Document:

Exhibit 10.7  

VENTURE LOAN AND SECURITY AGREEMENT 

Dated as of December 27, 2005 

by and between 

HORIZON
TECHNOLOGY FUNDING COMPANY LLC,

a Delaware limited liability company

76 Batterson Park Road

Farmington, CT 06032 

as
Lender 

And 

CONVIO, INC.,

a Delaware corporation

11921 N. Mopac Expressway

Suite 200

Austin, Texas 78759

as Borrower 

	Commitment Amount Loan A:	 	$3,000,000	 	 
	

Commitment Amount Loan B:	
 	

$1,000,000	
 	

 
	

Commitment Termination Date Loan A:	
 	

December 30, 2005	
 	

 
	

Commitment Termination Date Loan B:	
 	

March 31, 2006	
 	

 

   
The Lender and Borrower hereby agree as follows: 

AGREEMENT  

        1.    Definitions and Construction.    

        1.1    Definitions.    As used in this Agreement, the following capitalized terms shall have the following meanings: 

        "Affiliate" means any Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of another entity, any
Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons and each of such Person's officers; directors, joint venturers or partners. 

        "Agreement" means this Venture Loan and Security Agreement by and between Borrower and Lender dated as of the date on the cover page
hereto (as it may from time to time be amended or supplemented in writing signed by Borrower and Lender). 

        "Borrower" means the Borrower as set forth on the cover page of this Agreement. 

        "Borrower's Home State" means Texas. 

        "Business Day" means any day that is not a Saturday, Sunday, or other day on which banking institutions are authorized or required to
close in Connecticut or Borrower's Home State. 

        "Claim" has the meaning given such term in Section 10.3 of this Agreement 

        "Code" means the Uniform Commercial Code as adopted and in effect in the State of Connecticut, as amended from time to time;  provided that if by reason of mandatory
provisions of law, the creation and/or perfection or the effect of perfection or non-perfection of
the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Connecticut, the term "Code" shall also mean the Uniform Commercial Code as
in effect from time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection. 

        "Collateral" has the meaning given such term in Section 4.1 of this Agreement. 

        "Commitment Fee" has the meaning given such term in Section 2.6(b) of this
Agreement. 

        "Commitment Amount" means collectively, Commitment Amount Loan A and Commitment Amount Loan B. 

        "Commitment Amount Loan A" and "Commitment Amount Loan B" have the respective meanings as
set forth on the cover page of this Agreement. 

        "Commitment Termination Date Loan A" and "Commitment Termination Date Loan B" have the
respective meanings as set forth on the cover page of this Agreement. 

        "Default" means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder. 

        "Default Rate" means the per annum rate of interest equal to three percent (3%) over the Loan Rate, but such rate shall in no event be
more than the highest rate permitted by applicable law to be charged on commercial loans in a default situation. 

        "Disclosure Schedule" means Exhibit A attached hereto. 

        "Environmental Laws" means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, 

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in
each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal
Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community
Right-to-Know Act. 

        "Equity Securities" of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests,
membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other
rights to acquire any of the foregoing. 

        "ERISA" has the meaning given to such term in Section 7.12 of this Agreement. 

        "Event of Default" has the meaning given to such term in Section 8 of this
Agreement. 

        "Funding Certificate" means a certificate executed by a Responsible Officer of Borrower substantially in the form of  Exhibit B or such other form as Lender may
agree to accept. 

        "Funding Date" means any date on which a Loan is made to or on account of Borrower under this Agreement. 

        "GAAP" means generally accepted accounting principles as in effect in the United States of America from time to time, consistently
applied. 

        "Good Faith Deposit" has the meaning given such term in Section 2.6(a) of this
Agreement. 

        "Governmental Authority" means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal,
or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented. 

        "Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste. 

        "Indebtedness" means, with respect to Borrower or any Subsidiary, the aggregate amount of, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations of such Person, (e) all
obligations or liabilities of others secured by a Lien on any asset of such Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others
guaranteed by such Person, and (g) any other obligations or liabilities which are required by GAAP to be shown as debt on the balance sheet of such Person. Unless otherwise indicated, the term
"Indebtedness" shall include all Indebtedness of Borrower and the Subsidiaries. 

        "Indemnified Person" has the meaning given such term in Section 10.3 of this
Agreement. 

        "Intellectual Property" means all of Borrower's right, title and interest in and to patents, patent rights (and applications and
registrations therefor), trademarks and service marks (and applications and registrations therefor), inventions, copyrights, mask works (and applications and registrations therefor), trade names,
trade styles, software and computer programs, source code, object code, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with
respect to any research and development, all whether now owned or subsequently acquired 

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or
developed by Borrower and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media (but not including embedded computer
programs and supporting information included within the definition of "goods" under the Code). 

        "Investment" means the purchase or acquisition of any capital stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or deposit with, any Person. 

        "Landlord Agreement" means an agreement with one or more of Borrower's landlords substantially in the form provided by Lender to Borrower
or such other form as Lender may reasonably request. 

        "Lender" means the Lender as set forth on the cover page of this Agreement. 

        "Lender's Expenses" means all reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, documentation, administration and funding of the Loan Documents; and Lender's reasonable attorneys' fees, costs and expenses incurred in amending, modifying, enforcing or
defending the Loan Documents (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is
brought, whether before or after bankruptcy or insolvency, including without limitation all reasonable fees and costs incurred by Lender in connection with Lender's enforcement of its rights in a
bankruptcy or insolvency proceeding filed by or against Borrower or its Property. 

        "Lien" means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and title
retention agreement, encumbrance or other lien with respect to any Property in favor of any Person. 

        "Loan" means each advance of credit to Borrower made under this Agreement, and "Loans"
means, collectively, all such advances of credit. 

        "Loan A" means the first advance of credit to Borrower under this Agreement in the Commitment Amount Loan A. 

        "Loan B" means the advance of credit to Borrower under this Agreement, if any, in the Commitment Amount Loan B. 

        "Loan Documents" means, collectively, this Agreement, the Notes, the Warrant, any Landlord Agreement, and all other documents, instruments
and agreements entered into in connection with this Agreement, all as amended or extended from time to time. 

        "Loan Rate" means, with respect to each Loan, the per annum rate of interest (based on a year of twelve 30-day months) equal
to the greater of (a) 11.25% or (b) 11.25% plus the difference between (i) the one month LIBOR Rate, as reported in the  Wall Street Journal,
on the date which is five (5) days before the Funding Date for such Loan (or, if such date is not a Business Day, the next
earlier Business Day) and (ii) 3.75%. 

        "Maturity Date" means, with respect to each Loan, July 1, 2009, or if earlier, the date of acceleration of such Loan following an
Event of Default or the date of prepayment, whichever is applicable. 

        "Note" means each promissory note executed in connection with a Loan in substantially the form of  Exhibit C attached hereto, and, collectively, "Notes" means all such promissory notes. 

        "Obligations" means all debt, principal, interest, fees, charges, expenses and reasonable attorneys' fees and costs and other reasonable
amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents (other than the Warrant), or by any other
agreement between Lender and Borrower, and whether or not for 

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the
payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all Lender's Expenses (except for Lender's Expenses
relating to the Warrant). 

        "Officer's Certificate" means a certificate executed by a Responsible Officer substantially in the form of  Exhibit E or such other form as Lender may agree to
accept. 

        "Payment Date" has the meaning given such term in Section 2.2(a) of this Agreement. 

        "Permitted Indebtedness" means and includes: 

        (a)   Indebtedness
of Borrower to Lender; 

        (b)   Indebtedness
of Borrower secured by Liens permitted under clause (e) of the definition of Permitted Liens; 

        (c)   Indebtedness
arising from the endorsement of instruments in the ordinary course of business; 

        (d)   Indebtedness
existing on the date hereof and set forth on the Disclosure Schedule; 

        (e)   Indebtedness
consisting of a revolving credit facility in which the aggregate principal amount of outstanding advances are limited to an amount not greater than
(i) Eighty Percent (80%) of Borrower's outstanding accounts receivable plus (ii) One Million Dollars ($1,000,000); 

        (f)    Trade
debt and other unsecured Indebtedness incurred in the ordinary course of business (including deferred revenue and lease obligations); 

        (g)   Guaranties
by Borrower of obligations or liabilities of its Subsidiaries incurred in the ordinary course of business in an aggregate amount not to exceed Five Hundred
Thousand Dollars ($500,000) in any fiscal year; 

        (h)   Indebtedness
of Borrower to any of its Subsidiaries in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) in any fiscal year; 

        (i)    Surety,
performance and similar bonds incurred in the ordinary course of business not securing Indebtedness for borrowed money; 

        (j)    Indebtedness
of Borrower in respect of standby letters of credit to secure its obligations and those of its Subsidiaries regarding real property leases; 

        (k)   Indebtedness
that is subordinated on terms acceptable to the Lender in its sole discretion; and 

        (l)    Extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower. 

        "Permitted Investments" means and includes any of the following Investments: 

        (a)   Deposits
and deposit accounts with commercial banks organized under the laws of the United States or a state thereof to the extent if such institution has an aggregate
capital and surplus of not less than One Hundred Million Dollars ($100,000,000). 

        (b)   Investments
in marketable obligations issued or fully guaranteed by the United States and maturing not more than two (2) years from the date of issuance. 

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        (c)   Investments
in open market commercial paper rated at least "A1" or "P1" or higher by a national credit rating agency and maturing not more than two (2) years from
the creation thereof. 

        (d)   Investments
pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary course of business. 

        (e)   Investments
in Subsidiaries in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) in any fiscal year; 

        (f)    Investments
consisting of notes receivable of, or prepaid royalties or other credit extensions to, customers and suppliers who are not Affiliates in the ordinary course
of business; 

        (g)   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; 

        (h)   Investments
consisting of Borrower's accounts receivable in the ordinary course of business; 

        (i)    Investments
in joint ventures in the ordinary course of business in an aggregate amount not to exceed, in the aggregate, Five Hundred Thousand Dollars ($500,000) in any
fiscal year; provided, that upon request of Lender, Borrower shall pledge its ownership interests in any such joint venture to Lender as security for the Obligations; 

        (j)    Investments
consisting of (i) travel advances, in the ordinary course of business, to employees and service providers; and (ii) cashless loans to service
providers in respect of the purchase of Equity Securities of Borrower pursuant to employee stock purchase plans approved by Borrower's board of directors; and 

        (k)   Other
Investments aggregating not in excess of Two Hundred Fifty Thousand Dollars ($250,000) at any time. 

        "Permitted Liens" means and includes: 

        (a)   any
Lien created by this Agreement; 

        (b)   Liens
for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are not yet delinquent or which are being contested in good faith by
appropriate proceedings which suspend the collection thereof (provided that such appropriate proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any material item of Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such
Lien have been provided on the books of Borrower); 

        (c)   Liens
identified on the Disclosure Schedule; 

        (d)   carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business and which are not delinquent or
remain payable without penalty or which are being contested in good faith and by appropriate proceedings (provided that such appropriate proceedings do
not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately
bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower); 

        (e)   Liens
upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such equipment or other
personal property, or 

5

 

(ii) lease
obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided
that (A) such Liens are confined solely to the equipment or other personal property so acquired and the amount secured does not exceed the acquisition price thereof, and
(B) no such Lien shall be created, incurred, assumed or suffered to exist in favor of Borrower's officers, directors or shareholders holding ten percent (10%) or more of Borrower's Equity
Securities; 

        (f)    Licenses
of Intellectual Property entered into in the ordinary course of business in connection with joint ventures and corporate collaborations; 

        (g)   bankers'
liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business and Liens in favor of financial institutions arising in
connection with Borrower's deposit accounts or securities accounts held at such institutions to secure customary fees and charges; 

        (h)   cash
pledges and deposits to secure the performance of bids, trade contracts, leases, statutory obligations or governmental franchise obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, as well as cash deposits to collateralize letters of credit issued to serve such functions, in each case in the ordinary course of
business; 

        (i)    any
judgment, attachment or similar Lien not resulting in an Event of Default under Section 8.8; 

        (j)    Liens
to secure payment of worker's compensation, unemployment insurance, old age pensions or other social security obligations of Borrower in the ordinary course of
business; 

        (k)   easements,
reservations, rights-of-way, restrictions, minor defects or irregularities in title and similar charges or encumbrances affecting real
property not constituting a material adverse effect on the business or condition (financial or otherwise) of Borrower; and 

        (l)    Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described above 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. 

        "Person" means and includes any individual any partnership, any corporation, any business trust any joint stock company, any limited
liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency,
authority or bureau of any of the foregoing. 

        "Property" means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible. 

        "Responsible Officer" has the meaning given such term in Section 6.3 of this
Agreement. 

        "Scheduled Payments" has the meaning given such term in Section 2.2(a) of this
Agreement. 

        "Solvent" has the meaning given such term in Section 5.11 of this Agreement. 

        "Subsidiary" means any corporation or other entity of which a majority of the outstanding Equity Securities entitled to vote for the
election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries. 

        "Third Party Equipment" has the meaning given such term in Section 4.8 of this
Agreement. 

        "Transfer" has the meaning given such term in Section 7.4 of this Agreement. 

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        "Warrant" means the separate warrant or warrants dated on or about the date hereof in favor of the Lender or its designees to purchase
securities of Borrower. 

        1.2    Construction.    References in this Agreement to "Articles," "Sections," "Exhibits," "Schedules" and "Annexes"
are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to any document,
instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement
thereof and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words
"hereof," "herein" and `"hereunder" and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as
a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words "include" and "including" and words of similar import when used in this
Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, and all terms describing
Collateral shall be construed in accordance with the Code. The terms and information set forth on the cover page of this Agreement are incorporated into this Agreement. 

        2.    Loans; Repayment.    

        2.1    Commitment.    

        (a)   The Commitment Amount. Subject to the terms and conditions of this Agreement and relying upon the representations and
warranties herein set forth Lender agrees to lend to Borrower (i) prior to the Commitment Termination Date Loan A, Loan A in the amount of Commitment Amount Loan A, and (ii) prior to the
Commitment Termination Date Loan B, Loan B in the amount of Commitment Amount Loan B. 

        (b)   The Loans and the Notes. The obligation of Borrower to repay the unpaid principal amount of and interest on each Loan
shall be evidenced by a Note issued to Lender. 

        (c)   Use of Proceeds. The proceeds of each Loan shall be used solely for working capital or general corporate purposes of
Borrower. 

        (d)   Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents, Lender's obligation to lend the
undisbursed portion of the Commitment Amount to Borrower hereunder shall terminate on the earlier of (i) at Lender's sole election, the occurrence of any Event of Default hereunder,
(ii) with respect to Loan A, the Commitment Termination Date Loan A and (iii) with respect to Loan B, the Commitment Termination Date Loan B. Notwithstanding the foregoing, Lender's
obligation to lend the undisbursed portion of the Commitment Amount to Borrower shall terminate if, in Lender's sole judgment, there has been a material adverse change in the general affairs, results
of operations or financial condition of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the
business plan of Borrower presented to Lender on or before the date of this Agreement. 

        2.2    Payments.    

        (a)   Scheduled Payments.    Borrower shall make payments of accrued interest only on the outstanding principal
amount of each Loan on the Payment Dates specified in the Note 

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applicable
to such Loan through and including January 1, 2007 and thirty (30) equal payments of principal plus accrued interest on the outstanding principal amount of each Loan on each
subsequent Payment Date as set forth in the Note applicable to such Loan (collectively, the "Scheduled Payments"). Borrower shall make such Scheduled
Payments commencing on the date set forth in the Note applicable to such Loan and continuing thereafter on the first Business Day of each calendar month (each a "Payment
Date") through the Maturity Date. In any event, all unpaid principal and accrued interest shall be due and payable in full on the Maturity Date. 

        (b)   Interim Payment.    Unless the Funding Date for the Loan is the first day of a calendar month, Borrower shall
pay the per diem interest (accruing at the Loan Rate from the Funding Date through the last day of that month) payable with respect to such Loan on the first Business Day of the next calendar month. 

        (c)   Payment of Interest.    Borrower shall pay interest on each Loan at a per annum rate of interest equal to the
Loan Rate. All computations of interest (including interest at the Default Rate, if applicable) shall be based on a year of twelve 30-day months. Notwithstanding any other provision
hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans. 

        (d)   Application of Payments.    All payments received by Lender prior to an Event of Default shall be applied as
follows: (1) first, to Lender's Expenses then due and owing; and (2) second to all Scheduled Payments then due and owing (provided,  however, if
such payments are not sufficient to pay the whole amount then due, such payments shall be applied first to unpaid interest at the Loan Rate,
then to the remaining amount then due). After an Event of Default, all payments and application of proceeds shall be made as set forth in  Section 9.7. 

        (e)   Late Payment Fee.    Borrower shall pay to Lender a late payment fee equal to five percent (5%) of any
Scheduled Payment not paid within two (2) Business Days of when due. 

        (f)    Default Rate.    Borrower shall pay interest at a per annum rate equal to the Default Rate on any amounts
required to be paid by Borrower under this Agreement or the other Loan Documents (including Scheduled Payments), payable with respect to any Loan, accrued and unpaid interest, and any fees or other
amounts which remain unpaid after such amounts are due. If an Event of Default has occurred and the Obligations have been accelerated (whether automatically or by Lender's election), Borrower shall
pay interest on the aggregate, outstanding accelerated balance hereunder from the date of the Event of Default until all Events of Default are cured, at a per annum rate equal to the Default Rate. 

        2.3    Prepayments.    

        (a)   Mandatory Prepayment Upon an Acceleration.    If any Loan is accelerated following the occurrence of an Event
of Default pursuant to Section 9.1(a) hereof, then Borrower, in addition to any other amounts which may be due and owing hereunder, shall immediately pay to Lender the amount set forth in
Section 2.3(b) below, as if the Borrower had opted to prepay on the date of such acceleration. 

        (b)   Upon
five (5) Business Days' prior written notice to Lender, Borrower may, at its option, at any time, prepay all of the Loans by paying to Lender an amount equal
to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; (ii) an amount equal to (A) if the Loans are prepaid within twelve (12) months
from the date hereof thereof, three (3%) percent of the then outstanding principal balance of the Loans, (B) if the Loans are prepaid more than twelve (12) months from the date hereof
but less than twenty-four (24) months from the date hereof, two (2%) percent of the then outstanding principal balance 

8

 

of
the Loans, or (C) if the Loans are prepaid more than twenty-four (24) months from the date hereof, one (1%) percent of the then outstanding principal balance of the Loans;
(iii) the outstanding principal balance of the Loans and (iv) all other sums, if any, that shall have become due and payable hereunder. Notwithstanding the foregoing, if Borrower
completes a sale of its Equity Securities in an initial public offering or enters into a merger or acquisition which results in Lender, or the holder of the Warrant, being able to receive net cash
proceeds per share equal to at least two times the Warrant Price (as defined in the Warrant) from exercise of its right under the Warrant, Borrower shall not owe Lender (regardless of whether Lender
is holder of the Warrant) the amount set forth in Section 2.3(b)(ii) above. 

        2.4    Other Payment Terms.    

        (a)   Place and Manner.    Borrower shall make all payments due to Lender in lawful money of the United States. All
payments of principal, interest, fees and other amounts payable by Borrower hereunder shall be made, in immediately available funds, not later than 10:00 a.m. Connecticut time, on the date on
which such payment is due. Borrower shall make such payments to Lender via wire transfer as follows: 

	Payment via wire transfer:	 	 
	Credit:	 	Horizon Technology Funding Company LLC
	Bank Name:	 	ABN Amro/LaSalle Bank NA CDO Trust Services
	 	 	

	Bank Address:	 	135 South LaSalle Street, Suite 1625

Chicago, Illinois 60603

Attn: Greg Meyers, 312-904-0283
	Account No.:	 	2090067—Trust GL
	 	 	

	FFCT-Reference Account Number	 	721771.1
	ABA Routing No.:	 	071000505
	Reference:	 	Convio Invoice #                  

        (b)   Date.    Whenever any payment is due hereunder on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be. 

        2.5    Procedure for Making Loans.    

        (a)   Notice.    Borrower shall notify Lender of the date on which Borrower desires Lender to make any Loan at least
five (5) Business Days in advance of the desired Funding Date, unless Lender elects at its sole discretion to allow the Funding Date to be within five (5) Business Days of Borrower's
notice. Borrower's execution and delivery to Lender of a Note shall be Borrower's agreement to the terms and calculations thereunder with respect to such Loan. Lender's obligation to make any Loan
shall be expressly subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2. 

        (b)   Loan Rate Calculation.    Prior to each Funding Date, Lender shall establish the Loan Rate with respect to such
Loan, which shall be set forth in the Note to be executed by Borrower with respect to such Loan and shall be conclusive in the absence of a manifest error. 

        (c)   Disbursement.    Lender shall disburse the proceeds of each Loan by wire transfer to Borrower at the account
specified in the Funding Certificate for the Loan. 

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        2.6    Good Faith Deposit; Legal and Closing Expenses; and Commitment Fee.    

        (a)   Good Faith Deposit.    Borrower has delivered to Lender a good faith deposit in the amount of Fifteen Thousand
Dollars ($15,000) (the "Good Faith Deposit"). The Good Faith Deposit will be utilized to pay the Commitment Fee. 

        (b)   Legal, Due Diligence and Documentation Expenses.    Borrower shall pay to Lender concurrently with its
execution and delivery of this Agreement up to the amount of Six Thousand Dollars ($6,000) for Lender's legal, due diligence and documentation expenses in connection with the negotiation and
documentation of this Agreement and the Loan Documents. 

        (c)   Commitment Fee.    Borrower hereby authorizes Lender concurrently with Borrower's execution and delivery of
this Agreement to apply the Good Faith Deposit to the commitment fee and Borrower shall pay the balance of the commitment fee, so that, in the aggregate, Borrower shall pay Lender the amount of Twenty
Thousand Dollars ($20,000) (the "Commitment Fee"). The Commitment Fee shall be retained by Lender and be deemed fully earned upon receipt. 

        3.    Conditions of Loan.    

        3.1    Conditions Precedent to Closing.    At the time of the execution and delivery of this Agreement, Lender shall
have received, in form and substance reasonably satisfactory to Lender, all of the following (unless Lender has agreed to waive such condition or document, in which case such condition or document
shall be a condition precedent to the making of any Loan and shall be deemed added to Section 3.2): 

        (a)   Loan Agreement.    This Agreement duly executed by Borrower and Lender. 

        (b)   Warrant.    The Warrant to be issued to Lender or its designees, duly executed by Borrower. 

        (c)   Secretary's Certificate.    A certificate of the secretary or assistant secretary of Borrower with copies of
the following documents attached: (i) the certificate of incorporation and bylaws of Borrower certified by Borrower as being complete and in full force and effect on the date thereof,
(ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents. 

        (d)   Good Standing Certificates.    A good standing certificate from Borrower's state of incorporation and the state
in which Borrower's principal place of business is located, each dated as of a recent date. 

        (e)   Certificate of Insurance.    Evidence of the insurance coverage required by  Section 6.8 of this Agreement. 

        (f)    Consents.    All necessary consents of shareholders and other third parties with respect to the execution,
delivery and performance of this Agreement, the Warrant and the other Loan Documents. 

        (g)   Legal Opinion.    A legal opinion of Borrower's counsel covering the matters set forth in Exhibit D
hereto. 

        (h)   Grants of Security Interests in Intellectual Property.    Grants of security interests in any U.S. federally
registered Intellectual Property, in the forms provided by Lender. 

        (i)    Other Documents.    Such other documents and completion of such other matters, as Lender may reasonably deem
necessary or appropriate. 

10

 

        3.2    Conditions Precedent to Making a Loan.    The obligation of Lender to make each Loan is further subject to the
following conditions: 

        (a)   No Default.    No Default or Event of Default shall have occurred and be continuing. 

        (b)   No Material Adverse Effect.    No event shall have occurred and no condition shall exists which could
reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower since December 31, 2004. 

        (c)   Landlord Agreements.    Borrower shall have provided Lender with a Landlord Agreement for each location where
Borrower's books and records and the Collateral is located (unless Borrower is the fee owner thereof and except for locations where the value of the Collateral located at such locations has an
aggregate value of less than Fifty Thousand Dollars ($50,000)). 

        (d)   Note.    Borrower shall have duly executed and delivered to Lender a Note in the amount of the Loan. 

        (e)   UCC Financing Statements.    Lender shall have received such documents, instruments and agreements, including
UCC financing statements or amendments to UCC financing statements, as Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Lender pursuant to  Section 4. Borrower authorizes Lender to file any UCC financing statements, continuations of or amendments to UCC financing statements it deems
reasonably necessary to perfect its security interest in the Collateral. 

        (f)    Funding Certificate.    Borrower shall have duly executed and delivered to Lender a Funding Certificate for
such Loan. 

        (g)   Other Documents.    Such other documents and completion of such other matters, as Lender may reasonably deem
necessary or appropriate. 

        3.3    Covenant to Deliver.    Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item
required to be delivered to Lender as a condition to each Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item
shall not constitute a waiver by Lender of Borrower's obligation to deliver such item, and any such extension in the absence of a required item shall be in Lender's sole discretion. 

        4.    Creation of Security Interest.    

        4.1    Grant of Security Interest.    Borrower grants to Lender a valid, continuing security interest in all presently
existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by
Borrower of each of its covenants and duties under each of the Loan Documents (other than the Warrant). The term "Collateral" shall mean and include all
right, title, interest, claims and demands of Borrower in and to all personal property of Borrower, including without limitation, all of the following: 

        (a)   All
goods (and embedded computer programs and supporting information included within the definition of "goods" under the Code) and equipment now owned or hereafter
acquired, including, without limitation, all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any
of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 

        (b)   All
inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in
process 

11

 

and
finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's books relating to any of the foregoing; 

        (c)   All
contract rights and general intangibles (including Intellectual Property), now owned or hereafter acquired, including, without limitation, goodwill, license
agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature,
reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind; 

        (d)   All
now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by
Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by Borrower and Borrower's books relating to any of the foregoing; 

        (e)   All
documents, cash, deposit accounts, letters of credit (whether or not the letter of credit is evidenced by a writing), certificates of deposit, instruments,
promissory notes, chattel paper (whether tangible or electronic) and investment property, including, without limitation, all securities whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower's
books relating to the foregoing; and 

        (f)    Any
and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof including, without limitation,
insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property. 

        (g)   Notwithstanding
the foregoing, the Collateral shall not include any property that: (i) is nonassignable by its terms without the consent of the licensor thereof
or another party (but only to the extent such prohibition on transfer is enforceable under applicable law), or (ii) the granting of a security interest therein is contrary to applicable law,
provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral. 

        4.2    After-Acquired Property.    If Borrower shall at any time acquire a commercial tort claim, as defined in the
Code, Borrower shall promptly notify Lender in writing signed by Borrower of the brief details thereof and grant to Lender 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 satisfactory to Lender. 

        4.3    Duration of Security Interest.    Lender's security interest in the Collateral shall continue until the payment
in full and the satisfaction of all Obligations (other than the contingent indemnity obligations in Section 10.3 below) and termination of Lender's commitment to fund the Loans, whereupon such
security interest shall terminate. Lender shall, at Borrower's sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the
release contemplated by this Section 4.3, including duly executing and delivering termination statements for filing in all relevant jurisdictions
under the Code. 

12

  

        4.4    Location and Possession of Collateral.    The Collateral is and shall remain in the possession of Borrower at
its location listed on the cover page hereof or as set forth in the Disclosure Schedule (except for Collateral having an aggregate value of less than Fifty Thousand Dollars ($50,000)). Borrower shall
remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of its security interest therein) and so long as no Event of
Default has occurred, shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided
that the possession, enjoyment, control and use of the Collateral shall at all time be subject to the observance and performance of the terms of this Agreement. 

        4.5    Delivery of Additional Documentation Required.    Borrower shall from time to time execute and deliver to
Lender, at the request of Lender, all financing statements and other documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender's perfected security
interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents. 

        4.6    Right to Inspect.    Lender (through any of its officers, employees, or agents) shall have the right, upon
reasonable prior notice, from time to time during Borrower's usual business hours, to inspect Borrower's books and records and to make copies thereof and to inspect, test, and appraise the Collateral
in order to verify Borrower's financial condition or the amount, condition of or any other matter relating to, the Collateral; provided, that, if no Event of Default shall have occurred and be
continuing, Borrower shall not make inspections more than once per calendar year and the cost to Borrower of each such audit shall not exceed Three Thousand Five Hundred Dollars ($3,500). 

        4.7    Intellectual Property.    

        (a)   Registration of Copyrights.    At Lender's request, Borrower shall register or cause to be registered with the
United States Copyright Office any software (material to the business of Borrower) developed or acquired by Borrower in connection with any product developed or acquired for sale or licensing. 

        (b)   Additional Intellectual Property.    Borrower shall promptly notify Lender on or before the federal
registration or filing by Borrower of any patent or patent application, or trademark or trademark application, or copyright or copyright application and shall promptly execute and deliver to Lender
any grants of security interests in same, in form acceptable to Lender, to file with the United States Patent and Trademark Office or the United States Copyright Office, as applicable. 

        (c)   Protection of Intellectual Property.    Borrower shall (i) protect, defend and maintain the validity and
enforceability of its Intellectual Property and promptly advise Lender in writing of material infringements, and (ii) not allow any Intellectual Property material to Borrower's business to be
abandoned, forfeited or dedicated to the public without Lender's written consent unless no Event of Default has occurred and is continuing and the Borrower's board of directors determines in good
faith that (a) such action is in the best interests of the Borrower and (b) the value of such Intellectual Property is less than One Hundred Thousand Dollars ($100,000). 

        4.8    Lien Subordination.    Lender agrees that the Liens granted to it hereunder shall be subordinate to Liens to
securing Indebtedness permitted under clause (e) of the definition of Permitted Indebtedness. Lender agrees that the Liens granted to it hereunder in Third Party Equipment shall be subordinate
to the Liens of future lenders providing equipment and software financing and equipment and software lessors for equipment, software and other personal property acquired by Borrower after the date
hereof ("Third Party Equipment"); provided that in the case of 

13

 

equipment
financings and leasing such Liens are confined solely to the equipment or software so financed and the proceeds thereof and are Permitted Liens. Notwithstanding the foregoing, the
Obligations hereunder shall not be subordinate in right of payment to any obligations to other equipment lenders or equipment lessors and Lender's rights and remedies in any Collateral which does not
constitute Third Party Equipment shall not in any way be subordinate to the rights and remedies of any such lenders or equipment lessors. So long as no Event of Default has occurred and is continuing,
Lender agrees to execute and deliver such agreements and documents as may be reasonably requested by Borrower from time to time which set forth the lien subordination described in this  Section 4.8
and are reasonably acceptable to Lender. Lender shall have no obligation to execute any agreement or document which would impose
obligations, restrictions or lien priority on Lender which are less favorable to Lender than those described in this Section 4.8. 

        5.    Representations and Warranties.    Except as set forth in the Disclosure Schedule, Borrower represents and
warrants as follows: 

        5.1    Organization and Qualification.    Borrower is a corporation duly organized and validly existing under the laws
of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be
so qualified or in which the Collateral is located, except for such states as to which any failure to so qualify would not have a material adverse effect on Borrower. 

        5.2    Authority.    Borrower has all necessary power and authority to execute, deliver, and perform in accordance
with the terms thereof, the Loan Documents to which it is a party. Borrower has all requisite power and authority to own and operate its Property and to carry on its businesses as now conducted. 

        5.3    Conflict with Other Instruments, etc.    Neither the execution and delivery of any Loan Document to which
Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of
the terms, conditions or provisions of the certificate of incorporation, the by-laws, or any other organizational documents of Borrower or any law or any regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its Property is bound or to which it or
any of its Property is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens. 

        5.4    Authorization; Enforceability.    The execution and delivery of this Agreement, the granting of the security
interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein
contemplated have each been duly authorized by all necessary action on the part of Borrower. No authorization, consent, approval, license or exemption of and no registration, qualification,
designation, declaration or filing with, or notice to, any Person is, was or will be necessary to (i) the valid execution and delivery of any Loan Document to which Borrower is a party,
(ii) the performance of Borrower's obligations under any Loan Document, or (iii) the granting of the security interest in the Collateral, except for filings in connection with the
perfection of the security interest in any of the Collateral or the issuance of the Warrant. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general
application relating to or affecting the enforcement of creditors' rights or by general principles of equity. 

        5.5    No Prior Encumbrances.    Borrower has good and marketable title to the Collateral free and clear of Liens
except for Permitted Liens. Borrower has good title and ownership of, or is 

14

 

licensed
under, all of Borrower's current Intellectual Property. Borrower has not received any communications alleging that Borrower has violated, or by conducting its business as proposed, would
violate any proprietary rights of any other Person. Borrower has no knowledge of any infringement or violation by it of the intellectual property rights of any third party and has no knowledge of any
violation or infringement by a third party of any of its Intellectual Property. The Collateral and the Intellectual Property constitute substantially all of the assets and property of Borrower. 

        5.6    Name; Location of Chief Executive Office, Principal Place of Business and Collateral.    Borrower has not done
business under any name other than that specified on the signature page hereof. Borrower's jurisdiction of incorporation, chief executive office, principal place of business, and the place where
Borrower maintains its records concerning the Collateral are presently located in the state and at the address set forth on the cover page of this Agreement. The Collateral is presently located at the
address set forth on the cover page hereof or as set forth in the Disclosure Schedule. 

        5.7    Litigation.    There are no actions or proceedings pending by or against Borrower before any court or
administrative agency in which an adverse decision could have a material adverse effect on Borrower or the aggregate value of the Collateral. Borrower does not have knowledge of any such pending or
threatened actions or proceedings. 

        5.8    Financial Statements.    All financial statements relating to Borrower or any Affiliate that have been or may
hereafter be delivered by Borrower to Lender present fairly in all material respects Borrower's financial condition as of the date thereof and Borrower's results of operations for the period then
ended. 

        5.9    No Material Adverse Effect.    No event has occurred and no condition exists which could reasonably be expected
to have a material adverse effect on the financial condition, business or operations of Borrower since December 31, 2004. 

        5.10    Full Disclosure.    No representation, warranty or other statement made by Borrower in any Loan Document
(including the Disclosure Schedule), certificate or written statement furnished to Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make
the statements contained in such certificates or statements not misleading. There is no fact known to Borrower which materially adversely affects its ability to perform its obligations under this
Agreement. 

        5.11    Solvency, Etc.    Borrower is Solvent (as defined below) and, after the execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby, Borrower will be Solvent. "Solvent" means, with respect to any Person on any
date, that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they
become absolute and matured (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a transaction and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably
small capital. 

        5.12    Subsidiaries.    Borrower has no Subsidiaries. 

        5.13    Catastrophic Events; Labor Disputes.    None of Borrower or its properties is or has been affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo act of God or other casualty that could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower. There are 

15

 

no
disputes presently subject to grievance procedure, arbitration or litigation under any of the collective bargaining agreements, employment contracts or employee welfare or incentive plans to which
Borrower is a party, and there are no strikes, lockouts, work stoppages or slowdowns, or, to the knowledge of Borrower, jurisdictional disputes or organizing activity occurring or threatened which
could reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower. 

        5.14    Certain Agreements of Officers.    Employees and Consultants. 

        (a)   No Violation.    To the knowledge of Borrower no officer, employee or consultant of Borrower is, or is now
expected to be, in violation of any term of any employment contract, proprietary information agreement, nondisclosure agreement, noncompetition agreement or any other material contract or agreement or
any restrictive covenant relating to the right of any such officer, employee or consultant to be employed by Borrower because of the nature of the business conducted or to be conducted by Borrower or
relating to the use of trade secrets or proprietary information of others, and to Borrower's knowledge, the continued employment of Borrower's officers, employees and consultants does not subject
Borrower to any material liability for any claim or claims arising out of or in connection with any such contract, agreement, or covenant. 

        (b)   No Present Intention to Terminate.    To the knowledge of Borrower, no officer of Borrower, and no employee or
consultant of Borrower whose termination, either individually or in the aggregate, could reasonably be expected to have a material adverse effect on the financial condition, business or operations of
Borrower, has any present intention of terminating his or her employment or consulting relationship with Borrower. 

        6.    Affirmative Covenants.    Borrower, until the full and complete payment of the Obligations (other than the
contingent indemnity obligations in Section 10.3 below), covenants and agrees that: 

        6.1    Good Standing.    Borrower shall maintain its corporate existence and its good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a material adverse effect on the financial condition, operations
or business of Borrower. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a material adverse effect on its financial
condition, operations or business. 

        6.2    Government Compliance.    Borrower shall comply with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which could reasonably be expected to materially adversely affect the financial condition, operations or business of Borrower. 

        6.3    Financial Statements, Reports, Certificates.    Borrower shall deliver to Lender: (a) as soon as
available, but in any event within thirty (30) days after the end of each month, a company prepared balance sheet, income statement and cash flow statement covering Borrower's operations during
such period, certified by Borrower's president, treasurer, director of finance or chief financial officer (each, a "Responsible Officer"); (b) as
soon as available, but in any event within one hundred eighty (180) days after the end of Borrower's fiscal year, audited financial statements of Borrower prepared in accordance with GAAP,
together with an unqualified opinion on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to Lender; and (c) as soon as
available, but in any event within ninety (90) days after the end of Borrower's fiscal year or the date of Borrower's board of directors' adoption, Borrower's operating budget and plan for the
next fiscal year; and (d) such other financial information as Lender may reasonably request from time to time. From and after such time as Borrower becomes a publicly reporting company,
promptly as they are available and in any 

16

 

event:
(x) at the time of filing of Borrower's Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements
of Borrower filed with such Form 10-K; and (y) at the time of filing of Borrower's Form 10-Q with the Securities and Exchange Commission after the end of
each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q. In addition, Borrower shall deliver to Lender
(i) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; and (ii) promptly upon receipt
of notice thereof, a report of any material legal actions pending or threatened against Borrower or the commencement of any action, proceeding or governmental investigation involving Borrower is
commenced that is reasonably expected to result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars ($250,000) or more. 

        6.4    Certificates of Compliance.    Each time financial statements are furnished pursuant to  Section 6.3 above, Borrower
shall deliver to Lender an Officer's Certificate signed by a Responsible Officer in the form of, and certifying to
the matters set forth in Exhibit E hereto. 

        6.5    Notice of Defaults.    As soon as possible, and in any event within five (5) days after the discovery of
a Default or an Event of Default, Borrower shall provide Lender with an Officer's Certificate setting forth the facts relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto. 

        6.6    Taxes.    Borrower shall make due and timely payment or deposit of all federal state, and local taxes,
assessments, or contributions required of it by law or imposed upon any property belonging to it, and will execute and deliver to Lender, on demand, appropriate certificates attesting to the payment
or
deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request, furnish Lender with proof satisfactory to Lender indicating that Borrower has made such payments or deposits;  provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which
suspend the collection thereof (provided that such proceedings do not involve any substantial danger of the sale forfeiture or loss of any material item
of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such amounts or reserves sufficient to discharge such amounts have been provided on
the books of Borrower). 

        6.7    Use; Maintenance.    Borrower shall keep and maintain all items of equipment and other similar types of
personal property that form any significant portion or portions of the Collateral in good operating condition and repair and shall make all necessary replacements thereof and renewals thereto so that
the value and operating efficiency thereof shall at all times be maintained and preserved. Borrower shall not permit any such material item of Collateral to become a fixture to real estate or an
accession to other personal property, without the prior written consent of Lender. Borrower shall not permit any such material item of Collateral to be operated or maintained in violation of any
applicable law, statute, rule or regulation. With respect to items of leased equipment (to the extent Lender has any security interest in any residual Borrower's interest in such equipment under the
lease). Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance with the terms of the applicable lease. 

        6.8    Insurance.    Borrower shall keep its business and the Collateral insured for risks and in amounts, and as
Lender may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Lender. All property policies shall have a lender's loss
payable endorsement showing Lender as an additional loss payee and all liability policies shall show Lender as an additional insured and all policies shall provide that the insurer must give Lender at
least thirty (30) days notice before canceling its policy. At Lender's 

17

 

request,
Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall at Lender's option, be payable to Lender on account of the
Obligations. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy, toward the
replacement or repair of destroyed or damaged property; provided that (i) 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 Lender has been granted a first priority security interest and (ii) after the occurrence and during the continuation of an Event of
Default all proceeds payable under such casualty policy shall, at the option of Lender, be payable to Lender, on account of the Obligations. If Borrower fails to obtain insurance as required under
Section 6.8 or to pay any amount or furnish any required proof of payment to third persons and Lender, Lender may make all or part of such payment or obtain such insurance policies required in
Section 6.8, and take any action under the policies Lender deems prudent. On or prior to the first Funding Date and prior to each policy renewal, Borrower shall furnish to Lender certificates
of insurance or other evidence satisfactory to Lender that insurance complying with all of the above requirements is in effect. 

        6.9    Security Interest.    Assuming the proper and effective filing and indexing of one or more financing
statement(s) identifying the Collateral with the proper state and/or local authorities, the security interests in the Collateral granted to Lender pursuant to this Agreement (in which a security
interest may be perfected by the filing of a financing statement): (i) constitute and will continue to constitute first priority security interests (except to the extent any Permitted Liens may
have a superior priority to Lender's Lien under this Agreement) and (ii) are and will continue to be superior and prior to the rights of all other creditors of Borrower (except to the extent of
such Permitted Liens). Except as set forth in the Disclosure Schedule, none of Borrower's Intellectual Property is registered with either the US Patent and Trademark Office or the US Copyright Office. 

        6.10    Further Assurances.    At any time and from time to time Borrower shall execute and deliver such further
instruments and take such further action as may reasonably be requested by Lender to make effective the purposes of this Agreement, including without limitation, the continued perfection and priority
of Lender's security interest in the Collateral. 

        6.11    Equity Investment.    Borrower shall permit Lender or its assignees at Lender's option to purchase up to Five
Hundred Thousand Dollars ($500,000) worth of the securities sold in Borrower's next round of equity financing at the same price and on the same terms as paid and received by the lead investor of the
equity financing. Borrower agrees that it shall notify Lender promptly upon the execution by Borrower of a term sheet or letter of intent setting forth the terms and conditions of such financing and
in any event within five (5) days of such execution. 

        6.12    Subsidiaries.    Upon Lender's request, Borrower shall promptly provide Lender with a pledge of the ownership
interests of all of its Subsidiaries and cause such Subsidiaries to execute and deliver to Lender a guaranty of the Obligations and any and all documents reasonably deemed necessary by Lender to grant
a security interest to Lender in all of the assets of such Subsidiaries. 

        6.13    Assignability of Property.    Borrower shall provide Lender with notice of any of its property with a value of
greater than One Hundred Fifty Thousand Dollars ($150,000) that: (i) is nonassignable by its terms without the consent of the licensor thereof or another party (but only to the extent such
prohibition on transfer is enforceable under applicable law), or (ii) the granting of a security interest therein is contrary to applicable law. 

18

 

        7.    Negative Covenants.    Borrower, until the full and complete payment of the Obligations (other than the
contingent indemnity obligations in Section 10.3 below), covenants and agrees that Borrower, without the prior written consent of Lender, shall not: 

        7.1    Chief Executive Office.    Change its name, jurisdiction of incorporation, chief executive office, principal
place of business or any of the items set forth in Section 1 of the Disclosure Schedule without thirty (30) days prior written notice to Lender. 

        7.2    Collateral Control.    Subject to its rights under Sections 4.4 and
7.4, remove any items of Collateral from Borrower's facility located at the address set forth on the cover page hereof or as set forth on the Disclosure Schedule. 

        7.3    Liens.    Create, incur, assume or suffer to exist any Lien of any kind upon any of Borrower's Property,
whether now owned or hereafter acquired, except Permitted Liens. 

        7.4    Other Dispositions of Collateral.    Convey, sell, lease or otherwise dispose of all or any part of the
Collateral to any Person (collectively, a "Transfer""), except for: (i) Transfers of inventory in the ordinary course of business;
(ii) Transfers of surplus, worn-out or obsolete equipment; (iii) Transfers permitted under subclause (f) of the definition of Permitted Liens with respect to
Collateral; (iv) Transfers constituting Permitted investments or Permitted Liens (including the liquidation of Permitted Investments); (v) non-exclusive licenses of
Intellectual Property in the ordinary course of business; and (vi) Transfers of other property not to exceed One Hundred Thousand Dollars ($100,000) in any fiscal year. 

        7.5    Distributions.    (i) Pay any dividends or make any distributions on its Equity Securities;
(ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities (other than repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount sufficient to repurchase any early exercised, but unvested Equity Securities from employees of Borrower in connection with
the termination of any such employees employment with Borrower); (iii) return any capita] to any holder of its Equity Securities as such; (iv) make any distribution of
assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such; or (v) set apart any sum for any such purpose;  provided, however, Borrower may pay dividends payable solely in Equity Securities, and Borrower may
issue Equity Securities upon conversion of convertible debt, provided such convertible debt constitutes Permitted Indebtedness. 

        7.6    Mergers or Acquisitions.    Merge or consolidate with or into any other Person or acquire all or substantially
all of the capital stock or assets of another Person. 

        7.7    Change in Ownership.    Engage in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership of greater than twenty five percent (25%) (other than by the sale by Borrower of
Borrower's Equity Securities in a public offering or to venture capital investors so long as Borrower identifies to Lender the venture capital investors prior to the closing of the investment). 

        7.8    Transactions With Affiliates.    Enter into any contractual obligation with any Affiliate or engage in any
other transaction with any Affiliate except upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower, provided that
nothing contained herein shall prohibit Borrower from selling its Equity Securities to Borrower's current investors. 

        7.9    Indebtedness Payments.    (i) Prepay, redeem, purchase, defense or otherwise satisfy in any manner prior
to the scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Agreement or under any revolving credit 

19

 

agreement
constituting Permitted Indebtedness under clause (e) of the definition of Permitted Indebtedness) or lease obligations, (ii) amend, modify or otherwise change the terms of any
Indebtedness for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or shareholders. 

        7.10    Indebtedness.    Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness. 

        7.11    Investments.    Make any Investment except for Permitted Investments. 

        7.12    Compliance.    Become an "investment company" or a company controlled by an "investment company" under the
Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Loan for that purpose; fail to meet the
minimum funding requirements of the Employment Retirement Income Security Act of 1974, and its regulations, as amended from time to time ("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, in each case if the
violation could reasonably be expected to have a material adverse effect on Borrower's business or operations or could reasonably be expected to cause a material adverse change, or permit any of its
Subsidiaries to do so. 

        8.    Events of Default.    Any one or more of the following events shall constitute art
"Event of Default" by Borrower under this Agreement: 

        8.1    Failure to Pay.    If Borrower fails to pay when due and payable or when declared due and payable in accordance
with the Loan Documents: (i) any Scheduled Payment within two (2) days of the relevant Payment Date or the relevant Maturity Date or (ii) any other portion of the Obligations
within five (5) days after receipt of written notice from Lender that such payment is due. 

        8.2    Certain Covenant Defaults.    If Borrower fails to perform any obligation under  Section 6.8 or violates any of the
covenants contained in Section 7 of this Agreement. 

        8.3    Other Covenant Defaults.    If Borrower fails or neglects to perform, keep, or observe any other material term,
provision, condition, covenant, or agreement contained in this Agreement (other than as set forth in Section 5 and Sections 8.1. 8.2 or 8.4 through
8.13) in any of the other Loan Documents and Borrower has failed to cure such default within fifteen (15) days of the occurrence of such default. During this fifteen
(15) day period, the failure to cure the default is not an Event of Default (but no Loan will be made during the cure period). 

        8.4    Intentionally Omitted,    

        8.5    Seizure of Assets, Etc.    If any material portion of Borrower's assets is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material
part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency and
the same is not satisfied, discharged or paid within ten (10) days after Borrower receives notice thereof; provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower. 

20

  

        8.6    Service of Process.    The service of process upon Lender seeking to attach by a trustee or other process any
funds of the Borrower on deposit or otherwise held by Lender, or the delivery upon Lender of a notice of foreclosure by any Person seeking to attach or foreclose on any funds of the Borrower on
deposit or otherwise held by Lender, or the delivery of a notice of foreclosure or exclusive control to any entity holding or maintaining Borrower's deposit accounts or accounts holding securities by
any Person (other than Lender) seeking to foreclose or attach any such accounts or securities. 

        8.7    Default on Indebtedness.    One or more defaults shall exist under any agreement with any third party or
parties which consists of the failure to pay any Indebtedness in an aggregate principal amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) at maturity or which results in a right by
such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness in an aggregate amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or a default shall
exist under any financing agreement with Lender. 

        8.8    Judgments.    If a judgment or judgments for the payment of money in an amount, individually or in the
aggregate of at least Two Hundred Fifty Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days or more. 

        8.9    Misrepresentations.    If any material misrepresentation or material misstatement of a material fact exists now
or hereafter in any warranty, representation, statement, certification, or report made to Lender by Borrower or any officer, employee, agent, or director of Borrower. 

        8.10    Breach of Warrant.    If Borrower shall breach any material term of the Warrant. 

        8.11    Unenforceable Loan Document.    If any Loan Document shall in any material respect cease to be, or Borrower
shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms. 

        8.12    Involuntary Insolvency Proceeding.    If a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its Property or for the winding-up
or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a
period of thirty (30) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding. 

        8.13    Voluntary Insolvency Proceeding.    If Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its Property, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any oldie foregoing. 

        9.    Lender's Rights and Remedies.    

        9.1    Rights and Remedies.    Upon the occurrence and during the continuance of any Default or Event of Default which
has not been waived by Lender, Lender shall not have any further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during the
continuance of an Event of Default, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and 

21

 

without
limitation of the foregoing, Lender may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower: 

        (a)   Acceleration of Obligations.    Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise including (i) any accrued and unpaid interest, (ii) the amounts which would have otherwise come due under Section 2.3(b)(ii) if the Loans
had been voluntarily prepaid, (iii) the unpaid principal balance of the Loans and (iv) all other sums, if any, that shall have become due and payable hereunder, immediately due and
payable (provided that upon the occurrence of an Event of Default described in Section 8.12 or
8.13 all Obligations shall become immediately due and payable without any action by Lender); 

        (b)   Protection of Collateral.    Make such payments and do such acts as Lender considers necessary or reasonable to
protect Lender's security interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires and to make the Collateral available to Lender as Lender may designate. Borrower
authorizes Lender and its designees and agents to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase,
contest, or compromise any Lien which in Lender's determination appears or is claimed to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With
respect to any of Borrower's owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Lender's rights or remedies provided herein, at law, in equity, or otherwise; 

        (c)   Preparation of Collateral for Sale.    Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lender and its agents and any purchasers at or after foreclosure are hereby granted a non-exclusive,
irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section 9.1, to
use, without charge, Borrower's Intellectual Property, including without limitation, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights;  provided that such
license shall only be exercisable in connection with the disposition of Collateral upon Lender's exercise of its remedies hereunder; 

        (d)   Sale of Collateral.    Sell the Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Lender determines are commercially reasonable; and 

        (e)   Purchase of Collateral.    Credit bid and purchase all or any portion of the Collateral at any public sale. 

Any
deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower. 

        9.2    Set Off Right.    Lender may set off and apply to the Obligations any and all indebtedness at any time owing to
or for the credit or the account of Borrower or any other assets of Borrower in Lender's possession or control. 

        9.3    Effect of Sale.    Upon the occurrence and during the continuance of an Event of Default, to the extent
permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or 

22

 

extension
law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement
of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent
jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part
thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment
creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws and
covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Lender, but will suffer and permit the
execution of every such power as though no such power, law or laws had been made or enacted. Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate
to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against
Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns. 

        9.4    Power of Attorney in Respect of the Collateral.    Borrower does hereby irrevocably appoint Lender (which
appointment is coupled with an interest), the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name to file any notices of security interests, financing
statements and continuations and amendments thereof pursuant to the Code or federal law, as may be necessary to perfect, or to continue the perfection of Lender's security interests in the Collateral.
Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence and during the continuance of an Event of Default, the true and lawful attorney in
fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents,
issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full
power to settle, adjust or compromise any claim thereunder as fully as if Lender were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral
(including checks, drafts and other orders for the payment of money) that come into Lender's possession or under Lender's control; (c) to make all demands, consents and waivers, or take any
other action with respect to, the Collateral; (d) in Lender's discretion to file any claim or take any other action or proceedings, either in its own name or in the name of Borrower or
otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral; (e) endorse Borrower's name on any
checks or other forms of payment or security; (t) sign Borrower's name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust
all claims under Borrower's insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Lender determines
reasonable; (i) transfer the Collateral into the name of Lender or a third party as the Code permits; and (j) to otherwise act with respect thereto as though Lender were the outright
owner of the Collateral. 

        9.5    Lender's Expenses.    If Borrower fails to pay any amounts or furnish any required proof of payment due to
third persons or entities, as required under the terms of this Agreement, then Lender may do any or all of the following: (a) make payment of the same or any part thereof; or (b) obtain
and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as
Lender deems prudent. Any amounts paid or deposited by Lender shall constitute Lender's Expenses, shall be immediately due and payable, 

23

 

shall
bear interest at the Default Rate and shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement. Borrower shall pay all reasonable fees and expenses, including without limitation, Lender's Expenses, incurred by Lender in the
enforcement or attempt to enforce any of the Obligations hereunder not performed when due. 

        9.6    Remedies Cumulative.    Lender's rights and remedies under this Agreement, the Loan Documents, and all other
agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lender of one right or remedy
shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or
acquiescence by it. 

        9.7    Application of Collateral Proceeds.    The proceeds and/or avails of the Collateral, or any part thereof and
the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender, at the time of or received by Lender after the ocurrence of an Event of Default hereunder)
shall be paid to and applied as follows: 

        (a)   First, to the payment of out-of-pocket costs and expenses including all amounts expended to
preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and attorneys' fees, incurred or made hereunder by Lender, including, without limitation, Lender's Expenses; 

        (b)   Second, to the payment to Lender of the amount then owing or unpaid on the Loans for any accrued and unpaid interest, the
amounts which would have otherwise come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, the principal balance of the Loans, and all other Obligations with respect to
the Loans (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so
due owing or unpaid upon the Loans, then to the unpaid interest thereon, then to the amounts which would have otherwise came due under Section 2.3(b)(ii), if the Loans had been voluntarily
prepaid, then to the principal balance of the Loans, and then to the payment of other amounts then payable to Lender under any of the Loan Documents); and 

        (c)   Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to the Person lawfully entitled
to receive the same. 

        9.8    Reinstatement of Rights.    If Lender shall have proceeded to enforce any right under this Agreement or any
other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every
such ease (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with respect to the Property subject to the security
interest created under this Agreement. 

        10.    Waivers; Indemnification.    

        10.1    Demand; Protest.    Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable. 

        10.2    Lender's Liability for Collateral.    So long as Lender complies with its obligations, if any, under the Code.
Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or 

24

 

fashion
from any cause other than Lender's gross negligence or willful misconduct; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower, except to the extent such loss, damage or destruction is
caused by Lender's gross negligence or willful misconduct. 

        10.3    Indemnification and Waiver.    Whether or not the transactions contemplated hereby shall be consummated: 

        (a)   General Indemnity.    Borrower agrees upon demand to pay or reimburse Lender for all liabilities, obligations
and out-of-pocket expenses, including Lender's Expenses and reasonable fees and expenses of counsel for Lender from time to time arising in connection with the enforcement or
collection of sums due under the Loan Documents, and in connection with any amendment or modification of the Loan Documents or any "work-out" in connection with the Loan Documents.
Borrower shall indemnify, reimburse and hold Lender, and each of its respective successors, assigns, agents; attorneys, officers, directors, shareholders, servants, agents and
employees (each an "Indemnified Person") harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and
nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in
connection therewith (including reasonable attorneys' fees and expenses), fines, penalties (and other charges of any applicable Governmental Authority), licensing fees relating to any item of
Collateral, damage to or loss of use of property (including consequential or special damages to third parties or damages to Borrower's property), or bodily injury to or death of any person (including
any agent or employee of Borrower) (each, a "Claim"), directly or indirectly relating to or arising out of the use of the proceeds of the Loans or
otherwise, the falsity of any representation or warranty of Borrower or Borrower's failure to comply with the terms of this Agreement or any other Loan Document. The foregoing indemnity shall cover,
without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage,
discharge, emission or release of any Hazardous Materials on the premises owned, occupied or leased by Borrower, including any Claims asserted or arising under any Environmental Law, (iv) any
Claim for negligence or strict or absolute liability in tort, or (v) any Claim asserted as to or arising under any Landlord Agreement; provided,  however, Borrower shall not indemnify Lender for any liability incurred by Lender as a result of Lender's gross negligence or willful misconduct or
violation of any of the Loan Documents. Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Agreement. Upon Lender's written demand,
Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Lender, each of its partners, and each of their respective, agents, employees, directors, officers,
shareholders, successors and assigns against any indemnified Claim described in this Section 10.3(a). Borrower shall not settle or compromise any
Claim against or involving Lender without first obtaining Lender's written consent thereto, which consent shall not be unreasonably withheld. 

        (b)   Waiver.    NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE. BORROWER
AGREES THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES. 

25

 

        (c)   Survival; Defense.    The obligations in this  Section 10.3 shall survive payment of all other Obligations pursuant to Section 12.8. At
the election of any Indemnified Person. Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person's reasonable discretion, at the sole
cost and expense of Borrower. All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand. If it
is finally determined that such Indemnified Person is not entitled to indemnification, then such Indemnified Person shall, promptly after such final determination, reimburse Borrower all amounts
Borrower has expended in connection with such defense of such Indemnified Person. 

        11.    Notices.    Unless otherwise provided in this Agreement, all notices or demands by any party relating to this
Agreement or any other agreement entered into in connection herewith shall be in writing and
(except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid,
return receipt requested, by prepaid nationally recognized overnight courier, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below: 

	If to Borrower:	 	Convio, Inc.

11921 N. Mopac Expressway

Suite 200

Austin, TX 78759

Attention: Jim Offerdahl, CFO

Fax: (512) 652-2691

Ph: (512) 652-2622
	

If to Lender:	
 	

Horizon Technology Funding Company LLC

76 Batterson Park Road

Farmington, CT 06032

Attention: Legal Department

Fax: (860) 676-8655

Ph: (860) 676-8654

        The
parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. 

        12.    General Provisions.    

        12.1    Successors and Assigns.    This Agreement and the Loan Documents shall bind and inure to the benefit of the
respective successors and permitted assigns of each of the parties; provided, however, neither this
Agreement nor any rights hereunder may be assigned by Borrower without Lender's prior written consent, which consent may be granted or withheld in Lender's sole discretion. Lender shall have the right
without the consent of or notice to Borrower to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in Lender's rights and benefits hereunder. Lender may
disclose the Loan Documents and any other financial or other information relating to Borrower or any Subsidiary to any potential participant or assignee of any of the Loans,  provided, that such participant or assignee agrees to protect the confidentiality of such documents and
information using the same measures that it uses to protect its own confidential information. 

        12.2    Time of Essence.    Time is of the essence for the performance of all obligations set forth in this Agreement. 

26

 

        12.3    Severability of Provisions.    Each provision of this Agreement shall be several from every other provision of
this Agreement for the purpose of determining the legal enforceability of any specific provision. 

        12.4    Entire Agreement; Construction; Amendments and Waivers.    

        (a)   Entire Agreement.    This Agreement and each of the other Loan Documents dated as of the date hereof, taken
together, constitute and contain the entire agreement between Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between
the parties, whether written or oral, respecting the subject matter hereof. Borrower acknowledges that it is not relying on any representation or agreement made by Lender or any employee, attorney or
agent thereof, other than the specific agreements set forth in this Agreement and the Loan Documents. 

        (b)   Construction.    This Agreement is the result of negotiations between and has been reviewed by each of Borrower
and Lender executing this Agreement as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be
construed in favor of or against Borrower or Lender. Borrower and Lender agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol evidence shall be
necessary or appropriate to establish Borrower's or Lender's actual intentions. 

        (c)   Amendments and Waivers.    Any and all amendments, modifications, discharges or waivers of, or consents to any
departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of Lender. Any waiver or consent with respect to any provision
of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent affected in accordance with this  Section 12.4 shall be binding upon Lender and on
Borrower. 

        12.5    Reliance by Lender.    All covenants, agreements, representations and warranties made herein by Borrower shall
be deemed to be material to and to have been relied upon by Lender, notwithstanding any investigation by Lender. 

        12.6    No Set-Offs by Borrower.    All sums payable by Borrower pursuant to this Agreement or any of the
other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever. 

        12.7    Counterparts.    This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 

        12.8    Survival.    All covenants, representations and warranties made in this Agreement shall continue in full force
and effect so long as any Obligations (other than the contingent indemnity obligations in Section 10.3 above) or commitment to fund remain
outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in  Section 10.3 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought against Lender have
run. 

        13.    Relationship of Parties.    Borrower and Lender acknowledge, understand and agree that the relationship between
Borrower, on the one hand, and Lender, on the other, is, and at all time shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be a partner or a
joint venturer of Borrower or any of its Affiliates; nor shall Lender under any 

27

 

circumstances
be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its
Affiliates. Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform Borrower
or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its
Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by
Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon. 

        14.    Confidentiality.    All information (other than periodic reports filed by Borrower with the Securities and
Exchange Commission) disclosed by Borrower to Lender in writing or through inspection pursuant to this Agreement that is marked confidential shall be considered confidential. Lender agrees to use the
same degree of care to safeguard and prevent disclosure of such confidential information as Lender uses with its own confidential information, but in any event no less than a reasonable degree of
care. Lender shall not disclose such information to any third party (other than to Lender's partners,
attorneys, governmental regulators, or auditors, or to Lender's subsidiaries and affiliates and prospective transferees and purchasers of the Loans, all subject to the same confidentiality obligation
set forth herein or as required by law, regulation, subpoena or other order to be disclosed) and shall use such information only for purposes of evaluation of its investment in Borrower and the
exercise of Lender's rights and the enforcement of its remedies under this Agreement and the other Loan Documents. The obligations of confidentiality shall not apply to any information that
(a) was known to the public prior to disclosure by Borrower under this Agreement. (b) becomes known to the public through no fault of Lender. (c) is disclosed to Lender by a third
party having a legal right to make such disclosure, or (d) is independently developed by Lender. Notwithstanding the foregoing, solely to the extent necessary to permit Lender to realize on the
value of the Collateral, Lender's agreement of confidentiality shall not apply if Lender has acquired indefeasible title to any Collateral or in connection with any enforcement or exercise of Lender's
rights and remedies under this Agreement fallowing an Event of Default, including the enforcement of Lender's security interest in the Collateral. 

        15.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CONNECTICUT. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 

[Remainder
of page intentionally left blank.] 

28

 

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

	 	 	BORROWER:

CONVIO, INC.
	

 	
 	

By:	

/s/ Jim Offerdahl

	 	 	Name:	Jim Offerdahl

	 	 	Title:	CFO

	

 	
 	

LENDER:

HORIZON TECHNOLOGY FUNDING COMPANY LLC
	 	 	By:	Horizon Technology Finance, LLC, its sole member
	

 	
 	

By:	

/s/ Robert D. Pomeroy, Jr.

	 	 	Name:	Robert D. Pomeroy, Jr.
	 	 	Title:	Managing Member

29Exhibit 10.8  

        ATEL VENTURES, INC.

MASTER LEASE AGREEMENT NO. CONVX

Dated as of March 15, 2006 (the "Effective Date")  

	Between	ATEL VENTURES, INC., a California corporation, as Lessor ("Lessor")	 	600 California Street, 6th Floor

San Francisco CA 94108-2733

Attention: General Counsel
	    	 	 	 
	And	CONVIO, INC. a Delaware corporation, as Lessee ("Lessee")	 	11921 NORTH MOPAC EXPRESSWAY

SUITE 200

AUSTIN, TEXAS 78759

Attention: Jim Offerdahl

NO INTEREST IN THE RENT DUE OR THE RIGHTS OF THE LESSOR UNDER ANY LEASE OF EQUIPMENT CAN BE TRANSFERRED BY THE DELIVERY OF POSSESSION OF ANY COUNTERPART OF THIS
MASTER LEASE. SUCH AN INTEREST CAN BE TRANSFERRED ONLY BY DELIVERY OF POSSESSION OF THE ORIGINAL SIGNED COUNTERPART OF AN EQUIPMENT SCHEDULE EXECUTED PURSUANT HERETO. 

The
parties of this Master Lease Agreement ("Lease Agreement") hereto agree as follows: 

1.     Lease:  

        Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, subject to satisfaction of the conditions set forth in Section 3 and any Equipment
Schedule, the personal property including certain custom use equipment, miscellaneous computer hardware, office equipment, furniture, leasehold improvements, fixtures, (collectively with the Soft
Equipment (defined below), the "Equipment") described in any Equipment Schedules executed pursuant hereto substantially in the form of Exhibit A
hereto. Any reference herein to a "Lease" shall mean any Equipment Schedule, as it incorporates by reference all the terms and conditions of this Lease Agreement, the Acceptance Certificates, and any
Exhibits, Riders, Supplements, amendments, or addendum thereto, if any. Prior to the execution of an Equipment Schedule incorporating one or more Acceptance Certificates, such Acceptance Certificates
shall operate as a Lease and incorporate by reference all the terms and conditions of this Lease Agreement. 

2.     Definitions:  

        (a)   "Acceptance
Certificate" means the Certificate of Delivery and Acceptance and Request for Advance in the form of  Exhibit B hereto. 

        (b)   "Acceptance
Date" means the date Lessee inspects all the Equipment and deems it satisfactory for lease hereunder as indicated on the Acceptance Certificate, or such
other date as may be indicated in the applicable Equipment Schedule. 

        (c)   "Advance"
means the Equipment Cost under any Acceptance Certificate which is funded by the Lessor. 

        (d)   "Advance
Date" means the date of any Advances, which are made by Lessor to Lessee, or any Vendor pursuant to an Acceptance Certificate. 

        (e)   "Basic
Rent" means the amount indicated as the Basic Rent, due as monthly, quarterly, semiannual, or annual payments, in advance or in arrears, as set forth in the
applicable Acceptance Certificate and/or Equipment Schedule. 

        (f)    "Basic
Term" means the initial term of any Lease, as indicated on the applicable Equipment Schedule. 

        (g)   "Commencement
Date" means the first day of the calendar month following the Acceptance Date, or such other date as may be indicated in the applicable Equipment Schedule. 

        (h)   "Change
in Control" means a change in the majority interest or control of ownership of the Lessee in any one transaction or series of related transactions, or a sale,
assignment, or acquisition of all, or substantially all, of the property of Lessee by merger, consolidation or purchase. 

        (i)    "Daily
Rent" means the daily equivalent of the initial Basic Rent. 

        (j)    "Equipment
Cost" means the cost of the Equipment (including Soft Equipment) described in any Equipment Schedule. 

        (k)   "Event
of Default" means as defined in Section 9(a) hereof. 

        (l)    "Event
of Loss" means as defined in Section 8(a) hereof. 

        (m)  "Final
Payment" means the final payment due by Lessee hereunder, whether as Basic Rent, a bargain or nominal purchase option, put, balloon payment or other fixed
payment, as provided in Section 14 hereof. 

        (n)   "Guarantor"
means a guarantor or surety of the obligations of the Lessee hereunder, if any. 

        (o)   "Lease
Term" means the Basic Term, Renewal Term, and any Supplemental Term. 

        (p)   "Lessee
Reports" means any financial statements, projections, budget, business plan, due diligence materials, prospectus, registration statements, or any other materials
prepared by Lessee and distributed to its investors and creditors in the ordinary course of business or other reports as reasonably requested to be delivered to Lessor by Lessee. 

        (q)   "Proposal
Letter" means any letter issued by Lessor to Lessee describing the basic terms of a proposed lease financing. To the extent there is a conflict between the
Proposal Letter and this Lease, the terms and conditions of this Lease shall govern. 

        (r)   "Purchase
Agreement" means the contract for sale entered into by the Lessee and a Vendor, and shall include any and all purchase orders, purchase agreements, invoices,
and amendments to any of them. 

        (s)   "Renewal
Rent" means the amounts, if any, indicated on the applicable Equipment Schedule or any Rider thereto, or any amendment thereof, or otherwise in this Lease. 

        (t)    "Renewal
Term" means the renewal term, if any, indicated on the applicable Equipment Schedule or any Rider thereto, or any amendment thereof, or otherwise in this Lease,
and any holdover period beyond the expiration of the Basic Term or the Renewal Term, if any. 

        (u)   "Rent"
means Basic Rent, Daily Rent, or Renewal Rent. 

        (v)   "Soft
Equipment" means, installation and delivery costs, intangible personal property, warranty, service or other contract rights, taxes paid or prepaid, any
depreciation amounts. 

        (w)  "Stipulated
Loss Value" means the product of the corresponding percentage indicated on the Rider to the applicable Equipment Schedule, or on the Acceptance Certificate,
for the Rent payment date immediately preceding the date that the event which caused the Event of Loss or Event of Default occurred times the Equipment Cost of the item of Equipment suffering the
Event of Loss (or of all Equipment in the event of an Event of Default). 

        (x)   "Supplemental
Term" means the period from the earlier of the Advance Date or the Acceptance Date to the Commencement Date. 

        (y)   "UCC"
means the Uniform Commercial Code as enacted in California. 

        (z)   "Vendor"
means a manufacturer, distributor, or retailer of the Equipment. 

3.     Term of Lease and Conditions Precedent:  

        (a)   Lease Term.    The Lease Term, as to all Equipment designated on any Equipment Schedule or Acceptance
Certificate, shall include the Supplemental Term commencing on the earlier of the Acceptance Date or the Advance Date for such Equipment, and shall continue for a Basic Term equal to the initial
period ending that number of months from the Commencement Date as is specified in the applicable Equipment Schedule. The Lease Term may also include the Renewal Term, if any, granted in the applicable
Equipment Schedule. 

        (b)   Procurement, Delivery, and Acceptance. Prior to any Advance Date or Acceptance Date, Lessee shall have ordered the
Equipment from a Vendor pursuant to one or more purchase orders or other contracts for sale ("Purchase Agreements"). Lessee shall be solely responsible for the selection and ordering of the Equipment.
Lessee may instruct or direct Lessor, as its agent, to pay a Vendor for the Equipment on Lessee's behalf or, Lessee upon proof or evidence of purchase, may request reimbursement by Lessor for the
Equipment previously purchased by Lessee. If, for any reason, the Lessee fails to irrevocably accept the Equipment for Lease by executing an Equipment Schedule identifying the Equipment for which
Advances have been previously made by Lessor pursuant to any Acceptance Certificate, then Lessee shall, upon demand by Lessor, reimburse Lessor in full for those funds so advanced by paying to Lessor
a Stipulated Loss Value equal to not less than 110% of the Equipment Cost plus any unpaid Daily Rent. 

        (c)   Obligation to Pay for Equipment. Lessee may request Advances for Equipment in an aggregate amount not to exceed $2,000,000,
(the "Lease Line"). Advances to be made by the Lessor hereunder are subject to Lessee satisfying the following conditions precedent: (i) Lessor and Lessee shall have entered into mutually
acceptable lease documentation, including the Lease and other ancillary documents and instruments required by Lessor, including sufficiently detailed invoices from the Vendor identifying the Equipment
and Equipment Cost, corporate resolutions and incumbency certificates (substantially in the form of Exhibit Chereto), or other documents evidencing
the Lessee's authority to execute and deliver the Lease, evidence of insurance pursuant to an accord certificate(substantially on the terms set forth in  Exhibit D hereto), appropriate waivers from
all potential Equipment lien-holders, and UCC-1 Financing Statements with
respect to any Equipment financed hereunder; (ii) Lessee shall have either irrevocably accepted the Equipment for lease hereunder, or requested an Advance on Equipment to be placed under a
Lease by executing an Acceptance Certificate; (iii) Lessee shall have full legal right, title and interest in and to the Equipment, free and clear all liens, claims, and encumbrances,
whatsoever; (iv) all representations and warranties made under each Lease shall be true and correct, and there shall not exist an Event of Default or any condition, event, or act which with
notice or lapse 

of
time would become an Event of Default which has not been remedied or waived, and Lessee shall have fully performed all material terms and conditions required of Lessee under the Lease;
(v) there has not been any material adverse change in Lessee's financial condition or business operations since the date of Lessor's Proposal Letter; (vi) the aggregate Equipment Cost
funded under any Equipment Schedule shall be not less than $250,000; (vii) Lessor shall have approved the purchase of the proposed Equipment in Lessor's sole discretion; (viii) no more
than 30% of the Equipment Cost under all Equipment Schedules (on a cumulative basis) shall be allocated to Soft Equipment provided, however, if the percentage of Soft Equipment financed on any one
Equipment Schedule exceeds 30% of the total Equipment Cost funded on that Equipment Schedule, Lessor reserves the right, at its option, to require that Lessee finance sufficient hard Equipment Cost on
succeeding Equipment Schedules to bring the hard to Soft Equipment financed ratio back to 70% hard Equipment and 30% Soft Equipment on a cumulative basis; and (ix) the funding period ("Funding
Period") for Advances shall not extend beyond March 31, 2007 and each Advance prior to such date shall be subject to Lessor's mandatory 90-day credit review process wherein the
availability of funds is reviewed beginning 90 days after the date of the January 19, 2006 Proposal Letter and every 90 days thereafter and made available to Lessee at Lessor's
sole discretion and subject to other terms and conditions as Lessor may require in its sole discretion. 

        (d)   Prepayment of Equipment Schedules. Borrower has the right to prepay the Equipment Schedules in whole but not in part, and
only under the following terms and conditions with the assumption that the original Equipment Cost is the starting principal balance and each Equipment Schedule is the equivalent of a promissory note: 

	(a)
	Lessee
shall give Lessor at least ten (10) business days' prior written notice of its intent to prepay the Equipment Schedules, and 
	(b)
	Prepayment
shall be in the full amount of principal, earned but unpaid interest accrued to the date of prepayment (which pre-payment amount shall be provided to Lessee at
the time of any proposed pre-payment), any outstanding fees, taxes, costs or other reimbursements (including any indemnities) owing to Lessor and the amount of the Final Payment, (in the
aggregate, the "Prepayment Amount"). 
	(c)
	In
addition to the above Prepayment Amount, Lessee shall pay the following premium:

	(i)
	If
the prepayment is made in the first twelve (12) months after the date of this Agreement, a premium of four percent (4%) of the outstanding principal amount of all the
Equipment Schedules being prepaid; 
	(ii)
	If
the prepayment is made after the end of the twelfth (12th) month and before or at the end of the twenty-fourth (24th) month after the date of this Agreement, a premium of three
percent (3%) of the outstanding principal amount of all the Equipment Schedules being prepaid; and 
	(iii)
	If
the prepayment is made after the end of the twenty-fourth (24th) month and before the end of the thirty-sixth (36th) month after the date of this Agreement, a premium of two
percent (2%) of the outstanding principal amount of all the Equipment Schedules being prepaid.

	(d)
	Notwithstanding
the above, if at any time after September    , 2008 (18 months after the date of this Lease), Lessor has or is able to net exercise its Warrant and
has or is able to achieve an overall return greater than three (3) times the Warrant exercise price, Lessor shall waive the pre-payment premium referenced in this
Section 3(d). 

4.     Rent, Taxes and Late Payments:  

        (a)   Rent. Daily Rent shall be due on all Advances made by Lessor pursuant to any Acceptance Certificate and shall accrue from
the earlier of the Advance Date or the Acceptance Date of any item of Equipment at the Daily Rent set forth in the applicable Acceptance Certificate multiplied by the number of days from (and
including) the earlier of the Advance Date or the Acceptance Date to (but not including) the Commencement Date and shall be due and payable on the first day of each month until the Commencement Date.
The Basic Rent payable hereunder during the Basic Term is as set forth in the Equipment Schedule. Lessor and Lessee agree that the Basic Rent described in the Equipment Schedule has a corresponding
yield relationship to the U.S. Treasury obligation and with the closest equivalent maturity as the applicable Lease Basic Term as reported in The Wall Street
Journal on the date of, and quoted in, Lessor's Proposal Letter, and consequently, the Basic Rent, Lease Rate Factor, and Stipulated Loss Values (and Renewal Rent, if
applicable) may be adjusted upward by the Lessor on the date of preparation of the Equipment Schedule, or alternatively, on the funding date by a Notification of Rent Adjustment amendment prepared
thereafter, to reflect a change on such date in the reported yield of the U.S. Treasury obligation, with the equivalent term of the U.S. Treasury obligation quoted in the Proposal Letter (or the
closest term to such original U.S. Treasury obligation in the event an identical term issue is not reported, and in the event that two or more comparison Treasury obligations are quoted with identical
maturities, then with the "Asked" price which is closest to par) in order to preserve Lessor's anticipated corresponding yield relationship. Except as may otherwise be provided in any Equipment
Schedule, Basic Rent shall begin to accrue on the Commencement Date and shall be due and payable by Lessee on the first day of each period (advance) or the last day (arrears) of each period, as set
forth in the applicable Equipment Schedule. In addition to the Basic Rent and Daily Rent, Lessee shall pay Renewal Rent, if any, due as indicated in this Lease Agreement, or on any Equipment Schedule,
or any Rider hereto or thereto. All Rent due by Lessee hereunder is an absolute and unconditional obligation of Lessee which may not be abated or offset for any reason whatsoever as provided in
Section 10 hereof. 

        (b)   Taxes. In addition to the Rent set forth herein or in any Equipment Schedule, Lessee shall pay to Lessor an amount equal to
all taxes, fees, expenses or charges paid, payable or required to be collected by Lessor, however designated and whenever assessed, which are levied or based on the Rent, on the Lease, on the
Equipment Cost, or on the Equipment or on its purchase for lease hereunder, or on its possession, storage, use, lease, operation, control, delivery or value, including as a result of a
sale-leaseback, or from the Lease Term expiration, or earlier termination, or from the exercise of any early termination, purchase, or on the Final Payment, or renewal option granted in
the Lease or otherwise, or from any conveyance of title to Lessee or Lessee's designee; including, without limitation, state and local sales, use, privilege of doing business or excise taxes, taxes
based on gross revenue or receipts, any penalties or interest in connection therewith or taxes or amounts in lieu thereof paid or payable by Lessor in respect of the foregoing, but excluding solely
taxes based on Lessor's net income. Personal property taxes assessed on the Equipment during the term hereof shall be the sole responsibility of, and shall be paid on demand by, Lessee. Lessee agrees
to file, all required property tax returns and reports concerning the Equipment with all appropriate governmental agencies, and, at Lessor's written request, within not more than thirty
(30) days after Lessor's written request, to send Lessor confirmation of such filing. 

        (c)   Late Payments. Interest on any past due Rent and other payments due and payable shall accrue at the rate of
11/2% per month from the Rent or other payment due date, or if such rate shall exceed the maximum rate allowed by law, then at such maximum rate, and shall be payable on demand. Charges
for taxes, penalties and interest shall be promptly paid by Lessee. 

5.     Installation, Use and Quiet Possession of Equipment:  

        (a)   Lessee,
shall at all times maintain the Equipment in accordance with the manufacturer's specifications and in accordance with prudent industry standards and in
accordance with this Lease, specifying maintenance and return conditions for the Equipment. Lessee shall use the Equipment solely for business purposes, in compliance with the covenants and conditions
of all insurance policies required to be maintained by Lessee pursuant to the Lease. Lessee shall, at all times, during the Lease Term or any Renewal Term, assure that the Equipment is maintained in
operation and service in its original intended use. 

        (b)   Any
equipment, supplies spare or replacement parts or other items not specified in the Equipment Schedule which are used on or in connection with the Equipment must meet
the specifications of the manufacturer and shall be acquired by Lessee at its own expense. The Lessee shall at all times use the Equipment in compliance with all laws and regulations of all federal,
state, local and foreign authorities having jurisdiction thereof. 

        (c)   Lessee
will at all times keep the Equipment in its sole possession and control. The Equipment shall not be moved from the location stated in the applicable Equipment
Schedule without the prior written consent of Lessor (said consent not to be unreasonably withheld). 

        (d)   After
prior written notice to Lessor, Lessee may, at its own expense, make alterations in or add attachments to the Equipment, provided such alterations or attachments
do not interfere with the normal and satisfactory operation or maintenance of the Equipment or with Lessee's ability to obtain and maintain the maintenance contract required by Section 5(g)
hereof. The manufacturer or other organization selected by Lessee to maintain the Equipment ("Maintenance Organization") may incorporate engineering changes or make temporary alterations to the
Equipment upon request of Lessee. All such alterations and attachments shall be subject to the security interest of Lessor, provided that upon an Event of Default, or at the option of Lessor, such
alterations and attachments shall be removed by Lessee and the Equipment restored, at Lessee's expense, to its original condition as of the Acceptance Date thereof, reasonable wear and tear only
excepted, and upon the removal and restoration, the alteration and/or attachment which was made by Lessee shall become the property of Lessee free and clear of the security interest of Lessor. 

        (e)   So
long as there shall not exist an Event of Default, or any condition, event, or act which with notice or lapse of time would become an Event of Default, Lessor or any
Assignee shall not interfere with Lessee's use or possession of the Equipment during the Basic Term. 

        (f)    Lessee
shall, during the term of this Lease, at its expense, keep the Equipment in excellent operating order and condition, reasonable wear and tear excepted, and shall
make all necessary adjustments, repairs and replacements, and Lessee shall not use or permit the Equipment to be used in any manner or for any purpose for which, in the opinion of the manufacturer,
the Equipment is not designed or reasonably suitable. Lessee will at all times operate, use, and maintain the Equipment as represented by Lessee in its request for proposal and/or quotes or as
otherwise represented herein or in any other instrument or document prepared by Lessee or its agents. In no event shall Lessee operate, use or maintain the Equipment less favorably than Lessee would
or should operate, use or maintain its own equipment. 

        (g)   With
respect to the Equipment, Lessee shall, during the term of this Lease, at its own expense and discretion, according to prudent industry practice, either
(A) enter into and maintain in force a contract with the manufacturer or the Maintenance Organization covering at least prime shift maintenance of certain items of Equipment for which Lessee
deems such contract necessary which contract shall commence upon expiration of the manufacturer's warranty period, if any, relating to such item and Lessee shall furnish Lessor with a copy of such
contract(s), or (B) at its sole expense, maintain and service and repair any damage to, each item of Equipment in a manner consistent with prudent industry practice and Lessee's own practice so
that such item of Equipment is at all times (i) in the same condition as when delivered to Lessee, except for ordinary wear and tear, and (ii) in good operating order for the function
intended by its manufacturer's warranties and recommendations. 

        (h)   Upon
the occurrence and continuance of an Event of Default beyond any applicable cure period, if Lessor demands, pursuant to Section 9(b)(ii) hereof,
Lessee shall, at its expense, deliver the Equipment and all of the service records and all software and software documentation subject thereto to Lessor at a location not to exceed 1,500 miles from
Lessee's premises, in the same operating order, repair, condition and appearance as on the Acceptance Date, reasonable wear and tear only excepted, with all engineering and safety changes prescribed
by the manufacturer or Lessee's Maintenance Organization incorporated therein. At the time of return, the Equipment must be able to perform the function that it was originally intended to perform
without additional maintenance. If any computer software requires re-licensing when removed from Lessee's premises, Lessee shall bear all costs of such re-licensing. Lessee
shall, prior to such termination, arrange and pay for any repairs and changes as are necessary for the Equipment to satisfy the return condition stated herein and for the manufacturer or Maintenance
Organization to accept the Equipment under contract maintenance at its then standard rates, or alternatively, Lessor shall be entitled to repossess the Equipment and all of the service records and all
software and software documentation subject thereto from Lessee's premises. 

6.     Leasehold Rights and Inspection:  

        (a)   The
Equipment shall remain personal property regardless of the manner in which it may be installed or attached. Lessee shall, at Lessor's request, affix to the
Equipment, tags, decals or plates furnished by Lessor, indicating Lessor's security interest and Lessee shall not permit their removal or concealment. 

        (b)   Lessee
shall keep the Equipment free and clear of all liens and encumbrances except for (i) Lessor's security interest, (ii) the security interests of
Bridge Bank, N.A. and Horizon Technology Funding Company, and (iii) liens or encumbrances arising through the actions or omissions of Lessor which are not otherwise the obligation of Lessee to
clear or satisfy hereunder. LESSEE SHALL NOT SELL, CONVEY, TRANSFER, PART WITH POSSESSION OF, OR ASSIGN OR OTHERWISE ENCUMBER THIS LEASE OR ANY OF ITS RIGHTS HEREUNDER OR SUBLEASE THE EQUIPMENT, OR
SUFFER A CHANGE IN MAJORITY INTEREST OR CONTROL OF ITS OWNERSHIP IN ANY ONE TRANSACTION OR SERIES OF RELATED TRANSACTIONS, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (SAID CONSENT NOT TO BE
UNREASONABLY WITHHELD). EXCEPT AS PERMITTED HEREIN, ANY SUCH PURPORTED TRANSACTION SHALL BE NULL AND VOID AND OF NO FORCE AND EFFECT. LESSEE SHALL NOT BECOME THE SUBJECT MATTER OF, OR ENTER INTO ANY
MERGER OR ACQUISITION TRANSACTION WITH ANY OTHER ENTITY WHICH RESULTS IN SUCH OTHER ENTITY OBTAINING OWNERSHIP OR CONTROL OF OVER FIFTY PERCENT (50%) OF THE EQUITY OF THE LESSEE, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR (SAID CONSENT NOT TO BE UNREASONABLY WITHHELD). No permitted assignment or sublease shall relieve Lessee of any of its obligations hereunder. 

        (c)   Lessor
or its agents shall have free access to the Equipment upon two (2) business days advance notice and any and all records thereto at all reasonable times
(during ordinary business hours) for the purpose of inspecting the Equipment and for any other purpose contemplated in this Lease. Such inspections shall be at Lessor's cost and expense, except that
once annually during the Lease Term, or whenever an Event of Default has occurred or is continuing beyond any applicable cure period, the inspections shall be at Lessee's cost and expense. 

        (d)   Lessee
shall immediately notify Lessor of all material details concerning any significant damage to, or loss of, the Equipment arising out of any event or occurrence
whatsoever, including but not limited to, the alleged or apparent improper manufacture, functioning or operation of the Equipment. 

7.     No Warranties By Lessor:  

        Lessee warrants that, at the Acceptance Date thereof, it shall have (a) thoroughly inspected the Equipment; (b) determined for itself that all items
of Equipment are of a size, design, capacity and manufacture selected by it; and (c) satisfied itself that the Equipment is suitable for Lessee's purposes. LESSOR IS
FINANCING THE EQUIPMENT FOR LESSEE "AS IS", "WHERE IS" AND NOT BEING THE MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, MAKES NO WARRANTY OR REPRESENTATION WHATSOEVER,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP OR AS
TO PATENT INFRINGEMENT OR THE LIKE, it being agreed that all such risks, as between Lessor and Lessee, are to be borne by Lessee. Lessee agrees to look solely to the
manufacturer or to suppliers of the Equipment for any and all warranty claims and any and all warranties made by the manufacturer or the supplier of Lessor are, to the extent to which the same may be
assignable, hereby assigned to Lessee for the term of the applicable Equipment Schedule. Lessee agrees that Lessor shall not be responsible for the delivery, installation, maintenance, operation or
service of the Equipment or for delay or inadequacy of any or all of the foregoing. Lessor shall not be responsible for any direct or consequential loss or damage resulting from the installation,
operation or use of the Equipment or otherwise. Lessee will defend, indemnify and hold Lessor harmless against any and all suits, judgments, claims, demands and 

liabilities
of any kind and nature (including without limitation claims relating to environmental discharge, cleanup or compliance, and claims arising out of or in connection with the design,
manufacture, possession or operation of the Equipment, including environmental, product, or strict liability) and all costs and expenses (including, without limitation, reasonable attorneys' fees and
expenses), fines, penalties (and other charges of applicable governmental authorities), licensing fees relating to any item of Equipment, damage to or loss of property (including without limitation
consequential or special damages to third parties or damages to Lessee's property), or bodily injury to or death of any person (including, without limitation, any agent or employee of Lessee) to the
extent they may be incurred or suffered by Lessor or Assignee in connection herewith except to the extent such suits, judgments, claims, demands, liabilities, costs, expenses, fines, penalties, fees
or losses are caused by Lessor's gross negligence or willful misconduct. Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Lease 

8.     Risk of Loss on Lessee:  

        (a)   Beginning
on the Acceptance Date thereof and continuing until the Lease is terminated and all obligations of Lessee are performed, Lessee relieves Lessor of
responsibility for all risks of physical damage to or loss or destruction of the Equipment, howsoever caused (including without limitation, accident, theft, misplacement, condemnation, seizure,
forfeiture and abandonment) ("Event of Loss") with the exception of loss incurred due to Lessor's gross negligence and /or willful miscounduct. During the term of this Lease as to any Equipment
Schedule, Lessee shall, at its own expense, keep in effect all risk and public liability insurance policies covering the Equipment designated in each Equipment Schedule. The public liability insurance
policy shall be in such amount as is reasonably acceptable to Lessor. Any increase in the amount of such insurance coverage reasonably requested by Lessor shall be put into effect on the next
succeeding renewal date of such insurance. The all risk insurance policy shall be for an amount not less than the higher of replacement cost of the Equipment or the Stipulated Loss Value. Lessor, its
successors and assigns and/or such other party as may be designated by any thereof to Lessee, in writing, shall be named as additional insured and/or loss payees on such policies, which shall be
written by an insurance company of recognized responsibility which is reasonably acceptable to Lessor. Evidence of such insurance coverage shall be furnished to Lessor no later than the Acceptance
Date set forth in the Equipment Schedule(s) and, from time to time, thereafter as Lessor may request. Such policies shall provide that no less than thirty (30) days written notice shall be
given Lessor and any other party named as loss payee prior to cancellation of such policies for any reason. If Lessee fails to provide evidence of such insurance or to deliver evidence of renewal of
each such policy within thirty (30) days after Lessor's written request, Lessor shall, at its option, declare an Event of Default under the Lease pursuant to Section 9(a)(iv). Lessee
hereby irrevocably appoints Lessor or any other party named as loss payee as Lessee's attorney-in-fact coupled with an interest, so long as a default or Event of Default
hereunder exists and is continuing to negotiate and make claim for, receive payment of, and execute any and all documents that may be required to be provided to the insurance carrier in substantiation
of any such claim for loss or damage under said insurance policies, and to endorse Lessee's name to any and all drafts or checks in payment of the loss proceeds. 

        (b)   If
any item of Equipment is damaged or suffers an Event of Loss, Lessee shall give to Lessor prompt notice thereof and this Lease shall continue in full force and effect
without any abatement of Rent. Lessor shall determine, within twenty (20) days after the date of occurrence of such damage or Event of Loss, whether such item of Equipment can be repaired. In
the event Lessor reasonably determines that such item of Equipment can be repaired, Lessee shall cause such item of Equipment to be promptly repaired. In the event Lessor reasonably determines that
the item of Equipment cannot be repaired, Lessee shall at Lessee's election, either: (i) promptly replace such item of Equipment with equipment of like or better kind, make and model, utility
and value free and clear of all liens and encumbrances except for Lessor's lien, and this Lease shall continue in full force and effect as though such damage or destruction had not occurred; or
(ii) pay to Lessor an amount equal to the Stipulated Loss Value for the item of Equipment for the Rent due date immediately preceding the Event of Loss and this Lease will terminate as to the
item of Equipment suffering the Event of Loss and the Rent under the applicable Equipment Schedule shall be reduced thereafter pro rata by the reduction of the original Equipment Cost of the item of
Equipment suffering the Event of Loss. All proceeds of insurance received by Lessor, the designated loss payee, or Lessee under the policy referred to in the preceding paragraph of this Section shall
be applied toward the cost of any such repair or replacement so long as Lessee shall not be in default of its obligations hereunder. 

9.     Events of Default and Remedies:  

        (a)   Events of Default. The occurrence of any one of the following shall constitute an Event of Default hereunder: 

        (i)    Lessee
fails to pay an installment of Rent or other payment within three (3) business days after such Rent payment is due. 

        (ii)   Lessee
attempts to remove, sell, transfer, encumber, sublet or part with possession of the Equipment or any items thereof, except as expressly permitted herein. 

        (iii)  Any
material representation or warranty made or given by Lessee in this Lease or in any other document furnished to Lessor in connection herewith, (provided that any
breach of a representation or warranty that has a bearing on the Lessor's credit, economics, residual, title or collateral security considerations under this Lease shall be deemed to be material),
shall prove to have been incorrect in any material respect when made or given or, by reason of failure to state a material fact or otherwise, shall prove to have been misleading in any material
respect when such omission was made, or any of the statements or other documents or information submitted at any time heretofore or hereafter by Lessee to Lessor shall prove to have been untrue or, by
reason of failure to state a material fact or otherwise, shall prove to have been misleading in any material respect when made or given or omitted; 

        (iv)  Lessee
shall fail to observe or perform any of the other obligations required to be observed or performed by Lessee hereunder and such failure shall continue uncured
for thirty (30) days after written notice thereof to Lessee by Lessor or the then Assignee hereof. 

        (v)   Lessee
shall be in material breach of or in default beyond any applicable notice and/or cure period under any lease, loan, or other agreement or obligation at any time
executed with Lessor or with any other lessor, lender, or other creditor in the amount of $250,000, whether or not Lessee's obligations thereunder have been or are being accelerated by such party. 

        (vi)  Lessee
ceases doing business as a going concern, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts as they become due,
files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a petition seeking for itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar arrangement under any present or future statute, law or regulation or files an answer admitting the material allegations of the petition filed against it in any such proceeding,
consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of it or of all or any substantial part of its assets or properties, or if it or its shareholders shall take any
action looking to its dissolution or liquidation. 

        (vii) Within
thirty (30) days after commencement of any proceedings against Lessee seeking reorganization, arrangement, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation, such proceedings shall not have been dismissed, or if within thirty (30) days after the appointment without Lessee's
consent or acquiescence of any trustee, receiver or liquidator of it or of all or any substantial part of its assets and properties, such appointment shall not be vacated. 

        (viii) Lessee
becomes the subject matter of, or enters into any merger or acquisition transaction with any other entity which results in a Change in Control, without the
prior written consent of Lessor, which consent shall not be unreasonably withheld. 

        (ix)  Lessee
receives written notice from Lessor that Lessee has failed to comply with its insurance obligations under Section 8(a) and Lessee fails to so comply
within ten (10) business days after receipt of notice. 

        Any
Event of Default shall be deemed material and a substantial impairment of Lessor's interests for the purpose of this Lease, the UCC, and any other applicable law. 

        (b)   Remedies. Upon the occurrence and continuance of an Event of Default beyond any applicable cure period, Lessor may at its
option do any of the following: (i) by notice to Lessee terminate this Lease as to any or all Equipment Schedules; (ii) whether or not this Lease is terminated as to any or all Equipment
Schedules, take possession of any or all of the Equipment listed on any or all Equipment Schedules, wherever situated, and for such purpose, enter upon any premises without liability for so doing or
Lessor may cause Lessee and Lessee hereby agrees, to return said Equipment to Lessor as provided in this Lease; (iii) recover from Lessee, as liquidated damages for loss of a bargain and not as
a penalty, an amount equal to the Stipulated Loss Value of all Equipment calculated as of the Rent payment date preceding the date that the event which resulted in the Event of Default occurred, which
payment shall become immediately due and payable; and (iv) sell, dispose of, hold, use or lease any Equipment as Lessor in its sole discretion may determine. Lessor reserves the right, in its
sole and absolute discretion, to control the timing and negotiate the terms of any re-leasing or re-sale of any or all of the Equipment at a public auction or in a private
sale, at such time, on such terms and with such notice as Lessor shall in its sole and absolute discretion deem commercially reasonable. 

        (c)   Mitigation. In the event that Lessee shall have paid to Lessor or its Assignee, (as hereinafter defined), the liquidated
damages referred to in Section 9(b)(iii) above, and Lessee shall have previously returned the Equipment to Lessor in accordance with Section 9(b)(ii) above, then Lessor or
its Assignee shall pay to Lessee, promptly after receipt thereof, all sale or rental proceeds received from any sale or re-letting of the Equipment during the balance of the Basic Term
(after deduction of all unreimbursed damages, costs and expenses incurred by Lessor as a result of the Event of Default; or other sums due Lessor by Lessee under the Lease) said amount never to exceed
the amount of the liquidated damages paid by Lessee. Lessor shall use commercially reasonable efforts to sell, re-lease or otherwise use or dispose of the Equipment in mitigation of
damages to the extent required by law (however, Lessor shall not be obligated to give preference to the sale, lease or other disposition of the Equipment over the sale, lease or other disposition of
similar equipment owned or leased by Lessor). 

        (d)   Other Damages. Notwithstanding the exercise by Lessor or its Assignee of any of the remedies found in Section 9(b)
above, Lessee shall, in any event remain fully liable for reasonable damages as provided by law and for all reasonable costs of collection and reasonable expenses incurred by Lessor or its Assignee on
account of such Event of Default including but not limited to all expenses of selling or leasing the Equipment (including broker's and sales representative's fees and commissions), cleaning and
repainting, storage costs, repossession costs, court costs and reasonable attorney's fees. Lessee hereby agrees that, in any event, it will be liable for any deficiency after any lease or other
disposition of the Equipment. The rights afforded Lessor hereunder shall not be deemed to be exclusive, but may be exercised concurrently and shall be in addition to any other rights or remedies
provided to creditors or lessors under the UCC or otherwise by law or equity. 

10.   Net Lease:  

        It is understood and agreed that this is a net lease, and that, as between Lessor and Lessee, Lessee shall be responsible for all costs and expenses of every
nature whatsoever arising out of or in connection with or related to this Lease or the Equipment, or its possession, ownership, or use (including, but not limited to, taxes, insurance, maintenance,
transportation in and out, rigging, drayage, packing, installation and disconnect charges). Lessee's obligations to Lessor or its Assignee, as hereinafter defined, hereunder (including its obligation
to pay Rent when and as due without notice or demand, or any other sum due hereunder upon demand) are absolute and unconditional, and (i) may not be terminated, rescinded or revoked for any
reason whatsoever, except pursuant to the express provisions hereof, and (ii) shall not be subject to any abatement, reduction, recoupment, defense, offset or counterclaim available to Lessee
for any reason whatsoever including operation of law, defect in the Equipment, failure of Lessor or any Assignee to perform any of its obligations hereunder or for any other cause or reason
whatsoever, whether similar or dissimilar to the foregoing. Except under any circumstance in which no Event of Default has occurred, and Lessor or
its Assignee nevertheless interferes with Lessee's quiet enjoyment of the Equipment during the term of the Lease, Lessee hereby waives any and all defenses or claims Lessee may assert against Lessor
or any Assignee, whether now or in the future, and which would prevent Lessee from performing its obligations hereunder, including, without limitation, defect in the Equipment, interference with the
Lessee's use, operation or possession of the Equipment, failure of the Lessor or of any Assignee to perform any of its obligations hereunder, the liability or indebtedness of Lessor or any Assignee to
Lessee or any other person, or the bankruptcy, insolvency or default of the Lessor or any Assignee. In the event this Lease is terminated prior to its expiration by Lessee, then Lessee shall be
responsible and agrees to pay any and all costs and expenses and/or liabilities of Lessor as a result thereof, including taxes and any pre-payment penalties, fees or charges reasonably
assessed by any Assignee against Lessor or Lessee. Lessee hereby agrees that in the event that Lessee fails to pay or perform any material obligation under this Lease, Lessor may, at its option, pay
or perform said obligation and any payment made or expense incurred by Lessor in connection therewith shall become additional Rent which shall be due and payable by Lessee upon demand. 

11.   Assignment:  

        (a)   Lessee
agrees that Lessor may transfer or assign all or any part of Lessor's right, title and interest in, under or to the Equipment and this Lease and any or all sums
due or to become due pursuant to any of the above, to any third party (the "Assignee") for any reason and the Assignee may so reassign and transfer. Lessee agrees that upon receipt of written notice
from Lessor or Assignee of such assignment, Lessee shall perform all of its obligations hereunder for the benefit of Assignee and any successor assignee and, if so directed, shall pay all sums due or
to become due hereunder directly to the Assignee or to any other party designated by the Assignee. 

        (b)   Upon
receipt of notice of any such assignment, Lessee agrees to execute and deliver to Lessor such documentation as Assignee or any successor assignee may reasonably
require, including but not limited to a Notice and Acknowledgment of Assignment substantially in the form of Exhibit E hereto but which may also
include reaffirmation of Lessee's obligations to Assignee as are set forth in Section 10 hereof, which requires Lessee to make certain representations or reaffirmations as to some of the basic
terms and covenants contained in this Lease. Unless otherwise indicated in the Notice and Acknowledgment of Assignment, Lessor shall not be relieved of any of its obligations hereunder, and the rights
of Lessee hereunder shall not be impaired. 

12.   Ownership and Tax Treatment:  

        Lessee shall be deemed the owner of the Equipment for all purposes, including Federal and State income taxes, and all applicable sales, use, and property taxes,
and for FASB accounting purposes. The Lease is a "finance" lease for Federal income tax purposes and Lessee shall be entitled to all Federal and State income tax benefits attributable to owners of
tangible personal property. Lessor shall not take any deductions or credits for the Equipment inconsistent with this provision. 

13.   Representations and Warranties of Lessee:  

        The Lessee represents and warrants to the Lessor that the following are true and correct on the date the Lessee executes any Lease: 

        (i)    The
Lessee is duly formed and validly existing under the laws of the State of its organization, and has the full power and authority and legal right to carry on its
business as is now conducted, and is duly qualified to do business in the jurisdictions where the Equipment is or will be operated. 

        (ii)   The
Lease has been duly authorized, executed and delivered by the Lessee, and, constitutes the valid, legal and binding agreement of the Lessee, enforceable against the
Lessee in accordance with its terms. 

        (iii)  The
execution and delivery by the Lessee of the Lease and the Lessee's compliance with all of the provisions of the Lease are within the powers of the Lessee, and will
not, to the best of Lessee's knowledge, conflict with or result in a breach of any presently existing material law or governmental rule, regulation order, writ, injunction or decree. 

        (iv)  No
authorization or approval from, consent of, or filing, registration or qualification with, any state, federal or local governmental or public body or authority,
except as has been obtained or made, is necessary for the execution or delivery by the Lessee of the Lease, or the validity of the Lease or the operation and leasing of the Equipment by the Lessee. 

        (v)   The
Lessee, has not directly or indirectly offered, sold, encumbered or transferred any interest in the Equipment or solicited offers to buy, encumber or transfer any
such interest from, anyone other than the Lessor. Each Vendor of the Equipment is not affiliated with the Lessee and, to the best of Lessee's knowledge, Lessor has received the benefit of any and all
discounts or rebates thereto, and Lessee has not received directly any such rebates, discounts, kickbacks or reimbursements. 

        (vi)  Lessor's
interest in each item and Equipment will be free of all claims, liens and encumbrances arising by, through or under the Lessee other than pursuant to the terms
of this Lease. 

        (vii) The
Lessee is not in violation of any order of any court, arbitrator or governmental body material laws, ordinances or governmental rules or regulations (domestic or
foreign) to which it is subject, or with respect to any material loan agreement, debt instrument or contract with a supplier or customer of Lessee and has not failed to obtain or apply for any
licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property (including the Equipment) or to the conduct of its business. 

        (viii) There
are no suits or proceedings pending or, to the knowledge of the Lessee, threatened in any court or before any regulatory commission, board or other governmental
administrative agency against or affecting the Lessee which if determined adversely to Lessee would materially adversely affect Lessee's business as presently conducted or its ability to perform its
obligations hereunder. 

        (ix)  Neither
the Lease, nor any written statement furnished to the Lessor by the Lessee hereby, contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. 

        (x)   All
applications, financial statements and Lessee Reports, and all information hereafter furnished by Lessee and Guarantor to Lessor will be, true and correct in all
material respects as of the date submitted; 

        (xi)  As
of the date hereof, the date of any Equipment Schedule and of any Acceptance Date, there has been no material adverse change in any matter stated in such Lessee
Reports, which have been submitted, by Lessee and/or any Guarantor to Lessor. 

        (xii) Neither
Lessee nor any Guarantor has omitted to state any material fact which would make any of the foregoing false or misleading in light of the circumstances under
which made. 

        (xiii) The
Lessee's principal place of business, chief executive office, and state of incorporation (as such terms are used in the UCC) are indicated in the heading hereof. 

        (xiv) Since
the date of the Proposal Letter issued by Lessor in connection with this transaction, and as of the date of Lessee's latest Lessee Reports, which have been
previously submitted by Lessee to Lessor, there has not been any material adverse change in the contemplated business, operations, properties or financial condition of the Lessee. 

        (xv) The
Lessee will use the Equipment in accordance with its original request for quote or proposal, or any other written or oral representations made concerning the usage
of the Equipment. The Equipment will be used "predominately" in the United States as such term is used in the Internal Revenue Code. 

        (xvi) The
Equipment shall at all times remain the property of Lessee. Lessee will at all times protect and defend at its own cost and expense, the security interest of
Lessor against all claims, liens and legal processes of creditors of Lessee and other persons claiming by, through or under Lessee, and keep the Equipment free and clear from all such claims, liens
and processes. The Equipment is and shall remain personal property, and not part of any real estate or Lessee shall have obtained from all applicable real property interest holders appropriate
consents, waivers, and releases as reasonably requested by Lessor. 

14.   End-of-Lease Position:  

        Lessee's End-of-Lease position with respect to any Lease is as set forth on the applicable Equipment Schedule. 

15.   Miscellaneous:  

        (a)   Stock Warrant. Lessee agrees that it will issue to Lessor upon execution of this Lease Agreement a
warrant for the purchase of Lessee's stock (the "Warrant"), in the form of the Warrant Agreement attached hereto as Exhibit F. 

        (b)   Choice of Law. No consent or approval provided for herein shall be binding upon Lessor unless signed on its behalf by an
officer of Lessor. This Lease Agreement and each Lease shall be deemed to have been made in the State of California and shall be governed in all respects by the laws of such State. Lessor and Lessee
hereby submit themselves to the jurisdiction of the State and Federal courts in San Francisco, California or San Diego, California for any matter or controversy arising from any Lease. In the event
any provision of this Lease is enforced in a court of law, or any other judicial or administrative setting, then the party succeeding in such matter or controversy shall also be awarded all of its
attorney's fees and court costs and other expenses incurred in the pursuit or defense of such matter or controversy (including, without limitation, the defense of any counter-claims forwarded by the
losing party). 

        (c)   Entire Agreement. This Lease constitutes the entire agreement between Lessee and Lessor with respect to the Equipment,
supersedes all prior oral or written agreements and understandings, and no covenant, condition or other term or provision hereof may be waived or modified orally. 

        (d)   Notices. All notices hereunder shall be in writing, and any such notice shall become effective (i) the following day
upon delivery thereof to an overnight mail or courier service, (ii) in the case of notice by first class United States mail, three days after being so deposited in the United States mail, or
(iii) in the case of notice by facsimile transmission, immediately upon transmission, in each case addressed to the appropriate party at its respective address set forth above in the caption
heading of this Lease, or at such other address as such party may from time to time designate by written notice to the other party to the address indicated in the heading of this Lease Agreement. 

        (e)   Successors and Assigns. This Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective
successors and assigns (including any subsequent assignee of Assignee). 

        (f)    Unenforceability. If any term or provision of this Lease or the application thereof to any person is, to any extent,
invalid or unenforceable, the remainder of this Lease, or the application of such provision to the person other than those to which it is invalid or unenforceable, shall not be affected thereby, and
each provision of this Lease shall be valid and be enforced to the fullest extent permitted by law, provided however, that to the extent that the provisions of any such applicable law can be waived,
they are hereby waived by the Lessee. 

        (g)   Waivers and Consents. No waiver, approval, or consent of any of the terms and conditions hereof shall be effective unless
in writing and signed by the party against whom such waiver, approval, or consent is sought to be enforced. Any waiver, approval or consent granted by the Lessor are only effective if signed by an
authorized officer of the Lessor. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. 

        (h)   Further Assurances, Financing Statements. Lessee agrees to execute any and all other documents, instruments and agreements,
reasonably requested by the Lessor in furtherance of the intent of the parties herein. Lessor is hereby authorized by Lessee to cause this Lease or other instruments, including Uniform Commercial Code
Financing Statements, to be filed or recorded for the purpose of showing Lessor's interest in the Equipment. Lessee shall pay Lessor a transaction fee in the amount of $4,000 for any costs or fees
relating to any filings hereunder and other transactional costs including, but not limited to, actual out of pocket costs, fees, searches, documentation preparation, documentary stamps, and privilege
taxes. Lessee agrees that it shall pay, in addition to the amounts referred to above, if necessary, any additional reasonable fees for outside legal counsel retained by Lessor after the date of this
Agreement to modify Lease or prepare or modify Warrant documentation not to exceed $3,500. 

        (i)    Conflict. In the event of any conflict between the terms and conditions of this Lease Agreement and the terms and
conditions of any Equipment Schedule or Rider thereto, the terms and conditions of such Equipment Schedule or Rider shall prevail. 

        (j)    Financial Statements. So long as there are amounts due Lessor under this Lease, Lessee hereby agrees to deliver to Lessor
or Assignee and any successor assignee a copy of Lessee's: (i) annual audited financial statements within the earlier of (x) the date such audited financial statements are provided to
existing investors, and (y) no more than one-hundred and eighty (180) days after the end of its fiscal year unless Lessor consents otherwise in writing; (ii) quarterly
unaudited financial statement within sixty (60) days after the end of its fiscal quarter; and (iii) at the request of Lessor, monthly unaudited financial statements within thirty
(30) days after the end of each month and other Lessee Reports. Lessee shall notify Lessor within three (3) days of Lessee becoming aware of an Event of Default hereunder or any
condition, event, or act which with notice or lapse of time would become an Event of Default hereunder. 

        (k)   Survival. Any obligation required to be performed by Lessee under this Lease, which by their nature, or expressly survive
the termination of this Lease (including, without limitation, the obligations identified in Sections 4, 5, 6, 7, 8, 9, and 10), shall survive the expiration or other termination of this Lease for the
period prescribed by applicable law. 

        (l)    Use of Information. Lessee shall permit Lessor to list Lessee's name and logo and to describe the transaction contemplated
herein in Lessor's marketing materials and to post such information on Lessor's website. 

16.   Lease Status; California Finance Lenders Law; Security Interest:  

        Lessor and Lessee agree that Article 9 of the UCC governs the terms of this Lease, and this Lease will be deemed a "lease intended as security". This lease
intended as security is made pursuant to the California Finance Lenders Law, Division 9 (commencing with Section 22000 of the California Financial Code). Lessor is a California Finance Lender
with California Finance Lender's License No. 605-2302. FOR INFORMATION, CONTACT THE DEPARTMENT OF CORPORATIONS, STATE OF CALIFORNIA. Lessee hereby grants to Lessor a security
interest pursuant to Article 9 of the UCC as follows (the "Lessor's Lien"): 

        LESSOR
AND LESSEE AGREE THIS LEASE IS TO BE CONSTRUED TO BE A LEASE INTENDED AS SECURITY, AND LESSEE HEREBY GRANTS TO LESSOR A SECURITY INTEREST IN THE EQUIPMENT AND ANY ATTACHMENTS,
ADDITIONS, ACCESSIONS, SUBSTITUTIONS AND REPLACEMENTS THERETO AND LESSEE HEREBY AGREES TO PERMIT LESSOR TO FILE ANY AND ALL UCC FINANCING STATEMENTS REQUIRED IN ACCORDANCE WITH SECTION 15
(h) HEREOF. 

(Remainder
of page intentionally left blank) 

NO
INTEREST IN THE RENT DUE OR THE RIGHTS OF THE LESSOR UNDER ANY LEASE OF EQUIPMENT CAN BE TRANSFERRED BY THE DELIVERY OF POSSESSION OF ANY COUNTERPART OF THIS LEASE AGREEMENT. SUCH AN INTEREST CAN
BE TRANSFERRED ONLY BY DELIVERY OF POSSESSION OF THE ORIGINAL SIGNED COUNTERPART NO. 1 OF AN EQUIPMENT SCHEDULE EXECUTED PURSUANT HERETO. 

	LESSOR:	 	LESSEE:
	
ATEL VENTURES, INC.	
 	
CONVIO, INC.
	

By:	

/s/ Partitosh K. Choksi
	
 	

By:	

/s/ James Offerdahl

	

Title:	

Executive Vice President
	
 	

Title:	

Chief Financial Officer

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