Document:

Blueprint

 

Exhibit 10.1

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of March
28, 2019 (the “Effective
Date”), to be effective as of December 26, 2018, by
and among SILICON VALLEY
BANK, a California corporation (“Bank”), and BK TECHNOLOGIES, INC. (f/k/a RELM
Wireless Corporation), a Nevada corporation (“BK Technologies”) and RELM COMMUNICATIONS, INC., a Florida
corporation (“Relm
Communications” and, together with BK Technologies,
individually and collectively, jointly and severally,
“Borrower”),
whose address is 7100 Technology Drive, West Melbourne, Florida
32904, provides the terms on which Bank shall lend to Borrowers and
Borrowers shall repay Bank. The parties agree as
follows:

 

Recitals

 

A.           Bank
and Borrowers have entered into that certain Loan and Security
Agreement dated as of October 23, 2008 (as amended, the
“Prior Loan
Agreement”).

 

B.           Borrowers
have requested, and Bank has agreed, to amend and restate the Prior
Loan Agreement in its entirety. Bank and Borrowers hereby agree
that the Prior Loan Agreement is amended and restated in its
entirety as follows:

 

1 ACCOUNTING
AND OTHER TERMS

 

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

 

2 LOAN
AND TERMS OF PAYMENT

 

2.1 Promise
to Pay. Borrowers hereby unconditionally promise to pay Bank
the outstanding principal amount of all Credit Extensions and
accrued and unpaid interest thereon as and when due in accordance
with this Agreement.

 

2.1.1 Revolving
Line.

 

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

 

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

 

2.2 Overadvances.
If, at any time, the outstanding principal amount of the Advances
exceeds the Revolving Line, Borrowers shall immediately pay to Bank
in cash the amount of such excess (such excess, the
“Overadvance”).
Without limiting Borrowers’ obligation to repay Bank any
Overadvance, Borrowers agree to pay Bank interest on the
outstanding amount of any Overadvance, on demand, at a per annum
rate equal to the rate that is otherwise applicable to Advances
plus five percent (5.00%).

 

 

 

1

 

 

2.3 Payment
of Interest on the Credit Extensions.

 

(a) Interest Rate. Subject to
Section 2.3(b), the principal amount outstanding under the
Revolving Line shall accrue interest at a floating per annum rate
equal to one-quarter of one percent (0.25%) above the Prime Rate,
which interest shall be payable monthly in accordance with Section
2.3(d) below.

 

(b) Default Rate. Immediately upon
the occurrence and during the continuance of an Event of Default,
Obligations shall bear interest at a rate per annum which is five
percent (5.00%) above the rate that is otherwise applicable thereto
(the “Default
Rate”). Fees and expenses which are required to be
paid by Borrowers pursuant to the Loan Documents (including,
without limitation, Bank Expenses) but are not paid when due shall
bear interest until paid at a rate equal to the highest rate
applicable to the Obligations. Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a
permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Bank.

 

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

 

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

 

2.4 Fees.
Borrowers shall pay to Bank:

 

(a) Revolving Line Commitment Fee.
A fully earned, non-refundable commitment fee of Two Thousand Five
Hundred Dollars ($2,500), on the Effective Date.

 

(b) Termination Fee. Upon
termination of this Agreement or the termination or reduction of
the Revolving Line for any reason prior to the Revolving Line
Maturity Date, in addition to the payment of any other amounts
then-owing, a termination fee in an amount equal one percent
(1.00%) of the Revolving Line (or, in the case of a reduction of
the Revolving Line, of the amount remaining after such reduction),
provided that no termination fee shall be charged if the credit
facility hereunder is replaced with a new facility from Bank. The
termination fee shall be due and payable on the effective date of
termination or reduction and thereafter shall bear interest at a
rate equal to the highest rate applicable hereunder to any of the
Obligations.

 

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

 

(d) Fees Fully Earned. Unless
otherwise provided in this Agreement or in a separate writing by
Bank, Borrowers shall not be entitled to any credit, rebate, or
repayment of any fees earned by Bank pursuant to this Agreement
notwithstanding any termination of this Agreement or the suspension
or termination of Bank’s obligation to make loans and
advances hereunder. Bank may deduct amounts owing by Borrowers
under the clauses of this Section 2.4 pursuant to the terms of
Section 2.5(c). Bank shall provide Borrowers written notice of
deductions made from the Designated Deposit Account pursuant to the
terms of the clauses of this Section 2.4.

 

2.5 Payments;
Application of Payments; Debit of Accounts.

 

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

 

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

 

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

 

 

2

 

 

2.6 Withholding.
Payments received by Bank from any Borrower under this Agreement
will be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any
Governmental Authority (including any interest, additions to tax or
penalties applicable thereto). Specifically, however, if at any
time any Governmental Authority, applicable law, regulation or
international agreement requires any Borrower to make any
withholding or deduction from any such payment or other sum payable
hereunder to Bank, each Borrower hereby covenants and agrees that
the amount due from any Borrower with respect to such payment or
other sum payable hereunder will be increased to the extent
necessary to ensure that, after the making of such required
withholding or deduction, Bank receives a net sum equal to the sum
which it would have received had no withholding or deduction been
required, and Borrowers shall pay the full amount withheld or
deducted to the relevant Governmental Authority. Each Borrower
will, upon request, furnish Bank with proof reasonably satisfactory
to Bank indicating that such Borrower has made such withholding
payment; provided, however, that such Borrower need not make any
withholding payment if the amount or validity of such withholding
payment is contested in good faith by appropriate and timely
proceedings and as to which payment in full is bonded or reserved
against by such Borrower. The agreements and obligations of
Borrowers contained in this Section 2.6 shall survive the
termination of this Agreement.

 

3 CONDITIONS
OF LOANS

 

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

 

(a) duly executed
original signatures to this Agreement;

 

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

 

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

 

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

 

(e) certified copies,
dated as of a recent date, of financing statement searches, as Bank
may request, accompanied by written evidence (including any UCC
termination statements) that the Liens indicated in any such
financing statements constitute Permitted Liens;

 

(f) the Perfection
Certificate for each Borrower;

 

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

 

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

 

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

 

(a) timely receipt of
the Credit Extension request and any materials and documents
required by Section 3.4;

 

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

 

(c) Bank determines to
its satisfaction that there has not been a Material Adverse
Change.

 

 

3

 

 

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

 

3.4 Procedures
for Borrowing.

 

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

 

4 CREATION
OF SECURITY INTEREST

 

4.1 Grant
of Security Interest. Each Borrower hereby grants Bank, to
secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to
Bank, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products
thereof.

 

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

 

If this
Agreement is terminated, Bank’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity
obligations and Bank Services obligations that are fully cash
collateralized as set forth below) are repaid in full in cash. Upon
payment in full in cash of the Obligations (other than inchoate
indemnity obligations and Bank Services obligations that are fully
cash collateralized as set forth below) and at such time as
Bank’s obligation to make Credit Extensions has terminated,
Bank shall, at the sole cost and expense of Borrowers, release its
Liens and terminate its security interest in the Collateral and all
rights therein shall revert to Borrowers. In the event (a) all
Obligations (other than inchoate indemnity obligations and Bank
Services obligations that are fully cash collateralized as set
forth below) are satisfied in full, and (b) this Agreement is
terminated, Bank shall terminate the security interest granted
herein upon Borrowers providing cash collateral acceptable to Bank
in its good faith business judgment for Bank Services, if any. In
the event such Bank Services consist of outstanding Letters of
Credit, Borrowers shall provide to Bank cash collateral in an
amount equal to (x) if such Letters of Credit are denominated in
Dollars, then at least one hundred five percent (105.0%); and (y)
if such Letters of Credit are denominated in a Foreign Currency,
then at least one hundred ten percent (110.0%), of the Dollar
Equivalent of the face amount of all such Letters of Credit plus
all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business
judgment), to secure all of the Obligations relating to such
Letters of Credit.

 

4.2 Priority
of Security Interest. Each Borrower represents, warrants,
and covenants that the security interest granted herein is and
shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted
Liens that are permitted pursuant to the terms of this Agreement to
have superior priority to Bank’s Lien under this Agreement).
If any Borrower shall acquire a commercial tort claim valued in
excess of Twenty-Five Thousand Dollars ($25,000), such Borrower
shall promptly notify Bank in a writing signed by such Borrower of
the general details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to Bank.

 

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

 

 

4

 

 

5 REPRESENTATIONS
AND WARRANTIES

 

Borrowers represent
and warrant as follows:

 

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

 

The
execution, delivery and performance by each Borrower of the Loan
Documents to which it is a party have been duly authorized, and do
not (i) conflict with any of either Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default
under or violate any material Requirement of Law, (iii) contravene,
conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental
Authority by which either Borrower or any of its Subsidiaries or
any of their property or assets may be bound or affected, (iv)
require any action by, filing, registration, or qualification with,
or Governmental Approval from, any Governmental Authority (except
such Governmental Approvals which have already been obtained and
are in full force and effect), or (v) conflict with, contravene,
constitute a default or breach under, or result in or permit the
termination or acceleration of, any material agreement by which
either Borrower is bound. Neither Borrower is in default under any
agreement to which it is a party or by which it is bound in which
the default could have a material adverse effect on such
Borrower’s business.

 

5.2 Collateral.
Each Borrower has good title to, rights in, and the power to
transfer each item of the Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except
Permitted Liens. Each Borrower has no Collateral Accounts at or
with any bank or financial institution other than Bank or
Bank’s Affiliates except for the Collateral Accounts
described in the Perfection Certificate delivered to Bank in
connection herewith and which such Borrower has taken such actions
as are necessary to give Bank a perfected security interest
therein, pursuant to the terms of Section 6.8(b). The Accounts are
bona fide, existing obligations of the Account
Debtors.

 

The
Collateral is not in the possession of any third party bailee (such
as a warehouse) except as otherwise provided in the Perfection
Certificate. None of the components of the Collateral shall be
maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section 7.2.

 

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

 

Each
Borrower has the valid right to use licensed software that is
embedded in its inventory and off-the shelf software used in its
business, and each Borrower is the sole owner of its other
Intellectual Property which it owns or purports to own, except for
(a) non-exclusive licenses granted to its customers in the ordinary
course of business, (b) over-the-counter software that is
commercially available to the public, and (c) material Intellectual
Property licensed to Borrowers and noted on the Perfection
Certificate. Each patent which a Borrower owns or purports to own
and which is material to such Borrower’s business is valid
and enforceable, and no part of the Intellectual Property which a
Borrower owns or purports to own and which is material to such
Borrower’s business has been judged invalid or unenforceable,
in whole or in part. To the best of each Borrower's knowledge, no
claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such
claim could not reasonably be expected to have a material adverse
effect on such Borrower’s business. Except as noted on the
Perfection Certificate, Borrower is not a party to, nor is it bound
by, any Restricted License.

 

 

5

 

 

5.3 [Intentionally
Omitted].

 

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

 

5.5 Financial
Statements; Financial Condition. All consolidated financial
statements for Borrowers and any of their Subsidiaries delivered to
Bank fairly present in all material respects Borrowers’
consolidated financial condition and Borrowers’ consolidated
results of operations. There has not been any material
deterioration in Borrowers’ consolidated financial condition
since the date of the most recent financial statements submitted to
Bank.

 

5.6 Solvency.
The fair salable value of each Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its
liabilities; neither Borrower is left with unreasonably small
capital after the transactions in this Agreement; and each Borrower
is able to pay its debts (including trade debts) as they
mature.

 

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

 

5.8 Subsidiaries;
Investments. Neither Borrower owns any stock, partnership,
or other ownership interest or other equity securities except for
Permitted Investments.

 

5.9 Tax
Returns and Payments; Pension Contributions. Each Borrower
has timely filed all required tax returns and reports, and each
Borrower has timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by such
Borrower except (a) to the extent such taxes are being contested in
good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, or (b) if such taxes, assessments,
deposits and contributions do not, individually or in the
aggregate, exceed Ten Thousand Dollars ($10,000).

 

To the
extent any Borrower defers payment of any contested taxes, such
Borrower shall (i) notify Bank in writing of the commencement of,
and any material development in, the proceedings, and (ii) post
bonds or take any other steps required to prevent the Governmental
Authority levying such contested taxes from obtaining a Lien upon
any of the Collateral that is other than a “Permitted
Lien.” Neither Borrower is aware of any claims or adjustments
proposed for any of such Borrower’s prior tax years which
could result in additional taxes becoming due and payable by such
Borrower. Each Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in
accordance with their terms, and neither Borrower has withdrawn
from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with
respect to, any such plan which could reasonably be expected to
result in any liability of any Borrower, including any liability to
the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.

 

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

 

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

 

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

 

 

6

 

 

6 AFFIRMATIVE
COVENANTS

 

Each
Borrower shall do all of the following:

 

6.1 Government
Compliance.

 

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

 

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

 

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

 

(a) (i) (A) as soon as
available, but no later than thirty (30) days after filing with the
SEC (or, if not timely filed, not later than thirty (30) days after
the same were due to have been filed with the SEC),
Borrower’s 10-K and 8-K reports, and (B) as soon as
available, but no later than thirty (30) days after the last day of
each quarter, Borrower’s 10-Q reports; (ii) within sixty (60)
days after the end of each fiscal year, an annual operating budget
(which shall include a balance sheet, income statement and cash
flow statement presented in monthly or quarterly format) for the
following fiscal year, together with any related business forecasts
used in the preparation of such annual financial projections, and
any material updates to such projections and operating budget must
be delivered to Bank within fifteen (15) days of the Board’s
approval of such update;

 

(b) within thirty (30)
days after the last day of each quarter (or within thirty (30) days
after the last day of any month during which any Obligations are
outstanding), deliver to Bank aged listings of accounts receivable
and accounts payable (by invoice date);

 

(c) within thirty (30)
days after the last day of each quarter (or within thirty (30) days
after the last day of any month during which any Obligations are
outstanding), deliver to Bank a company prepared consolidated
balance sheet and income statement covering Borrowers’
consolidated operations for such quarter (or month, as applicable)
certified by a Responsible Officer and in a form acceptable to
Bank;

 

(d) within thirty (30)
days after the last day of each quarter (or within thirty (30) days
after the last day of any month during which any Obligations are
outstanding), a duly completed Compliance Certificate signed by a
Responsible Officer, certifying that as of the end of such quarter
(or month, as applicable), Borrowers were in full compliance with
all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants
set forth in this Agreement and such other information as Bank may
reasonably request, including, without limitation, a statement that
at the end of such month there were no held checks;

 

(e) within five (5)
days of delivery, copies of all statements, reports and notices
made generally available to Borrower’s security holders or to
any holders of Subordinated Debt;

 

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

 

 

7

 

 

(g) prompt written
notice of any changes to the beneficial ownership information set
out in items 2d, 2e, 2f and 2g of the Perfection Certificate. Each
Borrower understands and acknowledges that Bank relies on such
true, accurate and up-to-date beneficial ownership information to
meet Bank’s regulatory obligations to obtain, verify and
record information about the beneficial owners of its legal entity
customers;

 

(h) prompt written
notice of (i) any material change in the composition of the
Intellectual Property, (ii) the registration of any Copyright
(including any subsequent ownership right of any Borrower in or to
any Copyright), Patent or Trademark not previously disclosed to
Bank, or (iii) any Borrower’s knowledge of an event that
materially adversely affects the value of the Intellectual
Property; and

 

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

 

6.3 Accounts
Receivable.

 

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

 

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

 

(c) Collection of Accounts. Each
Borrower shall direct Account Debtors to deliver or transmit all
proceeds of Accounts into a lockbox account, or such other
“blocked account” as specified by Bank (either such
account, the “Cash Collateral
Account”). Whether or not an Event of Default has
occurred and is continuing, Borrowers shall immediately deliver all
payments on and proceeds of Accounts to the Cash Collateral
Account. Subject to Bank’s right to maintain a reserve
pursuant to Section 6.3(d), all amounts received in the Cash
Collateral Account shall be transferred on a daily basis to
Borrowers’ operating account with Bank. Each Borrower hereby
authorizes Bank to transfer to the Cash Collateral Account any
amounts that Bank reasonably determines are proceeds of the
Accounts (provided that Bank is under no obligation to do so and
this allowance shall in no event relieve such Borrower of its
obligations hereunder).

 

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

 

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

 

(f) Verifications; Confirmations; Credit
Quality; Notifications. Bank may, from time to time, (i)
verify and confirm directly with the respective Account Debtors the
validity, amount and other matters relating to the Accounts, either
in the name of any Borrower or Bank or such other name as Bank may
choose, and notify any Account Debtor of Bank’s security
interest in such Account and/or (ii) conduct a credit check of any
Account Debtor to approve any such Account Debtor’s credit.
Bank agrees that unless an Event of Default has occurred and is
continuing, Bank shall provide Borrowers with reasonable notice
before contacting Account Debtors under this Section
6.3(f).

 

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

 

 

8

 

 

6.4 Remittance
of Proceeds. Except as otherwise provided in Section 6.3(c),
deliver, in kind, all proceeds arising from the disposition of any
Collateral to Bank in the original form in which received by either
Borrower not later than the following Business Day after receipt by
such Borrower, to be applied to the Obligations (a) prior to an
Event of Default, pursuant to the terms of Section 6.3(c) hereof,
and (b) after the occurrence and during the continuance of an Event
of Default, pursuant to the terms of Section 9.4 hereof; provided
that, if no Event of Default has occurred and is continuing, such
Borrower shall not be obligated to remit to Bank the proceeds of
the sale of worn out or obsolete Equipment disposed of by such
Borrower in good faith in an arm’s length transaction for an
aggregate purchase price of Twenty Five Thousand Dollars ($25,000)
or less (for all such transactions in any fiscal year). Each
Borrower agrees that it will not commingle proceeds of Collateral
with any of such Borrower’s other funds or property but will
hold such proceeds separate and apart from such other funds and
property and in an express trust for Bank. Nothing in this Section
6.4 limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.

 

6.5 Taxes;
Pensions. Timely file, and require each of its Subsidiaries
to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely pay, all
foreign, federal, state and local taxes, assessments, deposits and
contributions owed by such Borrower and each of its Subsidiaries,
except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand,
appropriate certificates attesting to such payments, and pay all
amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their
terms.

 

6.6 Access
to Collateral; Books and Records. At reasonable times, on
one (1) Business Day’s notice (provided no notice is required
if an Event of Default has occurred and is continuing), Bank, or
its agents, shall have the right to inspect the Collateral and the
right to audit and copy Borrowers’ Books. The foregoing
inspections and audits shall be conducted no more often than once
every twelve (12) months (or more frequently as Bank in its
reasonable credit judgment determines that conditions warrant)
unless an Event of Default has occurred and is continuing in which
case such inspections and audits shall occur as often as Bank shall
determine is necessary. The foregoing inspections and audits shall
be conducted at Borrowers’ expense and the charge therefor
shall be One Thousand Dollars ($1,000) per person per day (or such
higher amount as shall represent Bank’s then-current standard
charge for the same), plus reasonable out-of-pocket expenses. In
the event any Borrower and Bank schedule an audit more than eight
(8) days in advance, and such Borrower cancels or seeks to or
reschedules the audit with less than eight (8) days written notice
to Bank, then (without limiting any of Bank’s rights or
remedies) such Borrower shall pay Bank a fee of Two Thousand
Dollars ($2,000) plus any out-of-pocket expenses incurred by Bank
to compensate Bank for the anticipated costs and expenses of the
cancellation or rescheduling.

 

6.7 Insurance.

 

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

 

(b) Ensure that
proceeds payable under any property policy are, at Bank’s
option, payable to Bank on account of the Obligations.
Notwithstanding the foregoing, (i) so long as no Event of Default
has occurred and is continuing, Borrowers shall have the option of
applying the proceeds of any casualty policy up to Twenty-Five
Thousand Dollars ($25,000) with respect to any loss, but not
exceeding Fifty Thousand Dollars ($50,000) in the aggregate for all
losses under all casualty policies in any one year, toward the
replacement or repair of destroyed or damaged property; provided
that any such replaced or repaired property (A) shall be of equal
or like value as the replaced or repaired Collateral and (B) shall
be deemed Collateral in which Bank has been granted a first
priority security interest, and (ii) after the occurrence and
during the continuance of an Event of Default, all proceeds payable
under such casualty policy shall, at the option of Bank, be payable
to Bank on account of the Obligations.

 

(c) At Bank’s
request, each Borrower shall deliver certified copies of insurance
policies and evidence of all premium payments. Each provider of any
such insurance required under this Section 6.7 shall agree, by
endorsement upon the policy or policies issued by it or by
independent instruments furnished to Bank, that it will give Bank
twenty (20) days prior written notice before any such policy or
policies shall be materially altered or canceled. If either
Borrower fails to obtain insurance as required under this Section
6.7 or to pay any amount or furnish any required proof of payment
to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section
6.7 and take any action under the policies Bank deems
prudent.

 

6.8 Accounts.

 

(a) Maintain its and
all of its Subsidiaries’ primary operating and other deposit
accounts, the Cash Collateral Account and primary
securities/investment accounts with Bank and Bank’s
Affiliates. Notwithstanding the foregoing, Borrower shall be
permitted to maintain its payment transmitter accounts so long as
the balances in any such payment transmitter accounts are swept to
an account maintained with Bank no less frequently than
weekly.

 

 

9

 

 

(b) In addition to and
without limiting the restrictions in (a), each Borrower shall
provide Bank five (5) days prior written notice before establishing
any Collateral Account at or with any bank or financial institution
other than Bank or Bank’s Affiliates. For each Collateral
Account that each Borrower at any time maintains, such Borrower
shall cause the applicable bank or financial institution (other
than Bank) at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect
Bank’s Lien in such Collateral Account in accordance with the
terms hereunder which Control Agreement may not be terminated
without the prior written consent of Bank. The provisions of the
previous sentence shall not apply to deposit accounts exclusively
used for payroll, payroll taxes, and other employee wage and
benefit payments to or for the benefit of any Borrower’s
employees and identified to Bank by such Borrower as
such.

 

6.9 Financial
Covenants.  Maintain at all times, subject to periodic
reporting, on a consolidated basis with respect to each Borrower
and its Subsidiaries:

 

(a)           Adjusted
Quick Ratio. An Adjusted Quick Ratio, tested as of the last
day of each quarter (or as of the last day of each month with
respect to any month during which any Obligations are outstanding),
of not less than 1.25 to 1.00; provided that Borrower’s Net
Cash shall at no time be less than One Million Dollars
($1,000,000).

 

(b)           Maximum
Total Leverage. A Total Leverage, measured on a trailing
twelve (12) month basis and tested as of the last day of each
quarter, of not more than 3.00 to 1.00.

 

6.10 Protection
and Registration of Intellectual Property Rights.

 

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

 

(b) If either Borrower
(i) obtains any Patent, registered Trademark, registered Copyright,
registered mask work, or any pending application for any of the
foregoing, whether as owner, licensee or otherwise, or (ii) applies
for any Patent or the registration of any Trademark, then such
Borrower shall immediately provide written notice thereof to Bank
and shall execute such intellectual property security agreements
and other documents and take such other actions as Bank may request
in its good faith business judgment to perfect and maintain a first
priority perfected security interest in favor of Bank in such
property. If either Borrower decides to register any Copyrights or
mask works in the United States Copyright Office, such Borrower
shall: (x) provide Bank with at least fifteen (15) days prior
written notice of such Borrower’s intent to register such
Copyrights or mask works together with a copy of the application it
intends to file with the United States Copyright Office (excluding
exhibits thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as
Bank may request in its good faith business judgment to perfect and
maintain a first priority perfected security interest in favor of
Bank in the Copyrights or mask works intended to be registered with
the United States Copyright Office; and (z) record such
intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the Copyright or
mask work application(s) with the United States Copyright Office.
Each Borrower shall promptly provide to Bank copies of all
applications that it files for Patents or for the registration of
Trademarks, Copyrights or mask works, together with evidence of the
recording of the intellectual property security agreement required
for Bank to perfect and maintain a first priority perfected
security interest in such property.

 

(c) Provide written
notice to Bank within ten (10) days of entering or becoming bound
by any Restricted License (other than over-the-counter software
that is commercially available to the public). Each Borrower shall
take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for (i)
any Restricted License to be deemed “Collateral” and
for Bank to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such
Restricted License, whether now existing or entered into in the
future, and (ii) Bank to have the ability in the event of a
liquidation of any Collateral to dispose of such Collateral in
accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents.

 

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

 

 

10

 

 

6.12 Online
Banking.

 

(a) Utilize
Bank’s online banking platform for all matters requested by
Bank which shall include, without limitation (and without request
by Bank for the following matters), uploading information
pertaining to Accounts and Account Debtors, requesting approval for
exceptions, requesting Credit Extensions, and uploading financial
statements and other reports required to be delivered by this
Agreement (including, without limitation, those described in
Section 6.2 of this Agreement).

 

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

 

6.13 Formation
or Acquisition of Subsidiaries. Notwithstanding and without
limiting the negative covenants contained in Sections 7.3 and 7.7
hereof, at the time that any Borrower forms any direct or indirect
Subsidiary or acquires any direct or indirect Subsidiary after the
Effective Date, such Borrower shall (a) cause such new Subsidiary
to provide to Bank a joinder to this Agreement to become a
co-borrower hereunder, or a Guaranty to become a Guarantor
hereunder, at Bank’s discretion, together with such
appropriate financing statements and/or Control Agreements, all in
form and substance satisfactory to Bank (including being sufficient
to grant Bank a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b)
provide to Bank appropriate certificates and powers and financing
statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory
to Bank; and (c) provide to Bank all other documentation in form
and substance satisfactory to Bank, including one or more opinions
of counsel satisfactory to Bank, which in its opinion is
appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document,
agreement, or instrument executed or issued pursuant to this
Section 6.13 shall be a Loan Document.

 

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

 

7 NEGATIVE
COVENANTS

 

Neither
Borrower do any of the following without Bank’s prior written
consent:

 

7.1 Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (a) of Inventory in the ordinary
course of business; (b) of worn-out or obsolete Equipment that is,
in the reasonable judgment of Borrower, no longer economically
practicable to maintain or useful in the ordinary course of
business of Borrower; (c) consisting of Permitted Liens and
Permitted Investments; (d) consisting of the sale or issuance of
any stock of Borrower permitted under Section 7.2 of this
Agreement; (e) consisting of Borrower’s use or transfer of
money or Cash Equivalents in a manner that is not prohibited by the
terms of this Agreement or the other Loan Documents; (f) of
non-exclusive licenses for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business and other
non-perpetual licenses that could not result in a legal transfer of
title of the licensed property but that may be exclusive in
respects other than territory and that may be exclusive as to
territory only as to discreet geographical areas outside of the
United States; (g) in the ordinary course of business for
reasonably equivalent consideration; (h) between Borrowers; (i) of
property in connection with sale-leaseback transactions; (j) of
property to the extent such property is exchanged for credit
against, or proceeds are promptly applied to, the purchase price of
other property used or useful in the business of either Borrower or
its Subsidiaries; and (k) consisting of sales or discounting of
delinquent accounts in the ordinary course of
business.

 

7.2 Changes
in Business, Management, Control, or Business Locations. (a)
Engage in or permit any of its Subsidiaries to engage in any
material line of business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or
reasonably related, complementary or incidental thereto or
reasonable extensions thereof; (b) liquidate or dissolve; or (c)
permit or suffer any Change in Control.

 

 

11

 

 

Neither
Borrower shall, without at least thirty (30) days prior written
notice to Bank: (1) add any new offices or business locations,
including warehouses (unless such new offices or business locations
contain less than Fifty Thousand Dollars ($50,000) in
Borrower’s assets or property) or deliver any portion of the
Collateral valued, individually or in the aggregate, in excess of
Fifty Thousand Dollars ($50,000) to a bailee at a location other
than to a bailee and at a location already disclosed in the
Perfection Certificate, (2) change its jurisdiction of
organization, (3) change its organizational structure or type, (4)
change its legal name, or (5) change any organizational number (if
any) assigned by its jurisdiction of organization. If either
Borrower intends to add any new offices or business locations,
including warehouses, containing in excess of Fifty Thousand
Dollars ($50,000) of Borrowers’ assets or property, then such
Borrower will first provide prior written notice to Bank, and the
landlord of any such new offices or business locations, including
warehouses, shall execute and deliver a landlord consent in form
and substance satisfactory to Bank. If either Borrower intends to
deliver any portion of the Collateral valued, individually or in
the aggregate, in excess of Fifty Thousand Dollars ($50,000) to a
bailee, and Bank and such bailee are not already parties to a
bailee agreement governing both the Collateral and the location to
which such Borrower intends to deliver the Collateral, then such
Borrower will first provide prior written notice to Bank, and such
bailee shall execute and deliver a bailee agreement in form and
substance satisfactory to Bank.

 

7.3 Mergers
or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another
Person (including, without limitation, by the formation of any
Subsidiary). A Subsidiary may merge or consolidate into another
Subsidiary or into either Borrower.

 

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

 

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

 

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

 

7.7 Distributions;
Investments. (a) Pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock other
than Permitted Distributions; or (b) directly or indirectly make
any Investment (including, without limitation, by the formation of
any Subsidiary) other than Permitted Investments, or permit any of
its Subsidiaries to do so.

 

7.8 Transactions
with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of either
Borrower, except for (a) transactions that are in the ordinary
course of either Borrower’s business, upon fair and
reasonable terms (when viewed in the context of any series of
transactions of which it may be a part, if applicable) that are no
less favorable to such Borrower than would be obtained in an
arm’s length transaction with a non-affiliated Person; or (b)
transactions among Borrowers, among Borrowers and their
Subsidiaries and among Borrower’s Subsidiaries so long as no
Event of Default exists or could result therefrom.

 

7.9 Subordinated
Debt. (a) Make or permit any payment on any Subordinated
Debt, except (i) under the terms of the subordination,
intercreditor, or other similar agreement to which such
Subordinated Debt is subject, and (ii) payments made with BK
Technologies’ capital stock or other Subordinated Debt, or
(b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof, provide
for earlier or greater principal, interest, or other payments
thereon, or adversely affect the subordination thereof to
Obligations owed to Bank.

 

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

 

 

12

 

 

8 EVENTS
OF DEFAULT

 

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

 

8.1 Payment
Default. Any Borrower fails to (a) make any payment of
principal or interest on any Credit Extension when due, or (b) pay
any other Obligations within three (3) Business Days after such
Obligations are due and payable (which three (3) Business Day cure
period shall not apply to payments due on the Revolving Line
Maturity Date). During the cure period, the failure to make or pay
any payment specified under clause (b) hereunder is not an Event of
Default (but no Credit Extension will be made during the cure
period);

 

8.2 Covenant
Default. (a) Any Borrower fails or neglects to perform any
obligation in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9,
6.10, 6.12, 6.13, or 6.14 or violates any covenant in Section 7;
or

 

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

 

8.3 Material
Adverse Change. A Material Adverse Change
occurs;

 

8.4 Attachment;
Levy; Restraint on Business.

 

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

 

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

 

8.5 Insolvency.
(a) Either Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b)
either Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against either Borrower and is not
dismissed or stayed within thirty (30) days (but no Credit
Extensions shall be made while any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is
dismissed);

 

8.6 Other
Agreements. There is, under any agreement to which any
Borrower or any Guarantor is a party with a third party or parties,
(a) any default resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount individually or in the aggregate in
excess of One Hundred Thousand Dollars ($100,000); or (b) any
breach or default by any Borrower or Guarantor, the result of which
could have a material adverse effect on any Borrower’s or any
Guarantor’s business; provided, however, that the Event of
Default under this Section 8.6 caused by the occurrence of a breach
or default under such other agreement shall be cured or waived for
purposes of this Agreement upon Bank receiving written notice from
the party asserting such breach or default of such cure or waiver
of the breach or default under such other agreement, if at the time
of such cure or waiver under such other agreement (x) Bank has not
declared an Event of Default under this Agreement and/or exercised
any rights with respect thereto; (y) any such cure or waiver does
not result in an Event of Default under any other provision of this
Agreement or any Loan Document; and (z) in connection with any such
cure or waiver under such other agreement, the terms of any
agreement with such third party are not modified or amended in any
manner which could in the good faith business judgment of Bank be
materially less advantageous to Borrowers or any
Guarantor;

 

 

13

 

 

8.7 Judgments;
Penalties. One or more fines, penalties or final judgments,
orders or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) (not covered by independent third-party insurance
as to which liability has been accepted by such insurance carrier)
shall be rendered against either Borrower by any Governmental
Authority, and the same are not, within ten (10) days after the
entry, assessment or issuance thereof, discharged, satisfied, or
paid, or after execution thereof, stayed or bonded pending appeal,
or such judgments are not discharged prior to the expiration of any
such stay (provided that no Credit Extensions will be made prior to
the satisfaction, payment, discharge, stay, or bonding of such
fine, penalty, judgment, order or decree);

 

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

 

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

 

8.10 Guaranty.
(a) Any guaranty of any Obligations terminates or ceases for any
reason to be in full force and effect; (b) any Guarantor does not
perform any obligation or covenant under any guaranty of the
Obligations; (c) any circumstance described in Sections 8.3, 8.4,
8.5, 8.6, 8.7, or 8.8 of this Agreement occurs with respect to any
Guarantor, (d) the death, liquidation, winding up, or termination
of existence of any Guarantor; or (e) (i) a material impairment in
the perfection or priority of Bank’s Lien in the collateral
provided by Guarantor or in the value of such collateral or (ii) a
material adverse change in the general affairs, management, results
of operation, condition (financial or otherwise) or the prospect of
repayment of the Obligations occurs with respect to any
Guarantor.

 

9 BANK’S
RIGHTS AND REMEDIES

 

9.1 Rights
and Remedies. Upon the occurrence and during the continuance
of an Event of Default, Bank may, without notice or demand, do any
or all of the following:

 

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

 

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

 

(c) demand that
Borrowers (i) deposit cash with Bank in an amount equal to at least
(A) one hundred five percent (105.0%) of the Dollar Equivalent of
the aggregate face amount of all Letters of Credit denominated in
Dollars remaining undrawn, and (B) one hundred ten percent (110.0%)
of the Dollar Equivalent of the aggregate face amount of all
Letters of Credit denominated in a Foreign Currency remaining
undrawn (plus, in each case, all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its
good faith business judgment)), to secure all of the Obligations
relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and
Borrowers shall forthwith deposit and pay such amounts, and (ii)
pay in advance all letter of credit fees scheduled to be paid or
payable over the remaining term of any Letters of
Credit;

 

(d) terminate any FX
Contracts;

 

 

14

 

 

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

 

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

 

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

 

(h) ship, reclaim,
recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Bank is hereby granted
a non-exclusive, royalty-free license or other right to use,
without charge, either Borrower’s labels, Patents,
Copyrights, mask works, rights of use of any name, trade secrets,
trade names, Trademarks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this
Section 9.1, each Borrower’s rights under all licenses and
all franchise agreements inure to Bank’s
benefit;

 

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

 

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

 

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

 

9.2 Power
of Attorney. Each Borrower hereby irrevocably appoints Bank
as its lawful attorney-in-fact, exercisable following the
occurrence of an Event of Default, to: (a) endorse such
Borrower’s name on any checks, payment instruments, or other
forms of payment or security; (b) sign such Borrower’s name
on any invoice or bill of lading for any Account or drafts against
Account Debtors; (c) demand, collect, sue, and give releases to any
Account Debtor for monies due, settle and adjust disputes and
claims about the Accounts directly with Account Debtors, and
compromise, prosecute, or defend any action, claim, case, or
proceeding about any Collateral (including filing a claim or voting
a claim in any bankruptcy case in Bank’s or either
Borrower’s name, as Bank chooses); (d) make, settle, and
adjust all claims under either Borrower’s insurance policies;
(e) pay, contest or settle any Lien, charge, encumbrance, security
interest, or other claim in or to the Collateral, or any judgment
based thereon, or otherwise take any action to terminate or
discharge the same; and (f) transfer the Collateral into the name
of Bank or a third party as the Code permits. Each Borrower hereby
appoints Bank as its lawful attorney-in-fact to sign such
Borrower’s name on any documents necessary to perfect or
continue the perfection of Bank’s security interest in the
Collateral regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and the Loan
Documents have been terminated. Bank’s foregoing appointment
as Borrowers’ attorney in fact, and all of Bank’s
rights and powers, coupled with an interest, are irrevocable until
all Obligations have been fully repaid and performed and the Loan
Documents have been terminated.

 

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

 

 

15

 

 

9.4 Application
of Payments and Proceeds. Bank shall have the right to apply
in any order any funds in its possession, whether from either
Borrower account balances, payments, proceeds realized as the
result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations. Bank shall pay any
surplus to Borrowers by credit to the Designated Deposit Account or
to other Persons legally entitled thereto; Borrowers shall remain
liable to Bank for any deficiency. If Bank, in its good faith
business judgment, directly or indirectly, enters into a deferred
payment or other credit transaction with any purchaser at any sale
of Collateral, Bank shall have the option, exercisable at any time,
of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until
the actual receipt by Bank of cash therefor.

 

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

 

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

 

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

 

9.8 Borrower
Liability. Any Borrower may, acting singly, request Credit
Extensions hereunder. Each Borrower hereby appoints each other as
agent for the other for all purposes hereunder, including with
respect to requesting Credit Extensions hereunder. Each Borrower
hereunder shall be jointly and severally obligated to repay all
Credit Extensions made hereunder, regardless of which Borrower
actually receives said Credit Extension, as if each Borrower
hereunder directly received all Credit Extensions. Each Borrower
waives (a) any suretyship defenses available to it under the Code
or any other applicable law, including, without limitation, the
benefit of California Civil Code Section 2815 permitting revocation
as to future transactions and the benefit of California Civil Code
Sections 1432, 2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849,
2850, and 2899 and 3433, and (b) any right to require Bank to: (i)
proceed against any Borrower or any other person; (ii) proceed
against or exhaust any security; or (iii) pursue any other remedy.
Bank may exercise or not exercise any right or remedy it has
against any Borrower or any security it holds (including the right
to foreclose by judicial or non-judicial sale) without affecting
any Borrower’s liability. Notwithstanding any other provision
of this Agreement or other related document, each Borrower
irrevocably waives all rights that it may have at law or in equity
(including, without limitation, any law subrogating Borrower to the
rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or
secondarily liable for any of the Obligations, for any payment made
by Borrower with respect to the Obligations in connection with this
Agreement or otherwise and all rights that it might have to benefit
from, or to participate in, any security for the Obligations as a
result of any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise. Any
agreement providing for indemnification, reimbursement or any other
arrangement prohibited under this Section 9.8 shall be null and
void. If any payment is made to a Borrower in contravention of this
Section 9.8, such Borrower shall hold such payment in trust for
Bank and such payment shall be promptly delivered to Bank for
application to the Obligations, whether matured or
unmatured.

 

 

16

 

 

10 NOTICES

 

All
notices, consents, requests, approvals, demands, or other
communication by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested,
with proper postage prepaid; (b) upon transmission, when sent by
electronic mail, provided that if such notice or other
communication is not sent during the recipient’s normal
business hours, then on the next Business Day for the recipient;
(c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the
party to be notified and sent to the address or email address
indicated below. Bank or Borrowers may change its mailing or
electronic mail address by giving the other party written notice
thereof in accordance with the terms of this Section
10.

 

	
If to Borrowers:

	
c/o
BK Technologies, Inc

7100
Technology Drive

West
Melbourne, Florida 32904

Attn:
Bill Kelly

Email:
bkelly@relm.com

 

 

	
If
to Bank:

	
Silicon Valley
Bank

3475
Piedmont Road, NE, Suite 560

Atlanta,
Georgia 30305

Attn:
Thomas Armstrong

Email:
TArmstrong@svb.com

 

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

 

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

 

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

 

 

17

 

 

WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of
the right to a trial by jury is not enforceable, the parties hereto
agree that any and all disputes or controversies of any nature
between them arising at any time shall be decided by a reference to
a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County,
California Superior Court) appointed in accordance with California
Code of Civil Procedure Section 638 (or pursuant to comparable
provisions of federal law if the dispute falls within the exclusive
jurisdiction of the federal courts), sitting without a jury, in
Santa Clara County, California; and the parties hereby submit to
the jurisdiction of such court. The reference proceedings shall be
conducted pursuant to and in accordance with the provisions of
California Code of Civil Procedure Sections 638 through 645.1,
inclusive. The private judge shall have the power, among others, to
grant provisional relief, including without limitation, entering
temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be
closed to the public and confidential and all records relating
thereto shall be permanently sealed. If during the course of any
dispute, a party desires to seek provisional relief, but a judge
has not been appointed at that point pursuant to the judicial
reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding
before the private judge shall be conducted in the same manner as
it would be before a court under the rules of evidence applicable
to judicial proceedings. The parties shall be entitled to discovery
which shall be conducted in the same manner as it would be before a
court under the rules of discovery applicable to judicial
proceedings. The private judge shall oversee discovery and may
enforce all discovery rules and orders applicable to judicial
proceedings in the same manner as a trial court judge. The parties
agree that the selected or appointed private judge shall have the
power to decide all issues in the action or proceeding, whether of
fact or of law, and shall report a statement of decision thereon
pursuant to California Code of Civil Procedure Section 644(a).
Nothing in this paragraph shall limit the right of any party at any
time to exercise self-help remedies, foreclose against collateral,
or obtain provisional remedies. The private judge shall also
determine all issues relating to the applicability, interpretation,
and enforceability of this paragraph.

 

This
Section 11 shall survive the termination of this
Agreement.

 

12 GENERAL
PROVISIONS

 

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

 

12.2 Successors
and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Neither
Borrower may assign this Agreement or any rights or obligations
under it without Bank’s prior written consent (which may be
granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to either Borrower, to
sell, transfer, assign, negotiate, or grant participation in all or
any part of, or any interest in, Bank’s obligations, rights,
and benefits under this Agreement and the other Loan
Documents.

 

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

 

 

18

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12.11 Electronic
Execution of Documents. The words “execution,”
“signed,” “signature” and words of like
import in any Loan Document shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity and
enforceability as a manually executed signature or the use of a
paper-based recordkeeping systems, as the case may be, to the
extent and as provided for in any applicable law, including,
without limitation, any state law based on the Uniform Electronic
Transactions Act.

 

 

19

 

 

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

 

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

 

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

 

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

 

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

 

12.17 No
Novation. Nothing contained herein shall in any way impair
the Prior Loan Agreement and the other Loan Documents now held for
the Obligations, nor affect or impair any rights, powers, or
remedies under the Prior Loan Agreement or any Loan Document, it
being the intent of the parties hereto that this Agreement shall
not constitute a novation of the Prior Loan Agreement or an accord
and satisfaction of the Obligations. Except as expressly provided
for in this Agreement, the Loan Documents are hereby ratified and
reaffirmed and shall remain in full force and effect. Borrowers
hereby ratify and reaffirm the validity and enforceability of all
of the liens and security interests heretofore granted pursuant to
the Loan Documents, as collateral security for the Obligations, and
acknowledge that all of such liens and security interests, and all
Collateral heretofore pledged as security for the Obligations,
continues to be and remains in full force and effect as Collateral
for the Obligations from and after the date of this
Agreement.

 

13 DEFINITIONS

 

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

 

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

 

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

 

“Adjusted EBITDA” shall mean (a) Net Income,
plus (b) Interest Expense, plus (c) to the extent deducted in the
calculation of Net Income, depreciation expense and amortization
expense, plus (d) income tax expense, plus (e) reasonable add-backs
for non-cash items including, but not limited to, stock
compensation and other one-time charges as approved by Bank in its
sole discretion on a case-by-case basis.

 

“Adjusted Quick Ratio” is the ratio
of (a) Quick Assets to (b) the sum of (i) Current Liabilities plus
(ii) to the extent not included in Current Liabilities, the
outstanding Indebtedness of Borrower to Bank minus (iii) the
current portion of Deferred Revenue.

 

 

20

 

 

“Administrator” is an individual
that is named:

 

(a)           as
an “Administrator” in the “SVB Online
Services” form completed by Borrowers with the authority to
determine who will be authorized to use SVB Online Services (as
defined in Bank’s Online Banking Agreement as in effect from
time to time) on behalf of Borrowers; and

 

(b)           as
an Authorized Signer of either Borrower in an approval by the
Board.

 

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

 

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

 

“Agreement” is defined in the
preamble hereof.

 

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

 

“Bank” is defined in the preamble
hereof.

 

“Bank Entities” is defined in
Section 12.9.

 

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

 

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

 

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

 

“Board” is either Borrower’s
board of directors or other equivalent governing body.

 

“Borrower” is defined in the
preamble hereof.

 

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

 

 

21

 

 

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

 

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

 

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

 

“Cash Equivalents” means (a)
marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having
maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1)
year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc.; (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue; and (d)
money market funds at least ninety-five percent (95%) of the assets
of which constitute Cash Equivalents of the kinds described in
clauses (a) through (c) of this definition.

 

“Change in Control” means (a) at
any time, any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of either Borrower or other than Fundamental
Global Investors, LLC, shall become, or obtain rights (whether by
means of warrants, options or otherwise) to become, the
“beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of
securities of BK Technologies, representing twenty-five percent
(25%) or more of the combined voting power of BK
Technologies’ then-outstanding securities; (b) during any
period of twelve (12) consecutive
calendar months, individuals who at the beginning of such period
constituted the Board of Directors of BK Technologies (together
with any new directors whose election by the Board of Directors of
BK Technologies was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was so approved during such period) cease for any reason
other than death or disability to constitute a majority of the
directors then in office; or (c) at any time, any Borrower shall
cease to own and control, of record and beneficially, directly or
indirectly, one hundred percent (100%) of each class of outstanding
capital stock of each Subsidiary of such Borrower free and clear of
all Liens (except Liens created by this Agreement).

 

“Claims” is defined in Section
12.3.

 

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

 

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

 

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

 

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

 

 

22

 

 

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

 

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

 

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

 

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

 

“Credit Extension” is any Advance,
any Overadvance, or any other extension of credit by Bank for
either or both Borrowers’ benefit under this
Agreement.

 

“Current Liabilities” are the
aggregate amount of Borrowers’ Total Liabilities that mature
within one (1) year.

 

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

 

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

 

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

 

“Designated Deposit Account” is the
account number ending 466 (last three digits) maintained by BK
Technologies with Bank.

 

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

 

“Dollar Equivalent” is, at any
time, (a) with respect to any amount denominated in Dollars, such
amount, and (b) with respect to any amount denominated in a Foreign
Currency, the equivalent amount therefor in Dollars as determined
by Bank at such time on the basis of the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign
Currency for transfer to the country issuing such Foreign
Currency.

 

“Effective Date” is defined in the
preamble hereof.

 

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

 

 

23

 

 

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

 

“Event of Default” is defined in
Section 8.

 

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

 

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

 

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

 

“FX Contract” is any foreign
exchange contract by and between Borrowers, or either of them, and
Bank under which such Borrower(s) commits to purchase from or sell
to Bank a specific amount of Foreign Currency on a specified
date.

 

“GAAP” is generally accepted
accounting principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other Person as may be approved by a significant
segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.

 

“General Intangibles” is all
“general intangibles” as defined in the Code in effect
on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation, all
Intellectual Property, claims, income and other tax refunds,
security and other deposits, payment intangibles, contract rights,
options to purchase or sell real or personal property, rights in
all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any
kind.

 

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

 

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

 

“Guarantor” is any Person providing
a Guaranty in favor of Bank.

 

“Guaranty” is any guarantee of all
or any part of the Obligations, as the same may from time to time
be amended, restated, modified or otherwise
supplemented.

 

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

 

“Indemnified Person” is defined in
Section 12.3.

 

 

24

 

 

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

 

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

 

(a) its Copyrights,
Trademarks and Patents;

 

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

 

(c) any and all source
code;

 

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

 

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

 

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

 

“Interest Expense” means for any
fiscal period, interest expense (whether cash or non-cash)
determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with
respect to any Credit Extension and other Indebtedness of Borrowers
and their Subsidiaries, including, without limitation or
duplication, all commissions, discounts, or related amortization
and other fees and charges with respect to letters of credit and
bankers’ acceptance financing and the net costs associated
with interest rate swap, cap, and similar arrangements, and the
interest portion of any deferred payment obligation (including
leases of all types).

 

 “Inventory”
is all “inventory” as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter
be made, and includes without limitation all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in
process and finished products, including without limitation such
inventory as is temporarily out of a Borrower’s custody or
possession or in transit and including any returned goods and any
documents of title representing any of the above.

 

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

 

“IP Agreement” is, individually and
collectively, (a) that certain Intellectual Property Security
Agreement between BK Technologies and Bank dated as January 27,
2015, as may be amended, modified or restated from time to time and
(b) that certain Intellectual Property Security Agreement between
Relm Communications and Bank dated as January 27, 2015, as may be
amended, modified or restated from time to time.

 

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

 

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

 

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

 

 

25

 

 

“Material Adverse Change” is (a) a
material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a
material adverse change in the business, operations, or condition
(financial or otherwise) of Borrowers; (c) a material impairment of
the prospect of repayment of any portion of the Obligations; or (d)
Bank determines, based upon information available to it and in its
reasonable judgment, that there is a reasonable likelihood that
Borrowers shall fail to comply with one or more of the financial
covenants in Section 6 during the next succeeding financial
reporting period.

 

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

 

“Net Cash” is the difference of (a)
Borrower’s unrestricted cash on deposit with Bank minus (b)
the outstanding principal amount of any Advances.

 

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

 

“Obligations” are Borrowers’
obligations to pay when due any debts, principal, interest, fees,
Bank Expenses, and other amounts either Borrower owes Bank now or
later, whether under this Agreement, the other Loan Documents, or
otherwise, including, without limitation, all obligations relating
to Bank Services and interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of either Borrower
assigned to Bank, and to perform each Borrower’s duties under
the Loan Documents.

 

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

 

“Overadvance” is defined in Section
2.2.

 

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

 

“Payment Date” is the last calendar
day of each month.

 

“Perfection Certificate” is defined
in Section 5.1.

 

“Permitted Distributions”
means:

 

(a) purchases of
capital stock from former employees, consultants and directors
pursuant to repurchase agreements or other similar agreements in an
aggregate amount not to exceed Fifty Thousand Dollars ($50,000) in
any fiscal year provided that at the time of such purchase no
Default or Event of Default has occurred and is
continuing;

 

(b) distributions or
dividends consisting solely of a Borrower’s capital
stock;

 

(c) purchases for value
of any rights distributed in connection with any stockholder rights
plan;

 

 

26

 

 

(d) purchases of
capital stock or options to acquire such capital stock with the
proceeds received from a substantially concurrent issuance of
capital stock or convertible securities;

 

(e) purchases of
capital stock pledged as collateral for loans to
employees;

 

(f) purchases of
capital stock in connection with the exercise of stock options,
warrants or other convertible securities or stock appreciation
rights by way of cashless exercise or in connection with the
satisfaction of withholding tax obligations;

 

(g) purchases of
fractional shares of capital stock arising out of stock dividends,
splits or combinations or business combinations;

 

(h) the settlement or
performance of such Person’s obligations under any equity
derivative transaction, option contract or similar transaction or
combination of transactions; and

 

(i) dividends to the
shareholder of BK Technologies not to exceed Five Million Dollars
($5,000,000) in the aggregate in any twelve-month period so long as
an Event of Default does not exist at the time of such dividend and
would not exist after giving effect to such dividend.

 

“Permitted Indebtedness”
is:

 

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

 

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

 

(c) Subordinated
Debt;

 

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

 

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

 

(f) Indebtedness
secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder;

 

(g) guaranties of
Permitted Indebtedness;

 

(h) Indebtedness
consisting of interest rate, currency, or commodity swap
agreements, interest rate cap or collar agreements or arrangements
designated to protect Borrowers against fluctuations in interest
rates, currency exchange rates, or commodity prices;

 

 

27

 

 

 

(i) Indebtedness
between Borrowers;

 

(j) Indebtedness with
respect to documentary letters of credit;

 

(k) Indebtedness of
entities acquired in any permitted merger or acquisition
transaction; and

 

(l) extensions,
refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (k) above, provided
that the principal amount thereof is not increased (except by an
amount equal to a reasonable premium or other reasonable amount
paid in connection with such refinancing and by an amount equal to
any existing, but unutilized, commitment thereunder) or the terms
thereof are not modified to impose more burdensome terms upon
Borrowers or their Subsidiaries, as the case may be.

 

“Permitted Investments”
are:

 

(a) Investments
(including, without limitation, Subsidiaries) existing on the
Effective Date which are shown on the Perfection
Certificate;

 

(b) Investments
consisting of Cash Equivalents;

 

(c) Investments
approved by BK Technologies’ Board of Directors or otherwise
pursuant to a Board-approved investment policy;

 

(d) Investments (i) by
a Borrower in another Borrower; (ii) by Borrowers in Subsidiaries
not to exceed One Hundred Thousand Dollars ($100,000) in the
aggregate in any fiscal year; and (iii) by Subsidiaries in other
Subsidiaries or in a Borrower;

 

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

 

(f) Investments
consisting of deposit accounts (but only to the extent that the
applicable Borrower is permitted to maintain such accounts pursuant
to Section 6.8 of this Agreement) in which Bank has a first
priority perfected security interest;

 

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

 

(h) Investments
consisting of (i) travel advances and employee relocation loans and
other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors
relating to the purchase of equity securities of Borrowers or their
Subsidiaries pursuant to employee stock purchase plans or
agreements approved by the Board;

 

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

 

 

28

 

 

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

 

(k) Investments in or
to a Borrower;

 

(l) Investments
acquired as a result of a foreclosure with respect to any secured
Investment; and

 

(m) Investments
consisting of interest rate, currency, or commodity swap
agreements, interest rate cap or collar agreements or arrangements
designated to protect Borrowers against fluctuations in interest
rates, currency exchange rates, or commodity prices.

 

“Permitted Liens” are:

 

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

 

(b) Liens for taxes,
fees, assessments or other government charges or levies, either (i)
not due and payable or (ii) being contested in good faith and for
which Borrowers maintain adequate reserves on its Books, provided
that no notice of any such Lien has been filed or recorded under
the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations adopted thereunder;

 

(c) purchase money
Liens and capital leases (i) on property (including accessions,
additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by
a Borrower incurred for financing such property securing no more
than One Hundred Thousand Dollars ($100,000) in the aggregate
amount outstanding, other than Accounts and Inventory, or (ii)
existing on property (including accessions, additions, parts,
replacements, fixtures, improvements and attachments thereto, and
the proceeds thereof) when acquired other than Accounts and
Inventory, if the Lien is confined to such property (including
accessions, additions, parts, replacements, fixtures, improvements
and attachments thereto, and the proceeds thereof);

 

(d) Liens of carriers,
warehousemen, suppliers, or other Persons that are possessory in
nature arising in the ordinary course of business so long as such
Liens attach only to Inventory, securing liabilities in the
aggregate amount not to exceed One Hundred Thousand Dollars
($100,000) and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by
appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject
thereto;

 

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

 

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

 

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

 

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

 

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

 

(j) Liens in favor of
other financial institutions arising in connection with a
Borrower’s deposit and/or securities accounts held at such
institutions, provided that (i) Bank has a first priority perfected
security interest in the amounts held in such deposit and/or
securities accounts and (ii) such accounts are permitted to be
maintained pursuant to Section 6.8 of this Agreement.

 

 

29

 

 

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

 

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

 

“Prior Loan Agreement” is defined
in the recitals to this Agreement.

 

“Quick Assets” is, on any date,
Borrowers’ consolidated, unrestricted and unencumbered cash
and Cash Equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined
according to GAAP.

 

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

 

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

 

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

 

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

 

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

 

“Revolving Line” is an aggregate
principal amount equal to One Million Dollars
($1,000,000).

 

 

30

 

 

“Revolving Line Maturity Date” is
December 26, 2019.

 

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

 

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

 

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

 

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

 

“Total Liabilities” is on any day,
obligations that should, under GAAP, be classified as liabilities
on Borrowers’ consolidated balance sheet, including all
Indebtedness, and current portion of Subordinated Debt permitted by
Bank to be paid by a Borrower, but excluding all other Subordinated
Debt.

 

“Total Leverage” is, for any period
as at any date of determination, the ratio of (a) Borrowers’
total consolidated Indebtedness as of such date, to (b)
Borrowers’ Adjusted EBITDA for such period.

 

“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 businesses of Borrowers connected with
and symbolized by such trademarks.

 

“Transfer” is defined in Section
7.1.

 

 [Signature
page follows.]

 

 

31

 

 

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

 

BORROWER:

 

BK
TECHNOLOGIES, INC.

 

 

By /s/
William P. Kelly

 

Name:
William P. Kelly

 

Title:
EVP & CFO

 

 

BORROWER:

 

RELM
COMMUNICATIONS, INC.

 

 

By /s/
William P. Kelly

 

Name:
William P. Kelly

 

Title:
EVP & CFO

 

 

BANK:

 

SILICON
VALLEY BANK

 

 

By /s/
Frank O’Brien

 

Name:
Frank O’Brien

 

Title:
Director

 

 

 

 

 

Signature
Page to Amended and Restated Loan and Security
Agreement

32

 

 

 

EXHIBIT A - COLLATERAL DESCRIPTION

 

 

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

 

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

 

all
Borrowers’ Books relating to the foregoing and any and all
claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions
and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing.Exhibit 4.1

 

AMENDMENT NO. 3 TO AMENDMENT AGREEMENT
AND WAIVER

 

This AMENDMENT NO.
3 TO AMENDMENT AGREEMENT AND WAIVER (this “Amendment”), dated as of March 28, 2019, is made by and between
Ener-Core, Inc., a Delaware corporation, with headquarters located at 30100 Town Center Dr., Suite O-209, Laguna Niguel, California
92677 (the “Company”), and the investor listed on the signature page attached hereto (the “Holder”).

 

RECITALS

 

A. Reference
is made to that certain Securities Purchase Agreement dated as of April 22, 2015, by and among the Company, the Holder (if applicable)
and the other investors (the “April 2015 Other Holders”) listed on the signature pages attached thereto (the
“April 2015 SPA”) and, if applicable, the Senior Secured Notes issued to the Holder pursuant thereto, as amended
and restated on December 2, 2016 pursuant to certain amendment agreements (as amended from time to time prior to the date hereof,
the “April 2015 Notes”);

 

B. Reference
is made to that certain Securities Purchase Agreement dated as of May 7, 2015, by and among the Company, the Holder (if applicable)
and the other investors (the “May 2015 Other Holders” and together with the April 2015 Other Holders, the “Other
Holders” and together with the Holder, the “Holders”) listed on the signature pages attached thereto
(the “May 2015 SPA” and together with the April 2015 SPA, individually, an “SPA” and collectively,
the “SPAs”), and, if applicable, the Senior Secured Notes issued to the Holder pursuant thereto, as amended
and restated on December 2, 2016 pursuant to certain amendment agreements (as amended from time to time prior to the date hereof,
the “May 2015 Notes” and together with the April 2015 Notes, the “2015 Notes”);

 

C. Reference
is made to that certain Amendment Agreement and Waiver dated as of December 31, 2018 by and among the Company and the Holder with
respect to the 2015 Notes and the SPAs (the “December Amendment”); and

 

D. In
compliance with Section 15 of the 2015 Notes and the SPAs, this Amendment shall only be effective upon the execution and delivery
of this Amendment and agreements in form and substance identical to this Amendment (other than with respect to the identity of
the Holder and any provision regarding the reimbursement of legal fees) (the “Other Agreements” and together
with this Amendment, the “Amendments”) by Other Holders of the 2015 Notes (each an “Other Holder”)
representing on the Closing Date at least the Required Holders (as defined in each of the 2015 Notes) (such time, the “Effective
Time”).

 

AGREEMENT

 

NOW THEREFORE,
in consideration of the foregoing mutual premises and the covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt, and legal adequacy of which is hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

 

ARTICLE I

AMENDMENT

 

1. Amendment
of December Amendment. All references to the date “January 31, 2019” set forth in the December Amendment are hereby
amended to instead refer to the date “April 30, 2019”, and all references to the date “February 1, 2019” set
forth in the December Amendment are hereby amended to instead refer to the date “May 1, 2019”. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set forth in the December Amendment.

 

     

     

    

 

article
II

MISCELLANEOUS

 

1. Effect
of this Amendment. This Amendment shall form a part of the 2015 Notes and SPAs for all purposes, and each holder of 2015 Notes
and each party to the SPAs shall be bound hereby. This Amendment shall only be deemed to be in full force and effect from and after
both the execution of this Amendment by the parties hereto and the execution of Amendments substantially identical to this Amendment
by the Company and “Holders” holding at least a majority of the aggregate principal amount of the 2015 Notes outstanding,
including the Lead Investor, as well as the Collateral Agent, that, together with undersigned, constitute the Required Holders
under each of the 2015 Notes and SPAs. From and after such effectiveness, any reference to the 2015 Notes and the SPAs shall be
deemed to be a reference to the 2015 Notes and SPAs, as amended hereby. Except as specifically amended as set forth herein, each
term and condition of the 2015 Notes and SPAs shall continue in full force and effect.

 

2. Entire
Agreement. This Amendment, together with the SPAs and 2015 Notes, as amended and/or amended and restated to date, contains
the entire agreement of the parties with respect to the matters contemplated hereby and thereby, and supersedes any prior or contemporaneous
written or oral agreements between them concerning the subject matter of this Amendment.

 

3. Governing
Law. This Amendment shall be governed by the internal law of the State of New York.

 

4. Counterparts.
This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and
the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document. This Amendment may be executed by fax or electronic mail,
in PDF format, and no party hereto may contest this Amendment’s validity solely because a signature was faxed or otherwise
sent electronically.

 

[Signature Page Follows]

 

    2

     

    

 

IN WITNESS WHEREOF,
the Holder and the Company have caused their respective signature pages to this Amendment to be duly executed as of the date first
written above.

 

	 	COMPANY:
	 	 
	 	ENER-CORE, INC.
	 	 
	 	By:	

	 	 	Name: 	Domonic J. Carney
	 	 	Title: 	Chief Financial Officer

 

Signature
Page to amendment no. 3 to Amendment Agreement and Waiver—2015 Notes

 

     

     

    

 

	 	HOLDER:
	 	 
	 	By:	

	 	 	Name: 	 
	 	 	Title: 	 

 

Signature
Page to amendment no. 3 to Amendment Agreement and Waiver—2015 Notes

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