Document:

AgreementOfLease

AGREEMENT OF LEASE

Property:
1381 Capital Boulevard Reno, Nevada

TABLE OF CONTETS
	
				
	Section
	 
	Page
	

	1.
	Reference Data and Definitions
	1
	

	2.
	Demise of Premises
	4
	

	3.
	Possession
	5
	

	4.
	Term
	5
	

	5.
	Base Rent
	6
	

	6.
	Additional Rent for Operating Expenses and Real Estate Taxes
	7
	

	7.
	Use; Compliance With Law
	10
	

	8.
	Alterations; Tenant's Property and Tenant's Responsibilities
	13
	

	9.
	Repairs and Other Work
	15
	

	10.
	Liens
	16
	

	11.
	Subordination
	17
	

	12.
	Inability to Perform
	18
	

	13.
	Destruction
	18
	

	14.
	Insurance
	19
	

	15.
	Eminent Domain
	21
	

	16.
	Assignment; Subleasing
	22
	

	17.
	Utilities and Services
	23
	

	18.
	Default
	24
	

	19.
	Insolvency or Bankruptcy
	26
	

	20.
	Fees and Expenses; Indemnity; Payment
	27
	

	21.
	Access to Premises
	28
	

	22.
	Notices
	28
	

	23.
	No Waiver
	29
	

	24.
	Estoppel Certificates
	29
	

	25.
	Rules and Regulations
	29
	

	26.
	Tenant's Taxes
	29
	

	27.
	Miscellaneous
	30
	

EXHIBITS

A    - Site Plan

B    - Notice of Nonresponsibility
C    - Fair Market Rent Determination
Schedule 1 - Right of First Offer 
Schedule 2 - Termination of Option

AGREEMENT OF LEASE
AGREEMENT OF LEASE (the “Lease”) made as of the thirtieth day of June, 2014 ("Effective Date") between KTR RENO LLC, a Delaware limited liability company (the “Landlord”), and LAWSON PRODUCTS, INC., an Illinois corporation (the “Tenant”).
Landlord and Tenant agree as follows:
1    Reference Data and Definitions1.    Reference Data and Definitions.  The following sets forth some of the basic lease information and definitions used in this Lease:

1.1    “Additional Rent” shall mean Tenant’s Proportionate Share (as hereinafter defined) of Real Estate Taxes and of Operating Expenses, and all other sums (exclusive of Base Rent) payable by Tenant to Landlord under this Lease.

1.2    “Base Rent” shall mean the annual Base Rent payable by Tenant to Landlord from and after the Commencement Date.  The Base Rent payable by Tenant to Landlord shall be in the amounts set forth below for the periods set forth below:
	
		
	Period (Months)
	Monthly Installment of Annual Base Rent

	0 - 12
	$33,668.00

	13 - 24
	$34,678.00

	25 - 36
	$35,718.00

	37 - 48
	$36,790.00

	49 - 60
	$37,894.00

	61 - 72
	$39,031.00

	73- 84
	$40,202.00

	85 - 96
	$41,408.00

	97 - 108
	$42,650.00

	109 - 120
	$43,930.00

1.3    "Building" shall mean the approximately 226,000 square foot building located at 1381 Capital Boulevard, Reno, Nevada.

1.4    "Commencement Date" shall mean June 30, 2014.

1.5    "Common Areas" shall mean the roadways, parking areas and landscaped areas on the Property, and the entrances, accessways and other areas located within the Building or otherwise on the Property intended for the common use of all tenants of the Property and their invitees.

1.6    "Concession Costs" shall mean leasing commissions and all other  costs such as construction allowances, rent concessions, moving expenses, takeover obligations and other similar inducements, incurred in leasing, subleasing or assigning a lease at the Building or this Lease.

1.7    "Excess Assignment Consideration" shall mean an amount, if any, equal to: (A) the consideration whenever paid by any assignee for the assignment, less (B) Concession Costs, reasonably incurred by Tenant in connection with such assignment.

1.8    "Excess Sublease Rent" shall mean an amount, if any, equal to: (A) (i) all rent  or other  

consideration  paid  to Tenant by any subtenant,  for and during  each month  less (ii) the portion of Tenant's Concession Costs reasonably incurred by Tenant in connection with such subletting and allocable to such month, less (B) (i) the monthly installment of Base Rent for such month plus (ii) such other rent or consideration attributable to such month, which would otherwise be required to be paid by Tenant to Landlord. In determining the amount of Excess Sublease Rent with respect to a sublease for less than all of the Premises, the amount of the monthly installment of Base Rent to be deducted pursuant to clause (B)(i) of this Section 1.8 shall be determined by multiplying the then applicable square foot rate of the monthly installment of Base Rent by the area of the portion of the Premises which has been sublet.

1.9    "Landlord" shall mean the Landlord named on page 1 of this Lease or any subsequent owner of such Landlord's interest in the Property.

1.10    "Landlord's Address":

c/o KTR Property Trust III 5 Tower Bridge
300 Barr Harbor Drive, Suite 150
Conshohocken, PA 19428 
Attn: Stephen J. Butte

1.11    "Lease Interest Rate" shall mean the lesser of (A) 200 basis points in excess of the Prime Rate in effect from time to time or (B) the maximum amount or rate that lawfully may be charged in the circumstances, if such a maximum exists.

1.12    "Lease Taxes" shall mean any tax, assessment, levy or other charge (other than any income, franchise, state, succession, transfer, gift, capital stock or inheritance tax) by any federal, state or local law now or hereafter imposed directly or indirectly upon Landlord with respect to this Lease or the value thereof, or upon Tenant's use or occupancy of the Premises, or upon the Base Rent, Additional Rent or any other sums payable under this Lease or upon this transaction.

1.13    "Operating Expenses" shall have the meaning set forth in Section 6.1.

1.14    "Permitted Use" shall mean the receipt, packaging, shipping, storage and distribution of industrial maintenance and repair supplies and related office and ancillary uses.

1.15    "Premises" shall mean the approximately 105,214 square foot area within the Building commonly known as 1381 Capital Boulevard, Reno, Nevada, as depicted  on the Site Plan, subject, however, to Section 2 below.

1.16    "Prime Rate" shall mean the rate of interest announced from time to time by Wells Fargo Bank, N.A. or its successor as its prime rate or, if such rate is discontinued, such comparable rate as Landlord reasonably designates by notice to Tenant.

1.17    "Property" shall mean the Building together with the parcel of land and all appurtenances thereto on which the Building is located as depicted on the Site Plan, together with all other improvements which may hereafter be constructed on such parcel of land.

1.18    "Real Estate Taxes" shall mean all real estate taxes and assessments, general or special, ordinary or extraordinary, foreseen or unforeseen (other than Lease Taxes) imposed upon the  Property (on a cash basis). If, due to a future change  in the method  of taxation, any tax shall be levied or imposed in substitution, in whole or in part, for (or in lieu of) any tax or addition to or increase in any tax which would otherwise be included within the definition of Real Estate Taxes, then such other tax shall be deemed to be included within Real Estate Taxes.

1.19    "Rent" shall mean Additional Rent and Base Rent, collectively.

1.20    "Security Deposit" shall mean $                 

1.21    "Site Plan" shall mean the site plan depicting the Property annexed to this Lease as Exhibit A.

1.22    "Tenant" shall mean the Tenant named on page 1 of this Lease and such person's permitted  successors and assigns, subject to the provisions ofthis Lease.

1.23    "Tenant Parties" shall mean Tenant's contractors, agents, servants, employees, attorneys, invitees and licensees.

1.24    "Tenant's Address" shall mean:

Neil E. Jenkins
Executive Vice President, Secretary and General Counsel Lawson Products, Inc.
8770 West Bryn Mawr Avenue Suite 900
Chicago, IL  60631
With copies to:

Steven Stender Much Shelist, P.C.
191 North Wacker Drive Suite 1800
Chicago, IL  60606

1.25    "Tenant's Proportionate Share" shall be Forty-Six and Fifty-Five hundredths percent (46.55%).

1.26    "Term" shall mean the ten (10) year period commencing on the Commencement Date and terminating on the last day of the calendar month in which the ten (10) year anniversary of the day immediately preceding the Commencement Date occurs.

2.    Demise of Premises. Subject to the terms of this Lease, and from and after the Commencement Date, Landlord leases to Tenant and Tenant leases from Landlord the Premises and grants to Tenant, so long as this Lease remains in effect, the non-exclusive right to use the Common Areas for their intended purposes in common with all others entitled  to use them. Tenant shall be entitled to use the Common Areas in the same manner and fashion as other tenants of the Building on a non-discriminatory basis. During the six (6) week period after the Commencement Date (the "Relocation Period"), Tenant shall have the right to remain in that portion of the remainder of the Building not contained within the Premises (the "Supplemental Area") for the limited purpose of relocating its operations and equipment located in the Supplemental Area to the Premises and otherwise decommissioning the Supplemental  Area. Tenant has paid  a license fee to Landlord on account of the entire Relocation Period  equal to $54,000  simultaneously  with the  execution  of this  Lease.    Provided  Tenant  is not  in  default hereunder beyond  applicable notice and cure periods, Tenant may extend the Relocation Period on a week-to-week basis (i.e. by no more than a single week at a time) thereafter by providing at least ten (10) business  days prior written notice of such election to Landlord  for each weekly extension together with a weekly license fee of $9,000 payable to Landlord, except that Tenant may   not   extend   the   Relocation   Period   past   the   twelve   (12)   week   anniversary   of   the Commencement  Date  without  Landlord's  prior  written  consent  (which  may  be  withheld  in Landlord's  sole discretion)  and the Relocation Period shall end as of commencement the week for which Landlord has rejected the extension or Tenant's election not to extend the Relocation Period.    Tenant  shall,  at  Tenant's  sole  cost,  remove  all  operations,  equipment  and  personal property from the Supplemental Area and place the Supplemental Area in broom clean condition and good working  order  and repair  on or prior to the expiration  or sooner termination  of the Relocation  Period  ("Relocation  Termination  Date").    Tenant  shall  repair  all  damage  to  the Supplemental Area resulting from its relocation of operations from the Supplemental Area to the Premises.  If 

Tenant completes the relocation of its operations from the Supplemental Area to the Premises  and places the  Supplemental  Area in the condition required by this  Section 2 on or prior to the Relocation Termination Date, the Relocation Period shall end and Tenant shall have no further right to operate or engage in decommissioning  activities in the Supplemental  Area. On or after the Relocation Termination Date, Landlord shall, at Landlord's sole cost, construct a demising wall between the Supplemental Area and the Premises.   Tenant shall be obligated to pay  all  utilities  used  in  or  by  the  Supplemental  Area.  If,  on  or  prior  to  the  Relocation
Termination Date, Tenant has not relocated its operations from the Supplemental Area to the Premises, and placed the Supplemental Area in the condition required by this Section, Tenant shall be in default hereunder without benefit of any notice and cure periods and commencing on the first day following the Relocation Termination Date, Tenant shall be obligated to  pay Landlord the sum of $12,500 per week, on account of the Supplemental Area in advance until Tenant has satisfied its obligations with respect  to  the  Supplemental  Area  without  limitation upon Landlord's other rights and remedies.

3.    Possession.

3.1    Delivery  of  Possession.    Tenant agrees that Tenant is familiar with the condition of the Premises as Tenant was the prior owner of the Property, and Tenant hereby accepts the foregoing on an "AS-IS," "WHERE-IS" basis except to the extent of Landlord's repair and maintenance obligations hereunder. Tenant acknowledges that Landlord has not made any representation as to the condition of the foregoing or the suitability of the foregoing for Tenant's intended use, except as may be herein expressly set forth. Tenant represents and warrants that Tenant has made its own inspection of the foregoing. Landlord shall not be obligated to make any repairs, replacements or improvements (whether structural or otherwise) of any kind or nature to the foregoing in connection with, or in consideration of, this Lease, except as set forth herein.

4.    Term.

4.1    Commencement Date.    The term of this Lease shall commence on the Commencement Date.

4.2    Rent  Commencement.    Tenant's obligation to pay Base Rent and Additional Rent shall commence on the Commencement Date. From and after  the Commencement Date and throughout the initial Term, Tenant shall pay annual Base Rent in the amount and in the monthly installments required by Section 1.2.

4.3    Renewal. If Tenant is not in material  default (beyond applicable periods for notice and cure) under this Lease at the time the applicable option to renew described below (each a "Renewal Option") is exercised or as of the commencement of the applicable Renewal Period (as hereinafter defined), Tenant shall have two options to extend the Term for five (5) years each (each a "Renewal Period") commencing on the first day following the last day of the initial Term or the first Renewal Period, as applicable, upon the same terms and conditions as are contained in this Lease, except as hereinafter provided. Base Rent for the first year of the applicable Renewal Period shall be equal to the greater of (i) the Fair Market Value Rental (as defined in Exhibit C attached hereto), or (ii) the annual Base Rent for the last year of the initial Term or the first Renewal Period, as applicable. The Fair Market Value Rental shall be determined in accordance with Exhibit C. Each Renewal Option shall be exercised by written notice to Landlord given no earlier than twelve (12) months nor later than nine (9) months prior to the last day of the initial Term or the first Renewal Period, as applicable, and the failure to timely exercise such right shall mean that such right is null and void.

4.4    Termination Option. Tenant will have the right to terminate  this Lease prior to the 

end of the Term, on and subject to the terms set forth  on Schedule  2 which  is attached hereto and incorporated herein.

5.    Base Rent.

5.1    Payment.    Base Rent shall be payable by Tenant to "KTR PROPERTY TRUST III, OR TO SUCH OTHER ENTITY DESIGNATED TO TENANT IN WRITING  BY LANDLORD" in equal monthly installments on or before the first day of each calendar month, in advance. All payments of Base Rent and Additional Rent  shall  be  made  without  prior demand, without offset, deduction or counterclaim of any kind, in lawful money of the United States of America. Such payments shall be made at Landlord's Address or at such other place as Landlord shall designate from time to time. Tenant's agreement to lease the Premises and pay Base Rent, Additional Rent and all other sums payable under this Lease are independent of any other covenant, agreement or term of this Lease except as otherwise provided in this Lease.

5.2    Late Charges. Any Rent payable by Tenant to Landlord under this Lease which is not paid within five (5) days after the same is due will be automatically subject to a late payment charge, as Additional Rent, of five percent (5%) of the delinquent amount, in each instance, to cover Landlord's additional administrative costs. In addition to the late charge set forth above, Tenant shall also be required to pay interest on all such unpaid sums (including any late charge(s)), at a per annum rate equal to the Lease Interest Rate plus three percent (3%) (the "Default Rate") on all such outstanding charges of Rent, said interest charges, as applicable, to be payable on the first (1st) of each month throughout the Term of this Lease, without further notice or demand therefor by Landlord. Such late charges and interest will be due and payable as set forth herein and will accrue from the date that such Rent (including late charges and interest) sums are payable under the provisions of this Lease until actually paid by Tenant.

5.3    Security  Deposit.    Tenant agrees to deposit the Security Deposit with Landlord on the date hereof. The Security Deposit shall be retained by Landlord  as security for the faithful performance and observance by Tenant of its obligations under this Lease, it being expressly agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord's damages. Except  as may otherwise be required by applicable law, (a) Tenant  shall not be entitled to any interest on the Security Deposit, (b) Landlord shall not be obligated to hold the Security Deposit in trust or in a separate account, and (c) Landlord shall have the right to commingle the Security Deposit with its other funds. If Tenant defaults under this Lease  and such default extends beyond any applicable grace or cure period (following  notice of default being given  to Tenant to the extent required hereunder), without limiting any  other  right  or remedy of Landlord, Landlord may also apply the whole or any part of the Security Deposit to the extent required for the payment of any Rent or other sums payable under this Lease as to which Tenant is in default or on account of any sum which Landlord may expend or may be required to expend by reason of Tenant's default. If any portion  of  the  Security  Deposit  is applied by Landlord for any such purpose, Tenant shall, within ten (10) days after demand is made by Landlord, deposit cash with  Landlord in an amount sufficient to restore the  Security Deposit to its original amount. If Tenant shall fully and faithfully comply with all  of  the covenants and conditions of this Lease, the Security Deposit  shall  be  promptly  returned  to Tenant after the expiration date of the Term and the surrender of the Premises to Landlord.  In no event shall the Security Deposit be applied to the last monthly installment of Base Rent or Additional Rent due prior to the expiration date of the Term. In the event of a sale of the Premises, Landlord shall have the right to transfer the Security Deposit to the purchaser subject to the terms of this Lease, whereupon Landlord shall be released by Tenant from all liability for the return of the Security Deposit and Tenant shall look solely to the new landlord for its return.

6.    Additional Rent for Operating Expenses  and Real Estate Taxes.

6.1    Definitions. "Operating Expenses" shall mean  any  and  all  reasonable costs and expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Property including, without limitation:

		
	(a)
	the cost of electricity, gas, water, sewer service, and other systems and utilities serving Common Areas, and the cost of supplies and equipment and maintenance and service contracts in connection therewith;

		
	(b)
	the cost of repairs, replacements, maintenance and cleaning, including, without limitation, the cost of janitorial and other service agreements, snow removal and trash removal with respect to Common Areas;

		
	(c)
	the cost of  all repairs and maintenance associated with the landscaped areas, surface parking areas and truck courts of the Property, including, without limitation, the cost of associated roof maintenance in connection with the Property;

		
	(d)
	the cost of fire, extended coverage, boiler, sprinkler, apparatus, public liability, property damage, rent, earthquake and other insurance as Landlord carries with respect  to  the  Property, including the amounts of any deductible payment  for  such insurance incurred by Landlord in connection with any claim thereunder;

		
	(e) 
	an annual management fee, not to exceed 3% per annum;

		
	(f)
	reasonable fees, charges and other costs, including, without limitation, consulting fees, attorneys' fees and accounting fees of all contractors engaged by Landlord in connection with the operation, maintenance or repair of the Property;

		
	(g)
	the cost of any capital improvements made to the Property after the date of this Lease designed to reduce Operating Expenses (amortized over the useful life in accordance with generally accepted accounting principles consistently applied, "GAAP"), together with interest on the unamortized balance(s) at the actual rate paid by Landlord;

		
	(h)
	the cost of any capital improvements made to the Property after the date of this Lease that are required under any Law (as hereinafter defined) (amortized in accordance with GAAP), together with interest on the unamortized balance( s) at the actual rate paid by Landlord;

		
	(i)
	the cost of supplies, materials and equipment used in the management, operation, maintenance and repair of the Property, including, without limitation, any rental fees for any such supplies, materials and equipment;

		
	(j)
	fees, costs and  disbursements  incurred  in  connection  with proceedings to contest,  determine,  or reduce  Operating  Expenses or Real Estate Taxes;

		
	(k)
	the fee for a bi-annual roof inspection contract, the costs of Landlord Repairs (as hereinafter defined) pursuant to  Section 9.3 and fire monitoring of the Building; and

		
	(l)
	the cost payable by the Property pursuant to any declaration of protective covenants or comparable recorded instrument affecting the Property.

"Operating Expenses" shall not include:

		
	(1)
	leasing commissions, accountants' or attorneys' fees, costs and disbursements and other expenses incurred in connection with proposals, negotiations, or disputes with tenants or other occupants or prospective tenants or other occupants, or associated with the enforcement of any leases or the defense  of Landlord's title to or interest in the Property or any part thereof;

		
	(2)
	except as  specifically provided in this Lease with regard to amortization of capital improvement costs, interest on debt or amortization payments on any mortgages or deeds of trust or any other borrowings of Landlord;

		
	(3)
	except as provided in this Lease with regard to capital expenditures, any other expense that under GAAP would not be considered a maintenance  or operating expense;

		
	(4)
	salaries, benefits or other compensation paid to leasing agents, promotional    directors, officers, directors and executives of Landlord above the rank of building managers, or not involved in the day-to-day operations or management of the Property  (except for out-of-pocket expenses of such persons related to the Property);

		
	(5)
	all contributions to any organizations, whether political or charitable;

		
	(6)
	interest or penalties for late payments;

		
	(7)
	any cost or expenditure for which Landlord is reimbursed, whether by insurance proceeds, warranties, service contracts or otherwise, except through rent adjustment or other tax or operating expense pass-through  provisions;

		
	(8)
	ground lease rental;

		
	(9)
	depreciation;

		
	(10)
	expenses in connection with services or other benefits of a type which are not provided to Tenant but are provided  to  another tenant or occupant; and

		
	(11)
	costs incurred by Landlord to comply with its obligations under Section 7.4 (Hazardous Substances) and under its indemnity.

6.2    Payment   of   Real   Estate   Taxes.    Commencing on the Commencement Date, Tenant shall be obligated to pay to Landlord Tenant's  Proportionate  Share  of  all Real Estate Taxes as Additional Rent. Without limitation of the foregoing, commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, one twelfth (I/12th) of Tenant's Proportionate Share of Real Estate Taxes on or before the first day of each month during any calendar year, in advance, in an amount reasonably estimated by Landlord in good faith and billed by Landlord to Tenant. Landlord shall have the right to reasonably revise such estimate from time to time. Within one hundred twenty (120) days after the expiration of each fiscal year for Real Estate Taxes, Landlord shall furnish Tenant with a statement  ("Landlord's Tax Statement") setting forth in reasonable detail the actual amount of Real  Estate  Taxes  for such year and Tenant's Proportionate Share of Real Estate Taxes.  If the  actual  amount  of Tenant's Proportionate Share of Real Estate Taxes due for such year differs from the estimated amount of Tenant's Proportionate  Share of Real Estate Taxes paid by Tenant for such year, then, if Tenant owes any amounts to Landlord, such amounts shall be paid by Tenant (whether or not this Lease has terminated) within thirty (30) days after receipt of Landlord's Tax Statement, and if Landlord owes any amounts to Tenant, such amounts shall be credited against the next installments of Base Rent and Additional Rent due from Tenant 

(or if the Lease has terminated for any reason other than Tenant's default, paid to Tenant within thirty (30) days after delivery of Landlord's  Tax  Statement.

6.3    Payment  of  Operating  Expenses.    Commencing on the Commencement Date, Tenant shall be obligated to pay to Landlord Tenant's Proportionate Share of all Operating Expenses as Additional Rent. Without limitation of the foregoing, commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, one twelfth (I/12th) of Tenant's Proportionate Share of Operating Expenses for the Property for each calendar year on or before the first day of each month during such year, in advance, in an amount reasonably estimated by Landlord in good faith and billed by Landlord to Tenant.  Landlord shall have the right to reasonably revise such estimate from time to time. Within one hundred twenty (120) days after the expiration of each calendar  year, Landlord shall furnish Tenant with a statement ("Landlord's Operating Expense Statement"), setting forth in reasonable detail the actual amount of Operating Expenses for the Property for such year and Tenant's Proportionate Share of Operating Expenses. If the actual amount of Tenant's Proportionate Share  of  Operating Expenses due for such year payable by Tenant differs from the estimated amount of Operating Expenses paid by Tenant for such year, then, if Tenant owes any amounts to Landlord, such amounts shall be paid by Tenant (whether or not this Lease has terminated) within thirty (30) days after receipt of Landlord's Operating Expense Statement, and if Landlord owes any amounts to Tenant, such amounts shall be credited against the next installments of Base Rent and Additional Rent due from Tenant (or if the Lease has terminated for any reason  other  than Tenant's default, paid to Tenant within thirty (30) days after delivery of Landlord's Operating Expense  Statement).

6.4    Tenant's Audit Rights. Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two (2) years. Not more frequently than once in every 12-month period and after at least twenty (20) days' prior written notice to Landlord, Tenant together with any representative of Tenant shall be permitted to audit the records of the Operating Expenses and Real Estate Taxes. If Tenant exercises its audit rights as provided above, Tenant shall conduct any inspection at a reasonable time and in a manner so as not to unduly disrupt the conduct of Landlord's business.  Any such inspection by Tenant shall be for the sole purpose of verifying the Operating Expenses and/or Real  Estate  Taxes. Tenant shall hold any information obtained during any such inspection in confidence, except that Tenant shall be permitted to disclose such information to its attorneys and advisors, provided Tenant informs such parties of the confidential nature of such information  and uses good faith and diligent efforts to cause such parties to maintain such information as confidential. Any shortfall or excess revealed and verified by Tenant's audit shall be paid to the applicable party within thirty (30) days after that party is notified of the shortfall or excess to the extent such overage or shortfall has not previously been adjusted pursuant to this Lease.  If Tenant's inspection of the records for any given year or partial year reveals that Tenant was overcharged for Operating Expenses or Real Estate Taxes by an amount of greater than three percent (3%), Tenant paid such overage and such overage was not otherwise adjusted pursuant to the terms of this Lease, Landlord shall reimburse Tenant for its reasonable, third party costs of the audit, up to an amount not to exceed $2,500.

7.    Use; Compliance With Law.

7.1    Permitted Use. The Premises shall be used only for the Permitted Use and for no other purpose.

7.2    No Nuisance. Tenant shall not allow, suffer or permit the Premises or any use thereof to constitute a nuisance.

7.3    Compliance  with   Laws.   Tenant,  at Tenant's  expense,  shall  comply  with and 

cause all of the Tenant Parties  to comply  with  all  applicable laws, ordinances,  rules  and regulations  of  governmental  and  quasi-governmental  authorities  ("Laws")  applicable  to  the Premises  or the use  or occupancy thereof.   Without  limiting  the  generality  of the  foregoing,
Tenant shall comply with the requirements of (a) the Occupational Safety and Health Act (and all regulations promulgated thereunder), and (b) the Americans with Disabilities Act (and all regulations promulgated thereunder), as the same may be amended from time to time. The foregoing obligation of Tenant shall not however permit Tenant to make,  without  Landlord's prior written approval, any alterations to the Premises which otherwise would require Landlord's approval under this Lease, and Tenant shall comply with all of the requirements of this Lease in making any such alterations.

7.4    Hazardous  Substances.

7.4.1    Definitions. "Hazardous Substance" shall mean any hazardous or toxic substance, material or waste which is or becomes regulated by any local, state or federal governmental authority having jurisdiction. The term "Hazardous Substance" includes, without limitation, any material or substance which is (i) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317), (ii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource  Conservation  and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903),  (iii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601), (iv) petroleum, (v) asbestos or asbestos-containing materials, (vi) polychlorinated biphenyls and (vii) petroleum products.

7.4.2    Compliance   with   Law.    Tenant shall conduct, and cause to be conducted, all operations and activity at the Premises in compliance with, and  in  all  other respects shall comply with, all applicable present and future federal, state, municipal and other governmental statutes, ordinances, regulations, orders, directives and other requirements, and all present and future requirements of common law, concerning  the protection  of public  health, safety or the environment (collectively "Environmental  Statutes").

7.4.3    Permits. Tenant, in a timely manner, shall, to the extent required due to Tenant's use of the Premises or arising out of Tenant's actions at the Property, obtain and maintain in full force and effect all permits, licenses and approvals, and shall make and file all notifications and registrations as required by Environmental Statutes. Tenant shall at all times comply with the terms and conditions of any such permits, licenses, approvals, notifications and registrations.

7.4.4    Documents.    Tenant shall provide to Landlord copies of the following pertaining to the Premises, the Property or Tenant's use thereof, promptly after each shall have been submitted, prepared or received by Tenant: (A) all applications and associated materials submitted to any governmental agency relating to any Environmental Statute; (B) all notifications, registrations, reports and other documents, and supporting information, prepared, submitted or maintained in connection with any Environmental Statute or otherwise relating to environmental conditions; (C) all permits, licenses, approvals, and amendments or modifications thereof, obtained under any Environmental Statute; and (D) any correspondence, notice of violation, summons, order, complaint, or other document received by Tenant pertaining to compliance with or liability under any Environmental  Statute.

7.4.5    Operations.    Tenant shall not cause in, on or under, or suffer or permit to occur in, on or under, the Premises any generation, use, manufacturing, refining, transportation, emission, release, treatment, storage, disposal, presence or handling of Hazardous Substances, except that limited quantities of Hazardous Substances may be used,  handled  or stored on the Premises, provided such is incident to and reasonably necessary for the maintenance of the Premises or Tenant's operations for the Permitted Use and is in compliance with all Environmental Statutes and other applicable governmental  requirements.  Should  a release of any Hazardous Substance occur at the Premises or the Property as the result of the acts or omissions of Tenant and/or any of the Tenant Parties, Tenant shall immediately contain, remove and dispose of, off the Premises or the Property, such Hazardous Substances and any material that was contaminated by the release, and remedy and mitigate all 

threats to human health or the environment relating to such release. When conducting any such measures Tenant shall comply with all Environmental Statutes.

7.4.6    Inspection.    Upon not less than twenty-four (24) hours' prior telephonic or written notice (except in case of an emergency in which event Landlord shall provide such telephonic or written notice as Landlord is able to under the circumstances), Tenant agrees to permit Landlord and its authorized representatives to enter, inspect and assess the Premises at reasonable times for the purpose of determining Tenant's compliance with the provisions of this Section. Such inspections and assessments may include obtaining samples and performing tests of soil, surface water, groundwater or other media.

7.4.7    Tanks.    Tenant shall not install or cause the installation of any above ground or underground storage tank at the Premises. Notwithstanding the foregoing, the parties acknowledge and approve the existence of two underground tanks located on the Premises (the "Tanks"), which provide a reservoir system for the collection of foam waste resulting from the activation of the foam fire suppression system. Tenant  represents  and warrants to Landlord that the Tanks were installed in compliance with all Laws, have been duly registered with the State of Nevada and have been owned and operated in compliance with all Laws. Tenant may leave the Tanks in place upon the expiration or sooner termination of the Lease provided it is permitted to do so by applicable Laws and complies with all Laws (including de-commissioning requirements) related to the abandonment of the Tanks, which obligation shall survive the expiration or sooner termination of this Lease.

7.4.8    Indemnification.    Notwithstanding any other prov1s10n in this Lease to the contrary, Tenant hereby agrees to indemnify and to hold harmless Landlord and its officers, directors, shareholders, partners and principals of, from and against any and all expense, loss, cost, claim, damage, penalty, fine, or liability of any kind or nature suffered by Landlord by reason of the presence or release of Hazardous Substances at or from the Premises  or  the Property, or any violation of Environmental Statutes by the Premises or the Property, as a result of the acts or omissions of Tenant or the Tenant Parties or Tenant's breach of any  of the provisions of this Section 7, including without limitation: (A) any and all expenses that Landlord may incur in complying with any Environmental Statutes, (B) any and all costs that Landlord may incur in monitoring, studying, assessing, containing, removing, remedying, mitigating, or otherwise responding to, the presence or release of any Hazardous Substance at or from the Premises or the Property, (C) any and all costs for which Landlord may be liable to any governmental  agency  for  monitoring,  studying,  assessing,  containing,  removing,  remedying, mitigating, or otherwise responding to, the presence or release of any Hazardous Substance at or from the Premises or the Property, (D) any and all fines or penalties assessed, or threatened to be assessed, upon Landlord by reason of a failure of Tenant to comply with any obligations, covenants or conditions set forth in this Section, and (E) any and all reasonable legal fees and costs incurred by Landlord in connection with any of the foregoing. Tenant's obligations under this Section shall survive the expiration or earlier termination of the Term of this Lease. Notwithstanding anything to the contrary in this Section 7.4, Tenant shall have no liability to Landlord with respect to Hazardous Substances present at the Property due to the acts or omissions of any party other than Tenant and the Tenant Parties.

7.5    Common Areas.

7.5.1    Tenant shall have the non-exclusive right to use the  Common Areas in common with other persons permitted under this Lease or persons approved by Landlord during the Term, subject to reasonable rules and regulations uniformly established and applied by Landlord and the provisions of this Lease.

7.5.2    Landlord reserves the right, at any time and from  time to time, without the consent of or liability to Tenant, to (i) make alterations or additions to the Property and the Common Areas, to change, add to, eliminate or reduce the extent, size, shape, number or configuration of any aspect of the Property and Common Areas, (ii) close to the general public all or any portion of the Property to the extent and for the period necessary to avoid any dedication to the public, provided Tenant  has reasonable means of ingress and egress to the Premises, (iii) effect any repairs or further construction, (iv) change the arrangement, character, use or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, landscaping, toilets, mechanical, plumbing, electrical or other operating systems or any other portions of the Common Areas or other parts of the Property provided such alterations  or additions do not materially adversely affect the use of the Common Areas by Tenant, 

or ingress to or egress from the Premises, and (v) change the name, number or designation by which the Property is commonly known; provided, however, Landlord  shall use reasonable efforts to limit and minimize any disruption of Tenant's use of the Premises in connection  with  Landlord's actions undertaken pursuant to this Section.

8.    Alterations;  Tenant's Property and Tenant's Responsibilities.

8.1    Alterations Defined.

8.1.1    Tenant shall not make or suffer or allow to be made any alterations, additions or improvements in or to the Premises (collectively, "Alterations") without first obtaining Landlord's written consent based  on detailed plans  and specifications submitted by Tenant; provided Landlord's consent will not be required if (a) the proposed Alterations will not affect the structure or the HVAC Systems (as hereinafter defined), mechanical, electrical, plumbing or life safety systems of the Building (collectively, "Building Systems") and (b) the total cost to acquire and install the proposed Alterations will be no more than (i) $25,000 in any one instance and (ii) $100,000 in the aggregate during any calendar year. In all other instances where Landlord's consent is so required, it may be granted or withheld by Landlord in its sole but  reasonable  discretion.    In  all  events,  Tenant  shall notify  Landlord  prior  to  commencing Alterations other than de minimis Alterations.

8.1.2    Tenant agrees that all such work (regardless of whether Landlord's consent is required) shall be done at Tenant's sole cost and expense, in accordance with the plans and specifications approved by Landlord and in a good and workmanlike manner, that the structural integrity of the Building shall not be impaired, and that no liens shall attach to all or any part of the Premises, the Building, or the Property by reason thereof. Tenant shall obtain, at its sole expense, all permits required for such work.

8.2    Removal of Property. Unless otherwise elected by Landlord as hereinafter provided, all Alterations made by Tenant shall become the property of Landlord and shall be surrendered to Landlord upon the expiration or earlier termination of this Lease, except as otherwise set forth in this Lease. However (i) movable equipment, trade fixtures, personal property, furniture, or any other items that can be removed without material harm to the Premises will remain Tenant's property; and (ii) the racks to be installed by Tenant (collectively, "Tenant Owned Property") shall not become the property of Landlord but shall be removed by Tenant upon the expiration or earlier termination  of this Lease. All Tenant Owned Property shall be removed from the Premises at Tenant's sole cost and expense at the expiration or sooner termination of this Lease. When granting consent for any Alterations that require Landlord's consent, Landlord shall indicate whether it will require the removal of those Alterations at the expiration or earlier termination of the Lease. Prior to making any Alterations not requiring Landlord's consent, Tenant shall request that Landlord notify Tenant whether Landlord requires Tenant to remove that Alteration prior to expiration or earlier termination of the Lease.  Tenant shall remove those Alterations that Landlord requested be removed under the prior two sentences at the expiration or earlier termination of the Lease. Tenant shall repair at its sole cost and expense all damage caused to the Premises or the Building by removal of any Alterations that Tenant is required to remove or Tenant Owned Property. Landlord may remove any Tenant Owned Property or Alterations that Tenant is required but fails to remove at the expiration or earlier termination of the Lease and Tenant shall pay to Landlord the reasonable cost of removal. Tenant's obligations under this Section shall survive the expiration or earlier termination of this Lease.

8.3    Tenant's    Responsibilities.    Pursuant to NRS 108.234, Landlord hereby informs Tenant that Tenant must comply with the requirements of NRS 108.2403 and NRS 108.2407. Tenant shall take all actions necessary under Nevada law to ensure that no liens encumbering Landlord's interest in the Property arise as a result of any work performed by or arranged to be performed by Tenant on the Premises or the Property ("Tenant Improvement Work"), including, without limitation, the recording of a notice of posted security in the Official Records of Clark County, Nevada, in accordance with NRS 108.2403 and either (i) establish a construction disbursement account pursuant to NRS 108.2403(1)(b)(1) or (ii) furnish and record, in accordance with NRS 108.2403(1)(b)(2), a surety bond for the prime contract for any Tenant Improvement Work at the Premises that meets the requirements of NRS 108.2415.  The name and address of Tenant's prime contractor who will be performing the Tenant Improvement Work will be provided to Landlord for Landlord's approval prior to the commencement of any of the Tenant Improvement Work, which approval shall not be unreasonably withheld. Tenant shall notify 

Landlord immediately upon the signing of any contract with the prime contractor for the construction, alteration or repair of any portion of the Premises or Tenant's improvements to the Premises. Tenant may not enter the Premises to begin initial construction on Tenant's improvements or begin any Alteration or other work in the Premises until Tenant has delivered evidence satisfactory to Landlord that Tenant has complied with the terms of this Section 8.3. Failure by Tenant to comply with the terms of this Section 8.3 shall permit Landlord to declare Tenant in default without benefit of any notice and cure periods. In accordance with NRS 108.234(2), Tenant agrees that Landlord's interest in the Premises and the Property shall not be subject to, and shall be immune from, the attachment of any lien arising as a result of the Tenant Improvement Work, including any improvement, construction, alteration or repair in the Premises by Tenant, if Landlord, within three (3) days after obtaining knowledge of the construction, alteration or repair, or the intended construction, alteration or repair, gives notice that Landlord will not be responsible for the improvement by recording a notice in writing to that effect with the Official Records of Clark County, Nevada ("Notice  of  Nonresponsibility" )  in  the  form  of  Exhibit   B  attached  hereto. The Notice of Nonresponsibility shall be deemed timely recorded within three (3) days immediately following the effective date of the Lease or by the date of the execution of this Lease by all parties, whichever occurs first. Each Notice of Nonresponsibility recorded pursuant  to NRS  108.234 shall set forth the information required in NRS 108.234(3) and shall be served by personal delivery or by certified mail, return receipt requested (1) upon Tenant within ten (10) days after the date on which the Notice of Nonresponsibility is recorded and (2) upon the prime contractor within ten (10) days after the date on which Tenant contracts with the prime contractor for the construction, alteration or repair of the work of improvement.

9.    Repairs  and Other Work.

9.1    Tenant's Obligations.

9.1.1    Tenant shall maintain in good, clean and sanitary order and condition the Premises, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, and ventilating systems ("HVAC Systems"),  electrical,  lighting facilities and equipment within the Premises, fixtures, interior walls, ceilings, decking, floors, windows, doors, plate glass and skylights located within the Premises, and signs (except Landlord's signs, if any) located on the Premises. Tenant shall enter into a preventative maintenance contract for the HVAC Systems on terms and with a provider reasonably acceptable to Landlord, which contract shall call for quarterly maintenance, inspection and repair of such HVAC Systems.

9.1.2    Tenant will not overload the electrical wiring serving the Premises or within the Premises, and will install at its expense, subject to the provisions of this Lease, any additional electrical wiring which may be required in connection with Tenant's apparatus.

9.1.3    Tenant will repair, at its expense, any damage to the Premises, or to the Property, arising out of Tenant's use or occupancy thereof, including damage caused by bringing into the Premises any property for Tenant's use or by the installation or removal of such property, all regardless of fault, or by whom such damage shall be caused, unless caused by Landlord, its agents, employees, or contractors.

9.1.4    If Tenant fails to perform Tenant's obligations under this Section 9.1, Landlord may enter upon the Premises after ten (10) days' prior written notice to Tenant (except in the event of an emergency, in which case no notice shall be required), perform such obligations on Tenant's behalf, and put the Premises in good order, condition and repair, and Tenant shall promptly pay to Landlord a sum equal to 115% of the cost thereof within ten (10) days of written demand by Landlord.

9.2    Conditions    Applicable    to    Repairs    and   Other    Work.    All repairs, replacements and reconstruction (including, without limitation, all Alterations) made by or on behalf of Tenant shall be made and performed: (a) at Tenant's cost and expense and at such time and in such manner as Landlord may reasonably designate, (b) by contractors or mechanics reasonably approved by Landlord, (c) at least equal in quality of materials and workmanship to the original work or installation, (d) in accordance with such reasonable requirements as Landlord may impose with respect to insurance to be obtained by Tenant in connection with the proposed work, 

(e) in accordance with all applicable laws and regulations of governmental authorities having jurisdiction over the Premises, and (f) if deemed reasonably appropriate by Landlord, Tenant shall provide Landlord with as built drawings of such Alterations.

9.3    Landlord's Obligations. Landlord shall  be  responsible  for  the performance of all repair, maintenance and replacement of all structural elements, roof  and exterior walls of the Building, except to the extent such is part of any Alterations.   The cost of: (a) all such repairs and maintenance pursuant to the first sentence of this Section 9.3 (the "Landlord Repairs") shall be reimbursed to Landlord as Operating Expenses  and (b) all replacements pursuant to the first sentence of this Section 9.3 shall be paid for by Landlord at its sole cost and expense, except as otherwise expressly set forth in Section 6.1.  Provided, however, if any such work, maintenance, repairs or replacements are required as a result of the negligence or misconduct of Tenant or any Tenant Parties, Tenant's failure to repair and maintain  the Premises or the misuse of the Premises or the Property by Tenant or the Tenant Parties (any of the foregoing, a "Tenant Necessitated Repair"), Tenant shall reimburse Landlord for  all reasonable costs paid or incurred by Landlord for such work upon demand as Additional Rent. Landlord shall also be responsible for the performance of landscaping and snow removal and repairs and maintenance of the exterior parking areas, sidewalks, truck courts and  HVAC Systems that are shared by more than one occupant of the Building provided that the cost of such activities shall be reimbursable as Operating Expense.

10.    Liens. Tenant shall keep the Premises and the  Property  free  from  any  liens arising out of any work performed or material furnished to or for the Premises by or for Tenant. If Tenant shall not, within thirty (30) days following notice of the imposition of any such lien, cause same to be released of record by payment or posting of a bond satisfactory to Landlord, Landlord, in addition to all other remedies provided under this Lease and by law, shall have the right (but not the obligation) to cause the lien to be released by such means as Landlord shall deem proper, including, without limitation, payment of the claim giving rise to such lien. All such sums reasonably paid by Landlord and all expenses incurred by it in connection therewith shall be considered Additional Rent and shall be payable by Tenant within ten (10) days after receipt of written demand. Tenant shall indemnify, defend and hold harmless Landlord and its agents, employees and contractors from and against any damages, losses or costs arising out of any such claim and from any liens or encumbrances arising from any work performed by Tenant or on behalf of Tenant in the Premises  or the Property. Tenant's indemnification of Landlord contained in this Paragraph shall survive the expiration or earlier termination of this Lease. All of the aforesaid rights of Landlord shall be in addition to any remedies which either Landlord or Tenant may have available to them at law or in equity. Notwithstanding  anything in this Lease to the contrary, Tenant is not authorized to act for or on behalf of Landlord as Landlord's agent or otherwise, for any purposes of constructing improvements, additions or alterations to the Premises.

11.    Subordination.

11.1    This Lease shall be subject and subordinate at all times to (a) all ground leases or underlying leases that may now exist or hereafter be executed affecting the Property or any portion thereof, (b) the lien of any mortgage, deed of trust or other security instrument that may now  exist or hereafter be executed in any amount for which the Property  or any portion thereof, any ground leases or underlying leases, or Landlord's interest or estate therein is specified as security, and (c) all modifications, renewals, supplements, consolidations and replacements thereof. If any ground lease or underlying lease terminates for any reason or any mortgage, deed of trust or other security instrument is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant, notwithstanding any subordination, shall  attorn to and become the tenant of the successor in interest to Landlord at the option of such successor in interest. The provisions of this Section shall be self operative and no further instrument shall be required to effect the provisions of this Section. Notwithstanding anything to the contrary contained herein, Landlord will, as a condition to the subordination of this Lease, provide Tenant with an executed subordination, non-disturbance and attornment agreement with  Landlord's lender, on customary terms.

11.2    If any mortgage  is foreclosed,  or Landlord's  interest  under  this  Lease is conveyed  or transferred  in lieu of foreclosure:  neither the mortgagee  nor any person  or entity acquiring title to the Property  as a result  of foreclosure or trustee's  sale, nor any successor or assign of either of the foregoing, shall be (i) liable for any default by Landlord, (ii) bound by or liable for any payment of Rent which may have been made more than 

thirty (30) days before the due date of such installment, (iii) subject to any defense or offset which Tenant may have to the payment of Rent or other performance under this Lease arising from any default by Landlord, or (iv) bound by any amendment or modification to this Lease made without the consent of such mortgagee if such mortgagee's consent thereto is required.

11.3    Within ten (10) days following request by Landlord, Tenant agrees to execute any documents reasonably required to effectuate the foregoing  subordination  or such other reasonable and  customary subordination, non-disturbance and attornment agreement submitted by Landlord to Tenant, which documents may contain such other terms as any mortgagee or prospective mortgagee may reasonably require, or to make this Lease prior to the lien of any mortgage, deed of trust or underlying lease, as the case may be.

11.4    Tenant agrees to simultaneously give to any party holding a mortgage encumbering the Building, by registered or certified mail, a copy of any notice of default served upon Landlord provided Tenant has been notified in writing of the names and addresses of such mortgagee(s) and such parties shall have the same cure rights as Landlord has under this Lease.

12.    Inability  to   Perform.    If, by reason of acts of God, governmental restrictions, strikes, labor disturbances, shortages of materials or supplies, actions or  inactions  of governmental authorities or any other cause or event beyond Landlord's or Tenant's reasonable control (collectively, "Force Majeure Events"), Landlord or Tenant is unable to furnish or is delayed in furnishing any utility or service required to be furnished by either party under the provisions of this Lease, or either party hereto is unable to perform or make or is delayed in performing or making any installations, decorations, repairs,  alterations,  additions  or improvements required to be performed or made under this  Lease, no  such inability  or delay shall impose any liability upon such non-performing party or provide the other party with any right to offset, deduction or abatement of Rent by reason of inconvenience or annoyance to such other party, or otherwise. The terms of this Section 12 shall not be applicable to or excuse any failing on the part of Tenant to satisfy Tenant's obligations to pay Rent or  other  required payments to Landlord.

13.    Destruction.

13.1    Repair. Subject to the provisions of Sections 13.2, 13.3 and 13.4 below, if any portion of the Building is damaged by fire, earthquake, flood or other casualty,  Landlord shall proceed immediately to make such repairs in accordance with Section 13.4.

13.2    Tenant's  Right  to  Terminate.    If such damage causes more than fifty percent (50%) of the Premises to be untenantable by Tenant and, in the reasonable estimate of an independent architect or contractor, such damage cannot be repaired within twelve (12) months after the date of the event causing such damage (under a normal construction schedule not requiring the payment of overtime or premium), Tenant may terminate this Lease by delivery of written notice to Landlord within thirty (30) days after the date on which such architect or contractor's estimate is delivered to Tenant by Landlord. Upon termination, Rent shall be apportioned as of the date of the damage and, provided Tenant is not in default, all prepaid Rent shall be repaid to Tenant.  Landlord agrees to provide Tenant with such estimate within thirty (30) days after Landlord has received written notice of such casualty.

13.3    Landlord's Right to Terminate. If (i) the cost to repair damage to or destruction of the Property exceeds fifty percent (50%) of replacement cost of the Building and other improvements on the Property for a casualty of the type covered by the insurance required to be carried  under Section 14.5, or (ii) the Premises or any other portion of the Property is damaged by a casualty not of the type covered by the insurance required to be carried under Section 14.5 and the amount by which the cost to repair such damage exceeds  available insurance proceeds, if any, is greater than fifteen percent (15%) of the then replacement cost of the Building and other improvements on the Property, or (iii) such damage cannot be repaired within twelve (12) months after the casualty (under a normal construction schedule not requiring the payment of overtime or premium), Landlord may terminate this Lease on twenty (20) days notice to Tenant by delivery of written notice to Tenant within forty-five (45) days after the date of the casualty. Upon termination, Rent shall be apportioned as of the date of the damage and all prepaid Rent shall 

be repaid to Tenant (less the amount necessary to cure any monetary default of Tenant under this Lease existing as of the date of termination).

13.4    Extent   of Repair   Obligations.   If this  Lease is not  terminated,  Landlord's repair obligation shall extend to the structure of the Building and all improvements  insured by Landlord in accordance with Section 14.5 below (except those  constructed  or  installed by Tenant, if any, completed after the date of this Lease, and the Tenant Owned  Property) in the Premises at the date possession of the Premises was delivered to Tenant, and Tenant shall repair all other portions of the Premises (including, without limitation, Alterations  and Tenant Owned Property). All such repairs shall be performed in a good and workmanlike  manner,  with  due diligence,   and   shall   restore   the   items   repaired   to   substantially   the   same  usefulness   and construction as existed immediately before the damage.  All work by Tenant shall be performed in accordance with the requirements of Section 9.2 above. In the event of any termination of this Lease, the  proceeds  from  any  insurance  paid  by  reason  of  damage  to or  destruction  of  the Property  or  any  portion  thereof,  or  any  other  element,  component  or  property  insured  by Landlord  (exclusive of proceeds  for damage to Tenant Owned Property), shall belong to and be paid to Landlord.

13.5    Adjustment  of Rent.    If a casualty renders all or part of the Premises untenantable, Rent shall proportionately abate commencing on the date of the casualty and ending when the Premises are delivered to Tenant with Landlord's restoration obligation substantially complete. The extent of the abatement shall be based upon the portion of the Premises rendered untenantable, inaccessible or unfit for use in a reasonable business manner for the purposes stated in this Lease.

13.6    Mutual Waiver of Subrogation. Notwithstanding anything to the contrary in this Lease, other than with respect to Tenant Necessitated Repairs, Landlord and Tenant mutually waive their respective rights of recovery against each other and each other's officers, directors, constituent partners, agents and employees, and Tenant waives such rights against each lessor under any ground or underlying lease and each lender under any mortgage or deed of trust or other lien encumbering the Property or any portion thereof or interest therein, to the extent any loss is or would be covered by fire, extended coverage, and other property insurance policies required to be carried under this Lease or otherwise carried by the waiving party, and the rights of the insurance carriers of such policy or policies to be subrogated to the rights of the insured under the applicable policy. Each party shall cause its insurance policy to be endorsed to evidence compliance with such waiver.

14.    Insurance.

14.1    Insurance   on   Tenant's   Property.    Tenant shall procure at its cost and expense and keep in effect during the Term insurance coverage for all risks of physical loss or damage insuring the full replacement value of Alterations, Tenant's trade fixtures, furnishings, equipment, plate glass, signs and all other items of Tenant Owned Property and other personal property of  Tenant. Landlord shall not be liable for any damage or damages of any nature whatsoever to persons or property caused by explosion, fire, theft or breakage, vandalism, falling plaster, by sprinkler, drainage or plumbing systems, or air conditioning equipment, by the interruption of any public utility or service, by steam, gas, electricity, water, rain or other substances leaking, issuing or flowing into any part of the Premises, by natural occurrence, acts of the public enemy, riot, strike, insurrection, war, court order, requisition or order  of governmental  body  or  authority,  or  by  anything  done  or  omitted  to  be  done  by  any  tenant, occupant or person in the Building, it being agreed that Tenant shall be responsible for obtaining appropriate insurance to protect its interests.

14.2    Tenant's  Liability  Insurance.   Tenant  shall procure at its cost and expense and maintain throughout the  Term  comprehensive  commercial  general  liability   insurance applicable  to the Premises  with  a minimum  combined  single limit  of liability of Two Million Dollars   ($2,000,000),   statutory  worker's   compensation   insurance,   and   employer's  liability insurance  with  a  One  Million  Dollar  ($1,000,000)  minimum  limit  covering all of Tenant's employees. Such liability insurance shall 

include, without limitation,  products and completed operations liability insurance,  fire  and  legal  liability  insurance,  and  such  other  coverage  as Landlord may reasonably require from time to time.  At Landlord's request Tenant shall increase such insurance coverage to a level that is commercially reasonably required by Landlord.

14.3    Form   of   Policies.    Tenant's insurance shall be issued by companies authorized to do business in the State of Nevada. Tenant shall have  the  right  to  provide insurance coverage pursuant to blanket policies obtained by Tenant if the blanket policies expressly afford coverage required by this Section 14. All insurance  policies required  to be carried by Tenant under this Lease (except for worker's compensation insurance) shall (i) name Landlord, and any other reasonable number of parties designated by Landlord as additional insureds, (ii) as to liability coverages, be written on an "occurrence" basis, (iii) provide that Landlord shall receive thirty (30) days notice from the insurer before any cancellation or change in coverage, and (iv) contain a provision that no act or omission of Tenant shall affect or limit the obligation of the insurer to pay the amount of any loss sustained. Each such policy shall contain a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord.  Tenant  shall  deliver reasonably satisfactory evidence of such insurance to Landlord on or before the date Tenant first enters or occupies the Premises, and thereafter at least thirty (30) days before the expiration dates of expiring policies. Notwithstanding the foregoing, if  any  such  insurance  expires  without having been renewed by Tenant, Landlord shall have the option, in addition to Landlord's other remedies to procure such insurance for the account of Tenant immediately and without notice to Tenant, and the cost thereof shall be paid to Landlord as Additional Rent. The limits of the insurance required under this Lease shall not limit liability of Tenant.

14.4    Compliance  with  Insurance  Requirements.   Tenant shall not do anything, or suffer or permit anything to be done, in or about the Premises that  shall invalidate  or be in conflict with the provisions of any fire or other insurance policies covering the Building.  Tenant, at Tenant's expense, shall comply with, and shall cause all occupants of the Premises to comply with, all  applicable  customary  rules,  orders,  regulations  or requirements  of  any board  of  fire underwriters or other similar body.

14.5    Landlord's  Insurance.    Landlord will purchase and maintain a standard policy of "all risk" insurance with customary exclusions covering the Building in the full replacement cost of the Building, together with rent loss insurance and windstorm coverage (on a full replacement cost basis). Landlord will purchase and maintain broad form commercial general liability insurance with a minimum combined single limit of liability of at least Two Million Dollars ($2,000,000), written by companies authorized to do business in the State of Nevada.  All costs of insurance carried by Landlord and referred to in this Section or otherwise will constitute Operating Expenses.

15.    Eminent Domain.

15.1    Effect  of  Taking.    If all of the Premises is condemned or taken in any permanent manner before or during the Term for any public or quasi-public use, or any permanent transfer of the Premises is made in avoidance of an exercise of the power of eminent domain (each of which events shall be referred to as a "taking"), this Lease shall automatically terminate as of the date of the vesting of title as a result of such taking. If a part of the Premises is so taken, this Lease shall automatically terminate as to the portion of the Premises so taken as of the date of the vesting of title as a result of such taking. If such portion of the Property is taken as to render the balance of the Premises unusable by Tenant for the Permitted Use, as reasonably determined by Tenant and Landlord, this Lease may be terminated by Landlord or Tenant, as of the date of the vesting of title as a result of such taking, by written notice to the other party given within sixty (60) days following notice to Landlord of the date on which said vesting will occur. If this Lease is not terminated as a result of any taking, Landlord shall restore the Building to 

an architecturally whole unit; provided, however, that Landlord shall not be obligated to expend on such restoration more than the amount of condemnation proceeds actually received by Landlord.

15.2    Award.    Landlord shall be entitled to the entire award for any taking, including, without limitation, any award made for the value of the leasehold estate created by this Lease. No  award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award that may be made in any taking, together with any and all rights of Tenant now or hereafter arising in or to such award or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the taking of personal property and fixtures belonging to Tenant, the unamortized value of improvements made or paid for by Tenant or the interruption of or damage to Tenant's business.

15.3    Adjustment  of Rent.  In the event of a partial taking that does not result in a termination of this  Lease as to the entire Premises, Base Rent and Additional Rent shall be equitably adjusted in relation to the portions of the Premises and Building taken or rendered unusable by such taking.

15.4    Temporary   Taking.    If all or any portion of the Premises is taken for a limited period of time before or during the Term, this Lease shall remain in full force and effect; provided, however, that Rent shall abate during such limited period in proportion to the portion of the Premises taken by such taking. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the taking of personal property and fixtures belonging to Tenant, the unamortized value of improvements made or paid for by Tenant or the interruption of or damage to Tenant's business.  Any temporary taking of all or a portion of the Premises which continues for six (6) months  shall be deemed a permanent taking of the Premises or such portion.
16.    Assignment;   Subleasing.

16.1    Consent   Required.    Neither Tenant nor any sublessee or assignee of Tenant, directly or indirectly, voluntarily or by operation of law, shall sell, assign, encumber, mortgage, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant's leasehold estate hereunder (each such act is referred to as an "Assignment" ), or  sublet  the Premises or any portion thereof or permit the Premises to be occupied by anyone other than Tenant (each such act is referred to as a "Sublease"), without Landlord's prior written consent in each instance, which consent will not be unreasonably withheld, conditioned or delayed; provided, however, that Landlord may withhold consent to an encumbrance, mortgage or pledge of Tenant's leasehold estate hereunder in its sole discretion. Any Assignment or Sublease that is not in compliance with this Section 16 shall be void. At the option of Landlord, any Assignment that is not in compliance with this Section 16 shall constitute a material default by Tenant under this Lease. The acceptance of Rent by Landlord from a proposed  assignee,  sublessee  or occupant of the Premises shall not constitute consent to such Assignment or Sublease by Landlord. Fifty percent (50%) of the Excess Assignment Consideration which is attributable to this Lease in connection with any Assignment, and fifty percent (50%) of the Excess Sublease Rent, shall be payable to Landlord as Additional Rent, except that the terms of this sentence shall not apply to any assignment or sublease that is permitted by Section 16.5 below without Landlord's consent. The right to such amounts is expressly reserved from the grant of Tenant's leasehold estate for the benefit of Landlord.

16.2    Notice. Any request by Tenant for Landlord's consent to a specific Assignment or Sublease shall include (a) the name of the proposed assignee, sublessee or occupant, (b) the nature of the proposed assignee's sublessee's or  occupant's  business  to  be carried on in the Premises, (c) a copy of 

the proposed Assignment or Sublease, and (d) such financial information (in the event of an Assignment) and such other information as Landlord may reasonably request concerning the proposed assignee, sublessee or occupant or its business. Landlord shall respond in writing, stating the reasons for  any disapproval, within fifteen (15) business days after receipt of all information reasonably necessary to evaluate the proposed Assignment or Sublease.

16.3    No Release. No consent by Landlord to any Assignment or Sublease by Tenant, and no specification in this Lease of a right of Tenant to make any Assignment or Sublease, shall relieve Tenant of  any obligation to be performed by Tenant under this Lease, whether arising before or after (a) the Assignment or Sublease or (b) any extension of the Term (pursuant to exercise of an option granted in this Lease). The consent by Landlord to any Assignment or Sublease shall not relieve Tenant or any successor of Tenant from the obligation to obtain Landlord's express written consent to any other Assignment or Sublease.

16.4    Cost  of Processing  Request.   Tenant  shall pay to Landlord the reasonable amount of Landlord's cost of processing every proposed Assignment or Sublease,  including without limitation reasonable legal review fees and expenses, together with the  reasonable amount  of  all  direct  and  indirect  expenses  incurred  by  Landlord  arising  from  any assignee, occupant or sublessee taking occupancy (including, without limitation, security service, janitorial and cleaning service, and rubbish removal service) up to an amount not to exceed $2,500 in any one instance.
16.5    Corporate   or   Partnership    Transfers.    Notwithstanding the foregoing, provided that (i) Tenant is not in default under this Lease, and (ii) no such transaction is undertaken with the intent of circumventing Tenant's liability  under this  Lease,  Tenant  may assign this Lease to any affiliate or subsidiary of Tenant or in connection with a merger or other consolidation of Tenant and may sublease all or some portion of the Premises to an affiliate or subsidiary of Tenant without Landlord's consent provided: (a) Tenant shall remain liable hereunder; (b) Tenant provides reasonable prior written notice to Landlord of such Assignment or Sublease; (c) after such transaction is effected, the tangible net worth (excluding goodwill) of the tenant under this Lease is equal to or greater than the tangible net worth of Tenant as of the date of this Lease; and (d) Landlord shall have received  an executed copy of all documentation effecting such transfer on or before its effective date.

16.6    Assumption of Obligations. Each assignee or other transferee of Tenant's interest under this Lease, other than Landlord, shall assume all obligations of Tenant under this Lease and shall be and remain liable jointly and severally with Tenant for the payment of Base Rent and Additional Rent, and for the performance of all the terms, covenants, conditions and agreements contained in this Lease which are to be perfonned by Tenant.  Each sublessee of all or any portion of the Premises shall agree in writing for the benefit of Landlord (a) to comply with and agree to the provisions of this Lease, and (b) that such sublease  (and  all  further subleases of any portion of the Premises) shall terminate upon any termination of this Lease, regardless of whether or not such termination is voluntary. No Assignment or Sublease shall be valid or effective unless the assignee or sublessee or Tenant shall deliver to Landlord a fully­ executed counterpart of the Assignment or Sublease and an instrument that contains a covenant of assumption by the assignee or agreement of the sublessee, reasonably satisfactory in substance and form to Landlord, consistent with the requirements of this Section 16.6. The failure or refusal of the assignee to execute such instrument of assumption or of the sublessee to execute the agreement described above shall not release or discharge the assignee or sublessee from its obligations that would have been contained in such instrument or agreement, all of which obligations shall run automatically to such assignee or sublessee.

16.7    Invalid  Assignment  and  Subleases.    Notwithstanding anything  to the contrary 

contained in this Section 16, in no event may Tenant enter into an Assignment or Sublease if, at the time of such Assignment or Sublease, Tenant is in default under this Lease.

17.    Utilities  and Services.

17.l    Utilities.    Tenant shall pay to Landlord, as Additional Rent, Tenant's Proportionate Share of all electric, gas, water and sewer utilities  consumed at the Property that are not separately metered. Tenant shall pay directly to the providing  utility  companies  all utilities that are separately metered to the Premises.

17.2    Certain   Services.    Tenant shall contract separately for the provision, at Tenant's sole cost, of janitorial service and trash removal for the Premises and Landlord  will have no obligation to provide any such services to the Premises.

17.3    Involuntary   Cessation   of   Services.   Landlord  reserves  the  right,  without any liability to Tenant and without affecting Tenant's covenants and obligations  hereunder,  to stop service of any or all of the HVAC Systems, electric, sanitary, and other systems serving the Premises, or to stop any other services required by Landlord under this Lease, whenever and for so long as may be necessary by reason of (i) accidents, emergencies, strikes, or the making of repairs or changes which Landlord, in good faith, deems necessary or (ii) any other cause beyond Landlord's reasonable control. No such interruption of service shall be deemed an eviction or disturbance of Tenant's use and possession of the Premises or any part thereof, or  render Landlord liable to Tenant for damages, or relieve Tenant from performance of Tenant's obligations under this Lease, including, but not limited to, the obligation to pay Rent; provided, however, that if any interruption of services persists for a period in excess of two (2) consecutive business days Tenant shall, as Tenant's sole remedy, be entitled to a proportionate abatement of Rent to the extent, if any, of any actual loss of use of the Premises by Tenant.

18.    Default.

18.1    Events  of Default  by Tenant.  Except as otherwise provided in this Lease, the failure to perform  or honor  any covenant,  condition  or other obligation  of Tenant  or the failure  of  any representation  made by  Tenant  under  this  Lease  shall  constitute  a  default by Tenant upon expiration of the applicable grace period, if any. Tenant shall have a period of five (5) days from the date it receives written notice from Landlord that any payment of Rent is due within which to cure any default in the payment of Rent. Except as otherwise provided in Section 19, Tenant shall have a period of thirty (30) days from the date of written notice from Landlord within which to cure any other default under this Lease; provided, however, that with respect to any default (other than a default which can be cured by the payment of money) that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Tenant commences to cure within thirty (30) days from Landlord's notice, continues to prosecute diligently the curing of such default and actually cures such default within ninety (90) days after Landlord's notice. Notwithstanding anything contained in this Section 18.1, Landlord shall not be obligated to provide Tenant with notice of substantially similar defaults more than two (2) times in any twelve (12) month period.

18.2    Remedies. Upon the occurrence of a default by Tenant that is not cured by Tenant within the applicable grace periods specified in Section 18.1, Landlord shall have all of the following rights and remedies in addition to all other rights and remedies available to Landlord at law or in equity:

18.2.1 The right to terminate Tenant's right to possession of the Premises and to recover (i) all Rent which shall have accrued and remain unpaid through the date of termination; plus (ii) the amount by which the unpaid Rent for the balance of the Term, discounted to present value at the Prime Rate then in effect, shall exceed the then fair rental value of the Premises for the balance of the Term (assuming reasonable allowance for downtime and free rent prior to the commencement of such fair market rent), similarly discounted, plus (iii) any other amount  necessary to compensate Landlord for all the damages caused by Tenant's failure to perform its 

obligations under this Lease (including, without limitation, reasonable attorneys' and accountants' fees, costs of alterations of the Premises, interest costs and brokers' fees incurred upon any reletting of the Premises).

18.2.2    The right to continue the Lease in effect after Tenant's breach and recover Rent as it becomes due. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord's initiative to protect its interest under this Lease shall not of themselves constitute a termination of Tenant's right to possession.

18.2.3    The right and power to enter the Premises and remove therefrom all persons and property, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply the proceeds therefrom pursuant to applicable law. In such event, Landlord may from time to time sublet the Premises or any part thereof for such term or terms (which may extend beyond the Term) and at such rent and such other terms as Landlord in its sole discretion may deem advisable, with the right to make alterations and repairs (in character substantially similar to those commonly made in warehouse and  distribution facilities  in the Reno area) to the Premises. Upon each such subletting, rents received from such subletting shall be applied by Landlord, first, to payment of any costs of such subletting (including, without limitation, reasonable attorneys' and accountants' fees, costs of alterations of the Premises, interest costs, and brokers' fees) and of any such alterations and repairs; second, to payment of Base Rent and Additional Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future Base Rent and Additional Rent as they become due. If any rental or other charges due under such sublease shall not be promptly paid to Landlord by the sublessees, or if such rentals received from such subletting during any month are less than Base Rent and Additional Rent to be paid during that month by Tenant, Tenant shall pay any such deficiency to Landlord the costs of such subletting (including, without limitation, attorneys' and accountants' fees, costs of alterations of the Premises, interest costs and brokers' fees), and any other amounts due Landlord under this Section 18.2. Such deficiency shall be calculated and paid monthly. No taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given to Tenant. Landlord's subletting the Premises without termination shall not constitute a waiver of Landlord's right to elect to terminate this Lease for such previous breach.

18.2.4    The right to have a receiver appointed for Tenant, upon application by Landlord, to take possession of the Premises, to apply any rental collected from the Premises and to exercise all other rights and remedies granted to Landlord pursuant to this Section.

18.2.5    The right to specific performance of any or all of Tenant's obligations under this Lease, and to damages for delay in or failure of such performance.

18.2.6    Landlord shall use reasonable efforts to mitigate damages resulting from a default by Tenant, as required by applicable law.

18.3    Remedies  Cumulative.    The exercise of any remedy provided by law or the provisions of this Lease shall not exclude any other remedies unless they are expressly excluded by this Lease. Tenant hereby waives any right of redemption or relief from forfeiture following termination of, or exercise of any remedy by Landlord with respect to, this Lease.

18.4    Events of Default by Landlord and Tenant's Remedies.    The failure by Landlord to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Landlord, where such failure shall continue for a period of thirty (30) days after written notice thereof by Tenant to Landlord, shall be deemed to be a default by Landlord under this Lease; provided, however, 

that if the nature of Landlord's default is such that more than thirty (30) days are reasonably required  for its cure, then Landlord shall not be deemed to be in default if Landlord commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. In the event of a default by Landlord beyond applicable cure periods, Tenant shall have the right, at its election, to:  (a)  sue  for damages directly resulting from such default by Landlord; or (b) perform the obligations described in the notice in which case Landlord shall reimburse Tenant for the reasonable cost of the performance of such obligations within thirty (30) days after Tenant's submission of  an invoice therefor. If Tenant elects to proceed under clause (b) above, then the Landlord's default shall be deemed to have been cured when Tenant's expense has been reimbursed in full. In the event Tenant commences a suit for  damages sustained by reason of  a Landlord default and prevails in such suit and obtains a final, non-appealable judgment with respect to such  suit, Tenant may then set-off the amount of such judgment against the amounts due to Landlord under this Lease.  Tenant shall have no other right to set-off.

18.5    Limitation of Landlord's Liability. None of Landlord's covenants, undertakings or agreements under this Lease is made or intended as personal covenants, undertakings or agreements by Landlord, or by any of Landlord's shareholders, directors, officers, trustees or constituent partners. All liability for damage or breach or nonperformance by Landlord shall be collectible only out of Landlord's interest from time to time in the Property, and no personal liability is assumed by nor at any time may be asserted against Landlord or any of Landlord's shareholders, directors, officers, trustees or  constituent  partners;  provided, however, that notwithstanding anything to the contrary set forth herein, in no event shall Landlord be liable for punitive, consequential, special, incidental or indirect damages.

18.6    Transfer   of  Landlord's   Interest.    Upon the sale or other conveyance or transfer of Landlord's interest in the Property, the transferor shall be relieved of all covenants and obligations of Landlord arising under this Lease from and after the closing of such sale, conveyance or transfer, provided the transferee assumes the obligations of Landlord under this Lease from and after the date of transfer.

19.    Insolvency   or  Bankruptcy.    The occurrence of any of the following shall, at Landlord's option, constitute a breach of this Lease by Tenant: (i) the appointment of a receiver to take possession of all or substantially all of the assets of Tenant or the Premises, (ii) an assignment by Tenant for the benefit of creditors, (iii) any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization, moratorium or other debtor relief act  or statute, whether now existing or hereafter amended or enacted, (iv) the filing of any voluntary petition in bankruptcy by Tenant, or the filing of any involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of ninety (90) days, (v) the attachment, execution or other judicial seizure of all or substantially all of Tenant's assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of sixty (60) days after the levy thereof, (vi) the admission of Tenant in writing of its inability to pay its debts as they become due, (vii) the filing by Tenant of any answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in  any proceeding seeking reorganization,  arrangement,  composition,  readjustment,  liquidation  or  dissolution  of Tenant or similar relief, (viii) if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed, or (ix) the occurrence of any of the foregoing with respect to any guarantor of Tenant's obligations under this Lease. Upon the occurrence of any such event or at any time thereafter, Landlord may elect to exercise any of its remedies under Section 18 above or any other remedy available at law or in equity. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise, and in no event shall this Lease or any rights or privileges under this Lease be an asset of Tenant under any bankruptcy, insolvency or reorganization proceedings. If, upon the occurrence of any of the events enumerated above, under applicable law Tenant or the trustee in bankruptcy has the right to affirm this Lease and continue to perform the obligations of Tenant under this Lease, Tenant or such trustee, in such time period as may be permitted by the bankruptcy court having jurisdiction, shall cure all defaults of Tenant outstanding under  this Lease as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease. Notwithstanding the provisions of Section 18.1, there shall be no cure periods for any breach or default under this Section 19 except as expressly provided in this Section 19.

20.    Fees and Expenses; Indemnity;  Payment.

20.l    Landlord's   Right   to   Remedy   Defaults.    If Tenant shall default in the performance of any of its obligations under this Lease after notice and expiration of the applicable cure period, Landlord, at any  time thereafter and without additional notice, may remedy such default for Tenant's account and at Tenant's reasonable expense, without waiving any other rights or remedies of Landlord with respect to such default. Notwithstanding the foregoing, Landlord shall have the right to cure any failure by Tenant to perform any of its obligations under this Lease without notice to Tenant if such failure results in an immediate threat to life or safety of any person. Notwithstanding anything contained  in  this  Lease, Landlord shall not be liable for, and there shall be no abatement of Rent with respect to, any injury to or interference with Tenant's business arising from the  exercise by  Landlord  of its rights under this Section 20.1, provided, however, Landlord will use reasonable care in exercising its rights under this section.

20.2    Indemnity.    Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses, costs, liabilities, damages and expenses including, without limitation, penalties, fines and reasonable attorneys' fees, to the extent incurred in connection with or arising from the use or occupancy or manner of use or occupancy of the Premises or any injury or damage caused by Tenant, Tenant Parties or any person occupying the Premises through Tenant. Landlord will use reasonable efforts to coordinate a  mutually agreeable time with Tenant for any such entry on the Premises.  Landlord  shall  indemnify, defend and hold Tenant harmless from and against any and all claims, losses, costs, liabilities, damages and expenses including, without limitation, penalties, fines and reasonable attorneys' fees, to the extent incurred in connection with or arising from (a) any injury or damage caused by any negligent or willful acts of any or all of Landlord; (b) the presence of Hazardous Substances introduced in, on, under or about the Premises as a result of the actions of Landlord or its agents, employees, representatives or contractors; or (c) a default by Landlord under this Lease. Nothing contained in this Section 20.2 shall be deemed to exculpate Landlord from, or indemnify Landlord for, Landlord's negligent or willful acts or omissions. The terms of this Section 20.2 shall survive the expiration or sooner termination of this Lease.

20.3    Interest  on Past  Due  Obligations.   Unless otherwise specifically provided herein, any amount due from Tenant to Landlord under this Lease which is not paid  within ten (10) days after written notice from Landlord shall bear interest from the due date until paid at the Default Rate.

21.    Access  to  Premises.    Landlord reserves for itself and its agents, employees and independent contractors the  right to enter the Premises upon at least  twenty-four  (24) hours notice to inspect the Premises, to supply any service to be provided by Landlord to Tenant, to prospective purchasers, mortgagees, beneficiaries or (no earlier than twelve (12) months prior to the expiration of this Lease) tenants, to post notices of nonresponsibility, to determine whether Tenant is complying with its obligations under this Lease, and to alter, improve or repair  the Premises or any other portion of the Building. Landlord's right  to  enter  the  Premises  shall include the right to grant reasonable access to the Premises to governmental or utility employees. Landlord may erect, use and maintain scaffolding, pipes, conduits and other necessary structures in and through the Premises or any other portion of the Building where reasonably required by the character of the work to be performed in making repairs or improvements, provided that the entrance to the Premises shall not be blocked or access interfered with thereby, and that there is no unreasonable interference with the business of Tenant. In the event  of  an  emergency, Landlord shall have the right to enter the Premises at any time on oral notice. Except to the extent caused by Landlord's gross negligence or willful misconduct, Tenant waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any right to abatement of Rent, or any other loss occasioned by Landlord's exercise of any of its rights under this Section 21. Any entry to the Premises or portions thereof obtained by Landlord in accordance with this Section 21 shall not be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portion thereof. Landlord shall perform any work pursuant to this Section 21 in a manner designed to cause as little interference with Tenant's use of the Premises as is reasonably practical, provided, however, that Landlord and Tenant shall cooperate as to the timing and staging of any such work.  To the extent reasonably practicable, any entry shall occur during normal business hours.

22.    Notices.    Except as otherwise expressly provided in this Lease, any payment required to be made and any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by personal delivery, registered or certified mail, return  receipt requested, or by overnight courier service, addressed (a) to Tenant at Tenant's Address, (b) to Landlord at Landlord's Address, or (c) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Section 22. Any such bill, statement, notice, demand, request or other communication  shall be deemed to have been rendered or given on the date of receipt or refusal to accept delivery.

23.    No Waiver.     Neither this Lease nor any term or provision of this Lease may be waived, and no breach thereof shall be waived, except by a written instrument signed by the party against which the enforcement of the waiver is sought. No failure by Landlord or Tenant to insist upon the strict performance of any obligation of the other party under this Lease or to exercise any right, power or remedy consequent upon a breach thereof, no acceptance of full or partial Base Rent or Additional Rent during the continuance of any such breach, no course of conduct between Landlord and Tenant, and no acceptance of the keys or to possession of the Premises before the termination of the Term by Landlord or any employee of Landlord shall constitute a waiver of any such breach or a waiver or modification of any term, covenant or condition of this Lease or operate as a surrender of this Lease. No waiver of any breach shall affect or alter this Lease, but each and every term, covenant and condition of this Lease shall continue in full force and effect with respect to any other then-existing or subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the aggregate of all Base Rent and Additional Rent then due under this Lease shall be deemed to be other than on account of the first items of such Base Rent and Additional Rent then accruing or becoming due, unless Landlord elects otherwise. No endorsement or statement on  any check and no letter accompanying any check or other payment of Base Rent or Additional Rent in any such lesser amount and no acceptance by Landlord of any such check or other payment shall constitute an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Base Rent or Additional Rent or to pursue any other legal remedy.

24.    Estoppel  Certificates.   Either party, at any time and from time to time, within ten (10) business days after written request from the other, shall execute, acknowledge and deliver to the other party, addressed to the other party and any prospective purchaser, ground or underlying lessor or mortgagee or beneficiary of any part of the Property, an estoppel certificate in form and substance reasonably designated by the other party.  It is intended that any such certificate may be relied upon by the party receiving the same and any prospective purchaser, investor, ground or underlying lessor or mortgagee or deed of trust beneficiary of all or any part of the Property.

25.    Rules  and  Regulations.    Tenant shall faithfully observe and comply with and cause all of its employees and invitees to observe and comply with all reasonable rules and regulations which may from time to time be put into effect by Landlord. In the event of any conflict between any such rule or regulation and this Lease, this Lease shall govern.

26.    Tenant's   Taxes.    In addition to all other sums to be paid by Tenant under this Lease, Tenant shall pay, before delinquency, any and all taxes  levied or assessed during the Term, whether or not now customary or within the contemplation of the parties, (a)  upon, measured by or reasonably attributable to Tenant's improvements, equipment, furniture, fixtures and other personal property located in the Premises, (b) upon or measured by Base Rent or Additional Rent, or both, payable under this Lease, including without limitation any sales, gross receipts or excise tax levied upon or measured by Base Rent or Additional Rent by any governmental body having jurisdiction with respect to the receipt of such rental; (c) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (d) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.   Tenant  shall reimburse  Landlord  upon  demand  for any and all such taxes paid  or payable by Landlord (other than state and federal personal or corporate income taxes measured by the net income of Landlord from all sources). Notwithstanding anything to the contrary in this Section 26, Tenant shall have the right to contest any taxes payable by Tenant under this Section provided that Tenant, at its sole cost and expense, diligently undertakes and pursues any such contest in appropriate proceedings, indemnifies Landlord against and 

holds Landlord harmless from all loss or damages that Landlord shall suffer by reason of such contest, and does not permit any lien to be placed on the Building or any part thereof or interest therein.

27.    Miscellaneous.

27.1    Annual  Financial  Statements.   Within ten (10) days following the request of Landlord,  at any time during the Term that Tenant is not a "publicly traded  company" (i.e., ownership interests are  listed on  a public  securities  exchange),  then  Tenant  shall  furnish  to Landlord  financial  statements,  in  form  and  substance  satisfactory  to  Landlord, showing the complete results of such entity's operations for its immediately preceding fiscal year, certified as true and correct by a certified public accountant (or  the  officer  of  Tenant  with  primary responsibility as to financial matters if Tenant's financial statements are not audited or reviewed by a certified public accountant) and prepared in accordance with generally accepted accounting principles applied on a consistent basis from year to year.

27.2    References. All personal pronouns used in this Lease, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. The use herein of the word "including" or "include" when following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters  set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as "without limitation", or "but not limited to," or words of similar import) is used with reference thereto. All references to "mortgage" and "mortgagee" shall include deeds of trust and beneficiaries under deeds of trust, respectively. All Exhibits referenced and attached to this Lease are incorporated in this Lease by this reference. The captions preceding the Sections of this Lease have been inserted solely as a matter of convenience, and such captions in no way define or limit the scope or intent of any provision of this Lease.

27.3    Successors and Assigns.  The terms, covenants and conditions  contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and, except as otherwise provided herein, their respective personal representatives and successors and assigns;  provided, however, that upon the sale, assignment or transfer by Landlord (or by any subsequent Landlord) of its interest in the Building as owner or lessee, including, without limitation, any transfer upon or in lieu of foreclosure or by operation of law, Landlord (or subsequent  Landlord) shall be relieved from all subsequent obligations or liabilities under this Lease,  and all obligations subsequent to such sale, assignment or transfer (but not any obligations or  liabilities that have accrued prior to the date of such sale, assignment or transfer) shall be binding upon the grantee, assignee or other transferee of such interest. Any such grantee,  assignee or transferee, by accepting such interest, shall be deemed to have assumed such  subsequent obligations and liabilities.

27.4    Severability. If any provision of this Lease or the application thereof  to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall remain in effect and shall be enforceable to the full extent permitted by law.

27.5    Construction.    This Lease shall be governed by and construed in accordance with the laws of the State in which the Building is located, without regard for such State's choice of law requirements.

27.6    Integration. The terms of this Lease (including, without limitation, the Exhibits to this Lease) are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Lease and may not be contradicted by evidence of any prior or contemporaneous agreement, arrangement,  understanding  or negotiation  (whether oral or written). The parties further intend that this Lease constitutes the complete and exclusive statement of its terms, and no extrinsic evidence whatsoever may be introduced in any judicial proceeding involving this Lease. Neither Landlord nor Landlord's agents have made any representations or  warranties with respect to  the Premises, the Building, the Property  or this Lease except as expressly set forth herein. The language in all parts of this Lease shall in all cases be construed as a whole and in accordance with its 

fair meaning and not construed for or against any party by reason of such party having drafted such language.

27.7    Surrender. Upon the expiration or sooner termination of the Term, Tenant will quietly and peacefully surrender to Landlord the Premises in the condition in which they are required to be kept as provided in this Lease, ordinary wear and tear excepted.

27.8    Quiet Enjoyment. Upon Tenant paying the Base Rent and Additional Rent and performing all of Tenant's obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term as against all persons or entities claiming by, through or under Landlord subject, however, to the provisions of this Lease and to the priority of any mortgages or deeds of trust or ground or underlying leases referred to in Section 11.

27.9    Holding Over. If Tenant shall hold over after the expiration of the Term, Tenant shall pay one hundred fifty percent (150%) of the Base Rent payable during the final full month of the Term (exclusive of abatements, if any), together, in either period, with an amount reasonably estimated by Landlord for the monthly Additional Rent payable under this Lease, and shall otherwise be on the terms and conditions herein specified so far as applicable (but expressly excluding all renewal or extension rights). No holding over by  Tenant  after  the Term  shall operate to extend the Term. Any holding over with Landlord's written  consent  shall  be construed as a tenancy at sufferance or from month to month, at Landlord's option. Any holding over without Landlord's written consent shall entitle Landlord to reenter the  Premises  as provided in Section 18, and to enforce all other rights and remedies provided by law or this Lease. 

27.10    Time of Essence.  Time is of the essence of each and every provision of this Lease.

27.11    Broker's    Commissions.    Each party represents and warrants to the other that it has not entered into any agreement or incurred or created any obligation which might require the other party to pay any broker's commission, finder's fee or other commission or fee relating to the leasing of the Premises. Each party shall indemnify, defend and hold harmless the other and the other's constituent partners and their respective officers, directors, shareholders, agents and employees from and against all claims for any such commissions or fees made by anyone claiming by or through the indemnifying party.

27.12    No Merger. The voluntary or other surrender or termination of this Lease by Tenant, or a mutual cancellation hereof shall not work a merger,  but,  at  Landlord's  sole option, shall either terminate all existing subleases or subtenancies or shall operate as an assignment to Landlord of all such subleases or subtenancies.

27.13    Survival.    All of Tenant's and Landlord's covenants and obligations contained in this Lease which by their nature might not be fully performed or capable of performance before the expiration or earlier termination of this Lease shall survive such expiration or earlier termination. No provision of this Lease providing for termination in certain events shall be construed as a limitation or restriction of Landlord's or Tenant's  rights  and remedies at law or in equity available upon a breach by the other party of this Lease.

27.14    Amendments.    No amendments or modifications of this Lease or any agreements in connection therewith shall be valid unless in writing duly executed by  both Landlord and Tenant. No amendment to this Lease shall be binding on any mortgagee or deed of trust beneficiary of Landlord (or purchaser at any foreclosure sale) unless such mortgagee or beneficiary shall have consented in writing to such amendment.

27.15    Consent Expenses. Tenant shall reimburse Landlord for, any and all actual, reasonable out-of-pocket costs or expenses paid or incurred by Landlord, including, without limitation, reasonable attorneys' fees, in connection with any of the following activities undertaken by or on behalf of Landlord under this Lease: (i) any inspections performed by Landlord pursuant to any inspection rights granted hereunder; (ii) subject to the limitation set forth in Section 16.4, the review, execution, negotiation or delivery of any consent, waiver, estoppel, subordination agreement or approval requested of Landlord by Tenant hereunder, including, without limitation, any request for consent to Alterations, any so-called "landlord's waiver'', or the negotiation or 

approval of the terms of, or any instruments associated with, any financing by Tenant; (iii) the review by Landlord of any request by Tenant for any other approval or consent hereunder, or any waiver of any obligation of Tenant hereunder; and (iv) any other negotiation, request or other activity comparable to any of the foregoing (collectively, such expenses, "Consent Expenses"). Tenant shall reimburse Landlord for any Consent Expenses within ten (10) days after the presentation by Landlord to Tenant of invoices therefor.

27.16    WAIVER    OF    JURY    TRIAL.    LANDLORD    AND TENANT KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL  BY  JURY  IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY AGAINST THE OTHER IN ANY MATTER ARISING OUT OF THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES OR ANY CLAIM OF INJURY OR DAMAGE.

27.17   DELIVERY  FOR  EXAMINATION.    DELIVERY OF THE LEASE TO EITHER PARTY SHALL NOT BIND ANY PARTY  IN ANY MANNER, AND NO LEASE OR OBLIGATIONS OF LANDLORD OR TENANT SHALL ARISE UNTIL THIS INSTRUMENT IS SIGNED BY BOTH LANDLORD AND TENANT AND DELIVERY IS MADE TO EACH PARTY.

[Signature Page to Follow]

IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly authorized representatives to execute this Lease on their behalf as of the date first above written.

LANDLORD

KTR RENO LLC, a Delaware limited liability compny

By:KTR Property Trust III
Its:Sole Member

TENANT

LAWSON PRODUCTS, INC., an Illinois corporation

By:___                
Its:___EX-10.38

 Exhibit 10.38 
  

 
  

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 

between 
 SILICON VALLEY
BANK 
 and 

QUICKLOGIC CORPORATION 

June 30, 2014 
  

 
  

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
			
	 1.
	  	ACCOUNTING AND OTHER TERMS	  	 	1	  
			
	 2.
	  	LOAN AND TERMS OF PAYMENT	  	 	1	  
			
	 3.
	  	CONDITIONS OF LOANS	  	 	7	  
			
	 4.
	  	CREATION OF SECURITY INTEREST	  	 	10	  
			
	 5.
	  	REPRESENTATIONS AND WARRANTIES	  	 	11	  
			
	 6.
	  	AFFIRMATIVE COVENANTS	  	 	13	  
			
	 7.
	  	NEGATIVE COVENANTS	  	 	15	  
			
	 8.
	  	EVENTS OF DEFAULT	  	 	17	  
			
	 9.
	  	BANK’S RIGHTS AND REMEDIES	  	 	18	  
			
	 10.
	  	NOTICES	  	 	20	  
			
	 11.
	  	CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE	  	 	21	  
			
	 12.
	  	GENERAL PROVISIONS	  	 	22	  
			
	 13.
	  	DEFINITIONS	  	 	24	  

  
 i 

 This THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”),
dated as of June 30, 2014, between SILICON VALLEY BANK, a California banking corporation (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054, and QUICKLOGIC CORPORATION, a Delaware corporation
(“Borrower”), whose address is 1277 New Orleans Drive, Sunnyvale, CA 94089-1138, provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. 

RECITALS 
 A.
Borrower and Bank are parties to a Second Amended and Restated Loan and Security Agreement dated June 30, 2006, as amended (collectively, the “Original Agreement”), pursuant to which Bank provides certain credit facilities to
Borrower. 
 B. Borrower and Bank desire to amend and restate the Original Agreement as set forth herein. 

C. This Agreement is not intended to constitute a novation of the indebtedness, liabilities and obligations incurred by Borrower under the
Original Agreement. Instead, all Obligations of Borrower incurred under the Original Agreement and outstanding on the date of this Agreement shall be deemed to be outstanding under this Agreement and to constitute Obligations under (and as defined
in) this Agreement. 
 NOW, THEREFORE, Borrower and Bank hereby agree as follows: 

1. ACCOUNTING AND OTHER TERMS. 

Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP.
The term “financial statements” includes the notes and schedules. The terms “including” and “includes” always mean “including (or includes) without limitation,” in this or any Loan Document. 

2. LOAN AND TERMS OF PAYMENT. 

2.1 Promise to Pay. Borrower will pay Bank the unpaid principal amount of all Credit Extensions and interest due on the unpaid principal
amount of the Credit Extensions. 
 2.1.1 Non-Formula Revolving Advances. 

(a) Availability. Subject to the terms and conditions of this Agreement, Bank will make Advances on a non-formula basis (the
“Non-Formula Advances”) in an aggregate amount not to exceed the amount calculated as the Committed Non-Formula Revolving Line minus the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit).
Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement. 

  
 1 

 (b) Incremental Facility. On one or more occasions during the term of this Agreement,
Borrower may request that Bank increase the Committed Non-Formula Revolving Line in a minimum amount of $1,000,000 (and in integral multiples of $1,000,000 in excess thereof) and in an aggregate amount for all such requests of up to $4,000,000.
Amounts borrowed in conjunction with any and all increases in the Non-Formula Revolving Line pursuant to this Section shall constitute Non-Formula Advances for all purposes under this Agreement and shall be subject to the same terms and conditions
as all other Non-Formula Advances. 
 (c) Termination. The Committed Non-Formula Revolving Line terminates on the Revolving Maturity
Date, when all outstanding Advances are immediately payable. 
 2.1.2 Requesting Advances. 

(a) Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, each Advance
shall be made upon Borrower’s irrevocable written notice delivered to Bank, by original document, facsimile or electronic delivery, in the form of a Payment/Advance Form attached as Exhibit B (the “Notice of
Borrowing”), each executed by a Responsible Officer of Borrower or his or her designee or without written instructions if the Advances are necessary to meet Obligations which have become due. Bank will credit Advances to Borrower’s
deposit account. Each Advance shall, at Borrower’s option in accordance with the terms of this Agreement, be either in the form of a Prime Rate Advance or a LIBOR Advance. Bank may make Advances under this Agreement without instructions if the
Advances are necessary to meet Obligations which have become due. Bank may reasonably rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due
to such reasonable reliance. Such Notice of Borrowing must be received by Bank prior to 11:00 a.m. Pacific time, (i) at least three (3) Business Days prior to the requested Funding Date, in the case of LIBOR Advances, and (ii) at
least one (1) Business Day prior to the requested Funding Date, in the case of Prime Rate Advances, specifying: 
 (i) the amount of
the Advance, which, if a LIBOR Advance is requested, shall be in an aggregate minimum principal amount of $500,000 or in any integral multiple of $100,000 in excess thereof; 

(ii) the requested Funding Date; 

(iii) whether the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and 

(iv) the duration of the Interest Period applicable to any such LIBOR Advances included in such notice; provided that if the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any Advance comprised of LIBOR Advances, such Interest Period shall be one (1) month. 

The proceeds of all such Advances will then be made available to Borrower on the Funding Date by Bank by transfer to the Deposit Account
designated by Borrower and, subsequently, by wire transfer to such other account as Borrower may instruct in the Notice of Borrowing. No Advances shall be deemed made to Borrower, and no interest shall accrue on any such Advance, until the related
funds have been deposited in the Deposit Account designated by Borrower. 

  
 2 

 (b) Conversion and Continuation Elections. 

(i) So long as (x) no Event of Default or Default exists; (y) Borrower shall not have sent any notice of termination of this
Agreement; and (z) Borrower shall have complied with such customary procedures as Bank has established from time to time for Borrower’s requests for LIBOR Advances, Borrower may, upon irrevocable written notice to Bank: 

(1) elect to convert on any Business Day, Prime Rate Advances in an amount equal to $500,000 or any integral multiple of
$100,000 in excess thereof into LIBOR Advances; 
 (2) elect to continue on any Interest Payment Date any LIBOR Advances
maturing on such Interest Payment Date (or any part thereof in an amount equal to $500,000 or any integral multiple of $100,000 in excess thereof); provided that if the aggregate amount of LIBOR Advances shall have been reduced, by payment,
prepayment, or conversion of part thereof, to be less than $500,000, such LIBOR Advances shall automatically convert into Prime Rate Advances, and on and after such date the right of Borrower to continue such Advances as, and convert such Advances
into, LIBOR Advances shall terminate; or 
 (3) elect to convert on any Interest Payment Date any LIBOR Advances maturing on
such Interest Payment Date (or any part thereof in an amount equal to $500,000 or any integral multiple of $100,000 in excess thereof) into Prime Rate Advances. 

(ii) Borrower shall deliver a Notice of Conversion/Continuation in accordance with Section 10 to be received by Bank prior to
11:00 a.m. Pacific time at least (i) three (3) Business Days in advance of the Conversion Date or Continuation Date, if any Advances are to be converted into or continued as LIBOR Advances; and (ii) one (1) Business Day in
advance of the Conversion Date, if any Advances are to be converted into Prime Rate Advances, in each case specifying the: 

(1) proposed Conversion Date or Continuation Date; 

(2) aggregate amount of the Advances to be converted or continued which, if any Advances are to be converted into or continued
as LIBOR Advances, shall be in an aggregate minimum principal amount of $500,000 or in any integral multiple of $100,000 in excess thereof; 

(3) nature of the proposed conversion or continuation; and 

(4) duration of the requested Interest Period. 

  
 3 

 (iii) If upon the expiration of any Interest Period applicable to any LIBOR Advances, Borrower
shall have timely failed to select a new Interest Period to be applicable to such LIBOR Advances, Borrower shall be deemed to have elected to convert such LIBOR Advances into Prime Rate Advances. 

(iv) Any LIBOR Advances shall, at Bank’s option, convert into Prime Rate Advances in the event that (i) an Event of Default or
Default shall exist, or (ii) the aggregate principal amount of the Prime Rate Advances which have been previously converted to LIBOR Advances, or the aggregate principal amount of existing LIBOR Advances continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period exceed the Committed Non-Formula Revolving Line. Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at its option, charge the Borrower’s Deposit Account
or any other account Borrower maintains with Bank) any amounts required to compensate Bank for any loss (including loss of anticipated profits), cost, or expense incurred by Bank, as a result of the conversion of LIBOR Advances to Prime Rate
Advances pursuant to any of the foregoing. 
 (v) Notwithstanding anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as if Bank had purchased such deposits to fund the LIBOR Advances.

 2.1.3 Letters of Credit Sublimit. 

(a) Bank will issue letters of credit for Borrower’s account not exceeding the Availability (“Letters of Credit”). 

(b) Each Letter of Credit will have an expiry date of no later than one hundred eighty (180) days after the Revolving Maturity Date, but
Borrower’s reimbursement obligation will be secured by cash on terms acceptable to Bank at any time after the Revolving Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request. 
 2.1.4 Foreign Exchange Sublimit. Subject to the limits
determined by Bank, Borrower may enter into foreign exchange forward contracts with the Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one business day after the contract date (the
“FX Forward Contract”). Bank may terminate the FX Forward Contracts if an Event of Default occurs and continues. 
 2.1.5
Cash Management Services Sublimit. Borrower may use Bank’s Cash Management Services up to an amount determined by Bank. Such services may include merchant services, direct deposit of payroll, business credit card, clearing house services,
control disbursement accounts and check cashing services identified in various cash management services agreements related to such services (the “Cash Management Services”). 

  
 4 

 2.1.6 Prepayment. 

(a) Prepayment and Repayment of Prime Rate Advances. Borrower may prepay any or all amounts owing under the Committed Non-Formula
Revolving Line without penalty or premium by paying all principal and accrued interest as of the date of prepayment. 
 (b) Prepayment and
Repayment of LIBOR Advances. Borrower may, upon three (3) business days written notice to Bank, prepay any or all amounts owing under the Committed Non-Formula Revolving Line provided Borrower pays, on the date of the prepayment
(i) all accrued and unpaid interest with respect to the prepaid portion of the Committed Non-Formula Revolving Line through the date the prepayment is made; (ii) the amount of the Committed Non-Formula Revolving Line which Borrower elected
to prepay plus any other amounts due and payable to Bank on such date, pursuant to this Agreement; and (iii) all other sums owing to Bank, including Bank Expenses, and all other fees and expenses incurred pursuant to Section 3.4(a), that
shall have become due and payable hereunder with respect to this Agreement. 
 2.2 Overadvances. If Borrower’s Obligations under
Sections 2.1.1, 2.1.2 and 2.1.3 at any time exceed the Committed Non-Formula Revolving Line, Borrower must immediately pay Bank the excess. 

2.3 Interest Rate, Payments. 

(a) Choice of Advances. Each Advance shall, at Borrower’s option in accordance with the terms of this Agreement, be either in the
form of a Prime Rate Advance or a LIBOR Advance; provided that in no event shall Borrower maintain at any time LIBOR Advances having more than five (5) different Interest Periods. Borrower shall pay interest accrued on the Advances at
the rates and in the manner set forth in Section 2.3(b)(i). 
 (b) Interest Computation. Interest on the Credit Extensions
and all fees payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed in the period during which such interest accrues. In computing interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit
Extension. 
 (c) Interest Rates. Each Advance shall bear interest on the outstanding principal amount thereof from the date when
made, continued or converted until paid in full at a rate per annum equal to (i) with respect to Prime Rate Advances, the Prime Rate plus the Prime Rate Margin, or (ii) with respect to LIBOR Advances, the LIBOR Rate plus the LIBOR
Rate Margin, as the case may be. On and after the expiration of any Interest Period applicable to any LIBOR Advance outstanding on the date of occurrence of an Event of Default or acceleration of the Obligations, the Effective Amount of such LIBOR
Advance shall, during the continuance of such Event of Default or after acceleration, bear interest in accordance with Section 2.3(d). 

  
 5 

 (d) Default Interest. Except as otherwise provided in Section 2.3(b)(i), after
an Event of Default, Obligations shall bear interest five percent (5.00%) above the rate effective immediately before the Event of Default (the “Default Rate”). Payment or acceptance of the increased interest provided in this
Section 2.3(d) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 

(e) Payments. Interest due on each Advance shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of any Advance pursuant to this Agreement for the portion of any Advance so prepaid and upon payment (including prepayment) in full thereof. All accrued but unpaid interest on the Advances shall be due and payable on the
Revolving Maturity Date. Bank may debit any of Borrower’s deposit accounts for principal and interest payments owing under this Agreement or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower’s
accounts. Debits initiated by the Bank shall generally be made prior to 12:00 noon Pacific time. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and additional fees or interest accrue, however solely making such payment on the next Business Day shall not result in an Event of Default. 

(f) Prime Rate Advances. Each change in the interest rate of the Prime Rate Advances based on changes in the Prime Rate shall be
effective on the effective date of such change and to the extent of such change. Bank shall use its best efforts to give Borrower prompt notice of any such change in the Prime Rate; provided, however, that any failure by Bank to provide
Borrower with notice hereunder shall not affect Bank’s right to make changes in the interest rate of the Prime Rate Advances based on changes in the Prime Rate. 

(g) LIBOR Advances. The interest rate applicable to each LIBOR Advance shall be determined in accordance with Section 3.3(a)
hereunder. Subject to Sections 3.3 and 3.4, such rate shall apply during the entire Interest Period applicable to such LIBOR Advance, and interest calculated thereon shall be payable on the Interest Payment Date applicable to such
LIBOR Advance. 
 2.4 Fees. Borrower will pay: 

(a) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and reasonable expenses) incurred through and after the
date of this Agreement, payable when due. 
 (b) Revolving Line of Credit Fee. On the Closing Date and on each anniversary of the
Closing Date, a Committed Non-Formula Revolving Line fee equal to $10,000, which shall be due, payable and fully earned on each such date. 

(c) Unused Line Fee. A fee payable quarterly, in arrears, on a calendar year basis, in an amount equal to one-quarter of one percent
(0.25%) per annum of the average unused portion of the Committed Non-Formula Revolving Line, as determined by Bank. 

  
 6 

 3. CONDITIONS OF LOANS. 

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

(a) Borrower shall have delivered duly executed original signatures to the Loan Documents to which it is a party; 

(b) Borrower shall have delivered its Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of
the State of Delaware as of a date no later than thirty (30) days after the effective date of this Agreement, unless waived by Bank; and 

(c) Borrower shall have delivered duly executed original signatures to the completed Borrowing Resolutions for Borrower. 

3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following: 
 (a) timely receipt of any Payment/Advance Form; and 

(b) the representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension except for representations and warranties made as of a specified earlier date, which must be materially true as of such earlier date and no Event of Default may have occurred and be continuing, or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties of Section 5 remain true except for representations and warranties made as of a specified earlier date, which
must be materially true as of such earlier date. 
 3.3 Special Provisions Governing LIBOR Advances. Notwithstanding any other
provision of this Agreement to the contrary, the following provisions shall govern with respect to LIBOR Advances as to the matters covered: 

(a) Determination of Applicable Interest Rate. As soon as practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final, conclusive and binding upon all parties) the interest rate that shall apply to the LIBOR Advances for which an interest rate is then being determined for the applicable
Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower. 
 (b) Inability to
Determine Applicable Interest Rate. In the event that Bank shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any LIBOR Advance,
that by reason of circumstances affecting the London interbank market adequate and fair means 

  
 7 

 
do not exist for ascertaining the interest rate applicable to such Advance on the basis provided for in the definition of LIBOR, Bank shall on such date give notice (by facsimile or by telephone
confirmed in writing) to Borrower of such determination, whereupon (i) no Advances may be made as, or converted to, LIBOR Advances until such time as Bank notifies Borrower that the circumstances giving rise to such notice no longer exist, and
(ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with respect to Advances in respect of which such determination was made shall be deemed to be (y) rescinded by Borrower, and (z) a request for a
Prime Rate Advance. 
 (c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall compensate Bank, upon
written request by Bank (which request shall set forth the manner and method of computing such compensation), for all reasonable losses, expenses and liabilities, if any (including any interest paid by Bank to lenders of funds borrowed by it to make
or carry its LIBOR Advances and any loss, expense or liability incurred by Bank in connection with the liquidation or re-employment of such funds) such that Bank may incur: (i) if for any reason (other than a default by Bank or due to any
failure of Bank to fund LIBOR Advances due to impracticability or illegality under Sections 3.4(d) and 3.4(e)) a borrowing or a conversion to or continuation of any LIBOR Advance does not occur on a date specified in a Notice of
Borrowing or a Notice of Conversion/Continuation, as the case may be, or (ii) if any principal payment or any conversion of any of its LIBOR Advances occurs under Section 3.4(a), on a date prior to the last day of an Interest Period
applicable to that Advance. 
 (d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all amounts payable to Bank under
this Section 3.3 and under Section 2.12 shall be made as though Bank had actually funded each of its relevant LIBOR Advances through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to the
definition of LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund each of its LIBOR Advances in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 3.3 and under Section 2.1.2. 

(e) LIBOR Advances After Default. After the occurrence and during the continuance of an Event of Default, (i) Borrower may not
elect to have an Advance be made or continued as, or converted to, a LIBOR Advance after the expiration of any Interest Period then in effect for such Advance and (ii) subject to the provisions of Section 3.3(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested conversion/continuation that has not yet occurred shall be deemed to be rescinded by Borrower and be deemed a request to convert or continue Advances referred to therein as Prime
Rate Advances. 
 3.4 Additional Requirements/Provisions Regarding LIBOR Advances. 

(a) If for any reason (including voluntary or mandatory prepayment or acceleration), Bank receives all or part of the principal amount of a
LIBOR Advance prior to the last day of the Interest Period for such Advance, Borrower shall immediately notify Borrower’s account officer at Bank and, on demand by Bank, pay Bank the amount (if any) by which (i) the additional interest
which would have been payable on the amount so received had it not been 

  
 8 

 
received until the last day of such Interest Period exceeds (ii) the interest which would have been recoverable by Bank by placing the amount so received on deposit in the certificate of
deposit markets, the offshore currency markets, or United States Treasury investment products, as the case may be, for a period starting on the date on which it was so received and ending on the last day of such Interest Period at the interest rate
determined by Bank in its reasonable discretion. Bank’s determination as to such amount shall be conclusive absent manifest error. 

(b) Borrower shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may determine to be necessary to compensate it for any
costs incurred by Bank that Bank determines are attributable to its making or maintaining of any amount receivable by Bank hereunder in respect of any Advances relating thereto (such increases in costs and reductions in amounts receivable being
herein called “Additional Costs”), in each case resulting from any Regulatory Change which: 
 (i) changes the basis of
taxation of any amounts payable to Bank under this Agreement in respect of any Advances (other than changes which affect taxes measured by or imposed on the overall net income of Bank by the jurisdiction in which Bank has its principal office); 

(ii) imposes or modifies any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any
deposits with, or other liabilities of Bank (including any Advances or any deposits referred to in the definition of LIBOR); or 
 (iii)
imposes any other condition affecting this Agreement (or any of such extensions of credit or liabilities). 
 Bank will notify Borrower of
any event occurring after the Closing Date which will entitle Bank to compensation pursuant to this Section 3.4 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Bank will furnish
Borrower with a statement setting forth the basis and amount of each request by Bank for compensation under this Section 3.4. Determinations and allocations by Bank for purposes of this Section 3.4 of the effect of any
Regulatory Change on its costs of maintaining its obligations to make Advances, of making or maintaining Advances, or on amounts receivable by it in respect of Advances, and of the additional amounts required to compensate Bank in respect of any
Additional Costs, shall be conclusive absent manifest error. 
 (c) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation, or treaty regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its applicable lending office) with any respect or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on capital of Bank or any person or entity controlling Bank (a “Parent”) as a consequence of its obligations hereunder to a level below that which Bank (or its
Parent) could have achieved but for such 

  
 9 

 
adoption, change, or compliance (taking into consideration policies with respect to capital adequacy) by an amount deemed by Bank to be material, then from time to time, within fifteen
(15) days after demand by Bank, Borrower shall pay to Bank such additional amount or amounts as will compensate Bank for such reduction. A statement of Bank claiming compensation under this Section 3.4(c) and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive absent manifest error. 
 (d) If, at any time, Bank, in its sole
and absolute discretion, determines that (i) the amount of LIBOR Advances for periods equal to the corresponding Interest Periods are not available to Bank in the offshore currency interbank markets, or (ii) LIBOR does not accurately
reflect the cost to Bank of lending the LIBOR Advances, then Bank shall promptly give notice thereof to Borrower. Upon the giving of such notice, Bank’s obligation to make the LIBOR Advances shall terminate; provided, however, Advances
shall not terminate if Bank and Borrower agree in writing to a different interest rate applicable to LIBOR Advances. 
 (e) If it shall
become unlawful for Bank to continue to fund or maintain any LIBOR Advances, or to perform its obligations hereunder, upon demand by Bank, Borrower shall prepay the Advances in full with accrued interest thereon and all other amounts payable by
Borrower hereunder (including, without limitation, any amount payable in connection with such prepayment pursuant to Section 3.4(a)). Notwithstanding the foregoing, to the extent a determination by Bank as described above relates to a
LIBOR Advance then being requested by Borrower pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, Borrower shall have the option, subject to the provisions of Section 3.3(c), to (i) rescind such Notice of
Borrowing or Notice of Conversion/Continuation by giving notice (electronically, by facsimile or by telephone confirmed in writing) to Bank of such rescission on the date on which Bank gives notice of its determination as described above, or
(ii) modify such Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or to have outstanding Advances converted into or continued as Prime Rate Advances by giving notice (electronically, by facsimile or by
telephone confirmed in writing) to Bank of such modification on the date on which Bank gives notice of its determination as described above. 

4. CREATION OF SECURITY INTEREST. 

4.1 Grant of Security Interest. Borrower grants Bank a continuing security interest in all presently existing and later acquired
Collateral to secure all Obligations and performance of each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank may place a
“hold” on any deposit account pledged as Collateral. Notwithstanding the foregoing, the security interest granted herein does not extend to and the term “Collateral” does not include: (A) any license or contract rights to
the extent (i) the granting of a security interest in it would be contrary to applicable law, or (ii) that such rights are nonassignable by their terms (but only to the extent such prohibition is enforceable under applicable law) without
the consent of the licensor or other party (but only to the extent such consent has not been obtained) and (B) pledges of more than 65% of foreign subsidiaries’ stock. If this Agreement is terminated, Bank’s lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations. 

  
 10 

 5. REPRESENTATIONS AND WARRANTIES. 

Borrower represents and warrants as follows: 

5.1 Due Organization and Authorization. Borrower and each material Subsidiary is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change. 
 The execution, delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change. 
 5.2 Collateral. Borrower has good title to the Collateral,
free of Liens except Permitted Liens. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the
account debtor. All Inventory, net of inventory reserves, is in all material respects of good and marketable quality, free from material defects. To the best of Borrower’s knowledge, Borrower is the sole owner of the Intellectual Property,
except for non-exclusive licenses granted to its customers in the ordinary course of business. To the best of Borrower’s knowledge, each Patent is valid and enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the extent such claim could not reasonably be expected to cause a Material Adverse Change.

 5.3 Litigation. Except as shown in the Disclosure Letter, there are no actions or proceedings pending or, to the knowledge of
Borrower’s Responsible Officers, threatened by or against Borrower or any material Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change. 

5.4 No Material Adverse Change in Financial Statements. All consolidated financial statements for Borrower delivered to Bank fairly
present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations as of the date of such financial statements. There has not been any material adverse change in Borrower’s
consolidated financial condition since the date of the most recent financial statements submitted to Bank. 
 5.5 Solvency. The fair
salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able
to pay its debts (including trade debts) as they mature. 

  
 11 

 5.6 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve
Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse
Change. None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves
under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently
conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
 5.7 Subsidiaries.
Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 
 5.8 Tax Returns and
Payments; Pension Contributions. To the best of Borrower’s knowledge, Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all federal, state and local taxes, assessments, deposits and contributions
owed by Borrower. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted,
(b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a
Lien upon any of the Collateral that is other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by
Borrower. To the best of Borrower’s knowledge, Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation
in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 
 5.9 Use of Proceeds. Borrower shall use
the proceeds of the Credit Extensions for general corporate purposes and as additional working capital. Borrower shall not use any proceeds of the Credit Extensions for personal, family, household or agricultural purposes. 

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

  
 12 

 6. AFFIRMATIVE COVENANTS. 

Borrower will do all of the following: 

6.1 Government Compliance. Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its jurisdiction
of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change.

 6.2 Financial Statements, Reports, Certificates. 

(a) Borrower will deliver to Bank: (i) as soon as available, but no later than 45 days after the last day of each month, a company
prepared consolidated balance sheet and income statement, prepared under GAAP, consistently applied, without footnotes and subject to year-end adjustments, covering Borrower’s consolidated operations during the period, in a form and certified
by a Responsible Officer acceptable to Bank; (ii) within 5 days of filing, notice to Bank of the filing of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission (“SEC”) unless such 10-K, 10-Q,
and 8-K reports are available in the SEC’s EDGAR database in which case Borrower shall not be required to deliver the same; (iii) Borrower’s budget and financial projections as of the earlier
of: (A) 60 days after the last day of Borrower’s fiscal year for the subject year and (B) the date provided to Borrower’s Board of Directors for the subject fiscal year; (iv) such other financial information Bank reasonably
requests; and (v) prompt notice of any material change in the composition of the Intellectual Property, including any subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark not shown in any intellectual property
security agreement between Borrower and Bank or knowledge of an event that materially adversely affects the value of the Intellectual Property. 

(b) The audited annual consolidated financial statements contained in Borrower’s annual report filed on Form 10-K with the SEC shall be
accompanied by an opinion which is unqualified or is otherwise consented to by Bank on such financial statements from an independent certified public accounting firm reasonably acceptable to Bank. 

(c) Within 45 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit C. 

  
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 (d) Bank has the right to audit Borrower’s Collateral at Borrower’s expense, but the
audits will be conducted no more often than every year unless an Event of Default has occurred and is continuing. 
 6.3 Inventory;
Returns. Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes older than 30 days and claims, that involve more than $200,000, excluding “ship from stock and debit transactions” and any returns from distributors of
unprogrammed Inventory which involve less than $500,000. 
 6.4 Taxes. Borrower will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on demand, appropriate certificates attesting to the payment. 

6.5 Access to Collateral; Books and Records. At reasonable times, on one Business Day’s notice (provided no notice is required if
an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right, upon one week’s notice to Borrower, to inspect the Collateral and the right to audit and copy Borrower’s Books. 

6.6 Insurance. Borrower will keep its business and the Collateral insured for risks and in amounts, as Bank may reasonably request.
Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least 20 day’s notice before canceling its policy. At Bank’s request, Borrower will deliver certified copies of
policies and evidence of all premium payments. If no Event of Default has occurred and is continuing, proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim,
provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest. If an Event of Default has occurred and is continuing, then, at Bank’s option, proceeds payable under any
policy will be payable to Bank on account of the Obligations. 
 6.7 Deposit and Investment Accounts. Borrower will maintain 95% of
its cash and Cash Equivalents held in the United States or its territories, in depository, investment and operating accounts with Bank and Bank’s affiliates which shall be held in the form of cash and such other investments as are consistent
with Borrower’s investment policy as approved by its Board of Directors. 
 6.8 Financial Covenants. Borrower will comply with
each of the following financial covenants: 
 (i) Tangible Net Worth. A Tangible Net Worth of at least $15,000,000, tested as of the
last day of each quarter. 

  
 14 

 (ii) Quick Ratio (Adjusted). Borrower will maintain a ratio of Quick Assets to Obligations
of at least 2.00 to 1.00, tested as of the last day of each month. 
 (iii) Cash. Unrestricted cash or Cash Equivalents at Bank or at
any of Bank’s Affiliates at all times in an amount of at least $8,000,000, tested as of the last day of each month. 
 6.9 Protection
of Intellectual Property Right. Borrower shall: (a) protect, defend and maintain the validity and enforceability of its material intellectual property; (b) promptly advise Bank in writing of material infringements of its intellectual
property; and (c) not allow any intellectual property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent. Notwithstanding anything to the contrary contained in this
section, Borrower confirms that on June 28, 2004, Bank and Borrower entered into a Negative Pledge Agreement in which Borrower agreed, subject to certain exceptions, not to encumber its Intellectual Property. 

6.10 Control Agreements. With respect to deposit accounts or investment accounts maintained at domestic financial institutions other
than Bank, within 10 Business Days of the opening of any such deposit account or investment account, Borrower will execute and deliver to Bank, control agreements in form satisfactory to Bank in order for Bank to perfect its security interest in
Borrower’s deposit accounts or investment accounts. 
 6.11 Litigation Cooperation. From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend
any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower. 
 6.12 Further
Assurances. Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest in the Collateral or to effect the purposes of this Agreement. 

7. NEGATIVE COVENANTS. 

Borrower will not do any of the following without Bank’s prior written consent, which will not be unreasonably withheld: 

7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, other than Transfers (i) of Inventory and Equipment in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the
property of Borrower or its Subsidiaries in the ordinary course of business; (iii) of worn-out or obsolete Equipment; (iv) other Transfers which in the aggregate do not exceed $200,000 in any fiscal
year; or (v) other Transfers otherwise permitted pursuant to Section 7 hereof. 

  
 15 

 7.2 Changes in Business, Ownership, Management or Business Locations. 

(i) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or
reasonably related thereto, (ii) direct or indirect acquisition by any persons (as such term is used in Section 13(d) and Section 14(d) (2) of the Exchange Act) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act), of beneficial ownership of the issued and outstanding shares of voting stock of the Borrower, the result of which acquisition is that such person or group possesses in excess of 35% of the combined voting power of
all then issued and outstanding stock of the Borrower, (iii) without contemporaneous written notice, relocate its chief executive office, or add any new offices or business locations, or (iv) without at least 30 days written notice, change
the jurisdiction of its incorporation. 
 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) such transactions do not in the aggregate
result in a decrease of more than 25% of Tangible Net Worth and (ii) no Event of Default has occurred, is continuing or would exist after giving effect to the transactions. A Subsidiary may merge or consolidate into another Subsidiary or into
Borrower. 
 7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, including guaranties of non-Borrower
obligations, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 7.5 Encumbrance. Create, incur, or allow any
Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first
priority security interest granted here, subject to Permitted Liens. 
 7.6 Distributions; Investments. Directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, except for
(A) repurchases of stock from former employees, consultants or directors of Borrower provided no Default or Event of Default has occurred and is continuing, or would be caused by such repurchase, and provided that the aggregate amount of such
repurchases shall not exceed $100,000 in the aggregate in any fiscal year, (B) distributions payable solely in Borrower’s capital stock, or (C) conversion of any convertible debt into capital stock of Borrower. 

7.7 Transactions with Affiliates. Directly or indirectly enter into or permit any material transaction with any Affiliate except
transactions that are in the ordinary course of Borrower’s business, on terms less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person. 

  
 16 

 7.8 Subordinated Debt. Make or permit any payment on any Subordinated Debt, except under
the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent. 

7.9 Compliance. Become an “investment company” or a company controlled by an “investment company,” under the
Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA,
permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 

8. EVENTS OF DEFAULT. 

Any one of the following is an Event of Default: 

8.1 Payment Default. If Borrower fails to pay any of the Obligations within 3 days after their due date. During the additional period
the failure to cure the default is not an Event of Default (but no Credit Extension will be made during the cure period); 
 8.2 Covenant
Default. If Borrower does not perform any obligation in Section 6 or violates any covenant in Section 7 or does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has not cured the default within 10 business days after it occurs, or if the default cannot be cured within 10 business days or cannot
be cured after Borrower’s attempts within 10 business day period, and the default may be cured within a reasonable time, then Borrower has an additional period (of not more than 30 days) to attempt to cure the default. During the additional
time, the failure to cure the default is not an Event of Default (but no Credit Extensions will be made during the cure period); 
 8.3
Material Adverse Change. 
 (i) A material impairment in the perfection or priority of Bank’s security interest in the Collateral or
in the value of such Collateral other than normal depreciation which is not covered by adequate insurance occurs; or (ii) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable
likelihood that Borrower will fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period. 

8.4 Attachment. If any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee
or receiver and the attachment, seizure or levy is not removed in 10 business days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed 

  
 17 

 
against any of Borrower’s assets by any government agency and not paid within 10 business days after Borrower receives notice. These are not Events of Default if stayed or if a bond is
posted pending contest by Borrower (but no Credit Extensions will be made during the cure period); 
 8.5 Insolvency. If Borrower
becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 45 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed);

 8.6 Other Agreements. If there is a default in any agreement between Borrower and a third party that gives the third party the
right to accelerate any Indebtedness exceeding $250,000 or that could reasonably be expected to cause a Material Adverse Change; 
 8.7
Judgments. If a money judgment(s) in the aggregate of at least $250,000 is rendered against Borrower and is unsatisfied and unstayed for 10 Business Days (but no Credit Extensions will be made before the judgment is stayed or satisfied); 

8.8 Misrepresentations. If Borrower or any Responsible Officer of Borrower makes any material misrepresentation or material misstatement
(when taken together with Borrower’s filings with the Securities & Exchange Commission) now or later in any warranty or representation in this Agreement or in any communication delivered to Bank or to induce Bank to enter this
Agreement or any Loan Document; or 
 8.9 Subordinated Debt. A default or breach occurs under any agreement between Borrower and any
creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such agreement. 

8.10 Guaranty. Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor does not perform any
obligation under any guaranty of the Obligations, or any material misrepresentation or material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in
connection with the guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to any Guarantor. 
 9. BANK’S
RIGHTS AND REMEDIES. 
 9.1 Rights and Remedies. When an Event of Default occurs and continues Bank may, without notice or demand,
do any or all of the following: 
 (a) Declare all Obligations, immediately due and payable (but if an event of Default described in
Section 8.5 occurs, all Obligations are immediately due and payable without any action by Bank); 
 (b) Stop advancing money or
extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank; 

  
 18 

 (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and
in any order that Bank considers advisable; 
 (d) Make any payments and do any acts it considers necessary and reasonable to protect its
security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to
exercise any of Bank’s rights or remedies; 
 (e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or
(ii) any amount held by Bank owing to or for the credit or the account of Borrower; 
 (f) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of
any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with
Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and 

(g) Dispose of the Collateral according to the Code. 

9.2 Power of Attorney. Effective only when an Event of Default occurs and continues until Borrower pays the Obligations in full,
Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts
against account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank
determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 
 9.3 Accounts
Collection. When an Event of Default occurs and continues, Bank may notify any Person owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit. 

  
 19 

 9.4 Bank Expenses. If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and due and payable
within 10 Business Days of written notice to Borrower, bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event
of Default. 
 9.5 Bank’s Liability for Collateral. If Bank complies with reasonable banking practices and Section 9-207 of
the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee,
or other person. Borrower bears all risk of loss, damage or destruction of the Collateral. 
 9.6 Remedies Cumulative. Bank’s
rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election,
and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose
for which it was given. 
 9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 

10. NOTICES 
 All notices,
consents, requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or
delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its address or facsimile number by giving the other party written notice thereof in accordance with the
terms of this Section 10. 

  
 20 

					
		 	If to Borrower:	  	Quicklogic Corporation
		 		  	1277 Orleans Drive, Sunnyvale
		 		  	California 94089-1138
		 		  	Attn: Patricia Hart
		 		  	Fax: (408) 990-4040
		 		  	Email: phart@quicklogic.com
			
		 	If to Bank:	  	Silicon Valley Bank
		 		  	555 Mission Street, Suite 900
		 		  	San Francisco, California 94105
		 		  	Attn: Gregory J. Peterson
		 		  	Fax: (415) 615-0076
		 		  	Email: gpeterson@svb.com

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

California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by
such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail
addressed to Borrower at the address set forth in Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the
U.S. mails, proper postage prepaid. 
 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH
PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
 WITHOUT INTENDING IN ANY WAY TO LIMIT THE
PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them
arising at any time shall be decided by a reference to a 

  
 21 

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

This Section 11 shall survive the termination of this Agreement. 

12. GENERAL PROVISIONS. 

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower
may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 

12.2 Indemnification. Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against:
(a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable attorney’s fees and expenses), and in each case of (a) and (b) above, except for any such obligations, claims, liabilities and losses caused by Bank’s
gross negligence or willful misconduct. 

  
 22 

 12.3 Limitation of Actions. Any claim or cause of action by Borrower against Bank, its
directors, officers, employees, agents, accountants, attorneys, or any other Person affiliated with or representing Bank based upon, arising from, or relating to this Loan Agreement or any other Loan Document, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Bank, its directors, officers, employees, agents, accountants or attorneys, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by (a) the filing of a complaint within one year from the earlier of (i) the date any of Borrower’s officers or directors had
knowledge of the first act, the occurrence or omission upon which such claim or cause of action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and (b) the service of a summons and complaint on an officer of
Bank, or on any other person authorized to accept service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any such
claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of Bank in its sole discretion. This provision shall survive any termination of this Loan Agreement or any other
Loan Document. 
 12.4 Time of Essence. Time is of the essence for the performance of all obligations in this Agreement. 

12.5 Severability of Provision. Each provision of this Agreement is severable from every other provision in determining the
enforceability of any provision. 
 12.6 Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the
Loan Documents consistent with the agreement of the parties so long as Bank provides Borrower with written notice of such correction. 

12.7 Amendments in Writing, Integration. All amendments to this Agreement must be in writing and signed by Borrower and Bank. This
Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of
this Agreement merge into this Agreement and the Loan Documents. 
 12.8 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 

12.9 Survival. All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain
outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run. 

12.10 Confidentiality. In handling any confidential information, Bank will exercise the same degree of care that it exercises for its
own proprietary information, but disclosure of information may be made (i) to Bank’s subsidiaries or affiliates in connection with their present 

  
 23 

 
or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans so long as such transfer or purchase is subject to a
confidentiality agreement reasonably acceptable to Borrower, (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank considers appropriate in
exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 

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

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

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

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

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

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

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

  
 24 

 “Accounts” are all existing and later arising accounts, contract rights, and
other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by
Borrower and Borrower’s Books relating to any of the foregoing. 
 “Advance” or “Advances” is a Prime
Rate Advance, a LIBOR Advance, or both, as the context requires. 
 “Affiliate” of a Person is a Person that owns or
controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited
liability company, that Person’s managers and members. 
 “Availability” means, as of any date of determination, the
amount that Borrower is entitled to borrow as Advances under Section 2.1.1 (after giving effect to all then outstanding Advances and all sublimit reserves applicable thereunder). 

“Bank Expenses” are all audit fees and expenses and reasonable costs and reasonable expenses (including reasonable
attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). 

“Borrower’s Books” are all Borrower’s books and records including ledgers, records regarding Borrower’s assets
or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 

“Borrowing Resolutions” of the Borrower shall be in substantially the form set forth as Exhibit D hereto. 

“Business Day” is any day other than a Saturday, Sunday or other day on which banking institutions in the State of California
are authorized or required by law or other governmental action to close, except that if any determination of a “Business Day” shall relate to a LIBOR Advance, the term “Business Day” shall also mean a day on which dealings are
carried on in the London interbank market. 
 “Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and
(d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition. 

  
 25 

 “Cash Management Services” are defined in Section 2.1.5. 

“Closing Date” is the date of this Agreement. 

“Code” is the California Commercial Code. 

“Collateral” is the property described on Exhibit A. 

“Committed Non-Formula Revolving Line” is Non-Formula Advances of up to $6,000,000, subject to increase at Borrower’s
election to up to $10,000,000 in accordance with Section 2.2.1(b). 
 “Contingent Obligation” is, for any Person, any
direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and
(iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange
rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support
arrangement. 
 “Continuation Date” means any date on which Borrower elects to continue a LIBOR Advance into another
Interest Period. 
 “Conversion Date” means any date on which Borrower elects to convert a Prime Rate Advance to a LIBOR
Advance or a LIBOR Advance to a Prime Rate Advance. 
 “Copyrights” are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 

“Credit Extension” is each Non-Formula Advance, Letter of Credit, Exchange Contract, or any other extension of credit by Bank
for Borrower’s benefit. 
 “Disclosure Letter” means the disclosure letter from Borrower to Bank of even date
herewith. 

  
 26 

 “Effective Amount” means with respect to any Advances on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowing and prepayments or repayments thereof occurring on such date. 

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

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

“FX Forward Contract” is defined in Section 2.1.4. 

“GAAP” is generally accepted accounting principles. 

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or
unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind. 
 “Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization. 
 “Guarantor” is any present or future guarantor of the
Obligations. 
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services,
such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations. 

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

  
 27 

 “Intellectual Property” is: 

(a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all
license fees and royalties from the use; 
 (b) Any trade secrets and any intellectual property rights in computer software and computer
software products now or later existing, created, acquired or held; 
 (c) All design rights which may be available to Borrower now or later
created, acquired or held; 
 (d) Any claims for damages (past, present or future) for infringement of any of the rights above, with the
right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above; 
 (e) All
proceeds and products of the foregoing, including all insurance, indemnity or warranty payments. 
 “Interest Payment Date”
means (i) with respect to any LIBOR Advance, the last day of each Interest Period applicable to such LIBOR Advance, provided, however, if any Interest Period is longer than three (3) months, then interest on the applicable
LIBOR Advance shall be payable at three (3) month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period; and (ii) with respect to Prime Rate Advances, the first (1st) day of
each month (or, if the first day of the month does not fall on a Business Day, then on the first Business Day following such date), and each date a Prime Rate Advance is converted into a LIBOR Advance to the extent of the amount converted to a LIBOR
Advance. 
 “Interest Period” means, as to any LIBOR Advance, the period commencing on the date of such LIBOR Advance, or
on the conversion/continuation date on which the LIBOR Advance is converted into or continued as a LIBOR Advance, and ending on the date that is one (1), two (2), three (3), six (6), nine (9), or twelve (12) months thereafter, in each case as
Borrower may elect in the applicable Notice of Borrowing or Notice of Conversion/Continuation; provided, however, that (a) no Interest Period with respect to any LIBOR Advance shall end later than the Revolving Maturity Date,
(b) the last day of an Interest Period shall be determined in accordance with the practices of the LIBOR interbank market as from time to time in effect, (c) if any Interest Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following Business Day unless, in the case of a LIBOR Advance, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day, (d) any Interest Period pertaining to a LIBOR Advance that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period, and (e) interest shall accrue from and include the first Business Day of an Interest Period but exclude the last Business Day
of such Interest Period. 

  
 28 

 “Interest Rate Determination Date” means each date for calculating the LIBOR for
purposes of determining the interest rate in respect of an Interest Period. The Interest Rate Determination Date shall be the second Business Day prior to the first day of the related Interest Period for a LIBOR Advance. 

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

“Investment” is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person. 
 “Letter of Credit” is defined in Section 2.1.3. 

“LIBOR Rate” means, for each Interest Period in respect of LIBOR Advances comprising part of the same Advances, an interest
rate per annum (rounded upward to the nearest 1/16th of one percent (0.0625%)) equal to LIBOR for such Interest Period divided by one (1) minus the Reserve Requirement for such Interest Period. 

“LIBOR Rate Margin” is three and one half percent (3.50%). 

“LIBOR” means, for any Interest Rate Determination Date with respect to an Interest Period for any Advance to be made,
continued as or converted into a LIBOR Advance, the rate of interest per annum determined by Bank to be the per annum rate of interest at which deposits in United States Dollars are offered to Bank in the London interbank market (rounded upward, if
necessary, to the nearest 1/100th of one percent (0.01%)) in which Bank customarily participates at 11:00 a.m. (local time in such interbank market) two (2) Business Days prior to the first day of such Interest Period for a period
approximately equal to such Interest Period and in an amount approximately equal to the amount of such Advance. 
 “LIBOR
Advance” means an Advance that bears interest based at the LIBOR Rate. 
 “Lien” is a mortgage, lien, deed of
trust, charge, pledge, security interest or other encumbrance. 
 “Loan Documents” are, collectively, this Agreement, any
note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 

“Mask Works” are all mask works or similar rights available for the protection of semiconductor chips, now owned or later
acquired. 

  
 29 

 “Material Adverse Change” is defined in Section 8.3. 

“Non-Formula Advance” or “Non-Formula Advances” is a loan advance (or advances) under the Committed
Non-Formula Revolving Line. 
 “Notice of Borrowing” shall have the meaning set forth for such term in
Section 2.1.2(a). 
 “Notice of Conversion/Continuation” means a notice given by Borrower to Bank in accordance
with Section 2.1.2, substantially in the form of Exhibit E, with appropriate insertions. 

“Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash
management services, letters of credit and foreign exchange contracts, if any and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 

“Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same. 

“Payment/Advance Form” means a Notice of Borrowing given by Borrower to Bank in accordance with Section 2.1.2,
substantially in the form of Exhibit B, with appropriate insertions. 
 “Permitted Indebtedness” is: 

(a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document; 

(b) Indebtedness existing on the Closing Date and shown on the Disclosure Letter; 

(c) Subordinated Debt; 
 (d)
Indebtedness to trade creditors incurred in the ordinary course of business; 
 (e) Indebtedness secured by Permitted Liens; 

(f) Indebtedness of Borrower to any Subsidiary and Contingent Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and Indebtedness of any Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby); 
 (g) Other Indebtedness not otherwise permitted by Section 7.4 not exceeding $250,000 in the
aggregate outstanding at any time; 

  
 30 

 (h) Extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (f) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be; and 

(i) Indebtedness of Borrower to (i) finance directors’ and officers’ liability insurance and (ii) to finance
Borrower’s “Cadence” and “Mentor Graphics” software licensing. 
 “Permitted Investments” are: 

Investments shown on the Disclosure Letter and existing on the Closing Date; and 

(a) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any state maturing within
one year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and
(iii) certificates of deposit issued maturing no more than one year after issue; 
 (b) Investments consisting of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower; 
 (c) Investments accepted in
connection with Transfers permitted by Section 7.1, 7.3 and 7.6; 
 (d) Investments by Borrower in Subsidiaries in the form of:
(A) capital stock of Subsidiaries not to exceed $500,000 in the aggregate in any fiscal year and (B) all other advancements, so long as any such investment is made for the purpose of funding operational requirements of the relevant
Subsidiary and so long as no Subsidiary maintains cash and cash equivalents at any time in excess of: (i) $800,000 for Quicklogic India; and (ii) $100,000 for each subsidiary other than Quicklogic India. In the event that any Subsidiary
does maintain cash and cash equivalents in excess of the aforementioned limitation, any transfer of cash by Borrower to any Subsidiary shall not be permitted under the terms of this Agreement; 

(e) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of
Directors; 
 (f) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 

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

  
 31 

 (h) Investments made pursuant to Borrower’s investment policy, as approved by Bank from time
to time; and 
 (i) Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive
licensing of technology, the development of technology or the providing of technical support, provided that any cash investments by Borrower do not exceed $250,000 in the aggregate in any fiscal year. 

“Permitted Liens” are: 

(a) Liens existing on the Closing Date and shown on the Disclosure Letter or arising under this Agreement or other Loan Documents; 

(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for
which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests; 
 (c) Purchase
money Liens (i) on Equipment or software acquired or held by Borrower or its Subsidiaries incurred for financing the acquisition of the Equipment (including Liens arising in connection with capital leases), or (ii) existing on equipment
when acquired, if the Lien is confined to the property, attachments and improvements and the proceeds of the equipment; 
 (d) Licenses or
sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest; 

(e) Leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased
premises or leased property and capital leases of Equipment or software; 
 (f) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 

(g) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7;

 (h) Liens approved by Bank in writing, granted to lenders to secure Permitted Indebtedness; 

  
 32 

 (i) Liens in favor of other financial institutions arising in connection with Borrower’s
deposit accounts held at such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit accounts; 

(j) Liens arising from Indebtedness of Borrower in connection with financing Borrower’s directors’ and officers’ liability
insurance and Borrower’s “Cadence” or “Mentor Graphics” software licensing; 
 (k) Liens on insurance proceeds
securing the payment of financed insurance premiums; and 
 (l) Other Liens not described above arising in the ordinary course of business
and not having or not reasonably likely to have a material adverse effect on Borrower and its Subsidiaries taken as a whole. 

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

“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate. 

“Prime Rate Advance” means a Non-Formula Advances that bears interest at the rate set forth in
Section 2.3(b)(i)(A). 
 “Prime Rate Margin” is one half of one percent (0.50%). 

“Quick Assets” is, on any date, Borrower’s unrestricted cash, Cash Equivalents, net billed accounts receivable, and
investments with maturities of fewer than 12 months and long-term investments with maturities of more than 12 months held at Bank or its affiliates, determined according to GAAP. 

“Quicklogic Canada” means QuickLogic Canada Company. 

“Quicklogic India” means QuickLogic (India) Private Limited. 

“Regulatory Change” means, with respect to Bank, any change on or after the date of this Agreement in United States federal,
state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or under any United States federal or
state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. 

“Reserve Requirement” means, for any Interest Period, the average maximum rate at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D against “Eurocurrency 

  
 33 

 
liabilities” (as such term is used in Regulation D) by member banks of the Federal Reserve System. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by Bank by reason of any Regulatory Change against (a) any category of liabilities which includes deposits by reference to which the LIBOR Rate is to be determined as provided in the definition of LIBOR
or (b) any category of extensions of credit or other assets which include Advances. 
 “Responsible Officer” is each
of the Chief Executive Officer, the President, the Chief Financial Officer, the Controller and the in-house general counsel of Borrower. 

“Revolving Maturity Date” is June 27, 2016. 

“Subordinated Debt” is debt incurred by Borrower subordinated to Borrower’s indebtedness owed to Bank and which is
reflected in a written agreement in a manner and form reasonably acceptable to Bank and approved by Bank in writing. 

“Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
 “Tangible Net
Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (i) any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt discount and expenses, Patents,
trade and service marks and names, and Copyrights, minus (ii) Total Liabilities, plus (iii) fifty percent (50%) of the net income, but without effect for any loss, of the Borrower as defined in accordance with GAAP, for
the immediately preceding measurement period. 
 “Trademarks” are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks. 

[Signature Page to Follow] 

  
 34 

 IN WITNESS WHEREOF, the undersigned parties have executed this Agreement by their respective duly
authorized officers as of the date first set forth above. 
  

			
	BORROWER:
	
	 QUICKLOGIC CORPORATION,
 a
Delaware corporation

		
	By:	 	 /s/ RALPH S. MARIMON

	Name:	 	Ralph S. Marimon
	Title:	 	VP Finance and CFO

 Third Amended and Restated Loan and Security Agreement 

 
			
	BANK:
	
	 SILICON VALLEY BANK,
 a
California banking corporation

		
	By:	 	 /s/ GREGORY PETERSON

	Name:	 	Gregory Peterson
	Title:	 	Vice President

  
 Third Amended and
Restated Loan and Security Agreement 

 EXHIBIT A 

COLLATERAL DESCRIPTION 

QUICKLOGIC CORPORATION 

The Collateral consists of all of Borrower’s right, title and interest in and to the following: 

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

All Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions
for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing; and 

Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business
of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, without
Bank’s prior written consent. 

  
 Exhibit A 

 EXHIBIT B 

FORM OF NOTICE OF BORROWING 

QUICKLOGIC CORPORATION 

Date:                      

 

	To:	SILICON VALLEY BANK 

 3003
Tasman Drive 
 Santa Clara, CA 95054 

Attention: Corporate Services Department 
  

	RE:	Third Amended and Restated Loan and Security Agreement dated as of June 30, 2014 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Quicklogic
Corporation (“Borrower”), and Silicon Valley Bank (the “Bank”) 

 Ladies and Gentlemen: 

The undersigned refers to the Loan Agreement, the terms defined therein and used herein as so defined, and hereby gives you notice irrevocably,
pursuant to Section 2.1.2(a) of the Loan Agreement, of the borrowing of an Advance. 
 1. The Funding Date, which shall be a
Business Day, of the requested borrowing is                     . 

2. The aggregate amount of the requested borrowing is $            . 

3. The requested Advance shall consist of $             of Prime Rate Advances and
$             of LIBOR Advances. 
 4. The duration of the Interest Period for
the LIBOR Advances included in the requested Advance shall be                      months. 

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed
Advance before and after giving effect thereto, and to the application of the proceeds therefrom, as applicable: 
 (a) all
representations and warranties of Borrower contained in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof; 

(b) no Default or Event of Default has occurred and is continuing, or would result from such proposed Advance; and 

Exhibit B 

  
 1 

 (c) the requested Advance will not cause the aggregate principal amount of the
outstanding Advances to exceed, as of the designated Funding Date, (i) the Committed Non-Formula Revolving Line minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), minus
(iii) the aggregate outstanding Advances. 
  

							
	Borrower	 		  	QUICKLOGIC CORPORATION
				
		 		  	By:	  	  

		 		  	Name:	  	  

		 		  	Title:	  	  

 For internal Bank use only 
  

									
	 LIBOR Pricing Date
	  	LIBOR	  	LIBOR Variance	 	 	Maturity Date
		  		  	 	        	% 	 	

  
 Exhibit B 

2 

 EXHIBIT C 

FORM OF COMPLIANCE CERTIFICATE 

QUICKLOGIC CORPORATION 
  

	TO:	SILICON VALLEY BANK 

	    	3003 Tasman Drive 

	    	Santa Clara, CA 95054 

  

	FROM:	QUICKLOGIC CORPORATION 

	    	1227 Orleans Drive 

	    	Sunnyvale, CA 94089-1138 

 The undersigned authorized officer (“Officer”) of QuickLogic Corporation
(“Borrower”) certifies that under the terms and conditions of the Third Amended and Restated Loan and Security Agreement between Borrower and Silicon Valley Bank (the “Agreement”), (i) Borrower is in complete compliance for
the period ending                      with all required covenants except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date, except for representations and warranties made as of a specific earlier date, which are to be true and correct in all material respects as of such earlier date. Attached are the
required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying
letter, footnotes or year-end adjustments. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined
not just at the date this certificate is delivered. 
 Please indicate compliance status by circling Yes/No under “Complies” column. 

 

											
	Reporting and Financial Covenants	  	Required	  	Complies	 
	 Monthly financial statements, Compliance Certificate
	  	Monthly within 45 days	  	 	Yes	  	  	 	No	  
	 Board Approved Projections
	  	Annual within 60 days of FYE or the date provided to Borrowers’ Board	  	 	Yes	  	  	 	No	  
	 Accounts Payable and Accounts Receivable Listings
	  	Within 30 days of the end of each month	  	 	Yes	  	  	 	No	  
	 10-Q, 10-K, and 8-K
	  	Within 5 days after filing with SEC	  	 	Yes	  	  	 	No	  
	 Minimum Tangible Net Worth
	  	Quarterly; $15,000,000	  	 	Yes	  	  	 	No	  
	 Quick Ratio Adjusted
	  	Monthly; 2.00 to 1.00	  	 	Yes	  	  	 	No	  
	 Minimum Cash
	  	Monthly; $8,000,000	  	 	Yes	  	  	 	No	  
	 Have there been updates to Borrower’s intellectual property, if appropriate?
	  	 	Yes	  	  	 	No	  

 The following financial covenant analys[is][es] and information set forth in Schedule 1 attached hereto are true and accurate
as of the date of this Certificate. 
 Exhibit C 

  
 1 

 The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No
exceptions to note.”) 
  
  

 
  
  

 
  

                          
                                         
                              

[Signature page follows] 
  

							
	QUICKLOGIC CORPORATION	 		  	BANK USE ONLY
				
		 		 		  	Received by:
                                    
	By:	 	  
	 		  	AUTHORIZED SIGNER
	Name:	 	  
	 		  	Date:
                                         
                           
	Title:	 	  
	 		  	
		 		 		  	Verified:
                                         
                   
		 		 		  	AUTHORIZED SIGNER
		 		 		  	Date:
                                         
                         
				
		 		 		  	Compliance Status:     Yes     No

  
 Exhibit C 

2 

 Schedule 1 to Compliance Certificate 

Financial Covenants of Borrower 

Dated:                      

I. Tangible Net Worth (Section 6.8(a)) 
 Required:
            $15,000,000 
 Actual: 

 

							
		 	A.	  	Value of Line I. (Tangible Net Worth)	  	$__________

 Is line A equal to or greater than $15,000,000 
  

			
	 No, not in compliance
	  	             Yes, in compliance

  

	II.	Adjusted Quick Ratio (Section 6.8(b)) 

 Required:
        2:00:1.00 
 Actual: 
  

							
		 	A.	  	Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries	  	$__________
				
		 	B.	  	Aggregate value of the net billed accounts receivable of Borrower and its Subsidiaries	  	$__________
				
		 	C.	  	Aggregate value of the Investments with maturities of fewer than 12 months of Borrower and its Subsidiaries held at Bank or its affiliates	  	$__________
				
		 	D.	  	Quick Assets (the sum of lines A through C)	  	$__________
				
		 	E.	  	Aggregate value of Obligations to Bank	  	$__________
				
		 	F.	  	Quick Ratio (line D divided by line E)	  	$__________

 Is line F equal to or greater than 2:00:1:00? 
  

			
	 No, not in compliance
	  	             Yes, in compliance

 Schedule 1 to Compliance Certificate 

	III.	Cash (Section 6.8(c)) 

 Required:         $8,000,000 

Actual: 
  

							
		 	A.	  	Value of Line III. (Cash)	  	$__________

 Is line A equal to or greater than $8,000,000? 
  

			
	              No, not in compliance
	  	             Yes, in compliance

  
 Schedule 1 to Compliance
Certificate 

 EXHIBIT D 

CORPORATE BORROWING RESOLUTION 
  

											
	Borrower:	  	 QuickLogic Corporation
 1227 Orleans
Drive
 Sunnyvale, CA 94089-1138
	  		  	Bank:	  	 Silicon Valley Bank
 3003 Tasman
Drive
 Santa Clara, CA 95054-1191
	  	

 I, the Secretary or Assistant Secretary of QuickLogic Corporation (“Borrower”), CERTIFY that Borrower is a
corporation duly organized and existing under the laws of the State of Delaware. 
 I certify that at a meeting of Borrower’s Board of Directors (or by
other authorized corporate action) duly held, the following resolutions were adopted: 
 It is resolved that any one of the following officers of Borrower,
whose name, title and signature is below: 
  

					
	 NAMES
	  	POSITIONS	  	ACTUAL SIGNATURES

 may act for Borrower, and: 

Borrow Money. Borrow money from Silicon Valley Bank (“Bank”). 

Execute Loan Documents. Execute any loan documents Bank requires. 

Grant Security. Grant Bank a security interest in any of Borrower’s assets. 

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds. 
 Letters of Credit. Apply for letters of credit from Bank. 

Foreign Exchange Contracts. Execute spot or forward foreign exchange contracts. 

Further Acts. Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they think necessary to effectuate these Resolutions. 
 Further resolved that all acts authorized by
these Resolutions and performed before they were adopted are ratified. These Resolutions remain in effect and Bank may rely on them until Bank receives written notice of their revocation. 

Exhibit D 

  
 1 

 I certify that the persons listed above are Borrower’s officers with the titles and signatures shown
following their names and that these resolutions have not been modified are currently effective. 
  

			
	CERTIFIED TO AND ATTESTED BY:
		
	X	 	  

	 *  Secretary or Assistant Secretary

		
	X	 	  

	*	NOTE: In case the Secretary or other certifying officer is designated by the foregoing resolutions as one of the signing officers, this resolution should also be signed by a second Officer or Director of Borrower.

  
 Exhibit D 

2 

 EXHIBIT E 

FORM OF NOTICE OF CONVERSION/CONTINUATION 

QUICKLOGIC CORPORATION 

Date:                     
 
  

	TO:	SILICON VALLEY BANK 

 3003
Tasman Drive 
 Santa Clara, CA 95054 

Attention: 
  

	RE:	Third Amended and Restated Loan and Security Agreement dated as of June 30, 2014 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Quicklogic
Corporation (“Borrower”), and Silicon Valley Bank (the “Bank”) 

 Ladies and Gentlemen: 

The undersigned refers to the Loan Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.1.2(b) of the Loan Agreement, of the [conversion] [continuation] of the Advances specified herein, that: 

1. The date of the [conversion] [continuation] is
                    , 20    . 

2. The aggregate amount of the proposed Advances to be [converted] is
$            or [continued] is $            . 

3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate] Advances. 

4. The duration of the Interest Period for the LIBOR Advances included in the [conversion] [continuation] shall
be             months. 
 The undersigned, on behalf of Borrower, hereby
certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [conversion] [continuation], before and after giving effect thereto and to the application of the proceeds therefrom: 

(a) all representations and warranties of Borrower stated in the Loan Agreement are true, accurate and complete in all material respects as of
the date hereof; and 
 (b) no Default or Event of Default has occurred and is continuing, or would result from such proposed [conversion]
[continuation]. 
 Exhibit E 

  
 1 

							
	Borrower	 		  	QUICKLOGIC CORPORATION
				
		 		  	By:	  	  

		 		  	Name:	  	  

		 		  	Title:	  	  

 For internal Bank use only 
  

									
	 LIBOR Pricing Date
	  	LIBOR	  	LIBOR Variance	 	 	Maturity Date
		  		  	 	____	% 	 	

  
 Exhibit E 

2

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