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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001193125-10-140416.txt : 20100616
<SEC-HEADER>0001193125-10-140416.hdr.sgml : 20100616
<ACCEPTANCE-DATETIME>20100616113936
ACCESSION NUMBER:		0001193125-10-140416
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20100611
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20100616
DATE AS OF CHANGE:		20100616

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			IRIDEX CORP
		CENTRAL INDEX KEY:			0001006045
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				770210467
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1230

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27598
		FILM NUMBER:		10899865

	BUSINESS ADDRESS:	
		STREET 1:		1212 TERRA BELLA AVE
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
		BUSINESS PHONE:		6509404700

	MAIL ADDRESS:	
		STREET 1:		1212 TERRA BELLA AVENUE
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="line-height:0px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P>
<P STYLE="margin-top:4px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>UNITED STATES </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Washington, DC 20549 </B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center>
<P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>FORM 8-K </B>
</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>CURRENT REPORT </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Pursuant to Section&nbsp;13 or 15(d) of </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>The Securities Exchange Act of 1934 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Date of Report (Date of earliest event reported) </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>June&nbsp;11, 2010 </B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center>
<P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="6"><B>IRIDEX
CORPORATION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>(Exact name of registrant as specified in its charter) </B></FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Delaware</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>0-27598</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>77-0210467</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(State or other jurisdiction</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>of incorporation)</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(Commission</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>File Number)</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(IRS Employer</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Identification No.)</B></FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>1212 Terra Bella Avenue </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Mountain View, California 94043 </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(Address of principal executive offices, including zip code) </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>(650) 940-4700 </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(Registrant&#146;s telephone number, including area code) </B></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(Former name or former address, if changed since last report)
</B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">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): </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </FONT></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </FONT></TD></TR></TABLE>
<P STYLE="font-size:8px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P>

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


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Item&nbsp;1.01</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Entry into a Material Definitive Agreement. </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">On June&nbsp;11, 2010, Iridex Corporation (the &#147;Company&#148;), entered into a Loan and Security Agreement (the &#147;Loan Agreement&#148;) with
Silicon Valley Bank (the &#147;Lender&#148;), providing for a $5.0 million secured revolving loan facility, with availability to be subject to an accounts receivable borrowing base formula in certain circumstances. As of June&nbsp;16, 2010, no loans
have been made or requested under the Loan Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:0px;"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrowings under the revolving loan facility accrue interest at a
per annum rate equal to the Lender&#146;s prime rate as in effect from time to time plus a margin, subject to a minimum prime rate of 4.00%. Interest on borrowings under the revolving loan facility is payable monthly. The Company may borrow, repay
and reborrow funds under the revolving loan facility until June&nbsp;11, 2012, at which time the revolving loan facility matures and all outstanding amounts under the revolving loan facility must be repaid. In certain circumstances, the Company may
be required to immediately repay principal amounts outstanding when it receives payments on its accounts receivable. On June
11</FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">th</SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2">, 2010, the Company paid a commitment fee of $12,500
and is required to pay a commitment fee of $12,500 on June&nbsp;11, 2011. In the event the Company elects to terminate the revolving loan facility before the maturity date, the Company is required to pay a fee in the amount of $50,000. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">All obligations under the Loan Agreement are secured by substantially all of the property of the Company, excluding the Company&#146;s intellectual
property but including any proceeds derived from the Company&#146;s intellectual property. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Loan Agreement contains customary covenants
for a revolving loan facility of this size and type that include, among others, covenants that limit the Company&#146;s and its subsidiaries&#146; ability to dispose of assets, enter into mergers or acquisitions, incur indebtedness, incur liens, pay
dividends or make distributions on the Company&#146;s capital stock, make investments or loans, and enter into certain affiliate transactions, in each case subject to customary exceptions for a credit facility of this size and type. The Loan
Agreement also contains a financial covenant requiring the Company to maintain a certain adjusted quick ratio. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Loan Agreement contains
customary events of default for a revolving loan facility of this size and type that include, among others, non-payment defaults, covenant defaults, a default in the event a material adverse change occurs, defaults in the event the Company&#146;s
assets are attached or the Company is enjoined from doing business, bankruptcy and insolvency defaults, cross-defaults to certain other material indebtedness, material judgment defaults, and inaccuracy of representations and warranties. The
occurrence of an event of default could result in an increase to the applicable interest rate of 5.0%, an acceleration of all obligations under the Loan Agreement, an obligation of the Company to repay all obligations in full, and a right by the
Lender to exercise all remedies available to it under the Loan Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">A copy of the Loan Agreement is attached as Exhibit 10.1 to this
Current Report and is incorporated by reference herein. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Item&nbsp;2.03</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The information set forth under Item&nbsp;1.01, &#147;Entry into a Material Definitive Agreement,&#148; is incorporated herein by reference. </FONT></P>
<P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Item&nbsp;9.01.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Financial Statements and Exhibits. </B></FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Exhibits </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1px solid #000000;width:25pt" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Exhibit<BR>No.</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="border-bottom:1px solid #000000;width:39pt" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Description</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" NOWRAP ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">10.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Loan and Security Agreement, dated as of June 11, 2010, by and between Iridex Corporation and Silicon Valley Bank.</FONT></TD></TR></TABLE>

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

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SIGNATURES </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>IRIDEX CORPORATION</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">By:</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;T<SMALL>HEODORE</SMALL> A.
B<SMALL>OUTACOFF&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Theodore A. Boutacoff</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>President and Chief Executive Officer</B></FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date: June&nbsp;16, 2010 </FONT></P>

<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>EXHIBIT INDEX </B></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="border-bottom:1px solid #000000;width:25pt" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Exhibit<BR>No.</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="border-bottom:1px solid #000000;width:39pt" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Description</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" NOWRAP ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">10.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Loan and Security Agreement, dated as of June 11, 2010, by and between Iridex Corporation and Silicon Valley Bank.</FONT></TD></TR></TABLE>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>dex101.htm
<DESCRIPTION>LOAN AND SECURITY AGREEMENT
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<HTML><HEAD>
<TITLE>Loan and Security Agreement</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Exhibit 10.1 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>LOAN AND SECURITY AGREEMENT </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>THIS LOAN AND SECURITY AGREEMENT</B> (this &#147;<B>Agreement</B>&#148;) dated as of June&nbsp;11, 2010 (the &#147;<B>Effective
Date</B>&#148;) between <B>SILICON VALLEY BANK</B>, a California corporation (&#147;<B>Bank</B>&#148;), and <B>IRIDEX CORPORATION</B>, a Delaware corporation (&#147;<B>Borrower</B>&#148;), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. The parties agree as follows: </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>1</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>ACCOUNTING AND OTHER TERMS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following
GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section&nbsp;13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent
such terms are defined therein. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>LOAN AND TERMS OF PAYMENT</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1 Promise to Pay. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1.1 Revolving Advances. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) <U>Availability</U>. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall
make advances against the Borrowing Base (&#147;<B>Formula Advances</B>&#148;) not exceeding the Availability Amount. Amounts borrowed hereunder may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable
terms and conditions precedent herein. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%;padding-bottom:0px;"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) <U>Streamline Period</U>. At any time in which
(i)&nbsp;there are no outstanding Advances or (ii)&nbsp;Borrower&#146;s Net Cash is greater than the Net Cash Threshold, Borrower may, at its option, commencing on the first
(1</FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">st</SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2">)&nbsp;day of the next month, elect to be in a
streamline period (each, a &#147;<B>Streamline Period</B>&#148;). At least five (5)&nbsp;days prior to requesting that a Streamline Period be put into effect, Borrower shall give Bank written notice thereof. On or prior to the Business Day
immediately preceding the commencement of the Streamline Period, Borrower will either (x)&nbsp;provide evidence satisfactory to Bank that Borrower&#146;s Net Cash is greater than the Net Cash Threshold, or (y)&nbsp;pay to Bank, by wire transfer, an
amount sufficient to repay in full all Obligations. Any Streamline Period elected by Borrower pursuant to clause (x)&nbsp;above will immediately terminate if Borrower&#146;s Net Cash is equal to or less than the Net Cash Threshold. During any
Streamline Period elected by Borrower pursuant to clause (y)&nbsp;above, Borrower may not request any Credit Extensions, and Bank shall have no obligation to make any Credit Extensions. To terminate a Streamline Period, Borrower shall provide Bank
at least five (5)&nbsp;days prior written notice thereof together with such information relating to the Eligible Accounts and other Collateral as Bank may specify. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) <U>Termination; Repayment</U>. The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1.2 Letters of Credit Sublimit. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit denominated in Dollars or a Foreign
Currency for Borrower&#146;s account. The aggregate Dollar Equivalent amount utilized for the issuance of Letters of Credit shall at all times reduce the amount otherwise available for Advances under the Revolving Line. The aggregate Dollar
Equivalent of the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) may not exceed the lesser of (i)&nbsp;the sum of (A)&nbsp;One Million Dollars ($1,000,000), minus (B)&nbsp;all amounts used for Cash
Management Services, and minus (C)&nbsp;the FX Reduction Amount, or&nbsp;(ii) the sum of (A)&nbsp;the lesser of (1)&nbsp;the Revolving Line or (2)&nbsp;the Borrowing Base plus, during any Streamline Period, the Non Formula Amount, minus (B)&nbsp;the
outstanding principal amount of all Advances (including any amounts used for Cash Management Services), and minus (C)&nbsp;the FX Reduction Amount. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) If, on the Revolving Line Maturity Date (or the effective date of any termination of this Agreement), there are any
outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to one hundred five percent (105%)&nbsp;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. All Letters of Credit shall be in form and substance
acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank&#146;s standard Application and Letter of Credit Agreement (the &#147;<B>Letter of Credit Application</B>&#148;). Borrower agrees to execute any
further documentation in connection with the Letters of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for
Borrower&#146;s account or by Bank&#146;s interpretations of any Letter of Credit issued by Bank for Borrower&#146;s account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of
omission or commission, in following Borrower&#146;s instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1.3 Foreign Exchange Sublimit. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower commits to purchase from
or sell to Bank a specific amount of Foreign Currency (each, a &#147;<B>FX Forward Contract</B>&#148;) on a specified date (the &#147;<B>Settlement Date</B>&#148;). FX Forward Contracts shall have a Settlement Date of at least one (1)&nbsp;FX
Business Day after the contract date and shall be subject to a reserve of ten percent (10%)&nbsp;of each outstanding FX Forward Contract (the &#147;<B>FX Reserve</B>&#148;). The aggregate amount of FX Forward Contracts at any one time may not exceed
ten (10)&nbsp;times the lesser of (a)&nbsp;the sum of (i)&nbsp;One Million Dollars ($1,000,000), minus (ii)&nbsp;all amounts used for Cash Management Services, and minus (iii)&nbsp;the Dollar Equivalent of the face amount of any outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit), or&nbsp;(b) the sum of (i)&nbsp;the lesser of (1)&nbsp;the Revolving Line or (2)&nbsp;the Borrowing Base plus, during any Streamline Period, the Non Formula Amount, minus (ii)&nbsp;the
outstanding principal amount of all Advances (including any amounts used for Cash Management Services), and minus (iii)&nbsp;the Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit). The amount otherwise available for Credit Extensions under the Revolving Line shall be reduced by an amount equal to ten percent (10%)&nbsp;of each outstanding FX Forward Contract (the &#147;<B>FX Reduction Amount</B>&#148;).&nbsp;Any
amounts needed to fully reimburse Bank for any amounts not paid by Borrower in connection with FX Forward Contracts will be treated as Advances under the Revolving Line (except for purposes of determining whether Borrower is in a Streamline Period)
and will accrue interest at the interest rate applicable to Advances. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1.4 Cash Management Services Sublimit.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower may use the Revolving Line for Bank&#146;s cash management services, which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified in Bank&#146;s various cash management services agreements (collectively, the &#147;<B>Cash Management Services</B>&#148;), in an aggregate amount not to exceed the
lesser of (a)&nbsp;the sum of (i)&nbsp;One Million Dollars ($1,000,000), minus (ii)&nbsp;the Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iii)&nbsp;the FX
Reduction Amount, or (b)&nbsp;the sum of (i)&nbsp;the lesser of (1)&nbsp;the Revolving Line or (2)&nbsp;the Borrowing Base plus, during any Streamline Period, the Non Formula Amount, minus (ii)&nbsp;the outstanding principal amount of all Advances,
minus (iii)&nbsp;the Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iv)&nbsp;the FX Reduction Amount. Any amounts Bank pays on behalf of Borrower for any
Cash Management Services will be treated as Advances (except for purposes of determining whether Borrower is in a Streamline Period) under the Revolving Line and will accrue interest at the interest rate applicable to Advances. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.1.5 Non Formula Line of Credit. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">During any Streamline Period, as part of the Revolving Line, Bank shall make non formula advances (the &#147;<B>Non Formula
Advance</B>&#148;) to Borrower in an aggregate amount not to exceed the lesser of (a)&nbsp;the Non Formula Amount, or (b)&nbsp;the sum of (i)&nbsp;the Revolving Line, minus (ii)&nbsp;the sum of all outstanding principal amounts of any Formula
Advances (including any amounts used for Cash Management Services), minus (iii)&nbsp;the Dollar Equivalent of the face </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iv)&nbsp;the FX Reduction Amount. The dollar amount of each Non Formula Advance shall
at all times reduce the amount otherwise available for Advances under the Revolving Line. Upon the termination of any Streamline Period, Borrower shall (x)&nbsp;deliver to Bank, as soon as possible, but in no event more than one (1)&nbsp;Business
Day after such termination, a Transaction Report containing detailed invoice reporting, signed by a Responsible Officer together with a current accounts receivable aging, and (y)&nbsp;if the outstanding principal amount of the Advances exceeds the
Availability Amount, Borrower shall immediately pay to Bank the excess and, in connection with same, hereby irrevocably authorizes Bank to debit any account of Borrower maintained by Borrower with Bank or any of Bank&#146;s Affiliates for the amount
of such excess. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.2 Overadvances. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">If, at any time, (a)&nbsp;the sum of (i)&nbsp;the outstanding principal amount of any Formula Advances (including any amounts used for
Cash Management Services), plus (ii)&nbsp;the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), plus (iii)&nbsp;the FX Reduction Amount, exceeds the lesser of the Revolving Line or the Borrowing
Base, or (b)&nbsp;the sum of (i)&nbsp;the outstanding principal amount of any Formula Advances (including any amounts used for Cash Management Services) and Non-Formula Advances, plus (ii)&nbsp;the face amount of any outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), plus (iii)&nbsp;the FX Reduction Amount, exceeds the Revolving Line, or (c)&nbsp;the outstanding principal balance of the Non-Formula Advances exceeds the Non-Formula Amount (the excess amount
set forth in (a), (b)&nbsp;and (c)&nbsp;above being an &#147;<B>Overadvance</B>&#148;), then Borrower shall immediately pay to Bank in cash such Overadvance. Without limiting Borrower&#146;s obligation to repay Bank any amount of the Overadvance,
Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.3
Payment of Interest on the Credit Extensions. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) <U>Advances</U>. Subject to Section&nbsp;2.3(b), the
principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate, plus the Applicable Margin, which interest shall be payable monthly in accordance with Section&nbsp;2.3(e) below.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) <U>Default Rate</U>. Immediately upon the occurrence and during the continuance of an Event of Default,
Obligations shall bear interest at a rate per annum which is five percent (5.00%)&nbsp;above the rate that is otherwise applicable thereto (the &#147;<B>Default Rate</B>&#148;) unless Bank otherwise elects from time to time in its sole discretion to
impose a smaller increase. Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the
highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section&nbsp;2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) <U>Adjustment to Interest Rate</U>. Changes to the interest rate of any
Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) <U>Debit of Accounts</U>. Bank may debit any of Borrower&#146;s deposit accounts, including the Designated Deposit
Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) <U>Payment; Interest Computation; Float Charge</U>. Interest is payable monthly on the last calendar day of each month
and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i)&nbsp;all Payments received after 12:00 p.m. Pacific time on any day shall be deemed received at the opening of business on the
next Business Day, and (ii)&nbsp;the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; <I>provided, however,</I> that if any Credit Extension is repaid on the same day on which it is made, such
day shall be included in computing interest on such Credit Extension. In addition, Bank shall be entitled to charge Borrower a &#147;float&#148; charge in an amount equal to three (3)&nbsp;Business Days interest, at the interest rate applicable to
the Advances whether or not any Advances are outstanding, on all Payments received by Bank. The float charge for each month shall be payable on the last day of the month. Bank shall not, however, be required to credit Borrower&#146;s account for the
amount of any item of payment which is unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrower&#146;s Designated Deposit Account for the amount of any item of payment which is returned to Bank unpaid. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.4 Fees. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower shall pay to Bank: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) <U>Commitment Fee</U>. A non-refundable commitment fee, fully earned as of the Effective Date, equal to Twenty Five
Thousand Dollars ($25,000) (the &#147;<B>Commitment Fee</B>&#148;) payable as follows: (i)&nbsp;Twelve Thousand Five Hundred Dollars ($12,500) on the Effective Date; and (ii)&nbsp;Twelve Thousand Five Hundred Dollars ($12,500) on the first
anniversary of the Effective Date; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) <U>Good Faith Deposit</U>. Borrower has paid to Bank a fully-earned
good faith 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
Commitment Fee; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) <U>Letter of Credit Fee</U>. Bank&#146;s customary fees and expenses for the issuance or
renewal of Letters of Credit, upon the issuance of such Letter of Credit, each anniversary of the issuance during the term of such Letter of Credit, and upon the renewal of such Letter of Credit by Bank; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) <U>Collateral Monitoring Fee</U>. In any month in which Borrower&#146;s Net Cash on any day in such month is less than
the Net Cash Threshold, a monthly collateral monitoring fee of Five Hundred Dollars ($500), payable in arrears on the last day of each such month (prorated for any partial month at the beginning and upon termination of this Agreement); provided that
Borrower shall not pay such fee prior to the initial Advance; and </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) <U>Bank Expenses</U>. All Bank Expenses (including reasonable
attorneys&#146; fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.5 Payments; Application of Payments. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) All payments (including prepayments) to be made by Borrower under any Loan Document shall be made in immediately
available funds in U.S. Dollars, without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on
the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) All payments with respect to the Obligations may be applied in such order and manner as Bank shall determine in its
sole discretion. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation
or application is not specified elsewhere in this Agreement. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>CONDITIONS OF LOANS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3.1 Conditions Precedent to Initial Credit Extension. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) duly executed original signatures to the Loan Documents; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) duly executed original signatures to the Control Agreement; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) Borrower&#146;s Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of
the State of Delaware as of a date no earlier than thirty (30)&nbsp;days prior to the Effective Date; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) duly
executed original signatures to the completed Borrowing Resolutions for Borrower; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) evidence that
(i)&nbsp;the Liens securing Indebtedness owed by Borrower to Wells Fargo Bank, National Association and American Medical Systems, Inc. and Laserscope will be terminated and (ii)&nbsp;the documents and/or filings evidencing the perfection of such
Liens, including without limitation any financing statements and/or control agreements, have or will, concurrently with the initial Credit Extension, be terminated. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) 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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(g) the Perfection Certificate of Borrower, together with
the duly executed original signature thereto; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(h) evidence satisfactory to Bank that the insurance policies
required by Section&nbsp;6.6 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) payment of the fees and Bank Expenses then due as specified in Section&nbsp;2.4 hereof. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3.2 Conditions Precedent to all Credit Extensions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Bank&#146;s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions
precedent: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) except as otherwise provided in Section&nbsp;3.4, timely receipt of an executed Transaction
Report; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) the representations and warranties in this Agreement shall be true, accurate, and complete in all
material respects on the date of the Transaction Report and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of
Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower&#146;s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and
complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) in Bank&#146;s sole discretion, there has not been a Material Adverse Change. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3.3 Covenant to Deliver. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3.4 Procedures for Borrowing. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an
Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with such
notification, Borrower must promptly deliver to Bank by electronic mail or facsimile a completed Transaction Report executed by a Responsible Officer or his or her designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make
Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a
person whom Bank believes is a Responsible Officer or designee. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>4</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>CREATION OF SECURITY INTEREST</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>4.1</B> <B>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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>4.2 Priority of Security Interest</B>. Borrower represents, warrants, and covenants that the security interest granted herein is and
shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank&#146;s Lien under this Agreement). If Borrower shall 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 reasonably satisfactory to Bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">If this Agreement is terminated, Bank&#146;s Lien in the
Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank&#146;s
obligation to make Credit Extensions has terminated, Bank shall, at Borrower&#146;s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>4.3 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, including a notice that any disposition of the Collateral in violation of this Agreement, by either Borrower or any other Person, shall be
deemed to violate the rights of Bank under the Code. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>REPRESENTATIONS AND WARRANTIES</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower represents and warrants as follows: </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.1 Due Organization, Authorization; Power and Authority. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower is duly existing and in good standing as a Registered Organization in the State of Delaware and is qualified and licensed to do
business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect
on Borrower&#146;s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled &#147;Perfection Certificate&#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;except as set forth on the Perfection Certificate, Borrower (and each of its
predecessors) has not, in the past five (5)&nbsp;years, changed its jurisdiction of formation, organizational structure or 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). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 reasonably be expected to have a material adverse effect on Borrower&#146;s business. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.2 Collateral.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Collateral is not in the possession of any third party bailee (such as a warehouse)
except as otherwise provided in the Perfection Certificate or otherwise permitted pursuant to Section&nbsp;7.2. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as
permitted pursuant to Section&nbsp;7.2. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">All Inventory is in all material respects of good and marketable quality, free from
material defects. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 other non-material Intellectual Property licensed to Borrower, and
(c)&nbsp;material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. To Borrower&#146;s knowledge, 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 Borrower&#146;s knowledge, no claim has
been made in writing 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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.3 Accounts Receivable. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) For each Account with respect to which Formula Advances are requested, on the date each Formula Advance is requested
and made, such Account shall be an Eligible Account. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) All statements made and all unpaid balances appearing
in all invoices, instruments and other documents evidencing the Eligible Accounts are and shall be true and correct in all material respects and all such invoices, instruments and other documents, and all of Borrower&#146;s Books are genuine and in
all respects what they purport to be. Whether or not an Event of Default has occurred and is continuing and upon notice to Borrower (provided no notice is required if an Event of Default has occurred and is continuing), Bank may notify any Account
Debtor owing Borrower money of Bank&#146;s security interest in such funds and verify the amount of such Eligible Account. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with
all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Transaction Report. To the best of
Borrower&#146;s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with
their terms. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.4 Litigation. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">There are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower
or any of its Subsidiaries involving more than Two Hundred Fifty Thousand Dollars ($250,000), individually or in the aggregate. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.5 Financial Statements; Financial Condition. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects
Borrower&#146;s consolidated financial condition and Borrower&#146;s consolidated results of operations, except that unaudited financial statements may be subject to normal adjustments and need not contain footnotes. 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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.6 Solvency. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.7 Regulatory Compliance. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. Neither Borrower nor any of its Subsidiaries is a &#147;holding company&#148; or an &#147;affiliate&#148; of a &#147;holding company&#148; or a &#147;subsidiary company&#148; of a
&#147;holding company&#148; as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a material adverse
effect on its business. None of Borrower&#146;s or any of its Subsidiaries&#146; 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, except to the extent that failure to obtain, make or file the same would not reasonably be expected to have a material adverse effect on its
business. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.8 Subsidiaries; Investments. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.9 Tax Returns and Payments; Pension Contributions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. 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, (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. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.10 Use of Proceeds. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business requirements and not
for personal, family, household or agricultural purposes. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.11 Full Disclosure. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as of the date
such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.12 Definition of &#147;Knowledge.&#148; </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 the Responsible Officers. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>AFFIRMATIVE COVENANTS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower shall do all of the following: </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.1 Government Compliance. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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 the Collateral. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.2 Financial Statements, Reports, Certificates. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Provide Bank with the following: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) a Transaction Report (and any schedules related thereto), (i)&nbsp;monthly within thirty (30)&nbsp;days of the end of
each month, during any Streamline Period, and (ii)&nbsp;weekly within two (2)&nbsp;Business Days of the end of each week, at all other times; provided, however that Borrower shall not be required to deliver any Transaction Reports to Bank at any
time when no Advances, other than Non Formula Advances, are outstanding; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) within thirty (30)&nbsp;days
after the end of each month, (A)&nbsp;monthly accounts receivable agings, aged by invoice date, (B)&nbsp;monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, (C)&nbsp;monthly reconciliations of
accounts receivable agings (aged by invoice date), transaction reports and general ledger and (D)&nbsp;a Deferred Revenue report, in form acceptable to Bank; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) as soon as available, but no later than (i)&nbsp;thirty (30)&nbsp;days after the last day of the first two months of
each fiscal quarter or (ii)&nbsp;forty-five (45)&nbsp;days after the last day of the last month of each fiscal quarter, a company prepared consolidated balance sheet and income statement covering Borrower&#146;s consolidated operations for such
month certified by a Responsible Officer and in a form acceptable to Bank (the &#147;<B>Monthly Financial Statements</B>&#148;); </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) within thirty (30)&nbsp;days after the last day of each month and together with the Monthly Financial Statements, a
duly completed Compliance Certificate in the form attached hereto as <U>Exhibit B</U> signed by a Responsible Officer; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) within thirty (30)&nbsp;days after the end of each fiscal year of Borrower, annual financial projections for the
following fiscal year as approved by Borrower&#146;s board of directors, together with any related business forecasts used in the preparation of such annual financial projections; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) as soon as available, and in any event within two hundred forty (240)&nbsp;days following the end of Borrower&#146;s
fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its
reasonable discretion; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(g) within five (5)&nbsp;days of filing, copies of all periodic and other
reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case
may be, including, without limitation, all reports on Form 10-K, 10-Q and 8-K. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower&#146;s website on the Internet at Borrower&#146;s website address; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(h) within five (5)&nbsp;days of delivery, copies of all statements, reports and notices made available to Borrower&#146;s
security holders or to any holders of Subordinated Debt; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000) or more; and
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) other financial information reasonably requested by Bank. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.3 Accounts Receivable. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) <U>Schedules and Documents Relating to Accounts</U><I></I>. Borrower shall deliver to Bank transaction reports and
schedules of collections, as provided in Section&nbsp;6.2, on Bank&#146;s standard forms; provided, however, that Borrower&#146;s failure to execute and deliver the same shall not affect or limit Bank&#146;s Lien and other rights in all of
Borrower&#146;s Accounts, nor shall Bank&#146;s failure to advance or lend against a specific Account affect or limit Bank&#146;s Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank&#146;s
request, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such
Accounts. In addition, Borrower shall deliver to Bank, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as
received, with all necessary indorsements, and copies of all credit memos. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) <U>Disputes</U>. So long as
any Credit Extensions are outstanding or have been requested, Borrower shall promptly notify Bank of all disputes or claims relating to Accounts, in excess of Fifty Thousand Dollars ($50,000). Borrower may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i)&nbsp;Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm&#146;s-length
transactions, and reports the same to Bank in the regular reports provided to Bank; (ii)&nbsp;no Event of Default has occurred and is continuing; and (iii)&nbsp;after taking into account all such discounts, settlements and forgiveness, the total
outstanding Formula Advances will not exceed the lesser of the Revolving Line or the Borrowing Base. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) <U>Collection of Accounts</U>.&nbsp;Borrower shall have the right to
collect all Accounts, unless and until an Event of Default has occurred and is continuing.&nbsp;Bank shall require that all proceeds of Accounts be deposited by Borrower into a lockbox account, or such other &#147;blocked account&#148; as specified
by Bank, pursuant to a blocked account agreement in such form as Bank may specify in its good faith business judgment. During any Streamline Period, provided no Event of Default has occurred and is continuing, funds in the blocked account will be
remitted to Borrower&#146;s primary operating account at Bank, but at all other times, such collections shall be applied to reduce the Obligations on a daily basis. After the occurrence and during the continuance of an Event of Default, Borrower
shall immediately deliver all payments on and proceeds of Accounts to an account maintained with Bank to be applied pursuant to the terms of Section&nbsp;9.4 hereof. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) <U>Returns</U>.&nbsp;Provided no Event of Default has occurred and is continuing and at any time any Credit Extensions
are outstanding, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i)&nbsp;determine the reason for such return, (ii)&nbsp;issue a credit memorandum to the Account Debtor in the appropriate amount, and
(iii)&nbsp;provide a copy of such credit memorandum to Bank, upon request from Bank.&nbsp;In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall immediately notify Bank of the
return of the Inventory. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) <U>Verification</U><I></I>. Bank may, from time to time upon notice to Borrower
(provided no notice is required if an Event of Default has occurred and is continuing), verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or
such other name as Bank may choose. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) <U>No Liability</U><I></I>. Bank shall not be responsible or liable
for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower&#146;s obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence or willful misconduct. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.4 Remittance of Proceeds. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Except as otherwise provided in Section&nbsp;6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank
in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations (1)&nbsp;prior to an Event of Default, pursuant to the terms of Section&nbsp;2.5(b) hereof, and
(2)&nbsp;after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section&nbsp;9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank
the proceeds of the sale of surplus, worn out or obsolete Equipment disposed of by Borrower in good faith in an arm&#146;s length transaction for an aggregate </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
purchase price of Two Hundred Thousand Dollars ($200,000) or less (for all such transactions in any fiscal year). Borrower agrees that it will maintain all proceeds of Collateral in an account
maintained with Bank. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.5 Taxes; Pensions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of
its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of
Section&nbsp;5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their
terms. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.6 Insurance. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 the sole lender loss payee
and waive subrogation against Bank. All liability policies shall show, or have endorsements showing, Bank as an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurer shall give Bank
at least twenty (20)&nbsp;days notice before canceling, amending, or declining to renew its policy. At Bank&#146;s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any property
policy with respect to Collateral shall, at Bank&#146;s option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a)&nbsp;so long as no Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy up to Fifty Thousand Dollars ($50,000) with respect to any loss with respect to Collateral, but not exceeding One Hundred Thousand Dollars ($100,000) in the aggregate for all losses with respect to
Collateral under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i)&nbsp;shall be of equal or like value as the replaced or repaired
Collateral and (ii)&nbsp;shall be deemed Collateral in which Bank has been granted a first priority security interest subject to Permitted Liens on such Collateral in existence as of the date of the casualty, and (b)&nbsp;after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such casualty policy with respect to Collateral shall, at the option of Bank, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as
required under this Section&nbsp;6.6 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;6.6, and take any
action under the policies Bank deems prudent. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.7 Operating Accounts. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Maintain with Bank and Bank&#146;s Affiliates Borrower&#146;s primary banking relationship including, without
limitation, its operating and other deposit accounts, securities accounts and excess cash, which excess cash shall represent at least eighty-five percent (85%)&nbsp;of Borrower&#146;s excess cash at all financial institutions. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Provide Bank five (5)&nbsp;days 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 by Borrower 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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.8 Financial Covenants. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Maintain at all times, to be tested as of the last day of each month on a consolidated basis with respect to Borrower and its
Subsidiaries: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) <U>Adjusted Quick Ratio</U>. A ratio of (i)&nbsp;Quick Assets to (ii)&nbsp;Current
Liabilities minus Deferred Revenue, of at least 1.25 to 1.00. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.9 Protection of Intellectual Property Rights.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property material
to Borrower&#146;s business; (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. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) 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, in a manner enforceable under applicable law, 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. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.10 Litigation Cooperation. </B>
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to
Bank, Borrower and its officers, employees and agents and Borrower&#146;s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.11 Access to Collateral; Books and Records. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">At reasonable times and upon reasonable notice, (provided no notice is required if an Event of Default has occurred and is continuing),
allow Bank, or its agents, to inspect the Collateral and audit and copy Borrower&#146;s Books. Unless an Event of Default has occurred and is continuing, such inspections or audits shall be conducted no more often than (a)&nbsp;once every twelve
(12)&nbsp;months during any period in which Borrower&#146;s Net Cash is greater than the Net Cash Threshold and Borrower&#146;s Net Income is greater than One Dollar ($1.00), or (b)&nbsp;twice every twelve (12)&nbsp;months at all other times. The
initial audit shall be completed with results satisfactory to Bank in its sole and absolute discretion within one hundred twenty (120)&nbsp;days after the Effective Date. 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 twenty (20)&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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>6.12 Further Assurances. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. 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 or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its
Subsidiaries. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>NEGATIVE COVENANTS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower shall not do any of the following without Bank&#146;s prior written consent: </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.1 Dispositions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, &#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; (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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-18- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.2 Changes in Business, Management, Ownership or Business Locations. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in
by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)&nbsp;liquidate or dissolve; or (c)&nbsp;(i) any Key Person ceases to hold such office with Borrower and such Key Person is not replaced with a Person of comparable
experience and approved by Borrower&#146;s Board of Directors within one hundred eighty (180)&nbsp;days of such Key Person ceasing to hold such office, or both Key Persons cease to hold such offices with Borrower and at least one such Key Person is
not replaced with a Person of comparable experience and approved by Borrower&#146;s Board of Directors within ninety (90)&nbsp;days of such Key Person ceasing to hold such office; 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-nine percent (49%)&nbsp;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 investors so long as Borrower identifies to Bank the venture capital investors prior to the
closing of the transaction and provides to Bank a description of the material terms of the transaction). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower shall not,
without at least thirty (30)&nbsp;days 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 Two Hundred Thousand Dollars ($200,000) in
Borrower&#146;s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred Thousand Dollars ($200,000) to a bailee at a location other than to a bailee and at a location already
disclosed in the Perfection Certificate, (2)&nbsp;change its jurisdiction of organization, (3)&nbsp;change its organizational type, (4)&nbsp;change its legal name, or (5)&nbsp;change any organizational number (if any) assigned by its jurisdiction of
organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred Thousand Dollars ($200,000) to a bailee, and Bank and such bailee are not already parties to a bailee
agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.3 Mergers or Acquisitions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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, provided that a Subsidiary may merge or consolidate into another Subsidiary or into Borrower. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.4 Indebtedness. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-19- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.5 Encumbrance. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein except for Permitted Liens described in clauses (c), (d),
(k)&nbsp;and (l)&nbsp;of the definition of &#147;Permitted Liens&#148; hereunder, 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 hereof and the definition of &#147;Permitted Liens&#148; herein. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.6 Maintenance of
Collateral Accounts. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Maintain any Collateral Account except pursuant to the terms of Section&nbsp;6.7(b) hereof.
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.7 Distributions; Investments. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock; provided that
(i)&nbsp;Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii)&nbsp;Borrower may pay dividends solely in common stock;
(iii)&nbsp;Borrower may repurchase the stock of former employees, directors or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect
to such repurchase, provided such repurchase does not exceed in the aggregate of One Hundred Thousand Dollars ($100,000) per fiscal year, and (iv)&nbsp;Borrower may make payments in cash in lieu of the issuance of fractional shares or
(b)&nbsp;directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.8 Transactions with Affiliates. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for
(i)&nbsp;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,
(ii)&nbsp;transactions between or among Borrower and its Subsidiaries, and (iii)&nbsp;compensation arrangements approved by Borrower&#146;s board of directors. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.9 Subordinated Debt. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or
other similar agreement to which such Subordinated Debt is subject, or (b)&nbsp;amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to
Obligations owed to Bank. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-20- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>7.10 Compliance. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower&#146;s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial
or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any material liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>EVENTS OF DEFAULT</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Any one of the following shall constitute an event of default (an &#147;<B>Event of Default</B>&#148;) under this Agreement: </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.1 Payment Default. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower fails to (a)&nbsp;make any payment of principal or interest on any Credit Extension on its due date, or (b)&nbsp;pay any other
Obligations within three (3)&nbsp;Business Days after such Obligations are due and payable (which three (3)&nbsp;Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to
make or pay any payment specified under clause (a)&nbsp;or (b)&nbsp;hereunder is not an Event of Default (but no Credit Extension will be made during the cure period); </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.2 Covenant Default. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.6, 6.7, 6.8, 6.10, or violates any
covenant in Section&nbsp;7; or </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section&nbsp;8) 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, that if the default cannot by its nature be cured within the ten (10)&nbsp;day period or cannot after diligent attempts by Borrower be
cured within such ten (10)&nbsp;day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30)&nbsp;days) to attempt to cure such default,
and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other
things, to financial covenants or any other covenants set forth in clause (a)&nbsp;above; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-21- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.3 Material Adverse Change. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">A Material Adverse Change occurs; </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.4 Attachment; Levy; Restraint on Business. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity
under the control of Borrower (including a Subsidiary) 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 (i)&nbsp;and (ii)&nbsp;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 </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) (i) 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; </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.5 Insolvency. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) 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 thirty (30)&nbsp;days (but no Credit Extensions shall be made while of any of the conditions
described in clause (a)&nbsp;exist and/or until any Insolvency Proceeding is dismissed); </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.6 Other Agreements.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">There is, under any agreement to which Borrower 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 Two Hundred Fifty Thousand Dollars ($250,000); or (b)&nbsp;any default by
Borrower, the result of which could have a material adverse effect on Borrower&#146;s business; </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.7 Judgments.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">One or more final judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate,
of at least Two Hundred Fifty Thousand Dollars ($250,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower 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); </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-22- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.8 Misrepresentations. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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; or </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>8.9 Subordinated Debt. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Any subordination agreement related to 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, except, in each case, as may be permitted pursuant to the terms of such subordination agreement. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>BANK&#146;S RIGHTS AND REMEDIES</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.1 Rights and Remedies. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">While an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) declare all Obligations immediately due and payable (but if an Event of Default described in Section&nbsp;8.5 occurs
all Obligations are immediately due and payable without any action by Bank); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) stop advancing money or
extending credit for Borrower&#146;s benefit under this Agreement or under any other agreement between Borrower and Bank; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) demand that Borrower (i)&nbsp;deposit cash with Bank in an amount equal to 105% 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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) terminate any FX Forward Contracts;
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order
that Bank considers advisable, notify any Person owing Borrower money of Bank&#146;s security interest in such funds, and verify the amount of such account; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-23- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) make any payments and do any acts it considers necessary or reasonable
to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain
possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank&#146;s rights or remedies; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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, and selling any Collateral and, in connection with Bank&#146;s exercise of its rights under this Section,
Borrower&#146;s rights under all licenses and all franchise agreements inure to Bank&#146;s benefit; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) demand and receive possession of Borrower&#146;s Books; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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). </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.2 Power of
Attorney. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and
during the continuance of an Event of Default, to: (a)&nbsp;endorse Borrower&#146;s name on any checks or other forms of payment or security; (b)&nbsp;sign Borrower&#146;s name on any invoice or bill of lading for any Account or drafts against
Account Debtors; (c)&nbsp;settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d)&nbsp;make, settle, and adjust all claims under Borrower&#146;s insurance
policies; (e)&nbsp;pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and
(f)&nbsp;transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower&#146;s name on any documents necessary to perfect or continue the perfection
of Bank&#146;s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Bank is under no further obligation to make
Credit Extensions hereunder. Bank&#146;s foregoing appointment as Borrower&#146;s attorney in fact, and all of Bank&#146;s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations)
have been fully repaid and performed and Bank&#146;s obligation to provide Credit Extensions terminates. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-24- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.3 Protective Payments. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">If Borrower fails to obtain the insurance called for by Section&nbsp;6.6 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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.4 Application of Payments and Proceeds. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">If an Event of Default has occurred and is continuing, Bank may apply any funds in its possession, whether from Borrower account balances,
payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank shall determine in its sole discretion. Any surplus shall be paid to Borrower by
credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in its good faith business judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.5 Bank&#146;s Liability for Collateral. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.6 No Waiver; Remedies Cumulative. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-25- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>9.7 Demand Waiver. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>10</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>NOTICES</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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; (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. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="15%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="82%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">If&nbsp;to&nbsp;Borrower:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Iridex Corporation</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">1212 Terra Bella Avenue</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mountain View, California 94043</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Attn: Chief Financial Officer</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fax: 650-940-4710</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Email:&nbsp;jmackaness@iridex.com</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">If to Bank:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Silicon Valley Bank</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">2400 Hanover Street</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Palo Alto, California 94304</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Attn: Ryan Edwards</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fax: (650) 320-0016</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Email:&nbsp;<U>redwards@svb.com</U></FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>11</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-26- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with,
Section&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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><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></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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; 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; 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. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-27- </FONT></P>


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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>GENERAL PROVISIONS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.1 Termination Prior to Revolving Line Maturity Date. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">This Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3)&nbsp;Business Days after
written notice of termination is given to Bank. Notwithstanding any such termination, Bank&#146;s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations).
If such termination is at Borrower&#146;s election or at Bank&#146;s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to Fifty Thousand Dollars ($50,000), provided, that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from another division of Bank. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.2 Successors and Assigns. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">This Agreement binds and is for the benefit of the successors and permitted assigns of each party.&nbsp;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 withheld in Bank&#146;s discretion).&nbsp;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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.3 Indemnification. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 contemplated by the Loan Documents (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. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.4 Time of Essence. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Time is of the essence for the performance of all Obligations in this Agreement. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.5 Severability of Provisions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-28- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.6 Correction of Loan Documents. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 written notice of such correction and allows Borrower at least ten (10)&nbsp;days to object to such correction. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.7 Amendments in Writing; Waiver; Integration. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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, 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. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.8 Counterparts. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.9 Survival. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 satisfied. The obligation of Borrower in Section&nbsp;12.3 to
indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.10 Confidentiality.</B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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, collectively, &#147;Bank Entities&#148;); (b)&nbsp;to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee&#146;s or purchaser&#146;s agreement to the terms of this provision); (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 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-29- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein.&nbsp;Confidential information does not include information
that is either: (i)&nbsp;in the public domain or in Bank&#146;s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (ii)&nbsp;disclosed to Bank by a third party if Bank does
not know that the third party is prohibited from disclosing the information. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Bank Entities may use the confidential
information for reporting purposes and the development and distribution of databases and market analyses so long as such confidential information is aggregated and anonymized prior to distribution unless otherwise expressly prohibited by Borrower.
The provisions of the immediately preceding sentence shall survive the termination of this Agreement. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.11
Attorneys&#146; Fees, Costs and Expenses. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In any action or proceeding between Borrower and Bank arising out of or relating
to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys&#146; fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.12 Electronic Execution of Documents. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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 same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping system, 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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.13 Captions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.14 Construction of Agreement. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.15 Relationship. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>12.16 Third Parties. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>13</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>DEFINITIONS</U> </B></FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>13.1 Definitions. </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>Account Debtor</B>&#148; is any &#147;account debtor&#148; as defined in the Code with such additions to such term as may
hereafter be made.<B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Advance</B>&#148; or &#147;<B>Advances</B>&#148; means a Formula Advance or a Non-Formula
Advance. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Affiliate</B>&#148; is, with respect to any Person, each other Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person&#146;s senior executive officers, directors, partners and, for any Person that is a limited liability company,
that Person&#146;s managers and members. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Agreement</B>&#148; is defined in the preamble hereof. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Applicable Margin</B>&#148; means the following amounts during the following times: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="68%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="79%"></TD>
<TD VALIGN="bottom" WIDTH="19%"></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:22pt"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Period</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Applicable&nbsp;Margin:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Streamline Period</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">0.25</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">%&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">At all other times</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.00</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">%&nbsp;</FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In the event
that Borrower fails to deliver to Bank when due the monthly financial statements and Compliance Certificate, the Applicable Margin shall be two percent (2.00%)&nbsp;until the first day of the first month after Bank receives and reviews such
financial statements and Compliance Certificate. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Availability Amount</B>&#148; is (a)&nbsp;the lesser of (i)&nbsp;the Revolving Line
or (ii)&nbsp;the amount available under the Borrowing Base, minus (b)&nbsp;the Dollar Equivalent amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (c)&nbsp;the FX Reduction Amount, minus
(d)&nbsp;any amounts used for Cash Management Services, and minus (e)&nbsp;the outstanding principal balance of any Advances. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Bank</B>&#148; is defined in the preamble hereof. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Borrower</B>&#148; is defined in the preamble hereof </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Borrowing Base</B>&#148; is eighty percent (80%)&nbsp;of Eligible Accounts, as determined by Bank from Borrower&#146;s most
recent Transaction Report; provided, however, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Borrowing Resolutions</B>&#148; are, with respect to any Person, those resolutions substantially in the form
attached hereto as <U>Exhibit D</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Business Day</B>&#148; is any day that is not a Saturday, Sunday or a day on
which Bank is closed. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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;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 (a)&nbsp;through (c)&nbsp;of this definition. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Cash Management Services</B>&#148; is defined in Section 2.1.4. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Collateral</B>&#148; is any and all properties, rights and assets of Borrower described on <U>Exhibit A</U>. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Collateral Account</B>&#148; is any Deposit Account, Securities Account, or Commodity Account. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Compliance Certificate</B>&#148; is that certain certificate in the form attached hereto as
<U>Exhibit B</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b)&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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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
Deposit Account, Securities Account, or Commodity Account. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Credit Extension</B>&#148; is any Formula Advance, Non Formula Advance, Letter of Credit, FX Forward Contract, amount utilized
for Cash Management Services, or any other extension of credit by Bank for Borrower&#146;s benefit. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Default Rate</B>&#148; is defined in Section&nbsp;2.3(b). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>Deferred Revenue</B>&#148; is all amounts received or invoiced in advance of performance under contracts and not yet
recognized as revenue.<B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Designated Deposit Account</B>&#148; is Borrower&#146;s
deposit account, account number _____________, maintained with Bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>Dollars</B><I>,</I><B></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.<B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>Dollar Equivalent</B>&#148; is, at any time,
(a)&nbsp;with respect to any amount denominated in Dollars, such amount, and (b)&nbsp;with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the
then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.<B> </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Effective Date</B>&#148; is defined in the preamble hereof. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Eligible Accounts</B>&#148; means Accounts which arise in the ordinary course of Borrower&#146;s business that meet all
Borrower&#146;s representations and warranties in Section&nbsp;5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless
Bank otherwise agrees in writing, Eligible Accounts shall not include: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Accounts for which the Account
Debtor is Borrower&#146;s Affiliate, officer, employee, or agent; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Accounts that the Account Debtor has not
paid within ninety (90)&nbsp;days of invoice date regardless of invoice payment period terms; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) Accounts
with credit balances over ninety (90)&nbsp;days from invoice date; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) Accounts owing from an Account Debtor,
in which fifty percent (50%)&nbsp;or more of the Accounts have not been paid within ninety (90)&nbsp;days of invoice date; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) Accounts billed in the United States and owing from an Account Debtor which does not have its principal place of
business in the United States or Canada unless such Accounts are otherwise Eligible Accounts, such Account is approved by Bank in writing, in its sole discretion, on a case-by-case basis and (i)&nbsp;covered in full by credit insurance satisfactory
to Bank, less any deductible, (ii)&nbsp;supported by letter(s) of credit acceptable to Bank, or (iii)&nbsp;supported by a guaranty from the Export-Import Bank of the United States; </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) Accounts billed and/or payable outside of the United States unless Bank
has a first priority, perfected security interest or other enforceable Lien in such Accounts under all applicable laws, including foreign laws (sometimes called foreign invoiced accounts) and such Account is approved by Bank in writing, in its sole
discretion, on a case-by-case basis; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(g) 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). </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(h) Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%)&nbsp;of
all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) 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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) 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; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(k) Accounts owing from an Account Debtor that has not been invoiced or where goods or services have not yet been rendered
to the Account Debtor (sometimes called memo billings or pre-billings); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(l) 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); </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(m) 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); </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(n) Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(o) 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); </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(p) Accounts for which the Account Debtor has not been invoiced; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(q) Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of
Borrower&#146;s business; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(r) Accounts for which Borrower has permitted Account Debtor&#146;s payment to
extend beyond ninety (90)&nbsp;days; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(s) Accounts arising from chargebacks, debit memos or others payment
deductions taken by an Account Debtor (but only to the extent the chargeback is determined invalid and subsequently collected by Borrower); </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(t) Accounts arising from product returns and/or exchanges (sometimes called &#147;warranty&#148; or &#147;RMA&#148;
accounts); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(u) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred
Revenue (but only to the extent of such Deferred Revenue); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(v) 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; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(w) 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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>ERISA</B>&#148; is the Employee Retirement Income Security Act of 1974, and its regulations.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Event of Default</B>&#148; is defined in Section&nbsp;8. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Exchange Act</B>&#148; is the Securities Exchange Act of 1934, as amended. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Foreign Currency</B>&#148; means lawful money of a country other than the United States. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Formula Advance</B>&#148; is defined in Section 2.1.1(a). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>Funding Date</B>&#148; is any date on which a Credit Extension is made to or for the account of Borrower which shall be a
Business Day.<B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B></B>&#147;<B>FX Business Day</B>&#148; is any day when (a)&nbsp;Bank&#146;s Foreign Exchange
Department is conducting its normal business and (b)&nbsp;the Foreign Currency being purchased or sold by Borrower is available to Bank from the entity from which Bank shall buy or sell such Foreign Currency.<B> </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-36- </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>FX Forward Contract</B>&#148; is defined in Section 2.1.3. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>FX Reduction Amount</B>&#148; is defined in Section&nbsp;2.1.3. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>FX Reserve</B>&#148; is defined in Section 2.1.3. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>General
Intangibles</B>&#148; is all &#147;general intangibles&#148; as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise),
insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Indemnified Person</B>&#148; is defined in Section&nbsp;12.3. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Initial Audit</B>&#148; is Bank&#146;s inspection of Borrower&#146;s Accounts, the Collateral, and Borrower&#146;s Books with
results satisfactory to Bank in its sole and absolute discretion. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-37- </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Intellectual Property</B>&#148; means all of Borrower&#146;s right, title, and
interest in and to the following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) its Copyrights, Trademarks and Patents; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions,
know-how, operating manuals; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) any and all source code; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) any and all design rights which may be available to a Borrower; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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 </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Inventory</B>&#148; is all &#147;inventory&#148; as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out
of Borrower&#146;s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Investment</B>&#148; is any beneficial ownership interest in any Person (including stock, partnership interest or other
securities), and any loan, advance or capital contribution to any Person. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Key Person</B>&#148; means any of
Borrower&#146;s Chief Executive Officer or Chief Financial Officer who are, as of the Effective Date, Theodore Boutacoff and James H. Mackaness, respectively. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Letter of Credit</B>&#148; means a standby letter of credit issued by Bank or another institution based upon an application,
guarantee, indemnity or similar agreement on the part of Bank as set forth in Section&nbsp;2.1.2. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Letter of Credit
Application</B>&#148; is defined in Section&nbsp;2.1.2(b). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Loan Documents</B>&#148; are, collectively, this Agreement, the Perfection Certificate, any note, or notes or guaranties
executed by Borrower or any other Person, and any other present or future agreement between Borrower or any other Person and/or for the benefit of Bank in connection with this Agreement, all as amended, restated, or otherwise modified. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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 financial condition of Borrower; or (c)&nbsp;a material impairment of the prospect of
repayment of any portion of the Obligations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Monthly Financial Statements</B>&#148; is defined in
Section&nbsp;6.2(c). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Net Cash</B>&#148; is the sum of (a)&nbsp;the balance of all of Borrower&#146;s unrestricted
cash and Cash Equivalents maintained at Bank or Bank&#146;s Affiliates, less (b)&nbsp;all outstanding Obligations. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Net Cash Threshold</B>&#148; is One Million Five Hundred Thousand Dollars ($1,500,000). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Net Income</B>&#148; means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any
date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Non Formula Advance</B>&#148; is defined in Section&nbsp;2.1.5. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Non Formula Amount</B>&#148; is a Non Formula Advance or Non Formula Advances in an amount equal to (a)&nbsp;Five Million
Dollars ($5,000,000) at all times that Borrower maintains a minimum Net Income of greater than One Dollar ($1.00) for the previous fiscal quarter or (b)&nbsp;Two Million Dollars ($2,000,000) at all other times. At any time that Borrower&#146;s Net
Income is equal to or less than One Dollar ($1.00) for the previous fiscal quarter, the Non-Formula amount will not be increased to Five Million Dollars ($5,000,000) until such time as Bank confirms that Borrower&#146;s Net Income was greater than
One Dollar ($1.00) at all times during the immediately preceding two (2)&nbsp;fiscal quarters. For purposes of determining the Non Formula Amount, Borrower&#146;s Net Income shall be tested as of the last day of each fiscal quarter and any changes
to the Non Formula Amount resulting from a change in Borrower&#146;s Net Income shall be effective as of the first day of the second calendar month following such fiscal quarter being tested. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters
of credit), cash management services, and foreign exchange contracts, if any, and including 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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Overadvance</B>&#148; is defined in Section&nbsp;2.1.5. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-39- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Payment</B>&#148; means all checks, wire transfers and other items of payment received by Bank (including proceeds of Accounts
and payment of the Obligations in full) for credit to Borrower&#146;s outstanding Credit Extensions or, if the balance of the Credit Extensions has been reduced to zero, for credit to its deposit accounts. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Perfection Certificate</B>&#148; is defined in Section&nbsp;5.1. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Permitted Indebtedness</B>&#148; is: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Borrower&#146;s Indebtedness to Bank under this Agreement and the other Loan Documents; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) Subordinated Debt; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) Indebtedness secured by Liens permitted under clauses (a)&nbsp;and (c)&nbsp;of the definition of
&#147;Permitted Liens&#148; hereunder; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(g) intercompany Indebtedness that otherwise constitutes an Investment
allowed under clauses (a)&nbsp;and (f)&nbsp;of the definition of Permitted Investments; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(h) unsecured
Indebtedness incurred with corporate credit cards; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) other unsecured Indebtedness not otherwise permitted by
Section&nbsp;7.4 not exceeding One Hundred Thousand Dollars ($100,000) in the aggregate outstanding at any time; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness
(a)&nbsp;through (h)&nbsp;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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Permitted Investments</B>&#148; are: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection
Certificate; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-40- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Investments consisting of Cash Equivalents; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of Borrower; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) Investments consisting of deposit accounts in which Bank has a
perfected security interest; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) Investments accepted in connection with Transfers permitted by
Section&nbsp;7.1; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) Investments (i)&nbsp;by Borrower in Subsidiaries related to any balances in connection
with intercompany sales in the ordinary course of business, (ii)&nbsp;by Borrower in Subsidiaries not to exceed Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year; and (iii)&nbsp;by Subsidiaries in other Subsidiaries or in
Borrower; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and
suppliers who are not Affiliates, in the ordinary course of business; provided that this paragraph (i)&nbsp;shall not apply to Investments of Borrower in any Subsidiary; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) other Investments not exceeding Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Permitted Liens</B>&#148; are: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the
other Loan Documents; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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 its Books, <U>provided</U> 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; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-41- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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 Two Hundred Thousand Dollars ($200,000) in the aggregate amount outstanding, or (ii)&nbsp;existing on Equipment when acquired, <U>if</U> the Lien is confined to the
property and improvements and the proceeds of the Equipment; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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 Two Hundred Thousand Dollars ($200,000) 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; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f)
Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a)&nbsp;through (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; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(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), <U>if</U> the leases, subleases, licenses and sublicenses do not prohibit granting Bank
a security interest therein; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(h) non-exclusive license of Intellectual Property granted to third parties in
the ordinary course of business; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(i) Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(j) Liens in favor of customs
and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(k) Liens on insurance proceeds in favor of insurance companies granted solely as security for financed premiums
<U>provided</U> such Liens are confined to such premiums and have no priority over any of Bank&#146;s Liens; and </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(l) 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 perfected security interest in the amounts held in such deposit and/or securities accounts. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-42- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Prime Rate</B>&#148; is the greater of (a)&nbsp;Bank&#146;s most recently announced
&#147;prime rate,&#148; even if it is not Bank&#146;s lowest rate or (b)&nbsp;four percent (4.00%). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Quick
Assets</B>&#148; is, on any date, Borrower&#146;s unrestricted cash and Cash Equivalents maintained with Bank, plus net billed accounts receivable. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Reserves</B>&#148; means, as of any date of determination, such
amounts as Bank may from time to time establish and revise in its good faith business judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a)&nbsp;to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i)&nbsp;the Collateral or any other property which is security for the Obligations or its value (including without limitation any
increase in delinquencies of Accounts), (ii)&nbsp;the assets, business or prospects of Borrower, or (iii)&nbsp;the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); or
(b)&nbsp;to reflect Bank&#146;s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or (c)&nbsp;in
respect of any state of facts which Bank determines in good faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Responsible Officer</B>&#148; is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of
Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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 the Bank&#146;s right to sell any Collateral. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Revolving Line</B>&#148; is an Advance or Advances in
an amount equal to Five Million Dollars ($5,000,000). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Revolving Line Maturity Date</B>&#148; is June&nbsp;11, 2012.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>SEC</B>&#148; shall mean the Securities and Exchange Commission, any successor thereto, and any analogous
Governmental Authority. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-43- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Settlement Date</B>&#148; is defined in Section 2.1.3. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Streamline Period</B>&#148; is defined in Section&nbsp;2.1.1(b). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Total
Liabilities</B>&#148; is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower&#146;s consolidated balance sheet, including all Indebtedness, but excluding all other Subordinated Debt. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Transaction Report</B>&#148; is that certain report of transactions and schedule of collections in the form attached hereto as
<U>Exhibit C</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#147;<B>Transfer</B>&#148; is defined in Section&nbsp;7.1. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">[Signature page follows.] </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-44- </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>IN WITNESS WHEREOF</B>, the parties hereto have caused this Agreement to be executed as
of the Effective Date. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="86%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">BORROWER:</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">IRIDEX CORPORATION</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">By</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ J. Mackaness</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">J. Mackaness</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">CFO</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="86%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">BANK:</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">SILICON VALLEY BANK</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">By</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Ryan Edwards</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ryan Edwards</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Relationship Manager</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">[Signature Page to Loan and Security Agreement] </FONT></P>

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

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>EXHIBIT A &#150; COLLATERAL DESCRIPTION </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Collateral consists of all of Borrower&#146;s right, title and interest in and to the following personal property: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, General Intangibles (except as provided below), 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 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Notwithstanding the foregoing, the Collateral does not include (i)&nbsp;property (and all substitutions, accessions, additions,
attachments, accessories, improvements, replacements, products and proceeds thereto) subject to a lien described in clause (c)&nbsp;of the definition of Permitted Liens in which the granting of a security interest in such property or equipment is
prohibited by or would constitute a default under any agreement or documents governing such property, provided that upon the termination or lapsing of any such prohibition, such property shall automatically be part of the Collateral;
(ii)&nbsp;property that constitutes the capital stock of a controlled foreign corporation (as defined in the Internal Revenue Code of 1986, as amended) in excess of sixty-five percent (65%)&nbsp;of the voting power of all classes of capital stock of
such controlled foreign corporation entitled to vote; and (iii)&nbsp;any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S.
Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall
automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank&#146;s security interest in such Accounts and such other property of Borrower that are proceeds of the
Intellectual Property. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Borrower has agreed not to encumber any of its Intellectual Property without Bank&#146;s prior written
consent. </FONT></P>

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

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>EXHIBIT B </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>COMPLIANCE CERTIFICATE </U></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">TO:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SILICON VALLEY BANK</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date:&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">FROM:&nbsp;&nbsp;IRIDEX CORPORATION</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The undersigned authorized officer of IRIDEX CORPORATION (&#147;Borrower&#148;) certifies that
under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the &#147;Agreement&#148;): </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1)&nbsp;Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below;
(2)&nbsp;there are no Events of Default; (3)&nbsp;all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date; (4)&nbsp;Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section&nbsp;5.9 of the Agreement; and (5)&nbsp;no Liens have been levied or claims made against Borrower or any of its Subsidiaries
relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Attached are the required documents supporting the certification. The undersigned certifies that the attached financial statements are
prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes and except, in the cases of unaudited financial statements for the absence of footnotes and subject to
year-end adjustments. 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. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Please indicate compliance status by circling Yes/No under &#147;Complies&#148; column. </B></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="46%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:69pt"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Reporting Covenant</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"> <P STYLE="border-bottom:1px solid #000000;width:32pt" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Required</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Complies</B></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Monthly financial statements with Compliance Certificate</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Monthly within 30 days and within 45 days of quarter end</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Annual financial statement (CPA Audited) + CC</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">FYE within 240 days</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">10-Q, 10-K and 8-K</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Within 5 days after filing with SEC</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">A/R&nbsp;&amp; A/P Agings and Deferred Revenue Reports</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) weekly during any Streamline Period and (b) monthly at all other times*</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Transaction Reports</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Monthly within 30 days</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Annual board projections</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">FYE within 30 days</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR></TABLE>
<P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">*</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Transaction Reports not required if no Advances (other than Non-Formula Advances) are outstanding </FONT></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="76%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
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<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:66pt"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B><U>Financial Covenant</U></B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Required</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Actual</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Complies</B></FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Maintain on a Monthly Basis:</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Minimum Adjusted Quick Ratio</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">1.25:1.00</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">_____:1.00</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="31%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="6%"></TD></TR>
<TR>
<TD VALIGN="bottom">&nbsp;<FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Performance Pricing</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Applies</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Net Cash &gt; $1,500,000</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a)&nbsp;Greater&nbsp;of&nbsp;Prime&nbsp;or&nbsp;4%&nbsp;plus&nbsp;(b)&nbsp;0.25%</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Net Cash <FONT STYLE="FONT-FAMILY:SYMBOL">&#163;</FONT> $1,500,000</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Greater of Prime or 4% plus (b) 2.00%</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;No</FONT></TD></TR></TABLE>

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

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true
and accurate as of the date of this Certificate. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following are the exceptions with respect to the certification above:
(If no exceptions exist, state &#147;No exceptions to note.&#148;) </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="39%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="9%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="40%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">IRIDEX CORPORATION</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>BANK USE ONLY</B></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>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Received&nbsp;by:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">AUTHORIZED SIGNER</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Verified:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">AUTHORIZED SIGNER</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Compliance Status:&nbsp;&nbsp;&nbsp;&nbsp; Yes&nbsp;&nbsp;&nbsp;&nbsp; No</FONT></TD></TR></TABLE>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">2 </FONT></P>


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<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Schedule 1 to Compliance Certificate </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Financial Covenants of Borrower </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated: ____________________ </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">I.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Adjusted Quick Ratio</B> (Section 6.8(a)) </FONT></TD></TR></TABLE>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Required:&nbsp;&nbsp;&nbsp;&nbsp; 1.25:1.00 </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Actual: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">A.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">B.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of the net billed accounts receivable of Borrower and its Subsidiaries</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">C.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of the Investments with maturities of fewer than 12 months</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Times New Roman" SIZE="2">of Borrower and it Subsidiaries</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">D.</FONT></P></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Quick Assets (the sum of lines A through C)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">E.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of Obligations to Bank</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">F.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower&#146;s consolidated balance sheet, including all Indebtedness, and not otherwise
reflected in line E above that matures within one (1) year</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">G.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Current Liabilities (the sum of lines E and F)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">H.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate value of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">I.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Line G minus line H</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">$<U></U></FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">J.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Quick Ratio (line D divided by line I)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">______</FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Is line H equal to or greater than
1.25:1:00? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;No, not in
compliance&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;Yes, in compliance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>EXHIBIT C </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Transaction Report </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">4 </FONT></P>

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