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Exhibit 10.9  

BUILDING LEASE AGREEMENT  

        This Building Lease Agreement ("Lease") dated as of January 26, 2004 ("Effective
Date"), is entered into by and between ROBERT JEAN LICHTER and GAIL F. LICHTER, Trustees of THE LICHTER FAMILY TRUST FIRST AMENDED AND RESTATED DECLARATION OF TRUST DATED
NOVEMBER 7, 1996, and KENNETH R. SATTERLEE and CANDACE C. SATTERLEE, Trustees of THE SATTERLEE FAMILY TRUST UTD APRIL 24, 1986, as tenants-in-common
("Landlord"), and INFOSONICS CORPORATION, a Maryland corporation ("Tenant"), on all of the terms and
conditions set forth below and in the attached Exhibits, each of which are incorporated into this Lease by this reference. For and in consideration of the mutual covenants and conditions set forth in
this Lease, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises as described in Section 1.1(b) below. 

        1.     Basic Lease Provisions. ("Basic Lease Provisions") 

        1.1   Building and Premises:

        (a)   Building. The "Building" shall mean the building and improvements located
at 5880 Pacific Center Blvd., San Diego California. 

        (b)   Premises. The "Premises" shall mean 31,925 square feet of rentable area
located within the Building and as depicted on the attached Exhibit "A". 

        (c)   Elan Lease. Tenant acknowledges that, as of the Effective Date, a portion of the Premises ("Elan
Premises") are currently leased by Elan Pharmaceuticals, Inc., a Delaware corporation ("Elan") pursuant to a Lease dated
November 19, 2003 ("Elan Lease") between Landlord and Elan. A copy of the Elan Lease has been provided to Tenant. Tenant's leasing of the
Premises pursuant to this Lease shall be subject to the Elan Lease and Elan's right to possession and quiet enjoyment of the Elan Premises during the term thereof, as the same may be extended. The
Elan Premises contain 8,008.64 square feet of rentable area, consisting of (i) the five (5) areas depicted as exclusive Elan space on the attached Exhibit
"A" and (ii) a twenty-five and 09/100 percent (25.09%) portion of the
common space within the Building as depicted on the attached Exhibit "A". The initial term of the Elan Lease is scheduled to expire on
November 30, 2004. Elan has one (1) option to extend the term of the Elan Lease through and until November 30, 2005. During the term of the Elan Lease, as the same may be
extended, (A) Elan shall have the right to use the Elan Premises pursuant to the terms and provisions of the Elan Lease; and (ii) Tenant shall bill Elan directly for the actual cost of
electricity service to the Elan Premises, subject to the applicable provisions of the Elan Lease. During the term of the Elan Lease, as the same may be extended, Landlord shall pay Tenant the sum of
Sixteen Thousand Seventeen and 28/100 Dollars ($16,017.28) ("Reimbursement Amount") on a monthly basis as a reimbursement of Elan's allocated share of
Base Rent, Operating Expenses and Real Property Taxes, subject to the provisions of Section 1.5below. The Reimbursement Amount shall be pro rated for
any partial month based on the actual number of days in the applicable month. Landlord shall use commercially reasonable efforts to enforce the terms and provisions of the Elan Lease. Upon termination
of the Elan Lease for any reason (other than by agreement between Landlord and Elan to voluntarily terminate the Elan Lease without Tenant's prior written consent, which may be withheld in Tenant's
sole and absolute discretion), (1) the Premises, for all purposes under this Lease, shall be deemed to include the Elan Premises and (2) Landlord shall not be obligated to pay Tenant the
Reimbursement Amount. 

        1.2   Use: Distribution, light assembly and repair of manufactured products and related office and administrative uses, subject
to Section 5 below. 

        1.3   Term: The term of this Lease ("Term") shall be for
eighty-four (84) months, commencing upon the Commencement Date (as defined below), subject the provisions of Section 2.4 below. 

 

The
"Commencement Date" shall be the date which is sixty (60) days following the earlier of (a) the date of Substantial Completion of the
Tenant Improvements (as defined in the Work Letter Agreement attached as Exhibit "B" ("Work Letter") and
incorporated herein by this reference) (with the exception of "punch list" items, as provided in Section 9 of the Work Letter), or (b) the date
on which Tenant commences its ordinary business operations from the Premises or any portion thereof. The target Commencement Date is April 1, 2004. Tenant shall have two (2) options to
extend the Term for periods of five (5) years each, pursuant to Section 2.5 below. 

        1.4   Rent: Base rent payable for the Premises ("Base Rent") during the initial
twelve (12) month period of the Term shall be One and 05/100 Dollars ($1.05) per rentable square foot of the Premises per month (i.e., $33,521.25). Base Rent shall be increased annually on each
anniversary of the Commencement Date by an amount equal to three percent (3%) of the Base Rent payable for the immediately preceding twelve (12) month period pursuant to Section  3.2 below. Rent
shall be payable in advance on the first (1st) day of each month during the Term, and shall be subject to a late charge if
not received by
the tenth (10th) day of such month, as provided in Section 12.4 below. Provided that Tenant is not in default under this Lease after the
lapse of any applicable cure periods, Base Rent shall be abated for month fourteen (14) of the initial Term. 

        1.5   Initial Rent Payment: Concurrently with delivery of the executed Lease, Tenant shall pay Landlord the sum of One Hundred
Five Thousand Twenty-Three and 82/100 Dollars ($105,023.82) ("Initial Rent Payment") (i.e., an amount equal to $33,521.25 per month,  less the
$16,017.28 monthly Reimbursement Amount, for six months) in immediately available funds, which shall be applied toward the first five
(5) monthly installments of Base Rent. Landlord shall not be obligated to pay the Reimbursement Amount during months one (1) through (6) of the initial Term. The remaining,
unapplied portion of the Initial Rent Payment, together with the month six (6) Reimbursement Amount (i.e. $17,503.97 + $16,017.28 = $33,521.25), shall be retained by
Landlord as the Security Deposit for the remainder of the Term, as the same may be extended. 

        1.6   Security Deposit: Thirty-Three Thousand Five Hundred Twenty-One and 25/100 Dollars ($33,521.25)
("Security Deposit"), payable as provided in Section 1.5 above. 

        1.7   Tenant's Share of Operating Expenses: One hundred percent (100%), subject to the provisions of Section  3.3 below. In addition, Tenant shall pay for the actual cost of
electricity services to the Building (subject to the provisions of Section  1.1(c) above) and security services required by Tenant, if any. 

        1.8   Parking: Approximately three (3) spaces per one thousand (1,000) square feet of rentable area. Ten
(10) spaces shall be reserved spaces located at the entrance to the Building for Tenant's visitors. 

        1.9   Broker: Landlord shall pay a commission to Business Real Estate Brokerage Company (David Odmark) equal to
31/2% of the Base Rent value of the initial Term (i.e., 3.5% of $3,047,736.83 = $106,670.79), fifty percent (50%) payable upon full execution and delivery of this Lease, with the
remaining fifty percent (50%) payable upon the Commencement Date. If the Purchase Option is exercised and the Closing occurs pursuant to Section 37
below, Landlord shall pay a commission to Business Real Estate Brokerage Company equal to One Hundred Forty-One Thousand Seven Hundred Fifty and 00/100 Dollars ($141,750.00) (i.e., 3.5% of
$4,050,000.00), less (a) the amount previously paid to Business Real Estate Brokerage Company as provided above in this Section  1.9 and (b) The
Amortization Delta Amount (as defined in Section 37(b) below).
 

        1.10 Limited Purchase Option: See Section 37 below. 

        2.     Term. 

        2.1   Term. The terms and provisions of this Lease shall be effective as of the Effective Date of this Lease. The Term and
Commencement Date of this Lease shall be as specified in Section 1.3 of the Basic Lease Provisions. 

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        2.2   Acceptance. On the Commencement Date, Tenant shall be deemed to have accepted the Premises in their then existing
condition and subject to all applicable recorded easements and covenants, conditions and restrictions, including, without limitation, the Declaration of Covenants, Conditions and Restrictions for
Units 2, 3, 4, and 6 of Pacific Corporate Center recorded October 24, 1986, as File No. 86-482692 ("CC&Rs"), and all
applicable zoning and municipal, county, state and federal laws, codes, ordinances and regulations, including without limitation, laws and regulations pertaining to the Americans with Disabilities Act
of 1990, 42 U.S.C. § 12101, et seq., as amended, and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 § U.S.C. 9601, et seq., as amended
(collectively, "Applicable Laws"). Notwithstanding the foregoing, Landlord represents and warrants that it has received no written notice (and is
otherwise unaware) of any violation of any Applicable Laws, including, without limitation, any laws or regulations regulating the use, storage and release of Hazardous Material, affecting the Building
or the Premises as of the Effective Date. Landlord shall be fully responsible, at Landlord's sole cost and expense, for correcting and/or remediating any such violations existing on or prior to the
Commencement Date. In addition, and without limiting the foregoing, Landlord shall construct or cause the construction of the Tenant Improvements pursuant to the Work Letter in compliance with
Applicable Laws, including, without limitation, applicable building and electrical code requirements. 

        2.3   Notice Confirming Commencement Date. Following the Commencement Date, Landlord shall deliver to Tenant a notice setting
forth the Commencement Date and expiration date of the Term, which notice shall be in the form of Exhibit"C" attached hereto. Tenant shall execute such
notice and return the same to Landlord within five (5) days of receipt thereof. 

        2.4   Option to Terminate. Provided that Tenant is not in default under this Lease after the lapse of any applicable cure
periods, Tenant shall have a one-time right ("Termination Right") to terminate this Lease effective on the date which is sixty
(60) months after the Commencement Date, provided that (a) Tenant shall deliver written notice of its exercise of the Termination Right, if at all, on or prior to the date which is
fifty-four (54) months after the Commencement Date and (b) concurrently with such notice, Tenant shall pay Landlord an amount equal to the sum of (i) the unamortized
cost of the Tenant Improvements (i.e. $315,357.00), amortized over the initial seven (7) year term with interest at a rate of seven percent (7%), as of the effective date of termination, and
(ii) the unamortized portion of the commissions paid to the Broker (over the initial seven (7) year term), as of the effective date of termination. The Termination Right is personal to
the original Tenant hereunder and may not be assigned except in connection with a Permitted Transfer pursuant to Section 11.1 below. 

        2.5   Options to Extend Term. Provided that Tenant is not in default under the Lease after the lapse of any applicable cure
periods, Tenant shall have two (2) options (each an "Option"; collectively, the "Options") to
extend the Term of the Lease for additional periods of five (5) years each (each, an "Option Term") on all of the same terms and conditions of
the Lease, except as expressly provided below in this Section 2.5. Tenant may exercise each Option by delivering written notice to Landlord of its
intention to so extend the term of the Lease no later than the date which is six (6) months prior to the expiration of the existing Term. Base Rent payable during the each Option Term shall be
ninety-five percent (95%) of the Market Rate (as defined below) as of the date on which Tenant exercises the applicable Option. The "Market Rate" shall mean the terms and conditions which
would be offered to a non-renewing, non-expansion, non-equity, non synthetic-lease tenant for comparable space with improvements of comparable age, appearance and
quality of construction located in the Sorrento Mesa submarket of San Diego, taking into account the value of existing tenant improvements over standard tenant improvements, parking ratios, rental
rates, rent concessions, operating expense base year, rent increases and equivalent location, access, visibility and signage. Comparable lease terms shall be based on five (5) year transactions
with corresponding adjustments to rental rates and concessions. Landlord shall determine the Market Rate by using its good faith judgment and shall provide written notice of the Market Rate 

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to
Tenant within fifteen (15) days after Tenant delivers notice of exercise of the applicable Option. Tenant shall have thirty (30) days ("Tenant's Review Period") after receipt of
Landlord's notice of the Market Rate within which to accept such rent or to reasonably object thereto in writing. In the event that Tenant objects, Landlord and Tenant shall attempt to agree upon the
Market Rate using their good faith efforts. If Landlord and Tenant are unable to reach agreement within fifteen (15) days following Tenant's Review Period, then each party shall select an
independent arbitrator who shall by profession be a real estate broker who shall have been active over the past five (5) year period in the leasing of commercial properties in the vicinity of
the Building. Neither Landlord nor Tenant shall consult with such broker as to his or her opinion as to the Market Rate prior to the appointment. The two brokers shall determine the Market Rate,
taking into account the requirements of this Section 2.5 within five (5) business days after appointment. In the event that the brokers are
unable to agree on the Market Rate within such five (5) business day period, the brokers shall select a third similarly qualified broker to determine the Market Rate pursuant to the provisions
of this Section 2.5 within five (5) business days thereafter. The new Base Rent shall be equal to ninety-five percent (95%) of the
Market Rate, subject to annual increases as provided in Section 3.2 below. The Options are personal to the original Tenant hereunder and may not be
assigned except in connection with a Permitted Transfer pursuant to Section 11.1 below. 

        3.     Rent. 

        3.1   Monthly Payment. Tenant shall pay Landlord Base Rent and Operating Expenses set forth in Sections  1.4and 3.3 above,
respectively, without notice, demand, offset or deduction. Tenant shall pay Landlord
the Initial Rent Payment provided in Section 1.5 above upon execution and delivery of this Lease. Rent for any period during the Term which is for less
than one calendar month shall be prorated based upon the actual number of days of the applicable calendar month. Rent shall be payable in lawful money of the United States to Landlord at the address
stated in Section 22 below or to such other person or at such other places as Landlord may designate in writing. 

        3.2   Annual Increase to Base Rent. As used in this Lease, the "Adjustment
Date" shall mean the annual anniversary of the Commencement Date, on which date the Base Rent shall be increased by an amount equal to three percent (3%) of the Base Rent
payable for the immediately preceding 12-month period. 

        3.3   Operating Expenses. This Lease contemplates a transaction commonly described as a "triple-net lease" whereby
the parties intend that Tenant shall bear all of the costs incurred by Landlord in connection with the operation, repair, maintenance, management, restoration and replacement of the Building or any
portion thereof, except as otherwise expressly set forth in this Lease (collectively, "Operating Expenses"). In addition to the Base Rent, Tenant shall
pay to Landlord during the Term of this Lease 100% of the annual Operating Expenses attributable to the Building as defined in this Section 3.3.
Payments of annual Operating Expenses shall be estimated by Landlord and shall be due and payable monthly on the same date as the Base Rent. Operating Expenses payable by Tenant may be adjusted by
Landlord on a quarterly basis should the actual Operating Expenses exceed the then current estimates. Within sixty (60) days after the expiration of each calendar year, Landlord shall provide
Tenant with a reasonably detailed statement showing the actual amount of Operating Expenses for the prior calendar year. If the estimated payments of Operating Expenses made by Tenant for such prior
year pursuant to this paragraph are less than or exceed the actual Operating Expenses for such prior year as shown in any such statement of actual Operating Expenses, then Tenant's account will be
adjusted to reflect the amounts due. All deficiencies are payable upon receipt of invoice and all overpayments made by Tenant shall be applied as a credit by Landlord to the next installment of
Operating Expense reimbursement. Concurrently, with the remittance of the prior year statement, or as soon thereafter as is reasonably possible, Landlord shall advise Tenant of the then current year's
estimate of Operating Expenses as well as the monthly payment due thereon. Any deficiencies in monthly billing that may have accrued from either the Commencement Date of this Lease or the 

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first
day of any subsequent calendar year, shall be due and payable upon receipt of an invoice to Tenant by Landlord. Failure of Landlord to timely furnish any statement of Operating Expenses for any
period during the Term of this Lease shall not relieve Tenant from paying Operating Expenses pursuant to this Section 3.3 nor prejudice Landlord from
enforcing its rights under this Section 3.3. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made
of Operating Expenses payable for the calendar year in which this Lease terminates, any deficiencies payable by Tenant shall be paid to Landlord within ten (10) days after receipt of invoice
for such calendar year. The provisions of this Section 3.3 shall survive the expiration or earlier termination of this Lease. Operating Expenses shall
include, but shall not be limited to, the following: 

        (a)   the
costs and expenses incurred in the operation, repair, maintenance, management and replacement of: 

        (i)    the
common areas of the Building ("Common Areas"), including, without limitation, surfaces, coverings and parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, irrigation systems, lighting facilities, fences and gates, and all taxes and assessments, utilities, insurance premiums, administrative charges and
other costs; and 

        (ii)   all
heating, air conditioning, plumbing, electrical systems, life safety equipment, telecommunications equipment, elevators and escalators, tenant directories, fire
detection systems, sprinkler systems and other equipment servicing the Building (collectively, "Building Systems") to the extent that Building Systems
are maintained by Landlord under this Lease; 

        (b)   janitorial,
trash disposal and secretary services; 

        (c)   the
cost incurred in connection with the implementation or operation of a transportation system management program or similar program, and the cost of any equipment
rental agreements or personal property used in connection with the maintenance, operation or repair of the Building; 

        (d)   the
cost of the premiums for the liability and property insurance policies (including, but not limited to, boiler and machinery insurance), earthquake and flood
insurance if maintained by Landlord, and other insurance policies maintained by Landlord; 

        (e)   the
cost of water, sewer, gas, electricity, heating, ventilation, air-conditioning and other utilities or services provided to the Building; 

        (f)    labor,
salaries and applicable fringe benefits (and taxes thereon) and costs, materials, supplies and tools, used in repairing, maintaining and/or cleaning the Building
and accounting costs and a management fee (plus the fair rental of any office space provided for the management office) attributable to the management and operation of the Building; 

        (g)   replacing
and/or adding improvements mandated by any governmental agency and any repairs or removals necessitated thereby; 

        (h)   replacing
equipment or improvements (including interest on the unamortized balance as is reasonable in the judgment of Landlord's accountant); and 

        (i)    replacing
and/or adding any equipment, device or capital improvement to reduce operation or maintenance expenses with respect to the Building (including interest on the
unamortized balance as is reasonable in the judgment of Landlord's accountant). 

Operating
Expenses shall also include an administrative fee equal to three percent (3%) of the aggregate amount of the foregoing expenses for each calendar year, for Landlord's administration and
supervision of all services. Notwithstanding any provision of this Section 3.3 to the contrary, 

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the
parties have agreed that Tenant's obligation to pay Operating Expenses (inclusive of the three percent (3%) administrative fee provided above) and Real Property Taxes (as defined in Section  9.2 below)
during the initial twelve (12) month period of the Term shall be the sum of Four Thousand Seven Hundred Eighty-Eight and 75/100
Dollars ($4,788.75) per month (i.e., $0.15 per rentable square foot). During each subsequent twelve (12) month period of the initial Term, Tenant's obligation to pay Operating Expenses and Real
Property Taxes shall be equal to the sum of (a) 15/100 Dollars ($0.15) per rentable square foot of the total Premises (i.e., $4,788.75) and (b) the incremental amount any increase in
Operating Expenses and Real Property Taxes over the actual amount of Operating Expenses and Real Property Taxes payable by Landlord on a rentable square footage basis for the immediately preceding
twelve (12) month period. For example, if the actual amount of Operating Expenses and Real Property Taxes payable by Landlord for the initial twelve (12) month period of the Term is
17/100 Dollars ($0.17) per rentable square foot, and the actual amount of Operating Expenses and Real Property Taxes payable by Landlord for the second (2nd) twelve (12) month
period of the Term is 18/100 Dollars ($0.18) per rentable square foot, then Tenant shall pay 16/100 Dollars ($0.16) per rentable square foot as its share of Operating Expenses and Real Property Taxes
for the second (2nd) twelve (12) month period of the Term. 

        3.4   Definition of Rent. The capitalized term "Rent," as used in this Lease,
shall mean the Base Rent Operating Expenses and any and all monetary obligations of Tenant under this Lease. 

        4.     Security Deposit. Tenant shall deposit with Landlord upon execution hereof the Security Deposit set forth in Section  1.6 of the Basic Lease Provisions as security for
Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said Security Deposit for the payment of any Rent or
other charge in default, for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, and/or to compensate Landlord for any loss or damage which Landlord may
suffer thereby. If Landlord so uses or applies all or any portion of the Security Deposit, Tenant shall, within ten (10) days after written demand, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the full amount set forth in Section 1.6. Landlord shall not be required to keep the Security Deposit
separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, the Security Deposit, or so much thereof as has not been applied by Landlord, shall be returned, without
payment of interest or other increment for its use, to Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's interest hereunder) within sixty (60) days after the Term
expires and Tenant vacates the Premises. No trust relationship is created herein between Landlord and Tenant with respect to the Security Deposit. 

        5.     Use. 

        5.1   Use. The Premises shall be used and occupied only for the purpose set forth in Section  1.2 of the Basic Lease Provisions and Tenant shall not use or permit the Premises
or any part thereof to be used for any other purpose or purposes
whatsoever. Tenant shall keep the Premises and every part thereof in a clean and safe condition free of nuisances. Tenant shall have access to and the right to conduct its business operations at the
Premises twenty-four (24) hours a day, seven (7) days a week. 

        5.2   Compliance with Law; Insurance Requirements. Tenant shall, at Tenant's sole cost and expense, promptly comply with all
Applicable Laws (including, without limitation, the Americans With Disabilities Act, 42 USC §§ 12101 et seq.), rules, regulations, orders, the CC&Rs, and the requirements of
any insurance underwriters or ratings bureaus, now in effect or which may hereafter come into effect, relating in any manner to the Premises and the occupation and use of the Premises by Tenant and
(subject only to Landlord's representations in Section 2.2 above) any improvements or alterations made to the Premises by or on behalf of Tenant. Tenant
shall conduct its business in a lawful manner and shall not use or permit the use of the Premises or the 

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Common
Areas in any unlawful manner or in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Building. 

        5.3   Rules and Regulations. Tenant agrees to comply with all of the rules and regulations attached hereto as  Exhibit "D" with respect to the Building, as the same may be
supplemented and/or modified by Landlord from time to time, and to cause its invitees to
comply with the same. Landlord or such other person(s) as Landlord shall have the right, from time to time, to modify and amend the rules and regulations, provided that a copy of any such modification
or amendment is delivered to Tenant prior to the effective date thereof. Landlord shall use commercially reasonable efforts to enforce the rules and regulations on a non-discriminatory
basis. 

        5.4   Suitability of Premises. Tenant acknowledges that it has satisfied itself by its own independent investigation that the
Premises are suitable for its intended use, and neither Landlord nor any agent of Landlord has made any representation or warranty as to the present or future suitability of the Premises, Common
Areas, or Building for the conduct of Tenant's business. 

        5.5   Vehicle Parking: Subject to the rules and regulations attached hereto as Exhibit
"D", and as established by Landlord from time to time, Tenant and its employees, agents, customers and invitees shall have the right to use the number of parking spaces
indicated in Section 1.8 of the Basic Lease Provisions within the parking area located adjacent and contiguous to the Building
("Parking Area"). Landlord shall have the right to relocate and/or restripe any portion of the Parking Area in its sole discretion, provided that the
number of parking spaces allocated to Tenant shall not be decreased. 

        5.6   Changes to Common Areas. Landlord shall have the right, in Landlord's sole discretion, from time to time to:
(a) close temporarily any of the Common Areas for maintenance and/or alteration purposes so long as reasonable access to the Premises remains available; (b) designate other land and
improvements outside the present boundaries of property surrounding the Building to be a part of the Common Areas; (c) use the Common Areas while making additional improvements, repairs or
alterations to the Building or any portion thereof; and (d) do and perform such other acts and make such other changes in, to or with respect to the Common Areas and the other portions of the
Building as Landlord may deem to be appropriate. 

        5.7   Roof Rights. 

        (a)   Tenant
shall have the right to use certain rooftop and antenna space and certain related vertical penetrations in the rooftop and related interior space, as designated
by Landlord on and within the Building ("Antenna Space") for the use of up to a total of three (3) communications antennas and/or satellite
dishes for Tenant's business ("Permitted Equipment") and for no other purposes. Tenant shall have the right to add additional antennas and equipment for
its business with Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Tenant shall have access to the rooftop upon twenty-four
(24) hours prior notice to Landlord and when accompanied by a representative of Landlord. 

        (b)   Tenant
shall, at its sole cost and expense, obtain and maintain any and all permits, approvals and/or licenses required by the CC&Rs and any and all governmental
agencies having jurisdiction over the Building for the construction, installation and operation of the Permitted Equipment. Tenant shall not use the Antenna Space in any way that interferes
(electronically or otherwise) with the use of the Building by Landlord or by any third party office tenants or licensees of Landlord. Upon written notice from Landlord to Tenant of any such
interference, Tenant shall immediately eliminate or mitigate such interference to the reasonable satisfaction of Landlord. If such interference cannot be eliminated or mitigated to the reasonable
satisfaction of Landlord within five (5) business days following such notice, Tenant shall immediately cease operating the equipment or portion thereof causing such interference. Tenant shall
not perform any maintenance, repairs, alterations or other work on 

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the
Permitted Equipment in any manner that disrupts or interferes with the use of the Building by Landlord or by other tenants or licensees of Landlord. Tenant shall not make any improvement or
alteration or take any other action that affects the integrity of the roof of the Building. Tenant shall be responsible for any damage, which Tenant or its agents or invitees may cause to the roof. 

        (c)   Tenant
shall cooperate with Landlord with respect to any and all maintenance and/or repair work performed by Landlord on or to the roof (collectively,
"Roof Work") during the term, as the same may be extended. In connection with such cooperation, Tenant shall temporarily move and/or relocate, at
Landlord's sole cost and expense, any and all portions of the Permitted Equipment and Tenant's improvements on or to the portion of the Antenna Space located on the roof to the extent and for the
duration reasonably necessary to accommodate any Roof Work. Landlord shall notify Tenant not less
than fifteen (15) business days prior to the commencement of any Roof Work. Landlord shall use commercially reasonable efforts to prevent any interference with or to the use and operation of
the Permitted Equipment by Tenant during the performance of any Roof Work. In the event that Landlord desires to remodel, improve or otherwise alter the Building so as to require the relocation of the
Permitted Equipment, then upon sixty (60) days prior notice to Tenant, Tenant shall cooperate with Landlord in relocating the Permitted Equipment provided that (a) such relocation is at
Landlord's expense, and (b) such relocation does not have any adverse effect on the continued operation of the Permitted Equipment. 

        (d)   Upon
termination of this Lease Agreement, Tenant shall (a) remove all of the Permitted Equipment and any and all other equipment, fixtures and personal property
of Tenant from the Antenna Space, (b) repair any damage caused by such removal, and (c) surrender the Antenna Space to Landlord free and clear of all debris. 

        6.     Maintenance, Repairs, Alterations, and Additions. 

        6.1   Landlord's Maintenance Obligations. Subject to the provisions of Section  8 and 13 below, and except for damage caused by
any act or omission of Tenant, or Tenant's employees,
agents, contractors or invitees, Landlord shall keep the foundation, roof, Building Systems (other than the portions of the heating, ventilating and air conditioning system located within the Premises
and serving the Premises exclusively), structural supports and exterior walls of the improvements on the Building in good order, condition and repair. Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the surfaces of walls within or making up any part of the Premises. Tenant shall promptly report in writing to Landlord any defective condition known to it which
Landlord is required to repair at its own expense. Tenant hereby waives the benefit of any present or future law which provides Tenant the right to repair the Premises or Property at Landlord's
expense or to terminate this Lease because of the condition of the Premises. 

        6.2   Tenant's Maintenance Obligations. Except as provided in Section 6.1
above, and Sections 8 and 13 below, Tenant shall keep all portions of the Premises (including systems
and equipment) and the portions of the heating, ventilating and air conditioning system located within the Premises and serving the Premises exclusively in good order, condition and repair (including
repainting and refinishing, as needed) during the Lease Term. If any portion of the Premises or any system or equipment in the Premises that Tenant is be obligated to repair cannot be fully repaired
or restored, Tenant shall promptly replace such portion of the Premises or system or equipment, regardless of whether the benefit of such replacement extends beyond the Term. Tenant shall maintain a
preventive maintenance contract providing for the regular inspection and maintenance of the heating and air conditioning system by a heating and air conditioning contractor, and such contract and
contractor shall be subject to approval by Landlord. Tenant shall fulfill all of Tenant's obligations under this Section 6.2 at Tenant's sole cost and
expense. If Tenant shall fail to maintain, repair or make replacements to the Premises as required by this Section 6.2, Landlord may, upon ten
(10) days prior notice to Tenant (except that no notice shall be required in the case 

8

 

of
an emergency), enter the Premises and perform such maintenance or repair (including replacement, as needed) on behalf of Tenant. In such case, Tenant shall reimburse Landlord for all costs
reasonably incurred in performing such maintenance, repair or replacement within ten (10) business days following the payment of such costs by Landlord. 

        6.3   Alterations and Additions. 

        (a)   Tenant
shall not, without Landlord's prior written consent, make any alterations or additions in, on or to the Premises. Landlord's consent to any such alterations or
additions shall not be unreasonably withheld; provided, however, Landlord may withhold its consent in its sole and absolute discretion with respect to any additions or alterations which affect the
structural portions of the Building or any Building Systems, or which can be seen from the exterior of the Premises. Notwithstanding the foregoing, however, Tenant shall have the right to make
alterations and/or additions in, on or to the Premises that do not affect the structural portions of the Building or any Building Systems and do not cost in excess of Five Thousand and 00/100 Dollars
($5,000.00) in each instance ("Permitted Alterations"), provided that (i) Tenant shall deliver notice to Landlord not less than five
(5) days prior to making any such Permitted Alterations to allow Landlord to post notices of non responsibility and (ii) any such Permitted Alterations shall comply with Applicable Laws.
Within thirty (30) days following the construction of any alterations and/or additions in, on or to the Premises made by Tenant pursuant to this Section  6.3(a), Tenant shall provide Landlord with
copies of "as-built" drawings for such alterations and/or additions. In the event that such
drawings are not provided to Landlord within such thirty (30) day period, Landlord shall have no obligation to repair or restore any such alterations and/or additions under this Lease in the
event of any casualty to the Premises. At the expiration of the Term, Landlord may require the removal of any or all of such alterations or additions and the restoration of the Premises to their prior
condition, at Tenant's expense; provided, however, that Tenant shall have no obligation to remove any portion of the Tenant Improvements. Should Landlord permit Tenant to make any alterations or
additions, Tenant shall use only contractors expressly approved by Landlord. In addition, Landlord may require Tenant to provide Landlord, at Tenant's sole cost and expense, with a lien and completion
bond in an amount equal to one hundred fifty percent (150%) of the estimated cost of such alterations and/or additions, to insure Landlord against any liability for mechanic's and materialmen's liens
and to insure completion of the work. Such
contractors shall carry liability and such other insurance of a type and in such reasonable amounts as Landlord shall reasonably require, naming Tenant, Landlord, Landlord's asset manager and property
manager and any other party Landlord specifies as additional insureds. Before commencing the work, such contractors shall furnish Landlord with certificates of insurance evidencing such coverage.
Tenant shall also maintain a policy of "builder's risk" insurance coverage for such work naming Landlord, Landlord's property manager and any other party Landlord specifies as additional insureds, and
Tenant shall provide to Landlord a certificate evidencing such coverage prior to commencing such work. Should Tenant make any alterations or additions without the prior approval of Landlord, or use a
contractor not expressly approved by Landlord, Landlord may, at any time during the Term of this Lease, require that Tenant remove any part or all of the same. 

        (b)   Any
alterations or additions in or about the Premises that Tenant shall desire to make (other than Permitted Alterations) shall be presented to Landlord in written form,
with proposed detailed plans. If Landlord consents to such alteration or addition, the consent shall be deemed conditioned upon Tenant acquiring a permit to do so from the applicable government
agencies, furnishing a copy thereof to Landlord prior to the commencement of the work, compliance by Tenant with all conditions of said permit in a prompt and expeditious manner, and compliance by
Tenant with Landlord's construction rules and regulations and scheduling requirements. 

9

  

        (c)   Tenant
shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use in the Premises, which claims
are or may be secured by any mechanic's or materialmen's lien against the Premises, the Building, or any interest therein. 

        (d)   Tenant
shall give Landlord not less than ten (10) days notice prior to the commencement of any work in the Premises by Tenant and Landlord shall have the right to
post notices of non-responsibility in or on the Premises and the Building. If Tenant, in good faith, contests the validity of any lien, claim or demand regarding the work, then Tenant
shall, at its sole expense, defend itself and Landlord and its agents against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the enforcement thereof
against Landlord or its agents or the Premises, the Building, upon the condition that if Landlord shall require, Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount
equal to such contested lien claim or demand indemnifying Landlord against liability for the same and holding the Premises, the Building free from the effect of such lien or claim. In addition,
Landlord may require Tenant to pay Landlord's reasonable attorneys' fees and costs in participating in such action if Landlord decides it is in Landlord's best interest to participate. 

        (e)   All
alterations and additions shall be done in a good, workmanlike, manner with good quality materials and shall be the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Term, unless Landlord requires their removal pursuant to Section 6.3(a) above. Any trade fixtures
installed and paid for by Tenant may be removed by Tenant during the Term of this Lease and shall upon demand by Landlord be removed upon expiration of the Term. Tenant shall in all events promptly
repair any damage caused by removal of trade fixtures. On or prior to the expiration or termination of this Lease, Landlord Tenant shall remove any and all alterations and additions that are
designated by Landlord to be removed by Landlord, at Tenant's sole cost and expense. 

        (f)    Tenant
shall provide Landlord with "as-built" plans and specifications for any alterations or additions. 

        6.4   Utility Additions. Landlord reserves the right to install new or additional utility facilities throughout the Building,
including, but not by way of limitation, such utilities as plumbing, electrical systems, communication systems, and fire protection and detection systems, so long as such installations do not
unreasonably interfere with Tenant's use of the Premises. 

        7.     Insurance; Indemnity. 

        7.1   Liability Insurance-Tenant. Tenant shall at Tenant's expense, obtain and keep in force during the Term of this Lease (and
any period prior to the Term of the Lease during which Tenant enters the Premises to conduct any fixturization or improvement work) a policy of Commercial General Liability Insurance, or equivalent,
in an amount of not less than Two Million Dollars ($2,000,000.00) per occurrence of bodily injury, personal injury and property damage combined or in a greater amount as reasonably determined by
Landlord and shall insure Tenant, with Landlord and Landlord's property manager and any other party Landlord specifies as additional insureds, against liability arising out of the use, occupancy
and/or maintenance of the Premises. Such insurance shall include a Broad Form Commercial General Liability Endorsement covering the insuring provisions of this Lease and the performance by Tenant of
the indemnity obligations provided in Section 7.7 below. Compliance with the above requirement shall not, however, limit the liability of Tenant
hereunder. 

        7.2   Liability Insurance-Landlord. Landlord shall obtain and keep in force during the Term of this Lease a policy of
Commercial General Liability Insurance, plus coverage against such other risks as Landlord deems advisable from time to time, in such amounts as Landlord deems 

10

 

advisable
from time to time, insuring Landlord, but not Tenant, against liability arising out of the ownership, use, occupancy or maintenance of the Building. 

        7.3   Property Insurance-Tenant. Tenant shall, at Tenant's expense, obtain and keep in force during the Term of this Lease,
fire and extended coverage insurance, with vandalism and malicious mischief, and sprinkler leakage endorsements, in an amount sufficient to cover the full replacement cost, as the same may exist from
time to time, of all of Tenant's personal property, fixtures and equipment in the Premises and the Building. Tenant shall, at Tenant's expense, also obtain and keep in force during the Term of this
Lease, business interruption, loss of income and extra expense insurance in amounts sufficient to pay for Tenant's expenses and lost income attributable to perils commonly insured against by prudent
tenants or attributable to prevention of access to the Premises as a result of such perils. 

        7.4   Property Insurance-Landlord. Landlord shall obtain and keep in force during the Term of this Lease a policy or policies
of insurance covering loss or damage to the Building, but not Tenant's personal property, fixtures or equipment, in such amounts as Landlord deems appropriate from time to time providing protection
against perils included within the classification of fire, extended coverage, vandalism, malicious mischief, plate glass, and such other perils as Landlord deems advisable from time to time or may be
required by a lender having a lien on the Building. Tenant will not be named in any such policies carried by Landlord and shall have no right to any proceeds therefrom. The policies required by
Sections 7.2 and 7.4 shall contain such deductibles as Landlord or its lender may determine. Tenant
shall not do or permit to be done anything which shall invalidate the insurance policies carried by Landlord. Tenant shall pay the entirety of any increase in any insurance premium for the Premises
over what it was immediately prior to the commencement of the Term of the Lease if the increase is specified by Landlord's insurance carrier as being caused by the nature of Tenant's occupancy or any
act or omission of Tenant, or Tenant's invitees. 

        7.5   Insurance Policies. All of Tenant's insurance policies required under this Section  7 shall (a) designate Landlord and Landlord's property manager and any other
party that Landlord specifies, as additional insureds (other than
with respect to Tenant's property damage insurance described in Section 7.3 above), (b) be primary insurance as to all claims thereunder and
provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant, and (c) contain a cross-liability endorsement or
severability of interest clause acceptable to Landlord. Tenant shall deliver to Landlord copies of all insurance policies required to be maintained by Tenant under this Section  7 or certificates
evidencing the existence and amounts of such insurance not less than seven (7) days prior to the Commencement Date of this
Lease. Such policies shall be issued by insurers having a rating of A-/VIII or better in Best's Key Rating Guide and who are admitted carriers in the State of California. No such policy
shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Landlord. Tenant shall, at least thirty (30) days
prior to the expiration of such policies, furnish Landlord with renewals thereof. 

        7.6   Waiver of Subrogation. Tenant and Landlord each hereby release and relieve the other (and Landlord's property manager),
and waive their entire right of recovery against the other (and Landlord's property manager), for direct and/or consequential loss or damage arising out of or incident to the perils required by this
Lease to be covered by property insurance carried by such party, whether due to the negligence of Landlord or Tenant or their agents, employees, contractors and/or invitees. All property insurance
policies required under this Lease shall be endorsed to provide for such waivers of subrogation. 

        7.7   Indemnity. Tenant shall indemnify and hold harmless Landlord and its agents, members, partners and employees, from and
against any and all claims for damage to the person or property of anyone or any entity to the extent arising from Tenant's use or occupancy of the Premises and Building, and shall further indemnify
and hold harmless Landlord from and against any and all 

11

 

claims,
costs and expenses to the extent arising from any breach or default in the performance of any obligations on Tenant's part to be performed under the terms of this Lease, or arising from any
act or omission of Tenant, or any of Tenant's agents, contractors, employees, or invitees, and from and against all costs, attorneys' fees, expenses and liabilities incurred by Landlord as the result
of any such use, conduct, activity, work, things done, permitted or suffered, breach, default or negligence, and in dealing therewith, including but not limited to the defense or pursuit of any claim
or any action or proceeding involved therein. In the event that any action or proceedings is brought against Landlord by reason of any such matters, Tenant upon notice from Landlord shall defend the
same at Tenant's expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense. Landlord need not have first paid any such claim in order to be
indemnified. Notwithstanding the foregoing, Tenant's indemnification obligations provided in this Section 7.7 shall not apply to any claim to the extent
arising out of the negligence or intentional acts of Landlord or of any of its agents, contractors or employees,. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk
of damage to property of Tenant or any damage to any Tenant Improvements, alterations or fixtures in the Premises, or injury to persons, in, upon or about the Building arising from any cause and
Tenant hereby waives all claims in respect thereof against Landlord. The provisions of this Section 7.7 shall survive the expiration or termination of
this Lease. 

        7.8   Exemption of Landlord from Liability. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's
business or any loss of income therefrom or for loss of or damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about
the Premises or the Building, nor shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors, whether such damage or injury is caused by or results from
theft, fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places, or from new
construction or the repair, alteration or improvement of any part of the Building, or of the equipment, fixtures or appurtenances applicable thereto, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, occupant or user of the Building, nor
from the failure of Landlord to enforce the provisions of any other lease of any other tenant of the Building. 

        7.9   No Representation of Adequate Coverage. Landlord makes no representation that the limits or forms of coverage of
insurance specified in this Section 7 are adequate to cover Tenant's property or obligations under this Lease. 

        7.10 Evidence of Insurance. Landlord and Tenant shall each furnish to the other, upon request from time to time, certificates
evidencing that any insurance policies required hereunder are being maintained and/or certified copies of any such policies. 

        8.     Damage or Destruction. 

        8.1   Repair of Damage to Premises by Landlord. Tenant shall promptly notify Landlord of any damage to the Premises resulting
from fire or any other casualty. If the Premises shall be damaged by fire or other casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of this Section 8, restore the Premises. Such restoration shall be to
substantially the same condition of the Premises prior to the casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage or deed of trust on
the Premises, or the lessor of a ground or underlying lease with respect to the Premises, or any other modifications deemed desirable by Landlord, provided that access to the Premises shall not be
materially impaired. In connection with such repairs and replacements, Tenant shall, prior to the 

12

 

commencement
of construction, submit to Landlord, for Landlord's review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the contractors to
perform such improvement work. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's business resulting in any way from such damage or the
repair thereof; provided however, that if such fire or other casualty shall have damaged the Premises to the extent that Tenant's occupancy is materially impaired, and if such damage is not the result
of the negligence or willful misconduct of Tenant or Tenant's employees, contractors, licensees, or invitees, Landlord shall allow Tenant a proportionate abatement of Base Rent and Operating Expenses
during the time and to the extent that the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof. 

        8.2   Landlord's Option to Repair. Notwithstanding the provisions of Section  8.1 above, Landlord may elect not to rebuild and/or restore the Premises and instead terminate
this Lease by notifying Tenant in writing of such
termination within sixty (60) days after the date of damage, such notice to include a termination date giving Tenant ninety (90) days to vacate the Premises, but Landlord may so elect
only if the Building shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, and one or more of the following conditions is present: (a) repairs cannot
reasonably be completed within one hundred eighty (180) days of the date of damage (when such repairs are made without the payment of overtime or other premiums); (b) the holder of any
mortgage or deed of trust on the Premises, or the lessor of a ground or underlying lease with respect to the Premises shall require that the insurance proceeds or any portion thereof be used to retire
the mortgage debt, or shall terminate the ground or underlying lease, as the case may be; or (c) the damage is not fully covered, except for deductible amounts, by Landlord's insurance
policies. 

        8.3   Termination Right. If Landlord does not elect to terminate this Lease pursuant to Landlord's termination right as
provided in Section 8.2 above and (a) the damage constitutes a "Tenant Damage Event" (as defined
below), and (b) the repair of such damage cannot, in the reasonable judgment of Landlord, be completed within one hundred eighty (180) days after being commenced, then Tenant may elect,
no earlier than sixty (60) days after the date of the damage and not later than ninety (90) days after the date of such damage, to terminate this Lease by written notice to Landlord
effective as of the date specified in the notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after the date such notice is given by Tenant. As used
herein, a "Tenant Damage Event" shall mean damage to all or any part of the Premises providing access to the Premises by fire or other casualty, which
damage is not the result of the negligence or willful misconduct of Tenant or any of Tenant's employees, agents, contractors, licensees or invitees, and which damage materially interferes
with Tenant's use of or access to the Premises and would entitle Tenant to an abatement of Rent pursuant to Section 8.1 above. 

        8.4   Damage Near End of Term. In the event that the Premises are destroyed or damaged to any substantial extent during the
last twelve (12) months of the Term of this Lease, then notwithstanding anything contained in this Section 8 and in addition to any termination
rights that Landlord may have pursuant to Section 8.2, Landlord shall have the option to terminate this Lease by giving written notice to Tenant of the
exercise of such option within sixty (60) days after such damage or destruction, in which event this Lease shall cease and terminate as of the date of such notice. Upon any such termination
pursuant to this Section 8.4, Tenant shall pay the Rent, properly apportioned up to such date of termination (but subject to the abatement provisions in
Section 8.1 above), and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in
provisions of this Lease which by their terms survive the expiration or earlier termination of this Lease. 

        8.5   Waiver of Statutory Provisions. The provisions of this Lease, including this Section  8, constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, all or any part of the Premises
or any other portion of the Building, and any 

13

 

statute
or regulation of the State of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage
or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises, the Building or any other portion of the Building. 

        9.     Taxes. 

        9.1   Payment of Taxes. Except as otherwise provided in Section 3.3 above,
Tenant shall pay the Real Property Taxes applicable to the Premises during the Lease Term. Payments of annual Real Property Taxes shall be estimated by Landlord and shall be due and payable monthly on
the same date as monthly payments of Base Rent. Within sixty (60) days after the expiration of each calendar year, Landlord shall provide Tenant with a statement showing the actual amount of
Real Property Taxes payable for the prior calendar year. If the estimated payments of Real Property Taxes made by Tenant for such prior year pursuant to this Section  9.1 are less than or exceed the
actual Real Property Taxes for such prior year as shown in any statement of actual Real Property Taxes provided by
Landlord, then Tenant's account shall be adjusted to reflect the amounts due. All deficiencies shall be payable upon receipt of invoice and all overpayments made by Tenant shall be applied as a credit
by Landlord to the next installment of Real Property Taxes. Failure of Landlord to timely furnish any statement of Real Property Taxes for any period during the Term of this Lease shall not relieve
Tenant from paying Real Property Taxes pursuant to this Section 9.1 nor prejudice Landlord from enforcing its rights under this Section  9.1. If any Real
Property Taxes to be paid by Tenant shall cover any period of time prior to or after the expiration or sooner termination of the Term,
such Real Property Taxes shall be equitably
prorated to cover only the period of time within the applicable tax fiscal year this Lease is in effect, and Landlord shall reimburse Tenant for any overpayment after such proration. 

        9.2   Definition of "Real Property Taxes". As used herein, the term "Real Property
Taxes" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, any assessment district charge pursuant to any existing or future
assessment district, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Premises or any portion
thereof by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other
improvement district thereof, as against any legal or equitable interest or Landlord in the Premises or in any portion thereof, as against Landlord's right to rent or other income therefrom, and as
against Landlord's business of leasing the Premises. The term "Real Property Taxes" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, or
as a supplement to any tax, fee, levy, assessment or charge included within the definition of "Real Property Taxes" above or (ii) which is imposed by reason of this transaction, any
modifications or changes hereto. Notwithstanding the foregoing, the definition of "Real Property Taxes" shall not include any increase in, or reassessment of, real property taxes due to a sale or
transfer of the Building (but shall include any increase and/or reassessment due to the construction of the Tenant Improvements). The term "Real Property Taxes" shall exclude any penalty or charge
incurred as a result of Landlord's failure to pay and/or to file any tax or informational returns when due. 

        9.3   Joint Assessment. If Tenant's personal fixtures, the taxes for which are to be paid separately by Tenant under Sections  9.2 or 9.4, are not separately assessed, Tenant's portion of that tax shall be equitably determined by
Landlord from the respective valuations assigned in the assessor's work sheets or such other information (which may include the cost of construction) as may be reasonably available. Landlord's
reasonable determination thereof, in good faith, shall be conclusive. 

        9.4   Personal Property Taxes. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Tenant 

14

 

contained
in the Premises or elsewhere. If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay to Landlord the taxes attributable to Tenant within
ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property. 

        10.   Utilities. Electricity service and gas service (if required by Tenant) to the Building shall be separately metered.
Tenant shall pay for all of the actual use thereof, subject only to reimbursement by Elan of the amounts specified in Section 1.1(c) above. There shall
be no abatement of Rent and Landlord shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor
dispute, breakdown, accident, repair or other cause beyond Landlord's reasonable control or due to laws or cooperation with governmental requirements. 

        11.   Assignment and Subletting. 

        11.1 Landlord's Consent Required. Tenant shall not sell, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer this Lease or any interest herein, and shall not sublet the Premises or any portion thereof, without the prior written consent of Landlord in each instance and any attempt to do so without
such consent shall be voidable at Landlord's election (all of the foregoing are hereafter sometimes referred to collectively as "Transfers" and any
person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a "Transferee"). Notwithstanding any provision of this
Section 11 to the contrary, Tenant shall have the right to assign the Lease at any time without Landlord's consent to any Affiliate (as defined below)
or any entity which owns or is owned by an Affiliate; (b) any entity acquiring substantially all of the assets of Tenant; or (c) another entity in connection with the merger of Tenant
with such entity (each a "Permitted Transfer"). For purposes of the Lease, "Affiliate" shall mean any
entity which is controlled by (directly or indirectly) Tenant, or which controls (directly or indirectly) Tenant, or which is under common control with Tenant. Tenant shall notify Landlord of any
Permitted Transfer not less than twenty (20) business days prior to the effective date thereof. The parties hereby agree that it shall be reasonable for Landlord to withhold consent to any
proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent: 

        (a)   the
Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building; 

        (b)   the
Transferee intends to use the portion of the Premises subject to the Transfer ("Subject Space") for purposes which
are not permitted under this Lease; 

        (c)   the
Transfer will result in more than a reasonable and safe number of occupants per floor within the Subject Space; 

        (d)   the
Transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities involved under the Lease on the date consent is
requested; 

        (e)   the
proposed Transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant of the Building a
right to cancel its lease; or 

        (f)    either
the proposed Transferee, or any person or entity which directly or indirectly, controls, controlled by, or is under common control with, the proposed Transferee,
(i) occupies space in the Building at the time of the request for consent, or (ii) is negotiating with Landlord to lease space in the Building at such time. 

        11.2 Tenant's Application. If Tenant desires at any time to enter into a Transfer, Tenant shall submit to Landlord at least
sixty (60) days prior to the proposed effective date of the Transfer 

15

 

("Proposed Effective Date"), in writing, a notice of intent to Transfer ("Transfer Notice"), which
Transfer Notice shall include: 

        (a)   the
Proposed Effective Date, which shall be no less than sixty (60) days nor more than ninety (90) days after the sending of such notice; 

        (b)   the
name of the proposed Transferee; 

        (c)   the
nature of the proposed Transferee's business to be carried on in the Premises; 

        (d)   the
terms and provisions of the proposed Transfer; 

        (e)   such
information as Landlord may request concerning the proposed Transferee, including recent financial statements and bank references; and 

        (f)    evidence
satisfactory to Landlord that the proposed Transferee (if the Transfer involves a transfer of possession) will immediately occupy and thereafter use the Subject
Space for the entire term of the Transfer. 

        11.3 Approval Procedure. If Landlord approves a Transfer, Tenant shall, prior to the Proposed Effective Date, submit to
Landlord an executed original of the Transfer agreement together with Landlord's standard form consent to Transfer for execution by Landlord. No purported Transfer shall be deemed effective as against
Landlord and no proposed Transferee shall take occupancy unless such consent is so executed by Landlord. 

        11.4 Required Provisions. Any and all Transfer agreements shall: 

        (a)   contain
such items as are described in Tenant's Transfer Notice under Section 11.2 or as otherwise agreed by Landlord; 

        (b)   prohibit
further Transfers without Landlord's consent under this Section 11; 

        (c)   impose
the same obligations and conditions (including the same use provisions) on the Transferee as are imposed on Tenant by this Lease (except as to Rent and Term or as
otherwise agreed by Landlord); 

        (d)   be
expressly subject and subordinate to each and every provision of this Lease; 

        (e)   have
a term that expires on or before the expiration of the Term of this Lease; and 

        (f)    provide
that Tenant and/or Transferee shall pay Landlord the amount of any additional costs or expenses incurred by Landlord for repairs, maintenance or otherwise as a
result of any change in the nature of occupancy caused by the Transfer. 

        11.5 Transfer Premium. Except in connection with a Permitted Transfer, If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this Section 11.5, received by Tenant from such Transferee. "Transfer Premium" shall mean all
rent, additional rent or other consideration payable by such Transferee in excess of the Rent payable by Tenant under this Lease on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for (a) any changes, alterations and improvements to the Premises in connection with the Transfer, (b) any
brokerage commissions in connection with the Transfer, and (c) any actual out-of-pocket marketing costs in connection with the Transfer. The determination of the amount
of the Transfer Premium shall be made on an annual basis in accordance with the terms of this Section 11.5, but an estimate of the amount of the
Transfer Premium shall be made on each month and one-twelfth of such estimated amount shall be paid to Landlord promptly, but in no event later than the next date for payment of Base Rent
hereunder, subject to an annual reconciliation on each anniversary date of the Transfer. 

        11.6 Fees for Review. Intentionally omitted. 

16

 

        11.7 No Release of Tenant. No consent by Landlord to any Transfer by Tenant shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether occurring before or after such consent or Transfer. Landlord's consent to any Transfer shall not relieve Tenant from the obligation to obtain Landlord's
express prior written consent to any other Transfer. The acceptance by Landlord of payment from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be
a consent to any subsequent Transfer, or be a release of Tenant from any obligation under this Lease. 

        11.8 Assumption of Obligations. Each Transferee shall assume all obligations of Tenant under this Lease and shall be and
remain liable jointly and severally with Tenant for the payment of the Rent and the performance of all the terms, covenants, conditions and agreements herein contained on Tenant's part to be performed
for the Term of this Lease. No Transfer shall be binding on Landlord unless the Transferee delivers to Landlord a counterpart of the instrument of Transfer in recordable form which contains a covenant
of assumption by the Transferee satisfactory in substance and form to Landlord, consistent with the above requirements. The failure or refusal of the Transferee to execute such instrument of
assumption shall not release or discharge the Transferee from its liability to Landlord hereunder. Landlord shall have no obligation whatsoever to perform any duty to or respond to any request from
any subtenant, it being the obligation of Tenant to administer the terms of its sublease. 

        11.9 Deemed Transfers. For purposes of this Lease, the term "Transfer" shall
also include the following transactions, which shall be subject to all of the provisions of this Section 11: (a) if the Tenant is a
non-publicly traded corporation, (i) the dissolution, merger, consolidation or other reorganization of Tenant, the sale or transfer of more than an aggregate of fifty percent (50%)
of the voting shares of Tenant (other than to immediate family members by reason of gift or death) within a twelve (12) month period, or (ii) the sale, mortgage, hypothecation or pledge
of more than an aggregate of fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12) month period; or (b) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners, or a transfer of fifty percent (50%) or more of the partnership interests, within a twelve
(12) month period, or the dissolution of the partnership without immediate reconstitution thereof. 

        11.10 Assignment by Operation of Law. No interest of Tenant in this Lease shall be assignable by operation of law. 

        11.11 Assignment of Sublease Rents. Tenant immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or any part of the Premises, and Landlord, as assignee and as attorney-in-fact for Tenant for purposes hereof,
or a receiver for Tenant appointed on Landlord's application, may collect such rents and apply same toward Tenant's obligations under this Lease; except that, until the occurrence of an act of default
by Tenant, Tenant shall have the right and license to collect such rents, subject to Landlord's right to receive and Tenant's obligation to pay to Landlord the Transfer Premium pursuant to Section  11.5
above. 

        12.   Default; Remedies. 

        12.1 Default. The occurrence of any one or more of the following events shall constitute a material default of this Lease by
Tenant: 

        (a)   The
breach by Tenant of any of the provisions of Sections 6.3(a), (b) or  (d) (Alterations and Additions),
11.1 (Assignment and Subletting),  24 (Abandonment), 29.2 (Subordination), 32 (Auctions,
Other Sales and Cessation of Business), or 40.1 (Easements), all of which are hereby deemed to be noncurable defaults without the necessity of any
notice by Landlord to Tenant thereof. 

        (b)   The
failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a
period of three (3) business days after notice thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a notice regarding such nonpayment pursuant to any applicable
summary eviction statute (including California Code of Civil Procedure Section 1161, et seq.), such notice shall also constitute the notice required by this Section  12.1(b). 

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        (c)   The
failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant other than those
referenced in Sections 12.1(a) and (b) above, where such failure shall continue for a period of thirty
(30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said thirty (30) day period and thereafter diligently pursues such cure to
completion. To the extent permitted by law, such thirty (30) day notice shall constitute the sole and exclusive notice required to be given to Tenant under any applicable summary eviction
statute (including California Code of Civil Procedure Section 1161, et seq.). 

        (d)   (i) The
making by Tenant of any arrangement or assignment for the benefit of creditors; (ii) Tenant becoming a "debtor" as defined in the Bankruptcy Code
or any successor statute, unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days; (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or
(iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within thirty (30) days, all of which are hereby deemed to be non-curable defaults without the necessity of any notice by Landlord to Tenant thereof. 

        (e)   The
existence of materially false information in any financial statement given to Landlord by Tenant, or its successor in interest or by any guarantor of any of Tenant's
obligations hereunder, which is hereby deemed to be a non-curable default without the necessity of any notice by Landlord to Tenant thereof. 

        (f)    The
material breach of any covenant of Purchaser set forth in the Purchase Agreement (as defined in Section 38 below). 

        12.2 Remedies. In the event of any material default of this Lease by Tenant, Landlord may at any time thereafter, with or
without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default: 

        (a)   Terminate
this Lease and Tenant's right to possession of the Premises by any lawful means, in which case Tenant shall immediately surrender possession of the Premises to
Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering
possession of the Premises;
expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and any real estate commission actually paid; the worth at the time of award by the
court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the Term after the time of such award exceeds the amount of such rental loss for the same period that Tenant
proves could be reasonably avoided; and that portion of the leasing commission paid by Landlord pursuant to Section 14 applicable to the unexpired Term
of this Lease. As used herein, the term "rent" shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease. 

        (b)   Without
terminating this Lease, re-enter and take possession of the Premises or any part thereof, and expel Tenant and those claiming through or under
Tenant, and remove the effects of both or either, and relet the Premises, or any part thereof, in Landlord's or Tenant's name, but for the account of Tenant. In such event, Tenant shall in no manner
be relieved from liability for payment of rent covering the balance of the Term of this Lease, and 

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Landlord's
retaking shall not be considered an acceptance of the Premises nor a manifestation of an intent to terminate this Lease. 

        (c)   Landlord
shall have the remedy described in California Civil Code Section 1951.4. Accordingly, Landlord may maintain Tenant's right to possession in which case
this Lease shall continue in effect whether or not Tenant shall have vacated or abandoned the Premises. In such event Landlord shall be entitled to enforce all of Landlord's rights and remedies under
this Lease, including the right to recover the rent as it becomes due hereunder. 

        (d)   Pursue
any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises are located. 

        12.3 Default by Landlord. Landlord shall not be in default under this Lease unless Landlord fails to perform obligations
required by Landlord within thirty (30) days after written notice by Tenant to Landlord and to the holder of any mortgage or deed of trust covering the Premises or ground lessor of the Premises
whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period
and thereafter diligently pursues the same to completion. Tenant further agrees that if Landlord shall have failed to cure such default within such time period as set forth hereinabove, then the
holder of the mortgage or deed of trust covering the Premises and/or the ground lessor of the Premises shall have an additional thirty (30) days within which to cure such default after the
Landlord's cure period specified hereinabove, or if such default cannot be cured within that time, then such additional time as may be necessary if within such additional thirty (30) day period
any such holder of the mortgage or deed of trust and/or ground lessor has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement
of foreclosure proceedings, if
necessary, to effect such cure). Notwithstanding any provision of this Lease to the contrary, in no event shall Tenant have the right to terminate this Lease as a result of Landlord's default, and
Tenant's remedies shall be limited to damages and/or injunction, subject to the restrictions in Section 48below. 

        12.4 Late Charges. If any installment of Base Rent, Operating Expenses, or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee on or prior to the tenth (10th) day of the month due, Tenant shall pay to Landlord a late charge equal to six percent (6%) of such overdue
amount. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedied granted hereunder. 

        12.5 Interest on Past-Due Obligations. Any amount not paid by Tenant to Landlord when due shall bear interest
from the date due at the maximum rate than allowable by law, except that interest shall not be payable on any late charge. Payment of interest shall not excuse or cure any default by Tenant. 

        13.   Condemnation. If all or any portion of the Premises or the Building are taken under the power of eminent domain, or sold
under the threat of the exercise of said power (all of which are herein called "condemnation"), Landlord shall have the option in its sole discretion to
terminate this Lease as of the taking of possession by the condemning authority, by giving written notice to Tenant of such election within thirty (30) days after receipt of notice of a taking
by condemnation, provided that if so much of the Premises is taken, or if access to the Premises is impaired, by such condemnation as would substantially and adversely affect the operation of Tenant's
business conducted from the Premises, Tenant shall have the option, to be exercised only in writing within thirty (30) days after the condemning authority takes such possession, to terminate
this Lease as of the date the condemning 

19

 

authority
takes such possession. If neither Landlord nor Tenant terminates this Lease in accordance with the foregoing, this Lease shall remain in full force and effect, but if a portion of the
Premises shall be taken, the Base Rent and Operating Expenses shall be reduced in the proportion that the floor area of the Premises taken bears to the total floor area of the Premises. Common Areas
taken shall be excluded from the Common Areas usable by Tenant and no reduction of Rent shall occur with respect thereto or by reason thereof. Any award for taking of all or any part of the Premises
or the Building under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Tenant shall be entitled to any separate award for loss of or damage to Tenant's
trade fixtures, removable personal property and unamortized Tenant Improvements that have been paid for by Tenant out of Tenant's own funds (and not paid for by Landlord out of the Allowance or the
Additional Allowance, as defined in the Work Letter, or otherwise). For that purpose the cost of such Tenant Improvements shall be amortized over the original Term of this Lease excluding any options.
In the event that this Lease is not terminated by reason of such condemnation, Landlord shall to the extent of severance damages received by Landlord in connection with such condemnation, repair any
damage to the Premises caused by such condemnation except to the extent that Tenant has been reimbursed therefor by the condemning authority. Tenant shall pay any amount in excess of such severance
damages required to complete such repair. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 265.130 of the California Code of Civil Procedure. 

        14.   Broker's Fee. Tenant and Landlord each represent and warrant to the other that neither has had any dealings with any
person, firm, broker or finder (other than the person whose name is set forth in Section 1.9 above) in connection with the negotiations of this Lease
and/or the consummation of the transaction contemplated hereby, and that it does not know of any other broker or other person, firm or entity who is entitled to any commission or finder's fee in
connection with such transactions, and Tenant and Landlord each hereby indemnify and hold the other harmless from and against any costs, expenses, attorneys' fees or liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying party. 

        15.   Estoppel Certificates and Financial Statements. Tenant shall at any time upon ten (10) days prior written notice
from the Landlord execute, acknowledge and deliver to Landlord and any lender of Landlord or prospective purchaser of the Building a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any, (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord, or specifying such defaults if
any are claimed; and (iii) confirming such other factual information regarding the status of this Lease as may be requested. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises. Failure to deliver such statement within such time shall be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii) there are no uncured defaults in the requesting party's performance, and (iii) if Landlord is the
requesting party, not more than one month's Rent has been paid in advance. Tenant further agrees to deliver to Landlord, or to any lender or purchaser designated by Landlord, audited financial
statements of Tenant for the preceding three (3) years within fifteen (15) business days following written request therefor from Landlord, provided that such request shall not be made
more than one (1) time per year during the Term of the Lease. All such financial statements shall be received by Landlord and such lender or purchaser in confidence and shall be used only for
purposes of evaluating the financing or purchasing of the Building. 

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        16.   Landlord's Liability. The term "Landlord" as used herein shall mean only the owner or owners, at the time in question, of
the fee title or a Tenant's interest in any ground lease of the Building. In the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers, then
the grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord
or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall be
binding on Landlord's successors and assigns only during their respective periods of ownership. 

        17.   Severability. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in
no event affect the validity of any other provision hereof. 

        18.   Force Majeure. Any obligation of Landlord which is delayed or not performed due to an act of God, strike, riot, shortage
of labor or materials, war (whether declared or undeclared), laws, governmental regulations or restrictions or any other governmental action or inaction, or any other cause of any kind whatsoever
which is beyond Landlord's reasonable control, shall not constitute a default hereunder and shall be performed within a reasonable time after the end of the cause for delay or nonperformance. 

        19.   Time is of the Essence. Time is of the essence with respect to the obligations to be performed under this Lease. 

        20.   Additional Rent. All monetary obligations of Tenant to Landlord under the terms of this Lease, including but not limited
to any expenses payable by Tenant hereunder, shall be deemed to be rent. 

        21.   Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties with respect to any
matter mentioned herein. No prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in
interest at the time of the modification. Except as otherwise stated in this Lease, Tenant hereby acknowledges that neither the Broker designated in Section  1.9 above, nor the Landlord nor any employee
or agent of any of such persons has made any oral or written warranties or representations to Tenant
relative to the condition or use by Tenant of the Premises or the Building and Tenant acknowledges that, subject only to the provisions of Section 2.2
above, Tenant assumes all responsibility regarding the California Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and
regulations in effect during the Term of this Lease. 

        22.   Notices. Any notice, demand or statement required or permitted to be given hereunder shall be in writing and may be given
by personal delivery, by certified or registered United States Mail ("U.S. Mail"), by recognized overnight courier service, or by telecopier, addressed
to a party at the address specified below or such other address for notice purposes as may be later specified by notice to the other party, except that upon Tenant's taking possession of the Premises,
the Premises shall constitute Tenant's address for notice purposes. Notices shall be deemed given upon actual receipt at the address required, or if by U.S. Mail two (2) business days following
deposit in the U.S. Mail, registered or certified, postage prepaid, or if by telecopier, upon electronic confirmation of good receipt by the receiving telecopier, whichever first occurs. A copy of all
notices required or permitted to be given to Landlord hereunder shall be concurrently transmitted to such other party or parties at such addresses as Landlord may from time to time hereafter designate
by notice to Tenant. 

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If
to Landlord: Kentoo LLC 

4510
Executive Drive, Plaza 5

San Diego, CA 92121

Attn: Ken Satterlee

Telecopier: (858) 452-3206 

If
to Tenant prior to the Commencement Date: 

InfoSonics
Corporation

c/o James S. Farley, Esq.

5900 La Place Court, Suite 100

Carlsbad, CA 92008

Telecopier: (760) 931-9086 

If
to Tenant after the Commencement Date: 

The
Premises 

        23.   Waivers. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Tenant of the same or any other provision. Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or
approval of any subsequent act by Tenant. The acceptance of Rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant
to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. 

        24.   Abandonment of Premises. Tenant shall not abandon the Premises (as defined in Section 1951.3 of the California
Civil Code). 

        25.   Holding Over. If Tenant, with or without Landlord's consent, remains in possession of all or any part of the Premises
after the expiration or earlier termination of the Term of this Lease, such occupancy shall be a tenancy from month to month, only, upon all of the provisions of this Lease pertaining to the
obligations of Tenant, except that the Base Rent payable shall be one hundred fifty percent (150%) of the Base Rent payable immediately preceding the expiration of the Term. Notwithstanding the
foregoing, if Tenant has not elected to exercise either Option and Tenant remains in possession of all or a portion of the Premises after the initial eighty-four (84) month Term,
Base Rent payable for the initial six (6) months of such holdover period shall be one hundred percent (100%) of the Base Rent payable immediately preceding the expiration of the Term. Nothing
contained in this Section 25 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to
require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Section  25 shall not be deemed
to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord
harmless from all loss, costs (including reasonable attorneys' fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any
succeeding Tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom. 

        26.   Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be
cumulative with all other remedies at law or in equity. 

        27.   Covenants and Conditions. Each provision of this Lease to be performed by Tenant shall be deemed both a covenant and a
condition. 

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        28.   Binding Effect: Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Tenant and
subject to the provisions of Section 16, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be
governed by the laws of the State of California and any litigation concerning this Lease between the parties hereto shall be initiated in the County of San Diego. 

        29.   Subordination. 

        29.1 This
Lease, including but not limited to any option or right of first refusal granted hereby, is subject and subordinate to any ground lease, mortgage, deed of trust or
any other security interest now or hereafter affecting the Building, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent
and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. On or prior to the Commencement Date, Landlord shall obtain a
Subordination, Non-Disturbance and Attornment Agreement executed by its lender in favor of Tenant, whereby such lender agrees, among other things, to recognize this Lease and Tenant's
right to quiet possession of the Premises in the event that such lender becomes the owner of the Building through foreclosure or otherwise. Notwithstanding such subordination, any ground lessor,
mortgagee, trustee or holder of any other security interest shall have the right, at its election upon written notice to Tenant, to have this Lease be made prior to its ground lease or the lien of its
mortgage, deed of trust or other security interest, whether this Lease is dated prior or subsequent to the date of said ground lease, mortgage, deed of trust or other security interest or the date of
recording thereof. Upon termination of any ground lease or foreclosure of any mortgage, deed of trust or other security interest, Tenant shall attorn, without any deductions or set offs whatsoever, to
the ground Landlord or any purchaser upon foreclosure. 

        29.2 Tenant
agrees to execute any documents required to effectuate subordination or attornment, or to make this Lease prior to any ground lease or any mortgage, deed of
trust or other security interest, if requested by Landlord or any ground lessor or holder of a mortgage, trust deed or other security interest. Tenant's failure to execute such documents within ten
(10) days after written demand shall constitute a material default by Tenant hereunder without further notice to Tenant. 

        30.   Attorneys' Fees; Jury Trial. If either party named herein brings an action to enforce the terms hereof or declare rights
hereunder, the prevailing party shall be entitled to reasonable attorneys' fees paid by the losing party as fixed by the court whether or not such action is pursued to decision or judgment. The
attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. Landlord shall be
entitled to reasonable attorneys' fees and all other costs and expenses incurred in the preparation and service of notice of default and consultations in connection therewith, whether or not a legal
action is subsequently commenced. Each party hereby waives any right to a trial by jury in any action to enforce the specific performance of this Lease, for damages for the breach hereof, or otherwise
for enforcement of any remedy hereunder. 

        31.   Landlord's Access. 

        31.1 Landlord
and Landlord's agents shall have the right to enter the Premises at reasonable times after twenty-four (24) hours notice to Landlord (except
in the event of an emergency) for the purpose of inspecting the same, performing any services required of Landlord, showing the same to prospective purchasers, lenders, or tenants, taking such
measures, erecting such scaffolding or other necessary structures, making such alterations, repairs, improvements, or additions to the Premises or to the Building as Landlord may reasonably deem
necessary or desirable and the 

23

 

erecting,
using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Tenant's use of the Premises.
Landlord may at any time during the last one hundred twenty (120 days) of the Term hereof place on or about the Premises "For Lease" signs. 

        31.2 All
activities of Landlord pursuant to this Section 31 shall be without abatement of Rent, nor shall Landlord have all
liability to Tenant for the same. 

        31.3 Landlord
shall have the right to retain keys to the Premises and to unlock all doors in or upon the Premises other than files, vaults and safes, and in the case of
emergency to enter the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forcible or unlawful entry or detainer of the Premises or an eviction. Tenant waives any
charges for damages or injuries or interference with Tenant's property or business in connection therewith. 

        32.   Auctions, Other Sales and Cessation of Business. Tenant shall not conduct, nor permit to be conducted, either voluntarily
or involuntarily, any auction upon the Premises or the Common Areas without Landlord's prior written consent. Notwithstanding anything to the contrary in this Lease, Landlord shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such consent. Tenant shall not make a bulk sale of its goods or move, or attempt to or threaten to move its goods and equipment
out of the Premises (other than in the ordinary course of business) or cease to conduct business from the Premises. 

        33.   Signs. Subject to Landlord's prior written approval (which shall not be unreasonably withheld), Tenant shall be permitted
to install, at Tenant's cost, identity signage at locations designated by Landlord, one monument sign at a location designated by Landlord and a sign on the top of the Building that comply with the
CC&Rs and all applicable governmental sign regulations. Following the installation of the signs, Tenant shall maintain the same, at Tenant's sole cost, in a clean and sightly condition and in good
working order throughout the Lease Term. Upon the expiration or earlier termination of this Lease, Tenant shall, at Tenant's sole cost, remove all signage from the Premises and repair any and all
damage, if any, caused by such removal. 

        34.   Merger. The voluntary or other surrender of this Lease, or a mutual cancellation thereof, or a termination by Landlord,
shall not work a merger, and shall, at the option of Landlord, terminate all or existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all such
subtenancies. 

        35.   Consents. Except for matters for which there is a standard of consent or approval specifically set forth in this Lease
(other than a reasonableness standard), and except for matters which could affect (i) Building Systems (ii) the structural aspects of the Building, (iii) the Common Areas, or
(iv) the exterior appearance of the Building or any buildings therein (including, without limitation, signs), in which case Landlord shall have the right to act in its sole and absolute
discretion as to the matters described in items (i), (ii), (iii) and (iv) above, any time the consent or approval of Landlord or Tenant is required under this Lease, such consent or
approval shall not be unreasonably withheld, conditioned or delayed. 

        36.   Quiet Possession. Upon Tenant paying the rent for the Premises and observing and performing all of the covenants,
conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term subject to all of the provisions of this
Lease. 

        37.   Limited Purchase Option. Provided that Tenant is not in default under this Lease after the lapse of any applicable cure
periods, Tenant shall have a one time right to purchase the Building and 

24

 

the
underlying real property on an as-is, where-is, with-all-faults basis, without any representation by Landlord ("Purchase
Option") on the following terms and conditions: 

        (a)   Tenant
shall elect to exercise the Purchase Option (if at all) during the period ("Option Period") (i) beginning
on the date ("Notice Date") on which Landlord delivers notice to Tenant that Landlord intends to record a parcel map, lot split or boundary adjustment
("Lot Split") in the Official Records of San Diego County, separating the property underlying the Building from the single legal parcel currently
containing the Building and the building located at 5870 Pacific Center Boulevard, and (ii) ending at 5:00 p.m. on the date which is five (5) days following the Notice Date, by
delivering notice that Tenant has elected to exercise the Purchase Option to Landlord at the address set forth in Section 22 above. Tenant shall use
commercially reasonable efforts to effect the Lot Split. The Lot Split shall be recorded no earlier than thirty (30) days after the Notice Date. The estimated date of recordation shall be
specified in Landlord's notice to Tenant pursuant to this Section 37(a). 

        (b)   The
purchase price ("Purchase Price") for the Building and the underlying real property shall be the sum (i) of
Four Million Fifty Thousand and 00/100 Dollars ($4,050,000.00) and (ii) the incremental amount of the then unamortized portion of the actual cost of the Tenant Improvements which is in excess
of the amount of One Hundred Thousand and 00/100 Dollars ($100,000.00) (i.e., $315,357.00 actual cost, minus $100,000.00 = $215,357.00), amortized over a five (5) year period with
interest at a rate of 7%, payable in immediately available funds at the Closing (as defined below). The dollar amount representing the difference between (A) the unamortized portion of the
$215,357.00 amount amortized over a five (5) year period and (B) the unamortized portion of the $215,357.00 amount amortized over a seven (7) year period, each with interest at a
rate of seven percent (7%), shall be deemed the "Amortization Delta Amount" and shall be deducted from the brokerage commission payable pursuant to
Section 1.9 above at the Closing. 

        (c)   Landlord
and Tenant shall open an escrow ("Escrow") with First American Title Insurance Company
("Escrow Holder") within three (3) business days after Tenant exercises the Purchase Option. The close of Escrow ("Closing") shall occur within
sixty (60) days after recordation of the Lot Split. Landlord and Tenant shall execute a short form purchase agreement with instructions to Escrow Holder that are consistent with the provisions
of this Section 37 ("Escrow Instructions"). The Escrow Instructions (i) shall not contain any representations of Landlord regarding the Building
or the underlying property other than that the Lot Split has been recorded in compliance with Applicable Laws and (ii) shall not contain any contingencies or conditions precedent to the Closing
that are not expressly provided in this Section 37. At the Closing, the Purchase Price shall be delivered to Landlord and the Building and the
underlying real property shall be delivered to Tenant subject to all matters of record, but free of any and all monetary encumbrances other than real property taxes and assessments, assessments levied
by any governmental agency and assessments charges under the CC&Rs, if any. 

        (d)   Tenant
shall have the right to assign or transfer the Purchase Option (i) to an Affiliate in connection with a Permitted Transfer of this Lease without Landlord's
prior consent, or (ii) to a third party at any time during the Option Term with Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Tenant shall
notify Landlord of any proposed assignment of the Purchase Option not less than thirty (30) days prior to the effective date thereof. No assignment of the Purchase Option shall release Tenant
of its obligations under this Lease. 

        (e)   This
Lease shall terminate and be of no further force and effect (except with respect to Tenant's indemnification obligations under this Lease) upon the Closing (as
defined in the 

25

 

Purchase
Agreement). In the event that the Purchase Option is exercised but the Escrow does not close, this Lease shall continue in full force and effect. 

        In
the event that the Purchase Option expires or terminates pursuant to this Section 37, Tenant shall execute and acknowledge, and
Landlord may cause to be recorded, a quitclaim deed in commercially reasonable form ("Quitclaim Deed") within three (3) business days following
Landlord's demand for the same. Tenant's failure to execute the Quitclaim Deed within such three (3) business day period shall constitute a material default by Tenant under this Lease, and
without further notice to Tenant and at Landlord's option, Landlord may execute the Quitclaim Deed on behalf of Tenant as Tenant's attorney-in-fact. Tenant does hereby make and
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead, to execute such Quitclaim Deed. 

        38.   Security Measures; Landlord's Reservations. 

        38.1 Tenant
hereby acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the
Building. Tenant assumes all responsibility for the protection of Tenant, its agents, and invitees and the property of Tenant and of Tenant's agents and invitees from acts of third parties. Nothing
herein contained shall prevent Landlord at Landlord's sole option from providing security protection for the Building or any part thereof. 

        38.2 Landlord
shall have the following rights: 

        (a)   To
change the name, address or title of the Building upon not less than ninety (90) days prior written notice to Tenant, provided that Landlord reimburses Tenant
for the actual, out-of-pocket cost of reprinting stationary and business cards, up to a
maximum amount of Two Thousand and 00/100 Dollars ($2,000.00), within thirty (30) days after invoice therefor; 

        (b)   To,
at Landlord's expense, provide and install Building standard graphics on the Building and such portions of the Common Areas as Landlord shall reasonably deem
appropriate; 

        (c)   To
grant to any tenant of the Building the exclusive right to conduct any business to the extent that such exclusive right does not conflict with any rights expressly
given herein; 

26

  

        (d)   To
place such signs, notices or displays as Landlord reasonably deems necessary or advisable upon the roof and/or exterior of the Building or any other building in the
Building or on pole signs or anywhere in the Common Areas. 

        38.3 Tenant
shall not: 

        (a)   Use
a representation (photographic or otherwise) of the Building or the Building or their name(s) in connection with Tenant's business without Landlord's consent; or 

        (b)   Suffer
or permit anyone, except in emergency, to go upon the roof of the Building without Landlord's consent. 

        39.   Structures. The obstruction of Tenant's view, air, or light by any structure erected in the vicinity of the Building,
whether by Landlord or third parties, shall in no way affect this Lease or impose any liability upon Landlord. 

        40.   Authority. If Tenant is a corporation, trust, or general or limited partnership, Tenant, and each individual executing
this Lease on behalf of such entity represent and warrant that such individual is duly authorized to execute and deliver this Lease on behalf of said entity and shall, within fifteen (15) days
after execution of this Lease, deliver to Landlord evidence of such authority satisfactory to Landlord. 

        41.   Execution. Preparation of this Lease by Landlord or Landlord's agent and submission of same to Tenant shall not be deemed
an offer to Tenant to lease. This Lease shall become binding upon Landlord and Tenant only when fully executed by both parties. This Lease may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one document. 

        42.   Lender Modification. Tenant agrees to make such reasonable modifications to this Lease as may be reasonably required by a
lender in connection with obtaining of normal financing or refinancing of the Building. 

        43.   Hazardous Material. Tenant shall not cause or permit any Hazardous Material (as hereinafter defined) to be brought upon,
kept or used in or about the Premises by Tenant, its agents, employees, contractors or invitees, without the prior written consent of Landlord, which consent may be granted or withheld in Landlord's
sole discretion. For the purpose of this Lease, "Hazardous Material" shall include oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including, without limitation, any "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" as such terms are defined in the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act, and in any other
law, ordinance, rule, regulation or order promulgated by the federal or state government, or any other governmental entity having jurisdiction over the Building or the parties to this Lease. If Tenant
breaches the obligations set forth in this paragraph, or if the presence of Hazardous Material in the Premises or at the Building by Hazardous Material otherwise occurs for which Tenant is legally
liable to Landlord for damage resulting therefrom, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses, including, without limitation, diminution in value of the Building, damages for the loss or restriction on use of rentable or usable space in or of any amenity of the Building, damages arising
from any adverse impact on leasing space in the Building, sums paid in settlement of claims, and any attorneys' fees, consultant fees and expert fees which arise during or after the Term of this Lease
as a result of such contamination. This indemnification of Landlord by Tenant shall survive expiration or termination of this Lease and includes, without limitation, costs incurred in connection with
any investigation of site conditions or any cleanup, remedial, removal or restoration work required by federal, state or local governmental agency or political subdivision because of Hazardous
Material present in, or under the 

27

 

Premises.
Without limiting the foregoing, if the presence of any Hazardous Material caused or permitted by Tenant results in any contamination of the Building, Tenant shall promptly take all actions,
at its sole expense, as are necessary to return the Building to the condition existing prior to the introduction of any such Hazardous Material; provided that Landlord's approval of such actions shall
first be obtained, with approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effects on
the Building. 

        44.   Landlord Exculpation. It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary,
and notwithstanding any applicable law to the contrary, the liability of Landlord hereunder and any recourse by Tenant against Landlord shall be limited solely and exclusively to the interest of
Landlord in and to the Building. Neither Landlord, nor any of its members, affiliates, tenants-in-common, managers or employees shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. 

        45.   Prohibition Against Recording. Neither this Lease, nor any memorandum, affidavit or other writing with respect thereto,
shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant. 

        46.   Attachments. Attached hereto are the following documents which constitute a part of this Lease: 

        Exhibit "A": Premises 

        Exhibit "B": Work Letter Agreement 

        Exhibit "C": Notice of Commencement Date 

        Exhibit "D": Rules and Regulations 

[signatures
on following page] 

28

 

        IN
WITNESS WHEREOF, this Building Lease Agreement is executed as of the Effective Date. 

	LANDLORD:	THE LICHTER FAMILY TRUST FIRST AMENDED AND RESTATED DECLARATION OF TRUST DATED NOVEMBER 7, 1996	 	 
	

 	

    
 Robert Jean Lichter, Trustee	
 	

 
	 	 	 	 
	

 	

THE SATTERLEE FAMILY TRUST UTD APRIL 24, 1986	
 	

 
	

 	

    
 Kenneth R. Satterlee, Trustee	
 	

 
	 	 	 	 

	TENANT:	 	INFOSONICS CORPORATION, a Maryland corporation
	

 	
 	

By:	

    
	
 	

 
	 	 	Name:	    
	 	 
	 	 	Title:	    
	 	 
	

 	
 	

 	

 	
 	

 
	

 	
 	

By:	

    
	
 	

 
	 	 	Name:	    
	 	 
	 	 	Title:	    
	 	 
	 	 	 	 	 	 

29

 
 
 

Exhibit "A"
  
  
  The Premises
  
  
  [TO BE ATTACHED]    

30

 

 
 

Exhibit "B"
  
  
  Work Letter
  
  
  [TO BE ATTACHED]    

31

 

 
 

Exhibit "C"
  
  
  Notice of Commencement Date    
    

	To:	 	 	 
	 	 	
	 
	 	 	
	 
	 	 	
	 

	Re:
	Building
Lease Agreement ("Lease") dated January 26, 2004, between Robert Jean Lichter and Gail F. Lichter, Trustees of The Lichter Family Trust First Amended and Restated
Declaration of Trust Dated November 7, 1996, and Kenneth R. Satterlee and Candace C. Satterlee, Trustees of the Satterlee Family Trust UTD April 24, 1986, as
tenants-in-common ("Landlord"), and Infosonics Corporation, a Maryland corporation ("Tenant"), concerning the Office Building located at 5880 Pacific Center Blvd, San Diego,
California. 

Ladies and Gentlemen: 

In
accordance with the Lease, we wish to advise you and/or confirm as follows: 

        1.     That
Substantial Completion of the Premises has occurred, and that the Term of the Lease shall commence or has commenced as
of                        , 2004 for a Term of
84 months ending on                        . 

        2.     The
rentable area of the Building is                        sq. ft. The Base Rent
is                        Dollars ($            ) per month.
 

        3.     That
in accordance with the Lease, Base Rent commenced to accrue on                        . 

        4.     If
the Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter, with the exception of
the final billing, shall be for the full amount of the monthly installment as provided for in the Lease. 

        5.     Rent
is due and payable in advance on the first day of each and every month during the Lease Term. Your rent checks should be made payable to
                                         
       at                        .
 

	 	 	"Landlord"	 
	

 	
 	

KENTOO LLC,

a California limited liability company, authorized agent	

 
	

 	
 	

By:	

    
 Kenneth R. Satterlee

Managing Member	

 
	 	 	 	 	 

Agreed to and Accepted as of            , 2004. 

"Tenant"

INFOSONICS
CORPORATION,

a Maryland corporation 

	By:	 	    
	 
	Name:	 	    
	 
	Title:	 	    
	 
	 	 	 	 

32

 
 
 

Exhibit "D"
  
  
  Rules and Regulations
  
  
  General Rules    
    

1.    Tenant
shall not suffer or permit the obstruction of any Common Areas, including driveways and walkways. 

2.    Landlord
reserves the right to refuse access to any persons Landlord in good faith judges to be a threat to the safety, reputation, or property of the Building and/or its occupants. 

3.    Tenant
shall not make or permit any noise or odors that annoy or interfere with other tenants or persons having business within the Building. 

4.    Tenant
shall not keep animals or birds within the Building, and shall not bring bicycles, motorcycles or other vehicles into portions of the Building that are not designated as
authorized for same (provided, however, that Tenant may bring bicycles into the Premises and may use a forklift in the warehouse portion of the Premises). 

5.    Tenant
shall not make, suffer or permit litter except in appropriate receptacles for that purpose. 

6.    Tenant
shall not alter any lock or install new or additional locks or bolts. 

7.    Tenant
shall be responsible for the inappropriate use of any toilet rooms, plumbing or other utilities. No foreign substances of any kind are to be inserted therein. 

8.    Tenant
shall not deface the walls, partitions or other surfaces of the Premises or the Building. 

9.    Tenant
shall not suffer or permit anything in or around the Premises that causes excessive vibration or floor loading in any part of the Building. 

10.    Furniture,
significant freight and equipment shall be moved into or out of the Building only with the Landlord's knowledge and consent, and subject to such reasonable limitations,
techniques and timing, as may be designated by Landlord. Tenant shall be responsible for any damage to the Building arising from any such activity. 

11.    Tenant
shall not employ any service or contractor for services or work to be performed in the Building, except as approved by Landlord. 

12.    Tenant
shall return all keys at the termination of its tenancy and shall be responsible for the cost of replacing any keys that are lost. 

13.    No
window coverings, shades or awnings shall be installed or used by Tenant without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed. 

14.    No
tenant, employee or invitee shall go upon the roof of the Building except as expressly provided in the Lease. 

15.    Tenant
shall not suffer or permit smoking or carrying of lighted cigar or cigarettes in areas reasonably designated by Landlord or by applicable governmental agencies as nonsmoking
areas. 

16.    Tenant
shall not use any method of heating or air conditioning other than as provided by Landlord or any dedicated system approved by Landlord. 

17.    The
Premises shall not be used for lodging or manufacturing, cooking or food preparation. Notwithstanding the foregoing, Underwriters' Laboratory-approved equipment and microwave
ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages, provided that such use is in accordance with all applicable laws, codes, ordinances,
rules and regulations, and does not cause odors which are objectionable to Landlord and other tenants. 

33

 

18.    Tenant
shall comply with all safety, fire protection and evacuation regulations established by Landlord or any applicable governmental agency. 

19.    Landlord
reserves the right to waive any one of these rules or regulations, and/or as to any particular tenant, and any such waiver shall not constitute a waiver of any other rule or
regulation or any subsequent application thereof to such tenant. 

20.    Tenant
assumes all risks from theft or vandalism to the Premises and agrees to keep the Premises locked as may be required. 

21.    Landlord
reserves the right to make such other reasonable rules and regulations as it may from time to time deem necessary for the appropriate operation and safety of the Building and
its occupants. Landlord shall provide Tenant with copies of any new and/or modified rules or regulations prior to the effective date thereof. Tenant agrees to abide by these and such other rules and
regulations. 

 
 

Parking Rules    
    

1.    Parking
areas shall be used only for parking vehicles no longer than full size passenger automobiles. 

2.    Tenant
shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded or
parked in areas other than those designated by Landlord for such activities. 

3.    Landlord
reserves the right to refuse the sale of monthly identification devices to any person or entity that willfully refuses to comply with the applicable rules, regulations, laws
and/or agreements. 

4.    Users
of the parking areas will obey all posted signs and park only in the areas designated for vehicle parking. 

5.    Unless
otherwise instructed, every person using the parking areas is required to park and lock his own vehicle. Landlord will not be responsible for any damage to vehicles, injury to
persons or loss of property, all of which risks are assumed by the party using the parking areas. 

6.    The
maintenance of vehicles in the parking areas or Common Areas is prohibited. The washing, waxing or cleaning of vehicles in designated areas shall be permitted during normal
business hours. 

7.    Tenant
shall be responsible for seeing that all its employees, agents and invitees comply with the applicable parking rules, regulations, laws and agreements. 

8.    Landlord
reserves the right to modify these rules and/or adopt such other reasonable and non-discriminatory rules and regulations as it may deem necessary for the property
operation of the parking area. 

9.    Such
parking use as is herein provided is intended merely as a license only and no bailment is intended or shall be created hereby. 

34

QuickLinks

Exhibit "A" The Premises [TO BE ATTACHED]

Exhibit "B" Work Letter [TO BE ATTACHED]

Exhibit "C" Notice of Commencement Date

Exhibit "D" Rules and Regulations General Rules

Parking RulesQuickLinks
 -- Click here to rapidly navigate through this document
  

Exhibit 10.10  

 
  LOAN AND SECURITY AGREEMENT
  (ACCOUNTS AND INVENTORY)    
    

         

  

	OBLIGOR#	NOTE #	AGREEMENT DATE
	3762180432	18	August 20, 2002
	CREDIT LIMIT	INTEREST RATE: Base Rate plus 0.00%	OFFICER NO./INITIALS
	        $4,750,000.00	        or the applicable Libor Rate	        49846 / T Fredericks

        THIS
AGREEMENT is entered into on September 20, 2002, between Comerica Bank-California, a California banking
corporation ("Bank") as secured party, whose headquarters office is 333 West Santa Clara Street, San Jose, CA 95113 and Infosonics Corporation, a corporation, and Infosonics de
Mexico, S. A. de C.V., a corporation, (Jointly and severally, individually and collectively "Borrower"), whose sole place of business (if it has only one), chief executive
office (if it has more than one place of business) is located at the address set forth below its name on the signature page to this Agreement. The parties agree as follows: 

	1.
	DEFINITIONS. 

        1.1   "Accounts"
shall mean and includes all presently existing and hereafter arising accounts, including without limitation all accounts receivable, contract rights and other
forms of right to payment for monetary obligations or receivables for property sold or to be sold, leased, licensed, assigned or otherwise disposed of, or for services rendered or to be rendered
(including without limitation all health-care-insurance receivables) owing to Borrower, and any supporting obligations, credit insurance, guaranties or security therefor,
irrespective of whether earned by performance. 

        1.2   "Agreement"
shall mean and includes this Loan and Security Agreement (Accounts and Inventory), any concurrent or subsequent rider to this Loan and Security Agreement
(Accounts and Inventory) and any extensions, supplements, amendments or modifications to this Loan and Security Agreement (Accounts and Inventory) and/or to any such rider. 

        1.3   "Bank
Expenses" shall mean and includes: all costs or expenses required to be paid by Borrower under this Agreement which are paid or advanced by Bank; taxes and
insurance premiums of every nature and kind of Borrower paid by Bank; filing, recording, publication and search fees, appraiser fees, auditor fees and costs, and title insurance premiums paid or
incurred by Bank in connection with Bank's transactions with Borrower; costs and expenses incurred by Bank in collecting the Accounts (with or without suit) to correct any default or enforce any
provision of this Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, disposing of, preparing for sale and/or advertising to sell the Collateral,
whether or not a sale is consummated; costs and expenses of suit incurred by Bank in enforcing or defending this Agreement or any portion hereof, including, but not limited to, expenses incurred by
Bank in attempting to obtain relief from any stay, restraining order, injunction or similar process which prohibits Bank from exercising any of its rights or remedies; and reasonable attorneys' fees
and expenses incurred by Bank in advising, structuring, drafting, reviewing, amending, terminating, enforcing, defending or concerning this Agreement, or any portion hereof or any agreement related
hereto, whether or not suit is brought. Bank Expenses shall include Bank's in-house legal charges at reasonable rates. 

2

 

        1.4   "Base
Rate" shall mean that variable rate of interest so announced by Bank at its headquarters office in San Jose, California as its "Base Rate" from time to time and
which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. 

        1.5   "Borrower's
Books" shall mean and includes all of Borrower's books and records including but not limited to minute books; ledgers; records indicating, summarizing or
evidencing Borrower's assets (including, without limitation, the Accounts), liabilities, business operations or financial condition, and all information relating thereto, computer programs; computer
disk or tape files; computer printouts; computer runs; and other computer prepared information and equipment of any kind. 

        1.6   "Borrowing
Base" shall mean the lessor of: (1) eighty percent (80%) of the net amount of Eligible Accounts, where the account Debtor is a resident of the United
States, after deducting therefrom all payments, adjustments and credits applicable thereto; plus (2) Eighty-five percent (85%) of Eligible Insured Accounts. 

        1.7   "Cash
Flow" shall mean, for any applicable period of determination, the Net Income (after deduction for income taxes and other taxes of such Person, or its subsidiaries,
determined by reference to income or profits of such Person, or its subsidiaries) for such period, plus, to the extent deducted in computation of such Net Income, the amount of depreciation and
amortization expense and the amount of deferred tax liability during such period, all as determined in accordance with GAAP. 

        1.8   "Cash
Flow Coverage Ratio" shall mean the ratio, as of any applicable period of determination, the numerator of which is Net Income plus depreciation plus amortization
plus (or minus) the increase (or decrease) in the deferred tax liability minus dividends and, to the extent that and so long as Borrower is an entity that is not directly subject to Federal income
taxation with respect to which any earnings are attributable ratably to each Person with an ownership interest in Borrower, minus any distributions to each such Person in an amount necessary to pay
each such Person's income tax resulting from such ownership interest, at the greater of actual draws or net income times the highest prevailing personal tax rate, and the denominator of which is the
current portion of long term debt plus the current portion of capital lease payments for the same period of determination. 

        1.9   "Collateral"
shall mean and includes all personal property of Borrower, including without limitation each and all of the following: the Accounts; the Inventory; the
General Intangibles; the Negotiable Collateral; Borrower's Books; all Borrower's deposit accounts; all Borrower's investment property (including without limitation securities and securities
entitlements); all goods, instruments, documents, policies and certificates of insurance, deposits, money or other personal property of Borrower in which Bank receives a security interest and which
now or later come into the possession, custody or control of Bank; all Borrower's equipment and fixtures; all additions, accessions, attachments, parts, replacements, substitutions, renewals,
interest, dividends, distributions or rights of any kind for or with respect to any of the foregoing (including without limitation any stock splits, stock rights, voting rights and preferential
rights); any supporting obligations for any of the foregoing; and the products and proceeds of any of the foregoing, including, but not limited to, proceeds of insurance covering the Collateral, and
any and all Accounts, General Intangibles, Negotiable Collateral, Inventory, equipment, money, deposit accounts, investment property, equipment, fixtures or other tangible and intangible property of
Borrower resulting from the sale or other disposition of the Collateral and the proceeds thereof and any supporting obligations or security therefor and any right to payment thereunder, and including,
without limitation, cash or other property which were proceeds and are recovered by a bankruptcy trustee or otherwise as a preferential transfer by Borrower. Notwithstanding anything to the contrary
contained herein, Collateral shall not include any waste or other materials which have been or may be designated as toxic or hazardous by Bank. 

        1.10 "Credit"
shall mean all Indebtedness, except that Indebtedness arising pursuant to any other separate contract, instrument, note, or other separate agreement which, by
its terms, provides for a specified interest rate and term. 

3

 

        1.11 "Credit
Limit" shall mean Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000). 

        1.12 "Current
Assets" shall mean, in respect of a Person and as of any applicable date of determination; all (a) unrestricted cash, marketable securities, or
certificates of deposit; (b) non-affiliated accounts receivable; (c) United States government securities; (d) claims against the United States government; and
(e) inventories (held for sale in the ordinary course of business) of such Person. 

        1.13 "Current
Liabilities" shall mean, in respect of a Person and as of any applicable date of determination, (a) all liabilities of such Person that should be
classified as current in accordance with GAAP, including, without limitation, any portion of the principal of the Indebtedness under this Agreement classified as current, plus (b) to the extent
not otherwise included, all liabilities of Borrower to any of its affiliates (including officers, directors, shareholders, subsidiaries and commonly held companies) whether or not classified as
current in accordance with GAAP. 

        1.14 "Daily
Balance" shall mean the amount determined by taking the amount of the Credit owed at the beginning of a given day, adding any new Credit advanced or incurred on
such date, and subtracting any payments or collections which are deemed to be paid and are applied by Bank in reduction of the Credit on that date under the provisions of this Agreement. 

        1.15 "Debt"
shall mean, as of any applicable date of determination, all items of indebtedness, obligation or liability of a Person, whether matured or unmatured, liquidated
or unliquidated, direct or indirect, absolute or contingent, joint or several, that should be classified as liabilities in accordance with GAAP. In the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness. 

        1.16 "Debt-to-Worth
Ratio" shall mean, in respect of a Person and as of any applicable date of determination, the ratio of (a) the total Debt
of such Person at such time, to (b) the Tangible Effective Net Worth of such Person at such time. 

        1.17 "Eligible
Accounts" shall mean and includes those Accounts of Borrower which are due and payable within ninety (90) days, or less, from the date of invoice, have
been validly assigned to Bank and strictly comply with all of Borrower's warranties and representations to Bank; but Eligible Accounts shall not include the following: (a) Accounts with respect
to which the account debtor is an officer, employee, partner, joint venturer or agent of Borrower; (b) Accounts with respect to which goods are placed on consignment, guaranteed sale or other
terms by reason of which the payment by the account debtor may be conditional; (c) Accounts with respect to which the account debtor is not a resident of the United States, unless covered by
credit insurance satisfactory to Bank ("Insured Accounts"); (d) Accounts with respect to which the account debtor is the United States or any department, agency or instrumentality of the United
States; (e) Accounts with respect to which the account debtor is any State of the United States or any city, county, town, municipality or division thereof; (f) Accounts with respect to
which the account debtor is a subsidiary of, related to, affiliated or has common shareholders, officers or directors with Borrower; (g) Accounts with respect to which Borrower is or may become
liable to the account debtor for goods sold or services rendered by the account debtor to Borrower; (h) Accounts not paid by an account debtor within ninety (90) days from the date of
the invoice; (i) Accounts with respect to which account debtors dispute liability or make any claim, or have any defense, crossclaim, counterclaim, or offset; (j) Accounts with respect
to which any Insolvency Proceeding is filed by or against the account debtor, or if an account debtor becomes insolvent, fails or goes out of business; (k) (1) Accounts, other than Insured
Accounts, owed by any single account debtor which exceed twenty percent (20%) of all of the Eligible Accounts; (I) Accounts, other than Insured Accounts, with a particular account debtor on
which over twenty-five percent (25%) of the aggregate amount owing is greater than ninety (90) days from the date of the invoice; and (m) Insured Accounts with a particular
account debtor on which over twenty-five percent (25%) of the aggregate amount 

4

 

owing
is greater than ninety (90) days from the date of the invoice and Borrower believes that there is a risk that Credit Insurance will not reimburse for the loss. 

        1.18 "Eligible
Insured Accounts" shall mean Accounts covered by credit insurance acceptable to Bank. 

        1.19 "Event
of Default" shall mean one or more of those events described in Section 7 contained herein below. 

        1.20 "GAAP"
shall mean, as of any applicable period, generally accepted accounting principles in effect during such period. 

        1.21 "General
Intangibles" shall mean and includes all of Borrower's present and future general intangibles and other personal property (including without limitation all
payment intangibles, electronic chattel paper, contract rights, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, blueprints, drawings, plans, diagrams, schematics, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment (including
without limitation, rights to payment evidenced by chattel paper, documents or instruments) and other rights under any royalty or licensing agreements, infringement claims, software (including without
limitation any computer program that is embedded in goods that consist solely of the medium in which the program is embedded), information contained on computer disks or tapes, literature, reports,
catalogs, insurance premium rebates, tax refunds, and tax refund claims), other than goods, Accounts, Inventory, Negotiable Collateral, and Borrowers Books. 

        1.22 "Indebtedness"
shall mean and includes any and all loans, advances, Letter of Credit Obligations, overdrafts, debts, liabilities (including, without limitation, any and
all amounts charged to Borrower's loan account pursuant to any agreement authorizing Bank to charge Borrower's loan account), obligations, lease payments, guaranties, covenants and duties owing by
Borrower to Bank of any kind and description whether advanced pursuant to or evidenced by this Agreement; by any note or other Instrument; or by any other agreement between Bank and Borrower and
whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due now existing or hereafter arising, including, without limitation, any interest, fees,
expenses, costs and other amounts owed to Bank that but for the provisions of the United States Bankruptcy Code would have accrued after the commencement of any Insolvency Proceeding, and including,
without limitation, any debt, liability, or obligations owing from Borrower to others which Bank may have obtained by assignment, participation, purchase or otherwise, and further including, without
limitation, all interest not paid when due and all Bank Expenses which Borrower is required to pay or reimburse by this Agreement, by law, or otherwise. 

        1.23 "Insolvency
Proceeding" shall mean and includes any proceeding or case commenced by or against Borrower, or any guarantor of Borrower's Indebtedness, or any of
Borrower's account debtors, under any provisions of the Bankruptcy Code, as amended, or any other bankruptcy or insolvency law, including, but not limited to assignments for the benefit of creditors,
formal or informal moratoriums, composition or extensions with some or all creditors, any proceeding seeking a reorganization, arrangement or any other relief under the Bankruptcy Code, as amended, or
any other bankruptcy or insolvency law. 

        1.24 "Inventory"
shall mean and includes all present and future inventory in which Borrower has any interest, including, but not limited to, goods held by Borrower for sale
or lease or to be furnished under a contract of service and all of Borrower's present and future raw materials, work in process, finished goods (including without limitation any computer program
embedded in any of the foregoing goods and any supporting information provided in connection therewith that (i) is associated with the goods in such a manner that the program customarily is
considered part of the goods or that (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the 

5

 

goods),
together with any advertising materials and packing and shipping materials, wherever located and any documents of title representing any of the above, and any equipment, fixtures or other
property used in the storing, moving, preserving, identifying, accounting for and shipping or preparing for the shipping of inventory, and any and all other items hereafter acquired by Borrower by way
of substitution, replacement, return, repossession or otherwise, and all additions and accessions thereto, and the resulting product or mass, and any documents of title respecting any of the above. 

        1.25 "Letter
of Credit Obligations" shall mean, as of any applicable date of determination, the sum of the undrawn amount of any letter(s) of credit issued by Bank upon the
application of and/or for the account of Borrower, plus any unpaid reimbursement obligations owing by Borrower to Bank in respect of any such letter(s) of credit. 

        1.26 "Net
Income" shall mean the net income (or loss) of a person for any period of determination, determined in accordance with GAAP but excluding in any event: 

        a.     any
gains or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and any taxes on the excluded
gains and any tax deductions or credits on account on any excluded losses; and 

        b.     in
the case of Borrower, net earnings of any Person in which Borrower has an ownership interest, unless such net earnings shall have actually been received by Borrower in
the form of cash distributions. 

        1.27 "Negotiable
Collateral" shall mean and include all of Borrower's present and future letters of credit, advises of credit, letter-of-credit
rights, certificates of deposit, notes, drafts, money, documents (including without limitation all negotiable documents), instruments (including without limitation all promissory notes), tangible
chattel paper or any other similar property. 

        1.28 "Judicial
Officer or Assignee" shall mean and includes any trustee, receiver, controller, custodian, assignee for the benefit of creditors or any other person or entity
having powers or duties like or similar to the powers and duties of trustee, receiver, controller, custodian or assignee for the benefit of creditors. 

        1.29 "Person"
or "person" shall mean and includes any individual, corporation, partnership, joint venture, firm, association, trust, unincorporated association, joint stock
company, government, municipality, political subdivision or agency or other entity. 

        1.30 "Quick
Assets" shall mean, as of any applicable date of determination, unrestricted cash, certificates of deposit or marketable securities and net accounts receivable
arising from the sale of goods and services, and United States government securities and/or claims against the United States government of Borrower and its subsidiaries. 

        1.31 "Subordinated
Debt" shall mean indebtedness of Borrower to third parties which has been subordinated to the Indebtedness pursuant to a subordination agreement in form
and content satisfactory to Bank. 

        1.32 "Subordination
Agreement" shall mean a subordination agreement in form satisfactory to Bank making all present and future indebtedness of Borrower to Natalie Roy and
JRC Corporation subordinate to the Indebtedness. 

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

6

 

        1.34 "Tangible
Net Worth" shall mean, with respect to any Person and as of any applicable date of determination, the excess of: 

        a.     the
net book value of all assets of such Person (excluding affiliate receivables, patents, patent rights, trademarks, trade names, franchises, copyrights, licenses,
goodwill, and all other intangible assets of such Person) after all appropriate deductions in accordance with GAAP (including, without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over 

        b.     all
Debt of such Person at such time. 

        1.35 "Working
Capital" shall mean, as of any applicable date of determination, Current Assets less Current Liabilities. 

Any
and all terms used in the foregoing definitions and elsewhere in this Agreement shall be construed and defined in accordance with the meaning and definition of such terms under and pursuant to the
California Uniform Commercial Code (hereinafter referred to as the "Uniform Commercial Code") as amended, revised or replaced from time to time. Notwithstanding the foregoing, the parties intend that
the terms used herein which are defined in the Uniform Commercial Code have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the Uniform Commercial Code shall in the
future be amended or held by a court to define any term used herein more broadly or inclusively than the Uniform Commercial Code in effect on the date of this Agreement, then such term, as used
herein, shall be given such broadened meaning. If the Uniform Commercial Code shall in the future be amended or held by a court to define any term used herein more narrowly, or less inclusively, than
the Uniform Commercial Code in effect on the date of this Agreement, such amendment or holding shall be disregarded in defining terms used in this Agreement. 

	2.
	LOAN AND TERMS OF PAYMENT. 

For
value received, Borrower promises to pay to the order of Bank such amount, as provided for below, together with interest, as provided for below. 

        2.1   Upon
the request of Borrower, made at any time and from time to time during the term hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower
an amount equal to the Borrowing Base; provided, however, that the Daily Balance shall not exceed the
lesser of either the Credit Limit or the Borrowing Base, minus all outstandings under the sublimit for Foreign Exchange Contracts and any obligations of Axcess Mobile, LLC, to Bank. If at any time for
any reason, the amount of Indebtedness owed by Borrower to Bank pursuant to this Section 2.1 of this Agreement is greater than the aggregate amount available to be drawn under this
Section 2.1 including Section 2.3, Borrower shall immediately pay to Bank, in cash, the amount of such excess. 

        2.2   Except
as hereinbelow provided, the Credit shall bear interest, on the Daily Balance owing, at a fluctuating rate of interest equal to the Base Rate plus zero (0.00%)
percentage points per annum; or at the LIBOR Rate plus 2.25% on the first Five Hundred Thousand ($500,000) and 2.50% on each Libor issued thereafter as determined in accordance with the LIBOR Addendum
attached hereto. All interest chargeable under this Agreement that is based upon a per annum calculation shall be computed on the basis of a three hundred sixty (360) day year for actual days
elapsed. The Base Rate as of the date of this Agreement is Four and Three Quarters percent (4.75%) per annum. In the event that the Base Rate announced is, from time to time hereafter, changed,
adjustment in the Base Rate shall be made and based on the Base Rate in effect on the date of such change. The Base Rate, as adjusted, shall apply to the Credit until the Base Rate is adjusted again. 

        All
interest payable by Borrower under the Credit shall be due and payable on the first day of each calendar month during the term of this Agreement. A late payment charge equal to five
percent (5%) of each late payment may be charged on any payment not received by Bank within ten 

7

 

(10) calendar
days after the payment due date, but acceptance of payment of this charge shall not waive any Event of Default under this Agreement. Upon the occurrence of an Event of Default
hereunder, and without constituting a waiver of any such Event of Default, then during the continuation thereof, at Bank's option, the Credit shall bear interest, on the Daily Balance owing, at a rate
equal to three percent (3%) per year in excess of the rate applicable immediately prior to the occurrence of the Event of Default, and such rate of interest shall fluctuate thereafter from time to
time at the same time and in the same amount as any fluctuation in the rate of interest applicable immediately prior to any such occurrence. 

        2.3   Subject
to the terms and conditions of this Agreement, Bank agrees to issue or cause to be issued Foreign Exchange Contracts during the term of this Agreement in the
aggregate outstanding face amount not to exceed (i) the lesser of the Credit Limit or the Borrowing Base, minus (ii) the then outstanding advances under this Agreement, provided that the
Foreign Exchange Contracts shall not in any case exceed Four Hundred Seventy-Five Thousand Dollars ($475,000). 

	3.
	TERM. 

        3.1   This
Agreement shall remain in full force and effect until September 7, 2003, or until terminated by notice by Borrower. Notice of such termination by Borrower
shall be effectuated by mailing of a registered or certified letter not less than thirty (30) days prior to the effective date of such termination, addressed to Bank at the address set forth
herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, should Borrower be in default of one or more of the provisions of this Agreement,
Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail,
suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Indebtedness shall become immediately due
and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Indebtedness to Bank in full. Notwithstanding termination, until all
Indebtedness has been fully satisfied, Bank shall retain its security interest in all existing Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its
obligations. 

        3.2   After
termination and when Bank has received payment in full of Borrower's Indebtedness to Bank, Bank shall reassign to Borrower all Collateral held by Bank, and shall
execute a termination of all security agreements and security interests given by Borrower to Bank. 

	4.
	CREATION OF SECURITY INTEREST. 

        4.1   Borrower
hereby grants to Bank a continuing security interest in all presently existing and hereafter arising Collateral in order to secure prompt repayment of any and
all Indebtedness owed by Borrower to Bank and in order to secure prompt performance by Borrower of each and all of its covenants and obligations under this Agreement and otherwise created. Bank's
security interest in the Collateral shall attach to all Collateral without further act on the part of Bank or Borrower. In the event that any Collateral, including proceeds, is evidenced by or
consists of Negotiable Collateral, Borrower, immediately upon the request of Bank, shall (a) endorse or assign such Negotiable Collateral to Bank, (b) deliver actual physical possession
of such Negotiable Collateral to Bank, and (c) mark conspicuously all of its records pertaining to such Negotiable Collateral with a legend, in form and substance satisfactory to Bank (and in
the case of Negotiable Collateral consisting of tangible chattel paper, immediately mark all such tangible chattel paper with a conspicuous legend in form and substance satisfactory to Bank),
indicating that the Negotiable Collateral is subject to the security interest granted to Bank hereunder. 

        4.2   Bank's
security interest in the Accounts shall attach to all Accounts without further act on the part of Bank or Borrower. Upon request from Bank, Borrower shall provide
Bank with schedules 

8

 

describing
all Accounts created or acquired by Borrower (including without limitation agings listing the names and addresses of, and amounts owing by date by account debtors), and shall execute and
deliver written assignments of all Accounts to Bank all in a form acceptable to Bank; provided, however,
Borrower's failure to execute and deliver such schedules and/or assignments shall not affect or limit Bank's security interest and other rights in and to the Accounts. Together with each schedule,
Borrower shall furnish Bank with copies of Borrower's customers' invoices or the equivalent, and original shipping or delivery receipts for all merchandise sold, and Borrower warrants the genuineness
thereof. Upon the occurrence of an Event of Default, Bank or Bank's designee may notify customers or account debtors of Bank's security interest in the Collateral and direct such customers or account
debtors to make payments directly to Bank, but unless and until Bank does so or gives Borrower other written instructions, Borrower shall collect all Accounts for Bank, receive in trust all payments
thereon as Bank's trustee, and, if so requested to do so from Bank, Borrower shall immediately deliver said payments to Bank in their original form as received from the account debtor and all letters
of credit, advices of credit, instruments, documents, chattel paper or any similar property evidencing or constituting Collateral. Notwithstanding anything to the contrary contained herein, if sales
of Inventory are made for cash, Borrower shall immediately deliver to Bank, in identical form, all such cash, checks, or other forms of payment which Borrower receives. The receipt of any check or
other item of payment by Bank shall not be considered a payment on account until such check or other item of payment is honored when presented for payment, in which event, said check or other item of
payment shall be deemed to have been paid to Bank two (2) calendar days after the date Bank actually receives such check or other item of payment. 

        4.3   Bank's
security interest in Inventory shall attach to all Inventory without further act on the part of Bank or Borrower. Borrower will at Borrower's expense pledge,
assemble and deliver such Inventory to Bank or to a third party as Bank's bailee; or hold the same in trust for Bank's account or store the same in a warehouse in Bank's name; or deliver to Bank
documents of title representing said Inventory; or evidence of Bank's security interest in some other manner acceptable to Bank. Until a default by Borrower under this Agreement or any other Agreement
between Borrower and Bank, Borrower may, subject to the provisions hereof and consistent herewith, sell the Inventory, but only in the ordinary course of Borrower's business. A sale of Inventory in
Borrower's ordinary course of business does not include an exchange or a transfer in partial or total satisfaction of a debt owing by Borrower. 

        4.4   Concurrently
with Borrower's execution of this Agreement, and at any time or times hereafter at the request of Bank, Borrower shall (a) execute and deliver to
Bank security agreements, mortgages, assignments, certificates of title, affidavits, reports, notices, schedules of accounts, letters of authority and all other documents that Bank may reasonably
request, in form satisfactory to Bank, to perfect and maintain perfected Bank's security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this
Agreement, (b) cooperate with Bank in obtaining a control agreement in form and substance satisfactory to Bank with respect to all deposit accounts, electronic chattel paper, investment
property, and letter-of-credit rights, and (c) in the event that any Collateral is in the possession of a third party, Borrower shall join with Bank in notifying such
third party of Bank's security interest and obtaining an acknowledgment from such third party that it is holding such Collateral for the benefit of Bank. By authenticating or becoming bound by this
Agreement, Borrower authorizes the filing of initial financing statement(s), and any amendment(s) covering the Collateral to perfect and maintain perfected Bank's security interest in the Collateral.
Upon the occurrence of an Event of Default, Borrower hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's true and
lawful attorney-in-fact with power to sign the name of Borrower on any security agreement, mortgage, assignment, certificate of title, affidavit, letter of authority, notice of
other similar documents which must be executed and/or filed in order to perfect or continue perfected Bank's security interest in the Collateral, and to take such actions in its own name or in
Borrower's name as Bank, in its sole discretion, deems necessary or 

9

 

appropriate
to establish exclusive possession or control (as defined in the Uniform Commercial Code) over any Collateral of such nature that perfection of Bank's security interest may be accomplished
by possession or control. 

        4.5   Borrower
shall make appropriate entries in Borrower's Books disclosing Bank's security interest in the Accounts. Bank (through any of its officers, employees or agents)
shall have the right at any time or times hereafter, provided that reasonable notice is provided, during Borrower's usual business hours, or during the usual business hours of any third party having
control over the records of Borrower, to inspect and verify Borrower's Books in order to verify the amount or condition of, or any other matter, relating to, said Collateral and Borrower's financial
condition. 

        4.6   Effective
only upon the occurrence of an Event of Default, Borrower appoints Bank or any other person whom Bank may designate as Borrower's
attorney-in-fact, with power: to endorse Borrower's name on any checks, notes, acceptances, money order, drafts or other forms of payment or security that may come into Bank's
possession; to sign Borrower's name on any invoice or bill of lading relating to any Accounts, on drafts against account debtors, on schedules and assignments of Accounts, on verifications of Accounts
and on notices to account debtors; to establish a lock box arrangement and/or to notify the post office authorities to change the address for delivery of Borrower's mail addressed to Borrower to an
address designated by Bank, to receive and open all mail addressed to Borrower, and to retain all mail relating to the Collateral and forward all other mail to Borrower; to send, whether in writing or
by telephone, requests for verification of Accounts; and to do all things necessary to carry out this Agreement. Borrower ratifies and approves all acts of the
attorney-in-fact. Neither Bank nor its attorney-in-fact will be liable for any acts or omissions or for any error of judgement or mistake of fact or
law. This power being coupled with an interest, is irrevocable so long as any Accounts in which Bank has a security interest remain unpaid and until the Indebtedness has been fully satisfied. 

        4.7   In
order to protect or perfect any security interest which Bank is granted hereunder, Bank may, in its sole discretion, discharge any lien or encumbrance or bond the
same, pay any insurance, maintain guards, warehousemen, or any personnel to protect the Collateral, pay any service bureau, or, obtain any records, and all costs for the same shall be added to the
Indebtedness and shall be payable on demand. 

        4.8   Borrower
agrees that Bank may provide information relating to this Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and service providers. 

	5.
	CONDITIONS PRECEDENT. 

        5.1   Conditions
precedent to the making of the loans and the extension of the financial accommodations hereunder, Borrower shall execute, or cause to be executed, and deliver
to Bank, in form and substance satisfactory to Bank and its counsel, the following: 

        a.     This
Agreement and other documents, instruments and agreements required by Bank; 

        b.     If
Borrower is a corporation, limited liability company, limited partnership or other such entity, certified copies of all actions taken by Borrower, any grantor of a
security interest to Bank to secure the Indebtedness, and any guarantor of the Indebtedness, authorizing the execution, delivery and performance of this Agreement and any other documents, instruments
or agreements entered into in connection herewith, and authorizing specific officers to execute and deliver any such documents, instruments and agreements; 

        c.     If
Borrower is a corporation, limited liability company, limited partnership or other such entity, then a certificate of good standing showing that Borrower is in good
standing under the laws of the state of its incorporation or formation and certificates indicating that Borrower is 

10

 

qualified
to transact business and is in good standing in any other state in which it conducts business; 

        d.     If
Borrower is a partnership, then a copy of Borrower's partnership agreement certified by each general partner of Borrower; 

        e.     UCC
searches and financing statements, tax lien and litigation searches, fictitious business statement filings, insurance certificates, notices or other similar documents
which Bank may require and in such form as Bank may require, in order to reflect, perfect or protect Bank's first priority security interest in the Collateral and in order to fully consummate all of
the transactions contemplated under this Agreement; 

        f.      Evidence
that Borrower has obtained insurance and acceptable endorsements; 

        g.     Such
control agreements from each Person as Bank may require; 

        h.     Duly
executed certificates of title with respect to that portion of the Collateral that is subject to certificates of title; 

        i.      Such
collateral access agreements from each lessor, warehouseman, bailee, and other Person as Bank may require, duly executed by each such Person; and 

        j.      Warranties
and representations of officers. 

	6.
	WARRANTIES. REPRESENTATIONS AND COVENANTS. 

        6.1   If
so requested by Bank, Borrower shall, at such intervals designated by Bank, during the term hereof execute and deliver a Report of Accounts Receivable or similar
report, in form customarily used by Bank. The aggregate amount of the Borrowing Base at all times during the effectiveness of this Agreement shall not be less than the advances made hereunder. Bank
shall have the right to recompute the Borrowing Base in conformity with this Agreement. 

        6.2   If
any warranty is breached as to any Account, or any Account is not paid in full by an account debtor within ninety (90) days from the date of invoice, or an
account debtor disputes liability or makes any claim with respect thereto, or a petition in bankruptcy or other application for relief under the Bankruptcy Code or any other insolvency law is filed by
or against an account debtor, or an account debtor makes an assignment for the benefit of creditors, becomes insolvent, fails or goes out of business, then Bank may deem ineligible any and all
Accounts owing by that account debtor, and reduce the Borrowing Base by the amount thereof. Bank shall retain its security interest in all Accounts, whether eligible or ineligible, until all
Indebtedness has been fully paid and satisfied. Returns and allowances, if any, as between Borrower and its customers, will be on the same basis and in accordance with the usual customary practices of
Borrower, as they exist at this time. Any merchandise which is returned by an account debtor or otherwise recovered shall be set aside, marked with Bank's name, and Bank shall retain a security
interest therein. Borrower shall promptly notify Bank of all disputes and claims and settle or adjust them on terms approved by Bank. After default by Borrower hereunder, no discount, credit or
allowance shall be granted to any account debtor by Borrower and no return of merchandise shall be accepted by Borrower without Bank's consent. Bank may, after default by Borrower, settle or adjust
disputes and claims directly with account debtors for amounts and upon terms which Bank considers advisable, and in such cases Bank will credit Borrower's loan account with only the net amounts
received by Bank in payment of the Accounts, after deducting all Bank Expenses in connection therewith. 

        6.3   Borrower
warrants, represents, covenants and agrees that: 

        a.     Borrower
has good and marketable title to the Collateral. Bank has and shall continue to have a first priority perfected security interest in and to the Collateral. The
Collateral shall at all 

11

 

times
remain free and clear of all liens, encumbrances and security interests (except those in favor of Bank); 

        b.     All
Accounts are and will, at all times pertinent hereto, be bona fide existing obligations created by the sale and delivery of merchandise or the rendition of services
to account debtors in the ordinary course of business, free of liens, claims, encumbrances and security interests (except as held by Bank and except as may be consented to, in writing, by Bank) and
are unconditionally owed to Borrower without defenses, disputes, offsets counterclaims, rights of return or cancellation, and Borrower shall have received no notice of actual or imminent bankruptcy or
insolvency of any account debtor at the time an Account due from such account debtor is assigned to Bank; and 

        c.     At
the time each Account is assigned to Bank, all property giving rise to such Account shall have been delivered to the account debtor or to the agent for the account
debtor for immediate shipment to, and unconditional acceptance by, the account debtor. Borrower shall deliver to Bank, as Bank may from time to time require, delivery receipts, customer's purchase
orders, shipping instructions, bills of lading and any other evidence of shipping arrangements. Absent such a request by Bank, copies of all such documentation shall be held by Borrower as custodian
for Bank. 

        6.4   At
the time each eligible Account is assigned to Bank, all such Eligible Accounts will be due and payable on terms set forth in Section 1.17, or on such other
terms approved in writing by Bank in advance of the creation of such Accounts and which are expressly set forth on the face of all invoices, copies of which shall be held by Borrower as custodian for
Bank, and no such Eligible Account will then be past due. 

        a.     Permit
representatives of Bank to conduct audits of Borrower's books and records relating to the Accounts and other Collateral and make extracts therefrom, with results
satisfactory to Bank, provided that Bank shall use its best efforts to not interfere with the conduct of Borrower's business, and to the extent possible
to arrange for verification of the Accounts directly with the account debtors obligated thereon or otherwise, all under reasonable procedures acceptable to Bank and at Borrower's sole expense;  provided,
further, that, prior to an Event of Default, Borrower shall not be responsible for the expense
of more than one (1) such audits, in any fiscal year. Notwithstanding any of the provisions contained in Section 1.6 hereof, Borrower
hereby acknowledges and agrees that upon completion of any such audit Bank shall have the right to adjust any Borrowing Base percentage, in its sole and reasonable discretion, based on its review of
the results of such collateral audit 

        6.5   Borrower
represents, warrants and covenants with Bank that Borrower will not, without Bank's prior written consent: 

        a.     Grant
a security interest in or permit a lien, claim or encumbrance upon any of the Collateral to any person, association, firm, corporation, entity or governmental
agency or instrumentality; 

        b.     Permit
any levy, attachment or restraint to be made affecting any of Borrower's assets; 

        c.     Permit
any Judicial Officer or Assignee to be appointed or to take possession of any or all of Borrower's assets; 

        d.     Other
than sales of Inventory in the ordinary course of Borrower's business, to sell, lease, or otherwise dispose of, move, or transfer, whether by sale or otherwise, any
of Borrower's assets; 

        e.     Change
its name, the location of its sole place of business, chief executive office or residence, business structure, corporate identity or structure, form of
organization or the state in 

12

 

which
it has been formed or organized; add any new fictitious names, liquidate, merge or consolidate with or into any other business organization; 

        f.      Move
or relocate any Collateral; 

        g.     Acquire
any other business organization; 

        h.     Enter
into any transaction not in the usual course of Borrower's business; 

        i.      Make
any change in Borrower's financial structure or in any of its business objectives, purposes or operations which would materially adversely affect the ability of
Borrower to repay Borrower's Indebtedness; 

        j.      Incur
any debts outside the ordinary course of Borrower's business except renewals or extensions of existing debts and interest thereon; 

        k.     Make
loans, advances or extensions of credit to any Person in an aggregate amount greater than Eight Hundred Thousand ($800,000), except in the ordinary course of
business. For purposes of this section oridnary course of business doesn not include Businees by inbetween Info and Ax; 

        l.      Guarantee
or otherwise, directly or indirectly, in any way be or become responsible for obligations of any other Person, whether by agreement to purchase the indebtedness
of any other Person, agreement for the furnishing of funds to any other Person through the furnishing of goods, supplies or services, by way of stock purchase, capital contribution, advance or loan,
for the purpose of paying or discharging (or causing the payment or discharge of) the indebtedness of any other Person, or otherwise, except for the endorsement of negotiable instruments by Borrower
in the ordinary course of business for deposit or collection; 

        m.    Make
any payment on account of any Subordinated Debt except for regularly scheduled payments of interest and principal in accordance with the provisions of any
Subordination Agreement executed by
Bank and the subordinated debt holder, or amend any provision contained in any documentation relating to any such Subordinated Debt without Bank's prior written consent; 

        n.     (a)
Sell, lease, transfer or otherwise dispose of properties and assets (whether in one transaction or in a series of transactions) except as to the sale of Inventory in
the ordinary course of business; (b) change its name, consolidate with or merge into any other corporation, permit another corporation to merge into it, acquire all or substantially all the
properties or assets of any other Person, enter into any reorganization or recapitalization or reclassify its capital stock, or (c) enter into any sale-leaseback transaction; 

        o.     Purchase
or hold beneficially any stock or other securities of, or make any investment or acquire any securities or other interest whatsoever in, any other Person, except
for the common stock of the Subsidiaries owned by Borrower on the date of this Agreement and except for certificates of deposit with maturities of one year or less of United States commercial banks
with capital, surplus and undivided profits in excess of One Hundred Million Dollars ($100,000,000) and the securities or other direct obligations of the United States Government maturing within one
year from the date of acquisition thereof; and 

        p.     Allow
any fact, condition or event to occur or exist with respect to any employee pension or profit sharing plans established or maintained by it which might constitute
grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan. 

        q.     Permit
Joseph Ram's compensation to exceed 35% of pretax profit excluding a salary cap of One Hundred Twenty-Five Thousand Dollars ($125,000) per year. 

13

 

        6.6   Borrower
represents, warrants, covenants and agrees that: 

        a.     Borrower's
true and correct legal name is that set forth on the signature page to this Agreement. Except as disclosed in writing to Bank on or before the date of this
Agreement, Borrower has not done business under any name other than that set forth on the signature page to this Agreement; 

        b.     If
Borrower is an individual, the location (as determined pursuant to the Uniform Commercial Code) of Borrower's principal residence is that set forth following
Borrower's name on the signature page to this Agreement; 

        c.     If
Borrower is a registered organization that is organized under the laws of any one of the states comprising the United States (e.g. corporation, limited partnership,
registered limited liability partnership or limited liability company), and is located (as determined pursuant to the Uniform Commercial Code) in the state under the laws of which it was organized,
Borrower's form of organization and the state in which it has been organized are those set forth immediately following Borrower's name on the signature page to this Agreement; 

        d.     If
Borrower is a registered organization organized under the laws of the United States, and Borrower is located in the state that United States law designates as its
location or, if United States law authorizes Borrower to designate the state for its location, the state designated by Borrower, or if neither of the foregoing are applicable, at the District of
Columbia (in each case as determined in accordance with the Uniform Commercial Code), Borrower's form of organization and the state or district in which it is located are those set forth immediately
following Borrower's name on the signature page to this Agreement; 

        e.     If
Borrower is a domestic organization that is not a registered organization under the laws of the United States or any state thereof (e.g. general partnership, joint
venture, trust, estate or association), and Borrower is located (as determined pursuant to the Uniform Commercial Code) at its sole place of business or, if it has more than one place of business, at
its chief executive office, Borrower's form of organization and the address of that location are those set forth on the signature page to this Agreement; and 

        f.      If
Borrower is a foreign individual or foreign organization or a branch or agency of a bank that is not organized under the laws of the United States or a state thereof,
Borrower is located (as determined pursuant to the Uniform Commercial Code) at the address set forth following Borrower's name on the signature page to this Agreement. 

        6.7   If
Borrower is a corporation, Borrower represents, warrants and covenants as follows: 

        a.     Borrower
will not make any distribution or declare or pay any dividend (in stock or in cash) to any shareholder or on any of its capital stock, of any class, whether now
or hereafter outstanding, or purchase, acquire, repurchase, or redeem or retire any such capital stock; provided,  however, to the extent that and so long
as Borrower is an entity that is not directly subject to Federal income taxation and with respect to which any
earnings are attributable ratably to each Person with an ownership interest in Borrower, Borrower may make distributions to each such Person in an amount necessary to pay each such Person's income tax
resulting from such ownership interest in Borrower per year, provided, further, that, promptly upon request of Bank, Borrower shall cause each such Person to provide Bank with copies of its tax return
to substantiate any such distribution; 

        b.     Borrower
is and shall at all times hereafter be a corporation duly organized and existing in good standing under the laws of the state of its incorporation and qualified
and licensed to do business in California or any other state in which it conducts its business; 

14

 

        c.     Borrower
has the right and power and is duly authorized to enter into this Agreement; and 

        d.     The
execution by Borrower of this Agreement shall not constitute a breach of any provision contained in Borrower's articles of incorporation or by-laws. 

        6.8   The
execution of and performance by Borrower of all of the terms and provisions contained in this Agreement shall not result in a breach of or constitute an event of
default under any agreement to which Borrower is now or hereafter becomes a party. 

        6.9   Borrower
shall promptly notify Bank in writing of its acquisition by purchase, lease or otherwise of any after acquired property of the type included in the Collateral,
with the exception of purchases of Inventory in the ordinary course of business. 

        6.10 All
assessments and taxes, whether real, personal or otherwise, due or payable by, or imposed, levied or assessed against, Borrower or any of its property have been
paid, and shall hereafter be paid in full, before delinquency. Borrower shall make due and timely payment or deposit of all federal, state and local taxes, assessments or contributions required of it
by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof. Borrower will make timely payment or deposit of all F.I.C.A. payments and
withholding taxes required of it by applicable laws, and will upon request furnish Bank with proof satisfactory to it that Borrower has made such payments or deposit. If Borrower fails to pay any such
assessment, tax, contribution, or make such deposit, or furnish the required proof, Bank may, in its sole and absolute discretion and without notice to Borrower, (I) make payment of the same or
any part thereof, or (ii) set up such reserves in Borrower's loan account as Bank deems necessary to satisfy the liability therefor, or both. Bank may conclusively rely on the usual statements
of the amount owing or other official statements issued by the appropriate governmental agency. Each amount so paid or deposited by Bank shall constitute a Bank Expense and an additional advance to
Borrower. 

        6.11 There
are no actions or proceedings pending by or against Borrower or any guarantor of Borrower before any court or administrative agency and Borrower has no knowledge
of any pending, threatened or imminent litigation, governmental investigations or claims, complaints, actions or prosecutions involving Borrower or any guarantor of Borrower, except as heretofore
specifically disclosed in writing to Bank. If any of the foregoing arise during the term of the Agreement, Borrower shall immediately notify Bank in writing. 

        6.12 Insurance.

        a.     Borrower,
at its expense, shall keep and maintain its assets insured against loss or damage by fire, theft, explosion, sprinklers and all other hazards and risks
ordinarily insured against by other owners who use such properties in similar businesses for the full insurable value thereof. Borrower shall also keep and maintain business interruption insurance and
public liability and property damage insurance relating to Borrower's ownership and use of the Collateral and its other assets. All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be satisfactory to Bank. Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All
such policies of insurance (except those of public liability and property damage) shall contain an endorsement in a form satisfactory to Bank showing Bank as a loss payee thereof, with a waiver of
warranties satisfactory to Bank, and all proceeds payable thereunder shall be payable to Bank and, upon receipt by Bank, shall be applied on account of the Indebtedness owing to Bank. To secure the
payment of the Indebtedness, Borrower grants Bank a security interest in and to all such policies of insurance (except those of public liability and property damage) and the proceeds thereof, and
Borrower shall direct all insurers under such policies of insurance to pay all proceeds thereof directly to Bank. 

15

 

        b.     Borrower
hereby irrevocably appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's attorney for the purpose of making, selling
and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of insurance. Borrower will not cancel any of such policies without Bank's prior written consent. Each such insurer shall agree by
endorsement upon the policy or policies of insurance issued by it to Borrower as required above, or by independent instruments furnished to Bank, that it will give Bank at least ten (10) days
written notice before any such policy or policies of insurance shall be altered or canceled, and that no act or default of Borrower, or any other person, shall affect the right of Bank to recover
under such policy or policies of insurance required above or to pay any premium in whole or in part relating thereto. Bank, without waiving or releasing any Indebtedness or any Event of Default, may,
but shall have no obligation to do so, obtain and maintain such policies of insurance and pay such premiums and take any other action with respect to such policies which Bank deems advisable. All sums
so disbursed by Bank, as well as reasonable attorneys' fees incurred by Bank, whether in-house or outside counsel is used, court costs, expenses and other charges relating thereto, shall
constitute Bank Expenses and are payable on demand. 

        c.     Borrower
shall promptly notify Bank in writing not later than 30 days prior to the cancellation of any Credit Insurance policies. 

        6.13 All
financial statements and information relating to Borrower which have been or may hereafter be delivered by Borrower to Bank are true and correct and have been
prepared in accordance with GAAP consistently applied and there has been no material adverse change in the financial condition of Borrower since the submission of such financial information to Bank. 

        6.14 Financial
Reporting. 

        a.     Borrower
at all times hereafter shall maintain a standard and modern system of accounting in accordance with GAAP consistently applied with ledger and account cards
and/or computer tapes and computer disks, computer printouts and computer records pertaining to the Collateral which contain information as may from time to time be requested by Bank, not modify or
change its method of accounting or enter into, modify or terminate any agreement presently existing, or at any time hereafter entered into with any third party accounting firm and/or service bureau
for the preparation and/or storage of Borrower's accounting records without the written consent of Bank first obtained and without said accounting firm and/or service bureau agreeing to provide
information regarding the Accounts and Inventory and Borrower's financial condition to Bank; permit Bank and any of its employees, officers or agents, upon demand, during Borrower's usual business
hours, or the usual business hour of third persons having control thereof, to have access to and examine all of Borrower's Books relating to the Collateral, Borrower's Indebtedness to Bank, Borrower's
financial condition and the results of Borrower's operations and in connection therewith, permit Bank or any of its agents, employees or officers to copy and make extracts therefrom. 

        b.     Borrower
shall deliver to Bank: (1) Within thirty (30) days after the end of each month, a company prepared balance sheet and profit and loss statement
covering Borrower's operations, (2) Within one hundred twenty (120) days after the end of each of Borrower's fiscal years a certified public accountants ("CPA") reviewed statement of
the financial condition of Borrower for each such fiscal year, including but not limited to, a balance sheet and profit and loss statement and any other report requested by Bank relating to the
Collateral and the financial condition of Borrower, and (3) a certificate signed by an authorized employee of Borrower to the effect that all reports, statements, computer disk or tape files,
computer printouts, computer runs, or other computer prepared information of any kind or nature relating to the foregoing or documents delivered or 

16

 

caused
to be delivered to Bank under this subparagraph are complete, correct and thoroughly present the financial condition of Borrower and that there exists on the date of delivery to Bank no
condition or event which constitutes a breach or Event of Default under this Agreement. 

        c.     Cause
each Guarantor to submit to Bank such Guarantor's financial statement, confirmed as to its correctness by Guarantor's signature, either on Bank's form or prepared
by an independent certified public accountant within 120 days of the end of each fiscal year of Borrower; and a completed copy of such Guarantor's federal income tax return same calendar year,
no later than 30 days after filing of same with the Internal Revenue Service. 

        d.     In
addition to the financial statements requested above, Borrower agrees to provide Bank with the following schedules: 

        (1)   Accounts
Receivable and Accounts Payable Agings within fifteen (15) days of each month end. 

        (2)   Inventory
Activity Reports within fifteen (15) days of each month end. 

        (3)   Transaction
Reports on a weekly basis if the aggregate outstanding balance exceeds Four Million Dollars ($4,000,000) and monthly if the aggregate outstanding balance is
less than Four Million Dollars ($4,000,000). 

        (4)   Borrowing
Base Certificate on a weekly basis if the aggregate outstanding balance exceeds Four Million Dollars ($4,000,000) and monthly if the aggregate outstanding
balance is less than Four Million Dollars ($4,000,000). 

        (5)   Compliance
Certification within 120 days of each fiscal year end. 

        (6)   An
alphabetized listing of Customer on a quarterly basis or more frequently (as requested by Bank) including addresses. 

        (7)   Credit
Insurance Reports on Accounts Receivable from Export Insurance Agency as requested by Bank evidencing Borrower is in good standing. 

        6.15 Borrower
shall maintain the following financial ratios and covenants on a consolidated basis, which shall be monitored on a monthly basis, except as noted below: 

        a.     Tangible
Effective Net Worth in an amount not less than $750,000, to increase each December 31by $150,000 on an annual basis. 

        b.     a
ratio of Quick Assets to Current Liabilities of not less than 0.70:1.00. 

        c.     a
Debt-to-Worth Ratio of not greater than 6.50:1.00 decreasing on December 31; 2002 to 5.50:1.00 and to decrease each December 31 by
..50 percent thereafter. 

        d.     Maintain
a quarterly Net Income after taxes of at least $1.00. 

        All
financial covenants shall be computed in accordance with GAAP consistently applied except as otherwise specifically set forth in this Agreement. All monies due from affiliates
(including officers, directors and shareholders) shall be excluded from Borrower's assets for all purposes hereunder. 

        6.16 Borrower
shall promptly supply Bank (and cause any guarantor to supply Bank) with such other information (including tax returns) concerning its financial affairs (or
that of any guarantor) as Bank may request from time to time hereafter, and shall promptly notify Bank of any material adverse change in Borrower's financial condition and of any condition or event
which constitutes a breach of or an event which constitutes an Event of Default under this Agreement. 

        6.17 Borrower
is now and shall be at all times hereafter solvent and able to pay its debts (including trade debts) as they mature. 

17

 

        6.18 Borrower
shall immediately and without demand reimburse Bank for all sums expended by Bank in connection with any action brought by Bank to correct any default or
enforce any provision of this Agreement, including all Bank Expenses; Borrower authorizes and approves all advances and payments by Bank for items described in this Agreement as Bank Expenses. 

        6.19 Each
warranty, representation and agreement contained in this Agreement shall be automatically deemed repeated with each advance and shall be conclusively presumed to
have been relied on by Bank regardless of any investigation made or information possessed by Bank. The warranties, representations and agreements set forth herein shall be cumulative and in addition
to any and all other warranties, representations and agreements which Borrower shall give, or cause to be given, to Bank, either now or hereafter. 

        6.20 Borrower
shall keep all of its principal bank accounts with Bank and shall notify Bank immediately in writing of the existence of any other bank account, deposit
account, or any other account into which money can be deposited. 

        6.21 Borrower
shall furnish to Bank: (a) as soon as possible, but in no event later than thirty (30) days after Borrower knows or has reason to know that any
reportable event with respect to any deferred compensation plan has occurred, a statement of the chief financial officer of Borrower setting forth the details concerning such reportable event and the
action which Borrower proposes to take with respect thereto, together with a copy of the notice of such reportable event given to the Pension Benefit Guaranty Corporation, if a copy of such notice is
available to Borrower; (b) promptly after the filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual report with respect to
each deferred compensation plan; (c) promptly after receipt thereof, a copy of any notice Borrower may receive from the Pension Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any deferred compensation plan; provided, however, this subparagraph shall not apply to
notice of general application issued by the Pension Benefit Guaranty Corporation or the Internal Revenue Service; and (d) when the same is made available to participants in the deferred
compensation plan, all notices and other forms of information from time to time disseminated to the participants by the administrator of the deferred compensation plan. 

        6.22 Borrower
is now and shall at all times hereafter remain in compliance with all federal, state and municipal laws, regulations and ordinances relating to the handling,
treatment and disposal of toxic substances, wastes and hazardous material and shall maintain all necessary authorizations and permits. 

        6.23 Borrower
shall limit direct and indirect compensation paid to owners to thirty-five percent (35%) of pretax profit excluding a salary cap of One Hundred
Twenty-Five Thousand Dollars ($125,000) per year. 

	7.
	EVENTS OF DEFAULT. 

Any
one or more of the following events shall constitute an Event of Default by Borrower under this Agreement: 

        a.     If
Borrower fails or neglects to perform, keep or observe any term, provision, condition, covenant, agreement, warranty or representation contained in this Agreement, or
any other present or future document, instrument or agreement between Borrower and Bank; 

        b.     If
any representation, statement, report or certificate made or delivered by Borrower, or any of its officers, employees or agents to Bank is not true and correct; 

        c.     If
Borrower fails to pay when due and payable or declared due and payable, all or any portion of Borrower's Indebtedness (whether of principal, interest, taxes,
reimbursement of Bank Expenses, or otherwise); 

18

 

        d.     If
there is a material impairment of the prospect of repayment of all or any portion of Borrower's Indebtedness or a material impairment of the value or priority of
Bank's security interest in the Collateral; 

        e.     If
all or any of Borrower's assets are attached, seized, subject to a writ or distress warrant, or are levied upon, or come into the possession of any Judicial Officer or
Assignee and the same are not released, discharged or bonded against within ten (10) days thereafter; 

        f.      If
any Insolvency Proceeding is filed or commenced by or against Borrower without being dismissed within ten (10) days thereafter; 

        g.     If
any proceeding is filed or commenced by or against Borrower for its dissolution or liquidation; 

        h.     If
Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; 

        i.      If
a notice of lien, levy or assessment is filed of record with respect to any or all of Borrower's assets by the United States Government, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other government agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a lien, whether
inchoate or otherwise, upon any or all of Borrower's assets and the same is not paid on the payment date thereof; 

        j.      If
a judgment or other claim becomes a lien or encumbrance upon any or all of Borrower's assets and the same is not satisfied, dismissed or bonded against within ten
(10) days thereafter; 

        k.     If
Borrower's records are prepared and kept by an outside computer service bureau at the time this Agreement is entered into or during the term of this Agreement such an
agreement with an outside service bureau is entered into, and at any time thereafter, without first obtaining the written consent of Bank, Borrower terminates, modifies, amends or changes its
contractual relationship with said computer service bureau or said computer service bureau fails to provide Bank with any requested information or financial data pertaining to Bank's Collateral,
Borrower's financial condition or the results of Borrower's operations; 

        l.      If
Borrower permits a default in any material agreement to which Borrower is a party with third parties so as to result in an acceleration of the maturity of Borrower's
indebtedness to others, whether under any indenture, agreement or otherwise; 

        m.    If
Borrower makes any payment on account of indebtedness which has been subordinated to Borrower's Indebtedness to Bank except as otherwise permitted under the terms of
this Agreement; 

        n.     If
any misrepresentation exists now or thereafter in any warranty or representation made to Bank by any officer or director of Borrower, or if any such warranty or
representation is withdrawn by any officer or director; 

        o.     If
any party subordinating its claims to that of Bank's or any guarantor of Borrower's Indebtedness dies, terminates its subordination or guaranty, violates the terms of
the subordination or guaranty, becomes insolvent, or an Insolvency Proceeding is commenced by or against any such subordinating party or guarantor; 

        p.     If
Borrower is an individual and Borrower dies; 

19

 

        q.     If
there is a change of ownership or control of fifty-one percent (51%) or more of the issued and outstanding stock of Borrower; or if there is any ownership
change to the issued and outstanding stock of Axcess Mobile, LLC; or 

        r.     Cancellation
of any insurance policy; 

        s.     If
any reportable event, which Bank determines constitutes grounds for the termination of any deferred compensation plan by the Pension Benefit Guaranty Corporation or
for the appointment by the appropriate United States District Court of a trustee to administer any such plan, shall have occurred and be continuing thirty (30) days after written notice of such
determination shall have been given to Borrower by Bank, or any such Plan shall be terminated within the meaning of Title IV of the Employment Retirement Income Security Act ("ERISA"), or a trustee
shall be appointed by the appropriate United States District Court to administer any such plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any plan and in
case of any event described in this Section 7, the aggregate amount of Borrower's liability to the Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed
five percent (5%) of Borrower's Tangible Effective Net Worth. 

        Notwithstanding
anything contained in Section 7 to the contrary, Bank shall refrain from exercising its rights and remedies and Event of Default shall thereafter not be deemed to
have occurred by reason of the occurrence of any of the events set forth in Sections 7.e, 7.f or 7.j of this Agreement if, within ten (10) days from the date thereof, the same is released,
discharged, dismissed, bonded against or satisfied; provided, however, if the event is the institution
of Insolvency Proceedings against Borrower, Bank shall not be obligated to make advances to Borrower during such cure period. 

	8.
	BANK'S RIGHTS AND REMEDIES. 

        8.1   Upon
the occurrence of an Event of Default by Borrower under this Agreement, Bank may, at its election, without notice of its election and without demand, do any one or
more of the following, all of which are authorized by Borrower: 

        a.     Declare
Borrower's Indebtedness, whether evidenced by this Agreement, installment notes, demand notes or otherwise, immediately due and payable to Bank; 

        b.     Cease
advancing money or extending credit to or for the benefit of Borrower under this Agreement, or any other agreement between Borrower and Bank; 

        c.     Terminate
this Agreement as to any future liability or obligation of Bank, but without affecting Bank's rights and security interests in the Collateral, and the
Indebtedness of Borrower to Bank; 

        d.     Without
notice to or demand upon Borrower or any guarantor, make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest
in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises
where the Collateral is located,
take and maintain possession of the Collateral and the premises (at no charge to Bank), or any part thereof, and to pay, purchase, contest or compromise any encumbrance, charge or lien which in the
opinion of Bank appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith; 

        e.     Without
limiting Bank's rights under any security interest, Bank is hereby granted a license or other right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property or a similar nature as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and Borrower's rights under all licenses and all franchise agreement shall 

20

 

inure
to Bank's benefit, and Bank shall have the right and power to enter into sublicense agreements with respect to all such rights with third parties on terms acceptable to Bank; 

        f.      Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sales and sell (in the manner provided for herein) the Inventory; 

        g.     Sell
or dispose the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at
such places (including Borrower's premises) as is commercially reasonable in the opinion of Bank. It is not necessary that the Collateral be present at any such sale. At any sale or other disposition
of the Collateral pursuant to this Section, Bank disclaims all warranties which would otherwise be given under the Uniform Commercial Code, including without limitation a disclaimer of any warranty
relating to title, possession, quiet enjoyment or the like, and Bank may communicate these disclaimers to a purchaser at such disposition. This disclaimer of warranties will not render the sale
commercially unreasonable; 

        h.     Bank
shall give notice of the disposition of the Collateral as follows: 

        (1)   Bank
shall give Borrower and each holder of a security interest in the Collateral who has filed with Bank a written request for notice, a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other
disposition is to be made; 

        (2)   The
notice shall be personally delivered or mailed, postage prepaid, to Borrower's address appearing in this Agreement, at least ten (10) calendar days before the
date fixed for the sale, or at least ten (10) calendar days before the date on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or
threatens to decline speedily in value. Notice to persons other than Borrower claiming an interest in the Collateral shall be sent to such addresses as have been
furnished to Bank or as otherwise determined in accordance with Section 9611 of the Uniform Commercial Code; and 

        (3)   If
the sale is to be a public sale, Bank shall also give notice of the time and place by publishing a notice one time at least ten (10) calendar days before the
date of the sale in a newspaper of general circulation in the county in which the sale is to be held; and 

        (4)   Bank
may credit bid and purchase at any public sale. 

        i.      Borrower
shall pay all Bank Expenses incurred in connection with Bank's enforcement and exercise of any of its rights and remedies as herein provided, whether or not suit
is commenced by Bank; 

        j.      Any
deficiency which exists after disposition of the Collateral as provided above will be paid immediately by Borrower. Any excess will be returned, without interest and
subject to the rights of third parties, to Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in good faith, is entitled to the excess; 

        k.     Without
constituting a retention of Collateral in satisfaction of an obligation within the meaning of 9620 of the Uniform Commercial Code or an action under California
Code of Civil Procedure 726, apply any and all amounts maintained by Borrower as deposit accounts (as that term is defined under 9102 of the Uniform Commercial Code) or other accounts that Borrower
maintains with Bank against the Indebtedness; 

        l.      The
proceeds of any sale or other disposition of Collateral authorized by this Agreement shall be applied by Bank first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorney fees and legal expenses incurred by Bank, whether in-house or outside 

21

 

counsel
is used, the balance of the proceeds of the sale or other disposition shall be applied in the payment of the Indebtedness, first to interest, then to principal, then to remaining Indebtedness
and the surplus, if any, shall be paid over to Borrower or to such other person(s) as may be entitled to it under applicable law. Borrower shall remain liable for any deficiency, which it shall pay to
Bank immediately upon demand. Borrower agrees that Bank shall be under no obligation to accept any noncash proceeds in connection with any sale or disposition of Collateral unless failure to do so
would be commercially unreasonable. If Bank agrees in its sole discretion to accept noncash proceeds (unless the failure to do so would be commercially unreasonable), Bank may ascribe any commercially
reasonable value to such proceeds. Without limiting the foregoing, Bank may apply any discount factor in determining the present value of proceeds to be received in the future or may elect to apply
proceeds to be received in the future only as and when such proceeds are actually received in cash by Bank; and 

        m.    The
following shall be the basis for any finder of fact's determination of the value of any Collateral which is the subject matter of a disposition giving rise to a
calculation of any surplus or deficiency under Section 9615(f) of the Uniform Commercial Code: (i) The Collateral which is the subject matter of the disposition shall be valued in an "as
is" condition as of the date of the disposition, without any assumption or expectation that such Collateral will be repaired or improved in any manner; (ii) the valuation shall be based upon an
assumption that the transferee of such Collateral desires a resale of the Collateral for cash promptly (but no later than 30 days) following the disposition; (iii) all reasonable closing
costs customarily borne by the seller in commercial sales transactions relating to property similar to such Collateral shall be deducted including, without limitation, brokerage commissions, tax
prorations, attorney's fees, whether in-house or outside counsel is used, and marketing costs; (iv) the value of the Collateral which is the subject matter of the disposition shall
be further discounted to account for any estimated holding costs associated with maintaining such Collateral pending sale (to the extent not accounted for in (iii) above), and other
maintenance, operational and ownership expenses; and (v) any expert opinion testimony given or considered in connection with a determination of the value of such Collateral must be given by
persons having at least 5 years experience in appraising property similar to the Collateral and who have conducted and prepared a complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such Collateral shall be a factor in determining the amount of proceeds which would have been realized in a disposition to a transferee
other than a secured party, a person related to a secured party or a secondary obligor under Section 9615(f) of the Uniform Commercial Code. 

        8.2   In
addition to any and all other rights and remedies available to Bank under or pursuant to this Agreement or any other documents, instrument or agreement contemplated
hereby, Borrower acknowledges and agrees that (i) at any time following the occurrence and during the continuance of any Event of Default, and/or (ii) termination of Bank's commitment or
obligation to make loans or advances or otherwise extent credit to or in favor of Borrower hereunder, in the event that and to the extent that there are any Letter of Credit Obligations outstanding at
such time, upon demand of Bank, Borrower shall deliver to Bank, or cause to be delivered to Bank, cash collateral in an amount not less than such Letter of Credit Obligations, which cash collateral
shall be held and retained by Bank as cash collateral for the repayment of such Letter of Credit Obligations, together with any and all other Indebtedness of Borrower to Bank remaining unpaid, and
Borrower pledges to Bank and grants to Bank a continuing first priority security interest in such cash collateral so delivered to Bank. Alternatively, Borrower shall cause to be delivered to Bank an
irrevocable standby letter of credit issued in favor of Bank by a bank acceptable to Bank, in its sole discretion, in an amount not less than such Letter of Credit Obligations, and upon terms
acceptable to Bank, in its sole discretion. 

        8.3   Bank's
rights and remedies under this Agreement and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as
provided by law 

22

 

or
in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election or acquiescence by Bank. 

	9.
	TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. If Borrower fails to pay promptly when due to another person or entity, monies which
Borrower is required to pay by reason of any provision in this Agreement, Bank may, but need not, pay the same and charge Borrower's loan account therefor, and Borrower shall promptly reimburse Bank.
All such sums shall become additional indebtedness owing to Bank, shall bear interest at the rate hereinabove provided, and shall be secured by all Collateral. Any payments made by Bank shall not
constitute (I) an agreement by it to make similar payments in the future, or (ii) a waiver by Bank of any default under this Agreement. Bank need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance or lien and the receipt of the usual official notice of the payment thereof shall be conclusive evidence that the same was validly
due and owing. Such payments shall constitute Bank Expenses and additional advances to Borrower.

	10.
	WAIVERS. 

        10.1 Borrower
agrees that checks and other instruments received by Bank in payment or on account of Borrower's Indebtedness constitute only conditional payment until such
items are actually paid to Bank and Borrower waives the right to direct the application of any and all payments at any time or times hereafter received by Bank on account of Borrower's Indebtedness
and Borrower agrees that Bank shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding any entry by Bank upon its books. 

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

        10.3 Bank
shall not in any way or manner be liable or responsible for (a) the safekeeping of the Inventory; (b) any loss or damage thereto occurring or arising
in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person
whomsoever. All risk of loss, damage or destruction of Inventory shall be borne by Borrower. 

        10.4 Borrower
waives the right and the right to assert a confidential relationship, if any, it may have with any accountant, accounting firm and/or service bureau or
consultant in connection with any information requested by Bank pursuant to or in accordance with this Agreement, and agrees that a Bank may contact directly any such accountants, accounting firm
and/or service bureau or consultant in order to obtain such information. 

        10.5 THE
UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD
THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS. 

        10.6 In
the event that Bank elects to waive any rights or remedies hereunder, or compliance with any of the terms hereof, or delays or fails to pursue or enforce any term,
such waiver, delay or failure to pursue or enforce shall only be effective with respect to that single act and shall not be construed to affect any subsequent transactions or Bank's right to later
pursue such rights and remedies. 

23

 

	11.
	ONE CONTINUING LOAN TRANSACTION. All loans and advances heretofore, now or at any time or times hereafter made by Bank to Borrower
under this Agreement or any other agreement between Bank and Borrower, shall constitute one loan secured by Bank's security interests in the Collateral and by all other security interests, liens,
encumbrances heretofore, now or from time to time hereafter granted by Borrower to Bank. 

Notwithstanding
the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security
interest in Borrower's principal dwelling which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if Borrower (or
any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering real property, that deed of trust or mortgage shall not secure the loan and any other Indebtedness of Borrower (or
any of them), unless expressly provided to the contrary in another place. 

	12.
	NOTICES. Unless otherwise provided in this Agreement, all notices or demands by either party on the other relating to this Agreement
shall be in writing and sent by regular United States mail, postage prepaid, properly addressed to Borrower or to Bank at the addresses stated in this Agreement, or to such other addresses as Borrower
or Bank may from time to time specify to the other in writing. Requests to Borrower by Bank hereunder may be made orally.

	13.
	AUTHORIZATION TO DISBURSE. Bank is hereby authorized to make loans and advances hereunder upon telephonic or other instructions
received from anyone purporting to be an officer, employee, or representative of Borrower, or at the discretion of Bank if said loans and advances are necessary to meet any Indebtedness of Borrower to
Bank. Bank shall have no duty to make inquiry or verify the authority of any such party, and Borrower shall hold Bank harmless from any damage, claims or liability by reason of Bank's honor of, or
failure to honor, any such instructions.

	14.
	PAYMENTS. Borrower hereby authorizes Bank to deduct the full amount of any interest, fees, costs, or Bank Expenses due under this
Agreement and not paid or collected when due in accordance with the terms and conditions hereof from any account maintained by Borrower with Bank. Should there be insufficient funds in any such
account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower; provided,  however, that Bank
shall not be obligated to advance funds to cover any such payment.

	15.
	DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents, schedules, invoices or other papers delivered to Bank, may be destroyed or
otherwise disposed of by Bank six (6) months after they are delivered to or received by Bank, unless Borrower requests, in writing, the return of the said documents, schedules, invoices or
other papers and makes arrangements, at Borrower's expense, for their return.

	16.
	CHOICE OF LAW. The validity of this Agreement, its construction, interpretation and enforcement, and the rights of the parties
hereunder and concerning the Collateral, shall be determined according to the laws of the State of California. The parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the state and federal courts in the Northern District of California or the County of Santa Clara.

	17.
	GENERAL PROVISIONS. 

        17.1 This
Agreement shall be binding and deemed effective when executed by Borrower and accepted and executed by Bank at its headquarters office. 

        17.2 This
Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties;  provided, however, that Borrower may not
assign this Agreement or any rights hereunder without Bank's
prior written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Bank shall release Borrower or any guarantor from their obligations to 

24

 

Bank.
Bank may assign this Agreement and its rights and duties hereunder. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in
Bank's rights and benefits hereunder. In connection therewith, Bank may disclose all documents and information which Bank now or hereafter may have relating to Borrower or Borrower's business. 

        17.3 Paragraph
headings and paragraph numbers have been set forth herein for convenience only; unless the contrary is compelled by the context, everything contained in each
paragraph applies equally to this entire Agreement. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include
the plural, and the term "including" is not limiting. The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. 

        17.4 Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Bank or Borrower, whether under any rule of construction or
otherwise; on the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto. 

        17.5 Each
provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific
provision. 

        17.6 This
Agreement cannot be changed or terminated orally. This Agreement contains the entire agreement of the parties hereto and supersedes all prior agreements,
understandings, representations, warranties and negotiations, if any, related to the subject matter hereof, and none of the parties shall be bound by anything not expressed in writing. 

        17.7 The
parties intend and agree that their respective rights, duties, powers, liabilities, obligations and discretions shall be performed, carried out, discharged and
exercised reasonably and in good faith. 

        17.8 In
addition, if this Agreement is secured by a deed of trust or mortgage covering real property, then the trustor or mortgagor shall not mortgage or pledge the
mortgaged premises as security for any other indebtedness or obligations. This Agreement, together with all other indebtedness secured by said deed of trust or mortgage, shall become due and payable
immediately, without notice, at the option of Bank, (a) if said trustor or mortgagor shall mortgage or pledge the mortgaged premises for any other indebtedness or obligations or shall convey,
assign or transfer the mortgaged premises by deed, installment sale contract or other instrument; (b) if the title to the mortgaged premises shall become vested in any other person or party in
any manner whatsoever, or (c) if there is any disposition (through one or more transactions) of legal or beneficial title to a controlling interest of said trustor or mortgagor. 

        17.9 Each
undersigned Borrower hereby agrees that it is jointly and severally, directly, and primarily liable to Bank for payment and performance in full of all duties,
obligations and liabilities under this Agreement and each other document, instrument and agreement entered into by Borrower with or in favor of Bank in connection herewith, and that such liability is
independent of the duties, obligations and liabilities of any other Borrower or any other guarantor of the Indebtedness, as applicable. Each reference herein to Borrower shall mean each and every
Borrower party hereto, individually and collectively, jointly and severally. 

25

 

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

	 	 	 	BORROWER:
	

Accepted and effective as of:                        , 2002 at Bank's Headquarters Office	
 	

 	

 
	 	 	 	INFOSONICS CORPORATION
 a California corporation
	COMERICA BANK-CALIFORNIA,
 a California banking corporation	 	By:	    

	 	 	 	Title:
	

By:	

Tracy Fredricks	
 	
INFOSONICS DE MEXICO SA DE CV,
	 	
	 	a corporation
	Title: Vice President	 	 	 
	

 	

 	
 	

By:	

    

	 	 	 	Title:
	

Address for Notices:	
 	

Address for Notices:
	

9920 S. La Cienega Blvd., Suite 1401

Inglewood, CA 90301

Attn: Loan Documentation Manager

Fax (310) 417-5414	
 	

6325 Lusk Blvd

San Diego, CA 92121

Attn:

Fax
	 	 	 	 	 

26

   

  

August 20,
2002 

Axcess
Mobile, LLC

6325 Lusk Blvd.

San Diego, CA 92121 

This
Letter Agreement is entered into by and between Comerica Bank ("Bank") and Axcess Mobile, LLC, a California limited liability company ("Borrower") as of this 20th day of August, 2002, at Bank's
headquarters office at 333 West Santa Clara Street, San Jose, CA 95113. 

Bank
has offered to Borrower a $300,000.00 Line of Credit ("Loan") which is subject to the terms and conditions set forth in Master Revolving Note ("Note") and Security Agreement ("Security
Agreement") each dated August 20, 2002 and the following additional terms and conditions: 

	1.
	Borrower
agrees that availability under this Loan is subject to the availability of ABL Loans as defined in Article 1 of that certain Loan and Security Agreement by and among
Infosonics Corporation and Infosonics de Mexico, S.A. de C.V. dated August 20, 2002. Additionally, Borrower agrees that anything herein to the contrary not withstanding, should the ABL Loans,
as now in effect or hereafter renewed, amended or restated, terminate for any reason, including without limitation, terminate at the request of the Borrower, terminate resulting from otherwise
provided or permitted under this Agreement, the entire principal balance of each and every obligation of Borrower to Bank, together with all accrued interest thereon, shall be due and payable on the
effective date of such termination.

	2.
	Borrower
shall provide to Bank the following reports:

	a.
	Monthly
company prepared financial statements within 30 days of each month end. 

Please
acknowledge your understanding and acceptance of these terms and conditions by signing below and returning this Letter Agreement to me. A copy has been provided for your records. 

	COMERICA BANK-CALIFORNIA	 
	

By:	
 	

    
 Tracy M. Fredricks

Vice President	

 
	

 	
 	

 	

 
	

Acknowledged and Accepted this                        day of September, 2002:
	

 	
 	

 	

 
	
AXCESS MOBILE, LLC	

 
	

By:	
 	

    
 Joseph Ram

Manager	

 
	 	 	 	 

1

   FIRST MODIFICATION TO LOAN AND SECURITY AGREEMENT  

        This First Modification to Loan and Security Agreement (this "Modification") is entered into by and between  INFOSONICS CORPORATION AND INFOSONICS de Mexico, Sa de C.V ("Borrower") and COMERICA
BANK-CALIFORNIA ("Bank") as of this 13th day of March, 2003, at San Jose, California. 

RECITALS  

        This Modification is entered into upon the basis of the following facts and understandings of the parties, which facts and understandings are acknowledged by the
parties to be true and accurate: 

        Bank
and Borrower previously entered into a Loan and Security Agreement (Accounts and Inventory) dated August 20, 2002. The Loan
and Security Agreement and each modification shall collectively be referred to herein as the "Agreement." 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below. 

AGREEMENT  

        1.     Incorporation by Reference. The Recitals and the documents referred to therein are incorporated herein by this reference.
Except as otherwise noted, the terms not defined herein shall have the meaning set forth in the Agreement. 

        2.     Modification to the Agreement. Subject to the satisfaction of the conditions precedent as set forth in Section 3
hereof, the Agreement is hereby modified as set forth below. 

        A.    In
Section 1.11 of the Agreement, the amount "Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000)" is
hereby deleted in its entirety and replaced with the amount "Six Million Five Hundred Thousand Dollars ($6,500,000)."

        3.     Legal Effect. The effectiveness of this Modification is conditioned upon receipt by Bank of this Modification, and any
other documents which Bank may require to carry out the terms hereof. Except as specifically set forth in this Modification, all of the terms and conditions of the Agreement remain in full force and
effect. 

        4.     Integration. This is an integrated Modification and supersedes all prior negotiations and agreements regarding the subject
matter hereof. All amendments hereto must be in writing and signed by the parties. 

        IN
WITNESS WHEREOF, the parties have agreed as of the date first set forth above. 

	
INFOSONICS CORPORATION	
 	

COMERICA BANK-CALIFORNIA
	

By:	

    
	
 	

By:	

    

	Title:	 	 	Carisa Azzi

Commercial Banking Officer
	 	 	 	 	 
	INFOSONICS DE MEXICO SA DE CV	 	 	 
	

By:	

    
	
 	

 	

 
	Title:	 	 	 
	 	 	 	 	 

1

SECOND MODIFICATION TO LOAN AND SECURITY AGREEMENT  

        This Second Modification to Loan and Security Agreement (this "Modification") is entered into by and among INFOSONICS CORPORATION AND
INFOSONICS DE MEXICO SA DE CV (jointly and severally, individually and collectively "Borrower") and COMERICA
BANK-CALIFORNIA ("Bank") as of this 19th day of August, 2003, at San Jose, California. 

RECITALS  

        This Modification is entered into upon the basis of the following facts and understandings of the parties, which facts and understandings are acknowledged by the
parties to be true and accurate: 

        Bank
and Borrower previously entered into a Loan and Security Agreement (Accounts and Inventory) dated August 20, 2002, which was subsequently amended pursuant to that certain
modification agreement dated March 13, 2003. The Loan and Security Agreement and each modification shall collectively be referred to herein as the "Agreement." 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below. 

AGREEMENT  

        1.     Incorporation by Reference. The Recitals and the documents referred to therein are incorporated herein by this reference.
Except as otherwise noted, the terms not defined herein shall have the meaning set forth in the Agreement. 

        2.     Modification to the Agreement. Subject to the satisfaction of the conditions precedent as set forth in Section 3
hereof, the Agreement is hereby modified as set forth below. 

        A.    In
Section 3.1 of the Agreement the date "September 7, 2003" hereby is deleted and replaced with
"December 7, 2003." 

        B.    Subsection
6.5(k) of the Agreement hereby is deleted in its entirety and replaced with the following: 

        "(k) Make
loans, advances or extensions of credit to any Person in an aggregate amount greater than Eight Hundred Thousand ($800,000), except in the ordinary course of
business. For purposes of this Subsection 6(k) ordinary course of business does not include business by and between Infosonics and Axcess Mobile. 

        C.    The
following new Section "6.24" hereby is inserted into the Agreement immediately following existing Section "6.23." 

        "6.24 In
the event that all amounts due hereunder have not been paid in full on or before December 7, 2003, Borrower hereby agrees to pay a loan fee in the amount of
One Thousand Six Hundred Twenty-Five Dollars ($1,625) immediately thereafter and further agree to pay a monthly fee of Five Hundred Forty Dollars ($540) for each month extended thereafter
or until all amounts due hereunder are paid in full. 

        D.    Legal Effect. Except as specifically set forth in this Modification, all of the terms and conditions of the Agreement
remain in full force and effect. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all promissory notes, guaranties, security
agreements, mortgages, deeds of trust, environmental agreements, and all other instruments, documents and agreements entered into in connection with the Agreement. Borrower represents and warrants
that the Representations and Warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing. The effectiveness
of this Modification and each of the documents, instruments and agreements entered into in connection with this Modification, including without 

limit
any replacement promissory note entered into in connection herewith, is conditioned upon receipt by Bank of this Modification, any other documents which Bank may require to carry out the terms
hereof, and including but not limited to each of the following 

        3.     Integration. This is an integrated Modification and supersedes all prior negotiations and agreements regarding the subject
matter hereof. All amendments hereto must be in writing and signed by the parties. 

        IN
WITNESS WHEREOF, the parties have agreed as of the date first set forth above. 

	
INFOSONICS CORPORATION	
 	

COMERICA BANK-CALIFORNIA
	

By:	

    
	
 	

By:	

    

	Title:	 	 	Tomas Schmidt

Vice President—Western Division
	 	 	 	 	 
	INFOSONICS DE MEXICO SA DE CV	 	 	 
	

By:	

    
	
 	

 	

 
	Title:	 	 	 
	 	 	 	 	 

   THIRD MODIFICATION TO LOAN AND SECURITY AGREEMENT  

        This Third Modification to Loan and Security Agreement (this "Modification") is entered into by and between INFOSONICS CORPORATION and INFOSONICS DE MEXICO S.V.
DE C.V. ("Borrower") and COMERICA BANK ("Bank") as of this March 4, 2004, at San Jose, California. 

RECITALS  

        This Modification is entered into upon the basis of the following facts and understandings of the parties, which facts and understandings are acknowledged by the
parties to be true and accurate: 

        Bank
and Borrower previously entered into a Loan and Security Agreement (Accounts and Inventory) dated August 20, 2002, which was subsequently modified pursuant to those certain
modification agreements dated March 13, 2003 and August 19, 2003. The Loan and Security Agreement as so modified, and as such may be otherwise modified, amended, restated, supplemented,
revised or replaced from time to time prior to the date hereof shall collectively be referred to herein as the "Agreement." 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below. 

AGREEMENT  

        1.     Incorporation by Reference. The Recitals and the documents referred to therein are incorporated herein by this reference.
Except as otherwise noted, the terms not defined herein shall have the meaning set forth in the Agreement. 

        2.     Modification to the Agreement. Subject to the satisfaction of the conditions precedent as set forth in Section 3
hereof, the Agreement is hereby modified as set forth below. 

        a.     In
Section 3.1 of the Agreement, the date "March 7, 2004" is hereby deleted and replaced with date "April 9, 2004." 

        3.     Legal Effect. 

        a.     Except
as specifically set forth in this Modification, all of the terms and conditions of the Agreement remain in full force and effect. Except as expressly set forth
herein, the execution, delivery, and performance of this Modification shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect
prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust, environmental agreements,
and all other instruments, documents and agreements entered into in connection with the Agreement. 

        b.     Borrower
represents and warrants that each of the representations and warranties contained in the Agreement are true and correct as of the date of this Modification, and
that no Event of Default has occurred and is continuing. 

        c.     The
effectiveness of this Modification and each of the documents, instruments and agreements entered into in connection with this Modification is conditioned upon receipt
by Bank of this Modification and any other documents which Bank may require to carry out the terms. 

        4.     Miscellaneous Provisions. 

        a.     This
is an integrated Modification and supersedes all prior negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and
signed by the parties. 

        b.     This
Modification may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 

1

 

        IN
WITNESS WHEREOF, the parties have agreed as of the date first set forth above. 

	
INFOSONICS CORPORATION	
 	

COMERICA BANK
	

By:	

    
	
 	

By:	

    

	Title:	    
	 	 	Tomas Schmidt

Vice President
	

 	

 	
 	

 	

 
	
INFOSONICS DE MEXICO S.V. DE C.V.	
 	

 	

 
	

By:	

    
	
 	

 	

 
	Title:	    
	 	 	 
	 	 	 	 	 

2

   FOURTH MODIFICATION TO LOAN AND SECURITY AGREEMENT  

        This Fourth Modification to Loan and Security Agreement (this "Modification") is entered into by and between INFOSONICS CORPORATION AND
INFOSONICS DE MEXICO SA DE CV ((jointly and severally, individually and "Borrower") and COMERICA BANK, successor by merger to
Comerica Bank-California ("Bank") as of this 29th day of March 2004, at San Jose, California. 

RECITALS  

        This Modification is entered into upon the basis of the following facts and understandings of the parties, which facts and understandings are acknowledged by the
parties to be true and accurate: 

        Bank
and Borrower previously entered into a Loan and Security Agreement (Accounts and Inventory) dated August 20, 2002 which was subsequently modified pursuant to those certain
modification agreements dated March 13, 2003, August 19, 2003 and March 4, 2004. The Loan and Security Agreement as so modified, and as such may be otherwise modified, amended,
restated, supplemented, revised or replaced from time to time prior to the date hereof shall collectively be referred to herein as the "Agreement." 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below. 

AGREEMENT  

        1.     Incorporation by Reference. The Recitals and the documents referred to therein are incorporated herein by this reference.
Except as otherwise noted, the terms not defined herein shall have the meaning set forth in the Agreement. 

        2.     Modification to the Agreement. Subject to the satisfaction of the conditions precedent as set forth in Section 3
hereof, the Agreement is hereby modified as set forth below. 

        A.    In
Section 1.11 of the Agreement, the amount "Six Million Five Hundred Thousand Dollars ($6,500,000)" hereby is
deleted and replaced with "Seven Million Five Hundred Thousand Dollars ($7,500,000)."

        B.    The
introductory clause (prior to the colon) of Section 1.17 of the Agreement is hereby amended to read as follows: 

        "1.17 Eligible
Accounts" shall mean and includes those Accounts of Borrower which are due and payable within ninety (90) days, or less, from the date of invoice, have
been validly assigned to Bank and strictly comply with all of Borrower's warranties and representations to Bank, and for the period from March 29, 2004 until and including June 28, 2004,
shall also include accounts up to Four Hundred Seventy Thousand Five Hundred Eighty-Eight Dollars ($470,588) from Retail Wireless which are over ninety (90) days from the date of invoice; but
Eligible Accounts shall not include the following:" 

        C.    In
Section 3.1 of the Agreement the date "April 9, 2004" hereby is deleted and replaced with  "May 15, 2005."

        D.    "Section 4.2
of the Agreement hereby is deleted in its entirety and replaced with the following: 

        "4.2 Bank's
security interest in the Accounts shall attach to all Accounts without further act on the part of Bank or Borrower. Upon request from Bank, Borrower shall
provide Bank with schedules describing all Accounts created or acquired by Borrower (including without limitation agings listing the names and addresses of, and amounts owing by date by account
debtors), and shall execute and deliver written assignments of all Accounts to Bank all in a 

1

 

form
acceptable to Bank; provided, however, Borrower's failure to execute and deliver such schedules
and/or assignments shall not affect or limit Bank's security interest and other rights in and to the Accounts. Together with each schedule, Borrower shall furnish Bank with copies of Borrower's
customers' invoices or the equivalent, and original shipping or delivery receipts for all merchandise sold, and Borrower warrants the genuineness thereof. Upon the occurrence of an Event of Default,
Bank or Bank's designee may notify customers or account debtors of Bank's security interest in the Collateral and direct such customers or account debtors to make payments directly to Bank, but unless
and until Bank does so or gives Borrower other written instructions, Borrower shall collect all Accounts for Bank, receive in trust all payments thereon as Bank's trustee, and, if so requested to do
so from Bank, Borrower shall immediately deliver said payments to Bank in their original form as received from the account debtor and all letters of credit, advices of credit, instruments, documents,
chattel paper or any similar property evidencing or constituting Collateral. Notwithstanding anything to the contrary contained herein, if sales of Inventory are made for cash, Borrower shall
immediately deliver to Bank, in identical form, all such cash, checks, or other forms of payment which Borrower receives. The receipt of any check or other item of payment by Bank shall not be
considered a payment on account until such check or other item of payment is honored when presented for payment, in which event, said check or other item of payment shall be deemed to have been paid
to Bank two (2) calendar days after the date Bank actually receives such check or other item of payment. Notwithstanding anything to the contrary contained herein, Borrower agrees that payment
of the Indebtedness shall be on remittance basis and that, effective immediately, Borrower shall: (a) set up cash collateral account with the Bank (including, without limitation, execution of
any and all documents to effectuate the set up); (b) direct all electronic funds transfer payments to the cash collateral account; and (c) immediately turn over to the Bank for deposit
to the cash collateral account any check(s) or other payment(s) Borrower receives." 

        E.    In
Section 6.14(b) of the Agreement the word "reviewed" hereby is deleted and replaced with  "audited."

        F.     Section 6.14
d. sub-clause (4) of the Agreement is hereby deleted in its entirety and replaced with the following: 

        "d.   (4)
A Borrowing Base Certificate on a weekly basis." 

        G.    Section 6.15
clauses "a. and c." of the Agreement are hereby deleted in their entirety and replaced with the following: 

        "a.   Tangible
Effective Net Worth in an amount not less than $1,700,000, increasing each December 31by $150,000 on an annual basis. 

        "c.   A
Debt-to-Worth Ratio of not more than 5.50:1.00." 

        3.     Legal Effect. 

        a.     Except
as specifically set forth in this Modification, all of the terms and conditions of the Agreement remain in full force and effect. Except as expressly set forth
herein, the execution, delivery, and performance of this Modification shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect
prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust, environmental agreements,
and all other instruments, documents and agreements entered into in connection with the Agreement. 

2

 

        b.     Borrower
represents and warrants that each of the representations and warranties contained in the Agreement are true and correct as of the date of this Modification, and
that no Event of Default has occurred and is continuing. 

        c.     The
effectiveness of this Modification and each of the documents, instruments and agreements entered into in connection with this Modification is conditioned upon receipt
by Bank of this Modification and any other documents which Bank may require to carry out the terms. 

        d.     In
consideration for Bank's willingness to enter into this Modification, Borrower shall pay to Bank a non-refundable fee in the sum of Two Thousand Five
Hundred Dollars ($2,500), which shall be deemed earned by Bank as of the date of this Modification and shall be payable by Borrower concurrently with Borrower's execution of this
Modification.] 

        4.     Miscellaneous Provisions. 

        a.     This
is an integrated Modification and supersedes all prior negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and
signed by the parties. 

        b.     This
Modification may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 

        IN
WITNESS WHEREOF, the parties have agreed as of the date first set forth above. 

	
INFOSONICS CORPORATION	
 	

COMERICA BANK
	

By:	

    
	
 	

By:	

    

	Title:	    
	 	 	Tomas Schmidt

Vice President—Western Division
	

 	

 	
 	

 	

 
	
INFOSONICS DE MEXICO S.V. DE C.V.	
 	

 	

 
	

By:	

    
	
 	

 	

 
	Title:	    
	 	 	 
	 	 	 	 	 

3

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LOAN AND SECURITY AGREEMENT (ACCOUNTS AND INVENTORY)

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