Document:

EXHIBIT 10.1

 

SECOND
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of November __, 2019 (the “Effective
Date”), by and among SILICON VALLEY BANK, a California corporation (“Bank”), Lantronix,
Inc., a Delaware corporation (“Lantronix”), and Lantronix
Holding Company, a Delaware corporation (“Holding” and together with Lantronix, and any other party
subsequently added as a co-borrower hereunder, individually and collectively, jointly and severally, “Borrower”),
provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:

 

Recitals

 

A.       Bank
and Borrower have entered into that certain Amended and Restated Loan and Security Agreement with an Effective Date of October
15, 2018 (as amended, the “Prior Loan Agreement”).

 

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

 

1                    
ACCOUNTING AND OTHER TERMS

 

Accounting terms not
defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding
any terms in this Agreement to the contrary, for purposes of any financial covenant and other financial calculations in this Agreement
(other than for purposes of updating the Borrowing Base) which are made in whole or in part based upon the Availability Amount
as of the last day of a particular month, calculations relying on information from a Borrowing Base Report shall be derived from
the Borrowing Base Report delivered within seven (7) days of month end pursuant to Section 6.2(a) (and not, for clarity, any more
recent Borrowing Base Report delivered after such period), and the actual delivery date of such Borrowing Base Report shall be
deemed to be the last day of the applicable month. Capitalized terms not otherwise defined in this Agreement shall have the meanings
set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided
by the Code to the extent such terms are defined therein.

 

2                    
LOAN AND TERMS OF PAYMENT

 

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

 

2.1.1          
Revolving Line.

 

(a)                
Availability. Subject to the terms and conditions of this Agreement (including, without limitation, the definition
of “Permitted Acquisition” herein) and to deduction of Reserves, Bank shall make Advances not exceeding the Availability
Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject
to the applicable terms and conditions precedent herein.

 

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

 

 

 

    	 	1	 

     

    

 

2.1.2          
Term Loan Advance.

 

(a)                
Availability. Subject to satisfaction of the terms and conditions of this Agreement, on the Effective Date (or as
soon as practicable thereafter), Bank shall make one (1) term loan to Borrower in an original principal amount equal to Six Million
Dollars ($6,000,000) (the “Term Loan Advance”), the proceeds of which shall be used by Borrower solely to finance
the Intrinsyc Acquisition. Bank shall fund the proceeds of the Term Loan Advance into Borrower’s restricted account numbered
xxx-xxxx-9826 at Bank to be released only upon consummation of the Intrinsyc Acquisition. After repayment, the Term Loan Advance
(or any portion thereof) may not be reborrowed.

 

(b)               
Interest Payments. With respect to the Term Loan Advance, commencing on the first Payment Date following the Funding
Date of the Term Loan Advance and continuing on the Payment Date of each month thereafter, Borrower shall make monthly payments
of interest, in arrears, on the outstanding principal amount of such Term Loan Advance at the rate set forth in Section 2.3(a)(ii).

 

(c)                
Repayment. Commencing on January 1, 2020, and continuing on each Payment Date thereafter, Borrower shall repay the
Term Loan Advance in (i) forty-eight (48) equal monthly installments of principal, plus (ii) monthly payments of accrued interest
at the rate set forth in Section 2.3(a)(ii). All outstanding principal and accrued and unpaid interest under the Term Loan Advance,
and all other outstanding Obligations with respect to the Term Loan Advance, are due and payable in full on the Term Loan Maturity
Date.

 

(d)               
Prepayment.

 

(i)                 
Permitted Prepayment. Borrower shall have the option to prepay all or a portion of the Term Loan Advance, provided
(i) any prepayment shall be in a minimum amount equal to at least One Million Dollars ($1,000,000), (ii) Borrower delivers written
notice to Bank of its election to prepay the Term Loan Advance (or any portion thereof) at least ten (10) days prior to such prepayment,
and (iii) Borrower pays, on the date of such prepayment (y) the outstanding principal plus accrued and unpaid interest with respect
to the portion of the Term Loan Advance being prepaid, and (z) all other sums, if any, that shall have become due and payable with
respect to the Term Loan Advance being prepaid, including interest at the Default Rate with respect to any past due amounts.

 

(ii)               
Mandatory Prepayment Upon an Acceleration. If the Term Loan Advance is accelerated by Bank following the occurrence
and during the continuance of an Event of Default, Borrower shall immediately pay to Bank an amount equal to the sum of (i) all
outstanding principal plus accrued and unpaid interest with respect to the Term Loan Advance, and (ii) all other sums, if any,
that shall have become due and payable with respect to the Term Loan Advance, including interest at the Default Rate with respect
to any past due amounts.

 

(iii)             
Mandatory Prepayment Upon Failure to Consummate the Intrinsyc Acquisition. If for any reason, (A) the Intrinsyc Acquisition
is not closed, signed and consummated, and (B) Intrinsyc Parent, Intrinsyc Taiwan and Intrinsyc US made co-borrowers to this Agreement
on or prior to January 31, 2020, Borrower shall immediately pay to Bank an amount equal to the sum of (y) all outstanding principal
plus accrued and unpaid interest with respect to the Term Loan Advance, and (z) all other sums, if any, that shall have become
due and payable with respect to the Term Loan Advance, including interest at the Default Rate with respect to any past due amounts.

 

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

 

 

 

    	 	2	 

     

    

 

2.3               
Payment of Interest on the Credit Extensions.

 

(a)                
Interest Rates.

 

(i)                 
Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest
at a floating per annum rate equal to the greater of (i) the Prime Rate or (ii) five percentage points (5.00%), in either case,
which interest shall be payable monthly in accordance with Section 2.3(d) below.

 

(ii)               
Term Loan Advance. Subject to Section 2.3(b), the outstanding principal amount of the Term Loan Advance shall accrue
interest at a floating per annum rate equal to the greater of (i) one percentage point (1.00%) above the Prime Rate or (ii) six
percentage points (6.00%), in either case, which interest shall be payable monthly in accordance with Section 2.3(d) below.

 

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

 

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

 

(d)               
Payment; Interest Computation. Interest is payable monthly on the Payment Date of each month and shall be computed
on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00
p.m. Pacific time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of
the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any
Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit
Extension. For purposes of the Interest Act (Canada): (x) whenever any interest or fee under this Agreement is calculated
on the basis of a period of time other than a calendar year, such rate used in such calculation, when expressed as an annual rate,
is equivalent to (A) such rate, multiplied by (B) the actual number of days in the calendar year in which the period for which
such interest or fee is calculated ends, and divided by (C) the number of days in such period of time; (y) the principle of deemed
reinvestment of interest shall not apply to any interest calculation under this Agreement; and (z) the rates of interest stipulated
in this Agreement are intended to be nominal rates and not effective rates or yields.

 

2.4               
Fees. Borrower shall pay to Bank:

 

(a)                
Term Loan Advance Commitment Fee. A fully earned, non-refundable commitment fee of Sixty Thousand Dollars ($60,000),
on the Effective Date;

 

(b)               
Anniversary Fee. A fully earned, non-refundable anniversary fee of Ten Thousand Dollars ($10,000) (the “Anniversary
Fee”) is earned as of the Effective Date and is due and payable on the earliest to occur of (i) the one (1) year anniversary
of the Effective Date, (ii) the termination of this Agreement or the Revolving Line, or (iii) the occurrence of an Event of Default;
and

 

 

 

    	 	3	 

     

    

 

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

 

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

 

2.5               
Payments; Application of Payments; Debit of Accounts.

 

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

 

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

 

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

 

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

 

 

 

    	 	4	 

     

    

 

3                    
CONDITIONS OF LOANS

 

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

 

(a)                
duly executed original signatures to this Agreement;

 

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

 

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

 

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

 

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

 

(f)                 
the Perfection Certificates of Borrower, together with the duly executed original signatures thereto;

 

(g)               
solely as a condition to the Term Loan Advance, duly executed signatures to the Intrinsyc Purchase Agreement and any other
documents required by Bank in connection therewith;

 

(h)               
solely as a condition to the Term Loan Advance, copies of the documents outlining the terms and conditions of the “Loan”
outlined in Section 4.11 of the Intrinsyc Purchase Agreement in form and substance satisfactory to Bank;

 

(i)                 
evidence that the insurance policies and endorsements required by Section 6.7 hereof are in full force and effect, together
with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and

 

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

 

 

 

    	 	5	 

     

    

 

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

 

(a)                
timely receipt of (i) the Credit Extension request and any materials and documents required by Section 3.4 and (ii) with
respect to the request for the Term Loan Advance, an executed Payment/Advance Form and any materials and documents required by
Section 3.4;

 

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

 

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

 

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

 

3.4               
Procedures for Borrowing.

 

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

 

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

 

 

 

    	 	6	 

     

    

 

4                    
CREATION OF SECURITY INTEREST

 

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

 

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

 

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

 

4.2               
Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein
is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted
Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement).
If Borrower shall acquire a commercial tort claim in an amount in excess of One Hundred Thousand Dollars ($100,000) (of, if an
Event of Default exists, any amount), Borrower shall promptly notify Bank in a writing signed by Borrower of the general details
thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement,
with such writing to be in form and substance reasonably satisfactory to Bank.

 

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

 

 

 

    	 	7	 

     

    

 

5                    
REPRESENTATIONS AND WARRANTIES

 

Borrower represents
and warrants as follows:

 

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

 

The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material
Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination
or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound
or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental
Authority (except such Governmental Approvals which have already been obtained and are in full force and effect), or (v) conflict
with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material
agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound
in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

 

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

 

The Collateral is not
in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None
of the components of the Collateral with an aggregate value of Two Hundred-Fifty Thousand Dollars ($250,000) or more (in the aggregate
for all Collateral at all such locations) shall be maintained at locations other than as provided in the Perfection Certificate
or as permitted pursuant to Section 7.2.

 

All Inventory is in
all material respects of good and marketable quality, free from material defects, other than (i) Inventory covered by manufacturer
warranties, (ii) Inventory in the process of being refurbished for sale, and (iii) to the extent Borrower maintains adequate reserves.

 

 

 

    	 	8	 

     

    

 

Borrower is the sole
owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers,
distributors and resellers in the ordinary course of business, (b) over-the-counter and open source software that is commercially
available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each
Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part
of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been
judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any
part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be
expected to have a material adverse effect on Borrower’s business.

 

Except as noted on
the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

 

5.3               
Accounts Receivable.

 

(a)                
For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account
shall be an Eligible Account.

 

(b)               
All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible
Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s
Books are genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each
Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower
has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in
any Borrowing Base Report. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments,
and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable
in accordance with their terms.

 

5.4               
Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened
in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Two Hundred
Fifty Thousand Dollars ($250,000).

 

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

 

5.6               
Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs)
exceeds the fair value of Borrower’s liabilities; 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.

 

5.7               
Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by
an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its
important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).
Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law
the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s
or any of its Subsidiaries’ 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 of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses
as currently conducted.

 

 

 

    	 	9	 

     

    

 

5.8               
Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity
securities except for Permitted Investments.

 

5.9               
Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state, provincial, and local taxes, assessments, deposits and contributions owed
by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the
aggregate, exceed Two Hundred-Fifty Thousand Dollars ($250,000).

 

To the extent Borrower
defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development
in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested
taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” 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 in excess of Two Hundred-Fifty Thousand Dollars ($250,000). 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.

 

5.10            
Use of Proceeds. Borrower shall use of the Term Loan Advance solely to finance the Intrinsyc Acquisition. Borrower shall
use the proceeds of all other Credit Extensions as working capital and to fund its general business requirements and not for personal,
family, household or agricultural purposes.

 

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

 

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

 

6                    
AFFIRMATIVE COVENANTS

 

Borrower shall do all
of the following:

 

6.1               
Government Compliance.

 

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

 

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

 

 

 

    	 	10	 

     

    

 

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

 

(a)                
within seven (7) days after the end of each month, a Borrowing Base Report (and any schedules related thereto and including
any other information requested by Bank with respect to Borrower’s Accounts), with accounts receivable ledger agings and
client list;

 

(b)               
within thirty (30) days after the end of each month, (i) monthly accounts receivable agings, aged by invoice date, (ii)
monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (iii) monthly reconciliations
of accounts receivable agings (aged by invoice date), transaction reports, and general ledger;

 

(c)                
as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower’s consolidated operations for such month certified by a Responsible
Officer and in a form acceptable to Bank (the “Monthly Financial Statements”);

 

(d)               
within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed
Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance
with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants
set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement
that at the end of such month there were no held checks;

 

(e)                
within the earlier of thirty (30) days after (i) the end of each fiscal year of Borrower or (ii) approval by the Board,
and contemporaneously with any updates or amendments thereto, (y) annual operating budgets (including income statements, balance
sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (z) annual financial projections for the
following fiscal year (on a quarterly basis), in each case as approved by the Board, together with any related business forecasts
used in the preparation of such annual financial projections;

 

(f)                 
[Intentionally Omitted];

 

(g)               
at all times that either Borrower is subject to the reporting requirements under the Exchange Act, within five (5) days
of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower and/or any Guarantor
with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange,
or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the
extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered,
shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s
website on the internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing
(which may be by electronic mail) of the posting of any such documents;

 

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

 

(i)                 
prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could
result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Two Hundred Fifty Thousand
Dollars ($250,000) or more;

 

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

 

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

 

 

 

    	 	11	 

     

    

 

6.3               
Accounts Receivable.

 

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

 

(b)               
Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts in excess of Two Hundred-Fifty
Thousand Dollars ($250,000). Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment
in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided
to Bank; (ii) no Event of Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements
and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.

 

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

 

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

 

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

 

(f)                 
Verifications; Confirmations; Credit Quality; Notifications. Bank may, from time to time, (i) verify and confirm
directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name
of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such
Account and/or (ii) conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit.

 

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

 

 

 

    	 	12	 

     

    

 

6.4               
Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from
the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business
Day after receipt by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms of Section
6.3(c) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section
9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank
the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction
for an aggregate purchase price of One Hundred Thousand Dollars ($100,000) or less (for all such transactions in any fiscal year).
Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section
6.4 limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

 

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

 

6.6               
Access to Collateral; Books and Records. At reasonable times, on three (3) Business Days’ notice (provided no
notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect
the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits shall be conducted
no more often than once every twelve (12) months (or more frequently as Bank in its sole discretion determines that conditions
warrant) unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often
as Bank shall determine is necessary. The foregoing inspections and audits shall be conducted at Borrower’s expense and the
charge therefor shall be One Thousand Dollars ($1,000) per person per day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an
audit more than eight (8) days in advance, and Borrower cancels or seeks to or reschedules the audit with less than eight (8) days
written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of Two Thousand
Dollars ($2,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of
the cancellation or rescheduling.

 

6.7               
Insurance.

 

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

 

(b)               
Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.
Notwithstanding the foregoing, (i) so long as no Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy up to Two Hundred-Fifty Thousand Dollars ($250,000) in the aggregate for all losses
under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any
such replaced or repaired property (A) shall be of equal or like value as the replaced or repaired Collateral and (B) shall be
deemed Collateral in which Bank has been granted a first priority security interest, and (ii) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be payable to
Bank on account of the Obligations.

 

 

 

    	 	13	 

     

    

 

(c)                
At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments.
Each provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued
by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any
such policy or policies shall be canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any
amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain
such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.

 

6.8               
Accounts.

 

(a)                
Maintain its and all of its Subsidiaries’ primary operating and other deposit accounts and the Cash Collateral Account
with Bank and Bank’s Affiliates, which accounts shall represent at least eighty-five percent (85%) of the dollar value of
Borrower’s and such Subsidiaries accounts at all financial institutions.

 

(b)               
As soon as possible, but no later than the date that is ninety (90) days after the Effective Date, Borrower shall obtain
any business credit cards, cash management services, or merchant processing services exclusively from Bank.

 

(c)                
In addition to and without limiting the restrictions in (a), Borrower shall provide Bank five (5) days prior written notice
before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates.

 

6.9               
Financial Covenants. Maintain, at all times, on a consolidated basis:

 

(a)                
Maximum Leverage Ratio. Measured as of the last day of each calendar quarter beginning with the calendar quarter
ending December 31, 2019, a maximum Leverage Ratio of (i) 3.0 to 1.0 for each calendar quarter ending December 31, 2019 through
and including December 31, 2020, (ii) 2.5 to 1.0 for each calendar quarter ending March 31, 2021 through and including December
31, 2021, and (iii) 2.0 to 1.0 for each calendar quarter ending after January 1, 2022.

 

(b)               
Minimum Cash. Measured as of the last day of each month, a balance of unrestricted cash and Cash Equivalents at Bank,
Bank’s Affiliates and any other Collateral Accounts subject to a Control Agreement in favor of Bank in an aggregate amount
equal to at least Three Million Dollars ($3,000,000).

 

6.10            
Protection of Intellectual Property Rights.

 

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

 

(b)               
Provide written notice to Bank within thirty (30) days of entering or becoming bound by any Restricted License (other than
over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain
the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral”
and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such
Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of a liquidation
of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement and the
other Loan Documents.

 

 

 

    	 	14	 

     

    

 

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            
Online Banking.

 

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

 

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

 

6.13            
Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections
7.3 and 7.7 hereof, within thirty (30) days of the date Borrower forms any direct or indirect Subsidiary or acquires any direct
or indirect Subsidiary after the Effective Date (including, without limitation, in connection with the Intrinsyc Acquisition or
pursuant to a Division), Borrower shall (a) cause such new Domestic or Canadian Subsidiary to provide to Bank a joinder to this
Agreement to become a co-borrower hereunder, or a Guaranty to become a Guarantor hereunder, at Bank’s discretion, together
with such appropriate financing statements and/or Control Agreements, all in form and substance reasonably satisfactory to Bank
(including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and powers and financing statements, pledging all
of the direct or beneficial ownership interest in such new Subsidiary (or, in the case of any new Foreign Subsidiary, 65% of the
voting stock of such Subsidiary) in form and substance reasonably satisfactory to Bank; and (c) provide to Bank all other documentation
in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion
is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement,
or instrument executed or issued pursuant to this Section 6.13 shall be a Loan Document.

 

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

 

7                    
NEGATIVE COVENANTS

 

Borrower shall not
do any of the following without Bank’s prior written consent:

 

7.1               
Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (including, without limitation, pursuant
to a Division) (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary
course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance
of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money
or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; (f) of non-exclusive
licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (g) from any Subsidiary
to Borrower and (h) other Transfers in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate
per fiscal year.

 

 

 

    	 	15	 

     

    

 

7.2               
Changes in Business, Management, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to
engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably
related thereto; (b) liquidate or dissolve except for the liquidation or dissolution of any non-operating Subsidiary of Borrower
that is not a Guarantor or co-Borrower hereunder with nominal assets and nominal liabilities, so long as all of the assets of such
liquidating or dissolving Subsidiary are transferred to a Borrower or Guarantor; (c) fail to provide notice to Bank of any Key
Person departing from or ceasing to be employed by Borrower within five (5) Business Days after his or her departure from Borrower;
or (d) permit or suffer any Change in Control, provided that only advance written notice of any Change in Control shall be required
so long as this Agreement is terminated and all Obligations (other than inchoate indemnity obligations or Bank Services that have
been cash collateralized to the satisfaction of Bank) are indefeasibly satisfied in full in cash concurrently with the closing
of the transaction effectuating such Change in Control.

 

Borrower shall not,
without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Two Hundred-Fifty Thousand Dollars ($250,000) in Borrower’s
assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred-Fifty
Thousand Dollars ($250,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection
Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal
name, (5) change its chief executive office or its registered office, or (6) change any organizational number (if any) assigned
by its jurisdiction of organization. If Borrower intends to add any new offices or business locations, including warehouses, containing
in excess of Two Hundred-Fifty Thousand Dollars ($250,000) of Borrower's assets or property, then the landlord of any such new
offices or business locations, including warehouses, shall execute and deliver a landlord consent in form and substance satisfactory
to Bank. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two
Hundred-Fifty Thousand Dollars ($250,000) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing
both the Collateral and the location to which Borrower intends to deliver the Collateral, then such bailee shall execute and deliver
a bailee agreement in form and substance satisfactory to Bank.

 

7.3               
Mergers, Amalgamations, or Acquisitions. Merge, amalgamate or consolidate, or permit any of its Subsidiaries to merge,
amalgamate or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary or pursuant
to a Division), other than Permitted Acquisitions. A Subsidiary may merge, amalgamate or consolidate into another Subsidiary or
into a Credit Party.

 

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

 

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

 

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

 

7.7               
Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase
any capital stock, provided that Borrower may (i) convert any of its convertible securities into other securities pursuant to the
terms of such convertible securities or otherwise in exchange thereof, (ii) pay dividends solely in common stock; and (iii) repurchase
the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist
at the time of any such repurchase and would not exist after giving effect to any such repurchase, provided that the aggregate
amount of all such repurchases does not exceed One Hundred Thousand Dollars ($100,000) per fiscal year; or (b) directly or indirectly
make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit
any of its Subsidiaries to do so.

 

 

 

    	 	16	 

     

    

 

7.8               
Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable
terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated
Person except for sales of inventory in the ordinary course of business on fair and reasonable terms consistent with past practices.

 

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

 

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

 

7.11            
Subsidiary Assets. Permit the aggregate value of all of the assets held at Borrower’s Subsidiaries and Affiliates
that are not co-borrowers or Guarantors hereunder to exceed ten percent (10%) of the consolidated asset value of Borrower and all
of its Subsidiaries and Affiliates at any time.

 

7.12            
Acquisition Account. Use or transfer cash or Cash Equivalents funded by Bank into Borrower’s account no. XXX-XXX-9826
in any way other than to fund up to Six Million Dollars ($6,000,000) of the purchase price paid by Borrower
to Intrinsyc in connection with the Intrinsyc Acquisition.

 

8                    
EVENTS OF DEFAULT

 

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

 

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

 

8.2               
Covenant Default.

 

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

 

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

 

 

 

    	 	17	 

     

    

 

8.3               
Material Adverse Change. A Material Adverse Change occurs;

 

8.4               
Attachment; Levy; Restraint on Business. 

 

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

 

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

 

8.5               
Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes
insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and is not dismissed
or stayed within forty-five (45) days (but no Credit Extensions shall be made while any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);

 

8.6               
Other Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or
parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity
of any Indebtedness in an amount individually or in the aggregate in excess of Two Hundred-Fifty Thousand Dollars ($250,000); or
(b) any breach or default by Borrower or Guarantor, the result of which could have a material adverse effect on Borrower’s
or any Guarantor’s business; provided, however, that the Event of Default under this Section 8.6 caused by the occurrence
of a breach or default under such other agreement shall be cured or waived for purposes of this Agreement upon Bank receiving written
notice from the party asserting such breach or default of such cure or waiver of the breach or default under such other agreement,
if at the time of such cure or waiver under such other agreement (x) Bank has not declared an Event of Default under this Agreement
and/or exercised any rights with respect thereto; (y) any such cure or waiver does not result in an Event of Default under any
other provision of this Agreement or any Loan Document; and (z) in connection with any such cure or waiver under such other agreement,
the terms of any agreement with such third party are not modified or amended in any manner which could in the good faith business
judgment of Bank be materially less advantageous to Borrower or any Guarantor;

 

8.7               
Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in
an amount, individually or in the aggregate, of at least Two Hundred-Fifty Thousand Dollars ($250,000) (not covered by independent
third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by
any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged,
satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to
the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge,
stay, or bonding of such fine, penalty, judgment, order or decree);

 

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

 

 

 

    	 	18	 

     

    

 

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

 

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

 

8.11            
Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an
adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority
that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result
in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission,
suspension, modification or non-renewal (i) causes, or could reasonably be expected to cause, a Material Adverse Change, or (ii)
adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable
jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to have a Material
Adverse Change on the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval
in any other jurisdiction.

 

9                    
BANK’S RIGHTS AND REMEDIES

 

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

 

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

 

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

 

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

 

(d)               
terminate any FX Contracts;

 

 

 

    	 	19	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)                
obtain from any court of competent jurisdiction an order for the sale or foreclosure of any or all of the Collateral;

 

(f)                 
appoint in writing a receiver or receiver and manager (a “Receiver”) for all or any part of the Collateral
who shall be vested with all of the Bank’s rights and remedies under this Agreement, at law or in equity. Any such Receiver,
with respect to responsibility for its acts, shall, to the extent permitted by applicable law, be deemed to the agent of Borrower
and not the Bank;

 

(g)               
obtain from any court of competent jurisdiction an order for the appointment of a Receiver of a Borrower or of any or all
of the Collateral;

 

(h)               
realize on any or all of the Collateral and sell, lease, assign, give options to purchase, or otherwise dispose of and deliver
any or all of the Collateral (or contract to do any of the above), in one or more parcels at any public or private sale, on such
terms and conditions as the Bank may deem advisable and at such prices as it may deem best; and

 

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

 

 

 

    	 	20	 

     

    

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	21	 

     

    

 

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.

 

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

 

10                 
NOTICES

 

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

 

	If to Borrower:	Lantronix, Inc.
	 	7535 Irvine Center Drive, Suite 100
	 	Irvine, CA 92618
	 	Attn: Jeremy Whitaker, CFO
	 	Email:
	 	Website URL: www.lantronix.com
	 	 
	With a copy
to:	Lantronix, Inc.
	 	7535 Irvine
Center Drive, Suite 100
	 	Irvine, CA
92618
	 	Attn: Kurt
E. Scheuerman, Vice President & General Counsel
	 	Email: legal@lantronix.com
	 	 
	If to Bank:	Silicon
Valley Bank
	 	4370 La Jolla Village Drive, Suite 1050
	 	San Diego, CA 92122
	 	Attn: Andrew Skalitzky
	 	Email: askalitzky@svb.com

 

 

 

    	 	22	 

     

    

 

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

 

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

 

This Section 11 shall
survive the termination of this Agreement.

 

 

 

    	 	23	 

     

    

 

12                 
GENERAL PROVISIONS

 

12.1            
Termination Prior to Maturity Date; Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long
as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other obligations which, by their
terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized
in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date and
the Term Loan Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank.
Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue
to survive notwithstanding this Agreement’s termination. No termination of this Agreement shall in any way affect or impair
any right or remedy of Bank, not shall any such termination relieve Borrower of any Obligation to Bank, until all of the Obligations
have been paid and performed in full. Those Obligations that are expressly specified in this Agreement as surviving this Agreement’s
termination shall continue to survive notwithstanding this Agreement’s termination and payment in full of the Obligations
then outstanding.

 

12.2            
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 or obligations under it without Bank’s prior written consent
(which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower,
to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations,
rights, and benefits under this Agreement and the other Loan Documents.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	24	 

     

    

 

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, is an original, and all taken together, constitute one Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	25	 

     

    

 

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

 

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

 

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

 

12.18        
Patriot Act. Bank hereby notifies Co-Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required
to obtain, verify and record information that identifies Co-Borrowers and each of their Subsidiaries, which information includes
the names and addresses of Co-Borrowers and each of their Subsidiaries and other information that will allow Bank, as applicable,
to identify Co-Borrowers and each of their Subsidiaries in accordance with the USA PATRIOT Act.

 

13                 
DEFINITIONS

 

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

 

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

 

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

 

“Administrator”
is an individual that is named:

 

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

 

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

 

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

 

 

 

    	 	26	 

     

    

 

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

 

“Agreement”
is defined in the preamble hereof.

 

“Anniversary
Fee” is defined in Section 2.4(b).

 

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

 

“Availability
Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the
outstanding principal balance of any Advances.

 

“Bank”
is defined in the preamble hereof.

 

“Bank Entities”
is defined in Section 12.9.

 

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

 

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

 

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

 

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

 

“Borrower”
is defined in the preamble hereof.

 

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

 

 

 

    	 	27	 

     

    

 

“Borrowing
Base” is (a) eighty percent (80%) of Eligible Accounts plus, without duplication, (b) the lesser of (i) eighty percent
(80%) of Eligible Foreign Accounts or (ii) Two Million Dollars ($2,000,000), each as determined by Bank from Borrower’s most
recent Borrowing Base Report (and as may subsequently be updated by Bank based upon information received by Bank including, without
limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Report); provided, however, that Bank
has the right to decrease the foregoing amount and percentages in its good faith business judgment to mitigate the impact of events,
conditions, contingencies, or risks which may adversely affect the Collateral or its value.

 

“Borrowing
Base Report” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from
time to time.

 

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

 

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

 

“Canadian
Subsidiary” means a Subsidiary organized under the laws of Canada or any province thereof.

 

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

 

“Cash Equivalents”
means (a) marketable direct obligations issued or unconditionally guaranteed by (i) the United States or any agency or any State,
or (ii) Canada or any agency or any Province thereof, 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 Standard
& Poor’s Ratings Group, Moody’s Investors Service, Inc., or DBRS; (c) Bank’s certificates of deposit issued
maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of
which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.

 

“Change in
Control” means (a) at any time after the Effective Date, any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options
or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly
or indirectly, of twenty-five percent (25%) or more of the ordinary voting power for the election of directors of Borrower (determined
on a fully diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture capital
or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven
(7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction;
(b) during any period of twelve (12) consecutive months, a majority of the members
of the Board cease to be composed of individuals (i) who were members of the Board on the first day of such period, (ii) whose
election or nomination to the Board was approved by individuals referred to in clause (i) above constituting at the time of
such election or nomination at least a majority of the Board or (iii) whose election or nomination to the Board was approved
by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least
a majority of the Board; or (c) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly,
one hundred percent (100%) of each class of outstanding capital stock of each subsidiary of Borrower free and clear of all Liens
(except Liens created by this Agreement).

 

 

 

    	 	28	 

     

    

 

“Claims”
is defined in Section 12.3.

 

“Code”
is (a) with respect to any assets located in the United States, the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein
or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions
of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral
is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code”
shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions,
and (b) with respect to any assets located in Canada, the PPSA; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on
any Collateral is governed by the PPSA or equivalent legislation in effect in a provincial jurisdiction other than British Columbia,
including, without limitation, the Civil Code of Quebec, the term “Code” shall mean the PPSA or equivalent legislation
as enacted and in effect in such other province solely for purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such provisions.

 

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

 

“Collateral
Account” is any Deposit Account, Securities Account, or Commodity Account of a Borrower or Guarantor.

 

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

 

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

 

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

 

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

 

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

 

“Credit Extension”
is any Advance, Term Loan Advance, Letter of Credit, FX Contract, any Overadvance, or any other extension of credit by Bank for
Borrower’s benefit.

 

 

 

    	 	29	 

     

    

 

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

 

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

 

“Designated
Deposit Account” is the account number ending 468 (last three digits) maintained by Borrower with Bank (provided, however,
if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained
with Bank as chosen by Bank).

 

“Division”
means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the
dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated
under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, or
any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership
or other entity.

 

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

 

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

 

“Domestic
Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the
District of Columbia.

 

“EBITDA”
shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense, plus (d) tax expense based on income, profits or capital, including federal, foreign, state,
franchise and similar taxes (and for the avoidance of doubt, specifically excluding any sales taxes or any other taxes held in
trust for a Governmental Authority), plus (e) with respect to consummated Permitted Acquisitions (or up to up to Five Hundred Thousand
Dollars ($500,000) in the aggregate in connection with unconsummated Permitted Acquisitions), fees or charges owed to any Person
for services performed by such Person in connection with such Permitted Acquisition and other out of pocket costs and expense incurred
in connection with such Permitted Acquisition, in each case incurred prior to or within 180 days after the consummation (or, in
the case of unconsummated transactions, the proposed date of consummation) of such Permitted Acquisition, plus (f) with respect
to any Permitted Acquisitions: (1) non-cash purchase accounting adjustments, including, without limitation, a dollar for dollar
adjustment for that portion of revenue that would have been recorded in the relevant period had the balance of deferred revenue
(unearned income) recorded on the closing balance sheet and before application of purchase accounting not been adjusted downward
to fair value to be recorded on the opening balance sheet in accordance with GAAP purchase accounting rules; and (2) non-cash adjustments
in accordance with GAAP purchase accounting rules under FASB Statement No. 141 and EITF Issue No. 01-3, in the event that such
an adjustment is required by independent auditors, in each case, as determined in accordance with GAAP, plus (g) reasonable and
customary fees, costs, charges and expenses, in respect of earn-outs incurred in connection with any Permitted Acquisition to the
extent permitted to be incurred under this Agreement that are required by the application of FAS 141R to be and are expensed by
Borrower and its Subsidiaries, plus (h) acquisition-related costs, restructuring charges and lease exit costs (1) incurred in the
first, second and third quarters of the 2019 calendar year in an aggregate amount not to exceed Three Million Dollars ($3,000,000);
(2) incurred in connection with the Intrinsyc Acquisition in an aggregate amount not to exceed Five Million Dollars ($5,000,000)
and (3) otherwise incurred in connection with (A) planned severance activities in the fourth quarter of the 2019 calendar year,
(B) planned severance related to the Maestro acquisition, and (C) any Permitted Acquisition after consummation of the Intrinsyc
Acquisition in an aggregate amount under this clause (3) not to exceed One Million Dollars ($1,000,000), plus (i) non-cash compensation
expense (including deferred non-cash compensation expense), arising from the sale or issuance of equity interests, the granting
of stock options, and the granting of stock appreciation rights and similar arrangements (including any repricing, amendment, modification,
substitution, or change of any such equity interests, stock option, stock appreciation rights, or similar arrangements) minus the
amount of any such expenses or charges when paid in cash to the extent not deducted in the computation of net earnings (or loss),
plus (j) up to Five Hundred Thousand Dollars ($500,000) in the aggregate of non-cash losses on sales of fixed assets or write downs
of fixed or intangible assets, plus (k) the amount of net cost savings, net operating expense reductions and other net operating
improvements and synergies projected by Borrower in good faith to be realized (calculated on a pro forma basis) as a result of
actions taken or to be taken in connection with any acquisition or disposition by the Borrower or any of its Subsidiaries, net
of the amount of actual benefits realized during such period that are otherwise included in the calculation of EBITDA from such
actions; provided, however, that the dollar amount of the value of the items set forth in this clause (k) EBITDA addback shall
not, at any time, exceed fifteen percent (15%) of the dollar amount of total EBITDA, plus (l) other non-cash items acceptable to
Bank in its sole discretion.

 

 

 

    	 	30	 

     

    

 

“Effective
Date” is defined in the preamble hereof.

 

“Eligible
Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet
all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance
with Section 6.3(f) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its good faith
business judgment. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and
to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall
not include:

 

(a)                
Accounts (i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii)
that are intercompany Accounts;

 

(b)               
Accounts that the Account Debtor has not paid within ninety (90) days of invoice date regardless of invoice payment period
terms;

 

(c)                
Accounts with credit balances over ninety (90) days from invoice date;

 

(d)               
Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have
not been paid within ninety (90) days of invoice date;

 

(e)                
Accounts owing from an Account Debtor (i) which does not have its principal place of business in the United States or Canada
or (ii) whose billing address (as set forth in the applicable invoice for such Account) is not in the United States or Canada;

 

(f)                 
Accounts billed from and/or payable to Borrower outside of the United States or Canada (sometimes called foreign invoiced
accounts);

 

(g)               
Accounts in which Bank does not have a first priority, perfected security interest under all applicable laws;

 

(h)               
Accounts billed and/or payable in a Currency other than Dollars, Canadian Dollars, Euros, Great British Pounds and/or Japanese
Yen;

 

(i)                 
Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account
Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the exception of customary credits, adjustments and/or discounts given to an Account Debtor
by Borrower in the ordinary course of its business;

 

(j)                 
Accounts with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising
and other similar marketing credits, unless otherwise approved by Bank in writing;

 

(k)               
Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality
thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment
of Claims Act of 1940, as amended;

 

(l)                 
Accounts with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of
such customer deposit and/or upfront payment;

 

 

 

    	 	31	 

     

    

 

(m)              
Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”,
“sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

 

(n)               
Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes
called memo billings or pre-billings);

 

(o)               
Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or
due according to completion or fulfillment requirements (sometimes called contracts accounts receivable, progress billings, milestone
billings, or fulfillment contracts);

 

(p)               
Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s
satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage
billings);

 

(q)               
Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

 

(r)                 
Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor
unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges
that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and
(iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

 

(s)                
Accounts for which the Account Debtor has not been invoiced;

 

(t)                 
Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s
business;

 

(u)               
Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days (including Accounts
with a due date that is more than ninety (90) days from invoice date);

 

(v)               
Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

 

(w)              
Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

 

(x)               
Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount),
or if the Account Debtor is subject to an Insolvency Proceeding (whether voluntary or involuntary), or becomes insolvent, or goes
out of business;

 

(y)               
Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts,
for the amounts that exceed that percentage, unless Bank approves in writing; and

 

(z)                
Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation,
accounts represented by “refreshed” or “recycled” invoices.

 

 

 

    	 	32	 

     

    

 

“Eligible
Foreign Accounts” means Accounts (a) owing from an Account Debtor (i) which does not have its principal place of business
in the United States or Canada, or (ii) whose billing address (as set forth in the applicable invoice for such Account) is not
in the United States or Canada, but which is otherwise an Eligible Account, and (b) is due and owing from of one of the following
Account Debtors: Nissin Systems, Atlantik Elektronik, Atlantik Systeme GmbH, Ingram Micro, Jade Solutions, Acal PLC, Alpha Micro,
Arrow Electronics, or Tech Data; or which is otherwise approved in writing by Bank in its good faith business judgment (provided
that Accounts owing to Chinese subsidiaries, affiliates or brother/sister companies of the foregoing approved account debtors shall
not be considered eligible accounts hereunder).

 

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

 

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

 

“Event of
Default” is defined in Section 8.

 

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

 

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

 

“Foreign Subsidiary”
means any Subsidiary which is not a Domestic Subsidiary or a Canadian Subsidiary.

 

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

 

“Funded Debt”
means (i) all Obligations owing from Borrower to Bank, but specifically excluding outstanding Bank Expenses, the Anniversary Fee
and any amounts owing to Bank in connection with outstanding Bank Services and (ii) all other funded Indebtedness of Borrower including
in connection with capital leases.

 

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

 

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

 

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

 

 

 

    	 	33	 

     

    

 

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

 

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

 

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

 

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

 

“Holding”
is defined in the preamble hereof.

 

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

 

“Indemnified
Person” is defined in Section 12.3.

 

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

 

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

 

(a)                
its Copyrights, Trademarks and Patents;

 

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

 

(c)                
any and all source code;

 

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

 

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

 

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

 

 

 

    	 	34	 

     

    

 

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

 

“Intrinsyc”
means Intrinsyc Technologies Corporation (“Intrinsyc Parent”) and all of its Subsidiaries.

 

“Intrinsyc
Acquisition” means Lantronix, Inc.’s acquisition of all of the outstanding shares of Intrinsyc pursuant to that
certain Arrangement Agreement by and between Lantronix, Inc. and Intrinsyc dated as of October 30, 2019 (the “Intrinsyc
Purchase Agreement”).

 

“Intrinsyc
Taiwan” means Intrinsyc Technologies Canada (Taiwan) Ltd., a Canadian corporation.

 

“Intrinsyc
US” means Intrinsyc Software (USA), Inc.

 

“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 and any documents of title representing any of the above.

 

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

 

“Key Person”
is each of Borrower’s (a) Chief Executive Officer, who is Paul Pickle as of the Effective Date, and (b) Chief Financial Officer,
who is Jeremy Whitaker as of the Effective Date.

 

“Lantronix”
is defined in the preamble hereof.

 

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

 

“Leverage
Ratio” means a ratio of (a) Funded Debt to (b) Borrower’s and its Subsidiaries’ consolidated trailing twelve
(12) month EBITDA; provided, however, beginning on the date that Borrower consummates the Intrinsyc Acquisition and joins Intrinsyc
Parent, Intrinsyc Taiwan and Intrinsyc US as co-borrowers under this Agreement, calculations of EBITDA for purposes of determining
compliance with the Leverage Ratio covenant shall include all EBITDA generated by Intrinsyc.

 

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

 

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

 

 

 

    	 	35	 

     

    

 

“Material
Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or
in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise)
of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.

 

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

 

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

 

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

 

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

 

“Overadvance”
is defined in Section 2.2.

 

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

 

“Payment/Advance
Form” is that certain form in the form attached hereto as Exhibit C.

 

“Payment Date”
is (a) with respect to the Term Loan Advance, the first (1st) calendar day of each month and (b) with respect to Advances, the
last calendar day of each month.

 

“Perfection
Certificate” is defined in Section 5.1.

 

 

 

    	 	36	 

     

    

 

“Permitted
Acquisition” (A) the Intrinsyc Acquisition so long as Borrower can demonstrate to Bank’s satisfaction that Borrower
will continue to have at least Four Million Five Hundred Thousand Dollars ($4,500,000) in cash and Cash Equivalents on a hand on
a pro-forma basis after all cash consideration is paid by Borrower to Intrinsyc in connection with the Intrinsyc acquisition, and
(B) any transaction or series of related transactions with any other Person whereby Borrower merges or consolidates with such Person,
acquires all of the ownership interests in such Person, or acquires all or substantially all of the assets of such Person, and
that meets the following requirements: (a) the credit risk to Bank, in its reasonable discretion, shall not be increased as
a result of such Permitted Acquisition; (b) Bank shall receive at least ten (10) Business Days’ prior written notice
of each such Permitted Acquisition, which notice shall include a reasonably detailed description of such Permitted Acquisition,
and such other financial information, financial analysis, documentation or other information relating to such Permitted Acquisition
as Bank shall reasonably request; (c) the total cash consideration (including, without limitation, any earn-out payment obligations)
for all Permitted Acquisitions (other than the Intrinsyc Acquisition) does not in the aggregate exceed Ten Million Dollars ($10,000,000)
during the term of this Agreement; (d) no Event of Default has occurred and is continuing or would exist after giving effect to
each such Permitted Acquisition, and Borrower shall demonstrate compliance, both before and after (on a pro forma basis) giving
effect to such Permitted Acquisition, with the terms of this Agreement (including without limitation, compliance with the financial
covenants set forth in this Agreement); (e) Borrower is the surviving legal entity; (f) such Permitted Acquisition shall only
involve assets located in the United States and comprising a business, or those assets of a business, in substantially the same
business or lines of business in which Borrower is engaged; (g) all Permitted Acquisitions must be non-hostile in nature and accretive
on a consolidated basis; (h) such transaction shall be consensual and shall have been approved by the target’s governing
board; (i) all transactions in connection therewith shall be consummated in accordance with applicable law; (j) no additional Indebtedness
shall be incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and target after giving effect
to such Permitted Acquisition; (k) the entity or assets acquired in such Permitted Acquisition shall not be subject to any Lien
other than Permitted Liens; (l) if the target is not merged with and into Borrower then, within twenty (20) days following the
consummation of such Permitted Acquisition, Borrower and the target shall have executed such documents and taken such actions as
may be required under Section 6.13; and (m) no Advances shall be outstanding at the time of such Permitted Acquisition or after
giving effect thereto, and no Advances shall be available thereafter until such time as Bank, in its sole discretion, has provided
Borrower with written notice that it may again request Advances.

 

“Permitted
Indebtedness” is:

 

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

 

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

 

(c)                
Subordinated Debt;

 

(d)               
unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

 

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

 

(f)                 
Indebtedness secured by Permitted Liens;

 

(g)               
Indebtedness in connection with Permitted Investments;

 

(h)               
contingent liabilities in respect of any earn-outs incurred in connection with the consummation of one or more Permitted
Acquisitions (subject at all times to the consideration limitations set forth in the definition of Permitted Acquisitions),

 

 

 

    	 	37	 

     

    

 

(i)                 
unsecured Indebtedness incurred in the ordinary course of business due and owing in connection with credit cards, credit
card processing services, debit cards, stored value cards, or commercial cards (including so-called “purchase cards”,
“procurement cards” or “p-cards”) (collectively, the “Credit Card Services”) provided
by financial institutions other than Bank in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000), but, commencing
ninety (90) days after the Effective Date, only if Bank cannot offer substantially equivalent terms in connection with its Credit
Card Services program;

 

(j)                 
extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through
(h) 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;

 

(k)               
unsecured Indebtedness owing from Lantronix to Intrinsyc in connection with that certain “Loan” in the amount
of Two Million Five Hundred Thousand Dollars ($2,500,000) to be made by Intrinsyc to Lantronix no later than one (1) Business Day
prior to the “Effective Date” (as defined in the Intrinsyc Purchase Agreement) on terms and conditions reasonably acceptable
to Bank; and

 

(l)                 
other unsecured Indebtedness in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) at any one
time outstanding.

 

“Permitted
Investments” are:

 

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

 

(b)               
Investments consisting of Cash Equivalents;

 

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

 

(d)               
Investments consisting of deposit accounts (but only to the extent that Borrower or any of its Subsidiaries is permitted
to maintain such accounts pursuant to Section 6.8 of this Agreement) in which, solely with respect to deposit accounts of Borrower
or a Guarantor, Bank has a first priority perfected security interest;

 

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

 

(f)                 
Investments (i) by a co-Borrower or Guarantor hereunder in another co-Borrower or Guarantor hereunder, (ii) by Borrower
in Subsidiaries not to exceed Six Hundred Fifty Thousand Dollars ($650,000) in the aggregate in any calendar month and (iii) by
Subsidiaries in other Subsidiaries or in Borrower;

 

(g)               
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 the Board;

 

(h)               
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;

 

 

 

    	 	38	 

     

    

 

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

 

(j)                 
deposits of cash made prior to the Effective Date in the ordinary course of business to secure performance of operating
leases (other than Indebtedness for borrowed money) in an aggregate amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000);
and

 

(k)               
other Investments not otherwise permitted by Section 7.7 not exceeding Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate in any twelve-month period.

 

“Permitted
Liens” are:

 

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

 

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

 

(c)                
purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment
securing no more than Fifty Thousand Dollars ($50,000) in the aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

 

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

 

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

 

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

 

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

 

 

 

    	 	39	 

     

    

 

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

 

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

 

(j)                 
Liens on up to Three Hundred Fifty Thousand Dollars ($350,000) of deposits of cash made prior to the Effective Date in the
ordinary course of business to secure performance of operating leases; and

 

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

 

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

 

“PPSA”
means the Personal Property Security Act (British Columbia) as amended and as may be further amended and in effect from
time to time.

 

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

 

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

 

“Receiver”
is defined in Section 9.1(f).

 

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

 

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

 

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

 

 

 

    	 	40	 

     

    

 

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

 

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

 

“Revolving
Line” is an aggregate principal amount equal to Six Million Dollars ($6,000,000).

 

“Revolving
Line Maturity Date” is November __, 2021.[1]

 

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

 

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

 

“Specified
Affiliate” is any Person (a) more than ten percent (10%) of whose aggregate issued and outstanding equity or ownership
securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower,
and/or (b) whose equity or ownership securities or interests representing more than ten percent (10%) of such Person’s total
outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.

 

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

 

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

 

“Term Loan
Advance” is defined in Section 2.1.2(a) of this Agreement.

 

“Term Loan
Maturity Date” is December 1, 2023.

 

“Trademarks”
means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

“Transfer”
is defined in Section 7.1.

 

[Balance of Page
Intentionally Left Blank]

 

 

 

[1] 24
months from the Effective Date. 

 

 

 

    	 	41	 

     

    

 

IN WITNESS WHEREOF,
this Agreement and all documents executed in connection therewith, or relating thereto, have been negotiated, prepared and deemed
to be executed by Borrower in the United States of America. In addition, this Agreement is being executed under the laws of the
State of California as of the Effective Date.

 

	 	BORROWER:
	 	 	 
	 	LANTRONIX, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Jeremy Whitaker
	 	 	 
	 	Name:	 Jeremy Whitaker
	 	 	 
	 	Title:	Chief Financial Officer
	 	 	 
	 	 	 
	 	LANTRONIX HOLDING COMPANY
	 	 	 
	 	 	 
	 	By:	/s/  Jeremy Whitaker
	 	 	 
	 	Name:	 Jeremy Whitaker
	 	 	 
	 	Title:	Chief Financial Officer
	 	 	 
	 	 	 
	 	BANK:	 
	 	 	 
	 	SILICON VALLEY BANK
	 	 	 
	 	 	 
	 	By:	/s/ Andrew Skalitzky
	 	 	 
	 	Name:	Andrew Skalitzky
	 	 	 
	 	Title:	Vice President

 

 

 

[Signature Page to Second Amended
and Restated Loan and Security Agreement]

 

 

 

    	 	42	 

     

    

 

EXHIBIT A - COLLATERAL DESCRIPTION

 

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

 

All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), Intellectual Property, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates
of deposit, guaranteed investment certificates, 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.

 

Notwithstanding the
foregoing, the Collateral does not include (a) more than 65% of the presently existing and hereafter arising issued and outstanding
shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors
or any other matter, (b) rights held under a license that are not assignable by their terms without the consent of the licensor
thereof (but only to the extent such restriction on assignment is enforceable under applicable law); (c) any interest of Borrower
as a lessee under an Equipment lease if Borrower is prohibited by the terms of such lease from granting a security interest in
such lease or under which such an assignment or Lien would cause a default to occur under such lease; provided, however, that upon
termination of such prohibition, such interest shall immediately become Collateral without any action by Borrower or Bank; or (d)
any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual
Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual
Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property,
then the Collateral shall automatically, and effective as of September 30, 2018, include the Intellectual Property to the extent
necessary to permit perfection of Bank’s security interest in such Accounts and such other property of Borrower that are
proceeds of the Intellectual Property.

 

Pursuant to the terms
of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without
Bank’s prior written consent.

 

 

 

 

 

 

 

 

 

    	 	43Equity
Interest Transfer Agreement 

Contract
number: 20190904

 

Party
A: Qianhai DaXingHuaShang Investment (Shenzhen) Co., Ltd.

Address:
Room 201, Building A, No. 1 Qianwan 1st Road, Qianhai Shenzhen-Hong Kong Cooperation Zone, Shenzhen

Unified
Social Credit Code: 91440300MA5DNJAB9E.

Legal
Representative: Yumin Lin

 

Party
B: Xingwen Wang

Address:
*********************

National
ID: *********************

 

Party
C: Fortune Valley Treasures, Inc.

Legal
Representative: Yumin Lin

 

Yunnan
Makaweng Wine & Spirits Co., Ltd. (hereinafter referred to as “Target Company”) is a limited liability company
registered on September 10, 2015 with a registered capital of RMB 5 million, of which Party B holds 51% of equity interests of
the Target Company.

 

According
to the “Company Law of the People’s Republic of China” and the “Contract Law of the People’s Republic
of China”, the three parties have reached an agreement, on the basis of friendly negotiations, equality and mutual benefits,
Party B transfers 51% of its shares equity held in the Target Company to Party A with the following terms and conditions:

 

Article
1: Amount of equity transfer, consideration and shares delivery

 

Party
B shall transfer 51% of the equity of the Target Company it holds to Party A. The consideration for the equity transfer is the
additional shares to be issued by Party C (Stock Symbol: FVTI). The delivery of Party C’s shares to Party B shall be deemed
as completion of delivery obligation of Party A. The actual amount of shares delivered by Party C shall be implemented in accordance
with Article 4 of this Agreement.

 

    	 	1	 

    	 

    

 

Article
2: Registration of shareholding changes

 

Party
B shall cooperate with the Target Company to record the relevant matters of Party A in the shareholders’ register of the
Target Company within 15 days after the effective date of this Agreement. Party B shall cooperate with the Target Company to register
the equity transfer with the registration authority, to change Party A as a new shareholder of the Target Company, sign and provide
all necessary documents related to the equity transfer. Unless causing a breach of this Agreement, Party A shall also make necessary
modifications on the relevant documents according to the requirements of the registration authority.

 

Article
3: Restrictions on the transfer of shares held by Party B

 

The
shares held by Party B shall not be disposed or transferred within three years from the date of delivery by Party A. During the
fourth year from the date of delivery by Party A, the amount of shares disposed by Party B shall not exceed 30% of the total number
of shares it held. During the fifth year from the date of delivery, the amount of shares disposed by Party B shall not exceed
60% of the total number of shares it held.

 

Party
B’s transfer of shares must comply with the provisions of the preceding paragraph and comply with the U.S. laws and requirements
of relevant authorities.

 

Article
4: Management of the Target Company, the delivery of shares and the performance of the Target Company after the equity transfer

 

After
the equity transfer, the Target Company shall set up a board of directors, which consists of five members. The chairman shall
be Xingwen Wang; the directors shall be Yongjun Sheng, Donghui Deng, Haibo Hong, Lin Wei, Jianhua Wang and Shengqian Zhang; the
supervisor of the Target Company shall be Kaihong Lin. The Target Company’s external guarantee, external financing, major
asset disposal, appointment or dismissal of the financial person in charge must be approved by the board of directors.

 

Within
[15] working days after the equity transfer, Party A shall make corresponding amendments to the Articles of Association of the
Target Company and make corresponding changes to the registration authority.

 

Party
A agrees that after the equity transfer, the legal representative of the Target Company will not be changed, and Xingwen Wang
will still be the director, and Xingwen Wang will also serve as the manager of Target Company. Party A has the right to supervise
the operation and management of the Target Company.

 

Party
A and Party B agreed that the net profit of the Target Company in 2020 will be 5 million yuan as the performance target.

 

    	 	2	 

    	 

    

 

The
amount of shares delivered by Party A to Party B is determined according to the net profit of the Target Company’s 2020
annual report. The specific calculation criteria are as follows:

 

Number
of Issuance Shares = A x 51% x 20 x B ÷ C

For
the purpose of the foregoing formula:

 

A
= Audited net annual profit of the Target Company in fiscal year 2020.

 

B
= The daily average middle exchange rate of U.S. Dollars to Chinese Yuan published by the State Administration of Foreign Exchange
of the People’s Republic of China on December 31, 2020.

 

C
= The closing price of FVTI’s common stock on December 31, 2020.

 

Article
5: Representations and warranties 

 

1.
Party B represents and warrants that the transfer of equity interests to Party A under this Agreement has obtained the consent
of the other shareholders of the Target Company, and the other shareholders of the Target Company have promised in writing to
waive their preemptive rights under the same conditions.

 

2.
Party B represents and warrants that it has transferred full rights of equity interests to Party A, and does not set any pledge
or other secured claims and other circumstances that affect the effectiveness of the equity transfer.

 

3.
Party B represents and warrants that the creditor’s rights and legal disputes existing before the signing of this Agreement
are not related to Party A.

 

Articles
6: Confidentiality 

 

1.
In this Agreement, all parties (Parties A, B and C) have an obligation of confidentiality to all information obtained from each
other, including but not limited to information on the operations, financial matters, trade secrets, technology secrets. No party
shall publish or use information unless required by law or judicial authorities.

 

2.
When parties (Parties A, B and C) disclose or publicize matters on this transfer of equity interest, they shall adopt a unified
manner through consultation to ensure that the goodwill of the parties is not impaired. Without the consent of other parties,
no party may publish any statements or languages regarding this transfer of equity interests.

 

Article
7: Expenses

 

The
expenses incurred in this equity transfer shall be borne by Party A, and Party B shall be obliged to cooperate with the above
work progress.

 

Article
8: Breach of contract

 

1.
If Party A breaches any of the representations, warranties and other obligations under this Agreement and causes losses to other
parties, Party A shall compensate the relevant parties for all the financial losses suffered thereby.

 

    	 	3	 

    	 

    

 

2.
If Party B breaches any of the representations, warranties and other obligations under this Agreement, and causes Party A not
be able to transfer the equity interests under this Agreement, Party B shall return to Party A all the considerations received
and compensate Party A for all the financial losses suffered by Party A.

 

Article
9: Delivery of relevant documents

 

In
the process of fulfilling this Agreement, notices should be delivered to the following:

 

Party
A’s recipient: Donghui Deng, Telephone No: ***************

 

Party
A’s address: 13th Floor, Building B1, Qiaofang Road, Qiaoxiang Road, Nanshan District, Shenzhen

 

Party
B’s recipient: Xingwen Wang, Telephone No.: ***************

 

Party’s
B address:

 

Party
C’s recipient: Donghui Deng, Telephone No: ***************

 

Party
C’s address: 13th Floor, Building B1, Qiaofang Road, Qiaoxiang Road, Nanshan District, Shenzhen

 

Party
D’s recipient: Donghui Deng, Telephone No: ***************

 

The
address specified in the preceding paragraph may be used as the address for delivery of relevant documents and litigation documents.
Should the relevant documents and litigation documents have not been actually received due to the incorrect address, the date
of receipt of returned relevant documents and litigation documents shall be deemed to be the date of delivery.

 

Article
10: Supplementary provisions

 

By
the consensus of the three parties, without any breach of relevant laws and regulations, the supplementary clauses reached by
the parties shall be included as part of this Agreement. If the supplementary clauses are inconsistent with this Agreement, the
supplementary clause shall prevail.

 

Article
11: Text form

 

If
any amendments and supplements to this Agreement are made by the three parties, the supplementary agreement shall be signed separately.
Any non-printed text or graphics in the body of this Agreement does not have any legal effect, unless agreed by the parties.

 

    	 	4	 

    	 

    

 

Article
12: Agreement Annex

 

Annexes
are matters related to this Agreement but not suitable for inclusion in the body of the Agreement. However, annexes have the same
legal effect as this Agreement.

 

Article
13: Dispute resolution

 

Any
relevant disputes incurred during the implementation of or related to this Agreement shall be resolved through friendly negotiation.
In the event that the negotiation fails, any party may bring a lawsuit to the local people’s court with appropriate jurisdiction.

 

Article
14: Effective date of Agreement

 

This
Agreement shall become effective on the date of signature or stamp seal of the three parties. This Agreement is made in triplicate,
and each of the parties holds one copy and all copies have the same legal effect.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    	 	5	 

    	 

    

 

Party
A: Qianhai DaXingHuaShang Investment (Shenzhen) Co., Ltd. [Corporate seal affixed herein]

Legal
representative: /s/ Yumin Lin

Date:
July 13, 2019

 

Party
B: /s/ Xingwen Wang

Date:
July 13, 2019

 

Party
C: Fortune Valley Treasures, Inc. [Corporate seal affixed herein]

Legal
Representative: /s/ Yumin Lin

Date:
July 13, 2019

 

Annexes:

 

1.
Copies of the business licenses of Party A, Party C and the Target Company, and a copy of the legal representatives’ national
ID cards;

 

2.
A copy of Party B’s national ID card.

 

    	 	6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00302-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00302-of-00352.parquet"}]]