating to any Accounts, on drafts against account debtors, on schedules and assignments of
Accounts, on verifications of Accounts and on notices to account debtors; to establish a lock box arrangement and/or to notify the post office authorities to change the address for delivery of Borrower’s mail addressed to Borrower to an address
designated by Bank, to receive and open all mail addressed to Borrower, and to retain all mail relating to the Collateral and forward all other mail to Borrower; to send, whether in writing or by telephone, requests for verification of Accounts; and
to do all things necessary to carry out this Agreement. Borrower ratifies and approves all acts of the attorney-in-fact. Neither Bank nor its attorney-in-fact will be liable for any acts or omissions or for any error of judgement or mistake of fact
or law. This power being coupled with an interest, is irrevocable so long as any Accounts in which Bank has a security interest remain unpaid and until the Indebtedness has been fully satisfied. 
 4.7 In order to protect or perfect any security interest which Bank is granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, warehousemen, or any personnel to protect the Collateral, pay any service bureau, or, obtain any records, and all costs for the same shall be added to the Indebtedness and shall be
payable on demand. 
 4.8 Borrower agrees that Bank may provide information relating to this Agreement or relating to Borrower to Bank’s
parent, affiliates, subsidiaries and service providers. 
 4.9 Pursuant to the Negative Pledge Agreement dated as of March 28, 2003,
Borrower, for itself and its Subsidiaries, agrees that it will not and that it will not permit its Subsidiaries to pledge or otherwise grant a security interest in the Intellectual Property to any Person, other than the Bank, or enter into or be
subject to any agreement with any other Person pursuant to which Borrower agrees for the benefit of such other Person that Borrower will not pledge or grant a security interest in the Intellectual Property, all without the Bank’s prior written
consent. 
 5. CONDITIONS PRECEDENT. 
 5.1
Conditions precedent to the making of the loans and the extension of the financial accommodations hereunder, Borrower shall execute, or cause to be executed, and deliver to Bank, in form and substance satisfactory to Bank and its counsel, the
following: 
 a. This Agreement and other documents, instruments and agreements required by Bank; 
  

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 b. Certified copies of all actions taken by Borrower, any grantor of a security interest to Bank to
secure the Indebtedness, and any guarantor of the Indebtedness, authorizing the execution, delivery and performance of this Agreement and any other documents, instruments or agreements entered into in connection herewith, and authorizing specific
officers to execute and deliver any such documents, instruments and agreements; 
 c. A certificate of good standing showing that Borrower is
in good standing under the laws of the state of its incorporation or formation and certificates indicating that Borrower is qualified to transact business and is in good standing in any other state in which it conducts business; 
 d. UCC searches and financing statements, tax lien and litigation searches, fictitious business statement filings, insurance certificates, notices or
other similar documents which Bank may require and in such form as Bank may require, in order to reflect, perfect or protect Bank’s first priority security interest in the Collateral and in order to fully consummate all of the transactions
contemplated under this Agreement; 
 e. Evidence that Borrower has obtained insurance and acceptable endorsements; 
 f. Such collateral access agreements from each lessor, warehouseman, bailee, and other Person as Bank may require, duly executed by each such Person; and

 g. Warranties and representations of officers. 
 6. WARRANTIES. REPRESENTATIONS AND COVENANTS. 
 6.1 If so requested by Bank, Borrower shall, at such intervals designated by
Bank, during the term hereof execute and deliver a Report of Accounts Receivable or similar report, in form customarily used by Bank. 
 6.2
If any warranty is breached as to any Account, or any Account is not paid in full by an account debtor within ninety (90) days from the date of invoice, or an account debtor disputes liability or makes any claim with respect thereto, or a
petition in bankruptcy or other application for relief under the Bankruptcy Code or any other insolvency law is filed by or against an account debtor, or an account debtor makes an assignment for the benefit of creditors, becomes insolvent, fails or
goes out of business, then Bank may deem ineligible any and all Accounts owing by that account debtor. Bank shall retain its security interest in all Accounts, whether eligible or ineligible, until all Indebtedness has been fully paid and satisfied.
Returns and allowances, if any, as between Borrower and its customers, will be on the same basis and in accordance with the usual customary practices of Borrower, as they exist at this time. Borrower shall promptly notify Bank of all returns and
recoveries and of all disputes and claims, where the return, recovery, dispute or claim involves more than Fifty Thousand Dollars ($50,000). Any merchandise which is returned by an account debtor or otherwise recovered shall be set aside, marked
with Bank’s name, and Bank shall retain a security interest therein. Borrower shall promptly notify Bank of all disputes and claims and settle or adjust them on terms approved by Bank. After default by Borrower hereunder, no discount, credit or
allowance shall be granted to any account debtor by Borrower and no return of merchandise shall be accepted by Borrower without Bank’s consent. Bank may, after default by Borrower, settle or adjust disputes and claims directly with account
debtors for amounts and upon terms which Bank considers advisable, and in such cases Bank will credit Borrower’s loan account with only the net amounts received by Bank in payment of the Accounts, after deducting all Bank Expenses in connection
therewith. 
 6.3 Borrower warrants, represents, covenants and agrees that: 
 a. Borrower has good and marketable title to the Collateral. Bank has and shall continue to have a first priority perfected security interest in and to
the Collateral. The Collateral shall at all times remain free and clear of all Liens, except for Permitted Liens; 
 b. All Accounts are and
will, at all times pertinent hereto, be bona fide existing obligations created by the sale and delivery of merchandise or the rendition of services to account debtors in the ordinary course of business, free of all Liens, except for Permitted Liens
and are unconditionally owed to Borrower without defenses, disputes, offsets counterclaims, rights of return or cancellation, and Borrower shall have received no notice of actual or imminent bankruptcy or insolvency of any account debtor at the time
an Account due from such account debtor is assigned to Bank; and 
 c. At the time each Account is assigned to Bank, all property giving rise
to such Account shall have been delivered to the account debtor or to the agent for the account debtor for immediate shipment to, and unconditional acceptance by, the account debtor. Borrower shall deliver to Bank, as Bank may from time to time
require, delivery receipts, customer’s purchase orders, shipping instructions, bills of lading and any other evidence of shipping arrangements. Absent such a request by Bank, copies of all such documentation shall be held by Borrower as
custodian for Bank. 
  

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 6.4 Borrower is the sole owner of the Intellectual Property, except for licenses granted by Borrower
to its customers in the ordinary course of business. To the best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents is valid and enforceable, and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse
Effect. Except as set forth in the Schedule, Borrower’s rights as a licensee of intellectual property do not give rise to more than five percent (5%) of its gross revenue in any given month, including without limitation revenue derived
from the sale, licensing, rendering or disposition of any product or service. 
 6.5 Borrower shall keep the Inventory only at the following
locations: 20400 Stevens Creek Boulevard, Suite 400, Cupertino, California 95014 and the owner or mortgagees of the respective locations are:
                                        .

 a. Borrower, immediately upon demand by Bank therefor, shall now and from time to time hereafter, at such intervals as are reasonably
requested by Bank, deliver to Bank, designations of Inventory specifying Borrower’s cost of Inventory, the wholesale market value thereof and such other matters and information relating to the Inventory as Bank may request; 
 b. All of the Inventory is and shall remain free from all purchase money or other security interests, or Liens, except for Permitted Liens; 

c. Borrower does now keep and hereafter at all times shall keep correct and accurate records itemizing and describing the kind, type, quality and
quantity of the Inventory, its cost therefor and selling price thereof, and the daily withdrawals therefrom and additions thereto, all of which records shall be available upon demand to any of Bank’s officers, agents and employees for
inspection and copying; 
 d. All Inventory, now and hereafter at all times, shall be new Inventory of good and merchantable quality free
from material defects; 
 e. Inventory is not now and shall not at any time or times hereafter be located or stored with a bailee,
warehouseman or other third party without Bank’s prior written consent, and, in such event, Borrower will concurrently therewith cause any such bailee, warehouseman or other third party to issue and deliver to Bank, warehouse receipts in
Bank’s name evidencing the storage of Inventory and/or an acknowledgment by such bailee of Bank’s prior rights in the Inventory, in each case in form and substance acceptable to Bank, in any event, Borrower shall instruct any third party
to hold all such Inventory for Bank’s account subject to Bank’s security interests and its instructions; and 
 f. Bank shall have
the right upon demand now and/or at all times hereafter, during Borrower’s usual business hours, after reasonable notice, to inspect and examine the Inventory and to check and test the same as to quality, quantity, value and condition and
Borrower agrees to reimburse Bank for Bank’s reasonable costs and expenses in so doing. 
 6.6 Borrower represents, warrants and
covenants with Bank that Borrower will not, without Bank’s prior written consent: 
 a. Grant a security interest in or permit a lien,
claim or encumbrance upon any of the Collateral or the Intellectual Property to any person, association, firm, corporation, entity or governmental agency or instrumentality; 
 b. Permit any levy, attachment or restraint to be made affecting any of Borrower’s assets; 
 c. Permit any Judicial Officer or Assignee to be appointed or to take possession of any or all of Borrower’s assets; 
 d. Other than sales of Inventory in the ordinary course of Borrower’s business, to sell, lease, or otherwise dispose of, move, or transfer, whether
by sale or otherwise, any of Borrower’s assets; 
 e. Change its name, the location of its sole place of business, chief executive
office or residence, business structure, corporate identity or structure, form of organization or the state in which it has been formed or organized; add any new fictitious names, liquidate, merge or consolidate with or into any other business
organization; 
  

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 f. Move or relocate any Collateral; 
 g. Acquire any other business organization unless such acquisition is permitted under Clause r. of this Section 6; 
 h. Enter into any transaction not in the usual course of Borrower’s business; 
 i. Make any change in Borrower’s financial structure or in any of its business objectives, purposes or operations which would materially adversely
affect the ability of Borrower to repay Borrower’s Indebtedness; 
 j. Incur any debts outside the ordinary course of Borrower’s
business, except Permitted Indebtedness; 
 k. Make loans, advances or extensions of credit to any Person, except Permitted Indebtedness;

 l. Guarantee or otherwise, directly or indirectly, in any way be or become responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of any other Person, agreement for the furnishing of funds to any other Person through the furnishing of goods, supplies or services, by way of stock purchase, capital contribution, advance or loan, for the
purpose of paying or discharging (or causing the payment or discharge of) the indebtedness of any other Person, or otherwise, except for the endorsement of negotiable instruments by Borrower in the ordinary course of business for deposit or
collection and Permitted Indebtedness; 
 m. Make any payment on account of any Subordinated Debt except for regularly scheduled payments of
interest and principal in accordance with the provisions of any Subordination Agreement executed by Bank and the subordinated debt holder, or amend any provision contained in any documentation relating to any such Subordinated Debt without
Bank’s prior written consent; 
 n. (a) Sell, lease, transfer or otherwise dispose of properties and assets (whether in one
transaction or in a series of transactions) except as to the sale of Inventory in the ordinary course of business; (b) change its name, consolidate with or merge into any other corporation, permit another corporation to merge into it, acquire
all or substantially all the properties or assets of any other Person, enter into any reorganization or recapitalization or reclassify its capital stock, except as permitted under Clause r. of this Section 6, or (c) enter into any
sale-leaseback transaction; 
 o. Purchase or hold beneficially any stock or other securities of, or make any investment or acquire any
securities or other interest whatsoever in, any other Person, except for Permitted Investments; 
 p. Allow any fact, condition or event to
occur or exist with respect to any employee pension or profit sharing plans established or maintained by it which might constitute grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan;

 q. Use any loan or other extension of credit under this Agreement or any other document, instrument or agreement entered into by Borrower
with or in favor of Bank in connection with this Agreement for any purpose other than to refinance existing revolving debt, to provide working capital for its operations and for other general business purposes. In no event shall the funds from any
such loan or other extension of credit be used directly or indirectly by any Person for personal, family, household or agricultural purposes or for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any
“margin stock” or any “margin securities” (as such terms are defined respectively in Regulation U and Regulation G promulgated by the Board of Governors of the Federal Reserve System) or to extend credit to others directly or
indirectly for the purpose of purchasing or carrying any such margin stock or margin securities. Borrower hereby represents and warrants that Borrower is not engaged principally, or as one of Borrower’s important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin stock or margin securities; and 
 r. Merge or consolidate,
or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person (collectively, “Merger and Acquisition Activities”). Notwithstanding the foregoing, Borrower may engage in Merger and Acquisition Activities in which
(i) such Merger and Acquisition Activities are generally in Borrower’s industry, (ii) Borrower is the surviving entity as a result of such transaction and there is no substantial change in Borrower’s executive management and the
(iii) the consideration consists of its common stock or cash, and further provided that Borrower may not engage in any Merger and Acquisition Activities if an Event of Default has occurred and is continuing at the time of such proposed
transaction or if an Event of Default would exist after giving effect to such transaction. 
  

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 6.7 Borrower represents, warrants, covenants and agrees that: 
 a. Borrower’s true and correct legal name is that set forth on the signature page to this Agreement. Except as disclosed in writing to Bank on or
before the date of this Agreement, Borrower has not done business under any name other than that set forth on the signature page to this Agreement; 
 b. If Borrower is an individual, the location (as determined pursuant to the Uniform Commercial Code) of Borrower’s principal residence is that set forth following Borrower’s name on the signature page to this Agreement;

 c. If Borrower is a registered organization that is organized under the laws of any one of the states comprising the United States (e.g.
corporation, limited partnership, registered limited liability partnership or limited liability company), and is located (as determined pursuant to the Uniform Commercial Code) in the state under the laws of which it was organized, Borrower’s
form of organization and the state in which it has been organized are those set forth immediately following Borrower’s name on the signature page to this Agreement; 
 d. If Borrower is a registered organization organized under the laws of the United States, and Borrower is located in the state that United States law designates as its location or, if United States law authorizes
Borrower to designate the state for its location, the state designated by Borrower, or if neither of the foregoing are applicable, at the District of Columbia (in each case as determined in accordance with the Uniform Commercial Code),
Borrower’s form of organization and the state or district in which it is located are those set forth immediately following Borrower’s name on the signature page to this Agreement; 
 e. If Borrower is a domestic organization that is not a registered organization under the laws of the United States or any state thereof (e.g. general
partnership, joint venture, trust, estate or association), and Borrower is located (as determined pursuant to the Uniform Commercial Code) at its sole place of business or, if it has more than one place of business, at its chief executive office,
Borrower’s form of organization and the address of that location are those set forth on the signature page to this Agreement; and 
 f.
If Borrower is a foreign individual or foreign organization or a branch or agency of a bank that is not organized under the laws of the United States or a state thereof, Borrower is located (as determined pursuant to the Uniform Commercial Code) at
the address set forth following Borrower’s name on the signature page to this Agreement. 
 6.8 If Borrower is a corporation, Borrower
represents, warrants and covenants as follows: 
 a. Borrower will not make any distribution or declare or pay any dividend (other than
dividends payable in stock) to any shareholder, whether now or hereafter outstanding, or purchase, acquire, repurchase, or redeem or retire any of its capital stock; provided, however, Borrower may repurchase the stock of former
employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase; 
 b. Borrower is and shall at all times hereafter be a corporation duly organized and existing in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in California or any other state in which it conducts its business; 
 c. Borrower
has the right and power and is duly authorized to enter into this Agreement; and 
 d. The execution by Borrower of this Agreement shall not
constitute a breach of any provision contained in Borrower’s articles of incorporation or by-laws. 
 6.9 The execution of and
performance by Borrower of all of the terms and provisions contained in this Agreement shall not result in a breach of or constitute an event of default under any agreement to which Borrower is now or hereafter becomes a party. 
 6.10 Borrower shall promptly notify Bank in writing of its acquisition by purchase, lease or otherwise of any after acquired property of the type
included in the Collateral, with the exception of purchases of Inventory in the ordinary course of business. 
 6.11 All assessments and
taxes, whether real, personal or otherwise, due or payable by, or imposed, levied or assessed against, Borrower or any of its property have been paid, and shall hereafter be paid in full, before delinquency. Borrower shall make due and timely
payment or deposit of all federal, state and local taxes, assessments or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or 

  

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		 		 	LOAN AND SECURITY AGREEMENT
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deposit thereof. Borrower will make timely payment or deposit of all F.I.C.A. payments and withholding taxes required of it by applicable laws, and will upon
request furnish Bank with proof satisfactory to it that Borrower has made such payments or deposit. If Borrower fails to pay any such assessment, tax, contribution, or make such deposit, or furnish the required proof, Bank may, in its sole and
absolute discretion and without notice to Borrower, (i) make payment of the same or any part thereof, or (ii) set up such reserves in Borrower’s loan account as Bank deems necessary to satisfy the liability therefor, or both. Bank may
conclusively rely on the usual statements of the amount owing or other official statements issued by the appropriate governmental agency. Each amount so paid or deposited by Bank shall constitute a Bank Expense and an additional advance to Borrower.

 6.12 There are no actions or proceedings pending by or against Borrower or any guarantor of Borrower before any court or administrative
agency and Borrower has no knowledge of any pending, threatened or imminent litigation, governmental investigations or claims, complaints, actions or prosecutions involving Borrower or any guarantor of Borrower, except as heretofore specifically
disclosed in writing to Bank. If any of the foregoing arise during the term of the Agreement, Borrower shall immediately notify Bank in writing. 
 6.13 Insurance. 
 a. Borrower, at its expense, shall keep and maintain its assets insured against loss or damage by fire, theft,
explosion, sprinklers and all other hazards and risks ordinarily insured against by other owners who use such properties in similar businesses for the full insurable value thereof. Borrower shall also keep and maintain business interruption
insurance and public liability and property damage insurance relating to Borrower’s ownership and use of the Collateral and its other assets. All such policies of insurance shall be in such form, with such companies, and in such amounts as may
be satisfactory to Bank. Borrower shall deliver to Bank evidence of the payments of such policies of insurance and evidence of insurance on an ACORD 27 (in the case of property insurance) or ACORD 25 (in the case of liability insurance) form of
certificate, each in effect for a period of not less than one year following the date of this Agreement. All such policies of insurance (except those of public liability and property damage) shall contain an endorsement in a form satisfactory to
Bank showing Bank as a loss payee thereof, with a waiver of warranties satisfactory to Bank, and all proceeds payable thereunder shall be payable to Bank and, upon receipt by Bank, shall be applied on account of the Indebtedness owing to Bank. To
secure the payment of the Indebtedness, Borrower grants Bank a security interest in and to all such policies of insurance (except those of public liability and property damage) and the proceeds thereof, and Borrower shall direct all insurers under
such policies of insurance to pay all proceeds thereof directly to Bank. 
 b. Upon the occurrence of an Event of Default, 
 c. Borrower hereby irrevocably appoints Bank (and any of Bank’s officers, employees or agents designated by Bank) as Borrower’s attorney for
the purpose of making, selling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. Borrower will not cancel any of such policies without Bank’s prior written consent. Each such insurer shall agree by endorsement upon the policy or policies of insurance
issued by it to Borrower as required above, or by independent instruments furnished to Bank, that it will give Bank at least ten (10) days written notice before any such policy or policies of insurance shall be altered or canceled, and that no
act or default of Borrower, or any other person, shall affect the right of Bank to recover under such policy or policies of insurance required above or to pay any premium in whole or in part relating thereto. Bank, without waiving or releasing any
Indebtedness or any Event of Default, may, but shall have no obligation to do so, obtain and maintain such policies of insurance and pay such premiums and take any other action with respect to such policies which Bank deems advisable. All sums so
disbursed by Bank, as well as reasonable attorneys’ fees incurred by Bank, whether in-house or outside counsel is used, court costs, expenses and other charges relating thereto, shall constitute Bank Expenses and are payable on demand.

 6.14 All financial statements and information relating to Borrower which have been or may hereafter be delivered by Borrower to Bank are
true and correct and have been prepared in accordance with GAAP consistently applied and there has been no material adverse change in the financial condition of Borrower since the submission of such financial information to Bank. 
 6.15 Financial Reporting. 
 a. Borrower at
all times hereafter shall maintain a standard and modern system of accounting in accordance with GAAP consistently applied with ledger and account cards and/or computer tapes and computer disks, computer printouts and computer records pertaining to
the Collateral which contain information as may from time to time be requested by Bank, not modify or change its method of accounting or enter into, modify or terminate any agreement presently existing, or at any time hereafter entered into with any
third party accounting firm and/or service bureau for the preparation and/or storage of Borrower’s accounting records without notifying Bank in writing and without said accounting firm and/or 

  

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service bureau agreeing to provide information regarding the Accounts and Inventory and Borrower’s financial condition to Bank; permit Bank and any of
its employees, officers or agents, upon demand, during Borrower’s usual business hours, or the usual business hour of third persons having control thereof, to have access to and examine all of Borrower’s Books relating to the Collateral,
Borrower’s Indebtedness to Bank, Borrower’s financial condition and the results of Borrower’s operations and in connection therewith, permit Bank or any of its agents, employees or officers to copy and make extracts therefrom.

 b. Borrower shall deliver to Bank within fifty (50) days after the end of each of the first three fiscal quarters of Borrower, a
company prepared balance sheet and profit and loss statement covering Borrower’s operations and deliver to Bank within ninety five (95) days after the end of each of Borrower’s fiscal years an unqualified audited statement of the
financial condition of Borrower for each such fiscal year, including but not limited to, a balance sheet and profit and loss statement and any other report requested by Bank relating to the Collateral and the financial condition of Borrower, and a
covenant compliance certificate (delivered to Bank along with the quarterly and annual financial statements) signed by an authorized officer of Borrower and such officers certification to the effect that all reports, statements, computer disk or
tape files, computer printouts, computer runs, or other computer prepared information of any kind or nature relating to the foregoing or documents delivered or caused to be delivered to Bank under this subparagraph are complete, correct and
thoroughly present the financial condition of Borrower and that there exists on the date of delivery to Bank no condition or event which constitutes a breach or Event of Default under this Agreement 
 c. In addition to the financial statements requested above, Borrower agrees to provide or cause to be provided to the Bank: 
  

	 	(1)	intellectual property reports within ninety five (95) days after the end of each fiscal year of Borrower; 

  

	 	(2)	such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as Bank may reasonably request from
time to time; and 

  

	 	(3)	if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all
reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission, which copies may be provided by delivery of electronic links to public filings to Bank, within five (5) days of filing (or 95 days of calendar quarter end for the
form 10-K or 50 days of calendar quarter end for the form 10-Q). 

 6.16 Borrower shall maintain the following financial ratios
and covenants on a consolidated and non-consolidated basis: 
  

	 	a.	a Quick Ratio of not less than 2.00 to 1.00, which shall be monitored on a quarterly basis; and 

  

	 	b.	a Liquidity Ratio of at least 1.00 to 1.00 at all times. 

 All financial covenants shall be computed in accordance with GAAP consistently applied except as otherwise specifically set forth in this Agreement. All monies due from affiliates (including officers, directors and shareholders) shall be
excluded from Borrower’s assets for all purposes hereunder. 
 6.17 Borrower shall promptly supply Bank (and cause any guarantor to
supply Bank) with such other information (including tax returns) concerning its financial affairs (or that of any guarantor) as Bank may request from time to time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower’s financial condition and of any condition or event which constitutes a breach of or an event which constitutes an Event of Default under this Agreement. 
 6.18 Borrower is now and shall be at all times hereafter solvent and able to pay its debts (including trade debts) as they mature. 
 6.19 Borrower shall immediately and without demand reimburse Bank for all sums expended by Bank in connection with any action brought by Bank to correct any default or enforce any provision of this Agreement,
including all Bank Expenses; Borrower authorizes and approves all advances and payments by Bank for items described in this Agreement as Bank Expenses. 
 6.20 Each warranty, representation and agreement contained in this Agreement shall be automatically deemed repeated with each advance and shall be conclusively presumed to have been relied on by Bank regardless of any

  

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		 		 	(ACCOUNTS AND INVENTORY)

  

 
investigation made or information possessed by Bank. The warranties, representations and agreements set forth herein shall be cumulative and in addition to
any and all other warranties, representations and agreements which Borrower shall give, or cause to be given, to Bank, either now or hereafter. 
 6.21 Borrower shall keep all of its principal bank accounts with Bank and, upon the occurrence of an Event of Default, shall notify Bank immediately in writing of the existence of any other bank account, deposit account, or any other
account into which money can be deposited. 
 6.22 Borrower shall furnish to Bank: (a) as soon as possible, but in no event later than
thirty (30) days after Borrower knows or has reason to know that any reportable event with respect to any deferred compensation plan has occurred, a statement of the chief financial officer of Borrower setting forth the details concerning such
reportable event and the action which Borrower proposes to take with respect thereto, together with a copy of the notice of such reportable event given to the Pension Benefit Guaranty Corporation, if a copy of such notice is available to Borrower;
(b) promptly after the filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual report with respect to each deferred compensation plan; (c) promptly after receipt thereof,
a copy of any notice Borrower may receive from the Pension Benefit Guaranty Corporation or the Internal Revenue Service with respect to any deferred compensation plan; provided, however, this subparagraph shall not apply to notice of
general application issued by the Pension Benefit Guaranty Corporation or the Internal Revenue Service; and (d) when the same is made available to participants in the deferred compensation plan, all notices and other forms of information from
time to time disseminated to the participants by the administrator of the deferred compensation plan. 
 6.23 Borrower is now and shall at
all times hereafter remain in compliance with all federal, state and municipal laws, regulations and ordinances relating to the handling, treatment and disposal of toxic substances, wastes and hazardous material and shall maintain all necessary
authorizations and permits. 
 7. EVENTS OF DEFAULT. 
 Any
one or more of the following events shall constitute an Event of Default by Borrower under this Agreement: 
 a. If Borrower fails or neglects
to perform, keep or observe any term, provision, condition, covenant, or agreement, contained in this Agreement (other than as described in clause (c) below), or any other present or future document, instrument or agreement between Borrower and
Bank and in the case of such noncompliance under Sections 6.8, 6.10, 6.13, 6.15 and 6.16 of this Agreement, the continuation of such noncompliance for a period of 10 days (the “Cure Period”) after the earlier of Borrower’s knowledge
thereof or Borrower’s receipt of notice from Bank thereof; provided, however, that if the default cannot by its nature be cured within the 10 day period or cannot after diligent attempts by Borrower be cured within such 10 day period, and such
default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have
cured such default shall not be deemed an Event of Default but no extensions of Credit will be made during such cure period; 
 b. If any
representation, statement, report or certificate made or delivered by Borrower, or any of its officers, employees or agents to Bank is not true and correct; 
 c. If Borrower fails to pay when due and payable or declared due and payable, all or any portion of Borrower’s Indebtedness (whether of principal, interest, taxes, reimbursement of Bank Expenses, or otherwise);

 d. If there is a material impairment of the prospect of repayment of all or any portion of Borrower’s Indebtedness or a material
impairment of the value or priority of Bank’s security interest in the Collateral; 
 e. If all or any material portion of
Borrower’s assets are attached, seized, subject to a writ or distress warrant, or are levied upon, or come into the possession of any Judicial Officer or Assignee and the same are not released, discharged or bonded against within ten
(10) days thereafter, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon
any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or
by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed
or an adequate bond has been posted pending a good faith contest by Borrower (provided that no extensions of Credit will be made during such cure period); 
  

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 f. If any Insolvency Proceeding is filed or commenced by or against Borrower without being dismissed
within thirty (30) days thereafter (provided that no extensions of Credit will be made prior to the dismissal of such Insolvency Proceeding); 
 g. If any proceeding is filed or commenced by or against Borrower for its dissolution or liquidation; 
 h. If Borrower is enjoined,
restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; 
 i. If a
notice of lien, levy or assessment is filed of record with respect to any or all of Borrower’s assets by the United States Government, or any department, agency or instrumentality thereof, or by any state, county, municipal or other government
agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a lien, whether inchoate or otherwise, upon any or all of Borrower’s assets and the same is not paid on the payment date thereof;

 j. If a judgment or other claim (individually or in the aggregate in excess of $250,000) becomes a lien or encumbrance upon any or all of
Borrower’s assets and the same is not satisfied, dismissed or bonded against within ten (10) days thereafter (provided that no extensions of Credit will be made prior to the satisfaction or stay of such judgment); 
 k. If Borrower’s records are prepared and kept by an outside computer service bureau at the time this Agreement is entered into or during the term
of this Agreement such an agreement with an outside service bureau is entered into, and at any time thereafter, without first obtaining the written consent of Bank, Borrower terminates, modifies, amends or changes its contractual relationship with
said computer service bureau or said computer service bureau fails to provide Bank with any requested information or financial data pertaining to Bank’s Collateral, Borrower’s financial condition or the results of Borrower’s
operations; 
 l. If Borrower permits a default in any material agreement to which Borrower is a party with third parties so as to result in
an acceleration of the maturity of Borrower’s indebtedness in excess of $250,000 to others, whether under any indenture, agreement or otherwise; 
 m. If Borrower makes any payment on account of indebtedness which has been subordinated to Borrower’s Indebtedness to Bank except as otherwise permitted under the terms of this Agreement; 
 n. If any misrepresentation exists now or thereafter in any warranty or representation made to Bank by any officer or director of Borrower, or if any
such warranty or representation is withdrawn by any officer or director; 
 o. If any party subordinating its claims to that of Bank’s
or any guarantor of Borrower’s Indebtedness dies, terminates its subordination or guaranty, violates the terms of the subordination or guaranty, becomes insolvent, or an Insolvency Proceeding is commenced by or against any such subordinating
party or guarantor; 
 p. If Borrower is an individual and Borrower dies; 
 q. If there is a change of ownership or control of fifty one percent (51%) or more of the issued and outstanding stock of Borrower; or 

r. If any reportable event, which Bank determines constitutes grounds for the termination of any deferred compensation plan by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any such plan, shall have occurred and be continuing thirty (30) days after written notice of such determination shall have
been given to Borrower by Bank, or any such Plan shall be terminated within the meaning of Title IV of the Employment Retirement Income Security Act (“ERISA”), or a trustee shall be appointed by the appropriate United States District Court
to administer any such plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any plan and in case of any event described in this Section 7, the aggregate amount of Borrower’s liability to the
Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent (5%) of Borrower’s Tangible Effective Net Worth. 
 Notwithstanding anything contained in Section 7 to the contrary, Bank shall refrain from exercising its rights and remedies and Event of Default shall thereafter not be deemed to have occurred by reason of
the occurrence of any of the events set forth in Sections 7.e, 7.f or 7.j of this Agreement if, within ten (10) days from the date thereof, the same is released, discharged, dismissed, bonded against or satisfied; provided,
however, if the event is the institution of Insolvency Proceedings against Borrower, Bank shall not be obligated to make advances to Borrower during such cure period. 
  

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 8. BANK’S RIGHTS AND REMEDIES. 
 8.1 Upon the occurrence of an Event of Default by Borrower under this Agreement, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by Borrower: 
 a. Declare Borrower’s Indebtedness, whether
evidenced by this Agreement, installment notes, demand notes or otherwise, immediately due and payable to Bank; 
 b. Cease advancing money
or extending credit to or for the benefit of Borrower under this Agreement, or any other agreement between Borrower and Bank; 
 c. Terminate
this Agreement as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in the Collateral, and the Indebtedness of Borrower to Bank; 
 d. Without notice to or demand upon Borrower or any guarantor, make such payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is
located, take and maintain possession of the Collateral and the premises (at no charge to Bank), or any part thereof, and to pay, purchase, contest or compromise any encumbrance, charge or lien which in the opinion of Bank appears to be prior or
superior to its security interest and to pay all expenses incurred in connection therewith; 
 e. Without limiting Bank’s rights under
any security interest, Bank is hereby granted a license or other right to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of
a similar nature as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral and Borrower’s rights under all licenses and all franchise agreement shall inure to Bank’s benefit, and Bank
shall have the right and power to enter into sublicense agreements with respect to all such rights with third parties on terms acceptable to Bank; 
 f. Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sales and sell (in the manner provided for herein) the Inventory; 
 g. Sell or dispose the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s
premises) as is commercially reasonable in the opinion of Bank. It is not necessary that the Collateral be present at any such sale. At any sale or other disposition of the Collateral pursuant to this Section, Bank disclaims all warranties which
would otherwise be given under the Uniform Commercial Code, including without limitation a disclaimer of any warranty relating to title, possession, quiet enjoyment or the like, and Bank may communicate these disclaimers to a purchaser at such
disposition. This disclaimer of warranties will not render the sale commercially unreasonable; 
 h. Bank shall give notice of the
disposition of the Collateral as follows: 
 (1) Bank shall give Borrower and each holder of a security interest in the Collateral who has
filed with Bank a written request for notice, a notice in writing of the time and place of public sale, or, if the sale is a private sale or some disposition other than a public sale is to be made of the Collateral, the time on or after which the
private sale or other disposition is to be made; 
 (2) The notice shall be personally delivered or mailed, postage prepaid, to
Borrower’s address appearing in this Agreement, at least ten (10) calendar days before the date fixed for the sale, or at least ten (10) calendar days before the date on or after which the private sale or other disposition is to be
made, unless the Collateral is perishable or threatens to decline speedily in value. Notice to persons other than Borrower claiming an interest in the Collateral shall be sent to such addresses as have been furnished to Bank or as otherwise
determined in accordance with Section 9611 of the Uniform Commercial Code; and 
 (3) If the sale is to be a public sale, Bank shall
also give notice of the time and place by publishing a notice one time at least ten (10) calendar days before the date of the sale in a newspaper of general circulation in the county in which the sale is to be held; and 
 (4) Bank may credit bid and purchase at any public sale. 
  

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 i. Borrower shall pay all Bank Expenses incurred in connection with Bank’s enforcement and
exercise of any of its rights and remedies as herein provided, whether or not suit is commenced by Bank; 
 j. Any deficiency which exists
after disposition of the Collateral as provided above will be paid immediately by Borrower. Any excess will be returned, without interest and subject to the rights of third parties, to Borrower by Bank, or, in Bank’s discretion, to any party
who Bank believes, in good faith, is entitled to the excess; 
 k. Without constituting a retention of Collateral in satisfaction of an
obligation within the meaning of 9620 of the Uniform Commercial Code or an action under California Code of Civil Procedure 726, apply any and all amounts maintained by Borrower as deposit accounts (as that term is defined under 9102 of the Uniform
Commercial Code) or other accounts that Borrower maintains with Bank against the Indebtedness; 
 l. The proceeds of any sale or other
disposition of Collateral authorized by this Agreement shall be applied by Bank first upon all expenses authorized by the Uniform Commercial Code and all reasonable attorney fees and legal expenses incurred by Bank, whether in-house or outside
counsel is used, the balance of the proceeds of the sale or other disposition shall be applied in the payment of the Indebtedness, first to interest, then to principal, then to remaining Indebtedness and the surplus, if any, shall be paid over to
Borrower or to such other person(s) as may be entitled to it under applicable law. Borrower shall remain liable for any deficiency, which it shall pay to Bank immediately upon demand. Borrower agrees that Bank shall be under no obligation to accept
any noncash proceeds in connection with any sale or disposition of Collateral unless failure to do so would be commercially unreasonable. If Bank agrees in its sole discretion to accept noncash proceeds (unless the failure to do so would be
commercially unreasonable), Bank may ascribe any commercially reasonable value to such proceeds. Without limiting the foregoing, Bank may apply any discount factor in determining the present value of proceeds to be received in the future or may
elect to apply proceeds to be received in the future only as and when such proceeds are actually received in cash by Bank; and 
 m. The
following shall be the basis for any finder of fact’s determination of the value of any Collateral which is the subject matter of a disposition giving rise to a calculation of any surplus or deficiency under Section 9615(f) of the Uniform
Commercial Code: (i) The Collateral which is the subject matter of the disposition shall be valued in an “as is” condition as of the date of the disposition, without any assumption or expectation that such Collateral will be repaired
or improved in any manner; (ii) the valuation shall be based upon an assumption that the transferee of such Collateral desires a resale of the Collateral for cash promptly (but no later than 30 days) following the disposition; (iii) all
reasonable closing costs customarily borne by the seller in commercial sales transactions relating to property similar to such Collateral shall be deducted including, without limitation, brokerage commissions, tax prorations, attorney’s fees,
whether in-house or outside counsel is used, and marketing costs; (iv) the value of the Collateral which is the subject matter of the disposition shall be further discounted to account for any estimated holding costs associated with maintaining
such Collateral pending sale (to the extent not accounted for in (iii) above), and other maintenance, operational and ownership expenses; and (v) any expert opinion testimony given or considered in connection with a determination of the
value of such Collateral must be given by persons having at least 5 years experience in appraising property similar to the Collateral and who have conducted and prepared a complete written appraisal of such Collateral taking into consideration the
factors set forth above. The “value” of any such Collateral shall be a factor in determining the amount of proceeds which would have been realized in a disposition to a transferee other than a secured party, a person related to a secured
party or a secondary obligor under Section 9615(f) of the Uniform Commercial Code. 
 8.2 In addition to any and all other rights and
remedies available to Bank under or pursuant to this Agreement or any other documents, instrument or agreement contemplated hereby, Borrower acknowledges and agrees that (i) at any time following the occurrence and during the continuance of any
Event of Default, and/or (ii) termination of Bank’s commitment or obligation to make loans or advances or otherwise extend credit to or in favor of Borrower hereunder, in the event that and to the extent that there are any Letter of Credit
Obligations and Exchange Contract Obligations outstanding at such time, upon demand of Bank, Borrower shall deliver to Bank, or cause to be delivered to Bank, cash collateral in an amount not less than such Letter of Credit Obligations and Exchange
Contract Obligations, which cash collateral shall be held and retained by Bank as cash collateral for the repayment of such Letter of Credit Obligations and Exchange Contract Obligations, together with any and all other Indebtedness of Borrower to
Bank remaining unpaid, and Borrower pledges to Bank and grants to Bank a continuing first priority security interest in such cash collateral so delivered to Bank. Alternatively, Borrower shall cause to be delivered to Bank an irrevocable standby
letter of credit issued in favor of Bank by a bank acceptable to Bank, in its sole discretion, in an amount not less than such Letter of Credit Obligations, and upon terms acceptable to Bank, in its sole discretion. 
 8.3 Bank’s rights and remedies under this Agreement and all other agreements shall be cumulative. Bank shall have all other rights and remedies not
inconsistent herewith as provided by law or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall
constitute a waiver, election or acquiescence by Bank. 
  

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 9. TAXES AND EXPENSES REGARDING BORROWER’S PROPERTY. If Borrower fails to pay promptly when due to
another person or entity, monies which Borrower is required to pay by reason of any provision in this Agreement, Bank may, but need not, pay the same and charge Borrower’s loan account therefor, and Borrower shall promptly reimburse Bank. All
such sums shall become additional Indebtedness owing to Bank, shall bear interest at the rate hereinabove provided, and shall be secured by all Collateral. Any payments made by Bank shall not constitute (i) an agreement by it to make similar
payments in the future, or (ii) a waiver by Bank of any default under this Agreement. Bank need not inquire as to, or contest the validity of, any such expense, tax, security interest, encumbrance or lien and the receipt of the usual official
notice of the payment thereof shall be conclusive evidence that the same was validly due and owing. Such payments shall constitute Bank Expenses and additional advances to Borrower. 
 10. WAIVERS. 
 10.1 Borrower agrees that checks and other instruments received by Bank in payment or
on account of Borrower’s Indebtedness constitute only conditional payment until such items are actually paid to Bank and Borrower waives the right to direct the application of any and all payments at any time or times hereafter received by Bank
on account of Borrower’s Indebtedness and Borrower agrees that Bank shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding any entry by Bank upon its books.

 10.2 Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be
liable. 
 10.3 Bank shall not in any way or manner be liable or responsible for (a) the safekeeping of the Inventory; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All risk
of loss, damage or destruction of Inventory shall be borne by Borrower. 
 10.4 Borrower waives the right and the right to assert a
confidential relationship, if any, it may have with any accountant, accounting firm and/or service bureau or consultant in connection with any information requested by Bank pursuant to or in accordance with this Agreement, and agrees that a Bank may
contact directly any such accountants, accounting firm and/or service bureau or consultant in order to obtain such information. 
 10.5
Co-Borrowers. Each Borrower agrees as follows: 
 a. Each Borrower agrees that it is jointly and severally, directly, and primarily liable to
Bank for payment in full of the Indebtedness and that such liability is independent of the duties, obligations and liabilities of the other Borrower. The Agreement and each other document, instrument and agreement entered into by any one or more of
the Borrowers in connection therewith (collectively, hereinafter, the “Loan Documents”) are a primary and original obligation of each Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and
continuing promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to the Loan Documents. Each
Borrower acknowledges that the obligations of such Borrower undertaken herein might be construed to consist, at least in part, of the guaranty of obligations of persons or entities other than such Borrower (including any other Borrower party hereto)
and, in full recognition of that fact, each Borrower consents and agrees that Bank may, at any time and from time to time, without notice or demand, whether before or after any actual or purported termination, repudiation, or revocation of the
Agreement and the other Loan Documents by any one or more Borrowers, and without affecting the enforceability or continuing effectiveness hereof as to each Borrower: (a) supplement, restate, modify, amend, increase, decrease, extend, renew,
accelerate, or otherwise change the time for payment or the terms of the Indebtedness or any part thereof, including any increase or decrease of the rate(s) of interest thereon; (b) supplement, restate, modify, amend, increase, decrease or
waive, or enter into or give any agreement, approval, or consent with respect to, the Indebtedness or any part thereof, or any of the Loan Documents or any additional security or guaranties, or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder; (c) accept new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or the Indebtedness or any part thereof; (d) accept partial payments
on the Indebtedness; (e) receive and hold additional security or guaranties for the Indebtedness or any part thereof; (f) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer, or
enforce any security or guaranties, and apply any security and direct the order or manner of sale thereof as Bank in its sole and absolute discretion may determine; (g) release any Person from any personal liability with respect to the
Indebtedness or any part thereof; (h) settle, release on terms satisfactory to Bank or by operation of applicable laws, or otherwise liquidate or enforce any Indebtedness and any security therefor or guaranty thereof in any manner, consent to
the transfer of any security and bid and purchase at any sale; or (i) consent to the merger, change, or any other restructuring or termination of the corporate or partnership existence of any Borrower or any other Person, and correspondingly
restructure the Indebtedness, and any such merger, change, restructuring, or termination shall not affect the liability of any Borrower or the continuing effectiveness hereof, or the enforceability hereof with respect to all or any part of the
Indebtedness. 
  

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 b. Upon the occurrence and during the continuance of any Event of Default, Bank may enforce the
Agreement and the other Loan Documents independently as to each Borrower and independently of any other remedy or security Bank at any time may have or hold in connection with the Indebtedness, and it shall not be necessary for Bank to marshal
assets in favor of any Borrower or any other Person or to proceed upon or against or exhaust any security or remedy before proceeding to enforce the Agreement and the other Loan Documents. Each Borrower expressly waives any right to require Bank to
marshal assets in favor of any Borrower or any other Person or to proceed against any other Borrower or any Collateral provided by any Person, and agrees that Bank may proceed against Borrowers or any Collateral in such order as it shall determine
in its sole and absolute discretion. 
 c. Bank may file a separate action or actions against any Borrower, whether action is brought or
prosecuted with respect to any security or against any other person, or whether any other person is joined in any such action or actions. Each Borrower agrees that Bank and any Borrower and any affiliate of any Borrower may deal with each other in
connection with the Indebtedness or otherwise, or alter any contracts or agreements now or hereafter existing between any of them, in any manner whatsoever, all without in any way altering or affecting the continuing efficacy of the Agreement or the
other Loan Documents. 
 d. Bank’s rights under the Loan Documents shall be reinstated and revived, and the enforceability of the
Agreement and the other Loan Documents shall continue, with respect to any amount at any time paid on account of the Indebtedness which thereafter shall be required to be restored or returned by Bank, all as though such amount had not been paid. The
rights of Bank created or granted herein and the enforceability of the Agreement and the other Loan Documents at all times shall remain effective to cover the full amount of all the Indebtedness even though the Indebtedness, including any part
thereof or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against any Borrower and whether or not any other Borrower shall have any personal liability with respect thereto. 

e. To the maximum extent permitted by applicable law and to the extent that a Borrower is deemed a guarantor, each Borrower expressly waives any and
all defenses now or hereafter arising or asserted by reason of (a) any disability or other defense of any other Borrower with respect to the Indebtedness, (b) the unenforceability or invalidity of any security or guaranty for the
Indebtedness or lack of perfection or continuing perfection or failure of priority of any security for the Indebtedness, (c) the cessation for any cause whatsoever of the liability of any other Borrower (other than by reason of the full payment
and performance of all Indebtedness), (d) any failure of the Bank to marshal assets in favor of Bank or any Borrower or any other person, (e) any failure of Bank to give notice of sale or other disposition of collateral to any Borrower or
any other Person or any defect in any notice that may be given in connection with any sale or disposition of collateral, (f) any failure of Bank to comply with applicable law in connection with the sale or other disposition of any collateral or
other security for any Obligation, including any failure of Bank to conduct a commercially reasonable sale or other disposition of any collateral or other security for any Obligation, (g) any act or omission of Bank or others that directly or
indirectly results in or aids the discharge or release of any Borrower or the Indebtedness or any security or guaranty therefor by operation of law or otherwise, (h) any law which provides that the obligation of a surety or guarantor must
neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation, (i) any failure of Bank to file or enforce a
claim in any bankruptcy or other proceeding with respect to any Person, (j) the election by Bank of the application or non-application of Section 1111(b)(2) of the United States Bankruptcy Code, (k) any extension of credit or the
grant of any lien under Section 364 of the United States Bankruptcy Code, (1) any use of cash collateral under Section 363 of the United States Bankruptcy Code, (m) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person, (n) the avoidance of any lien in favor of Bank for any reason, or (o) any action taken by Bank that is authorized by the Agreement or any other provision of any Loan Document.
Until such time as all of the Indebtedness have been fully, finally, and indefeasibly paid in full in cash: (i) each Borrower hereby waives and postpones any right of subrogation it has or may have as against any other Borrower with respect to
the Indebtedness; and (ii) in addition, each Borrower also hereby waives and postpones any right to proceed or to seek recourse against or with respect to any property or asset of any other Borrower. Each Borrower expressly waives all setoffs
and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to
the Indebtedness, and all notices of acceptance of the Agreement or the other Loan Documents or of the existence, creation or incurring of new or additional Indebtedness. 
 f. In the event that all or any part of the Indebtedness at any time are secured by any one or more deeds of trust or mortgages or other instruments creating or granting liens on any interests in real property, each
Borrower authorizes Bank, upon the occurrence of and during the continuance of any Event of Default, at its sole option, without notice or demand and without affecting the obligations of any Borrower, the enforceability of the Agreement and the
other Loan Documents, or the validity or enforceability of any liens of Bank, to foreclose any or all of such deeds of trust or mortgages or other instruments by judicial or nonjudicial sale. 
  

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 g. Without limiting the generality of any other waiver or other provision set forth in this
Agreement, each Borrower waives all rights and defenses that such Borrower may have because the Indebtedness is secured by real property. This means, among other things: 
 (1) Bank may collect from any Borrower without first foreclosing on any real or personal property pledged as Collateral by any other
Borrower to secure the Indebtedness. 
 (2) If Bank forecloses on any real property pledged as Collateral by any Borrower:

  

	(a)	the amount of the debt may be reduced only by the price for which that Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

  

	(b)	Bank may collect from any Borrower even if Bank, by foreclosing on the real property pledged as Collateral, has destroyed any right that Borrower may have to collect from any other
Borrower. 

 This is an unconditional and irrevocable waiver of any rights and defenses each Borrower may have because the
Indebtedness is secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. 
 h. To the fullest extent permitted by applicable law, to the extent that a Borrower is deemed a guarantor, each Borrower expressly waives any defenses to
the enforcement of the Agreement and the other Loan Documents or any rights of Bank created or granted hereby or to the recovery by Bank against any Borrower or any other Person liable therefor of any deficiency after a judicial or nonjudicial
foreclosure or sale, even though such a foreclosure or sale may impair the subrogation rights of Borrowers and may preclude Borrowers from obtaining reimbursement or contribution from other Borrowers. To the fullest extent permitted by applicable
law, each Borrower expressly waives any suretyship defenses or benefits that it otherwise might or would have under applicable law. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY BANK, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE INDEBTEDNESS,
HAS DESTROYED SUCH BORROWER’S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE OTHER BORROWERS BY OPERATION OF LAW, INCLUDING BUT NOT LIMITED TO SECTION 580d OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, OR OTHERWISE. 
 10.6 THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR
IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS. 
 10.7 Judicial Reference Provision. 
 This Reference Provision will be applicable so long as, under applicable law and precedent, a pre-dispute Jury Trial Waiver provision similar to that contained in
Section 10.6 of this Agreement is invalid or unenforceable. Delay in requesting appointment of a referee pending review of any such decision, or participation in litigation pending review, will not be deemed a waiver of this Reference
Provision. 
 a. Other than (i) non-judicial foreclosure of security interests in real or personal property, (ii) the appointment
of a receiver or (iii) the exercise of other provisional remedies (any of which may be initiated pursuant to applicable law), any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to the
Agreement, will be resolved by a reference proceeding in California in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute
the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Agreement, venue for the reference proceeding will be in the Superior Court or Federal
District Court in the County or District where venue is otherwise appropriate under applicable law (the “Court”). 
 b. The referee
shall be a retired Judge or Justice selected by mutual written agreement of the parties. If the parties do not agree, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a
referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. The referee shall be appointed to sit with all the powers provided by law. Each party
shall have one peremptory challenge pursuant to CCP §170.6. Pending appointment of the referee, the Court has power to issue temporary or provisional remedies. 
  

 21 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 c. The parties agree that time is of the essence in conducting the reference proceedings.
Accordingly, the referee shall be requested to (a) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (b) if practicable, try all issues of law or fact within
ninety (90) days after the date of the conference and (c) report a statement of decision within twenty (20) days after the matter has been submitted for decision. Any decision rendered by the referee will be final, binding and
conclusive, and judgment shall be entered pursuant to CCP §644. 
 d. The referee will have power to expand or limit the amount and
duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered, no party shall be entitled to
“priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding. 
 e. Except
as expressly set forth in this Agreement, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any
hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject to the referee’s power to
award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial. 
 f. The
referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the
reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, provide all temporary or provisional remedies, enter equitable orders that will be binding on the parties and rule on any motion which would be
authorized in a trial, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of
the reference. The referee’s decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court. The parties reserve the right to appeal from the final judgment or order or from any
appealable decision or order entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted,
is also to be a reference proceeding under this provision. 
 g. If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or
Justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding. 

THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY, AND THAT
THEY ARE IN EFFECT WAIVING THEIR RIGHT TO TRIAL BY JURY IN AGREEING TO THIS REFERENCE PROVISION. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL
BENEFIT AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF OR IS RELATED TO THE AGREEMENT. 
 10.8 In the event that Bank elects to waive any rights or remedies hereunder, or compliance with any of the terms hereof, or delays or fails to pursue or enforce any term, such waiver, delay or failure to pursue or enforce shall only be
effective with respect to that single act and shall not be construed to affect any subsequent transactions or Bank’s right to later pursue such rights and remedies. 
 11. ONE CONTINUING LOAN TRANSACTION. All loans and advances heretofore, now or at any time or times hereafter made by Bank to Borrower under this Agreement or any other agreement between Bank and Borrower,
shall constitute one loan secured by Bank’s security interests in the Collateral and by all other security interests, liens, encumbrances heretofore, now or from time to time hereafter granted by Borrower to Bank. 
  

 22 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that
portion shall not be secured by any deed of trust or mortgage on or other security interest in Borrower’s principal dwelling which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in
another place, or (ii) if Borrower (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering real property, that deed of trust or mortgage shall not secure the loan and any other Indebtedness of Borrower (or any of
them), unless expressly provided to the contrary in another place. 
 12. NOTICES. Unless otherwise provided in this Agreement, all notices or demands
by either party on the other relating to this Agreement shall be in writing and sent by regular United States mail, postage prepaid, properly addressed to Borrower or to Bank at the addresses stated in this Agreement, or to such other addresses as
Borrower or Bank may from time to time specify to the other in writing. Requests for information made to Borrower by Bank from time to time hereunder may be made orally or in writing, at Bank’s discretion. 
 13. AUTHORIZATION TO DISBURSE. Bank is hereby authorized to make loans and advances hereunder upon telephonic or other instructions received from anyone
purporting to be an officer, employee, or representative of Borrower, or at the discretion of Bank if said loans and advances are necessary to meet any Indebtedness of Borrower to Bank. Bank shall have no duty to make inquiry or verify the authority
of any such party, and Borrower shall hold Bank harmless from any damage, claims or liability by reason of Bank’s honor of, or failure to honor, any such instructions. 
 14. PAYMENTS. Borrower hereby authorizes Bank to deduct the full amount of any interest, fees, costs, or Bank Expenses due under this Agreement and not paid or collected when due in accordance with the terms
and conditions hereof from any account maintained by Borrower with Bank. Should there be insufficient funds in any such account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower;
provided, however, that Bank shall not be obligated to advance funds to cover any such payment. 
 15. DESTRUCTION OF BORROWER’S
DOCUMENTS. Any documents, schedules, invoices or other papers delivered to Bank, may be destroyed or otherwise disposed of by Bank six (6) months after they are delivered to or received by Bank, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes arrangements, at Borrower’s expense, for their return. 
 16. CHOICE OF
LAW. The validity of this Agreement, its construction, interpretation and enforcement, and the rights of the parties hereunder and concerning the Collateral, shall be determined according to the laws of the State of California. The parties agree
that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state and federal courts in the Northern District of California or the County of Santa Clara. 
 17. GENERAL PROVISIONS. 
 17.1 This Agreement shall be
binding and deemed effective when executed by Borrower and accepted and executed by Bank at its Western Division headquarters office. 
 17.2
This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrower may not assign this Agreement or any rights hereunder without Bank’s prior
written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Bank shall release Borrower or any guarantor from their obligations to Bank. Bank may assign this Agreement and its rights and duties hereunder.
Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in Bank’s rights and benefits hereunder. In connection therewith, Bank may disclose all documents and information which
Bank now or hereafter may have relating to Borrower or Borrower’s business. 
 17.3 Paragraph headings and paragraph numbers have been
set forth herein for convenience only; unless the contrary is compelled by the context, everything contained in each paragraph applies equally to this entire Agreement. Unless the context of this Agreement clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural, and the term “including” is not limiting. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. 
 17.4 Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed or resolved against Bank or Borrower, whether under any rule of construction or otherwise; on the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. 
 17.5
Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 
  

 23 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 17.6 This Agreement cannot be changed or terminated orally. This Agreement contains the entire
agreement of the parties hereto and supersedes all prior agreements, understandings, representations, warranties and negotiations, if any, related to the subject matter hereof, and none of the parties shall be bound by anything not expressed in
writing. 
 17.7 The parties intend and agree that their respective rights, duties, powers, liabilities, obligations and discretions shall be
performed, carried out, discharged and exercised reasonably and in good faith. 
 17.8 In addition, if this Agreement is secured by a deed of
trust or mortgage covering real property, then the trustor or mortgagor shall not mortgage or pledge the mortgaged premises as security for any other indebtedness or obligations. This Agreement, together with all other indebtedness secured by said
deed of trust or mortgage, shall become due and payable immediately, without notice, at the option of Bank, (a) if said trustor or mortgagor shall mortgage or pledge the mortgaged premises for any other indebtedness or obligations or shall
convey, assign or transfer the mortgaged premises by deed, installment sale contract or other instrument; (b) if the title to the mortgaged premises shall become vested in any other person or party in any manner whatsoever, or (c) if there
is any disposition (through one or more transactions) of legal or beneficial title to a controlling interest of said trustor or mortgagor. 
 17.9 Each undersigned Borrower hereby agrees that it is jointly and severally, directly, and primarily liable to Bank for payment and performance in full of all duties, obligations and liabilities under this Agreement and each other
document, instrument and agreement entered into by Borrower with or in favor of Bank in connection herewith, and that such liability is independent of the duties, obligations and liabilities of any other Borrower or any other guarantor of the
Indebtedness, as applicable. Each reference herein to Borrower shall mean each and every Borrower party hereto, individually and collectively, jointly and severally. 
 17.10 This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This
Agreement, together with each other document, instrument and agreement entered into with or in favor of Bank in connection herewith and in connection with the Prior Agreement, to the extent not amended and restated hereby, constitute the entire
understanding among the parties hereto with respect to the subject matter hereof and, as applicable amends and restates in full the Prior Agreement and any other agreement, written or oral, with respect thereto. Borrower ratifies and reaffirms the
continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust, environmental agreements, and all other instruments, documents and agreements entered into in connection with the Prior Agreement that are
not amended and restated in connection with this Agreement. 
 [SIGNATURES ON NEXT PAGE] 
  

 24 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security Agreement (Accounts and Inventory) to be
executed as of the date first hereinabove written. 
  

							
		 		 	BORROWER:
		
	 Accepted and effective as of: March 8, 2006
 at Bank’s Western Division Headquarters Office
	 	 CHORDIANT SOFTWARE, INC.,
 a Delaware
corporation

				
		 		 	By:	 	 /s/ Peter Norman

	COMERICA BANK,	 	Name:	 	Peter Norman
	a Michigan banking corporation	 	Title:	 	Chief Financial Officer
				
	By:	 	 /s/ Benjamin Yu
	 		 	
	Name:	 	Benjamin Yu	 		 	
	Title:	 	Vice President	 		 	

  

			
	 Address for Bank Notices:
  
 75 East Trimble Road
 San Jose, California 95131
 Attn: Credit Manager
 Fax number: (408) 556-5091
	  	 Address for Borrower Notices:
  
 20400 Stevens Creek Blvd.
 Suite 400
 Cupertino, California 95014
 Attention: George de Urioste
 Fax number: (408) 517-0270

  

 25 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 PERMITTED INDEBTEDNESS SCHEDULE 
  

 26 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 PERMITTED INVESTMENTS SCHEDULE 
  

 27 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 PERMITTED LIENS SCHEDULE 
  

 28 

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 EXHIBIT “A” 
 COLLATERAL DESCRIPTION ATTACHMENT TO 
 SECOND AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT 
 All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or
hereafter created or acquired, and wherever located, including, but not limited to: 
  

	(a)	all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable
documents), equipment (including all accessions and additions thereto), general intangibles (including payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for
sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and
records with respect to any of the foregoing, and the computers and equipment containing said books and records; 

  

	(b)	all common law and statutory copyrights and copyright registrations, applications for registration, now existing or hereafter arising, in the United States of America or in any
foreign jurisdiction, obtained or to be obtained on or in connection with any of the foregoing, or any parts thereof or any underlying or component elements of any of the foregoing, together with the right to copyright and all rights to renew or
extend such copyrights and the right (but not the obligation) of Secured Party to sue in its own name and/or in the name of the Debtor for past, present and future infringements of copyright; 

  

	(c)	all trademarks, service marks, trade names and service names and the goodwill associated therewith, together with the right to trademark and all rights to renew or extend such
trademarks and the right (but not the obligation) of Secured Party to sue in its own name and/or in the name of the Debtor for past, present and future infringements of trademark; 

  

	(d)	all (i) patents and patent applications filed in the United States Patent and Trademark Office or any similar office of any foreign jurisdiction, and interests under patent
license agreements, including, without limitation, the inventions and improvements described and claimed therein, (ii) licenses pertaining to any patent whether Debtor is licensor or licensee, (iii) income, royalties, damages, payments,
accounts and accounts receivable now or hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (iv) right (but not the obligation) to
sue in the name of Debtor and/or in the name of Secured Party for past, present and future infringements thereof, (v) rights corresponding thereto throughout the world in all jurisdictions in which such patents have been issued or applied for,
and (vi) reissues, divisions, continuations, renewals, extensions and continuations-in-part with respect to any of the foregoing; and 

  

	(e)	any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security
therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured
Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001. 

 Notwithstanding the foregoing, the
Collateral shall not include any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present and future infringement of any of the foregoing
(collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment from the sale, licensing or disposition of all or any part of, or
rights in, the Intellectual Property (the “Rights to Payment”). Notwithstanding the foregoing, if and only if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property
is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of August 31, 2000, include the Intellectual Property but only to the extent necessary to permit perfection Bank’s
security interest in the Rights to Payment and Bank shall have no right, title and interest in the Intellectual Property other than to perfect its security interest in the Rights to Payment. 
  

 29 

 Exhibit 10.1 
 EXHIBIT “B” 
 TECHNOLOGY & LIFE SCIENCES DIVISION 
 LOAN ANALYSIS 
 LOAN ADVANCE/PAYDOWN
REQUEST FORM 
 DEADLINE FOR SAME DAY PROCESSING IS 3:00* P.M, P.S.T. 
 DEADLINE FOR WIRE TRANSFERS IS 1.30 P.M, P.S.T. 
 *At month end and the day before a
holiday, the cut off time is 1:30 P.M., P.S.T. 
  

					
	TO: Loan Analysis	  	DATE:                         	  	TIME:                 
	FAX #: (650) 846-6840            	  		  	

  

					
	FROM:	 	  
	 	TELEPHONE REQUEST (For Bank Use Only):
		 	Borrower’s Name	 	
			
	FROM:	 	  
	 	The following person is authorized to request the loan payment transfer/loan advance on the designated account and is known to me.
		 	Authorized Signer’s Name	 	
			
	FROM:	 	  
	 	
		 	Authorized Signature (Borrower)	 	        Authorized Requester & Phone #
			
	PHONE #:	 	  
	 	
		 		 	        Received by (Bank) & Phone #
	FROM ACCOUNT#:                                   
        	 	
	(please include Note number, if applicable)	 	
	TO ACCOUNT #:                                  
               	 	        Authorized Signature (Bank)
	(please include Note number, if applicable)	 	

  

					
	 REQUESTED TRANSACTION TYPE
	 	 REQUESTED DOLLAR AMOUNT
	 	For Bank Use Only
	PRINCIPAL INCREASE* (ADVAN	 	$                                      
                        	 	Date Rec’d:
	PRINCIPAL PAYMENT (ONLY)	 	$                                      
                        	 	Time:
		 		 	Comp. Status     YES     NO
	OTHER INSTRUCTIONS:	 		 	Status Date:
	  
	 		 	Time:
	  
	 		 	Approval:
	  
	 		 	

 All representations and warranties of Borrower stated in the Loan Agreement are true, correct and complete in all
material respects as of the date of the telephone request for and advance confirmed by this Borrowing Certificate; provided, however, that those representations and warranties the date expressly referring to another date shall be true, correct and
complete in all material respects as of such date. 
 *IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE? (PLEASE CIRCLE ONE)
    YES    NO 
 If YES, the Outgoing Wire Transfer Instructions must be completed below.

  

					
	OUTGOING WIRE TRANSFER INSTRUCTIONS	  	Fed Reference Number	  	Bank Transfer Number
	
	The items marked with an asterisk (*) are required to be completed.

  

			
	*Beneficiary Name	  	
	*Beneficiary Account Number
	*Beneficiary Address	  	
	Currency Type	  	                        US DOLLARS ONLY
	*ABA Routing Number (9 Digits)
	*Receiving Institution Name
	*Receiving Institution Address
	*Wire Amount	  	$

 For Bank Use Only 
 CRA Purpose Code                  Risk Rate                  CRA
Inc. $             Mat Date of Adv                  Mgmt Class
                 
 FED Call Code
                 Autopay Info                  Coll Code
                 Coll desc                  SIC
                 Rate              
 Pymt Sched                  Other
                 Test Key #                  Appv’d
                 Appv’d                  Confirm
                 
 Entered By
                 Printed (Initials)                  Bkg Office #
                 Reviewed By                  

 Exhibit 10.1 
 LOAN AND SECURITY AGREEMENT 
 (ACCOUNTS AND INVENTORY) 
 EXHIBIT “C” 
 COMPLIANCE CERTIFICATE 
  

	TO:	COMERICA BANK 

  

	FROM:	CHORDIANT SOFTWARE, INC. 

 The undersigned authorized officer of CHORDIANT
SOFTWARE, INC. hereby certifies that in accordance with the terms and conditions of the Second Amended Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending                      with all required covenants, except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes. 
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

									
	 Reporting Covenant
	  	Required	  	Complies
	 Quarterly Financial Statements (10Q)
	  	within 50 days of quarter-end	  	Yes	  	No
	 Annual (CPA Audited, 10K)
	  	within 95 days of FYE	  	Yes	  	No
	 Annual intellectual property report
	  	within 95 days of FYE	  	Yes	  	No
				
	 Financial Covenant
	  	Required	  	Actual	  	Complies
	 Minimum Liquidity Ratio at all times
	  	1.00:1.00	  	        :1.00	  	Yes	  	No
	 Minimum Quick Ratio on a quarterly basis
	  	2.00:1.00	  	        :1.00	  	Yes	  	No

  

									
	Comments Regarding Exceptions:	  	BANK USE ONLY	  		  		  	
	See Attached.	  		  		  		  	
		  	Received by:	  	  
	  		  	
	Sincerely,	  	AUTHORIZED SIGNER	  		  	
		  	Date:	  	  
	  		  	
	  
  
	  	Verified:	  	  
	  		  	
	SIGNATURE	  	AUTHORIZED SIGNER	  		  	
	  
  
	  	Date:	  	  
	  		  	
	TITLE	  		  		  		  	
	  
  
	  	Compliance Status	  	Yes    	  	No
	DATE	  		  		  		  	

					
		 		 	LOAN AND SECURITY AGREEMENT
		 		 	(ACCOUNTS AND INVENTORY)

  

 EXHIBIT “D” 
 Investment Policy Guidelines to be Attached 
  

 2Separation Agreement between Stephen Kelly and Chordiant Software

 Exhibit 10.4 
 March 1, 2006 
 Stephen Kelly 
 Chordiant Software, Inc. 
 20400 Stevens Creek Blvd., Suite 400 
 Cupertino, CA 95014 
 Dear Stephen: 
 This letter sets forth the terms of the separation agreement (the “Agreement”) that Chordiant Software, Inc. (the “Company”) is offering to you to aid
in your employment transition. 
 1. Separation Date. Your employment termination date will be May 1, 2006 (the “Separation
Date”). Between now and the Separation Date, you will remain an employee of the Company under the same terms and conditions currently in effect, provided however, that as of the date of this Agreement, you will no longer serve as an
officer of the Company. 
 2. Board of Directors. You will remain a member of the Company’s Board of Directors
(“Board”) until the date of the Company’s 2006 Annual Shareholders’ Meeting unless your resignation is required earlier due to the independence requirements of the Securities and Exchange Commission or NASDAQ Stock Market. On the
Separation Date, you will tender your resignation from the Board to be effective on the date of the Company’s 2006 Annual Shareholders’ Meeting or such earlier date as may be required due to the independence requirements of the Securities
and Exchange Commission or NASDAQ Stock Market. 
 3. Accrued Salary and Vacation Pay. On the Separation Date, the Company will pay
you all accrued salary and all accrued and unused vacation (if any) earned by you through the Separation Date, less standard payroll deductions and withholdings. You are entitled to these payments by law. 
 4. Severance Benefits. The Company will provide you with the following severance benefits subject to the terms and conditions set forth below:

 a. Salary Continuation. The Company will continue your base salary currently in effect ($400,000) for a twelve (12) month
period following the Separation Date. These payments shall be made on the Company’s regular payroll schedule, beginning with the first regularly scheduled payroll date following the Separation Date, and shall be subject to standard payroll
deductions and withholdings. 
 b. Bonus. If you earn your bonus for the first two quarters of the 2006 fiscal year under the terms of
the Company’s 2006 Executive Bonus Plan, then the Company will pay you your bonus for those quarters at the range of 80% of your base salary, subject to the terms and conditions set forth in the 2006 Executive Bonus Plan. Any such bonus shall
be paid on the schedule set forth in the 2006 Executive Bonus Plan, and shall be subject to standard payroll deductions and withholdings. 
  

 - 1 - 

 c. Equity Awards. 
 i. Restricted Stock. As you remain employed by the Company through April 1, 2006, you will vest in 100% of the shares subject to your restricted stock grant for 125,000 shares. Except as otherwise provided
herein, this grant shall be governed in all respects by the terms of the applicable plan documents and stock purchase agreement. 
 ii.
Accelerated Vesting. The Company will accelerate the vesting of fifty percent (50%) of any unvested shares subject to any stock options that you have previously been granted by the Company. You and the Company acknowledge and agree the
number of shares to be accelerated under this section 4(c)(ii) shall be 20,139 shares. These shares shall be deemed vested and exercisable as of the Separation Date. Except as otherwise provided herein, your option(s) shall be governed in all
respects by the terms of the applicable plan documents and option agreement. 
 iii. Post-Termination Exercise. You will have a one
(1) year period following the effective date of your resignation from the Board to exercise any vested shares subject to any option(s) granted to you by the Company. 
 d. Outplacement Services. The Company will provide you with up to $5,000 of outplacement assistance through a provider acceptable to the Company, with payments to be made directly to the provider for services
rendered. 
 e. Separation Date Release. As a condition to receiving the severance benefits set forth in this section 4, you are
required to execute the Separation Date Release attached hereto as Exhibit A on the Separation Date, and to allow such release to become effective. 
 f. UK Compromise Agreement. As a further condition to receiving the severance benefits set forth in this section 4, you are required to execute the Compromise Agreement attached hereto as Exhibit B within the period commencing on the
Separation Date and ending 7 calendar days thereafter and to submit the signed Compromise Agreement to the Company before the end of this period. 
 5. Reimbursement of Legal Fees. The Company shall reimburse you for up to $2,000 in legal fees incurred for consultation regarding your employment status with the Company and for the review of the terms of this Agreement upon receipt
of invoices for such services. 
 6. Health Insurance. You will continue to receive health insurance benefits under the Company’s
group plans, as currently enrolled, through the Separation Date. After this date, and to the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you
will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an 

  

 - 2 - 

 
individual policy through the provider of the Company’s health insurance, if you wish. You will be provided with a separate notice describing your
rights and obligations under the applicable state and/or federal insurance laws. 
 7. No Other Compensation or Benefits. You
acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation, severance, or benefits relating to or arising from your employment with the Company, after the
Separation Date, with the exception of any vested right you may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account). By way of example, you acknowledge that you are not owed any bonus, incentive
compensation, or commissions, except as may be expressly provided herein. 
 8. Expense Reimbursement. You agree that, within thirty
(30) days after the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, for which you seek reimbursement. The Company will reimburse
you for such expenses pursuant to its regular business practice. 
 9. Return of Company Property. You agree to fulfill your
obligation to within five days of your Separation Date return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including, but not limited to, Company files, notes,
correspondence, memoranda, notebooks, drawings, records, reports, lists, compilations of data, proposals, agreements, drafts, minutes, studies, plans, forecasts, purchase orders, business cards and stationery, financial and operational information,
technical and training information, research and development information, customer information and contact lists, sales and marketing information, personnel information, vendor information, promotional literature and instructions, product and
manufacturing information, computer-recorded information, electronic information (including e-mail and correspondence), other tangible property and equipment (including, but not limited to, computer equipment, facsimile machines, and cellular
telephones), credit cards, entry cards, identification badges and keys; and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). You agree
that you will immediately make a diligent search to locate any such documents, property and information. In addition, if you have used any personal computer, server, or e-mail system to receive, store, prepare or transmit any Company confidential or
proprietary data, materials or information, you agree to within five days of your Separation Date provide the Company with a computer-useable copy of all such information and then permanently delete and expunge such Company confidential or
proprietary information from those systems; and you agree to provide the Company access to your system as reasonably requested to verify that the necessary copying and/or deletion is completed. Your timely return of all such Company documents and
other property is a precondition to your receipt of the severance benefits provided under this Agreement. 
 10. Proprietary Information
Obligations. You acknowledge your continuing obligations under your Proprietary Information and Inventions Agreement (the “Proprietary Information Agreement”), a copy of which is attached hereto as Exhibit C. 
  

 - 3 - 

 11. Nondisparagement. You agree not to disparage the Company and its officers, directors,
employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; and the Company (through its officers and directors) agrees not to disparage you in any manner likely to be
harmful to you or your business, business reputation or personal reputation; provided that you and the Company may respond accurately and fully to any inquiry or request for information when required by legal process. 
 12. No Voluntary Adverse Action. You agree that you will not voluntarily (except in response to legal compulsion) assist any third party in
bringing or pursuing any proposed or pending litigation, arbitration, administrative claim or other formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents. 
 13. Cooperation. You agree to cooperate fully with the Company in connection with its actual or contemplated defense, prosecution, or
investigation of any claims or demands by or against third parties, or other matters, arising from events, acts, or failures to act that occurred during the period of your employment by the Company. Such cooperation includes, without limitation,
making yourself available to the Company upon reasonable notice, without subpoena, to provide complete, truthful, and accurate information in witness interviews and deposition and trial testimony. The Company will reimburse you for reasonable
out-of-pocket expenses you incur in connection with any such cooperation (excluding forgone wages or other compensation) and will make reasonable efforts to accommodate your scheduling needs. In addition, you agree to execute all documents (if any)
necessary to carry out the terms of this Agreement. 
 14. No Admissions. Nothing contained in this Agreement shall be construed as an
admission by you or the Company of any liability, obligation, wrongdoing or violation of law. 
 15. Release of Claims. In exchange
for the consideration under this Agreement to which you would not otherwise be entitled, you hereby generally and completely release, acquit and forever discharge the Company and its parent or subsidiary entities, successors, predecessors and
affiliates, and its and their directors, officers, employees, shareholders, agents, attorneys, insurers, affiliates and assigns, from any and all claims, liabilities and obligations, both known and unknown, that arise from or are in any way related
to events, acts, conduct, or omissions occurring at any time prior to and including the date you sign this Agreement. This general release includes, but is not limited to: (a) all claims arising out of or in any way related to your employment
with the Company or the termination of that employment; (b) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance payments, fringe benefits,
stock, stock options, or any other ownership or equity interests in the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including
but not limited to claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including but not limited to claims for discrimination, harassment,
retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act of 1967 (as
amended) (the “ADEA”), the California Labor Code, and the California Fair Employment and Housing Act. Notwithstanding the foregoing, you are not 

  

 - 4 - 

 
hereby releasing the Company from any obligation it may otherwise have to indemnify you for your acts within the course and scope of your employment with the
Company, pursuant to the articles and bylaws of the Company, any fully executed written agreement with the Company, or applicable law. You represent that you have no lawsuits, claims or actions pending in your name, or on behalf of any other person
or entity, against the Company or any other person or entity subject to the release granted in this paragraph. In addition, you covenant not to sue, initiate, or continue any legal or administrative proceeding with regard to any or all claims you
have released herein. 
 16. ADEA WAIVER. You hereby acknowledge that you are knowingly and voluntarily waiving and
releasing any rights you may have under the ADEA and that the consideration given for the waiver and release in the preceding paragraph is in addition to anything of value to which you were already entitled. You further acknowledge that you have
been advised by this writing, as required by the ADEA, that: (a) your waiver and release do not apply to any rights or claims that may arise after you sign this Agreement; (b) you should consult with an attorney prior to executing this
Agreement (although you may voluntarily decide not to do so); (c) you have twenty-one (21) days within which to consider this Agreement (although you may choose to voluntarily execute this Agreement earlier); (d) you have seven
(7) days following the execution of this Agreement to revoke this Agreement (in a written revocation sent to the Company’s Chairman); and (e) this Agreement will not be effective until the eighth day after this Agreement has been
signed both by you and by the Company (the “Effective Date”). 
 17. Section 1542 Waiver. In giving the release set
forth in this Agreement, which includes claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not
extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” You hereby expressly waive and
relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the releases granted herein, including but not limited to the release of unknown and unsuspected claims
granted in this Agreement. 
 18. Miscellaneous. This Agreement (including its Exhibits) constitutes the complete, final and exclusive
embodiment of the entire agreement between you and the Company with regard to its subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes
any other such promises, warranties or representations. By way of example (and without limitation), this Agreement supersedes your offer letter dated November 14, 2002. This Agreement may not be modified or amended except in a writing signed by
both you and a duly authorized officer of the Company. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors
and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be
rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law. This Agreement shall be deemed to have been entered into, and construed and enforced in accordance with, the laws of the State of
California without regard to conflicts of law principles, save for 

  

 - 5 - 

 
Exhibit B, which shall be deemed to have been entered into, and construed and enforced in accordance with, the laws of England. Any ambiguity in this
Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This
Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures will suffice as original signatures. 
 If this Agreement is acceptable to you, please sign below and return the original to me. 
 Sincerely, 
  

			
	CHORDIANT SOFTWARE, INC.
		
	By:	 	 /s/ Steven R. Springsteel

  
 Exhibit A – Separation Date Release

 EXHIBIT B - UK Compromise Agreement 
 Exhibit C – Proprietary Information Agreement 
  

					
	UNDERSTOOD AND AGREED:	 	
			
	 /s/ Steven Kelly
	 	Stephen Kelly	  	

 Date: March 18, 2006 
  

 - 6 - 

 EXHIBIT A 
 SEPARATION DATE RELEASE 
 (To be
signed on the Separation Date.) 
 In exchange for the severance benefits and other consideration provided to me by Chordiant Software,
Inc. (the “Company”), and as required by my Separation Agreement with the Company, I hereby provide the following Separation Date Release (the “Release”). 
 I hereby generally and completely release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns from any and all claims, liabilities and obligations, both known and unknown, arising out of or in any way related to events, acts, conduct, or omissions occurring at any
time prior to or at the time that I sign this Release. This general release includes, but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment;
(2) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership or equity
interests in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of
1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as amended) (“ADEA”), the federal Family and Medical Leave Act, the California Family Rights Act, the California
Labor Code, and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, I am not releasing the Company hereby from any obligation to indemnify me pursuant to the articles and bylaws of the Company, any valid fully
executed indemnification agreement with the Company, applicable law, or applicable directors and officers liability insurance. I represent that I have no lawsuits, claims or actions pending in my name, or on behalf of any other person or entity,
against the Company or any other person or entity subject to the release granted in this paragraph. 
 I acknowledge that I am knowingly and
voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given for the waiver and release in the preceding paragraph is in addition to anything of value to which I am already entitled. I further acknowledge
that I have been advised by this writing that: (a) my waiver and release do not apply to any rights or claims that may arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although
I may choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this Release (although I may choose voluntarily to sign it earlier); (d) I have seven (7) days following the date I sign this Release to revoke
it by providing written notice of revocation to the Company’s Chairman; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth calendar day after the date I sign it
(the “Effective Date”). 
  

 - 7 - 

 I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. I acknowledge that I
have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any
jurisdiction with respect to my release of claims herein, including but not limited to the release of unknown and unsuspected claims. 
  

			
	By:	 	  

		 	Stephen Kelly
		
	Date:	 	  

  

 - 8 - 

 EXHIBIT B 
 UK Compromise Agreement 
 THIS AGREEMENT is made the
     day of March 2006 
 BETWEEN: 
  

	(1)	CHORDIANT SOFTWARE, INC a US corporation with its worldwide headquarters at 20400 Stevens Creek Blvd, Cupertino, CA, 95014, U.S.A. (the “Company”); and

  

	(2)	STEPHEN KELLY of 20400 Stevens Creek Blvd, Cupertino, CA, 95014, U.S.A. (“You/you”). 

  

	1.	You acknowledge and agree that your employment with the Company will terminate on the 1 May 2006 (the “Termination Date”). 

  

	2.	You warrant to the Company that you have received independent advice from [name of solicitor] of [name of solicitor’s firm] of [address of solicitor’s firm] (the
“Relevant Independent Adviser”) as to the terms and effects of this Agreement under English law prior to your executing the same and, in particular, as to its effect on your ability to pursue any of the rights or claims set out in clause 3
of this Agreement. It is a condition of this Agreement that you will procure that the Relevant Independent Adviser executes the Relevant Independent Adviser’s Certificate set out in Appendix 1 to this Agreement and submits it to the Company
within two working days of the date of this Agreement. 

  

	3.	The payments and other benefits provided to you by the Company under this Agreement set out in the letter of March 1 are being paid to you by the Company and are hereby
accepted by you in full and final settlement of any and all claims you have or may have against the Company, any Group Company (as defined below) or any of the officers, directors, employees or consultants of the Company or any Group Company,
whether such claims arise out of or are in connection with your employment with the Company, any contract of employment between the Company and you, the termination of your employment with the Company, including, but not limited to, claims:

  

	 	3.1	for or in relation to: unfair dismissal; discrimination, harassment or victimisation on the grounds of your sex, marital status or gender; discrimination, harassment or
victimisation on the grounds of your race, colour, nationality, or ethnic or national origins; discrimination, harassment or victimisation on the grounds of any disability you have or may have; a failure to make reasonable adjustments under
Section 4A Disability Discrimination Act 1995; discrimination, harassment or victimisation on the grounds of sexual orientation, discrimination, harassment or victimisation on the grounds of religion or belief, unlawful or unauthorised
deductions of or from wages; equal pay; you having made or threatened to make a “protected disclosure” within the meaning of Section 43A Employment Rights Act 1996; and any entitlement to a statutory or contractual redundancy payment;

  

 - 9 - 

	 	3.2	for or in relation to breach of contract or breach of the Working Time Regulations 1998, including, but not limited to, claims in respect of any unpaid salary, pay in lieu of
notice, wrongful dismissal, holiday pay, sick pay, commission, pension contributions, bonus payments or incentive payments of any kind; 

  

	 	3.3	arising under the common law (including, without limitation, all tortious claims) and all claims for breach of statutory duty, including, without limitation all personal injury
claims arising from any illnesses, diseases, medical conditions, symptoms, accidents or injuries of which you are aware at the date of this Agreement; 

  

	 	3.4	under the Employment Rights Act 1996; the Trade Union and Labour Relations (Consolidation) Act 1992; the National Minimum Wage Act 1998; the Working Time Regulations 1998; or under
any other laws of England or the European Union, 

 Provided that nothing in this Agreement will affect any rights or settle any
claims which you have or may have in relation to your accrued rights under any occupational pension scheme operated by the Company or in relation to any personal injury claims arising from any illnesses, diseases, medical conditions, symptoms,
accidents or injuries of which you are unaware at the date of this Agreement. 
  

	4.	You hereby warrant and represent that: 

  

	 	4.1	you have raised each and every claim set out in Clause 3 above prior to entering into this Agreement; and 

  

	 	4.2	in relation to any claim which you have not raised in Clause 3, you are not, to the best of your knowledge, having taken independent advice from the Relevant Independent Adviser,
aware of any such claim or any facts or matters which might give rise to any such claim. 

  

	5.	You acknowledge and agree that the severance benefits payable to you under section 4 of the separation agreement between the Company and you shall constitute good and valuable
consideration for the terms and conditions set out in this Agreement. 

  

	6.	The parties acknowledge and agree that this Agreement satisfies the conditions for regulating compromise agreements under Section 203(3) of the Employment Rights Act 1996,
Section 77(4A) of the Sex Discrimination Act 1975, Section 72(4A) of the Race Relations Act 1976, Section 288(2B) of the Trade Union and Labour Relations (Consolidation) Act 1992, Section 9(3) of the Disability Discrimination Act
1995, Regulation 35(3) of the Working Time Regulations 1998, Section 49(4) of the National Minimum Wage Act 1998, Regulation 9 of the Part-Time Workers (Prevention Of Less Favourable Treatment) Regulations 2000, Schedule 4 of the Employment
Equality (Sexual Orientation) Regulations 2003 and Schedule 4 of the Employment Equality (Religion or Belief) Regulations 2003. 

  

 - 10 - 

	7.	In this Agreement “Group Company” means each and every company and/or corporation in any jurisdiction: (a) which from time to time is a subsidiary or a holding
company of the Company; (b) which from time to time is a subsidiary of such holding company (excluding the Company); and (c) over which the Company or its holding company has control within the meaning of Section 416 of the Income and
Corporation Taxes Act 1988 (and where the terms “subsidiary” and “holding company” have the meanings attributed to them by section 736 of the Companies Act 1985) and the term “Group Companies” shall be construed
accordingly. 

  

	8.	You acknowledge and agree that the Company is entering into this Agreement not only for itself but also as the trustee of each Group Company. You agree that any Group Company shall
be entitled to enforce any term of this Agreement that confers a benefit on that Group Company and that this clause shall be interpreted as complying with Section 1(a) of the Contracts (Rights of Third Parties) Act 1999 for this purpose. Except
with respect to any Group Companies (which shall be deemed third party beneficiaries), no term of this Agreement is enforceable under the Contract (Rights of Third Parties) Act 1999 by any person who is not a party to this Agreement.

  

	9.	This Agreement shall be construed in accordance with the law of England and the parties submit to the exclusive jurisdiction of the English Courts. 

  

	10.	This Agreement is provided on a without prejudice basis but shall become binding on the parties at such time as it has been signed by both parties to this Agreement.

 IN WITNESS the parties have signed this Agreement on the date written above. 
  

					
	 Signed for and on behalf of
 Chordiant Software, Inc:
	  	  
	 	
			
	 Signed by Stephen Kelly:
	  	  
	 	

  

 - 11 - 

 Appendix 1 
 RELEVANT INDEPENDENT ADVISER’S CERTIFICATE 
 I, [name of solicitor] of [name of solicitor’s firm],
solicitors, of [address of solicitor’s firm] hereby certify to CHORDIANT SOFTWARE, INC (the “Company”) that: 
  

	1.	I am instructed by Stephen Kelly (the “Employee”). 

  

	2.	At all times during which I have advised the Employee on the subject matter of the Compromise Agreement between the Company and the Employee (the “Agreement”) I have been
a Relevant Independent Adviser as defined by Section 203(3A) of the Employment Rights Act 1996, Section 77(4B) of the Sex Discrimination Act 1975, Section 72(4B) of the Race Relations Act 1976, section 288(4) of the Trade Union and
Labour Relations (Consolidation) Act 1992, section 9(4) of the Disability Discrimination Act 1995, section 35(4) of the Working Time Regulations 1998, Section 49(5) of the National Minimum Wage Act 1998, Regulation 9 of the Part-time Workers
(Prevention of Less Favourable Treatment) Regulations 2000, Schedule 4 of the Employment Equality (Sexual Orientation) Regulations 2003, and Schedule 4 of the Employment Equality (Religion or Belief) Regulations 2003. 

  

	3.	I have given independent advice to the Employee as to the terms and effect of the Agreement under English law prior to the Employee executing the same and, in particular, as to its
effect on the Employee’s ability to pursue any rights or claims before an Employment Tribunal. 

  

	4.	When I gave the advice referred to in sub-clause 3 above, there was in force a contract of insurance covering the risk of a claim by the Employee in respect of loss arising in
consequence of the said advice. 

  

					
	 Signed by the Relevant
 Independent Adviser:
	  	  
	 	
			
	 Dated:
	  	  
	 	2006

  

 - 12 - 

 EXHIBIT C 
 Proprietary Information and Inventions Agreement 
  

 - 13 -

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