{"id":41124,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/loan-and-security-agreement-com21-inc-and-nationscredit.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"loan-and-security-agreement-com21-inc-and-nationscredit","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/loan-and-security-agreement-com21-inc-and-nationscredit.html","title":{"rendered":"Loan and Security Agreement &#8211; Com21 Inc. and NationsCredit Commercial Corp."},"content":{"rendered":"<pre>\n                           LOAN AND SECURITY AGREEMENT\n\n\nBORROWER:      COM2L, INC.\nADDRESS:       750 TASMAN DRIVE\n               MILPITAS, CALIFORNIA 95035\n\nDATE:   MAY 30,1997\n\nThis Loan and Security Agreement is entered into on the above date between\nGREYROCK BUSINESS CREDIT, a Division of NationsCredit Commercial Corporation\n(\"GBC\"), whose address is 10880 Wilshire Blvd. Suite 950, Los Angeles, CA 90024\nand the borrower named above (\"Borrower\"), whose chief executive office is\nlocated at the above address (\"Borrower's Address\"). The Schedule to this\nAgreement (the \"Schedule\") being signed concurrently is an integral part of this\nAgreement. (Definitions of certain terms used in this Agreement are set forth in\nSection 8 below.)\n\n        1. LOANS.\n\n               1.1 LOANS. GBC will make loans to Borrower (the \"Loans\"), up to\nthe amounts (the \"Credit Limit\") shown on the Schedule*, provided no Default or\nEvent of Default has occurred and is continuing. If at any time or for any\nreason the total of all outstanding Loans and all other Obligations exceeds the\nCredit Limit, Borrower shall immediately pay the amount of the excess to GBC,\nwithout notice or demand. **\n\n        *MINUS THE AVAILABILITY RESERVES\n\n        **\"AVAILABILITY RESERVES\" SHALL MEAN SUCH AMOUNTS AS GBC MAY FROM TIME\nTO TIME ESTABLISH AND REVISE IN ITS GOOD FAITH BUSINESS JUDGMENT TO REFLECT (A)\nANY MATERIAL INCREASE IN DILUTION WITH RESPECT TO THE ACCOUNTS OR ANY MATERIAL\nDECLINE IN THE GENERAL CREDITWORTHINESS OF ACCOUNT DEBTORS; AND\/OR (B) EVENTS,\nCONDITIONS, CONTINGENCIES OR RISKS WHICH MAY SUBSTANTIALLY AFFECT EITHER THE\nCOLLATERAL OR ANY OTHER PROPERTY WHICH IS SECURITY FOR THE OBLIGATIONS OR ITS\nVALUE, OR THE ASSETS, BUSINESS OR PROSPECTS OF BORROWER OR THE SECURITY\nINTERESTS AND OTHER RIGHTS OF GBC IN THE COLLATERAL (INCLUDING THE\nENFORCEABILITY, PERFECTION AND PRIORITY THEREOF) AND\/OR (C) GBC'S GOOD FAITH\nBELIEF THAT ANY COLLATERAL REPORT OR FINANCIAL INFORMATION FURNISHED BY OR ON\nBEHALF OF BORROWER TO GBC WAS FALSE OR MISLEADING IN A MATERIAL RESPECT WHEN\nMADE.\n\n               1.2 INTEREST. All Loans and all other monetary Obligations shall\nbear interest at the rate shown on the Schedule, except where expressly set\nforth to the contrary in this Agreement or in another written agreement signed\nby GBC and Borrower. Interest shall be payable monthly, on the last day of the\nmonth. Interest may, in GBC's discretion, be charged to Borrower's loan account,\nand the same shall thereafter bear interest at the same rate as the other Loans.\n\n               1.3 FEES. Borrower shall pay GBC the fee(s) shown on the\nSchedule, which are in addition to all interest and other sums payable to GBC\nand are not refundable.\n\n        2.     SECURITY INTEREST.\n\n               2.1 SECURITY INTEREST. To secure the payment and performance of\nall of the Obligations when due, Borrower hereby grants to GBC a security\ninterest in all of Borrower's interest in the following, whether now owned or\nhereafter acquired, and wherever located (collectively, the \"Collateral\"): All\nInventory, Equipment,\n\n\n\n\n     2\n\n\n\nReceivables, and General Intangibles, including, without limitation, all of\nBorrower's Deposit Accounts, all money, all collateral in which GBC is granted a\nsecurity interest pursuant to any other present or future agreement, all\nproperty now or at any time in the future in GBC's possession, and all proceeds\n(including proceeds of any insurance policies, proceeds of proceeds and claims\nagainst third parties), all products of the foregoing, and all books and records\nrelated to any of the foregoing.*\n\n        * NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 2.1, SUCH\nGRANT OF A SECURITY INTEREST SHALL NOT EXTEND TO, AND THE TERM \"COLLATERAL\"\nSHALL NOT INCLUDE, ANY GENERAL INTANGIBLES OF THE BORROWER (WHETHER OWNED OR\nHELD AS LICENSEE OR LESSEE, OR OTHERWISE), TO THE EXTENT THAT (I) SUCH GENERAL\nINTANGIBLES ARE NOT ASSIGNABLE OR CAPABLE OF BEING ENCUMBERED AS A MATTER OF LAW\nOR UNDER THE TERMS OF THE LICENSE, LEASE OR OTHER AGREEMENT APPLICABLE THERETO\n(BUT SOLELY TO THE EXTENT THAT ANY SUCH RESTRICTION SHALL BE ENFORCEABLE UNDER\nAPPLICABLE LAW), WITHOUT THE CONSENT OF THE LICENSOR OR LESSOR THEREOF OR OTHER\nAPPLICABLE PARTY THERETO AND (II) SUCH CONSENT HAS NOT BEEN OBTAINED; PROVIDED,\nHOWEVER, THAT THE FOREGOING GRANT OF SECURITY INTEREST SHALL EXTEND TO, AND THE\nTERM \"COLLATERAL\" SHALL INCLUDE (A) ANY GENERAL INTANGIBLE WHICH IS A RECEIVABLE\nOR A PROCEED OF, OR OTHERWISE RELATED TO THE ENFORCEMENT OR COLLECTION OF, ANY\nRECEIVABLE, OR GOODS WHICH ARE THE SUBJECT OF ANY RECEIVABLE, (B) ANY AND ALL\nPROCEEDS OF ANY OTHER GENERAL INTANGIBLES WHICH ARE OTHERWISE EXCLUDED TO THE\nEXTENT THAT THE ASSIGNMENT OR ENCUMBRANCE OF SUCH PROCEEDS IS NOT SO RESTRICTED,\nAND (C) UPON OBTAINING THE CONSENT OF ANY SUCH LICENSOR, LESSOR OR OTHER\nAPPLICABLE PARTY'S CONSENT WITH RESPECT TO ANY SUCH OTHERWISE EXCLUDED GENERAL\nINTANGIBLES, SUCH GENERAL INTANGIBLES AS WELL AS ANY AND ALL PROCEEDS THEREOF\nTHAT MIGHT THERETOFORE HAVE BEEN EXCLUDED FROM SUCH GRANT OF A SECURITY INTEREST\nAND THE TERM \"COLLATERAL\".\n\n3.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.\n\n        In order to induce GBC to enter into this Agreement and to make Loans,\nBorrower represents and warrants to GBC as follows, and Borrower covenants that\nthe following representations will continue to be true, and that Borrower will\nat all times comply with all of the following covenants:\n\n        3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is\nand will continue to be, duly organized, validly existing and in good standing\nunder the laws of the jurisdiction of its incorporation. Borrower is and will\ncontinue to be qualified and licensed to do business in all jurisdictions in\nwhich any failure to do so would have a material adverse effect on Borrower. The\nexecution, delivery and performance by Borrower of this Agreement, and all other\ndocuments contemplated hereby (i) have been duly and validly authorized, (ii)\nare enforceable against Borrower in accordance with their terms (except as\nenforcement may be limited by equitable principles and by bankruptcy,\ninsolvency, reorganization, moratorium or similar laws relating to creditors'\nrights generally), (iii) do not violate Borrower's articles or certificate of\nincorporation, or Borrower's by-laws, or any law or any material agreement or\ninstrument which is binding upon Borrower or its property, and (iv) do not\nconstitute grounds for acceleration of any material indebtedness or obligation\nunder any material agreement or instrument which is binding upon Borrower or its\nproperty.\n\n        3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the\nheading to this Agreement is its correct name. Listed on the Schedule are all\nprior names of Borrower and all of Borrower's present and prior trade names.\nBorrower shall give GBC 30 * days prior written notice before changing its name\nor doing business under any other name. Borrower has complied, and will in the\nfuture comply, with all laws relating to the conduct of business under a\nfictitious business name.\n\n        *15\n\n        3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in\nthe heading to this Agreement is Borrower's chief executive office. In addition,\nBorrower has places of business and Collateral is located only at the locations\nset forth on the Schedule. Borrower will give GBC at least 30 * days prior\nwritten notice before\n\n                                       2.\n\n\n\n     3\n\n\n\nopening any additional place of business, changing its chief executive office,\nor moving any of the Collateral to a location other than Borrower's Address or\none of the locations set forth on the Schedule***\n\n        * 15\n\n        ** (OTHER THAN (I) IN CONNECTION WITH SALES OR OTHER DISPOSITIONS OF\nINVENTORY AND OTHER PRODUCT IN THE ORDINARY COURSE OF BUSINESS, (II) DISPOSAL IN\nTHE ORDINARY COURSE OF BUSINESS OF ITEMS OF COLLATERAL WHICH HAVE BECOME WORN\nOUT OR OBSOLETE OR WHICH ARE PROMPTLY BEING REPLACED, PROVIDED THAT WITHOUT\nGBC'S PRIOR WRITTEN CONSENT BORROWER SHALL NOT DISPOSE OF MORE THAN $50,000 OF\nCOLLATERAL (WITH EACH ITEM OF SUCH COLLATERAL TO BE VALUED AT THE GREATER OF\nCOST OR FAIR MARKET VALUE) IN ANY FISCAL YEAR, (III) DISPOSAL OF DEMONSTRATION\nINVENTORY OUTSIDE THE ORDINARY COURSE OF BUSINESS NOT EXCEEDING IN THE AGGREGATE\n$50,000 IN ANY FISCAL YEAR, DISPOSAL OF EQUIPMENT INVENTORY OUTSIDE THE ORDINARY\nCOURSE OF BUSINESS NOT EXCEEDING IN THE AGGREGATE $50,000 IN ANY FISCAL YEAR,\n(IV) MOVEMENT OF EQUIPMENT TO ANY ADDITIONAL LOCATION REPORTED TO GBC AND WITHIN\nA JURISDICTION IN WHICH GBC HAS TAKEN ALL NECESSARY ACTION IN ORDER TO PROTECT\nAND PERFECT ITS SECURITY INTEREST THEREIN, AND (V) ANY AND ALL MOBILE GOODS\nWHICH ARE OF A TYPE NORMALLY USED IN MORE THAN ONE JURISDICTION). IN CONNECTION\nWITH OPENING OF NEW SALES OFFICES OUTSIDE OF THE DENVER OFFICE, BORROWER WILL BE\nPERMITTED TO PROVIDE GBC NOTICE WITHIN 30 DAYS FOLLOWING THE OPENING OF THE NEW\nOFFICE, PROVIDED THAT (I) THE COLLATERAL LOCATED AT SUCH NEW SALES OFFICE SHALL\nNOT EXCEED $50,000 UNTIL SUCH NOTICE HAS BEEN GIVEN TO GBC AND GBC HAS TAKEN ALL\nNECESSARY ACTION IN ORDER TO PROTECT AND PERFECT ITS SECURITY INTEREST IN ANY\nCOLLATERAL TO BE LOCATED AT SUCH OFFICE, AND (II) NOT MORE THAN AN AGGREGATE OF\n$100,000 OF COLLATERAL SHALL AT ANY TIME BE LOCATED AT NEW SALES OFFICES FOR\nWHICH NOTICE HAS NOT YET BEEN GIVEN TO GBC AND FOR WHICH GBC HAS NOT YET TAKEN\nALL NECESSARY ACTION IN ORDER TO PROTECT AND PERFECT ITS SECURITY INTEREST IN\nANY COLLATERAL TO BE LOCATED AT SUCH OFFICES.\n\n        3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at\nall times in the future be, the sole owner of all the Collateral, except for\nitems of Equipment which are leased by Borrower. The Collateral now is and will\nremain free and clear of any and all liens, charges, security interests,\nencumbrances and adverse claims, except for Permitted Liens. GBC now has, and\nwill continue to have, a first-priority perfected and enforceable security\ninterest in all of the Collateral, subject only to the Permitted Liens, and\nBorrower will at all times defend GBC and the Collateral against all claims of\nothers. So long as any Loan is outstanding none of the Collateral now is or will\nbe affixed to any real property in such a manner, or with such intent, as to\nbecome a fixture*. Borrower is not and will not become a lessee under any real\nproperty lease pursuant to which the lessor may obtain any rights in any of the\nCollateral and no such lease now prohibits, restrains, impairs or will prohibit,\nrestrain or impair Borrower's right to remove any Collateral from the leased\npremises **. Whenever any Collateral is located upon premises in which any third\nparty has an interest (whether as owner, mortgagee, beneficiary under a deed of\ntrust, lien or otherwise), Borrower shall, whenever requested by GBC, use its\nbest efforts to cause such third party to execute and deliver to GBC, in form\nacceptable to GBC, such waivers and subordinations as GBC shall specify, so as\nto ensure that GBC's rights in the Collateral are, and will continue to be,\nsuperior to the rights of any such third party. Borrower will keep in full force\nand effect, and will comply *** with all the terms of, any lease of real\nproperty where any of the Collateral now or in the future may be located.\n\n        * , UNLESS SUCH COLLATERAL IS COVERED BY A FIXTURE FILING DULY EXECUTED\nAND DELIVERED BY THE BORROWER IN FAVOR OF GBC, IS RECORDED WITH RESPECT TO SUCH\nREAL PROPERTY, AND PROVIDES GBC'S SECURITY INTEREST\/LIEN AGAINST SUCH COLLATERAL\nWITH PRIORITY SATISFACTORY TO GBC.\n\n        ** EXCEPT TO THE EXTENT PROVIDED UNDER LEASES WITH RESPECT TO WHICH THE\nLANDLORD HAS ENTERED INTO A LANDLORD'S WAIVER AND AGREEMENT IN RECORDABLE FORM\nAND SATISFACTORY TO GBC, ACKNOWLEDGING GBC'S PRIOR SECURITY INTEREST IN THE\nCOLLATERAL AND PROVIDING ACCESS FOR GBC TO THE COLLATERAL AND THE PREMISES\n\n\n                                       3.\n\n\n\n     4\n\n\n\n        ***IN ALL MATERIAL RESPECTS\n\n        3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in\ngood working condition, ordinary wear and tear excepted, and Borrower will not\nuse the Collateral for any unlawful purpose. Borrower will immediately advise\nGBC in writing of any material loss or damage to the Collateral.\n\n        3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at\nBorrower's Address complete and accurate books and records, comprising an\naccounting system in accordance with generally accepted accounting principles.\n\n        3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial\nstatements now or in the future delivered to GBC have been, and will be,\nprepared in conformity with generally accepted accounting principles and now and\nin the future will completely and fairly reflect the financial condition of\nBorrower, at the times and for the periods therein stated*. Between the last\ndate covered by any such statement provided to GBC and the date hereof, there\nhas been no material adverse change in the financial condition or business of\nBorrower. Borrower is now and will continue to be solvent.\n\n        * , EXCEPT IN THE CASE OF QUARTERLY FINANCIAL INFORMATION FOR THE\nABSENCE OF FOOTNOTE DISCLOSURE AND SUBJECT TO CHANGES RESULTING FROM NORMAL,\nYEAR-END AUDIT ADJUSTMENTS, AND EXCEPT IN THE CASE OF PROJECTIONS OR FORECASTS\nFOR THE UNDERSTANDING THAT ALTHOUGH BORROWER HAS PREPARED THE SAME IN GOOD FAITH\nUTILIZING ASSUMPTIONS IT BELIEVES TO BE REASONABLE, GBC RECOGNIZES THAT\nFORECASTS AND ASSUMPTIONS BY THEIR NATURE INVOLVE APPROXIMATIONS AND\nUNCERTAINTIES.\n\n        3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely\nfiled, and will timely file, all tax returns and reports required by applicable\nlaw, and Borrower has timely paid, and will timely pay, all applicable taxes,\nassessments, deposits and contributions now or in the future owed by Borrower.\nBorrower may, however, defer payment of any contested taxes, provided that\nBorrower (i) in good faith contests Borrower's obligation to pay the taxes by\nappropriate proceedings promptly and diligently instituted and conducted, (ii)\nnotifies GBC in writing of the commencement of, and any material development in,\nthe proceedings, and (iii) posts bonds or takes any other steps required to keep\nthe contested taxes from becoming a lien upon any of the Collateral. Borrower is\nunaware of any claims or adjustments proposed for any of Borrower's prior tax\nyears which could result in additional taxes becoming due and payable by\nBorrower. Borrower has paid, and shall continue to pay all amounts necessary to\nfund all present and future pension, profit sharing and deferred compensation\nplans in accordance with their terms, and Borrower has not and will not withdraw\nfrom participation in, permit partial or complete termination of, or permit the\noccurrence of any other event with respect to, any such plan which could result\nin any liability of Borrower, including any liability to the Pension Benefit\nGuaranty Corporation or any other governmental agency.\n\n        3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all\nmaterial respects, with all provisions of all applicable laws and regulations,\nincluding, but not limited to, those relating to Borrower's ownership of real or\npersonal property, the conduct and licensing of Borrower's business, and all\nenvironmental matters.\n\n        3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,\nsuit, litigation, proceeding or investigation pending or (to best of Borrower's\nknowledge) threatened by or against or affecting Borrower in any court or before\nany governmental agency (or any basis therefor known to Borrower) which *\nresult, either separately or in the aggregate, in any material adverse change in\nthe financial condition or business of Borrower, or in any material impairment\nin the ability of Borrower to carry on its business in substantially the same\nmanner as it is now being conducted. Borrower will promptly inform GBC in\nwriting of any claim, proceeding, litigation or investigation in the future\nthreatened or instituted by or against Borrower involving any single claim of\n$50,000 or more, or involving $100,000 or more in the aggregate.\n\n\n                                       4.\n\n\n\n     5\n\n\n\n        *IS REASONABLY LIKELY TO\n\n\n        3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for\nlawful business purposes.\n\n4.      RECEIVABLES.\n\n        4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and\nwarrants to GBC as follows: Each Receivable with respect to which Loans are\nrequested by Borrower shall, on the date each Loan is requested and made,\nrepresent an undisputed, bona fide, existing, unconditional obligation of the\nAccount Debtor created by the sale, delivery, and acceptance of goods or the\nrendition of services, in the ordinary course of Borrower's business.\n\n        4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower\nrepresents and warrants to GBC as follows: All statements made and all unpaid\nbalances appearing in all invoices, instruments and other documents evidencing\nthe Receivables are and shall be true and correct and all such invoices,\ninstruments and other documents and all of Borrower's books and records are and\nshall be genuine and in all respects what they purport to be, and all\nsignatories and endorsers have the capacity to contract. All sales and other\ntransactions underlying or giving rise to each Receivable shall comply * with\nall applicable laws and Governmental rules and regulations. ** signatures and\nendorsements on all documents, instruments, and agreements relating to all\nReceivables are and shall be genuine, and all such documents, instruments and\nagreements are and shall be legally enforceable in accordance with their terms.\n\n        * IN ALL MATERIAL RESPECTS\n\n        ** TO THE BEST OF THE BORROWER'S KNOWLEDGE AT THE TIME OF THE SALE, ALL\n\n        4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall\ndeliver to GBC transaction reports and loan requests, schedules and assignments\nof all Receivables, and schedules of collections, * all on GBC's standard\nforms**; provided, however, that Borrower's failure to execute and deliver the\nsame shall not affect or limit GBC's security interest and other rights in all\nof Borrower's Receivables, nor shall GBC's failure to advance or lend against a\nspecific Receivable affect or limit GBC's security interest and other rights\ntherein. *** with each such schedule and assignment, or later if **** requested\nby GBC, Borrower shall furnish GBC with copies (or, at GBC's request, originals)\nof all contracts, orders, invoices, and other similar documents, and all\noriginal shipping instructions, delivery receipts, bills of lading, and other\nevidence of delivery, for any goods the sale or disposition of which gave rise\nto such Receivables, and Borrower warrants the genuineness of all of the\nforegoing. Borrower shall also furnish to GBC an aged accounts receivable trial\nbalance in such form and at such intervals as GBC shall request. In addition,\nBorrower shall deliver to GBC the originals of all instruments, chattel paper,\nsecurity agreements, guarantees and other documents and property evidencing or\nsecuring any Receivables, immediately upon receipt thereof and in the same form\nas received, with all necessary endorsements.\n\n* AS GBC SHALL REQUEST,\n\n** , OR ON SUCH OTHER FORMS AS SHALL BE REASONABLY SATISFACTORY TO GBC\n\n*** IF AT ANY TIME REQUESTED BY GBC, TOGETHER\n\n**** SO\n\n        4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect\nall Receivables, unless and until a Default or an Event of Default has occurred\n*. Borrower shall hold all payments on, and proceeds of, Receivables in trust\nfor GBC, and Borrower shall deliver all such payments and proceeds to GBC,\nwithin one business day after\n\n                                       5.\n\n\n\n     6\n\n\n\nreceipt of the same, in their original form, duly endorsed, to be applied to the\nObligations in such order as GBC shall determine.\n\n*       AND IS CONTINUING\n\n        4.5 DISPUTES. Borrower shall notify GBC promptly of all disputes or\nclaims relating to Receivables on the regular reports to GBC. Borrower shall not\nforgive, or settle any Receivable for less than payment in full, or agree to do\nany of the foregoing, except that Borrower may do so, provided that: (i)\nBorrower does so in good faith, in a commercially reasonable manner, in the\nordinary course of business, and in arm's length transactions, which are\nreported to GBC on the regular reports provided to GBC; (ii) no Default or Event\nof Default has occurred and is continuing; and (iii) taking into account all\nsuch settlements and forgiveness, the total outstanding Loans and other\nObligations will not exceed the Credit Limit.\n\n        4.6 RETURNS. Provided no Event of Default has occurred and is\ncontinuing, if any Account Debtor returns any Inventory to Borrower in the\nordinary course of its business, Borrower shall promptly determine the reason\nfor such return and promptly issue a credit memorandum to the Account Debtor in\nthe appropriate amount (sending a copy to GBC). In the event any attempted\nreturn occurs after the occurrence * of any Event of Default, Borrower shall (i)\nnot accept any return without GBC's prior written consent, (ii) hold the\nreturned Inventory in trust for GBC, (iii) segregate all returned Inventory from\nall of Borrower's other property, (iv) conspicuously label the returned\nInventory as GBC's property, and (v) immediately notify GBC of the return of any\nInventory, specifying the reason for such return, the location and condition of\nthe returned Inventory, and on GBC's request deliver such returned Inventory to\nGBC.\n\n        * AND DURING THE CONTINUANCE\n\n        4.7 VERIFICATION. GBC may, from time to time, verify directly with the\nrespective Account Debtors the validity, amount and other matters relating to\nthe Receivables, by means of mail, telephone or otherwise, either in the name of\nBorrower or GBC or such other name as GBC may choose, * and GBC or its designee\nmay, at any time, notify Account Debtors that it has a security interest in the\nReceivables.\n\n        * PROVIDED THAT, IF NO EVENT OF DEFAULT AND NO EVENT WHICH, WITH NOTICE\nOR PASSAGE OF TIME OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT HAS OCCURRED\nAND IS CONTINUING, SUCH VERIFICATIONS SHALL NOT BE DONE MORE FREQUENTLY THAN\nONCE PER CALENDAR QUARTER\n\n        4.8 NO LIABILITY. GBC shall not under any circumstances be responsible\nor liable for any shortage or discrepancy in, damage to, or loss or destruction\nof, any goods, the sale or other disposition of which gives rise to a\nReceivable, or for any error, act, omission, or delay of any kind occurring in\nthe settlement, failure to settle, collection or failure to collect any\nReceivable, or for settling any Receivable in good faith for less than the full\namount thereof, nor shall GBC be deemed to be responsible for any of Borrower's\nobligations under any contract or agreement giving rise to a Receivable. Nothing\nherein shall, however, relieve GBC from liability for its own gross negligence\nor willful misconduct.\n\n5.      ADDITIONAL DUTIES OF THE BORROWER.\n\n        5.1 INSURANCE. Borrower shall, at all times, insure all of the tangible\npersonal property Collateral and carry such other business insurance, with\ninsurers reasonably acceptable to GBC, * in such form and amounts as GBC may\nreasonably require, and Borrower shall provide evidence of such insurance to\nGBC, so that GBC is satisfied that such insurance is, at all times, in full\nforce and effect. All such insurance policies shall name GBC as an additional\nloss payee, and shall contain a lenders loss payee endorsement in form\nreasonably acceptable to GBC. Upon receipt of the proceeds of any such\ninsurance, GBC shall apply such proceeds in reduction of the Obligations as GBC\nshall determine in its sole discretion, except that, provided no Default or\nEvent of Default has occurred and\n\n                                       6.\n\n\n\n     7\n\n\n\nis continuing, GBC shall release to Borrower insurance proceeds with respect to\nEquipment totaling less than $100,000, which shall be utilized by Borrower for\nthe replacement of the Equipment with respect to which the insurance proceeds\nwere paid. GBC may require reasonable assurance that the insurance proceeds so\nreleased will be so used. If Borrower fails to provide or pay for any insurance,\nGBC may, but is not obligated to, obtain the same at Borrower's expense.\nBorrower shall promptly deliver to GBC copies of all reports made to insurance\ncompanies **.\n\n        * COVERING SUCH PROPERTY AND RISKS AS IS CUSTOMARILY CARRIED BY\nCOMPANIES ENGAGED IN SIMILAR BUSINESSES AND OWNING SIMILAR PROPERTIES IN THE\nLOCALITIES WHERE THE BORROWER OPERATES, AND\n\n        ** INVOLVING CLAIMS IN EXCESS OF $50,000\n\n        5.2 REPORTS. Borrower, at its expense, shall provide GBC with the\nwritten reports set forth in the Schedule, and such other written reports with\nrespect to Borrower (including budgets, sales projections, operating plans and\nother financial documentation), as GBC shall from time to time reasonably\nspecify.\n\n        5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on\none business day's notice, GBC, or its agents, shall have the right to inspect\nthe Collateral, and the right to audit and copy Borrower's books and records.\nGBC shall take reasonable steps to keep confidential all information obtained in\nany such inspection or audit, but GBC shall have the right to disclose any such\ninformation to its auditors, regulatory agencies, and attorneys, and pursuant to\nany subpoena or other legal process. The foregoing inspections and audits shall\nbe at Borrower's expense and the charge therefor shall be $600 per person per\nday (or such higher amount as shall represent GBC's then current standard charge\nfor the same), plus reasonable out-of-pockets expenses. Borrower shall not be\ncharged more than $3,000 per audit (plus reasonable out-of-pockets expenses),\nnor shall audits be done more frequently than four times per calendar year,\nprovided that the foregoing limits shall not apply after the occurrence of a\nDefault or Event of Default, nor shall they restrict GBC's right to conduct\naudits at its own expense (whether or not a Default or Event of Default has\noccurred). Borrower will not enter into any agreement with any accounting firm,\nservice bureau or third party to store Borrower's books or records at any\nlocation other than Borrower's Address, without first obtaining GBC's written\nconsent, which may be conditioned upon such accounting firm, service bureau or\nother third party agreeing to give GBC the same rights with respect to access to\nbooks and records and related rights as GBC has under this Agreement.\n\n        5.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or other\ndisposition of any Collateral shall be delivered, in kind, by Borrower to GBC in\nthe original form in which received by Borrower not later than the following\nbusiness day after receipt by Borrower, to be applied to the Obligations in such\norder as GBC shall determine; provided that, if no Default or Event of Default\nhas occurred and is continuing, then Borrower shall not be obligated to remit to\nGBC the proceeds of the sale of Equipment which is sold in the ordinary course\nof business, in a good-faith arm's length transaction. Except for the proceeds\nof the sale of Equipment as set forth above, Borrower shall not commingle\nproceeds of Collateral with any of Borrower's other funds or property, and shall\nhold such proceeds separate and apart from such other funds and property and in\nan express trust for GBC. Nothing in this Section limits the restrictions on\ndisposition of Collateral set forth elsewhere in this Agreement.\n\n        5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,\nBorrower shall not, without GBC's prior written consent, do any of the\nfollowing: (i) merge or consolidate with another corporation or entity *; (ii)\nacquire any assets, except in the ordinary course of business; (iii) enter into\nany other transaction outside the ordinary course of business; (iv) sell or\ntransfer any Collateral, except that Borrower may (a) sell finished Inventory in\nthe ordinary course of Borrower's business, (b) sell Equipment in the ordinary\ncourse of business, in good-faith arm's length transactions; ** (v) store any\nInventory or other Collateral with any warehouseman or other third party ***;\n(vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or\nother contingent basis ****; (vii) make any loans of any money or other assets\n+; (viii) incur any debts, outside the ordinary course of business, which would\nhave a material, adverse effect on Borrower or on the prospect of repayment of\nthe Obligations; (ix)\n\n                                       7.\n\n\n\n     8\n\n\n\nguarantee or otherwise become liable with respect to the obligations of another\nparty or entity ++; (x) pay or declare any dividends on Borrower's stock (except\nfor dividends payable solely in stock of Borrower); (xi) redeem, retire,\npurchase or otherwise acquire, directly or indirectly, any of Borrower's stock\n+++; (xii) make any change in Borrower's capital structure which would have a\nmaterial adverse effect on Borrower or on the prospect of repayment of the\nObligations; or (xiii) dissolve or elect to dissolve; or (xiv) agree to do any\nof the foregoing.\n\n        * (PROVIDED THAT BORROWER MAY MERGE INTO ANOTHER CORPORATION FOR\nPURPOSES OF EFFECTING A REINCORPORATION INTO ANOTHER STATE AFTER GBC HAS\nNOTIFIED BORROWER IN WRITING THAT ALL STEPS NECESSARY TO PROTECT THE VALIDITY\nAND PERFECTION OF GBC'S FIRST-PRIORITY SECURITY INTEREST IN THE COLLATERAL,\nSUBJECT TO PERMITTED LIENS, HAVE BEEN TAKEN)\n\n        ** (C) LICENSE, SUBLICENSE AND GRANT DISTRIBUTION AND SIMILAR RIGHTS IN\nTHE ORDINARY COURSE OF BUSINESS, AND (D) SELL OR DISPOSE OF ASSETS IN THE\nORDINARY COURSE OF BUSINESS WHICH HAVE BECOME WORN OUT OR OBSOLETE OR WHICH ARE\nPROMPTLY BEING REPLACED, AND ASSETS (OTHER THAN RECEIVABLES) OUTSIDE THE\nORDINARY COURSE OF BUSINESS NOT EXCEEDING IN THE AGGREGATE $50,000 (WITH EACH\nSUCH ASSET TO BE VALUED AT THE GREATER OF COST OR FAIR MARKET VALUE) IN ANY\nFISCAL YEAR\n\n        *** EXCEPT AFTER GBC HAS NOTIFIED BORROWER IN WRITING THAT ALL STEPS\nNECESSARY TO PROTECT THE VALIDITY, PERFECTION AND ENFORCEABILITY OF GBC'S\nFIRST-PRIORITY SECURITY INTEREST IN THE INVENTORY, SUBJECT TO PERMITTED LIENS,\nHAS BEEN TAKEN AND EXCEPT FOR INVENTORY IN AN AGGREGATE AMOUNT OF $1,000,000\nSTORED AT CELESTICA AND OTHER INVENTORY LEFT FOR TESTING WITH CUSTOMERS IN THE\nORDINARY COURSE OF BUSINESS\n\n        **** OTHER THAN INVENTORY BEING TESTED BY CUSTOMERS IN THE ORDINARY\nCOURSE OF BUSINESS\n\n         + OTHER THAN LOANS TO OR GUARANTEES OF THE OBLIGATIONS OF EMPLOYEES IN\nCONNECTION WITH RECRUITING, RELOCATION OR OTHER PURPOSES, NOT TO EXCEED $100,000\nIN THE AGGREGATE OUTSTANDING AT ANY TIME, AND LOANS ARISING AS THE RESULT OF\nACCEPTING PROMISSORY NOTES FROM EMPLOYEES FOR THE PURCHASE BY SUCH EMPLOYEES OF\nSTOCK OF THE BORROWER\n\n        ++ OTHER THAN ENDORSEMENTS OF INSTRUMENTS OR ITEMS OF PAYMENT FOR\nCOLLECTION IN THE ORDINARY COURSE OF BUSINESS, OBLIGATIONS PURSUANT TO THE\nBORROWER'S BYLAWS OR IN INDEMNIFICATION AGREEMENTS, TO INDEMNIFY OFFICERS,\nDIRECTORS AND EMPLOYEES OF THE BORROWER IN CONNECTION WITH THE PERFORMANCE OF\nTHEIR DUTIES FOR THE BORROWER AND THE GUARANTEES DESCRIBED ABOVE\n\n        +++ EXCEPT THAT BORROWER MAY REPURCHASE OR REDEEM SHARES OF ITS STOCK\nFOR UP TO $100,000 IN THE AGGREGATE IN ANY FISCAL YEAR, IN CONNECTION WITH AN\nEMPLOYEE STOCK PURCHASE PROGRAM, PROVIDED NO EVENT OF DEFAULT AND NO EVENT\nWHICH, WITH NOTICE OR PASSAGE OF TIME OR BOTH, WOULD CONSTITUTE AN EVENT OF\nDEFAULT UNDER THE LOAN AGREEMENT, HAS OCCURRED AND IS CONTINUING\n\n        5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be\ninstituted by or against GBC with respect to any Collateral or in any manner\nrelating to Borrower, Borrower shall without expense to GBC, make available\nBorrower and its officers, employees and agents, and Borrower's books and\nrecords*, without charge, to the extent that GBC may deem them reasonably\nnecessary in order to prosecute or defend any such suit or proceeding.\n\n        * SUBJECT TO THE PRESERVATION OF THE ATTORNEY-CLIENT PRIVILEGE\n\n        5.7 NOTIFICATION OF CHANGES. Borrower will * notify GBC in writing of\nany change in its ** officers or directors, the opening of any new bank account\nor other deposit account, and any material adverse change in the business or\nfinancial affairs of Borrower.\n\n\n                                       8.\n\n\n\n     9\n\n\n\n        * WITHIN A REASONABLE TIME PERIOD\n        ** EXECUTIVE\n\n        5.8 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by\nGBC, to execute all documents and take all actions, as GBC may deem reasonably\nnecessary or useful in order to perfect and maintain GBC's perfected security\ninterest in the Collateral, and in order to fully consummate the transactions\ncontemplated by this Agreement.\n\n        5.9 INDEMNITY. Borrower hereby agrees to indemnify GBC and hold GBC\nharmless from and against any and all claims, debts, liabilities, demands,\nobligations, actions, causes of action, penalties, costs and expenses (including\n* attorneys' fees), of every nature, character and description, which GBC may\nsustain or incur based upon or arising out of any of the Obligations, any actual\nor alleged failure to collect and pay over any withholding or other tax relating\nto Borrower or its employees, any relationship or agreement between GBC and\nBorrower, any actual or alleged failure of GBC to comply with any writ of\nattachment or other legal process relating to Borrower or any of its property,\nor any other matter, cause or thing whatsoever occurred, done, omitted or\nsuffered to be done by GBC relating to Borrower or the Obligations (except any\nsuch amounts sustained or incurred as the result of the gross negligence or\nwillful misconduct of GBC or any of its directors, officers, employees, agents,\nattorneys, or any other person affiliated with or representing GBC) **.\nNotwithstanding any provision in this Agreement to the contrary, the indemnity\nagreement set forth in this Section shall survive any termination of this\nAgreement and shall for all purposes continue in full force and effect.\n\n        * REASONABLE\n\n        ** PROVIDED THAT THE FOREGOING INDEMNITY SHALL NOT EXTEND TO LOST\nPROFITS OF GBC OR TO CONSEQUENTIAL DAMAGES WHICH MAY BE SUFFERED BY GBC\n\n6.      TERM.\n\n        6.1 MATURITY DATE. This Agreement shall continue in effect until the\nmaturity date set forth on the Schedule (the \"Maturity Date\"); provided that the\nMaturity Date shall automatically be extended, and this Agreement shall\nautomatically and continuously renew, for successive additional terms of one\nyear each, unless one party gives written notice to the other, not less than *\ndays prior to the next Maturity Date, that such party elects to terminate this\nAgreement effective on the next Maturity Date.\n\n        * 30\n\n        6.2 EARLY TERMINATION. This Agreement may be terminated prior to the\nMaturity Date as follows: (i) by Borrower, effective three business days after\nwritten notice of termination is given to GBC; or (ii) by GBC at any time after\nthe occurrence of an Event of Default, without notice, effective immediately. If\nthis Agreement is terminated by Borrower or by GBC under this Section 6.2,\nBorrower shall pay to GBC a termination fee (the \"Termination Fee\") in the\namount shown on the Schedule. The Termination Fee shall be due and payable on\nthe effective date of termination and thereafter shall bear interest at a rate\nequal to the highest rate applicable to any of the Obligations.\n\n        6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier\neffective date of termination, Borrower shall pay and perform in full all\nObligations, whether evidenced by installment notes or otherwise, and whether or\nnot all or any part of such Obligations are otherwise then due and payable.\nWithout limiting the generality of the foregoing, if on the Maturity Date, or on\nany earlier effective date of termination, there are any outstanding letters of\ncredit issued based upon an application, guarantee, indemnity or similar\nagreement on the part of GBC, then on such date Borrower shall provide to GBC\ncash collateral in an amount equal to % * of the face amount of all such letters\nof credit plus all interest, fees and costs due or (in GBC's estimation) likely\nto become\n\n                                       9.\n\n\n\n     10\n\n\n\ndue in connection therewith, to secure all of the Obligations relating to said\nletters of credit, pursuant to GBC's then standard form cash pledge agreement.\nNotwithstanding any termination of this Agreement, all of GBC's security\ninterests in all of the Collateral and all of the terms and provisions of this\nAgreement shall continue in full force and effect until all Obligations have\nbeen paid and performed in full; provided that, without limiting the fact that\nLoans are subject to the discretion of GBC, GBC may, in its sole discretion,\nrefuse to make any further Loans after termination. No termination shall in any\nway affect or impair any right or remedy of GBC, nor shall any such termination\nrelieve Borrower of any Obligation to GBC, until all of the Obligations have\nbeen paid and performed in full. Upon payment and performance in full of all the\nObligations and termination of this Agreement, GBC shall promptly deliver to\nBorrower termination statements, requests for reconveyances and such other\ndocuments as may be reasonably required to terminate GBC's security interests.\n\n* 100%\n\n7.      EVENTS OF DEFAULT AND REMEDIES.\n\n        7.1 EVENTS OF DEFAULT. The occurrence of any of the following events\nshall constitute an \"Event of Default\" under this Agreement, and Borrower shall\ngive GBC immediate written notice thereof: (a) Any warranty, representation,\nstatement, report or certificate made or delivered to GBC by Borrower or any of\nBorrower's officers, employees or agents, now or in the future, shall be untrue\nor misleading in a material respect *; or (b) Borrower shall fail to pay when\ndue any Loan or ** any interest thereon or any other monetary Obligation; or (c)\nthe total Loans and other Obligations outstanding at any time shall exceed the\nCredit Limit ***; or (d) Borrower shall fail to perform any non-monetary\nObligation which by its nature cannot be cured; or (e) Borrower shall fail to\nperform any other non-monetary Obligation, which failure is not cured within 5\nbusiness days after the date performance is due; or (f) any levy, assessment,\nattachment, seizure, lien or encumbrance (other than a Permitted Lien) is made\non all or any part of the Collateral **** which is not cured within 10 days\nafter the occurrence of the same; or (g) any default or event of default occurs\nunder any obligation secured by a Permitted Lien, which is not cured within any\napplicable cure period or waived in writing, by the holder of the Permitted Lien\n+; or (h) Borrower breaches any material contract or obligation, which has or\nmay reasonably be expected to have a material adverse effect on Borrower's\nbusiness or financial condition; or (i) dissolution, termination of existence,\ninsolvency or business failure of Borrower or any Guarantor; or appointment of a\nreceiver, trustee or custodian, for all or any part of the property of,\nassignment for the benefit of creditors by, or the commencement of any\nproceeding by Borrower or any Guarantor under any reorganization, bankruptcy,\ninsolvency, arrangement. readjustment of debt, dissolution or liquidation law or\nstatute of any jurisdiction, now or in the future in effect; or (j) the\ncommencement of any proceeding against Borrower or any Guarantor under any\nreorganization, bankruptcy, insolvency, arrangement, readjustment of debt,\ndissolution or liquidation law or statute of any jurisdiction, now or in the\nfuture in effect, which is not cured by the dismissal thereof within 45 days\nafter the date commenced; or (k) revocation or termination of, or limitation or\ndenial of liability upon, any guaranty of the Obligations or any attempt to do\nany of the foregoing; or (1) revocation or termination of, or limitation or\ndenial of liability upon, any pledge of any certificate of deposit, securities\nor other property or asset pledged by any third party to secure any or all of\nthe Obligations, or any attempt to do any of the foregoing, or commencement of\nproceedings by or against any such third party under any bankruptcy or\ninsolvency law; or (m) Borrower makes any payment on account of any indebtedness\nor obligation which has been subordinated to the Obligations other than as\npermitted in the applicable subordination agreement, or if any Person who has\nsubordinated such indebtedness or obligations terminates or in any way limits or\nterminates its subordination agreement; or (n) there shall be a change in the\nrecord or beneficial ownership of the outstanding shares of stock of Borrower ++\nwithout the prior written consent of GBC +++; or (o) Borrower shall generally\nnot pay its debts as they become due, or Borrower shall conceal, remove or\ntransfer any part of its property, with intent to hinder, delay or defraud its\ncreditors, or make or suffer any transfer of any of its property which may be\nfraudulent under any bankruptcy, fraudulent conveyance or similar law; or (p)\nthere shall be a material adverse change in Borrower's business or financial\ncondition. GBC may cease making any Loans hereunder during any of the above cure\nperiods, and thereafter if an Event of Default has occurred.\n\n\n                                       10.\n\n\n\n     11\n\n\n\n        * AS OF THE DATE MADE\n\n        ** , WITHIN THREE DAYS OF THE DUE DATE,\n\n        *** AND THE BORROWER SHALL FAIL TO REPAY AN AMOUNT EQUAL TO THE EXCESS\nWITHIN ONE BUSINESS DAY OF DEMAND\n\n        **** WITH A VALUE IN EXCESS OF $10,000\n\n\n        + , PROVIDED THAT IF THE AMOUNT INVOLVED IS LESS THAN $50,000 THEN THE\nSAME SHALL NOT BE AN EVENT OF DEFAULT UNLESS AND UNTIL THE HOLDER OF THE\nPERMITTED LIEN COMMENCES ANY ACTION TO ENFORCE ITS LIEN AGAINST ANY COLLATERAL\n\n        ++ SUCH THAT THERE SHALL BE A CHANGE IN THE GROUP OF PERSONS WHO\nPRESENTLY, IN THE AGGREGATE, HOLD MORE THAN 50% OF THE STOCK OF THE BORROWER\n\n        +++ OTHER THAN PURSUANT TO AN INITIAL PUBLIC OFFERING\n\n        7.2 REMEDIES. Upon the occurrence and during the continuance of any\nEvent of Default, and at any time thereafter *, GBC, at its option, and without\nnotice or demand of any kind (all of which are hereby expressly waived by\nBorrower)** , may do any one or more of the following: (a) Cease making Loans or\notherwise extending credit to Borrower under this Agreement or any other\ndocument or agreement; (b) Accelerate and declare all or any part of the\nObligations to be immediately due, payable, and performable, notwithstanding any\ndeferred or installment payments allowed by any instrument evidencing or\nrelating to any Obligation; (c) Take possession of any or all of the Collateral\nwherever it may be found, and for that purpose Borrower hereby authorizes GBC\nwithout judicial process to enter onto any of Borrower's premises without\ninterference to search for, take possession of, keep, store, or remove any of\nthe Collateral, and remain on the premises or cause a custodian to remain on the\npremises in exclusive control thereof, without charge for so long as GBC deems\nit reasonably necessary in order to complete the enforcement of its rights under\nthis Agreement or any other agreement; provided, however, that should GBC seek\nto take possession of any of the Collateral by Court process, Borrower hereby\nirrevocably waives: (i) any bond and any surety or security relating thereto\nrequired by any statute, court rule or otherwise as an incident to such\npossession; (ii) any demand for possession prior to the commencement of any suit\nor action to recover possession thereof; and (iii) any requirement that GBC\nretain possession of, and not dispose of, any such Collateral until after trial\nor final judgment; (d) Require Borrower to assemble any or all of the Collateral\nand make it available to GBC at places designated by GBC which are reasonably\nconvenient to GBC and Borrower, and to remove the Collateral to such locations\nas GBC may deem advisable; (e) Complete the processing, manufacturing or repair\nof any Collateral prior to a disposition thereof and, for such purpose and for\nthe purpose of removal, GBC shall have the right to use Borrower's premises,\nvehicles, hoists, lifts, cranes, equipment and all other property without\ncharge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its\ncondition at the time GBC obtains possession of it or after further\nmanufacturing, processing or repair, at one or more public and\/or private sales,\nin lots or in bulk, for cash, exchange or other property, or on credit, and to\nadjourn any such sale from time to time without notice other than oral\nannouncement at the time scheduled for sale. GBC shall have the right to conduct\nsuch disposition on Borrower's premises without charge, for such time or times\nas GBC deems reasonable, or on GBC's premises, or elsewhere and the Collateral\nneed not be located at the place of disposition. GBC may directly or through any\naffiliated company purchase or lease any Collateral at any such public\ndisposition, and if permissible under applicable law, at any private\ndisposition. Any sale or other disposition of Collateral shall not relieve\nBorrower of any liability Borrower may have if any Collateral is defective as to\ntitle or physical condition or otherwise at the time of sale; (g) Demand payment\nof, and collect any Receivables and General Intangibles comprising Collateral\nand, in connection therewith, Borrower irrevocably authorizes GBC to endorse or\nsign Borrower's name on all collections, receipts, instruments and other\ndocuments, to take possession of and open mail addressed to Borrower and remove\ntherefrom payments made with\n\n                                       11.\n\n\n\n     12\n\n\n\nrespect to any item of the Collateral or proceeds thereof, and, in GBC's sole\ndiscretion, to grant extensions of time to pay, compromise claims and settle\nReceivables, General Intangibles and the like for less than face value; and (h)\nDemand and receive possession of any of Borrower's federal and state income tax\nreturns and the books and records utilized in the preparation thereof or\nreferring thereto. All reasonable attorneys' fees, expenses, costs, liabilities\nand obligations incurred by GBC with respect to the foregoing shall be added to\nand become part of the Obligations, shall be due on demand, and shall bear\ninterest at a rate equal to the highest interest rate applicable to any of the\nObligations. Without limiting any of GBC's rights and remedies, from and after\nthe occurrence of any Event of Default, the interest rate applicable to the\nObligations shall be increased by an additional *** percent per annum.\n\n        * WHILE AN EVENT OF DEFAULT IS CONTINUING\n\n        ** ,EXCEPT THAT GBC SHALL GIVE BORROWER ONE GENERAL NOTICE, CONCURRENTLY\nWITH OR PRIOR TO EXERCISING ANY OF THE FOLLOWING REMEDIES, WHICH NOTICE MAY BE\nGIVEN VIA FACSIMILE (WHICH WILL BE DEEMED TO HAVE BEEN GIVEN THE DAY OF\nELECTRONIC CONFIRMATION OF DELIVERY VIA FACSIMILE (OR IF THAT DAY IS NOT A\nBUSINESS DAY, THEN THE NEXT BUSINESS DAY AFTER ELECTRONIC CONFIRMATION OF\nDELIVERY VIA FACSIMILE)), STATING, IN GENERAL TERMS, THAT \"GBC IS PROCEEDING TO\nEXERCISE ITS RIGHTS AND REMEDIES\" OR WORDS OF SIMILAR EFFECT (BUT NO SUCH NOTICE\nSHALL BE REQUIRED IF EXIGENT CIRCUMSTANCES MAKE IT UNDULY DIFFICULT OR\nIMPRACTICAL TO GIVE ANY SUCH NOTICE)\n\n        *** TWO\n\n        7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and\nGBC agree that a sale or other disposition (collectively, \"sale\") of any\nCollateral which complies with the following standards will conclusively be\ndeemed to be commercially reasonable: (i) Notice of the sale is given to\nBorrower at least seven days prior to the sale, and, in the case of a public\nsale, notice of the sale is published at least seven days before the sale in a\nnewspaper of general circulation in the county where the sale is to be\nconducted; (ii) Notice of the sale describes the collateral in general,\nnon-specific terms; (iii) The sale is conducted at a place designated by GBC,\nwith or without the Collateral being present; (iv) The sale commences at any\ntime between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash\nor by cashier's check or wire transfer is required; (vi) With respect to any\nsale of any of the Collateral, GBC may (but is not obligated to) direct any\nprospective purchaser to ascertain directly from Borrower any and all\ninformation concerning the same. GBC shall be free to employ other methods of\nnoticing and selling the Collateral, in its discretion, if they are commercially\nreasonable.\n\n        7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of\nany Event of Default, without limiting GBC's other rights and remedies, Borrower\ngrants to GBC an irrevocable power of attorney coupled with an interest,\nauthorizing and permitting GBC (acting through any of its employees, attorneys\nor agents) at any time, at its option, but without obligation, with or without\nnotice to Borrower, and at Borrower's expense, to do any or all of the\nfollowing, in Borrower's name or otherwise, but GBC agrees to exercise the\nfollowing powers in a commercially reasonable manner: (a) Execute on behalf of\nBorrower any documents that GBC may, in its sole discretion, deem advisable in\norder to perfect and maintain GBC's security interest in the Collateral, or in\norder to exercise a right of Borrower or GBC, or in order to fully consummate\nall the transactions contemplated under this Agreement, and all other present\nand future agreements; (b) Execute on behalf of Borrower any document\nexercising, transferring or assigning any option to purchase, sell or otherwise\ndispose of or to lease (as lessor or lessee) any real or personal property which\nis part of GBC's Collateral or in which GBC has an interest; (c) Execute on\nbehalf of Borrower, any invoices relating to any Receivable, any draft against\nany Account Debtor and any notice to any Account Debtor, any proof of claim in\nbankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other\nlien, or assignment or satisfaction of mechanic's, materialman's or other lien;\n(d) Take control in any manner of any cash or non-cash items of payment or\nproceeds of Collateral: endorse the name of Borrower upon any instruments, or\ndocuments, evidence of payment or Collateral that may come into GBC's\npossession; (e) Endorse all checks and other forms of remittances received by\nGBC; (f) Pay, contest or settle any lien, charge, encumbrance, security interest\nand adverse claim in or to any of the Collateral, or any judgment based thereon,\nor otherwise take any action to terminate or discharge the same; Grant\nextensions of time to pay, compromise claims and settle Receivables and\n\n                                       12.\n\n\n\n     13\n\n\n\nGeneral Intangibles for less than face value and execute all releases and other\ndocuments in connection therewith; (h) Pay any sums required on account of\nBorrower's taxes or to secure the release of any liens therefor, or both; (i)\nSettle and adjust, and give releases of, any insurance claim that relates to any\nof the Collateral and obtain payment therefor; (j) Instruct any third party\nhaving custody or control of any books or records belonging to, or relating to,\nBorrower to give GBC the same rights of access and other rights with respect\nthereto as GBC has under this Agreement; and (k) Take any action or pay any sum\nrequired of Borrower pursuant to this Agreement and any other present or future\nagreements. Any and all reasonable sums paid and any and all reasonable costs,\nexpenses, liabilities, obligations and reasonable attorneys' fees incurred by\nGBC with respect to the foregoing shall be added to and become part of the\nObligations, shall be payable on demand, and shall bear interest at a rate equal\nto the highest interest rate applicable to any of the Obligations. In no event\nshall GBC's rights under the foregoing power of attorney or any of GBC's other\nrights under this Agreement be deemed to indicate that GBC is in control of the\nbusiness, management or properties of Borrower.\n\n        7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any\nsale or other disposition of the Collateral shall be applied by GBC first to the\nreasonable costs, expenses, liabilities, obligations and attorneys' fees\nincurred by GBC in the exercise of its rights under this Agreement, second to\nthe interest due upon any of the Obligations, and third to the principal of the\nObligations, in such order as GBC shall determine in its sole discretion. Any\nsurplus shall be paid to Borrower or other persons legally entitled thereto;\nBorrower shall remain liable to GBC for any deficiency. If GBC, in its sole\ndiscretion, directly or indirectly enters into a deferred payment or other\ncredit transaction with any purchaser at any sale of Collateral, GBC shall have\nthe option, exercisable at any time, in its sole discretion, of either reducing\nthe Obligations by the principal amount of purchase price or deferring the\nreduction of the Obligations until the actual receipt by GBC of the cash\ntherefor.\n\n        7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set\nforth in this Agreement, GBC shall have all the other rights and remedies\naccorded a secured party under the California Uniform Commercial Code and under\nall other applicable laws, and under any other instrument or agreement now or in\nthe future entered into between GBC and Borrower, and all of such rights and\nremedies are cumulative and none is exclusive. Exercise or partial exercise by\nGBC of one or more of its rights or remedies shall not be deemed an election,\nnor bar GBC from subsequent exercise or partial exercise of any other rights or\nremedies. The failure or delay of GBC to exercise any rights or remedies shall\nnot operate as a waiver thereof, but all rights and remedies shall continue in\nfull force and effect until all of the Obligations have been fully paid and\nperformed.\n\n8. DEFINITIONS. As used in this Agreement, the following terms have the\nfollowing meanings:\n\n        \"Account Debtor\" means the obligor on a Receivable.\n\n        Affiliate\" means, with respect to any Person, a relative, partner,\nshareholder, director, officer, or employee of such Person, or any parent or\nsubsidiary of such Person, or any Person controlling, controlled by or under\ncommon control with such Person.\n\n        \"Agreement\" and \"this Agreement\" means this Loan and Security Agreement\nand all modifications and amendments thereto, extensions thereof, and\nreplacements therefor.\n\n        \"Business Day\" means a day on which GBC is open for business.\n\n        \"Code\" means the Uniform Commercial Code as adopted and in effect in the\nState of California from time to time.\n\n        \"Collateral\" has the meaning set forth in Section 2.1 above.\n\n\n                                       13.\n\n\n\n     14\n\n\n\n        \"Default\" means any event which with notice or passage of time or both,\nwould constitute an Event of Default.\n\n        \"Deposit Account\" has the meaning set forth in Section 9105 of the Code.\n\n        \"Eligible Receivables\" means unconditional Receivables arising in the\nordinary course of Borrower's business from the completed sale of goods or\nrendition of services, which GBC, in its sole judgment, shall deem eligible for\nborrowing, based on such considerations as GBC may from time to time deem\nappropriate.\n\n        \"Equipment\" means all of Borrower's present and hereafter acquired\nmachinery, molds, machine tools, motors, furniture, equipment, furnishings,\nfixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and\nother tangible personal property (other than Inventory) of every kind and\ndescription used in Borrower's operations or owned by Borrower and any interest\nin any of the foregoing, and all attachments, accessories, accessions,\nreplacements, substitutions, additions or improvements to any of the foregoing,\nwherever located.\n\n        \"Event of Default\" means any of the events set forth in Section 7.1 of\nthis Agreement.\n\n        \"General Intangibles\" means all general intangibles of Borrower, whether\nnow owned or hereafter created or acquired by Borrower, including, without\nlimitation, all choses in action, causes of action, corporate or other business\nrecords, Deposit Accounts, inventions, designs, drawings, blueprints, patents,\npatent applications, trademarks and the goodwill of the business symbolized\nthereby, names, trade names, trade secrets, goodwill, copyrights, registrations,\nlicenses, franchises, customer lists, security and other deposits, rights in all\nlitigation presently or hereafter pending for any cause or claim (whether in\ncontract, tort or otherwise), and all judgments now or hereafter arising\ntherefrom, all claims of Borrower against GBC, rights to purchase or sell real\nor personal property, rights as a licensor or licensee of any kind, royalties,\ntelephone numbers, proprietary information, purchase orders, and all insurance\npolicies and claims (including life insurance, key man insurance, credit\ninsurance, liability insurance, property insurance and other insurance), tax\nrefunds and claims, computer programs, discs, tapes and tape files, claims under\nguaranties, security interests or other security held by or granted to Borrower,\nall rights to indemnification and all other intangible property of every kind\nand nature (other than Receivables).\n\n        \"Guarantor\" means any Person who has guaranteed any of the Obligations.\n\n        \"Inventory\" means all of Borrower's now owned and hereafter acquired\ngoods, merchandise or other personal property, wherever located, to be furnished\nunder any contract of service or held for sale or lease (including all raw\nmaterials, work in process, finished goods and goods in transit), and all\nmaterials and supplies of every kind, nature and description which are or might\nbe used or consumed in Borrower's business or used in connection with the\nmanufacture, packing, shipping, advertising, selling or finishing of such goods,\nmerchandise or other personal property, and all warehouse receipts, documents of\ntitle and other documents representing any of the foregoing.\n\n        \"LIBOR Rate\" means (i) the one-month London Interbank Offered Rate for\ndeposits in U.S. dollars, as shown each day in The Wall Street Journal (Eastern\nEdition) under the caption \"Money Rates - London Interbank Offered Rates\n(LIBOR)\"; or (ii) if the Wall Street Journal does not publish such rate, the\noffered one-month rate for deposits in U.S. dollars which appears on the Reuters\nScreen LIBOR Page as of 10:00 a.m., New York time, each day, provided that if at\nleast two rates appear on the Reuters Screen LIBOR Page on any day, the \"LIBOR\nRate\" for such day shall be the arithmetic mean of such rates; or (iii) if the\nWall Street Journal does not publish such rate on a particular day and no such\nrate appears on the Reuters Screen LIBO Page on such day, the rate per annum at\nwhich deposits in U.S. dollars are offered to the principal London office of The\nChase Manhattan Bank, in the London interbank market at approximately 11:00\nA.M., London time, on such day in an amount approximately equal to the\noutstanding principal amount of the Loans, for a period of one month, in each of\nthe foregoing cases as determined in good faith by GBC, which determination\nshall be conclusive absent manifest error.\n\n\n                                       14.\n\n\n\n     15\n\n\n\n        \"Obligations\" means all present and future Loans, advances, debts,\nliabilities, obligations, guaranties, covenants, duties and indebtedness at any\ntime owing by Borrower to GBC, whether evidenced by this Agreement or any note\nor other instrument or document, whether arising from an extension of credit,\nopening of a letter of credit, banker's acceptance, loan, guaranty,\nindemnification or otherwise, whether direct or indirect (including, without\nlimitation, those acquired by assignment and any participation by GBC in\nBorrower's debts owing to others), absolute or contingent, due or to become due,\nincluding, without limitation, all interest, charges, expenses, fees, attorney's\nfees, expert witness fees, audit fees, letter of credit fees, loan fees,\ntermination fees, minimum interest charges and any other sums chargeable to\nBorrower under this Agreement or under any other present or future instrument or\nagreement between Borrower and GBC.\n\n        \"Permitted Liens\" means the following: (i) purchase money security\ninterests in specific items of Equipment; (ii) leases of specific items of\nEquipment; (iii) liens for taxes not yet payable; (iv) additional security\ninterests and liens which are subordinate to the security interest in favor of\nGBC and are consented to in writing by GBC (which consent shall not be\nunreasonably withheld); (v) security interests being terminated substantially\nconcurrently with this Agreement; (vi) liens of materialmen, mechanics,\nwarehousemen, carriers, or other similar liens arising in the ordinary course of\nbusiness and securing obligations which are not delinquent; (vii) liens incurred\nin connection with the extension, renewal or refinancing of the indebtedness\nsecured by liens of the type described above in clauses (i) or (ii) above *,\nprovided that any extension, renewal or replacement lien is limited to the\nproperty encumbered by the existing lien and the principal amount of the\nindebtedness being extended, renewed or refinanced does not increase; (viii)\nLiens in favor of customs and revenue authorities which secure payment of\ncustoms duties in connection with the importation of goods**. GBC will have the\nright to require, as a condition to its consent under subparagraph (iv) above,\nthat the holder of the additional security interest or lien sign an\nintercreditor agreement on GBC's then standard form, acknowledge that the\nsecurity interest is subordinate to the security interest in favor of GBC, and\nagree not to take any action to enforce its subordinate security interest so\nlong as any Obligations remain outstanding, and that Borrower agree that any\nuncured default in any obligation secured by the subordinate security interest\nshall also constitute an Event of Default under this Agreement.\n\n        *  OR CLAUSE (IV) ABOVE\n\n        ** ,(IX) LIENS OR SECURITY INTERESTS EXISTING AS OF THE DATE HEREOF AND\nDISCLOSED IN THE SCHEDULE; (X) ANY JUDGMENT, ATTACHMENT OR SIMILAR LIEN, UNLESS\nTHE JUDGMENT IT SECURES IS NOT FULLY COVERED BY INSURANCE AND HAS NOT BEEN\nDISCHARGED WITHIN 15 DAYS OF THE ENTRY THEREOF; (XI) EASEMENTS, RIGHTS OF WAY,\nSERVITUDES OR ZONING OR BUILDING RESTRICTIONS AND OTHER MINOR ENCUMBRANCES ON\nREAL PROPERTY AND IRREGULARITIES IN THE TITLE TO SUCH PROPERTY WHICH DO NOT IN\nTHE AGGREGATE MATERIALLY IMPAIR THE USE OR VALUE OF SUCH PROPERTY OR RISK THE\nLOSS OR FORFEITURE OF TITLE THERETO; AND (XII) LIENS WHICH CONSTITUTE BANKER'S\nLIENS, RIGHTS OF SET-OFF OR SIMILAR RIGHTS AND REMEDIES AS TO DEPOSIT ACCOUNTS\nOR OTHER FUNDS MAINTAINED WITH ANY BANK OR OTHER FINANCIAL INSTITUTION, WHETHER\nARISING BY OPERATION OF LAW OR PURSUANT TO CONTRACT; PROVIDED THAT (A) SUCH\nDEPOSIT ACCOUNT IS NOT A DEDICATED CASH COLLATERAL ACCOUNT, AND (B) IS NOT\nINTENDED BY THE BORROWER TO PROVIDE COLLATERAL TO THE DEPOSITORY INSTITUTION\n\n        \"Person\" means any individual, sole proprietorship, partnership, joint\nventure, trust, unincorporated organization, association, corporation,\ngovernment, or any agency or political division thereof, or any other entity.\n\n        \"Receivables\" means all of Borrower's now owned and hereafter acquired\naccounts (whether or not earned by performance), letters of credit, contract\nrights, chattel paper, instruments, securities, documents and all other forms of\nobligations at any time owing to Borrower, all guaranties and other security\ntherefor, all merchandise returned to or repossessed by Borrower, and all rights\nof stoppage in transit and all other rights or remedies of an unpaid vendor,\nlienor or secured party.\n\n        Other Terms. All accounting terms used in this Agreement, unless\notherwise indicated, shall have the meanings given to such terms in accordance\nwith generally accepted accounting principles, consistently applied. All\n\n                                       15.\n\n\n\n     16\n\n\n\nother terms contained in this Agreement, unless otherwise indicated, shall have\nthe meanings provided by the Code, to the extent such terms are defined therein.\n\n9.      GENERAL PROVISIONS.\n\n        9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all\nchecks, wire transfers and other items of payment received by GBC (including\nproceeds of Receivables and payment of the Obligations in full) shall be deemed\napplied by GBC on account of the Obligations three Business Days after receipt\nby GBC of immediately available funds. GBC shall not, however, be required to\ncredit Borrower's account for the amount of any item of payment which is\nunsatisfactory to GBC in its discretion, and GBC may charge Borrower's Loan\naccount for the amount of any item of payment which is returned to GBC unpaid.\n\n        9.2 APPLICATION OF PAYMENTS. All payments with respect to the\nObligations may be applied, and in GBC's sole discretion reversed and\nre-applied, to the Obligations, in such order and manner as GBC shall determine\nin its sole discretion.\n\n        9.3 CHARGES TO ACCOUNT. GBC may, in its discretion, require that\nBorrower pay monetary Obligations in cash to GBC, or charge them to Borrower's\nLoan account, in which event they will bear interest at the same rate applicable\nto the Loans.\n\n        9.4 MONTHLY ACCOUNTINGS. GBC shall provide Borrower monthly with an\naccount of advances, charges, expenses and payments made pursuant to this\nAgreement. Such account shall be deemed correct, accurate and binding on\nBorrower and an account stated (except for reverses and reapplications of\npayments made and corrections of errors discovered by GBC), * unless Borrower\nnotifies GBC in writing to the contrary within sixty days after each account is\nrendered, describing the nature of any alleged errors or admissions.\n\n        * ABSENT MANIFEST ERROR,\n\n        9.5 NOTICES. All notices to be given under this Agreement shall be in\nwriting and shall be given either personally or by reputable private delivery\nservice or by regular first-class mail, or certified mail return receipt\nrequested, addressed to GBC or Borrower at the addresses shown in the heading to\nthis Agreement, or at any other address designated in writing by one party to\nthe other party. All notices shall be deemed to have been given upon delivery in\nthe case of notices personally delivered, or at the expiration of one business\nday following delivery to the private delivery service, or * business days\nfollowing the deposit thereof in the United States mail, with postage prepaid.\n\n        * THREE\n\n        9.6 SEVERABILITY. Should any provision of this Agreement be held by any\ncourt of competent jurisdiction to be void or unenforceable, such defect shall\nnot affect the remainder of this Agreement, which shall continue in full force\nand effect.\n\n        9.7 INTEGRATION. This Agreement and such other written agreements,\ndocuments and instruments as may be executed in connection herewith are the\nfinal, entire and complete agreement between Borrower and GBC and supersede all\nprior and contemporaneous negotiations and oral representations and agreements,\nall of which are merged and integrated in this Agreement. There are no oral\nunderstandings, representations or agreements between the parties which are not\nset forth in this Agreement or in other written agreements signed by the parties\nin connection herewith.\n\n        9.8 WAIVERS. The failure of GBC at any time or times to require Borrower\nto strictly comply with any of the provisions of this Agreement or any other\npresent or future agreement between Borrower and GBC shall\n\n                                       16.\n\n\n\n     17\n\n\n\nnot waive or diminish any right of GBC later to demand and receive strict\ncompliance therewith. Any waiver of any default shall not waive or affect any\nother default, whether prior or subsequent, and whether or not similar. None of\nthe provisions of this Agreement or any other agreement now or in the future\nexecuted by Borrower and delivered to GBC shall be deemed to have been waived by\nany act or knowledge of GBC or its agents or employees, but only by a specific\nwritten waiver signed by an authorized officer of GBC and delivered to Borrower.\nBorrower waives demand, protest, notice of protest and notice of default or\ndishonor, notice of payment and nonpayment, release, compromise, settlement,\nextension or renewal of any commercial paper, instrument, account, General\nIntangible, document or guaranty at any time held by GBC on which Borrower is or\nmay in any way be liable, and notice of any action taken by GBC, unless\nexpressly required by this Agreement.\n\n        9.9 AMENDMENT. The terms and provisions of this Agreement may not be\nwaived or amended, except in a writing executed by Borrower and a duly\nauthorized officer of GBC.\n\n        9.10 TIME OF ESSENCE. Time is of the essence in the performance by\nBorrower of each and every obligation under this Agreement.\n\n        9.11 ATTORNEYS FEES AND COSTS. Borrower shall reimburse GBC for all\nreasonable attorneys' fees and all filing, recording, search, title insurance,\nappraisal, audit, and other reasonable costs incurred by GBC, pursuant to, or in\nconnection with, or relating to this Agreement (whether or not a lawsuit is\nfiled), including, but not limited to, any reasonable attorneys' fees and costs\nGBC incurs in order to do the following: prepare and negotiate this Agreement\nand the documents relating to this Agreement; obtain legal advice in connection\nwith this Agreement or Borrower; enforce, or seek to enforce, any of its rights;\nprosecute actions against, or defend actions by, Account Debtors, commence,\nintervene in, or defend any action or proceeding; initiate any complaint to be\nrelieved of the automatic stay in bankruptcy; file or prosecute any probate\nclaim, bankruptcy claim, third-party claim, or other claim; examine, audit,\ncopy, and inspect any of the Collateral or any of Borrower's books and records;\nprotect, obtain possession of, lease, dispose of, or otherwise enforce GBC's\nsecurity interest in, the Collateral; and otherwise represent GBC in any\nlitigation relating to Borrower. If either GBC or Borrower files any lawsuit\nagainst the other predicated on a breach of this Agreement, the prevailing party\nin such action shall be entitled to recover its reasonable costs and attorneys'\nfees, including (but not limited to) reasonable attorneys' fees and costs\nincurred in the enforcement of, execution upon or defense of any order, decree,\naward or judgment. All attorneys' fees and costs to which GBC may be entitled\npursuant to this Paragraph shall immediately become part of Borrower's\nObligations, shall be due on demand, and shall bear interest at a rate equal to\nthe highest interest rate applicable to any of the Obligations.\n\n        9.12 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be\nbinding upon and inure to the benefit of the respective successors, assigns,\nheirs, beneficiaries and representatives of Borrower and GBC; provided, however,\nthat Borrower may not assign or transfer any of its rights under this Agreement\nwithout the prior written consent of GBC, and any prohibited assignment shall be\nvoid. No consent by GBC to any assignment shall release Borrower from its\nliability for the Obligations.\n\n        9.13 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one\nPerson, their liability shall be joint and several, and the compromise of any\nclaim with, or the release of, any Borrower shall not constitute a compromise\nwith, or a release of, any other Borrower.\n\n        9.14 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower\nagainst GBC, its directors, officers, employees, agents, accountants or\nattorneys, based upon, arising from, or relating to this Loan Agreement, or any\nother present or future document or agreement, or any other transaction\ncontemplated hereby or thereby or relating hereto or thereto, or any other\nmatter, cause or thing, whatsoever, occurred, done, omitted or suffered to be\ndone by GBC, its directors, officers, employees, agents, accountants or\nattorneys, shall be barred unless asserted by Borrower by the commencement of an\naction or proceeding in a court of competent jurisdiction by the filing of a\ncomplaint within one year after * the first act, occurrence or omission upon\nwhich such claim or cause of action,\n\n                                       17.\n\n\n\n     18\n\n\n\nor any part thereof, is based, and the service of a summons and complaint on an\nofficer of GBC, or on any other person authorized to accept service on behalf of\nGBC, within thirty (30) days thereafter. Borrower agrees that such one-year\nperiod is a reasonable and sufficient time for Borrower to investigate and act\nupon any such claim or cause of action. The one-year period provided herein\nshall not be waived, tolled, or extended except by the written consent of GBC in\nits sole discretion. This provision shall survive any termination of this Loan\nAgreement or any other present or future agreement.\n\n        * BORROWER LEARNS OF, OR IN THE EXERCISE OF REASONABLE DILIGENCE SHOULD\nHAVE LEARNED OF,\n\n        9.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used\nin this Agreement for convenience. Borrower and GBC acknowledge that the\nheadings may not describe completely the subject matter of the applicable\nparagraph, and the headings shall not be used in any manner to construe, limit,\ndefine or interpret any term or provision of this Agreement. The term\n\"including\", whenever used in this Agreement, shall mean \"including (but not\nlimited to)\". This Agreement has been fully reviewed and negotiated between the\nparties and no uncertainty or ambiguity in any term or provision of this\nAgreement shall be construed strictly against GBC or Borrower under any rule of\nconstruction or otherwise.\n\n        9.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and\ntransactions hereunder and all rights and obligations of GBC and Borrower shall\nbe governed by the laws of the State of California. As a material part of the\nconsideration to GBC to enter into this Agreement, Borrower (i) agrees that all\nactions and proceedings relating directly or indirectly to this Agreement shall,\nat GBC's option, be litigated in courts located within California, and that the\nexclusive venue therefor shall be Los Angeles County; (ii) consents to the\njurisdiction and venue of any such court and consents to service of process in\nany such action or proceeding by personal delivery or any other method permitted\nby law; and (iii) waives any and all rights Borrower may have to object to the\njurisdiction of any such court, or to transfer or change the venue of any such\naction or proceeding,\n\n        9.17 CONFIDENTIALITY. GBC COVENANTS AND AGREES, ON A CONTINUING BASIS,\nTO USE REASONABLE EFFORTS TO MAINTAIN THE CONFIDENTIALITY OF AND NOT TO DISCLOSE\nTO ANY PERSON OTHER THAN ITS OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND\nACCOUNTANTS AND AFFILIATES, AND SUCH OTHER PERSONS TO WHOM GBC SHALL AT ANY TIME\nBE REQUIRED TO MAKE SUCH DISCLOSURE IN ACCORDANCE WITH APPLICABLE LAW, ANY AND\nALL PROPRIETARY, TRADE SECRET OR CONFIDENTIAL INFORMATION PROVIDED TO OR\nRECEIVED BY GBC FROM OR ON ACCOUNT OF BORROWER OR ANY AFFILIATE OF BORROWER,\nINCLUDING BUSINESS PLANS AND FORECASTS, NON-PUBLIC FINANCIAL INFORMATION,\nCONFIDENTIAL OR SECRET PROCESSES, FORMULAE, DEVICES OR CONTRACTUAL INFORMATION,\nCUSTOMER LISTS, EMPLOYEE RELATION MATTERS, AND ANY OTHER INFORMATION THE\nDISCLOSURE OF WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE\nIMPACT ON THE BUSINESS, FINANCES OR OPERATIONS OF BORROWER OR ITS AFFILIATES,\nPROVIDED, HOWEVER, THE FOREGOING PROVISIONS SHALL NOT BE EFFECTIVE REGARDING THE\nDISPOSITION OF COLLATERAL AFTER AN EVENT OF DEFAULT.\n\n        9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND GBC EACH HEREBY WAIVE THE\nRIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,\nOR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE\nINSTRUMENT OR AGREEMENT BETWEEN GBC AND BORROWER, OR ANY CONDUCT, ACTS OR\nOMISSIONS OF GBC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,\n\n                                       18.\n\n\n\n     19\n\n\n\nAGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GBC OR BORROWER,IN ALL OF\nTHE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.\n\n        BORROWER:\n\nCOM21, INC.\n\n\n        BY\n            -------------------------------\n              PRESIDENT OR VICE PRESIDENT\n\n        BY\n            -------------------------------\n               SECRETARY OR ASS'T SECRETARY\n\nGBC:\n\n        GREYROCK BUSINESS CREDIT,\n        A DIVISION OF NATIONSCREDIT COMMERCIAL\n        CORPORATION\n\n\n        BY\n            -------------------------------\n       TITLE\n             ------------------------------\n \n\n                                       19.\n\n\n\n     20\n\n\n\n\n                                   SCHEDULE TO\n                           LOAN AND SECURITY AGREEMENT\n\n\nBORROWER:             COM21, INC.\nADDRESS:              750 TASMAN DRIVE\n                      MILPITAS, CALIFORNIA 95035\n\nDATE:                 MAY 30, 1997\n\nThis Schedule is an integral part of the Loan and Security Agreement between\nGREYROCK BUSINESS CREDIT, A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION\n(\"GBC\") and the above-borrower (\"Borrower\") of even date.\n\n1.      CREDIT LIMIT\n        (Section 1.1):   An amount not to exceed the lesser of (a) or (b) below:\n\n                         (a)    $5,000,000 at any one time outstanding; or\n\n                         (b)    The sum of the following:\n\n                                (i) Receivable Loans. 80% of the amount of\n                                Borrower's Eligible Receivables (as defined in\n                                Section 8 above), plus\n\n                                (ii) Term Loan. The unpaid principal balance of\n                                the Term Loan in the original principal amount\n                                of $2,000,000 being made concurrently herewith\n                                by GBC to Borrower (the \"Term Loan\") and\n                                evidenced by the Secured Promissory Note (\"Term\n                                Note\") of even date herewith made by Borrower to\n                                the order of GBC.\n\n2.      INTEREST.\n\n        INTEREST RATE (Section 1.2):\n\n                            The interest rate in effect throughout each calendar\n                            month during the term of this Agreement shall be the\n                            highest \"LIBOR Rate\" in effect during such month,\n                            plus 4.875% per annum, provided that the interest\n                            rate in effect in each month shall not be less than\n                            9% per annum, and provided that the interest charged\n                            for each month shall be a minimum of $6,000,\n                            regardless of the amount of the Obligations\n                            outstanding. Interest shall be calculated on the\n                            basis of a 360-day year for the actual number of\n                            days elapsed. \"LIBOR Rate\" has the meaning set forth\n                            in Section 8 above.\n\n3. FEES (Section 1.3\/Section 6.2):\n\n        Loan Fee:           $50,000, payable concurrently herewith.\n\n\n                                       20.\n\n\n\n     21\n\n\nGREYROCK BUSINESS CREDIT                 SCHEDULE TO LOAN AND SECURITY AGREEMENT\n\n        Termination Fee:    $6,000 per month for each month (or portion thereof)\n                            from the effective date of termination to the \n                            Maturity Date\n\n        NSF Check Charge:   $15.00 per item.\n\n        Wire Transfers:     $15.00 per transfer.\n\n4.      MATURITY DATE\n        (Section            6.1): MAY 31, 1998, subject to automatic renewal as\n                            provided in Section 6.1 above, and early termination\n                            as provided in Section 6.2 above.\n\n==================================================================\n5.      REPORTING. (Section 5.2):\n\n                            Borrower shall provide GBC with the following:\n\n                            1.      Annual financial statements, as soon as\n                                    available, and in any event within 90 days\n                                    following the end of Borrower's fiscal year,\n                                    certified by independent certified public\n                                    accountants acceptable to GBC.\n\n                            2.      Quarterly unaudited financial statements, as\n                                    soon as available, and in any event within\n                                    30 days after the end of each fiscal quarter\n                                    of Borrower.\n\n                            3.      Monthly unaudited financial statements, as\n                                    soon as available, and in any event within\n                                    30 days after the end of each month.\n\n                            4.      Monthly Receivable agings, aged by invoice\n                                    date, within 10 days after the end of each\n                                    month.\n\n                            5.      Monthly accounts payable agings, aged by\n                                    invoice date, and outstanding or held check\n                                    registers within 10 days after the end of\n                                    each month.\n\n\n6.      BORROWER INFORMATION:\n\n               PRIOR NAMES OF\n               BORROWER\n               (Section 3.2): None\n\n               PRIOR TRADE\n               NAMES OF BORROWER\n               (Section 3.2): None\n\n               EXISTING TRADE\n               NAMES OF BORROWER\n\n                                             21.\n\n\n\n     22\nGREYROCK BUSINESS CREDIT                 SCHEDULE TO LOAN AND SECURITY AGREEMENT\n\n\n               (Section 3.2): None\n\n               OTHER LOCATIONS AND\n               ADDRESSES (Section 3.3): 7900 E. Union Ave., Suite 1100, \n               Denver, CO\n\n               MATERIAL ADVERSE\n               LITIGATION (Section 3.10): None\n\n7.      OTHER COVENANTS:\n\n                            Borrower shall at all times comply with all of\n                            the following additional covenants:\n\n                            (1) WARRANTS. The Borrower shall provide GBC with\n                            five-year warrants to purchase 50,000 shares of\n                            Series F Preferred Stock of the Borrower, on the\n                            terms set forth in the Warrant to Purchase Stock and\n                            related documents being executed concurrently with\n                            this Agreement, at $4.00 per share (which Borrower\n                            represents and warrants is the last price at which\n                            Borrower issued and sold its Series F Preferred\n                            Stock, which were sales of over 5,000,000 shares\n                            during the period April 4, 1996 to May 7, 1996).\n                            Such warrants shall contain such terms and\n                            provisions as Borrower and GBC shall agree. Said\n                            warrants shall be deemed fully earned on the date\n                            hereof, shall be in addition to all interest and\n                            other fees, and shall be non-refundable.\n\nBorrower:                                     GBC:\nCOM21, INC.                              GREYROCK BUSINESS CREDIT,\n                                              a Division of NationsCredit \n                                              Commercial Corporation\n\nBy__________________________________________\n        President                               By_____________________________\n                                                Title__________________________\nBy__________________________________________    \n        Secretary or Ass't Secretary\n\n\n\n\n\n\n                                       22.\n\n\n\n     23\n                                                       WARRANT TO PURCHASE STOCK\n\n\nTHIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER\nTHE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR\nOTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT\nOR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE\nCORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.\n\n\n\n                            WARRANT TO PURCHASE STOCK\n\nWarrant to Purchase 50,000          Issue Date:                 May 30, 1997\nShares of the Series F Preferred    Expiration Date:            May 30, 2002\nStock of Com21, Inc.                   Initial Exercise Price: $4.00 per share\n\n                THIS WARRANT CERTIFIES THAT, for the agreed upon value\n                of $1.00 and for other good and valuable\n                consideration, GREYROCK BUSINESS CREDIT, A DIVISION OF\n                NATIONSCREDIT COMMERCIAL CORPORATION (\"Holder\") is\n                entitled to purchase the number of fully paid and\n                non-assessable shares of the class of securities (the\n                \"Shares\") of Com21, Inc. (the \"Company\") at the\n                initial exercise price per Share (the \"Warrant Price\")\n                all as set forth above and as adjusted pursuant to\n                Article 2 of this Warrant, subject to the provisions\n                and upon the terms and conditions set forth in this\n                Warrant. The address of the Holder is 10880 Wilshire\n                Blvd. Suite 950, Los Angeles, CA 90024 and the address\n                of the Company is 750 Tasman Drive, Milpitas,\n                California 95035.\n\nARTICLE 1. EXERCISE.\n\n        1.1 METHOD OF EXERCISE. Holder may exercise this Warrant at any time on\nor prior to the Expiration Date, in whole or in part, for amounts not less than\nten thousand (10,000) shares (as adjusted pursuant to Article 2 of this Warrant)\nby delivering a duly executed Notice of Exercise in substantially the form\nattached as Appendix 1 to the principal office of the Company. Unless Holder is\nexercising the conversion right set forth in Section 1.2, Holder shall also\ndeliver to the Company a certified bank check, bank draft or wire transfer of\nimmediately available funds in an amount equal to the Warrant Price then in\neffect multiplied by the number of Shares being Purchased for the Shares being\npurchased.\n\n        1.2 CONVERSION RIGHT. In lieu of exercising, this Warrant as specified\nin Section 1.1, Holder may from time to time convert this Warrant, in whole or\nin part, into a number Of Shares determined by dividing (a) the aggregate fair\nmarket value of the Shares or other securities otherwise issuable upon exercise\nof this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair\nmarket value of one Share. The fair market value of the Shares shall be\ndetermined pursuant to Section 1.4.\n\n        1.3    [Reserved]\n\n        1.4 FAIR MARKET VALUE. If the Shares are traded in a public market, the\nfair market value of the Shares shall be the closing price of the Shares (or the\nclosing price of the Company's stock into which the Shares are convertible)\nreported for the business day immediately before Holder delivers its Notice of\nExercise to the Company. If the Shares are not traded in a public market, the\nBoard of Directors of the Company shall determine fair market value in its\nreasonable good faith judgment. The foregoing notwithstanding, if Holder advises\nthe Board of Directors in writing that Holder disagrees with such determination,\nthen the Company and Holder shall promptly agree upon a reputable investment\nbanking firm to undertake such valuation. If the valuation of such investment\nbanking firm is greater than that determined by the Board of Directors, then all\nfees and expenses of such investment banking firm shall be paid by the Company.\nIn all other circumstances, such fees and expenses shall be paid by Holder.\n\n        1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder\nexercises or converts this Warrant, the Company shall deliver to Holder\ncertificates for the Shares acquired and, if this Warrant has not been fully\nexercised or converted and has not expired, a new Warrant representing the\nShares not so acquired.\n\n\n                                  1.\n\n\n     24\n                                                       WARRANT TO PURCHASE STOCK\n\n        1.6 REPLACEMENT OF WARRANTS. On receipt of evidence reasonably\nsatisfactory to the Company of the loss, theft, destruction or mutilation of\nthis Warrant and, in the case of loss, theft or destruction, on delivery of an\nindemnity agreement reasonably satisfactory in form and amount to the Company\nor, in the case of mutilation, or surrender and cancellation of this Warrant,\nthe Company at Holder's expense shall execute and deliver, in lieu of this\nWarrant, a new warrant of like tenor.\n\n        1.7 REPURCHASE ON SALE, MERGER OR CONSOLIDATION OF THE COMPANY.\n\n        1.7.1. \"ACQUISITION\". For the purpose of this Warrant, \"Acquisition\"\nmeans any sale, license, or other disposition of all or substantially all of the\nassets of the Company, or any reorganization, consolidation, or merger of the\nCompany where the holders of the Company's securities before the transaction\nbeneficially own less than 50% of the outstanding voting securities of the\nsurviving entity after the transaction.\n\n        1.7.2. ASSUMPTION OF WARRANT. If upon the closing of any Acquisition the\nsuccessor entity assumes the obligations of this Warrant, then this Warrant\nshall be exercisable for the same securities, cash, and property as would be\npayable for the Shares issuable upon exercise of the unexercised portion of this\nWarrant as if such Shares were outstanding on the record date for the\nAcquisition and subsequent closing. The Warrant Price shall be adjusted\naccordingly.\n\n        1.7.3. NONASSUMPTION. If upon the closing of any Acquisition the\nsuccessor entity does not assume the obligations of this Warrant and Holder has\nnot otherwise exercised this Warrant in full, then the unexercised portion of\nthis Warrant shall be deemed to have been automatically converted pursuant to\nSection 1.2 and thereafter Holder shall participate in the Acquisition on the\nsame terms as other holders of the same class of securities of the Company.\n\n        1.7.4. [Reserved]\n\nARTICLE 2. ADJUSTMENTS TO THE SHARES.\n\n        2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a\ndividend on its common stock (or the Shares if the Shares are securities other\nthan common stock) payable in common stock, or other securities, subdivides the\noutstanding common stock into a greater amount of common stock, or, if the\nShares are securities other than common stock, subdivides the Shares in a\ntransaction that increases the amount of common stock into which the Shares are\nconvertible, then upon exercise of this Warrant, for each Share acquired, Holder\nshall receive, without cost to Holder, the total number and kind of securities\nto which Holder would have been entitled had Holder owned the Shares of record\nas of the date the dividend or subdivision occurred.\n\n        2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any\nreclassification, exchange, substitution, or other event that results in a\nchange of the number and\/or class of the securities issuable upon exercise or\nconversion of this Warrant, Holder shall be entitled to receive, upon exercise\nor conversion of this Warrant, the number and kind of securities and property\nthat Holder would have received for the Shares if this Warrant had been\nexercised immediately before such reclassification, exchange, substitution, or\nother event. Such an event shall include any automatic conversion of the\noutstanding or issuable securities of the Company of the same class or series as\nthe Shares to common stock pursuant to the terms of the Company's Articles of\nIncorporation upon the closing of a registered public offering of the Company's\ncommon stock. The Company or its successor shall promptly issue to Holder a new\nWarrant for such new securities or other property. The new Warrant shall provide\nfor adjustments which shall be as nearly equivalent as may be practicable to the\nadjustments provided for in this Article 2 including, without limitation,\nadjustments to the Warrant Price and to the number of securities or property\nissuable upon exercise of the new Warrant. The provisions of this Section 2.2\nshall similarly apply to successive reclassifications, exchanges, substitutions,\nor other events.\n\n        2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are\ncombined or consolidated, by reclassification or otherwise, into a lesser number\nof shares, the Warrant Price shall be proportionately increased.\n\n        2.4    [Reserved]\n\n        2.5 NO IMPAIRMENT. The Company shall not, by amendment of its Articles\nof Incorporation or through a reorganization, transfer of assets, consolidation,\nmerger, dissolution, issue, or sale of securities or any other voluntary action,\navoid or seek to avoid the observance or performance of any of the terms to be\nobserved or performed under this Warrant by the Company, but shall at all times\nin good faith assist in carrying out of all the provisions of this Article 2 and\nin taking \n\n\n                                       2.\n\n\n     25\n                                                       WARRANT TO PURCHASE STOCK\n\nall such action as may be reasonably necessary or appropriate to protect\nHolder's rights under this Article against impairment.\n\n        2.6 FRACTIONAL SHARES. No fractional Shares shall be issuable upon\nexercise or conversion of the Warrant and the number of Shares to be issued\nshall be rounded down to the nearest whole Share. If a fractional share interest\narises upon any exercise or conversion of the Warrant, the Company shall\neliminate such fractional share interest by paying to Holder an amount computed\nby multiplying the fractional interest by the fair market value of a full Share.\n\n        2.7 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant\nPrice, the Company at its expense shall promptly compute such adjustment, and\nfurnish Holder with a certificate of its Chief Financial Officer setting forth\nsuch adjustment and the facts upon which such adjustment is based. The Company\nshall, upon written request, furnish Holder a certificate setting forth the\nWarrant Price in effect upon the date thereof and the series of adjustments\nleading to such Warrant Price.\n\nARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.\n\n        3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and\nwarrants to the Holder as follows:\n\n        (a) The initial Warrant Price referenced on the first page of this\nWarrant is not greater than (i) the price per share at which the Shares were\nlast issued in an arms-length transaction in which at least $500,000 of the\nShares were sold and (ii) the fair market value of the Shares as of the date of\nthis Warrant, as such value is determined in accordance with Section 1.4 hereof.\n\n        (b) All Shares which may be issued upon the exercise of the purchase\nright represented by this Warrant and payment of the aggregate purchase price\n(other than in connection with a purchase under Section 1.2 hereof), and all\nsecurities, if any, issuable upon conversion of the Shares, shall, upon Issuance\nand payment of the aggregate purchase price for all of the Shares purchased\n(other than in connection with an exercise hereunder pursuant to Section 1.2\nhereof) be duly authorized, validly issued, fully paid and non-assessable, and\nfree of any liens and encumbrances except for restrictions on transfer provided\nfor herein or under applicable federal and state securities laws.\n\n        3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a) to\ndeclare any dividend or distribution upon its common stock, whether in cash,\nproperty, stock, or other securities and whether or not a regular cash dividend;\n(b) to offer for subscription pro rata to the holders of any class or series of\nits stock any additional shares of stock of any class or series or other rights;\n(c) to effect any reclassification or recapitalization of common stock; (d) to\nmerge or consolidate with or into any other corporation, or sell, lease,\nlicense, or convey all or substantially all of its assets, or to liquidate,\ndissolve or wind up; or (e) offer holders of registration rights the opportunity\nto participate in an underwritten public offering of the company's securities\nfor cash, then, in connection with each such event, the Company shall give\nHolder (1) at least 20 days prior written notice of the date on which a record\nwill be taken for such dividend, distribution, or subscription rights (and\nspecifying the date on which the holders of common stock will be entitled\nthereto) or for determining rights to vote, if any, in respect of the matters\nreferred to in (c) and (d) above; (2) in the case of the matters referred to in\n(c) and (d) above at least 20 days prior written notice of the date when the\nsame will take place (and specifying the date on which the holders of common\nstock will be entitled to exchange their common stock for securities or other\nproperty deliverable upon the occurrence of such event); and (3) in the case of\nthe matter referred to in (e) above, the same notice as is given to the holders\nof such registration rights.\n\n        3.3 INFORMATION RIGHTS. So long as the Holder holds this Warrant and\/or\nany of the Shares, the Company shall deliver to the Holder (a) promptly after\nmailing, copies of all notices or other written communications to the\nshareholders of the Company, (b) within ninety (90) days after the end of each\nfiscal year of the Company, the annual audited financial statements of the\nCompany certified by independent public accountants of recognized standing and\n(c) within forty-five (45) days after the end of each of the first three\nquarters of each fiscal year, the Company's quarterly, unaudited financial\nstatements.\n\n        3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE \"1933\nACT\"). The Company agrees that the Shares or, if the Shares are converted into\ncommon stock of the Company, such common stock, shall be subject to the\nregistration rights set\nforth on Exhibit A.\n\nARTICLE 4. MISCELLANEOUS\n\n\n                                       3.\n\n\n     26\n                                                       WARRANT TO PURCHASE STOCK\n\n        4.1 TERM: NOTICE OF EXPIRATION. This Warrant is exercisable, in whole or\nin part, at any time and from time to time on or before the Expiration Date set\nforth above.\n\n        4.2 LEGENDS. This Warrant and the Shares (and the securities issuable,\ndirectly or indirectly, upon conversion of the Shares, if any) shall be\nimprinted with a legend in substantially the following form:\n\n        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,\nAS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN\nEFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN\nOPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL\nTHAT SUCH REGISTRATION IS NOT REQUIRED.\n\n        4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the\nShares issuable upon exercise of this Warrant (and the securities issuable,\ndirectly or indirectly, upon conversion of the Shares, if any) may not be\ntransferred or assigned in whole or in part without compliance with applicable\nfederal and state securities laws by the transferor and the transferee\n(including, without limitation, the delivery of investment representation\nletters and legal opinions reasonably satisfactory to the Company, if reasonably\nrequested by the Company). The Company shall not require Holder to provide an\nopinion of counsel (i) if the transfer is to any corporation that on its own or\nthrough other intermediate corporations has an effective complete ownership\ninterest in 100% of the stock of the Holder, or if the transfer is to any\nwholly-owned subsidiary of any such entity or to any wholly-owned subsidiary of\nHolder, or (ii) if there is no question as to the availability of current\ninformation as referenced in Rule 144(c) (as reasonably determined by the\nCompany), Holder represents that it has complied with Rule 144(d) and (e) in\nreasonable detail, the selling broker represents that it has complied with Rule\n144(f), and the Company is provided with a copy of Holders notice of proposed\nsale as filed with the SEC.\n\n        4.4 TRANSFER PROCEDURE. Subject to the provisions of Section 4.2, Holder\nmay transfer all or part of this Warrant or the Shares issuable upon exercise of\nthis Warrant (or the securities issuable, directly or indirectly, upon\nconversion of the Shares, if any) by giving the Company notice of the portion of\nthe Warrant being transferred setting forth the name, address and taxpayer\nidentification number of the transferee and surrendering this Warrant to the\nCompany for reissuance to the transferee(s) (and Holder if applicable), provided\nthat the Holder shall be permitted to effect no more than five (5) transfers of\nthe Warrant during the term of this Warrant and each such transfer shall be in\nthe minimum number of 10,000 Shares. The Company shall have the right to refuse\nto transfer any portion of this Warrant to any person who directly competes with\nthe Company, as such refusal is determined by the Company in its reasonable\ndiscretion. Holder further agrees that, upon the specific written request of the\nCompany or its underwriters relating to the initial public offering of the\ncommon stock of the Company, the Holder will not sell or otherwise transfer the\nWarrant or the Shares during the 180 day period following the effective date of\nthe registration statement of the Company in connection with such initial public\noffering.\n\n        4.5 NOTICES. All notices and other communications from the Company to\nthe Holder, or vice versa, shall be shall be in writing and shall be given\neither personally or by reputable private delivery service or by regular\nfirst-class mail, or certified mail return receipt requested, addressed to each\nsuch party at the addresses shown in the heading to this Agreement, or at any\nother address designated in writing by one party to the other party. All notices\nshall be deemed to have been given upon delivery in the case of notices\npersonally delivered, or at the expiration of one business day following\ndelivery to the private delivery service, or three business days following the\ndeposit thereof in the United States mail, with postage prepaid.\n\n        4.6 WAIVER. This Warrant and any term hereof may be changed, waived,\ndischarged or terminated only by an instrument in writing signed by the party\nagainst which enforcement of such change, waiver, discharge or termination is\nsought.\n\n        4.7 ATTORNEYS FEES. In the event of any dispute between the parties\nconcerning the terms and provisions of this Warrant, the party prevailing in\nsuch dispute shall be entitled to collect from the other party all costs\nincurred in such dispute, including reasonable attorneys' fees.\n\n        4.8 GOVERNING LAW. This Warrant shall be governed by and construed in\naccordance with the laws of the State of California, without giving effect to\nits principles regarding conflicts of law.\n\n        4.9 NO RIGHTS AS SHAREHOLDER. This Warrant, as distinct from the Shares\nfor which this Warrant is exercisable, \n\n\n                                       4.\n     27\n                                                       WARRANT TO PURCHASE STOCK\n\nwill not entitle Holder to any of the rights of a stockholder of the Company.\n\n        4.10 SURVIVAL. The representations and warranties set forth in this\nWarrant by the Company (other than with respect to Section 3.1(a) after the date\nhereof) and the Holder shall survive the date of this Warrant and will expire\nupon the earlier of (a) the Expiration Date or (b) the date that the Holder has\nexercised this Warrant for all of the Shares purchasable pursuant to the terms\nhereof.\n\nARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE HOLDER.\n\n        5.1 Holder hereby represents and warrants to the Company as follows:\n\n        (a) Investment Purpose. The right to acquire Preferred Stock or the\nPreferred Stock issuable upon exercise of the Holder's rights contained herein\nwill be acquired for investment and not with a view to the sale or distribution\nof any part thereof, and the Holder has no present intention of selling or\nengaging in any public distribution of the same except pursuant to a\nregistration or exemption.\n\n        (b) Private Issue. The Holder understands (i) that the Preferred Stock\nissuable upon exercise of this Warrant is not registered under the 1933 Act or\nqualified under applicable state securities laws on the ground that the issuance\ncontemplated by this Warrant will be exempt from the registration and\nqualifications requirements thereof, and (ii) that the Company's reliance on\nsuch exemption is predicated on the representations set forth herein.\n\n        (c) Disposition of Holder's Rights. In no event will the Holder make a\ndisposition of any of its rights to acquire Preferred Stock or Preferred Stock\nissuable upon exercise of such rights unless and until (i) it shall have\nnotified the Company of the proposed disposition, and (ii) if requested by the\nCompany and as limited by the provisions set forth in Section 4.3 hereof, it\nshall have furnished the Company with an opinion of counsel (which counsel may\neither be inside or outside counsel to the Holder) satisfactory to the Company\nand its counsel to the effect that (A) appropriate action necessary for\ncompliance with the 1933 Act has been taken, or (B) an exemption from the\nregistration requirements of the 1933 Act is available. Notwithstanding the\nforegoing, the restrictions imposed upon the transferability of any of its\nrights to acquire Preferred Stock or Preferred Stock issuable on the exercise of\nsuch rights do not apply to transfers from the beneficial owner of any of the\naforementioned securities to its nominee or from such nominee to its beneficial\nowner, and shall terminate as to any particular share of Preferred Stock when\n(1) such security shall have been effectively registered under the 1933 Act and\nsold by the holder thereof in accordance with such registration or (2) such\nsecurity shall have been sold without registration in compliance with Rule 144\nunder the 1933 Act, or (3) a letter shall have been issued to the Holder at its\nrequest by the staff of the Securities and Exchange Commission or a ruling shall\nhave been issued to the Holder at its request by such Commission stating that no\naction shall be recommended by such staff or taken by such Commission, as the\ncase may be, if such security is transferred without registration under the 1933\nAct in accordance with the conditions set forth in such letter or ruling and\nsuch letter or ruling specifies that no subsequent restrictions on transfer are\nrequired. Whenever the restrictions imposed hereunder shall terminate, as\nhereinabove provided, the Holder or holder of a share of Preferred Stock then\noutstanding as to which such restrictions have terminated shall be entitled to\nreceive from the Company, without expense to such holder, one or more new\ncertificates for the Warrant or for such shares of Preferred Stock not bearing\nany restrictive legend.\n\n        (d) Financial Risk. The Holder has such knowledge and experience in\nfinancial and business matters as to be capable of evaluating, the merits and\nrisks of its investment, and has the ability to bear the economic risks of its\ninvestment.\n\n        (e) Risk of No Registration. The Holder understands that if the Company\ndoes not register with the Securities and Exchange Commission pursuant to\nSection 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the\nSecurities Exchange Act of 1934 (the \"1934 Act\"), or if a registration statement\ncovering the securities under the 1933 Act is not in effect when it desires to\nsell (i) the rights to purchase Preferred Stock pursuant to this Warrant\nAgreement, or (ii) the Preferred Stock issuable upon exercise of the right to\npurchase, it may be required to hold such securities for an indefinite period.\nThe Holder also understands that any sale of its rights of the Holder to\npurchase Preferred Stock or Preferred Stock which might be made by it in\nreliance upon Rule 144 under the 1933 Act may be made only in accordance with\nthe terms and conditions of that Rule.\n\n        (f) Accredited Investor. Holder is an \"accredited investor\" within the\nmeaning of the Securities and Exchange Rule 501 of Regulation D, as presently in\neffect.\n\n\n                                       5.\n     28\n                                                       WARRANT TO PURCHASE STOCK\n\n        (g) Due Incorporation, etc. Holder is a corporation duly organized,\nvalidly existing, and in good standing under the laws of its state of\norganization.\n\n        (h) Information. Holder has had access to sufficient information about\nthe Company, and has had the opportunity to ask questions and has received\nanswers about the Company, to make an informed investment decision.\n\n        COM21, INC.\n\n    By _______________________________________\n       Chairman of the Board, President or\n       Vice President\n\n    By _______________________________________\n       Secretary of Ass't Secretary\n\n\n                                       6.\n\n\n     29\n                                                       WARRANT TO PURCHASE STOCK\n\n                                   APPENDIX 1\n\n                               NOTICE OF EXERCISE\n\n    1. The undersigned hereby elects to purchase _______ shares of the\nCommon\/Series ______ Preferred [strike one] Stock of __________ pursuant to the\nterms of the attached Warrant, and tenders herewith payment of the purchase\nprice of such shares in full.\n\n    1. The undersigned hereby elects to convert the attached Warrant into Shares\nin the manner specified in the Warrant. This conversion is exercised with\nrespect to __________ of the Shares covered by the Warrant.\n\n    [Strike paragraph that does not apply.]\n\n    2. Please issue a certificate or certificates representing said shares in\nthe name of the undersigned or in such other name as is specified below:\n\n    -----------------------------\n       (NAME)\n\n    -----------------------------\n\n    -----------------------------\n       (ADDRESS)\n\n    3. The undersigned represents it is acquiring the shares solely for its own\naccount and not as a nominee for any other party and not with a view toward the\nresale or distribution thereof except in compliance with applicable securities\nlaws.\n\n\n--------------------------------\n(Signature)\n\n--------------------------------\n(Date)\n\n\n                                    EXHIBIT A\n\n                               REGISTRATION RIGHTS\n\n    The Shares (if common stock), or the common stock issuable upon conversion\nof the Shares, shall be deemed \"Registrable Securities\" entitled to \"piggy back\"\nregistration rights and the Holder shall be deemed to be a \"Holder\" (for\npurposes of piggyback registration rights only) pursuant to the terms of the\nfollowing agreement (the \"Agreement\") between the Company and its investor(s):\n\n    Amended and Restated Information and Registration Rights Agreement dated \nApril 4, 1996\n\n    The Company agrees that no amendments will be made to the Agreement which\nwould have a disproportionately adverse impact on Holder's registration rights\nthereunder when compared with the registration rights of the other holders of\nregistration rights under the Agreement, without the consent of Holder.\n\n    All parties understand and agree that the registration rights of Holder as\ngranted hereunder shall be limited to those set forth in Section 7 of the\nAgreement (regarding piggyback registration) and related sections and the Holder\nshall have no rights under Section 6 of the Agreement (regarding demand\nregistration rights).\n\n\n                                       7.<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7151],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9560,9567],"class_list":["post-41124","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-com21-inc","corporate_contracts_industries-technology__programming","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41124"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41124"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41124"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}