4 . 1 Grant of Security Interest .

<response> 4 . 1 Grant of Security Interest . </response>


Borrower hereby grants to Agent , for the ratable benefit of Lenders , and to each Lender , to secure the payment and performance in full of all of the Obligations , a continuing security interest in , and pledges to Agent , for the ratable benefit of Lenders , and to each Lender , the Collateral , wherever located , whether now owned or hereafter acquired or arising , and all proceeds and products thereof .

<response> <person>Borrower</person> hereby grants to Agent , for the ratable benefit of Lenders , and to each <person>Lender</person> , to secure the payment and performance in full of all of the Obligations , a continuing security interest in , and pledges to Agent , for the ratable benefit of Lenders , and to each <person>Lender</person> , the Collateral , wherever located , whether now owned or hereafter acquired or arising , and all proceeds and products thereof . </response>


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 Agent and / or Lenders ' Lien under this Agreement ).

<response> <person>Borrower</person> 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 Agent and / or Lenders ' Lien under this Agreement ). </response>


If Borrower shall acquire a commercial tort claim , Borrower shall promptly notify Agent in a writing signed by Borrower of the general details thereof and grant to Agent , for the ratable benefit of Lenders , and to each Lender , 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 Agent .

<response> If <person>Borrower</person> shall acquire a commercial tort claim , <person>Borrower</person> shall promptly notify Agent in a writing signed by <person>Borrower</person> of the general details thereof and grant to Agent , for the ratable benefit of Lenders , and to each <person>Lender</person> , 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 Agent . </response>


<response> If this Agreement is terminated , Agent ' s and Lenders ' Lien in the Collateral shall continue until the Obligations ( other than inchoate indemnity obligations ) are repaid in full in cash . </response>


Upon payment in full in cash of the Obligations and at such time as Agent ' s and Lenders ' obligation to make Credit Extensions has terminated , Agent shall , at Borrower ' s sole cost and expense , release its Liens in the Collateral and deliver such documents and make such filings as Borrower shall reasonably request .

<response> Upon payment in full in cash of the Obligations and at such time as Agent ' s and Lenders ' obligation to make Credit Extensions has terminated , Agent shall , at <person>Borrower</person> ' s sole cost and expense , release its Liens in the Collateral and deliver such documents and make such filings as <person>Borrower</person> shall reasonably request . </response>


<response> 4 . 2 Authorization to File Financing Statements . </response>


Borrower hereby authorizes Agent to file financing statements , without notice to Borrower , with all appropriate jurisdictions to perfect or protect Agent ' s and Lenders ' interest or rights hereunder , including a notice that any disposition of the Collateral , by either Borrower or any other Person , shall be deemed to violate the rights of Lenders under the Code .

<response> <person>Borrower</person> hereby authorizes Agent to file financing statements , without notice to <person>Borrower</person> , with all appropriate jurisdictions to perfect or protect Agent ' s and Lenders ' interest or rights hereunder , including a notice that any disposition of the Collateral , by either <person>Borrower</person> or any other Person , shall be deemed to violate the rights of Lenders under the Code . </response>


5 REPRESENTATIONS AND WARRANTIES Borrower represents and warrants as follows : 5 . 1 Due Organization and Authorization .

<response> 5 REPRESENTATIONS AND WARRANTIES <person>Borrower</person> represents and warrants as follows : 5 . 1 Due Organization and Authorization . </response>


Borrower and each of its Subsidiaries , if any , are duly existing and in good standing , as Registered Organizations in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower ' s business or operations .

<response> <person>Borrower</person> and each of its Subsidiaries , if any , are duly existing and in good standing , as Registered Organizations in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on <person>Borrower</person> ' s business or operations . </response>


In connection with this Agreement , Borrower has delivered to Agent and Lenders a completed perfection certificate signed by Borrower ( the " Perfection Certificate ").

<response> In connection with this Agreement , <person>Borrower</person> has delivered to Agent and Lenders a completed perfection certificate signed by <person>Borrower</person> ( the " Perfection Certificate "). </response>


Borrower represents and warrants to Agent and each Lender that ( a ) Borrower ' s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof ; ( b ) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate ; ( c ) the Perfection Certificate accurately sets forth Borrower ' s organizational identification number or accurately states that Borrower has none ; ( d ) the Perfection Certificate accurately sets forth Borrower ' s place of business , or , if more than one , its chief executive office as well as Borrower ' s mailing address ( if different than its chief executive office ) ( or as Borrower has given Agent notice pursuant to Section 7 . 2 ); ( e ) except as disclosed on the Perfection Certificate , Borrower ( and each of its predecessors ) has not , in the past five ( 5 ) years , changed its jurisdiction of formation , organizational structure or type , or any organizational number assigned by its jurisdiction ; and ( f ) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete .

<response> <person>Borrower</person> represents and warrants to Agent and each <person>Lender</person> that ( a ) <person>Borrower</person> ' s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof ; ( b ) <person>Borrower</person> is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate ; ( c ) the Perfection Certificate accurately sets forth <person>Borrower</person> ' s organizational identification number or accurately states that <person>Borrower</person> has none ; ( d ) the Perfection Certificate accurately sets forth <person>Borrower</person> ' s place of business , or , if more than one , its chief executive office as well as <person>Borrower</person> ' s mailing address ( if different than its chief executive office ) ( or as <person>Borrower</person> has given Agent notice pursuant to Section 7 . 2 ); ( e ) except as disclosed on the Perfection Certificate , <person>Borrower</person> ( and each of its predecessors ) has not , in the past five ( 5 ) years , changed its jurisdiction of formation , organizational structure or type , or any organizational number assigned by its jurisdiction ; and ( f ) all other information set forth on the Perfection Certificate pertaining to <person>Borrower</person> and each of its Subsidiaries is accurate and complete . </response>


If Borrower is not now a Registered Organization but later becomes one , Borrower shall promptly notify Agent of such occurrence and provide Agent with Borrower ' s organizational identification number .

<response> If <person>Borrower</person> is not now a Registered Organization but later becomes one , <person>Borrower</person> shall promptly notify Agent of such occurrence and provide Agent with <person>Borrower</person> ' s organizational identification number . </response>


- 4 - The execution , delivery and performance of the Loan Documents have been duly authorized , and do not conflict with Borrower ' s organizational documents , nor constitute an event of default under any material agreement by which Borrower is bound .

<response> - 4 - The execution , delivery and performance of the Loan Documents have been duly authorized , and do not conflict with <person>Borrower</person> ' s organizational documents , nor constitute an event of default under any material agreement by which <person>Borrower</person> is bound . </response>


Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower ' s business .

<response> <person>Borrower</person> 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 <person>Borrower</person> ' s business . </response>


5 . 2 Collateral .

<response> 5 . 2 Collateral . </response>


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 .

<response> <person>Borrower</person> 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 . </response>


Borrower has no deposit accounts other than the deposit accounts with Agent , the deposit accounts , if any , described in the Perfection Certificate delivered to Agent and Lenders in connection herewith , or of which Borrower has given Agent notice and taken such actions as are necessary to give Agent and Lenders a perfected security interest therein .

<response> <person>Borrower</person> has no deposit accounts other than the deposit accounts with Agent , the deposit accounts , if any , described in the Perfection Certificate delivered to Agent and Lenders in connection herewith , or of which <person>Borrower</person> has given Agent notice and taken such actions as are necessary to give Agent and Lenders a perfected security interest therein . </response>


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 as Borrower has given Agent notice pursuant to Section 7 . 2 .

<response> 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 as <person>Borrower</person> has given Agent notice pursuant to Section 7 . 2 . </response>


None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as Borrower has given Agent notice pursuant to Section 7 . 2 .

<response> None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as <person>Borrower</person> has given Agent notice pursuant to Section 7 . 2 . </response>


In the event that Borrower , after the date hereof , intends to store or otherwise deliver any portion ( in excess of Fifty Thousand Dollars ($ 50 , 000 . 00 ) in the aggregate ) of the Collateral to a bailee , then Borrower will first receive the written consent of Agent and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in its reasonable discretion All Inventory is in all material respects of good and marketable quality , free from material defects .

<response> In the event that <person>Borrower</person> , after the date hereof , intends to store or otherwise deliver any portion ( in excess of Fifty Thousand Dollars ($ 50 , 000 . 00 ) in the aggregate ) of the Collateral to a bailee , then <person>Borrower</person> will first receive the written consent of Agent and such bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in its reasonable discretion All Inventory is in all material respects of good and marketable quality , free from material defects . </response>


Except as noted on the Perfection Certificate , Borrower is not a party to , nor is bound by , any material license or other agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower ' s interest in such license or agreement or any other property .

<response> Except as noted on the Perfection Certificate , <person>Borrower</person> is not a party to , nor is bound by , any material license or other agreement with respect to which <person>Borrower</person> is the licensee that prohibits or otherwise restricts <person>Borrower</person> from granting a security interest in <person>Borrower</person> ' s interest in such license or agreement or any other property . </response>


Borrower shall provide written notice to Agent within thirty ( 30 ) days after entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower ' s business or financial condition ( other than over - the - counter software that is commercially available to the public ).

<response> <person>Borrower</person> shall provide written notice to Agent within thirty ( 30 ) days after entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on <person>Borrower</person> ' s business or financial condition ( other than over - the - counter software that is commercially available to the public ). </response>


Borrower shall take such steps as Agent requests to obtain the consent of , or waiver by , any person whose consent or waiver is necessary for all such licenses or contract rights to be deemed " Collateral " and for Agent and Lenders to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement ( such consent or authorization may include a licensor ' s agreement to a contingent assignment of the license to Agent if Agent determines that is necessary in its good faith judgment ), whether now existing or entered into in the future .

<response> <person>Borrower</person> shall take such steps as Agent requests to obtain the consent of , or waiver by , any person whose consent or waiver is necessary for all such licenses or contract rights to be deemed " Collateral " and for Agent and Lenders to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement ( such consent or authorization may include a licensor ' s agreement to a contingent assignment of the license to Agent if Agent determines that is necessary in its good faith judgment ), whether now existing or entered into in the future . </response>


5 . 3 Litigation .

<response> 5 . 3 Litigation . </response>


Except as disclosed on the Perfection Certificate or as Borrower has given notice pursuant to Section 6 . 2 ( a ), 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 that could reasonably be expected to result in damages payable by Borrower or any of its Subsidiaries in an amount involving more than Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ).

<response> Except as disclosed on the Perfection Certificate or as <person>Borrower</person> has given notice pursuant to Section 6 . 2 ( a ), there are no actions or proceedings pending or , to the knowledge of the Responsible Officers , threatened in writing by or against <person>Borrower</person> or any of its Subsidiaries that could reasonably be expected to result in damages payable by <person>Borrower</person> or any of its Subsidiaries in an amount involving more than Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ). </response>


<response> 5 . 4 No Material Deterioration in Financial Statements . </response>


All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent fairly present in all material respects Borrower ' s consolidated financial condition and Borrower ' s consolidated results of operations as of the dates and for the periods presented .

<response> All consolidated financial statements for <person>Borrower</person> and any of its Subsidiaries delivered to Agent fairly present in all material respects <person>Borrower</person> ' s consolidated financial condition and <person>Borrower</person> ' s consolidated results of operations as of the dates and for the periods presented . </response>


As of the date of this Agreement , there has not been any material deterioration in Borrower ' s consolidated financial condition since the date of the most recent financial statements submitted to Agent .

<response> As of the date of this Agreement , there has not been any material deterioration in <person>Borrower</person> ' s consolidated financial condition since the date of the most recent financial statements submitted to Agent . </response>


5 . 5 Solvency .


The fair salable value of Borrower ' 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 .

<response> The fair salable value of <person>Borrower</person> ' s assets ( including goodwill minus disposition costs ) exceeds the fair value of its liabilities ; <person>Borrower</person> is not left with unreasonably small capital after the transactions in this Agreement ; and <person>Borrower</person> is able to pay its debts ( including trade debts ) as they mature . </response>


5 . 6 Regulatory Compliance .

<response> 5 . 6 Regulatory Compliance . </response>


Borrower is not an " investment company " or a company " controlled " by an " investment company " under the Investment Company Act of 1940 .

<response> <person>Borrower</person> is not an " investment company " or a company " controlled " by an " investment company " under the Investment Company Act of 1940 . </response>


Borrower is not engaged as one of its important activities in extending credit for margin stock ( under Regulations T and U of the Federal Reserve Board of Governors ).

<response> <person>Borrower</person> is not engaged as one of its important activities in extending credit for margin stock ( under Regulations T and U of the <organization>Federal Reserve Board of Governors</organization> ). </response>


Borrower has complied in all material respects with the Federal Fair Labor Standards Act .

<response> <person>Borrower</person> has complied in all material respects with the Federal Fair Labor Standards Act . </response>


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 .

<response> <person>Borrower</person> 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 . </response>


None of Borrower ' s or any of its Subsidiaries ' properties or assets has been used by Borrower or any Subsidiary or , to Borrower ' s knowledge , by previous Persons , in disposing , producing , storing , treating , or transporting any hazardous substance other than in material compliance with all laws .

<response> None of <person>Borrower</person> ' s or any of its Subsidiaries ' properties or assets has been used by <person>Borrower</person> or any Subsidiary or , to <person>Borrower</person> ' s knowledge , by previous Persons , in disposing , producing , storing , treating , or transporting any hazardous substance other than in material compliance with all laws . </response>


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 government authorities that are necessary to continue its business as currently conducted .

<response> <person>Borrower</person> 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 government authorities that are necessary to continue its business as currently conducted . </response>


<response> - 5 - 5 . 7 Subsidiaries ; Investments . </response>


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

<response> <person>Borrower</person> does not own any stock , partnership interest or other equity securities except for Permitted Investments . </response>


<response> 5 . 8 Tax Returns and Payments ; Pension Contributions . </response>


Borrower has timely filed all required tax returns and reports , and Borrower and its Subsidiaries have timely paid all foreign , federal , state and local taxes , assessments , deposits and contributions owed by Borrower , provided that Borrower may defer payment of any contested taxes , so long as Borrower ( a ) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted , and ( b ) with respect to contested amounts in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 ), ( i ) notifies Agent in writing of the commencement of , and any material development in , the proceedings , and ( ii ) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a " Permitted Lien ".

<response> <person>Borrower</person> has timely filed all required tax returns and reports , and <person>Borrower</person> and its Subsidiaries have timely paid all foreign , federal , state and local taxes , assessments , deposits and contributions owed by <person>Borrower</person> , provided that <person>Borrower</person> may defer payment of any contested taxes , so long as <person>Borrower</person> ( a ) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted , and ( b ) with respect to contested amounts in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 ), ( i ) notifies Agent in writing of the commencement of , and any material development in , the proceedings , and ( ii ) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a " Permitted Lien ". </response>


Except as set forth on the Perfection Certificate , Borrower is unaware of any claims or adjustments proposed for any of Borrower ' s prior tax years which could result in additional taxes becoming due and payable by Borrower .

<response> Except as set forth on the Perfection Certificate , <person>Borrower</person> is unaware of any claims or adjustments proposed for any of <person>Borrower</person> ' s prior tax years which could result in additional taxes becoming due and payable by <person>Borrower</person> . </response>


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 .

<response> <person>Borrower</person> has paid all amounts necessary to fund all present pension , profit sharing and deferred compensation plans in accordance with their terms , and <person>Borrower</person> 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 <person>Borrower</person> , including any liability to the <organization>Pension Benefit Guaranty Corporation</organization> or its successors or any other governmental agency . </response>


5 . 9 Use of Proceeds .

<response> 5 . 9 Use of Proceeds . </response>


Borrower shall use the proceeds of the Credit Extensions solely to fund its general business requirements and not for personal , family , household or agricultural purposes .

<response> <person>Borrower</person> shall use the proceeds of the Credit Extensions solely to fund its general business requirements and not for personal , family , household or agricultural purposes . </response>


5 . 10 Full Disclosure .

<response> 5 . 10 Full Disclosure . </response>


No written representation , warranty or other statement of Borrower in any certificate or written statement given to Agent or any Lender , as of the date such representation , warranty , or other statement was made , taken together with all such written certificates and written statements given to Agent or any Lender , 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 Agent 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 ).

<response> No written representation , warranty or other statement of <person>Borrower</person> in any certificate or written statement given to Agent or any <person>Lender</person> , as of the date such representation , warranty , or other statement was made , taken together with all such written certificates and written statements given to Agent or any <person>Lender</person> , 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 Agent that the projections and forecasts provided by <person>Borrower</person> 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 ). </response>


5 . 11 IL Subsidiary .

<response> 5 . 11 IL Subsidiary . </response>


Borrower represents and warrants that IL Subsidiary , a wholly - owned subsidiary of Borrower , throughout the term of this Agreement will continue to own no assets , except for office furniture and furnishings , including computers , servers , laptops and similar office equipment .

<response> <person>Borrower</person> represents and warrants that IL Subsidiary , a wholly - owned subsidiary of <person>Borrower</person> , throughout the term of this Agreement will continue to own no assets , except for office furniture and furnishings , including computers , servers , laptops and similar office equipment . </response>


In the event that the IL Subsidiary owns any other assets , except as set forth herein , then Borrower shall notify Lenders and at Lenders ' option , the IL Subsidiary will become a co - Borrower to this Agreement and shall grant a first priority security interest in all assets ( except for intellectual property ) to the Agent , for the ratable benefit of the Lenders .

<response> In the event that the IL Subsidiary owns any other assets , except as set forth herein , then <person>Borrower</person> shall notify Lenders and at Lenders ' option , the IL Subsidiary will become a co - <person>Borrower</person> to this Agreement and shall grant a first priority security interest in all assets ( except for intellectual property ) to the Agent , for the ratable benefit of the Lenders . </response>


6 AFFIRMATIVE COVENANTS Borrower shall do all of the following : 6 . 1 Government Compliance .

<response> 6 AFFIRMATIVE COVENANTS <person>Borrower</person> shall do all of the following : 6 . 1 Government Compliance . </response>


Maintain its and all its Subsidiaries ' legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower ' s business or operations .

<response> Maintain its and all its Subsidiaries ' legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on <person>Borrower</person> ' s business or operations . </response>


Borrower shall comply , and have each Subsidiary comply , with all laws , ordinances and regulations to which it is subject , the noncompliance with which could reasonably be expected to have a material adverse effect on Borrower ' s business .

<response> <person>Borrower</person> shall comply , and have each Subsidiary comply , with all laws , ordinances and regulations to which it is subject , the noncompliance with which could reasonably be expected to have a material adverse effect on <person>Borrower</person> ' s business . </response>


<response> 6 . 2 Financial Statements , Reports , Certificates . </response>


( a ) Deliver to Agent : ( i ) as soon as available , but no later than thirty ( 30 ) days after the last day of each quarter , a company prepared consolidated balance sheet and income statement covering Borrower ' s

<response> ( a ) Deliver to Agent : ( i ) as soon as available , but no later than thirty ( 30 ) days after the last day of each quarter , a company prepared consolidated balance sheet and income statement covering <person>Borrower</person> ' s </response>


- 6 - consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Agent ; ( ii ) as soon as available , but no later than one hundred eighty ( 180 ) days after the last day of Borrower ' s fiscal year , audited consolidated financial statements prepared under GAAP , consistently applied , together with an unqualified opinion ( except for going concern qualifications common for emerging companies ) on the financial statements from an independent certified public accounting firm acceptable to Agent in its reasonable discretion ; ( iii ) within five ( 5 ) days of delivery , copies of all statements , reports and notices made available to Borrower ' s security holders generally or to holders of Subordinated Debt ; ( iv ) in the event that Borrower becomes subject to the reporting requirements under the Securities Exchange Act of 1934 , as amended , within five ( 5 ) days of filing , all reports on Form 10 - K , 10 - Q and 8 - K filed with the Securities and Exchange Commission or a link thereto on Borrower ' s or another website on the Internet ; ( v ) a prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) or more ; ( vi ) as soon as available , but no later than thirty ( 30 ) days prior to Borrower ' s fiscal year end , Board approved annual budget and financial projections commensurate with those provided to Borrower ' s capital investors ; and ( viii ) budgets , sales projections , operating plans and other financial information reasonably requested by Agent .

<response> - 6 - consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Agent ; ( ii ) as soon as available , but no later than one hundred eighty ( 180 ) days after the last day of <person>Borrower</person> ' s fiscal year , audited consolidated financial statements prepared under GAAP , consistently applied , together with an unqualified opinion ( except for going concern qualifications common for emerging companies ) on the financial statements from an independent certified public accounting firm acceptable to Agent in its reasonable discretion ; ( iii ) within five ( 5 ) days of delivery , copies of all statements , reports and notices made available to <person>Borrower</person> ' s security holders generally or to holders of Subordinated Debt ; ( iv ) in the event that <person>Borrower</person> becomes subject to the reporting requirements under the Securities Exchange Act of 1934 , as amended , within five ( 5 ) days of filing , all reports on Form 10 - K , 10 - Q and 8 - K filed with the Securities and Exchange Commission or a link thereto on <person>Borrower</person> ' s or another website on the Internet ; ( v ) a prompt report of any legal actions pending or threatened in writing against <person>Borrower</person> or any of its Subsidiaries that could reasonably be expected to result in damages or costs to <person>Borrower</person> or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) or more ; ( vi ) as soon as available , but no later than thirty ( 30 ) days prior to <person>Borrower</person> ' s fiscal year end , Board approved annual budget and financial projections commensurate with those provided to <person>Borrower</person> ' s capital investors ; and ( viii ) budgets , sales projections , operating plans and other financial information reasonably requested by Agent . </response>


( b ) Within thirty ( 30 ) days after the last day of each month , deliver to Agent " Flash Reports ", which shall include : ( i ) a summary of cash balances , ( ii ) aged listings of accounts receivable and accounts payable ( by invoice date ), and ( iii ) a summary of revenue and net income received by Borrower which shall be certified by a Responsible Officer and in a form acceptable to Agent .

<response> ( b ) Within thirty ( 30 ) days after the last day of each month , deliver to Agent " Flash Reports ", which shall include : ( i ) a summary of cash balances , ( ii ) aged listings of accounts receivable and accounts payable ( by invoice date ), and ( iii ) a summary of revenue and net income received by <person>Borrower</person> which shall be certified by a Responsible Officer and in a form acceptable to Agent . </response>


6 . 3 Inventory ; Returns .

<response> 6 . 3 Inventory ; Returns . </response>


<response> Keep all Inventory in good and marketable condition , free from material defects . </response>


Returns and allowances between Borrower and its Account Debtors shall follow Borrower ' s customary practices as they exist at the Effective Date .

<response> Returns and allowances between <person>Borrower</person> and its Account Debtors shall follow <person>Borrower</person> ' s customary practices as they exist at the Effective Date . </response>


Borrower must promptly notify Agent of all returns , recoveries , disputes and claims that involve more than Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ).

<response> <person>Borrower</person> must promptly notify Agent of all returns , recoveries , disputes and claims that involve more than Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ). </response>


6 . 4 Taxes ; Pensions .

<response> 6 . 4 Taxes ; Pensions . </response>


Make , and cause each of its Subsidiaries to make , timely payment of all foreign , federal , state , and local taxes or assessments ( other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5 . 8 hereof ) and shall deliver to Agent , 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 .

<response> Make , and cause each of its Subsidiaries to make , timely payment of all foreign , federal , state , and local taxes or assessments ( other than taxes and assessments which <person>Borrower</person> is contesting pursuant to the terms of Section 5 . 8 hereof ) and shall deliver to Agent , 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 . </response>


6 . 5 Insurance .

<response> 6 . 5 Insurance . </response>


Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower ' s industry and location and as Agent may reasonably request .

<response> Keep its business and the Collateral insured for risks and in amounts standard for companies in <person>Borrower</person> ' s industry and location and as Agent may reasonably request . </response>


<response> Insurance policies shall be in a form , with companies , and in amounts that are satisfactory to Lenders and Agent . </response>


All property policies shall have a lender ' s loss payable endorsement showing each Lender as lender loss payee and waive subrogation against Lenders , and all liability policies shall show , or have endorsements showing , each Lender as an additional insured .

<response> All property policies shall have a <person>lender</person> ' s loss payable endorsement showing each <person>Lender</person> as <person>lender</person> loss payee and waive subrogation against Lenders , and all liability policies shall show , or have endorsements showing , each <person>Lender</person> as an additional insured . </response>


<response> All policies ( or the loss payable and additional insured endorsements ) shall provide that the insurer must give Agent on behalf of Lenders at least twenty ( 20 ) days notice before canceling , amending , or declining to renew its policy . </response>


At Agent ' s request , Borrower shall deliver insurance certificates and evidence of all premium payments .

<response> At Agent ' s request , <person>Borrower</person> shall deliver insurance certificates and evidence of all premium payments . </response>


<response> Proceeds payable under any policy shall , at Agent ' s option , be payable to Agent and Lenders on account of the Obligations . </response>


Notwithstanding the foregoing , ( a ) so long as no Event of Default has occurred and is continuing , Borrower shall have the option of applying the proceeds of any casualty policy up to Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ), in the aggregate , toward the replacement or repair of destroyed or damaged property ; provided that any such replacement or repaired property ( i ) shall be of equal or like value as the replaced or repaired Collateral and ( ii ) shall be deemed Collateral in which Agent and Lenders have been granted a first priority security interest , subject to Permitted Liens , and ( b ) after the occurrence and during the continuance of an Event of Default , all proceeds payable under such casualty policy shall , at the option of Agent , be payable to Agent , for the ratable benefit of Lenders , on account of the Obligations .

<response> Notwithstanding the foregoing , ( a ) so long as no Event of Default has occurred and is continuing , <person>Borrower</person> shall have the option of applying the proceeds of any casualty policy up to Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ), in the aggregate , toward the replacement or repair of destroyed or damaged property ; provided that any such replacement or repaired property ( i ) shall be of equal or like value as the replaced or repaired Collateral and ( ii ) shall be deemed Collateral in which Agent and Lenders have been granted a first priority security interest , subject to Permitted Liens , and ( b ) after the occurrence and during the continuance of an Event of Default , all proceeds payable under such casualty policy shall , at the option of Agent , be payable to Agent , for the ratable benefit of Lenders , on account of the Obligations . </response>


If Borrower fails to obtain insurance as required under this Section 6 . 5 or to pay any amount or furnish any required proof of payment to third persons and Agent , Agent may make all or part of such payment or obtain such insurance policies required in this Section 6 . 5 , and take any action under the policies Agent deems prudent .

<response> If <person>Borrower</person> fails to obtain insurance as required under this Section 6 . 5 or to pay any amount or furnish any required proof of payment to third persons and Agent , Agent may make all or part of such payment or obtain such insurance policies required in this Section 6 . 5 , and take any action under the policies Agent deems prudent . </response>


6 . 6 Operating Accounts .

<response> 6 . 6 Operating Accounts . </response>


<response> ( a ) Maintain its depository and investment accounts and an operating account with Agent and Agent ' s affiliates . </response>


- 7 - ( b ) Provide Agent five ( 5 ) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Agent or its Affiliates .

<response> - 7 - ( b ) Provide Agent five ( 5 ) days prior written notice before establishing any Collateral Account at or with any <organization>bank</organization> or financial institution other than Agent or its Affiliates . </response>


In addition , for each Collateral Account that Borrower at any time maintains , Borrower shall cause the applicable bank or financial institution ( other than Agent ) 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 Agent ' s and Lenders ' Lien in such Collateral Account in accordance with the terms hereunder , which Control Agreement may not be terminated until this Agreement is terminated and all Obligations have been satisfied ( other than inchoate indemnity obligations ) without the prior written consent of Agent .

<response> In addition , for each Collateral Account that <person>Borrower</person> at any time maintains , <person>Borrower</person> shall cause the applicable <organization>bank</organization> or financial institution ( other than Agent ) 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 Agent ' s and Lenders ' Lien in such Collateral Account in accordance with the terms hereunder , which Control Agreement may not be terminated until this Agreement is terminated and all Obligations have been satisfied ( other than inchoate indemnity obligations ) without the prior written consent of Agent . </response>


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 ' s employees and identified to Agent by Borrower as such .

<response> 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 <person>Borrower</person> ' s employees and identified to Agent by <person>Borrower</person> as such . </response>


<response> 6 . 7 Protection of Intellectual Property Rights . </response>


Borrower shall use commercially reasonable efforts to protect , defend and maintain the validity and enforceability of its material intellectual property , except where Borrower in the exercise of its business judgment deems it in its best interest not to do so .

<response> <person>Borrower</person> shall use commercially reasonable efforts to protect , defend and maintain the validity and enforceability of its material intellectual property , except where <person>Borrower</person> in the exercise of its business judgment deems it in its best interest not to do so . </response>


6 . 8 Litigation Cooperation .

<response> 6 . 8 Litigation Cooperation . </response>


From the date hereof and continuing through the termination of this Agreement , make available to Agent , without expense to Agent , Borrower and its officers , employees and agents and Borrower ' s books and records , to the extent that Agent may deem them reasonably necessary to prosecute or defend any third - party suit or proceeding instituted by or against Agent and / or any Lender with respect to any Collateral or relating to Borrower .

<response> From the date hereof and continuing through the termination of this Agreement , make available to Agent , without expense to Agent , <person>Borrower</person> and its officers , employees and agents and <person>Borrower</person> ' s books and records , to the extent that Agent may deem them reasonably necessary to prosecute or defend any third - party suit or proceeding instituted by or against Agent and / or any <person>Lender</person> with respect to any Collateral or relating to <person>Borrower</person> . </response>


6 . 9 Further Assurances .

<response> 6 . 9 Further Assurances . </response>


<response> Execute any further instruments and take further action as Agent reasonably requests to perfect or continue Agent ' s and Lenders ' Lien in the Collateral or to effect the purposes of this Agreement . </response>


7 NEGATIVE COVENANTS Borrower shall not do any of the following without Agent ' s prior written consent : 7 . 1 Dispositions .

<response> 7 NEGATIVE COVENANTS <person>Borrower</person> shall not do any of the following without Agent ' s prior written consent : 7 . 1 Dispositions . </response>


Convey , sell , lease , transfer or otherwise dispose of ( collectively , " Transfer "), or permit any of its Subsidiaries to Transfer , all or any part of its business or property , except for Transfers ( a ) of Inventory in the ordinary course of business ; ( b ) of worn - out , or obsolete Equipment ; ( c ) in connection with Permitted Liens and Permitted Investments ; ( d ) of non - exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business ; and ( e ) other Transfers having an aggregate book value not in excess of Fifty Thousand Dollars ($ 50 , 000 ) in the aggregate in any fiscal year .

<response> Convey , sell , lease , transfer or otherwise dispose of ( collectively , " Transfer "), or permit any of its Subsidiaries to Transfer , all or any part of its business or property , except for Transfers ( a ) of Inventory in the ordinary course of business ; ( b ) of worn - out , or obsolete Equipment ; ( c ) in connection with Permitted Liens and Permitted Investments ; ( d ) of non - exclusive licenses for the use of the property of <person>Borrower</person> or its Subsidiaries in the ordinary course of business ; and ( e ) other Transfers having an aggregate book value not in excess of Fifty Thousand Dollars ($ 50 , 000 ) in the aggregate in any fiscal year . </response>


<response> 7 . 2 Changes in Business , Management , Ownership , or Business Locations . </response>


( a ) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary , as applicable , or reasonably related thereto ; ( b ) liquidate or dissolve ; or ( c ) ( i ) have a change in management such that the Key Person resigns , is terminated , or is no longer actively involved in the management of the Borrower in his / her current position and a replacement reasonably satisfactory to Borrower ' s Board for such Key Person is not made within ninety ( 90 ) days after departure from Borrower ; or ( ii ) enter into any transaction or series of related transactions in which the stockholders of Borrower immediately prior to the first such transaction own less than 60 % 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 ' s equity securities in a public offering or to venture capital investors so long as Borrower identifies to Agent the venture capital investors prior to the closing of the transaction ).

<response> ( a ) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by <person>Borrower</person> and such Subsidiary , as applicable , or reasonably related thereto ; ( b ) liquidate or dissolve ; or ( c ) ( i ) have a change in management such that the Key Person resigns , is terminated , or is no longer actively involved in the management of the <person>Borrower</person> in his / her current position and a replacement reasonably satisfactory to <person>Borrower</person> ' s Board for such Key Person is not made within ninety ( 90 ) days after departure from <person>Borrower</person> ; or ( ii ) enter into any transaction or series of related transactions in which the stockholders of <person>Borrower</person> immediately prior to the first such transaction own less than 60 % of the voting stock of <person>Borrower</person> immediately after giving effect to such transaction or related series of such transactions ( other than by the sale of <person>Borrower</person> ' s equity securities in a public offering or to venture capital investors so long as <person>Borrower</person> identifies to Agent the venture capital investors prior to the closing of the transaction ). </response>


Borrower shall not , without at least thirty ( 30 ) days prior written notice to Agent : ( 1 ) add any new offices or business locations , including warehouses ( unless such new offices or business locations contain less than Fifty Thousand Dollars ($ 50 , 000 . 00 ) in Borrower ' s assets or property ), ( 2 ) change its jurisdiction of organization , ( 3 ) change its organizational type , ( 4 ) change its legal name , ( 5 ) change any organizational number ( if any ) assigned by its jurisdiction of organization .

<response> <person>Borrower</person> shall not , without at least thirty ( 30 ) days prior written notice to Agent : ( 1 ) add any new offices or business locations , including warehouses ( unless such new offices or business locations contain less than Fifty Thousand Dollars ($ 50 , 000 . 00 ) in <person>Borrower</person> ' s assets or property ), ( 2 ) change its jurisdiction of organization , ( 3 ) change its organizational type , ( 4 ) change its legal name , ( 5 ) change any organizational number ( if any ) assigned by its jurisdiction of organization . </response>


7 . 3 Mergers or Acquisitions .

<response> 7 . 3 Mergers or Acquisitions . </response>


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 .

<response> 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 <person>Borrower</person> . </response>


7 . 4 Indebtedness .

<response> 7 . 4 Indebtedness . </response>


<response> Create , incur , assume , or be liable for any Indebtedness , or permit any Subsidiary to do so , other than Permitted Indebtedness . </response>


- 8 - 7 . 5 Encumbrance .

<response> - 8 - 7 . 5 Encumbrance . </response>


Create , incur , or allow any Lien on any of its property , or assign or convey any right to receive income , including the sale of any Accounts , or permit any of its Subsidiaries to do so , except for Permitted Liens , or permit any Collateral not to be subject to the first priority security interest granted herein ( except for validly perfected purchase money security interests ), or enter into any agreement , document , instrument or other arrangement ( except with or in favor of Lenders ) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning , mortgaging , pledging , granting a security interest in or upon , or encumbering any of Borrower ' s or any Subsidiary ' s intellectual property , except as is otherwise permitted in Section 7 . 1 hereof and the definition of " Permitted Liens " herein .

<response> Create , incur , or allow any Lien on any of its property , or assign or convey any right to receive income , including the sale of any Accounts , or permit any of its Subsidiaries to do so , except for Permitted Liens , or permit any Collateral not to be subject to the first priority security interest granted herein ( except for validly perfected purchase money security interests ), or enter into any agreement , document , instrument or other arrangement ( except with or in favor of Lenders ) with any Person which directly or indirectly prohibits or has the effect of prohibiting <person>Borrower</person> or any Subsidiary from assigning , mortgaging , pledging , granting a security interest in or upon , or encumbering any of <person>Borrower</person> ' s or any Subsidiary ' s intellectual property , except as is otherwise permitted in Section 7 . 1 hereof and the definition of " Permitted Liens " herein . </response>


<response> 7 . 6 Maintenance of Collateral Accounts . </response>


<response> Maintain any Collateral Account except pursuant to the terms of Section 6 . 6 ( b ) hereof . </response>


7 . 7 Distributions ; Investments .

<response> 7 . 7 Distributions ; Investments . </response>


( a ) Directly or indirectly make any Investment other than Permitted Investments , or permit any of its Subsidiaries to do so ; or ( b ) pay any dividends or make any distribution or payment or redeem , retire or purchase any capital stock , provided that ( i ) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof and make payments in cash for any fractional share upon such conversion or in connection with the exercise or conversion of warrants or other securities in an amount not to exceed $ 25 , 000 in the aggregate , ( ii ) Borrower may pay dividends solely in common stock ; and ( iii ) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase , provided such repurchase does not exceed in the aggregate of $ 100 , 000 per fiscal year .

<response> ( a ) Directly or indirectly make any Investment other than Permitted Investments , or permit any of its Subsidiaries to do so ; or ( b ) pay any dividends or make any distribution or payment or redeem , retire or purchase any capital stock , provided that ( i ) <person>Borrower</person> may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof and make payments in cash for any fractional share upon such conversion or in connection with the exercise or conversion of warrants or other securities in an amount not to exceed $ 25 , 000 in the aggregate , ( ii ) <person>Borrower</person> may pay dividends solely in common stock ; and ( iii ) <person>Borrower</person> may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase , provided such repurchase does not exceed in the aggregate of $ 100 , 000 per fiscal year . </response>


7 . 8 Transactions with Affiliates .

<response> 7 . 8 Transactions with Affiliates . </response>


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

<response> Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of <person>Borrower</person> , except for transactions that are in the ordinary course of <person>Borrower</person> ' s business , upon fair and reasonable terms that are no less favorable to <person>Borrower</person> than would be obtained in an arm ' s length transaction with a non - affiliated Person . </response>


7 . 9 Subordinated Debt .

<response> 7 . 9 Subordinated Debt . </response>


<response> ( a ) Make or permit any payment on any Subordinated Debt , except under the terms of the subordination , intercreditor , or other similar agreement to which such Subordinated Debt is subject , or ( b ) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Agent and / or Lenders . </response>


7 . 10 Compliance .

<response> 7 . 10 Compliance . </response>


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

<response> Become an " investment company " or a company controlled by an " investment company ", under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock ( as defined in Regulation U of the <organization>Board of Governors of the Federal Reserve System</organization> ), or use the proceeds of any Credit Extension for that purpose ; fail to meet the minimum funding requirements of <organization>ERISA</organization> , permit a Reportable Event or Prohibited Transaction , as defined in <organization>ERISA</organization> , 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 <person>Borrower</person> ' s business , or permit any of its Subsidiaries to do so ; withdraw or permit any Subsidiary to withdraw from participation in , permit partial or complete termination of , or permit the occurrence of any other event with respect to , any present pension , profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of <person>Borrower</person> , including any liability to the <organization>Pension Benefit Guaranty Corporation</organization> or its successors or any other governmental agency . </response>


<response> 8 EVENTS OF DEFAULT Any one of the following shall constitute an event of default ( an " Event of Default ") under this Agreement : 8 . 1 Payment Default . </response>


Borrower fails to make any payment of principal or interest on any Credit Extension or pay any other Obligations within three ( 3 ) Business Days after such Obligations are due and payable ( which three ( 3 ) Business Day grace period will not apply to payments due on the Maturity Date ).

<response> <person>Borrower</person> fails to make any payment of principal or interest on any Credit Extension or pay any other Obligations within three ( 3 ) Business Days after such Obligations are due and payable ( which three ( 3 ) Business Day grace period will not apply to payments due on the Maturity Date ). </response>


<response> During the cure period , the failure to cure the payment default is not an Event of Default ( but no Credit Extension will be made during the cure period ); 8 . 2 Covenant Default . </response>


( a ) Borrower fails or neglects to perform any obligation in Sections 6 . 2 , 6 . 6 , or violates any covenant in Section 7 ; or

<response> ( a ) <person>Borrower</person> fails or neglects to perform any obligation in Sections 6 . 2 , 6 . 6 , or violates any covenant in Section 7 ; or </response>


- 9 - ( b ) Borrower fails or neglects to perform , keep , or observe any other term , provision , condition , covenant or agreement contained in this Agreement , any Loan Documents , and as to any default ( other than those specified in this Section 8 ) under such other term , provision , condition , covenant or agreement that can be cured , has failed to cure the default within ten ( 10 ) days after the occurrence thereof ; provided , however , that if the default cannot by its nature be cured within the ten ( 10 ) day period or cannot after diligent attempts by Borrower be cured within such ten ( 10 ) day period , and such default is likely to be cured within a reasonable time , then Borrower shall have an additional period ( which shall not without Agent ' s written consent exceed thirty ( 30 ) days ) to attempt to cure such default , and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default ( but no Credit Extensions shall be made during such cure period ).

<response> - 9 - ( b ) <person>Borrower</person> fails or neglects to perform , keep , or observe any other term , provision , condition , covenant or agreement contained in this Agreement , any Loan Documents , and as to any default ( other than those specified in this Section 8 ) under such other term , provision , condition , covenant or agreement that can be cured , has failed to cure the default within ten ( 10 ) days after the occurrence thereof ; provided , however , that if the default cannot by its nature be cured within the ten ( 10 ) day period or cannot after diligent attempts by <person>Borrower</person> be cured within such ten ( 10 ) day period , and such default is likely to be cured within a reasonable time , then <person>Borrower</person> shall have an additional period ( which shall not without Agent ' s written consent exceed thirty ( 30 ) days ) to attempt to cure such default , and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default ( but no Credit Extensions shall be made during such cure period ). </response>


<response> Grace periods provided under this Section shall not apply to any covenants set forth in subsection ( a ) above ; 8 . 3 Intentionally Deleted ; 8 . 4 Attachment . </response>


( a ) Any material portion of Borrower ' s assets is attached , seized , levied on , or comes into possession of a trustee or receiver and the attachment , seizure or levy is not removed in ten ( 10 ) days ; ( b ) the service of process seeking to attach , by trustee or similar process , any funds of Borrower , or of any entity under control of Borrower ( including a Subsidiary ), on deposit with Agent or Agent ' s Affiliate ; ( c ) Borrower is enjoined , restrained , or prevented by court order from conducting a material part of its business ; ( d ) a judgment or other claim in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) becomes a Lien on any of Borrower ' s assets ; or ( e ) a notice of lien , levy , or assessment is filed against any of Borrower ' s assets by any government agency and not paid within ten ( 10 ) days after Borrower receives notice .

<response> ( a ) Any material portion of <person>Borrower</person> ' s assets is attached , seized , levied on , or comes into possession of a trustee or receiver and the attachment , seizure or levy is not removed in ten ( 10 ) days ; ( b ) the service of process seeking to attach , by trustee or similar process , any funds of <person>Borrower</person> , or of any entity under control of <person>Borrower</person> ( including a Subsidiary ), on deposit with Agent or Agent ' s Affiliate ; ( c ) <person>Borrower</person> is enjoined , restrained , or prevented by court order from conducting a material part of its business ; ( d ) a judgment or other claim in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) becomes a Lien on any of <person>Borrower</person> ' s assets ; or ( e ) a notice of lien , levy , or assessment is filed against any of <person>Borrower</person> ' s assets by any government agency and not paid within ten ( 10 ) days after <person>Borrower</person> receives notice . </response>


These are not Events of Default if stayed or if a bond is posted pending contest by Borrower ( but no Credit Extensions shall be made during the cure period ); 8 . 5 Insolvency ( a ) Borrower is unable to pay its debts ( including trade debts ) as they become due or ( b ) the fair salable value of Borrower ' s assets ( including goodwill minus disposition costs ) exceeds the fair value of its liabilities ; ( c ) Borrower begins an Insolvency Proceeding ; or ( d ) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty ( 30 ) days ( but no Credit Extensions shall be made while of any of the conditions described in clause ( a ) exist and / or until any Insolvency Proceeding is dismissed ); 8 . 6 Other Agreements .

<response> These are not Events of Default if stayed or if a bond is posted pending contest by <person>Borrower</person> ( but no Credit Extensions shall be made during the cure period ); 8 . 5 Insolvency ( a ) <person>Borrower</person> is unable to pay its debts ( including trade debts ) as they become due or ( b ) the fair salable value of <person>Borrower</person> ' s assets ( including goodwill minus disposition costs ) exceeds the fair value of its liabilities ; ( c ) <person>Borrower</person> begins an Insolvency Proceeding ; or ( d ) an Insolvency Proceeding is begun against <person>Borrower</person> and not dismissed or stayed within thirty ( 30 ) days ( but no Credit Extensions shall be made while of any of the conditions described in clause ( a ) exist and / or until any Insolvency Proceeding is dismissed ); 8 . 6 Other Agreements . </response>


There is a default in any agreement to which Borrower or any Guarantor is a party with a third party or parties resulting in a right by such third party or parties , whether or not exercised , to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ); 8 . 7 Judgments .

<response> There is a default in any agreement to which <person>Borrower</person> or any Guarantor is a party with a third party or parties resulting in a right by such third party or parties , whether or not exercised , to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ); 8 . 7 Judgments . </response>


A judgment or judgments for the payment of money in an amount , individually or in the aggregate , of at least Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) ( not covered by independent third - party insurance ) shall be rendered against Borrower and shall remain unsatisfied or unstayed for a period of thirty ( 30 ) days after the entry thereof ( provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment ); 8 . 8 Misrepresentations .

<response> A judgment or judgments for the payment of money in an amount , individually or in the aggregate , of at least Two Hundred Fifty Thousand Dollars ($ 250 , 000 . 00 ) ( not covered by independent third - party insurance ) shall be rendered against <person>Borrower</person> and shall remain unsatisfied or unstayed for a period of thirty ( 30 ) days after the entry thereof ( provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment ); 8 . 8 Misrepresentations . </response>


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 Agent and / or Lenders or to induce Agent and / or Lenders to enter this Agreement or any Loan Document , and such representation , warranty , or other statement is incorrect in any material respect when made ; or 8 . 9 Subordinated Debt .

<response> <person>Borrower</person> or any Person acting for <person>Borrower</person> makes any representation , warranty , or other statement now or later in this Agreement , any Loan Document or in any writing delivered to Agent and / or Lenders or to induce Agent and / or Lenders to enter this Agreement or any Loan Document , and such representation , warranty , or other statement is incorrect in any material respect when made ; or 8 . 9 Subordinated Debt . </response>


A default or breach occurs under any agreement between Borrower and any creditor of Borrower that signed a subordination , intercreditor , or other similar agreement with Agent and / or Lenders , or any creditor that has signed such an agreement with Agent and / or Lenders breaches any terms of such agreement .

<response> A default or breach occurs under any agreement between <person>Borrower</person> and any creditor of <person>Borrower</person> that signed a subordination , intercreditor , or other similar agreement with Agent and / or Lenders , or any creditor that has signed such an agreement with Agent and / or Lenders breaches any terms of such agreement . </response>


<response> 9 RIGHTS AND REMEDIES 9 . 1 Rights and Remedies . </response>


While an Event of Default occurs and continues Agent may , without notice or demand , do any or all of the following : ( a ) declare all Obligations immediately due and payable ( but if an Event of Default described in Section 8 . 5 occurs all Obligations are immediately due and payable without any action by Agent and / or Lenders ); ( b ) stop advancing money or extending credit for Borrower ' s benefit under this Agreement or under any other agreement between Borrower and Agent and / or Lenders ;

<response> While an Event of Default occurs and continues Agent may , without notice or demand , do any or all of the following : ( a ) declare all Obligations immediately due and payable ( but if an Event of Default described in Section 8 . 5 occurs all Obligations are immediately due and payable without any action by Agent and / or Lenders ); ( b ) stop advancing money or extending credit for <person>Borrower</person> ' s benefit under this Agreement or under any other agreement between <person>Borrower</person> and Agent and / or Lenders ; </response>


- 10 - ( c ) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Agent considers advisable , notify any Person owing Borrower money of Agent ' s and Lenders ' security interest in such funds , and verify the amount of such account ; ( d ) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and / or its security interest in the Collateral .

<response> - 10 - ( c ) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Agent considers advisable , notify any Person owing <person>Borrower</person> money of Agent ' s and Lenders ' security interest in such funds , and verify the amount of such account ; ( d ) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and / or its security interest in the Collateral . </response>


Borrower shall assemble the Collateral if Agent requests and make it available as Agent designates .

<response> <person>Borrower</person> shall assemble the Collateral if Agent requests and make it available as Agent designates . </response>


<response> Agent 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 . </response>


Borrower grants Agent for the benefit of Lenders a license to enter and occupy any of its premises , without charge , to exercise any of Agent ' s rights or remedies ; ( e ) apply to the Obligations then due and payable any ( i ) balances and deposits of Borrower it holds , or ( ii ) any amount held by Agent or Lenders owing to or for the credit or the account of Borrower ; ( f ) ship , reclaim , recover , store , finish , maintain , repair , prepare for sale , advertise for sale , and sell the Collateral .

<response> <person>Borrower</person> grants Agent for the benefit of Lenders a license to enter and occupy any of its premises , without charge , to exercise any of Agent ' s rights or remedies ; ( e ) apply to the Obligations then due and payable any ( i ) balances and deposits of <person>Borrower</person> it holds , or ( ii ) any amount held by Agent or Lenders owing to or for the credit or the account of <person>Borrower</person> ; ( f ) ship , reclaim , recover , store , finish , maintain , repair , prepare for sale , advertise for sale , and sell the Collateral . </response>


Agent is hereby granted a non - exclusive , royalty - free license or other right to use , without charge , Borrower ' s labels , patents , copyrights , mask works , rights of use of any name , trade secrets , trade names , trademarks , service marks , and advertising matter , or any similar property as it pertains to the Collateral , in completing production of , advertising for sale , and selling any Collateral and , in connection with Agent ' s exercise of its rights under this Section , Borrower ' s rights under all licenses and all franchise agreements inure to Agent for the benefit of Lenders ; ( g ) place a " hold " on any account maintained with Agent or Lenders 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 ; ( h ) demand and receive possession of Borrower ' s Books ; and ( i ) exercise all rights and remedies available to Agent and / or Lenders 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 ).

<response> Agent is hereby granted a non - exclusive , royalty - free license or other right to use , without charge , <person>Borrower</person> ' s labels , patents , copyrights , mask works , rights of use of any name , trade secrets , trade names , trademarks , service marks , and advertising matter , or any similar property as it pertains to the Collateral , in completing production of , advertising for sale , and selling any Collateral and , in connection with Agent ' s exercise of its rights under this Section , <person>Borrower</person> ' s rights under all licenses and all franchise agreements inure to Agent for the benefit of Lenders ; ( g ) place a " hold " on any account maintained with Agent or Lenders 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 ; ( h ) demand and receive possession of <person>Borrower</person> ' s Books ; and ( i ) exercise all rights and remedies available to Agent and / or Lenders 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 ). </response>


9 . 2 Power of Attorney .

<response> 9 . 2 Power of Attorney . </response>


Borrower hereby irrevocably appoints Agent as its lawful attorney - in - fact , exercisable upon the occurrence and during the continuance of an Event of Default , to : ( a ) endorse Borrower ' s name on any checks or other forms of payment or security ; ( b ) sign Borrower ' s name on any invoice or bill of lading for any Account or drafts against Account Debtors ; ( c ) settle and adjust disputes and claims about the Accounts directly with Account Debtors , for amounts and on terms Agent determines reasonable ; ( d ) make , settle , and adjust all claims under Borrower ' s insurance policies ; ( e ) 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 ) transfer the Collateral into the name of Agent for the benefit of Lenders or a third party as the Code permits .

<response> <person>Borrower</person> hereby irrevocably appoints Agent as its lawful attorney - in - fact , exercisable upon the occurrence and during the continuance of an Event of Default , to : ( a ) endorse <person>Borrower</person> ' s name on any checks or other forms of payment or security ; ( b ) sign <person>Borrower</person> ' s name on any invoice or bill of lading for any Account or drafts against Account Debtors ; ( c ) settle and adjust disputes and claims about the Accounts directly with Account Debtors , for amounts and on terms Agent determines reasonable ; ( d ) make , settle , and adjust all claims under <person>Borrower</person> ' s insurance policies ; ( e ) 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 ) transfer the Collateral into the name of Agent for the benefit of Lenders or a third party as the Code permits . </response>


Borrower hereby appoints Agent as its lawful attorney - in - fact to sign Borrower ' s name on any documents necessary to perfect or continue the perfection of Agent ' s and Lenders ' security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Agent and Lenders are under no further obligation to make Credit Extensions hereunder .

<response> <person>Borrower</person> hereby appoints Agent as its lawful attorney - in - fact to sign <person>Borrower</person> ' s name on any documents necessary to perfect or continue the perfection of Agent ' s and Lenders ' security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Agent and Lenders are under no further obligation to make Credit Extensions hereunder . </response>


Agent ' s foregoing appointment as Borrower ' s attorney in fact , and all of Agent ' s rights and powers , coupled with an interest , are irrevocable until all Obligations have been fully repaid and performed and Agent ' s and Lenders ' obligation to provide Credit Extensions terminates .

<response> Agent ' s foregoing appointment as <person>Borrower</person> ' s attorney in fact , and all of Agent ' s rights and powers , coupled with an interest , are irrevocable until all Obligations have been fully repaid and performed and Agent ' s and Lenders ' obligation to provide Credit Extensions terminates . </response>


<response> 9 . 3 Accounts Verification ; Collection . </response>


During the existence of an Event of Default has occurred and is continuing , Agent may notify any Person owing Borrower money of Agent ' s and Lenders ' security interest in such funds and verify the amount of such account .

<response> During the existence of an Event of Default has occurred and is continuing , Agent may notify any Person owing <person>Borrower</person> money of Agent ' s and Lenders ' security interest in such funds and verify the amount of such account . </response>


After the occurrence and during the continuance of an Event of Default , any amounts received by Borrower shall be held in trust by Borrower for Agent and Lenders , and , if requested by Agent , Borrower shall immediately deliver such receipts to Agent for the benefit of Lenders in the form received from the Account Debtor , with proper endorsements for deposit .

<response> After the occurrence and during the continuance of an Event of Default , any amounts received by <person>Borrower</person> shall be held in trust by <person>Borrower</person> for Agent and Lenders , and , if requested by Agent , <person>Borrower</person> shall immediately deliver such receipts to Agent for the benefit of Lenders in the form received from the Account Debtor , with proper endorsements for deposit . </response>


9 . 4 Protective Payments .

<response> 9 . 4 Protective Payments . </response>


If Borrower fails to obtain the insurance called for by Section 6 . 5 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 , Agent may obtain such insurance or make such payment , and all amounts so paid by Agent are Lenders ' Expenses and immediately due and payable , bearing interest at the then highest

<response> If <person>Borrower</person> fails to obtain the insurance called for by Section 6 . 5 or fails to pay any premium thereon or fails to pay any other amount which <person>Borrower</person> is obligated to pay under this Agreement or any other Loan Document , Agent may obtain such insurance or make such payment , and all amounts so paid by Agent are Lenders ' Expenses and immediately due and payable , bearing interest at the then highest </response>


<response> - 11 - applicable rate charged by Agent , and secured by the Collateral . </response>


Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter .

<response> Agent will make reasonable efforts to provide <person>Borrower</person> with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter . </response>


No payments by Agent are deemed an agreement to make similar payments in the future or Agent ' s or any Lender ' s waiver of any Event of Default .

<response> No payments by Agent are deemed an agreement to make similar payments in the future or Agent ' s or any <person>Lender</person> ' s waiver of any Event of Default . </response>


<response> 9 . 5 Application of Payments and Proceeds . </response>


If an Event of Default has occurred and is continuing , Agent and Lenders may apply any funds in their 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 Agent shall determine in its sole discretion .

<response> If an Event of Default has occurred and is continuing , Agent and Lenders may apply any funds in their possession , whether from <person>Borrower</person> 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 Agent shall determine in its sole discretion . </response>


Any surplus shall be paid to Borrower or other Persons legally entitled thereto ; Borrower shall remain liable to Agent and Lenders for any deficiency .

<response> Any surplus shall be paid to <person>Borrower</person> or other Persons legally entitled thereto ; <person>Borrower</person> shall remain liable to Agent and Lenders for any deficiency . </response>


If Agent and / or Lenders , in their good faith business judgment , directly or indirectly enter into a deferred payment or other credit transaction with any purchaser at any sale of Collateral , Agent and each Lender 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 Agent of cash therefor .

<response> If Agent and / or Lenders , in their good faith business judgment , directly or indirectly enter into a deferred payment or other credit transaction with any purchaser at any sale of Collateral , Agent and each <person>Lender</person> 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 Agent of cash therefor . </response>


<response> 9 . 6 Agent ' s and Lenders ' Liability for Collateral . </response>


<response> So long as Agent and Lenders comply with reasonable banking practices and the Code regarding the safekeeping of the Collateral in the possession or under the control of Agent and Lenders , Agent and Lenders shall not be liable or responsible for : ( a ) the safekeeping of the Collateral ; ( b ) any loss or damage to the Collateral ; ( c ) any diminution in the value of the Collateral ; or ( d ) any act or default of any carrier , warehouseman , bailee , or other Person . </response>


Borrower bears all risk of loss , damage or destruction of the Collateral .

<response> <person>Borrower</person> bears all risk of loss , damage or destruction of the Collateral . </response>


9 . 7 No Waiver ; Remedies Cumulative .

<response> 9 . 7 No Waiver ; Remedies Cumulative . </response>


Agent ' s and / or any Lender ' 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 Agent and / or Lenders thereafter to demand strict performance and compliance herewith or therewith .

<response> Agent ' s and / or any <person>Lender</person> ' s failure , at any time or times , to require strict performance by <person>Borrower</person> of any provision of this Agreement or any other Loan Document shall not waive , affect , or diminish any right of Agent and / or Lenders thereafter to demand strict performance and compliance herewith or therewith . </response>


No waiver hereunder shall be effective unless signed by Agent and each Lender and then is only effective for the specific instance and purpose for which it is given .

<response> No waiver hereunder shall be effective unless signed by Agent and each <person>Lender</person> and then is only effective for the specific instance and purpose for which it is given . </response>


<response> Agent ' s and Lenders ' rights and remedies under this Agreement and the other Loan Documents are cumulative . </response>


<response> Agent and Lenders have all rights and remedies provided under the Code , by law , or in equity . </response>


<response> Agent ' s exercise of one right or remedy is not an election , and Agent ' s waiver of any Event of Default is not a continuing waiver . </response>


<response> Agent ' s delay in exercising any remedy is not a waiver , election , or acquiescence . </response>


9 . 8 Demand Waiver .

<response> 9 . 8 Demand Waiver . </response>


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 Agent on which Borrower is liable .

<response> <person>Borrower</person> 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 Agent on which <person>Borrower</person> is liable . </response>


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


Either Lender , Agent , or Borrower may change its address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10 .

<response> Either <person>Lender</person> , Agent , or <person>Borrower</person> may change its address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10 . </response>


If to Borrower :

<response> If to <person>Borrower</person> : </response>


Vringo , Inc .

<response> <organization>Vringo</organization> , Inc . </response>


BIG Center , Bet Shemesh

<response> <organization>BIG Center</organization> , <location>Bet Shemesh</location> </response>


1 Yigal Allon Blvd

<response> <location>1 Yigal Allon Blvd</location> </response>


Bet Shemesh 00062 Israel

<response> <location>Bet Shemesh 00062 Israel</location> </response>


Attn : David Corre

<response> Attn : <person>David Corre</person> </response>


Fax : + 972 2 991 3382

<response> Fax : + 972 2 991 3382 </response>


Email : david . corre @ vringo . com

<response> Email : <person>david</person> . <person>corre</person> @ <organization>vringo</organization> . com </response>


- 12 - If to Agent or SVB :

<response> - 12 - If to Agent or SVB : </response>


Silicon Valley Bank

<response> <organization>Silicon Valley Bank</organization> </response>


535 Fifth Avenue , 27th Floor ,

<response> <location>535 Fifth Avenue</location> , <location>27th Floor</location> , </response>


New York , New York 10017

<response> <location>New York</location> , <location>New York 10017</location> </response>


Attn : Mr . Michael Moretti

<response> Attn : Mr . <person>Michael Moretti</person> </response>


Fax : ( 212 ) 688 - 5994

<response> Fax : ( 212 ) 688 - 5994 </response>


Email : MMoretti @ svb . com

<response> Email : <person>MMoretti</person> @ <organization>svb</organization> . com </response>


with a copy to :


Riemer & Braunstein LLP

<response> <organization>Riemer</organization> & <organization>Braunstein LLP</organization> </response>


Three Center Plaza Boston , Massachusetts 02108

<response> <location>Three Center Plaza Boston</location> , <location>Massachusetts 02108</location> </response>


Attn : David A . Ephraim , Esquire

<response> Attn : <person>David A</person> . <person>Ephraim</person> , <location>Esquire</location> </response>


Fax : ( 617 ) 880 - 3456

<response> Fax : ( 617 ) 880 - 3456 </response>


Email : DEphraim @ riemerlaw . com

<response> Email : <person>DEphraim</person> @ <organization>riemerlaw</organization> . com </response>


If to Gold Hill :

<response> If to <location>Gold Hill</location> : </response>


Gold Hill Venture Lending 03 , L . P .

<response> <location>Gold Hill Venture Lending 03</location> , L . P . </response>


Two Newton Executive Park , Suite 203

<response> Two <location>Newton Executive Park</location> , <location>Suite 203</location> </response>


2227 Washington Street

<response> <location>2227 Washington Street</location> </response>


Newton , Massachusetts 02462

<response> <location>Newton</location> , <location>Massachusetts 02462</location> </response>


Attn : Mr . David Fischer

<response> Attn : Mr . <person>David Fischer</person> </response>


Fax : ( 617 ) 243 - 2601

<response> Fax : ( 617 ) 243 - 2601 </response>


Email : DFischer @ goldhillcapital . com

<response> Email : <person>DFischer</person> @ <location>goldhillcapital</location> . com </response>


- 13 - 11 CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER Massachusetts law governs the Loan Documents without regard to principles of conflicts of law .

<response> - 13 - 11 CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER <location>Massachusetts</location> law governs the Loan Documents without regard to principles of conflicts of law . </response>


Borrower , Lenders and Agent each submit to the exclusive jurisdiction of the State and Federal courts in Massachusetts ; provided , however , that if for any reason Agent and / or Lenders cannot avail themselves of such courts in the Commonwealth of Massachusetts , Borrower accepts jurisdiction of the courts and venue in Santa Clara County , California .

<response> <person>Borrower</person> , Lenders and Agent each submit to the exclusive jurisdiction of the State and Federal courts in <location>Massachusetts</location> ; provided , however , that if for any reason Agent and / or Lenders cannot avail themselves of such courts in the <location>Commonwealth of Massachusetts</location> , <person>Borrower</person> accepts jurisdiction of the courts and venue in <location>Santa Clara County</location> , <location>California</location> . </response>


NOTWITHSTANDING THE FOREGOING , AGENT SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE AGENT ' S OR LENDERS ' RIGHTS AGAINST BORROWER OR ITS PROPERTY .

<response> NOTWITHSTANDING THE FOREGOING , AGENT SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST <person>BORROWER</person> OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE AGENT ' S OR LENDERS ' RIGHTS AGAINST <person>BORROWER</person> OR ITS PROPERTY . </response>


TO THE EXTENT PERMITTED BY APPLICABLE LAW , BORROWER , LENDERS AND AGENT 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 .

<response> TO THE EXTENT PERMITTED BY APPLICABLE LAW , <person>BORROWER</person> , LENDERS AND AGENT 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 . </response>


<response> THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT . </response>


<response> EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL . </response>


<response> 12 GENERAL PROVISIONS 12 . 1 Successors and Assigns . </response>


<response> This Agreement binds and is for the benefit of the successors and permitted assigns of each party . </response>


Borrower may not assign this Agreement or any rights or obligations under it without Agent ' s prior written consent ( which may be granted or withheld in Agent ' s discretion ).

<response> <person>Borrower</person> may not assign this Agreement or any rights or obligations under it without Agent ' s prior written consent ( which may be granted or withheld in Agent ' s discretion ). </response>


Lenders and Agent have 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 , Agent ' s and / Lenders ' obligations , rights , and benefits under this Agreement and the other Loan Documents .

<response> Lenders and Agent have the right , without the consent of or notice to <person>Borrower</person> , to sell , transfer , assign , negotiate , or grant participation in all or any part of , or any interest in , Agent ' s and / Lenders ' obligations , rights , and benefits under this Agreement and the other Loan Documents . </response>


12 . 2 Indemnification .

<response> 12 . 2 Indemnification . </response>