<SUBMISSION>
<ACCESSION-NUMBER>0001193125-14-125124
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20140327
<ITEMS>1.01
<ITEMS>2.03
<ITEMS>9.01
<FILING-DATE>20140401
<DATE-OF-FILING-DATE-CHANGE>20140401
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>INFOSONICS Corp
<CIK>0001274032
<ASSIGNED-SIC>5065
<IRS-NUMBER>330599368
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-32217
<FILM-NUMBER>14732398
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>3636 NOBEL DRIVE, SUITE 325
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92122
<PHONE>858 373-1600
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>3636 NOBEL DRIVE, SUITE 325
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92122
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INFOSONICS CORP
<DATE-CHANGED>20031219
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d701450d8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
</HEAD>
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 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C.&nbsp;20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM 8-K
</B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>CURRENT REPORT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Pursuant
to Section&nbsp;13 or 15(d) </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>of the Securities Exchange Act of 1934 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Date of Report (Date of earliest event reported):&nbsp;April&nbsp;1, 2014 (March 27, 2014) </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:24pt; font-family:Times New Roman" ALIGN="center"><B>InfoSonics Corporation </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Exact name of registrant as specified in its charter) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" ALIGN="center"><B>Maryland</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>001-32217</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>33-0599368</B></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(State or other jurisdiction</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>of incorporation)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Commission</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>File Number)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(IRS Employer</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Identification No.)</B></P></TD></TR>
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<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>3636 Nobel Drive, Suite #325,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>San Diego, CA 92122</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="bottom" ALIGN="center"><B>(Address of principal executive offices)</B></TD>
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</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Registrant&#146;s telephone number, including area code: (858)&nbsp;373-1600 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Not Applicable </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Former
name or former address, if changed since last report) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>

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<TD WIDTH="10%" VALIGN="top" ALIGN="left"><B>Item&nbsp;1.01.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Entry into a Material Definitive Agreement. </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On March&nbsp;27, 2014, InfoSonics
Corporation (the &#147;Company&#148;) entered into a Loan and Security Agreement with Silicon Valley Bank for a $2 million revolving line of credit (the &#147;Credit Facility&#148;), together with an attendant Intellectual Property Security
Agreement. Borrowings under the Credit Facility will be used to fund the Company&#146;s working capital needs and for general corporate purposes. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company&#146;s obligations under the Credit Facility will be secured by substantially all of the Company&#146;s assets. Availability of
borrowings under the Credit Facility from time to time is subject to a borrowing base calculation based upon both domestic and foreign eligible accounts receivable multiplied by an advance rate of 80% and 70%, respectively. Borrowings under the
Credit Facility will bear interest based on the face amount of the financed receivables at the prime rate plus 4.5% for domestic receivables and 3.53% for foreign receivables. The Credit Facility contains representations and warranties, affirmative,
restrictive and financial covenants, and events of default which are customary for credit facilities of this type. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Copies of the Loan and
Security Agreement and the Intellectual Property Security Agreement are filed as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="10%" VALIGN="top" ALIGN="left"><B>Item&nbsp;2.03.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. </B></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The disclosures required by this Item&nbsp;2.03 are contained in Item&nbsp;1.01 above, and are incorporated as if fully restated herein. </P>
<P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><B>Item&nbsp;9.01.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Financial Statements and Exhibits. </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(d)</TD>
<TD ALIGN="left" VALIGN="top">Exhibits </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:25.30pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Exhibit<BR>No.</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:39.50pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Description</B></P></TD></TR>


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<TD VALIGN="top" NOWRAP>99.1</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Loan and Security Agreement dated as of March 27, 2014 between Silicon Valley Bank and InfoSonics Corporation.</TD></TR>
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<TD VALIGN="top" NOWRAP>99.2</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Intellectual Property Security Agreement dated as of March 27, 2014 between Silicon Valley Bank and InfoSonics Corporation</TD></TR>
</TABLE>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SIGNATURES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"><B>InfoSonics Corporation</B></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Vernon A. LoForti</P></TD></TR>
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<TD VALIGN="top">Vernon A. LoForti</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Date: April&nbsp;1, 2014</TD>
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<TD VALIGN="top">Chief Financial Officer</TD></TR>
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<TYPE>EX-99.1
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.1 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>LOAN AND SECURITY AGREEMENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This <B>LOAN AND SECURITY AGREEMENT</B> (this &#147;<B>Agreement</B>&#148;) dated as of March&nbsp;27, 2014 (the &#147;<B>Effective
Date</B>&#148;) is between <B>SILICON VALLEY BANK</B>, a California corporation (&#147;<B>Bank</B>&#148;), and <B>INFOSONICS CORPORATION</B>, a Maryland corporation (&#147;<B>Borrower</B>&#148;), and provides the terms on which Bank shall lend to
Borrower, and Borrower shall repay Bank. The parties agree as follows: </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>1. ACCOUNTING AND OTHER TERMS </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP;
provided that if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or Bank shall so request, Borrower and Bank shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided, further, that, until so amended, (a)&nbsp;such ratio or requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (b)&nbsp;Borrower shall provide Bank financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section&nbsp;13 of this Agreement. 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. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2. LOAN AND TERMS OF PAYMENT
</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.1 Promise to Pay</B>. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit
Extensions and accrued and unpaid interest thereon together with any fees and Finance Charges as and when due in accordance with this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman"><B>2.1.1 Financing of Accounts</B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) <U>Availability</U>. Subject to the terms of this Agreement, Borrower may request that Bank finance specific Eligible Accounts. Bank may,
in its good faith business discretion finance such Eligible Accounts by extending credit to Borrower in an amount equal to the result of the Advance Rate multiplied by the face amount of the Eligible Account (the &#147;<B>Advance</B>&#148;). Bank
may, in its sole discretion, change the percentage of the Advance Rate for a particular Eligible Account on a case by case basis. When Bank makes an Advance, the Eligible Account becomes a &#147;Financed Receivable.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) <U>Maximum Advances</U>. The aggregate amount of Advances outstanding at any time may not exceed Two Million Dollars ($2,000,000) and made
based on Eligible Accounts owing from an Account Debtor which does not have its principal place of business in the United States may not exceed One Million Dollars ($1,000,000). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) <U>Borrowing Procedure</U>. Borrower will deliver an Invoice Transmittal for each Eligible Account it offers. Bank may rely on information
set forth in or provided with the </P>

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Invoice Transmittal. In addition, upon Bank&#146;s request, Borrower shall deliver to Bank any contracts, purchase orders, or other underlying supporting documentation with respect to such
Eligible Account. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) <U>Credit Quality; Confirmations</U>. Bank may, at its option, conduct a credit check of the Account Debtor for
each Account requested by Borrower for financing hereunder to approve any such Account Debtor&#146;s credit before agreeing to finance such Account. Bank may also verify directly with the respective Account Debtors the validity, amount and other
matters relating to the Accounts (including confirmations of Borrower&#146;s representations in Section&nbsp;5.3 of this Agreement) by means of mail, telephone or otherwise, either in the name of Borrower or Bank from time to time in its sole
discretion. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) <U>Accounts Notification/Collection</U>. Bank may notify any Account Debtor of Bank&#146;s security interest in the
Borrower&#146;s Accounts and verify and/or, subject to the terms of this Agreement, collect them. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) <U>Early Termination</U>. This
Agreement may be terminated with respect to Advances prior to the Account Advance Maturity Date as follows: (i)&nbsp;by Borrower, effective three Business Days after written notice of termination is given to Bank; or (ii)&nbsp;by Bank at any time
after the occurrence of an Event of Default, without notice, effective immediately. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) <U>Account Advance Maturity Date</U>. All
Obligations outstanding hereunder with respect to Advances shall be immediately due and payable in full on the Account Advance Maturity Date. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) <U>Suspension of Advances</U>. Borrower&#146;s ability to request that Bank finance Eligible Accounts hereunder will terminate if, in
Bank&#146;s sole discretion, there has been a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material
adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the Effective Date. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.2 Collections, Finance Charges, Remittances and Fees</B>. The Obligations shall be subject to the following fees and Finance Charges.
Unpaid fees and Finance Charges may, in Bank&#146;s discretion, accrue interest at the then highest rate applicable to the Obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.3 Collections</B>. Collections will be credited to the Financed Receivable Balance for such Financed Receivable, but if there is an Event
of Default, Bank may apply Collections to the Obligations in any order it chooses. If Bank receives a payment for both a Financed Receivable and a non-Financed Receivable, the funds will first be applied to the Financed Receivable and, if there is
no Event of Default then existing, the excess will be remitted to Borrower, subject to Section&nbsp;2.8 of this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.4
Facility Fee</B>. A fully earned, non-refundable facility fee of Twenty Thousand Dollars ($20,000) is due upon the Effective Date (the &#147;<B>Facility Fee</B>&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.5 Finance Charges</B>. In computing Finance Charges on the Obligations under this Agreement, all Collections received by Bank shall be
deemed applied by Bank on account of the </P>
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Obligations on the same Business Day as receipt of the Collections. Borrower will pay a finance charge (the &#147;<B>Finance Charge</B>&#148;) on the Financed Receivable Balance which is equal to
the Applicable Rate <U>divided by</U> three hundred sixty&nbsp;(360) <U>multiplied by</U> the number of days each such Financed Receivable is outstanding <U>multiplied by</U> the outstanding Financed Receivable Balance. The Finance Charge is payable
when the Advance made based on such Financed Receivable is repaid in accordance with Section&nbsp;2.11 of this Agreement. Immediately upon the occurrence of an Event of Default, the Applicable Rate will increase an additional five percent
(5.00%)&nbsp;per annum. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.6 Accounting</B>.<B></B> After each Reconciliation Period, Bank will provide Borrower with an accounting of
the transactions for that Reconciliation Period, including the amount of all Financed Receivables, all Collections, Adjustments, Finance Charges and the Facility Fee. If Borrower does not object to the accounting in writing within thirty
(30)&nbsp;days it shall be considered accurate, absent manifest error. All Finance Charges and other interest and fees are calculated on the basis of a 360 day year and actual days elapsed. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.7 Deductions</B><B></B>.<B></B> Bank may deduct fees, Bank Expenses, Finance Charges, Advances which become due pursuant to
Section&nbsp;2.11 of this Agreement, and other amounts due pursuant to this Agreement from any Advances made or Collections received by Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.8 Lockbox; Account Collection Services.</B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) All payments with respect to the Accounts (other than payments by check) shall be sent by the applicable Account Debtor (and each
depository institution where proceeds of Accounts are on deposit) to a cash collateral account that Bank controls (the <B></B>&#147;<B>Cash Collateral Account</B>&#148;). It will be considered an immediate Event of Default if the Cash Collateral
Account is not established and operational on the Effective Date and at all times thereafter. For payments by check, Borrower may either (in its discretion) utilize electronic deposit capture through Bank (&#147;<B>Electronic Deposit
Capture</B>&#148;) or direct Account Debtors to remit payments by check to a lockbox account established with Bank (the <B></B>&#147;<B></B><B>Lockbox</B>&#148;); provided, however, Bank reserves the right at any time to require that Borrower
establish a Lockbox with Bank and direct each Account Debtor (and each depository institution where proceeds of Accounts are on deposit) to remit payments by check with respect to the Accounts to such Lockbox. It will be considered an immediate
Event of Default if the Lockbox is not established and operational within thirty (30)&nbsp;days of Bank&#146;s request and at all times thereafter. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Upon receipt by Borrower of any proceeds of Accounts, Borrower shall immediately transfer and deliver same to Bank, along with a detailed
cash receipts journal. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Provided no Event of Default exists or an event that with notice or lapse of time will be an Event of Default,
within two (2)&nbsp;days of receipt of any proceeds of the Accounts by Bank (whether received by Bank in the Cash Collateral Account or Lockbox, directly from Borrower, or otherwise), Bank will turn over to Borrower such proceeds, other than
(i)&nbsp;Collections applied by Bank pursuant to Section&nbsp;2.3 of this Agreement and (ii)&nbsp;such proceeds which shall be used by Bank to repay any other amounts due to Bank, such as the Finance Charge and Bank Expenses; provided, however, Bank
may hold a reasonable amount of proceeds of the Accounts (whether received by Bank in the Cash Collateral Account or Lockbox, directly </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


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from Borrower, or otherwise and whether or not in respect of Financed Receivables) as a reserve until the end of the applicable Reconciliation Period if Bank, in its reasonable discretion,
determines that other Financed Receivable(s) may no longer qualify as an Eligible Account at any time prior to the end of the subject Reconciliation Period. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) This Section&nbsp;2.8 does not impose any affirmative duty on Bank to perform any act other than as specifically set forth herein. All
Accounts and the proceeds thereof are Collateral, and if an Event of Default occurs, Bank may, without notice, apply the proceeds of such Accounts to the Obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.9 Bank Expenses</B>. Borrower shall pay all Bank Expenses (including reasonable attorneys&#146; fees and expenses, plus expenses, for
documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.10 Good Faith Deposit</B>.
Borrower has paid to Bank a deposit of Fifteen Thousand Dollars ($15,000) (the &#147;<B>Good Faith Deposit</B>&#148;) to initiate Bank&#146;s due diligence review process. Any portion of the Good Faith Deposit not utilized to pay Bank Expenses will
be applied to the Facility Fee. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.11 Repayment of Obligations; Adjustments.</B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman"><B>2.11.1 Repayment</B>. Borrower will repay each Advance on the earliest of: (a)&nbsp;the date on which payment is received of the Financed
Receivable with respect to which the Advance was made, (b)&nbsp;the date on which the Financed Receivable is no longer an Eligible Account, (c)&nbsp;the date on which any Adjustment is asserted to the Financed Receivable (but only to the extent of
the Adjustment if the Financed Receivable otherwise remains an Eligible Account), (d)&nbsp;the date on which there is a breach of any representation or warranty in Section&nbsp;5.3 of this Agreement or of any covenant in the Loan Documents, or
(e)&nbsp;the Account Advance Maturity Date (including any early termination). Each payment will also include all accrued Finance Charges with respect to such Advance and all other amounts then due and payable hereunder. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman"><B>2.11.2 Repayment on Event of Default</B>. When there is an Event of Default, Borrower will, if Bank demands (or, upon the occurrence of an
Event of Default under Section&nbsp;8.5 of this Agreement, immediately without notice or demand from Bank) repay all of the Obligations. The demand may, at Bank&#146;s option, include the Advance for each Financed Receivable then outstanding and all
accrued Finance Charges, reasonable attorneys&#146; and professional fees, court costs and expenses, Bank Expenses and any other Obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman"><B>2.11.3 Debit of Accounts</B>. Bank may debit any of Borrower&#146;s deposit accounts for payments or any amounts Borrower owes Bank
hereunder. Bank shall promptly notify Borrower when it debits Borrower&#146;s accounts. These debits shall not constitute a set-off. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>2.12 Power of Attorney</B>. Borrower irrevocably appoints Bank and its successors and assigns as attorney-in-fact and authorizes Bank and
its successor and assigns, to: (a)&nbsp;following the occurrence of an Event of Default, (i)&nbsp;sell, assign, transfer, pledge, compromise, or discharge all or any part of the Financed Receivables; (ii)&nbsp;demand, collect, sue, and give releases
to any Account Debtor for monies due and compromise, prosecute, or defend any action, claim, case or </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>


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proceeding about the Financed Receivables, including filing a claim or voting a claim in any bankruptcy case in Bank&#146;s or Borrower&#146;s name, as Bank chooses; and (iii)&nbsp;prepare, file
and sign Borrower&#146;s name on any notice, claim, assignment, demand, draft, or notice of or satisfaction of lien or mechanics&#146; lien or similar document; and (b)&nbsp;regardless of whether an Event of Default has occurred and is continuing,
(i)&nbsp;notify all Account Debtors to pay Bank directly; (ii)&nbsp;receive, open, and dispose of mail addressed to Borrower; (iii)&nbsp;endorse Borrower&#146;s name on checks or other instruments (to the extent necessary to pay amounts owed
pursuant to any of the Loan Documents); and (iv)&nbsp;execute on Borrower&#146;s behalf any instruments, documents, financing statements to perfect Bank&#146;s interests in the Financed Receivables and Collateral and do all acts and things necessary
or prudent, as determined solely and exclusively by Bank, to protect or preserve, Bank&#146;s rights and remedies under the Loan Documents, as directed by Bank. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>3. CONDITIONS OF LOANS </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>3.1 Conditions Precedent to Initial Credit Extension</B>. Bank&#146;s obligation to make the initial Credit Extension 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: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) the Loan Documents; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b)
any Control Agreements required by Bank; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Borrower&#146;s Operating Documents and a good standing certificate of Borrower certified by
the Secretary of State of the State of Maryland as of a date no earlier than thirty (30)&nbsp;days prior to the Effective Date; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) the
completed and executed Borrowing Resolutions for Borrower; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) certified copies, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial
Credit Extension, will be terminated or released; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) the Perfection Certificate of Borrower, together with the duly executed original
signature thereto; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) a bailee agreement in favor of Bank from OHL International; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) the IP&nbsp;Agreement; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i)
evidence satisfactory to Bank that the insurance policies required by Section&nbsp;6.4 of this Agreement 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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) the completion of an initial audit with results satisfactory to Bank in its sole and absolute discretion; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(k) payment of the fees and Bank Expenses then due as specified in Section&nbsp;2.12 of this Agreement. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>3.2 Conditions Precedent to all Credit Extensions</B>. Bank&#146;s agreement to make each
Credit Extension, including the initial Credit Extension, is subject to the following: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) receipt of the Invoice Transmittal, as
applicable; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Bank shall have (at its option) conducted the confirmations and verifications as described in Section&nbsp;2.1.1(d) of
this Agreement; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) each of the representations and warranties in this Agreement shall be true, accurate, and complete on the date of the
Invoice Transmittal and no Event of Default shall have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower&#146;s representation and warranty on that date that the representations and warranties in this
Agreement remain true, accurate, and complete; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) in Bank&#146;s sole discretion, there has not been a Material Adverse Change. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>3.3 Covenant to Deliver</B>. 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&#146;s obligation to deliver such item, and the
making of any Credit Extension in the absence of a required item shall be in Bank&#146;s sole discretion. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>4. CREATION OF SECURITY
INTEREST </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>4.1 Grant of Security Interest</B>. 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 represents, warrants, and covenants that
the security interest granted herein shall be and shall at all times continue to be a first priority perfected security interest in the Collateral subject only to Permitted Liens. If Borrower shall at any time acquire a commercial tort claim,
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 satisfactory to Bank. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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 may have superior priority to Bank&#146;s Lien in this Agreement). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">6 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If this Agreement is terminated, Bank&#146;s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are satisfied in full, and at such time Bank shall, at Borrower&#146;s sole cost and expense, terminate its security interest in the Collateral and all rights therein shall revert to Borrower.
In the event (a)&nbsp;all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (b)&nbsp;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 (i)&nbsp;one hundred five percent (105%)&nbsp;if the letter of credit is denominated in U.S. Dollars or (ii)&nbsp;one hundred ten percent (110%)&nbsp;if the letter of credit is denominated in a currency other than U.S.&nbsp;Dollars of the Dollar
Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to such
Letters of Credit. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>4.2 Authorization to File Financing Statements</B>. Borrower hereby authorizes Bank to file financing statements,
without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank&#146;s interest or rights hereunder. Any such financing statements may indicate the Collateral as &#147;all assets of the Debtor&#148; or words of similar
effect, or as being of an equal or lesser scope, or with greater detail, all in Bank&#146;s discretion. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5. REPRESENTATIONS AND
WARRANTIES </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower represents and warrants as follows: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.1 Due Organization and Authorization</B>. Borrower and each of its Subsidiaries are duly existing and in good standing as Registered
Organizations in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any other jurisdiction in which the conduct of their respective business or ownership of property requires that
they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower&#146;s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by
Borrower, entitled Perfection Certificate (the &#147;<B>Perfection Certificate</B>&#148;). Borrower represents and warrants to Bank that (a)&nbsp;Borrower&#146;s exact legal name is that indicated on the Perfection Certificate and on the signature
page hereof; (b)&nbsp;Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c)&nbsp;the Perfection Certificate accurately sets forth Borrower&#146;s organizational identification
number or accurately states that Borrower has none; (d)&nbsp;the Perfection Certificate accurately sets forth Borrower&#146;s place of business, or, if more than one, its chief executive office as well as Borrower&#146;s mailing address (if
different than its chief executive office); (e)&nbsp;Borrower (and each of its predecessors) has not, in the past five (5)&nbsp;years, changed its jurisdiction of formation, corporate structure, organizational type, or any organizational number
assigned by its jurisdiction; and (f)&nbsp;all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (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). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">7 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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)&nbsp;conflict with any of Borrower&#146;s organizational documents, (ii)&nbsp;contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii)&nbsp;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)&nbsp;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)&nbsp;constitute an event
of default under 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 have a material adverse effect on Borrower&#146;s business.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.2 Collateral</B>. Borrower has good title to, has 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 deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate
delivered to Bank in connection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein. The Accounts are bona fide, existing obligations of the Account Debtors.
All Inventory is in all material respects of good and marketable quality, free from material defects. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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 are currently being maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section&nbsp;7.2 of this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower is the sole owner of the Intellectual Property which
it owns or purports to own except for (a)&nbsp;non-exclusive licenses granted to its customers in the ordinary course of business, (b)&nbsp;over-the-counter software that is commercially available to the public, and (c)&nbsp;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&#146;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&#146;s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower&#146;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&#146;s business. Except as noted on the Perfection Certificate, Borrower is not a party to, nor is
it bound by, any Restricted License. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.3 Financed Receivables</B>. Borrower represents and warrants for each Financed Receivable: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Such Financed Receivable is an Eligible Account; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Borrower is the owner of and has the legal right to sell, transfer, assign and encumber such Financed Receivable; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">8 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) The correct amount is on the Invoice Transmittal and is not disputed; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) Payment is not contingent on any obligation or contract and Borrower has fulfilled all its obligations as of the Invoice Transmittal date;
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) Such Financed Receivable is based on an actual sale and delivery of goods and/or services rendered, is due to Borrower, is not past
due or in default, has not been previously sold, assigned, transferred, or pledged and is free of any liens, security interests and encumbrances other than Permitted Liens; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) There are no defenses, offsets, counterclaims or agreements for which the Account Debtor may claim any deduction or discount; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Borrower reasonably believes no Account Debtor is insolvent or subject to any Insolvency Proceedings; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) Borrower has not filed or had filed against it Insolvency Proceedings and does not anticipate any filing; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i) Bank has the right to endorse and/or require Borrower to endorse all payments received on Financed Receivables and all proceeds of
Collateral; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) No representation, warranty or other statement of Borrower in any certificate or written statement given to Bank
contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement contained in the certificates or statement not misleading. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.4 Litigation</B>. There are no actions or proceedings pending or, to the knowledge of Borrower&#146;s Responsible Officers, threatened in
writing by or against Borrower or any Subsidiary in which an adverse decision could reasonably be expected to cause a Material Adverse Change. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.5 No Material Deviation in Financial Statements and Deterioration in Financial Condition</B>. All consolidated financial statements for
Borrower and any Subsidiary delivered to Bank fairly present in all material respects Borrower&#146;s consolidated financial condition and Borrower&#146;s consolidated results of operations. There has not been any material deterioration in
Borrower&#146;s consolidated financial condition since the date of the most recent financial statements submitted to Bank. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.6
Solvency</B>. The fair salable value of Borrower&#146;s assets (including goodwill minus disposition costs) exceeds the fair value of its 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.7 Regulatory Compliance</B>. Borrower is not an
&#147;investment company&#148; or a company &#147;controlled&#148; by an &#147;investment company&#148; 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&nbsp;X, T and&nbsp;U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">9 </P>


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Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower&#146;s or any Subsidiary&#146;s
properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower&#146;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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.8 Subsidiaries</B>. Borrower does not own any stock, partnership interest or other equity securities except for
Permitted Investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.9 Tax Returns and Payments; Pension Contributions</B>. Borrower and each Subsidiary have timely filed all
required tax returns and reports, and Borrower and each Subsidiary have timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each Subsidiary. Borrower may defer payment of any
contested taxes, provided that Borrower (a)&nbsp;in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b)&nbsp;notifies Bank in writing of the commencement of, and any
material development in, the proceedings and (c)&nbsp;posts bonds or takes any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a
&#147;Permitted Lien&#148;. Borrower is unaware of any claims or adjustments proposed for any of Borrower&#146;s prior tax years which could result in additional taxes becoming due and payable by Borrower. 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.10 Full Disclosure</B>. 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 any projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed
as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>5.11 Definition of </B><B>&#147;</B><B>Knowledge</B>.&#148; For purposes of the Loan Documents, whenever a representation or warranty is
made to Borrower&#146;s knowledge or awareness, to the &#147;best of&#148; Borrower&#146;s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">10 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6. AFFIRMATIVE COVENANTS </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower shall do all of the following: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.1 Government Compliance. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Maintain its and all its Subsidiaries&#146; 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&#146;s business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower&#146;s business. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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 Collateral. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Deliver to Bank, within five (5)&nbsp;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 noncompliance with which would reasonably be expected to have a material adverse effect on any of the Governmental
Approvals or otherwise on the operations of Borrower or any of its Subsidiaries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.2 Financial Statements, Reports, Certificates.
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Deliver to Bank: (1)&nbsp;as soon as available, but no later than thirty (30)&nbsp;days after the last day of each Reconciliation
Period, a company prepared consolidated and consolidating balance sheet and income statement covering Borrower&#146;s consolidated operations during the period certified by a Responsible Officer and in a form reasonably acceptable to Bank;
(2)&nbsp;within five (5)&nbsp;days of filing, copies of all statements, reports and notices made available to Borrower&#146;s security holders or to any holders of Subordinated Debt and all reports on Form&nbsp;10-K, 10-Q and 8-K filed with the SEC;
(3)&nbsp;a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or more; (4)&nbsp;as soon as
available, but no later than seven (7)&nbsp;days after approval by Borrower&#146;s Board of Directors, annual financial projections for the following fiscal year approved by Borrower&#146;s Board of Directors, together with any related business
forecasts used in the preparation of such annual financial plans and projections; and (5)&nbsp;budgets, sales projections, operating plans or other financial information reasonably requested by Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Within thirty (30)&nbsp;days after the last day of each Reconciliation Period, deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in the form of <U>Exhibit&nbsp;B</U>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Allow Bank to inspect the Collateral and
audit and copy Borrower&#146;s Books, including, but not limited to, Borrower&#146;s Accounts, prior to the initial Advance and upon </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">11 </P>


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reasonable notice to Borrower. Such inspections or audits shall be conducted no more often than once every twelve (12)&nbsp;months unless an Event of Default has occurred and is continuing. The
foregoing inspections and audits shall be at Borrower&#146;s expense, and the charge therefor shall be Eight Hundred Fifty Dollars ($850) per person per day (or such higher amount as shall represent Bank&#146;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 ten (10)&nbsp;days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10)&nbsp;days written notice to Bank,
then (without limiting any of Bank&#146;s rights or remedies), Borrower shall pay Bank a fee of One Thousand Dollars ($1,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the
cancellation or rescheduling. After the occurrence of an Event of Default, Bank may audit Borrower&#146;s Collateral at Borrower&#146;s expense, including, but not limited to, Borrower&#146;s Accounts as frequently as Bank deems necessary at
Borrower&#146;s expense and at Bank&#146;s sole and exclusive discretion, without notification to and authorization from Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d)
Upon Bank&#146;s request, provide a written report on any Financed Receivable, where payment of such Financed Receivable does not occur by its due date and include the reasons for the delay. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) Provide Bank with, as soon as available, but no later than thirty (30)&nbsp;days following each Reconciliation Period, an aged listing of
accounts receivable and accounts payable by invoice date, in form and detail acceptable to Bank. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) Provide Bank with, as soon as
available, but no later than thirty (30)&nbsp;days following each Reconciliation Period, a Deferred Revenue report, if applicable, and a distributor sell-through report, in form and detail acceptable to Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Provide Bank prompt written notice of (i)&nbsp;any material change in the composition of the Intellectual Property, (ii)&nbsp;the
registration of any Copyright, including any subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark not shown in the IP Agreement, and (iii)&nbsp;Borrower&#146;s knowledge of an event that could reasonably be expected to
materially and adversely affect the value of the Intellectual Property. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.3 Taxes</B>.<B></B> Make, and cause each Subsidiary to make,
timely payment of all foreign, federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to such payments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.4 Insurance</B>. Keep its business and the Collateral insured for risks
and in amounts standard for companies in Borrower&#146;s industry and location, and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All property policies shall have
a lender&#146;s loss payable endorsement showing Bank as an additional loss payee and waive subrogation against Bank, and all liability policies shall show, or have endorsements showing, Bank as an additional insured. All policies (or the lender
loss payable and additional insured endorsements) shall provide that the insurer must give Bank at least twenty (20)&nbsp;days&#146; notice before canceling, amending, or declining to renew its policy. At Bank&#146;s request, Borrower shall deliver
certified copies of policies and </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">12 </P>


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evidence of all premium payments. Proceeds payable under any policy shall, at Bank&#146;s option, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as
required under this Section&nbsp;6.4 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&nbsp;6.4, and take any
action under the policies Bank deems prudent. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.5 Accounts. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) To permit Bank to monitor Borrower&#146;s financial performance and condition, maintain Borrower&#146;s and such Subsidiaries&#146;
primary depository and operating accounts and securities accounts with Bank and Bank&#146;s Affiliates, which accounts shall represent at least eighty five percent (85%)&nbsp;of the dollar value of Borrower&#146;s and such Subsidiaries&#146;
accounts at all financial institutions. Any Guarantor shall maintain all depository and operating accounts with Bank, and, with respect to securities accounts, with an affiliate of Bank. Borrower shall utilize Bank&#146;s international banking
services for not less than eighty five percent (85%)&nbsp;of the international banking services required by Borrower, including, but not limited to, foreign currency wires, hedges, swaps, FX Contracts, and Letters of Credit. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Provide Bank five (5)&nbsp;days&#146; prior written notice before establishing any Collateral Account at or with any bank or financial
institution other than Bank or Bank&#146;s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank&#146;s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may
not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit
of Borrower&#146;s employees and identified to Bank by Borrower as such. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.6 Inventory; Returns</B><B>; Notices of Adjustments</B>.
Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrower&#146;s customary practices as they exist at the Effective Date. If, at any time
during the term of this Agreement, any Account Debtor asserts an Adjustment in excess of One Hundred Thousand Dollars ($100,000), Borrower issues a credit memorandum, or any representation, warranty or covenant set forth in this Agreement or the
other Loan Documents is no longer true in all material respects, Borrower will promptly advise Bank. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.7 Financial Covenants</B>.
Maintain at all times, to be tested as of the last day of each month, unless otherwise noted: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a)<U> Tangible Net Worth</U>. A Tangible
Net Worth of at least Fifteen Million Dollars ($15,000,000), increasing by fifty percent (50%), effective on the first day of each quarter, of any and all (i)&nbsp;of Borrower&#146;s quarterly net income for the previous quarter (as determined in
accordance with GAAP), and (ii)&nbsp;proceeds received by Borrower from the sale of its equity securities or the incurrence of Subordinated Debt during the previous quarter. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) <U>Adjusted Quick Ratio</U>. An Adjusted Quick Ratio of at least 1.75 to 1.00. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">13 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.8 Protection and Registration of Intellectual Property Rights. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) (i)&nbsp;Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii)&nbsp;promptly advise Bank in
writing of material infringements of its Intellectual Property; and (iii)&nbsp;not allow any Intellectual Property material to Borrower&#146;s business to be abandoned, forfeited or dedicated to the public without Bank&#146;s written consent. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) If Borrower (i)&nbsp;obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for
any of the foregoing, whether as owner, licensee or otherwise, or (ii)&nbsp;applies for any Patent or the registration of any Trademark, then Borrower shall immediately provide written notice thereof to Bank and shall execute such intellectual
property security agreements and other documents and take such other actions as Bank shall request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in such property. If
Borrower decides to register any Copyrights or mask works in the United States Copyright Office, Borrower shall: (x)&nbsp;provide Bank with at least fifteen (15)&nbsp;days&#146; prior written notice of Borrower&#146;s intent to register such
Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y)&nbsp;execute an intellectual property security agreement and such other documents and take
such other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in the Copyrights or mask works intended to be registered with the United States
Copyright Office; and (z)&nbsp;record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office. Borrower
shall promptly provide to Bank copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement necessary
for Bank to perfect and maintain a first priority perfected security interest in such property. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Provide written notice to Bank within
ten (10)&nbsp;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)&nbsp;any Restricted License to be deemed &#147;Collateral&#148; 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)&nbsp;Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank&#146;s rights and remedies
under this Agreement and the other Loan Documents. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.9 Litigation Cooperation</B>. From the Effective Date 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&#146;s Books, 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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">14 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>6.10 Further Assurances</B>. Execute any further instruments and take further action as Bank
reasonably requests to perfect or continue Bank&#146;s Lien in the Collateral or to effect the purposes of this Agreement. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7. NEGATIVE
COVENANTS </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower shall not do any of the following without Bank&#146;s prior written consent. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.1 Dispositions</B>. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively a &#147;<B>Transfer</B>&#148;), or
permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a)&nbsp;of Inventory in the ordinary course of business; (b)&nbsp;of worn-out or obsolete Equipment; and (c)&nbsp;in connection with
Permitted Liens and Permitted Investments and (d)&nbsp;of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and licenses that could not result in a legal transfer of title of the
licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United States. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.2 Changes in Business, Management, Ownership, or Business Locations</B>. (a)&nbsp;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)&nbsp;liquidate or dissolve; or (c)&nbsp;(i)&nbsp;any Key Person ceases to hold such offices with
Borrower and replacements satisfactory to Bank are not made within thirty (30)&nbsp;days after his or her departure from Borrower; or (ii)&nbsp;enter into any transaction or series of related transactions in which the stockholders of Borrower who
were not stockholders immediately prior to the first such transaction own more than forty percent (40)% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the
sale of Borrower&#146;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 prior to the closing of the transaction and
provides to Bank a description of the material terms of the transaction. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower shall not, without at least thirty (30)&nbsp;days&#146;
prior written notice to Bank: (1)&nbsp;add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Five Thousand Dollars ($5,000) in Borrower&#146;s assets or property),
(2)&nbsp;change its jurisdiction of organization, (3)&nbsp;change its organizational structure or type, (4)&nbsp;change its legal name, (5)&nbsp;change any organizational number (if any) assigned by its jurisdiction of organization, or
(6)&nbsp;deliver any portion of the Collateral to a bailee, unless (i)&nbsp;such bailee location contains less than Five Thousand Dollars ($5,000) in Borrower&#146;s assets or property and (ii)&nbsp;Bank and such bailee are parties to a bailee
agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower hereby agrees upon
Borrower adding any new office or business location, including any warehouse, Borrower will cause its landlord to enter into a landlord consent in favor of Bank prior to such new office or business location containing Fifty Thousand Dollars
($50,000) of Collateral. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">15 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower hereby agrees that prior to Borrower delivering any Collateral to a bailee, Borrower
shall cause such bailee to execute and deliver a bailee agreement in form and substance satisfactory to Bank. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.3 Mergers or
Acquisitions</B>. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.4 Indebtedness</B>. Create, incur, assume,
or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.5 Encumbrance</B>. 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, or 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&#146;s or any Subsidiary&#146;s Intellectual Property, except as is otherwise permitted in
Section&nbsp;7.1 of this Agreement and the definition of &#147;Permitted Liens&#148; herein. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.6 Maintenance of Collateral
Accounts</B>. Maintain any Collateral Account except pursuant to the terms of Section&nbsp;6.5 of this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.7 Distributions;
Investments</B>. (a)&nbsp;Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; or (b)&nbsp;pay any dividends or make any distribution or
payment or redeem, retire or purchase any capital stock. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.8 Transactions with Affiliates</B>. 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&#146;s business, upon fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm&#146;s length transaction with a non-affiliated Person. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.9 Subordinated Debt</B>. (a)&nbsp;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)&nbsp;amend any provision in any document relating to the Subordinated Debt
which would increase the amount owed by Borrower thereof, shorten the maturity thereof, increase the rate of interest applicable thereto or adversely affect the subordination thereof to Obligations owed to Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.10 Compliance</B>. Become an &#147;investment company&#148; or a company controlled by an &#147;investment company&#148;, 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 (a)&nbsp;meet the minimum funding requirements of ERISA, (b)&nbsp;prevent a Reportable Event or Prohibited Transaction as defined in ERISA, or </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">16 </P>


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(c)&nbsp;comply with the Federal Fair Labor Standards Act, the failure of any of the conditions in clauses&nbsp;(a) through&nbsp;(c) which could reasonably be expected to have a material adverse
effect on Borrower&#146;s business, or violate any other law or regulation, if the violation could reasonably be expected to have a materials adverse effect on Borrower&#146;s business or permit any 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>7.11 Subsidiary Cash.</B> Permit its Subsidiaries to have, in the aggregate, more than Three Hundred Fifty Thousand Dollars ($350,000) in
cash and Cash Equivalents at any time for a period of more than three (3)&nbsp;consecutive Business Days with any such excess being immediately transferred back to Borrower. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8. EVENTS OF DEFAULT </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Any
one of the following shall constitute an event of default (an &#147;<B>Event of Default</B>&#148;) under this Agreement: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.1 Payment
Default</B>. Borrower fails to pay any of the Obligations when due; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.2 Covenant Default</B>. Borrower fails or neglects to perform
any obligation in Section&nbsp;2.11 or Section&nbsp;6 of this Agreement or violates any covenant in Section&nbsp;7 of this Agreement or fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement
contained in this Agreement, any Loan Documents and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10)&nbsp;days after the occurrence thereof;
provided, however, grace and cure periods provided under this Section&nbsp;8.2 shall not apply to financial covenants or any other covenants that are required to be satisfied, completed or tested by a date certain; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.3 Material Adverse Change</B>. A Material Adverse Change occurs; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.4 Attachment; Levy; Restraint on Business. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) (i)&nbsp;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) on deposit or otherwise maintained with Bank or any Bank Affiliate, or (ii)&nbsp;a notice of lien or levy is filed against any of Borrower&#146;s assets by any government agency, and the same under
subclauses&nbsp;(i) and&nbsp;(ii) hereof are not, within ten (10)&nbsp;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)&nbsp;day cure period; or </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) (i)&nbsp;any material portion of Borrower&#146;s assets is attached, seized, levied on, or comes into
possession of a trustee or receiver, or (ii)&nbsp;any court order enjoins, restrains, or prevents Borrower from conducting any material part of its business; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">17 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.5 Insolvency</B>. (a)&nbsp;Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise becomes insolvent; (b)&nbsp;Borrower begins an Insolvency Proceeding; or (c)&nbsp;an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within <FONT STYLE="white-space:nowrap">forty-five</FONT>
(45)&nbsp;days (but no Credit Extensions shall be made while any of the conditions described in clause&nbsp;(a) exist and/or until any Insolvency Proceeding is dismissed); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.6 Other Agreements</B>. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties,
(a)&nbsp;any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Hundred Thousand Dollars ($100,000); or
(b)&nbsp;any default by Borrower or Guarantor, the result of which could result in a Material Adverse Change to Borrower&#146;s or any Guarantor&#146;s business; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.7 Judgments</B>. One or more final judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate,
of at least One Hundred Thousand Dollars ($100,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower and the same are not, within ten
(10)&nbsp;days after the entry thereof, discharged or 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
discharge, stay, or bonding of such judgment, order, or decree); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.8 Misrepresentations</B>. 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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.9 Subordinated Debt</B>. 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; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>8.10 Governmental Approvals</B>. Any Governmental Approval shall have been (a)&nbsp;revoked, rescinded, suspended, modified in an adverse
manner or not renewed in the ordinary course for a full term or (b)&nbsp;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&nbsp;(a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i)&nbsp;has, or could reasonably be expected to have, a
Material Adverse Change, or (ii)&nbsp;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 affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">18 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9. BANK&#146;S RIGHTS AND REMEDIES </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9.1 Rights and Remedies</B>. When an Event of Default occurs and continues beyond any applicable grace period Bank may, without notice or
demand, do any or all of the following: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) declare all Obligations immediately due and payable (but if an Event of Default described in
Section&nbsp;8.5 of this Agreement occurs, all Obligations are immediately due and payable without any action by Bank); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) stop
advancing money or extending credit for Borrower&#146;s benefit under this Agreement or under any other agreement between Borrower and Bank; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) for any Letters of Credit, demand that Borrower (i)&nbsp;deposit cash with Bank in an amount equal to (i)&nbsp;one hundred five percent
(105%)&nbsp;if the outstanding Letters of Credit are denominated in U.S. Dollars or (ii)&nbsp;one hundred ten percent (110%)&nbsp;if the outstanding Letters of Credit are denominated in a currency other than U.S. Dollars, of the Dollar Equivalent of
the aggregate face amount of all Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations
relating to such Letters of Credit, 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)&nbsp;pay in advance all letter of credit fees
scheduled to be paid or payable over the remaining term of any Letters of Credit; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) terminate any FX Contracts; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) 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&#146;s security interest in such funds and verify the amount of such account. 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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) make any payments and do any acts it
considers necessary or reasonable to protect 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&#146;s rights or remedies; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) apply to the Obligations any
(i)&nbsp;balances and deposits of Borrower it holds, or (ii)&nbsp;any amount held by Bank owing to or for the credit or the account of Borrower; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower&#146;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, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">19 </P>


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and selling any Collateral and, in connection with Bank&#146;s exercise of its rights under this Section&nbsp;9.1, Borrower&#146;s rights under all licenses and all franchise agreements inure to
Bank&#146;s benefit; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i) place a &#147;hold&#148; 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; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) demand and receive possession of Borrower&#146;s Books; and </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9.2 Protective Payments</B>. If Borrower fails to obtain
the insurance called for by Section&nbsp;6.4 of this Agreement 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, 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&#146;s waiver of any Event of
Default. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9.3 Bank&#146;s Liability for Collateral</B>. 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)&nbsp;the safekeeping of the Collateral; (b)&nbsp;any loss or damage to the Collateral; (c)&nbsp;any diminution in the
value of the Collateral; or (d)&nbsp;any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9.4 No Waiver; Remedies Cumulative</B>. Bank&#146;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&#146;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&#146;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&#146;s waiver of any Event of Default is not a continuing waiver. Bank&#146;s delay in exercising any remedy is not a waiver, election, or acquiescence. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>9.5 Demand Waiver</B>. 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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">20 </P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>10. NOTICES </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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)&nbsp;upon the earlier of actual receipt and three (3)&nbsp;Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b)&nbsp;upon transmission, when sent by electronic mail or facsimile transmission (except that if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient); (c)&nbsp;one (1)&nbsp;Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d)&nbsp;when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section&nbsp;10. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="83%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">If&nbsp;to&nbsp;Borrower:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">InfoSonics Corporation</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">3636 Nobel Drive, Suite 325</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">San Diego, CA 92122</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Attn: Vern LoForti, CFO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Fax: (858) 373-1503</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Email: <U>vern.loforti@infosonics.com</U></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">If to Bank:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Silicon Valley Bank</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">4370 La Jolla Village Drive, Suite 1050</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">San Diego, CA 92122</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Attn: Jason Salit</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top">Email: jsalit@svb.com</TD></TR>
</TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>11. CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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 Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the
granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided to Borrower in accordance with, Section&nbsp;10 of this Agreement and that service so made shall be
deemed completed upon the earlier to occur of Borrower&#146;s actual receipt thereof or three (3)&nbsp;days after deposit in the U.S. mails, proper postage prepaid. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">21 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>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. </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">WITHOUT INTENDING IN ANY WAY TO
LIMIT THE PARTIES&#146; 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&nbsp;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 &#167;&#167;&nbsp;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 &#167;&nbsp;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. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12. GENERAL PROVISIONS </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.1 Successors and Assigns</B>. 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&#146;s prior written consent (which may be granted or </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">22 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
withheld in Bank&#146;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&#146;s obligations, rights, and benefits under this Agreement and the other Loan Documents. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.2
Indemnification</B>. 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 &#147;<B>Indemnified Person</B>&#148;) harmless
against: (a)&nbsp;all obligations, demands, claims, and liabilities (collectively, &#147;<B>Claims</B>&#148;) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b)&nbsp;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&#146; fees
and expenses), except for Claims and/or losses directly caused by such Indemnified Person&#146;s gross negligence or willful misconduct. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.3 Right of Set-Off</B>. Borrower hereby grants to Bank, a lien, security interest and 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 Bank
subsidiary) 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 set off 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.4 Time of Essence</B>. Time is of the essence for the performance of all Obligations in this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.5 Correction of Loan Documents</B>. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the
agreement of the parties so long as Bank provides Borrower with written notice of such correction and allows Borrower at least ten (10)&nbsp;days to object to such correction. In the event of such objection, such correction shall not be made except
by an amendment signed by both Bank and Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.6 Severability of Provisions</B>. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.7 Amendments in Writing; Waiver; Integration</B>. No
purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by
the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or
evidence, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">23 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.8 Counterparts</B>. 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.9 Survival</B>. All
covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by
their terms, are to survive the termination of this Agreement) have been paid in full and satisfied. Without limiting the foregoing, except as otherwise provided in Section&nbsp;4.1, the grant of security interest by Borrower in Section&nbsp;4.1
shall survive until the termination of all Bank Services Agreements. The obligation of Borrower in Section&nbsp;12.2 of this Agreement to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action
shall have run. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.10 Confidentiality</B>. 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)&nbsp;to Bank&#146;s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, each a &#147;<B>Bank Entity</B>&#148; and
collectively, the &#147;<B>Bank Entities</B>&#148;); (b)&nbsp;to prospective transferees or purchasers of any interest in the Advances (provided, however, Bank shall obtain any prospective transferee&#146;s or purchaser&#146;s agreement to the terms
of this Section&nbsp;12.10); (c)&nbsp;as required by law, regulation, subpoena, or other order; (d)&nbsp;to Bank&#146;s regulators or as otherwise required in connection with Bank&#146;s examination or audit; (e)&nbsp;as Bank considers appropriate
in exercising remedies under the Loan Documents; and (f)&nbsp;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: (i)&nbsp;either in the public domain other than as a result of Bank&#146;s breach of this section or is in Bank&#146;s possession when disclosed to Bank; or (ii)&nbsp;disclosed to Bank
by a third party on a nonconfidential basis if Bank does not know that the third party is prohibited from disclosing the information. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">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 termination of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.11 Electronic Execution of Documents</B>. The words &#147;execution,&#148; &#147;signed,&#148; &#147;signature&#148; 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 </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">24 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.12 Captions</B>. The
headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.13 Construction
of Agreement</B>. 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.14 Relationship</B>. 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&#146;s-length contract. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>12.15 Third Parties</B>. Nothing in this Agreement, whether express or implied, is intended to: (a)&nbsp;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)&nbsp;relieve or discharge the obligation or liability of any person not an express party to
this Agreement; or (c)&nbsp;give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>13. DEFINITIONS </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>13.1
Definitions</B>. As used in the Loan Documents, the word &#147;shall&#148; is mandatory, the word &#147;may&#148; is permissive, the word &#147;or&#148; is not exclusive, the words &#147;includes&#148; and &#147;including&#148; 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: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Account</B>&#148; is any &#147;account&#148; as 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 Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Account Advance Maturity Date</B>&#148;
is eighteen (18)&nbsp;months from the Effective Date. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Account Debtor</B>&#148; is as defined in the Code and shall include,
without limitation, any person liable on any Financed Receivable, such as, a guarantor of the Financed Receivable and any issuer of a letter of credit or banker&#146;s acceptance. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Adjusted Quick Ratio</B>&#148; is the ratio of (a)&nbsp;Quick Assets to (b)&nbsp;Current Liabilities minus Deferred Revenue. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Adjustments</B>&#148; are all discounts, allowances, returns, recoveries, disputes, claims of any kind (including, without
limitation, counterclaims or warranty claims), offsets, defenses, rights of recoupment, rights of return, or short payments, asserted by or on behalf of any Account Debtor for any Financed Receivable. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">25 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Advance</B>&#148; is defined in Section&nbsp;2.1.1 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Advance Rate</B>&#148; is (i)&nbsp;with respect to Accounts owing from an Account Debtor which has its principal place of business in
the United States, eighty percent (80%)&nbsp;and (ii)&nbsp;with respect to Accounts owing from an Account Debtor which does not have its principal place of business in the United States, seventy percent (70%), in each case, net of any offsets
related to each specific Account Debtor, or such other percentage as Bank establishes under Section&nbsp;2.1.1 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Affiliate</B>&#148; of any Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that Person&#146;s senior executive officers, directors, partners, and, for any Person that is a limited liability company, that Person&#146;s managers and members. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Agreement</B>&#148; is defined in the preamble of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Applicable Rate</B>&#148; is a per annum rate equal to the Prime Rate plus (i)&nbsp;with respect to Financed Receivables where the
Eligible Accounts are owing from an Account Debtor which has its principal place of Business in the United States, four and one half percent (4.50%)&nbsp;and (ii)&nbsp;with respect to Financed Receivables where the Eligible Accounts are owing from
an Account Debtor which does not have its principal place of Business in the United States, three and fifty three hundredths of one percent (3.53%). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Bank</B>&#148; is defined in the preamble of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Bank Entities</B>&#148; is defined in Section&nbsp;12.10 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Bank Expenses</B>&#148; are all audit fees and expenses, costs, and expenses (including reasonable attorneys&#146; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Bank Services</B>&#148; 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&#146;s various agreements related thereto (each, a &#147;<B>Bank Services Agreement</B>&#148;).
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Borrower</B>&#148; is defined in the preamble of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Borrower&#146;s Books</B>&#148; are all Borrower&#146;s books and records including ledgers, federal and state tax returns, records
regarding Borrower&#146;s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">26 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Borrowing Resolutions</B>&#148; are, with respect to any Person, those resolutions
substantially in the form attached hereto as <U>Exhibit&nbsp;C</U>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Business Day</B>&#148; is any day that is not a Saturday,
Sunday or a day on which Bank is closed. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Cash Collateral Account</B>&#148; is defined in Section&nbsp;2.8 of this Agreement.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Cash Equivalents</B>&#148; means (a)&nbsp;marketable direct obligations issued or unconditionally guaranteed by the United
States or any agency or any State thereof having maturities of not more than one (1)&nbsp;year from the date of acquisition; (b)&nbsp;commercial paper maturing no more than one (1)&nbsp;year after its creation and having the highest rating from
either Standard&nbsp;&amp; Poor&#146;s Ratings Group or Moody&#146;s Investors Service, Inc.; (c)&nbsp;Bank&#146;s certificates of deposit issued maturing no more than one (1)&nbsp;year after issue; and (d)&nbsp;money market funds at least
ninety-five percent (95%)&nbsp;of the assets of which constitute Cash Equivalents of the kinds described in clauses&nbsp;(a) through&nbsp;(c) of this definition. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Claims</B>&#148; is defined in Section&nbsp;12.2 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Code</B>&#148; is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of
California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article
or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank&#146;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 &#147;<B>Code</B>&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Collateral</B>&#148; is any and all properties, rights and assets of Borrower described on <U>Exhibit&nbsp;A</U>. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Collateral Account</B>&#148; is any Deposit Account, Securities Account, or Commodity Account. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Collections</B>&#148; are all funds received by Bank from or on behalf of an Account Debtor for Financed Receivables. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Commodity Account</B>&#148; is any &#147;commodity account&#148; as defined in the Code with such additions to such term as may
hereafter be made. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Compliance Certificate</B>&#148; is attached hereto as <U>Exhibit&nbsp;B</U>. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">27 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Contingent Obligation</B>&#148; is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a)&nbsp;any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co&#150;made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b)&nbsp;any obligations for undrawn letters of credit for the account of that Person; and (c)&nbsp;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 &#147;Contingent Obligation&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Control Agreement</B>&#148; 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
Collateral Account. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Copyrights</B>&#148; are any and all copyright rights, copyright applications, copyright registrations and
like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Credit Extension</B>&#148; is any Advance or any other extension of credit by Bank for Borrower&#146;s benefit under this Agreement.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Current Liabilities</B>&#148; are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate
amount of Borrower&#146;s Total Liabilities that mature within one (1)&nbsp;year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Deferred Revenue</B>&#148; is all amounts
received or invoiced, as appropriate, in advance of performance under contracts and not yet recognized as revenue. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Deposit
Account</B>&#148; is any &#147;deposit account&#148; as defined in the Code with such additions to such term as may hereafter be made. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Dollars</B>,&#148; &#147;<B>dollars</B>&#148; or use of the sign &#147;<B>$</B>&#148; means only lawful money of the United States
and not any other currency, regardless of whether that currency uses the &#147;$&#148; sign to denote its currency or may be readily converted into lawful money of the United States. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Effective Date</B>&#148; is defined in the preamble of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Electronic Deposit Capture</B>&#148; is defined in Section&nbsp;2.8 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Eligible Accounts</B>&#148; are billed Accounts in the ordinary course of Borrower&#146;s business that meet all Borrower&#146;s
representations and warranties in Section&nbsp;5.3 of this Agreement, have been, at the option of Bank, confirmed in accordance with Section&nbsp;2.1.1(d) of this Agreement, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">28 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
and are due and owing from Account Debtors deemed creditworthy by Bank in its sole discretion. Without limiting the fact that the determination of which Accounts are eligible hereunder is a
matter of Bank discretion in each instance, Eligible Accounts shall not include the following Accounts (which listing may be amended or changed in Bank&#146;s discretion with notice to Borrower): </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Accounts for which the Account Debtor is Borrower&#146;s Affiliate, officer, employee, or agent; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Accounts that the Account Debtor has not paid within one hundred twenty (120)&nbsp;days of invoice date regardless of invoice payment
period terms; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Accounts owing from an Account Debtor if fifty percent (50%)&nbsp;or more of the Accounts owing from such Account
Debtor have not been paid within one hundred twenty (120)&nbsp;days of invoice date; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) Accounts billed and/or payable outside of the
United States; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) 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 &#147;contra&#148; 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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) 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; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a &#147;sale guaranteed&#148;, &#147;sale
or return&#148;, &#147;sale on approval&#148;, or other terms if Account Debtor&#146;s payment may be conditional; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) 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); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i) Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower&#146;s failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress
billings, milestone billings, or fulfillment contracts); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) Accounts owing from an Account Debtor the amount of which may be subject to
withholding based on the Account Debtor&#146;s satisfaction of Borrower&#146;s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(k) Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">29 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(l) 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 in its sole discretion wherein the Account Debtor acknowledges that (i)&nbsp;it has title to and has ownership of the goods
wherever located, (ii)&nbsp;a bona fide sale of the goods has occurred, and (iii)&nbsp;it owes payment for such goods in accordance with invoices from Borrower (sometimes called &#147;bill and hold&#148; accounts); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(m) Accounts for which the Account Debtor has not been invoiced; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(n) Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower&#146;s business;
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(o) Accounts subject to chargebacks or other payment deductions taken by an Account Debtor with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the ordinary course of its business; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(p) Accounts arising from
product returns and/or exchanges (sometimes called &#147;warranty&#148; or &#147;RMA&#148; accounts); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(q) 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, or becomes insolvent, or goes out of business; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(r) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such
Deferred Revenue); and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(s) Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including,
without limitation, accounts represented by &#147;refreshed&#148; or &#147;recycled&#148; invoices. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Equipment</B>&#148; is all
&#147;equipment&#148; 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>ERISA</B>&#148; is the Employee Retirement Income Security Act of 1974, and its regulations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Events of Default</B>&#148; are set forth in Section&nbsp;8 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Exchange Act</B>&#148; is the Securities Exchange Act of 1934, as amended. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Facility Fee</B>&#148; is defined in Section&nbsp;2.4 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Finance Charges</B>&#148; is defined in Section&nbsp;2.5 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Financed Receivables</B>&#148; are all those Eligible Accounts, including their proceeds which Bank finances and makes an Advance, as
set forth in Section&nbsp;2.1.1 of this Agreement. A Financed Receivable stops being a Financed Receivable (but remains Collateral) when the Advance made for the Financed Receivable has been fully paid. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">30 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Financed Receivable Balance</B>&#148; is the total outstanding gross face amount, at any
time, of any Financed Receivable. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Foreign Currency</B>&#148; means lawful money of a country other than the United States. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Foreign Subsidiary</B>&#148; means any Subsidiary which is not a Domestic Subsidiary. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Funding Date</B>&#148; is any date which a Credit Extension is made to or on account of Borrower which shall be a Business Day. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>FX Contract</B>&#148; 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>GAAP</B>&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Good Faith Deposit</B>&#148; is defined in Section&nbsp;2.10 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Governmental Approval</B>&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Governmental Authority</B>&#148; 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Guarantor</B>&#148; is any present or future guarantor of the Obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Indebtedness</B>&#148; is (a)&nbsp;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)&nbsp;obligations evidenced by notes, bonds, debentures or similar instruments, (c)&nbsp;capital lease obligations and (d)&nbsp;Contingent Obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Indemnified Person</B>&#148; is defined in Section&nbsp;12.2 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Insolvency Proceeding</B>&#148; is any proceeding by or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">31 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Intellectual Property</B>&#148; means all of Borrower&#146;s right, title, and interest
in and to the following: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) its Copyrights, Trademarks and Patents; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating
manuals; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) any and all source code; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) any and all design rights which may be available to a Borrower; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Inventory</B>&#148; is all &#147;inventory&#148; as defined in the Code in effect on the Effective Date 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&#146;s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Investment</B>&#148; is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Invoice Transmittal</B>&#148; shows Eligible Accounts which Bank may
finance and, for each such Account, includes the Account Debtor&#146;s, name, address, invoice amount, invoice date and invoice number. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>IP Agreement</B>&#148; is that certain Intellectual Property Security Agreement of even date herewith executed and delivered by
Borrower to Bank, as amended, modified or restated from time to time. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Key Person</B>&#148; is any of Borrower&#146;s Chief
Executive Officer or Chief Financial Officer, who are, as of the Effective Date, Joseph Ram and Vernon A. LoForti, respectively. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Letter of Credit</B>&#148; is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an
application, guarantee, indemnity, or similar agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Lien</B>&#148; 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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">32 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Loan Documents</B>&#148; are, collectively, this Agreement, the Perfection Certificate,
any Banks Services Agreement, the IP Agreement, the Borrowing Resolutions, any note, or notes or guaranties executed by Borrower and/or any Guarantor, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of
Bank in connection with this Agreement, all as amended, restated, or otherwise modified. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Lockbox</B>&#148; is defined in
Section&nbsp;2.8 of this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Material Adverse Change</B>&#148; is: (a)&nbsp;a material impairment in the perfection or
priority of Bank&#146;s Lien in the Collateral or in the value of such Collateral; (b)&nbsp;a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; or (c)&nbsp;a material impairment of the prospect
of repayment of any portion of the Obligations; or (d)&nbsp;Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section&nbsp;6 of this Agreement during the next succeeding financial reporting period. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Obligations</B>&#148; are Borrower&#146;s obligations to pay when due any debts, principal, interest, Bank Expenses and other amounts
Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank, and to perform Borrower&#146;s duties under the Loan Documents. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Operating Documents</B>&#148; are, for any Person, such
Person&#146;s formation documents, as certified with the Secretary of State of such Person&#146;s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a)&nbsp;if such Person is a corporation, its bylaws in
current form, (b)&nbsp;if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c)&nbsp;if such Person is a partnership, its partnership agreement (or similar agreement), each of the
foregoing with all current amendments or modifications thereto. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Patents</B>&#148; means all patents, patent applications and
like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Perfection Certificate</B>&#148; is defined in Section&nbsp;5.1 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Permitted Indebtedness</B>&#148; is: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Borrower&#146;s Indebtedness to Bank under this Agreement and the other Loan Documents; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Indebtedness existing on the Effective Date which is shown on the Perfection Certificate; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Subordinated Debt; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d)
Unsecured Indebtedness to trade creditors incurred in the ordinary course of business; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">33 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) Indebtedness incurred as a result of endorsing negotiable instruments received in the
ordinary course of business; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) Indebtedness secured by Liens permitted under clauses&nbsp;(a) and&nbsp;(c) of the definition of
&#147;Permitted Liens&#148; hereunder; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness&nbsp;(a) through&nbsp;(f) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Permitted Investments</B>&#148; are: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate
(but specifically excluding any future Investments in any Subsidiaries unless otherwise permitted hereunder); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Investments consisting
of Cash Equivalents; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of Borrower&#146;s business; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) Investments consisting of deposit accounts in which Bank has a first
priority perfected security interest; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) Investments accepted in connection with Transfers permitted by Section&nbsp;7.1 of this
Agreement; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) Investments by Borrower in Subsidiaries in the ordinary course of business not to exceed Five Million Dollars ($5,000,000)
in the aggregate in any fiscal year; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Investments consisting of (i)&nbsp;travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business, and (ii)&nbsp;loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or
agreements approved by Borrower&#146;s Board of Directors; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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; and </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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&nbsp;(i) shall not apply to Investments of Borrower in any Subsidiary. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">34 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Permitted Liens</B>&#148; are: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Liens existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement and the other Loan
Documents; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Liens for taxes, fees, assessments or other government charges or levies, either (i)&nbsp;not due and payable or
(ii)&nbsp;being contested in good faith and for which Borrower maintains adequate reserves on Borrower&#146;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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) purchase money Liens (i)&nbsp;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)&nbsp;existing on Equipment when acquired, if the Lien is confined to the property and improvements and the
proceeds of the Equipment; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(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 Fifty Thousand Dollars ($50,000) 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; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) Liens to secure payment of workers&#146; 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); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a)&nbsp;through&nbsp;(c), <U>but</U> 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; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) leases or subleases of real property granted in the ordinary course of Borrower&#146;s business (or,
if referring to another Person, in the ordinary course of such Person&#146;s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of
Borrower&#146;s business (or, if referring to another Person, in the ordinary course of such Person&#146;s business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) non-exclusive license of Intellectual Property granted to third parties in the ordinary course of business, and licenses of Intellectual
Property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United
States; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">35 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i) Liens arising from attachments or judgments, orders, or decrees in circumstances not
constituting an Event of Default under Sections&nbsp;8.4 and 8.7 of this Agreement; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) Liens in favor of other financial
institutions arising in connection with Borrower&#146;s deposit and/or securities accounts held at such institutions, provided that Bank has a first priority perfected security interest in the amounts held in such deposit and/or securities accounts.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Person</B>&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Prime Rate</B>&#148; 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 &#147;prime rate&#148; then in effect; provided 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 &#147;Prime Rate&#148; 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). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Quick Assets</B>&#148; is,
on any date, Borrower&#146;s consolidated, unrestricted cash and Cash Equivalents maintained with Bank, net accounts receivable aged less than one hundred twenty (120)&nbsp;days from invoice date, and investments with Bank with maturities of fewer
than twelve (12)&nbsp;months determined according to GAAP. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Reconciliation Period</B>&#148; is each calendar month. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Registered Organization</B>&#148; is any &#147;registered organization&#148; as defined in the Code with such additions to such term
as may hereafter be made. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Requirement of Law</B>&#148; 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Responsible Officer</B>&#148; is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Restricted License</B>&#148; is any material license or other agreement with
respect to which Borrower is the licensee (a)&nbsp;that prohibits or otherwise restricts Borrower from granting a security interest in Borrower&#146;s interest in such license or agreement or any other property, or (b)&nbsp;for which a default under
or termination of could interfere with Bank&#146;s right to sell any Collateral. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>SEC</B>&#148; shall mean the Securities and
Exchange Commission, any successor thereto, and any analogous Governmental Authority. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">36 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Securities Account</B>&#148; is any &#147;securities account&#148; as defined in the
Code with such additions to such term as may hereafter be made. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Subordinated Debt</B>&#148; is indebtedness incurred by Borrower
subordinated to all of Borrower&#146;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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Subsidiary</B>&#148; is, as to any Person, a corporation, partnership, limited liability company or
other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the
context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Tangible Net
Worth</B>&#148; is, on any date, Borrower&#146;s consolidated shareholder&#146;s equity minus any intangible assets. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Trademarks</B>&#148; 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">&#147;<B>Transfer</B>&#148; is defined in Section&nbsp;7.1 of this Agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><I></I></B><B>[</B><B><I>Signature page follows</I></B><B>]</B><B><I> </I></B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">37 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="86%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"><B>BORROWER</B></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">INFOSONICS CORPORATION</TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Vernon A. LoForti</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Name:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vernon A. LoForti</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vice President &amp; Chief Financial Officer</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"><B>BANK</B></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">SILICON VALLEY BANK</TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ William T. O&#146;Grady</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Name:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">William T. O&#146;Grady</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vice President</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[</B><B><I>Signature page to Loan and Security Agreement</I></B><B>] </B></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U>EXHIBIT A </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U>COLLATERAL DESCRIPTION </U></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Collateral consists of all of Borrower&#146;s right, title and interest in and to the following personal property: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting
obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">All Borrower&#146;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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Notwithstanding the foregoing, the Collateral does not include (a)&nbsp;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)&nbsp;any intent-to-use trademarks at all times prior
to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise; (c)&nbsp;any interest of Borrower as a lessee or sublessee under a real
property lease; (d)&nbsp;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); or (e)&nbsp;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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-1 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U>EXHIBIT B </U></B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt;margin-bottom:0pt">


<IMG SRC="g701450ex99_1pg040.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SPECIALTY FINANCE DIVISION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Compliance Certificate </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">I,
an authorized officer of INFOSONICS CORPORATION (&#147;Borrower&#148;) certify solely in my capacity as such officer, and not as an individual, that under the Loan and Security Agreement (as amended, the &#147;Agreement&#148;) between Borrower and
Silicon Valley Bank (&#147;Bank&#148;) as follows for the period ending &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (all capitalized terms used herein shall have the
meaning set forth in this Agreement): </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Borrower represents and warrants for each Financed Receivable: </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Each Financed Receivable is an Eligible Account; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower is the owner with legal right to sell, transfer, assign and encumber such Financed Receivable; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The correct amount is on the Invoice Transmittal and is not disputed; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Payment is not contingent on any obligation or contract and Borrower has fulfilled all its obligations as of the Invoice Transmittal date;
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Each Financed Receivable is based on an actual sale and delivery of goods and/or services rendered, is due to Borrower, is not past due
or in default, has not been previously sold, assigned, transferred, or pledged and is free of any liens, security interests and encumbrances other than Permitted Liens; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">There are no defenses, offsets, counterclaims or agreements for which the Account Debtor may claim any deduction or discount; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower reasonably believes no Account Debtor is insolvent or subject to any Insolvency Proceedings; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower has not filed or had filed against it Insolvency Proceedings and does not anticipate any filing; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Bank has the right to endorse and/ or require Borrower to endorse all payments received on Financed Receivables and all proceeds of
Collateral. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">No representation, warranty or other statement of Borrower in any certificate or written statement given to Bank contains any
untrue statement of a material fact or omits to state a material fact necessary to make the statement contained in the certificates or statement not misleading. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">B-1 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Additionally, Borrower represents and warrants as follows: </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and
in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. The execution,
delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower&#146;s organizational documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not
in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower has good title to the Collateral, free of Liens except Permitted Liens. All inventory is in all material respects of good and
marketable quality, free from material defects. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower is not an &#147;investment company&#148; or a company &#147;controlled&#148; by
an &#147;investment company&#148; 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 has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change.
None of Borrower&#146;s or any Subsidiary&#146;s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower&#146;s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under
GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently
conducted except where the failure to obtain or make such consents, declarations, notices or filings would not reasonably be expected to cause a Material Adverse Change. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Borrower is in compliance with the Financial Covenant(s) set forth in Section&nbsp;6.7 of this Agreement. Attached are the required documents
supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with
any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">B-2 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Financial Covenant </U></B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="63%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Required</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Actual</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Compliance</TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" NOWRAP> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Tangible Net Worth</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>See&nbsp;Section&nbsp;6.7(a)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">$</TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>Yes</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>No</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" NOWRAP> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Adjusted Quick Ratio</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>1.75 to 1.00</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>Yes</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP>No</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">All other representations and warranties in this Agreement are true and correct in all material respects on
this date, and Borrower represents that there is no existing Event of Default. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Sincerely,</TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Signature</TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title</TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Date</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">B-3 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U></U></B><U><B>EXHIBIT C</B><B> </B></U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>BORROWING RESOLUTIONS </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt;margin-bottom:0pt">


<IMG SRC="g701450ex99_1pg043.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>CORPORATE BORROWING CERTIFICATE </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="9%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="28%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>B<SMALL>ORROWER</SMALL></B><SMALL></SMALL>:<B></B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>Infosonics Corporation</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" ALIGN="right"><B>D<SMALL>AT</SMALL></B><SMALL><B>E</B></SMALL>:&nbsp;&nbsp;March&nbsp;27, 2014</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><B>B<SMALL>ANK</SMALL>: </B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>Silicon Valley Bank</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">I hereby certify as follows, as of the date set forth above: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">1. I am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">2. Borrower&#146;s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Maryland. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">3. Attached hereto are true, correct and complete copies of Borrower&#146;s Articles/Certificate of Incorporation (including amendments), as filed with the
Secretary of State of the state in which Borrower is incorporated as set forth above. Such Articles/Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date
hereof. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">4. The following resolutions were duly and validly adopted by Borrower&#146;s Board of Directors at a duly held meeting of such directors (or
pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Silicon Valley
Bank (&#147;Bank&#148;) may rely on them until Bank receives written notice of revocation from Borrower. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>R<SMALL>ESOLVED</SMALL></B><SMALL></SMALL>, that <B>any one </B>of the following officers or employees of Borrower, whose names, titles and
signatures are below, may act on behalf of Borrower: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="31%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:19.10pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Name</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:15.05pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Title</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:30.60pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Signature</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1.00pt solid #000000; width:35.95pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Authorized<BR>to Add or<BR>Remove<BR>Signatories</P></TD></TR>


<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">Vernon A. LoForti</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">VP, CFO and Secretary</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Vernon A. LoForti</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">Joseph Ram</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">President &amp; CEO</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Joseph Ram</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>R<SMALL>ESOLVED</SMALL> F<SMALL>URTHER</SMALL>, </B>that <B>any one</B> of the persons designated above
with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>R<SMALL>ESOLVED</SMALL> F<SMALL>URTHER</SMALL>, </B>that such individuals may, on behalf of
Borrower:<B> </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Borrow Money</B>. Borrow money from Bank. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Execute Loan Documents</B>. Execute any loan documents Bank requires. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Grant Security</B>. Grant Bank a security interest in any of Borrower&#146;s assets. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Negotiate Items</B>. Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an
interest and receive cash or otherwise use the proceeds. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Apply for Letters of Credit</B>. Apply for letters of credit from Bank. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Enter Derivative Transactions</B>. Execute spot or forward foreign exchange contracts, interest rate swap agreements, or other derivative
transactions. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Further Acts</B>. Designate other individuals to request advances, pay fees and costs and execute other documents or
agreements (including documents or agreement that waive Borrower&#146;s right to a jury trial) they believe to be necessary to effect these resolutions. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><B>R<SMALL>ESOLVED</SMALL> F<SMALL>URTHER</SMALL>,</B> that all acts authorized by the above resolutions and any prior acts relating thereto
are ratified. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">5. The persons listed above are Borrower&#146;s officers or employees with their titles and signatures shown next to their names. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="87%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Vernon A. LoForti</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Name:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vernon A. LoForti</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vice President, CFO and Secretary</TD></TR>
</TABLE></DIV> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman"><I></I>*** <I>If the Secretary, Assistant Secretary or other certifying officer executing above is
designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.</I> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">I, the President and Chief Executive Officer of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.
</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="87%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Joseph Ram</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Name:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Joseph Ram</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">President and CEO</TD></TR>
</TABLE></DIV>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>d701450dex992.htm
<DESCRIPTION>EX-99.2
<TEXT>
<HTML><HEAD>
<TITLE>EX-99.2</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.2 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>INTELLECTUAL PROPERTY SECURITY AGREEMENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This Intellectual Property Security Agreement (&#147;Agreement&#148;) is entered into as of the Effective Date by and between SILICON VALLEY
BANK (&#147;Bank&#148;) and INFOSONICS CORPORATION. (&#147;Grantor&#148;). </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>RECITALS </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A. Bank has agreed to make certain advances of money and to extend certain financial accommodation to Grantor (the &#147;Loans&#148;) in the
amounts and manner set forth in that certain Loan and Security Agreement by and between Bank and Grantor dated the Effective Date (as the same may be amended, modified or supplemented from time to time, the &#147;Loan Agreement&#148;; capitalized
terms used herein are used as defined in the Loan Agreement). Bank is willing to make the Loans to Grantor, but only upon the condition, among others, that Grantor shall grant to Bank a security interest in certain Copyrights, Trademarks, Patents,
and Mask Works (as each term is described below) to secure the obligations of Grantor under the Loan Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">B. Pursuant to the terms
of the Loan Agreement, Grantor has granted to Bank a security interest in all of Grantor&#146;s right, title and interest, whether presently existing or hereafter acquired, in, to and under all of the Collateral. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, as collateral
security for the prompt and complete payment when due of its obligations under the Loan Agreement, Grantor hereby represents, warrants, covenants and agrees as follows: </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>AGREEMENT </U></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">1. <U>Grant of
Security Interest</U>. To secure its obligations under the Loan Agreement, Grantor grants and pledges to Bank a security interest in all of Grantor&#146;s right, title and interest in, to and under its intellectual property (all of which shall
collectively be called the &#147;Intellectual Property Collateral&#148;), including, without limitation, the following: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(a) Any and all
copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held, including without limitation those set forth on <U>Exhibit A</U> attached hereto (collectively, the &#147;Copyrights&#148;); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(b) Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or
hereafter existing, created, acquired or held; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(c) Any and all design rights that may be available to Grantor now or hereafter existing,
created, acquired or held; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(d) All patents, patent applications and like protections including, without limitation, improvements,
divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, including without limitation the patents and patent applications set forth on <U>Exhibit B</U> attached hereto (collectively, the &#147;Patents&#148;);
</P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(e) 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 Grantor connected with and symbolized by such trademarks, including without limitation those set forth on <U>Exhibit C</U> attached hereto (collectively, the
&#147;Trademarks&#148;); </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(f) All mask works or similar rights available for the protection of semiconductor chips, now owned or hereafter
acquired, including, without limitation those set forth on <U>Exhibit D</U> attached hereto (collectively, the &#147;Mask Works&#148;); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(g) Any and all claims for damages by way of past, present and future infringements of any of the rights included above, 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; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(h) All licenses or other rights to use any of the Copyrights, Patents, Trademarks, or Mask Works and all license fees and royalties arising
from such use to the extent permitted by such license or rights; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(i) All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks, Patents, or Mask Works; and </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">(j) All proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any of the foregoing. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">2. <U>Recordation</U>. Grantor
authorizes the Commissioner for Patents, the Commissioner for Trademarks and the Register of Copyrights and any other government officials to record and register this Agreement upon request by Bank. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">3. <U>Authorization</U>. Grantor hereby authorizes Bank to (a)&nbsp;modify this Agreement unilaterally by amending the exhibits to this
Agreement to include any Intellectual Property Collateral which Grantor obtains subsequent to the date of this Agreement, and (b)&nbsp;file a duplicate original of this Agreement containing amended exhibits reflecting such new Intellectual Property
Collateral. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">4. <U>Loan Documents</U>. This Agreement has been entered into pursuant to and in conjunction with the Loan Agreement, which
is hereby incorporated by reference. The provisions of the Loan Agreement shall supersede and control over any conflicting or inconsistent provision herein. The rights and remedies of Bank with respect to the Intellectual Property Collateral are as
provided by the Loan Agreement and related documents, and nothing in this Agreement shall be deemed to limit such rights and remedies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">5.
<U>Execution in Counterparts</U>. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., &#147;pdf&#148; or &#147;tif&#148; format) shall be effective as delivery of a manually executed counterpart of this Agreement.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">6. <U>Successors and Assigns</U>. This Agreement will be binding on and shall inure to the benefit of the parties hereto and their
respective successors and assigns. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">7. <U>Governing Law</U>. This Agreement and any claim, controversy, dispute or cause of action
(whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the United States and the
State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[</B><B><I>Balance of Page Intentionally Left Blank</I></B><B>] </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">IN WITNESS WHEREOF, the parties have caused this Intellectual Property Security Agreement to be
duly executed by its officers thereunto duly authorized as of the first date written above. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="89%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">GRANTOR:</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">INFOSONICS CORPORATION.</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Vernon A. LoForti</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vernon A. LoForti</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vice President &amp; Chief Financial Officer</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">BANK:</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">SILICON VALLEY BANK</TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ William T. O&#146;Grady</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">William T. O&#146;Grady</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Title:</TD>
<TD VALIGN="bottom"><FONT STYLE="font-size:8pt">&nbsp;</FONT></TD>
<TD VALIGN="top">Vice President</TD></TR>
</TABLE></DIV> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[</B><B><I>Signature Page to Intellectual Property Security Agreement</I></B><B>] </B></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>EXHIBIT A </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Copyrights </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="84%"></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1.00pt solid #000000; width:37.25pt; font-size:8pt; font-family:Times New Roman">Description</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Number</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Date</TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None registered.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>EXHIBIT B </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Patents </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="84%"></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1.00pt solid #000000; width:37.25pt; font-size:8pt; font-family:Times New Roman">Description</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Number</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Date</TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None recorded</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>EXHIBIT C </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Trademarks </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="84%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1.00pt solid #000000; width:37.25pt; font-size:8pt; font-family:Times New Roman">Description</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Number</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Date</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">IQ</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">85404129</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8/22/11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">VKL</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">85277597</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3/25/11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">VERYKOOL SAN DIEGO, CALIFORNIA</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">85724039</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9/8/12</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">INFOSONICS</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">78962810</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8/29/06</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Design</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">77511791</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">6/30/08</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">VERYKOOL</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">77036229</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11/3/06</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><U>EXHIBIT D </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Mask Works </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="84%"></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1.00pt solid #000000; width:37.25pt; font-size:8pt; font-family:Times New Roman">Description</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Number</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">Registration/<br>Application<br>Date</TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>
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