Business Financing Agreement, by and between Arlo Technologies, Inc. and Western Alliance Bank dated as of November 5, 2019

This BUSINESS FINANCING AGREEMENT, dated as of November 5, 2019 (the “Closing Date”), is made and entered into between WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Lender”), and ARLO TECHNOLOGIES, INC., a Delaware corporation (“Borrower”), on the following terms and conditions:

Upon the request of Lender, Borrower shall deliver to Lender a certificate of insurance listing all insurance in force.

Notwithstanding the foregoing, the financial statements and information required to be delivered pursuant to this Section 4.15 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the internet at Borrower’s website address; provided, however, Borrower shall promptly notify Lender in writing (which may be by electronic mail) of the posting of any such documents.

Additionally, within thirty (30) days of the Closing Date, Borrower shall deliver to Lender, each in form and substance satisfactory to Lender, (i) a landlord’s consent for Borrower’s leased headquarters location and each of Borrower’s leased locations where Collateral in excess of One Million Dollars ($1,000,000) is stored and (ii) a bailee agreement with respect to the premises located at MobilTech Global Services, LLC, 4710 Mercantile, Fort Worth, Texas 761371, APL Warehouse, 408 Brea Canyon Rd., City of Industry, CA 91789, Tracelogix Corporation, 3605 Knight Right Suite 1010, Memphis, TN 38118, and any other bailee location where Collateral in excess of One Million Dollars ($1,000,000) is stored.

Lender will promptly provide to Borrower or Borrower’s designated agents, such UCC-3 and other termination statements and any other release documents as are reasonably requested with respect to any Excluded Collateral.

Regardless of the terms of any Credit Card Services Agreement, Borrower agrees that any amounts Borrower owes Lender thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Lender to have all such Obligations secured by a continuing security interest in all presently existing and hereafter acquired or arising Collateral. Upon termination of this Agreement, all Obligations with respect to Credit Card Services shall be secured by unencumbered cash in such amounts (to be not less than one hundred ten percent (110%) of the amount of such Credit Card Services) and on terms reasonably acceptable to Lender, and, effective as of such termination date, the balance in any deposit accounts held by Lender and the certificates of deposit issued by Lender in Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates), shall automatically secure such obligations to the extent of the then outstanding Credit Card Services; and Borrower authorizes Lender to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the Credit Card Services continue.

“Account Balance” means at any time the aggregate of the Advances outstanding as reflected on the records maintained by Lender, together with any past due Finance Charges thereon.

“Account Debtor” has the meaning in the UCC and includes any Person liable on any Receivable, including without limitation, any guarantor of any Receivable and any issuer of a letter of credit or banker’s acceptance assuring payment thereof.

“Adjustments” means all discounts, allowances, disputes, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to any Receivable.

“Advance” means an advance made by Lender to Borrower under this Agreement.

“Advance Rate” means sixty percent (60%) or such greater or lesser percentage as Lender may from time to time establish in its reasonable discretion upon notice to Borrower if Lender determines that the trailing twelve (12) month dilution deteriorates by more than five percent (5%).

“Advance Request” means a writing in form and substance satisfactory to Lender and signed by an Authorized Person requesting an Advance.

"Affiliate" means, as to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person.

“Agreement” means this Business Financing Agreement.

“Authorized Person” means any one of the individuals authorized to sign on behalf of Borrower, and any other individual designated by any one of such authorized signers.

“Best Buy Adjustments” means discounts, offsets and charge-backs applied by Best Buy in the ordinary course of business consistent with past practices on substantially the terms and conditions as disclosed to Lender as of the Closing Date (or upon terms and conditions as disclosed in writing to, and accepted by, Lender after the Closing Date).

“Borrower’s Account” means Borrower’s general operating account maintained with Lender, into which all Advances will be deposited unless otherwise instructed by Borrower in writing.

"Borrowing Base" means at any time (i) the Eligible Receivable Amount multiplied by the Advance Rate minus (ii) such reserves as Lender may in good faith deem proper and necessary from time to time. Lender shall endeavor to provide notice to and consult with Borrower with respect to any such reserves so long as no Event of Default has occurred and is continuing, but Lender’s failure to provide such notice and/or so consult with Borrower shall not be deemed a breach of this Agreement or otherwise give rise to any liability.

“Cash Equivalents” means (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, and (iii) certificates of deposit maturing no more than one (1) year from the date of investment therein issued by Lender.

“Change of Control” shall mean (a) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction, or (b) any Subsidiary of Borrower ceases to be wholly-owned by Borrower (other than pursuant to a Permitted Dissolution).

“Clean-up Period” means the period beginning on January 1^st and continuing through June 30^th of each year.

“Collateral” means all of Borrower’s rights and interest in any and all personal property located in the United States or any territory thereof or the District of Columbia, whether now existing or hereafter acquired or created and wherever located (within the United States or any territory thereof or the District of Columbia), and all products and proceeds thereof and accessions thereto, including but not limited to the following (collectively, the “Collateral”): (a) all accounts (including health care insurance receivables), chattel paper (including tangible and electronic chattel paper), inventory (including all goods held for sale or lease or to be furnished under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto), instruments (including promissory notes), investment property (including securities and securities entitlements), documents (including negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of Borrower which is now or hereafter identified by Borrower or Lender, general intangibles (including payment intangibles and software), goods (including fixtures) and all of Borrower’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds thereof, including without limitation, insurance proceeds, and all supporting obligations and the security therefore or for any right to payment. Notwithstanding the foregoing, the Collateral shall not include (a) any Intellectual Property, now owned or hereafter acquired, or any claims for damages by way of any past, present and future infringement of any of the foregoing; provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment"), (b) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or any other matter, (c) any interest of Borrower as a lessee or sublessee under a real property lease, (d) rights held under a license that are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment is enforceable under applicable law), (e) any interest of Borrower as a lessee under an equipment lease if Borrower is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or lien would cause a default to occur under such lease; provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by Borrower or Lender, (f) the Excluded Account, and (g) any assets sold or transferred pursuant to the Permitted Transaction (“Excluded Collateral”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Lender's security interest in the Rights to Payment.

“Collection Account” means the deposit account maintained with Lender in which all Collections are to be deposited, and as to which Borrower has no right to withdraw funds.

“Collections” means (a) prior to the initial Advance request with respect to an invoice issued by Borrower to an Account Debtor in 2020, all payments from or on behalf of an Account Debtor with respect to Eligible Receivables, and (b) from and at all times after the initial Advance request with respect to an invoice issued by Borrower to an Account Debtor in 2020, all payments from or on behalf of an Account Debtor with respect to Eligible Receivables and all payments from or on behalf of Costco and Amazon (whether or not with respect to Eligible Receivables).

“Compliance Certificate” means a certificate in the form attached as Exhibit A to this Agreement by an Authorized Person that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered.

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

“Credit Card Facility” means a facility for Credit Card Services, as set forth in Section 1.6, in an aggregate amount not to exceed the Credit Card Limit.

“Credit Card Limit” means One Hundred Thousand Dollars ($100,000) or such other amount as is approved by Lender in writing.

“Credit Card Services” are any products, credit services and/or financial accommodations relating to credit cards and/or other cash management services previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Lender or any Lender Affiliate.

“Credit Card Services Agreements” are any agreements, instruments or documents relating to Credit Card Services.

“Credit Extension” means any Advance, use of the Credit Card Facility, or any other extension of credit by Lender for Borrower’s benefit

“Credit Limit” means Forty Million Dollars ($40,000,000), which is intended to be the maximum amount of Advances at any time outstanding.

“Default” means any Event of Default or any event that with notice, lapse of time or otherwise would constitute an Event of Default.

“Disclosure Letter” means that certain Disclosure Letter of even date herewith, that was delivered to and accepted by Lender as of the Closing Date, to which each of the Schedules to such Disclosure Letter referenced herein is attached. Each reference to a Schedule of the Disclosure Letter shall refer to the applicable Schedule attached to the Disclosure Letter.

“Dormant Subsidiary” means each of Avaak Inc. and Placemeter Inc., each of which are wholly owned Subsidiaries of Borrower.

“Eligible Receivable” means a Receivable that satisfies all of the following:

"Eligible Receivable Amount" means at any time the sum of the Receivable Amounts of the Eligible Receivables.

“Event of Default” has the meaning set forth in Section 7.1.

“Excluded Account” means Borrower’s restricted cash account maintained with HSBC Bank (account no. ******427) for the purpose of providing cash collateral for a letter of credit, provided that the balance in such account shall not exceed Five Million Dollars ($5,000,000) at any time.

“Facility Fee” means a payment of an annual fee equal to one-quarter percentage point (0.25%) of the Credit Limit due upon the Closing Date and each anniversary thereof so long as any Advance is outstanding or available hereunder.

“Finance Charge” means an interest amount equal to the Finance Charge Percentage of the ending daily Account Balance for the relevant period.

“Finance Charge Percentage” means a floating rate per year equal to the Prime Rate plus two and one-quarter percentage points (2.25%) plus an additional five percentage points (5.0%) during any period that an Event of Default has occurred and is continuing.

“Foreign Subsidiary” means any Subsidiary not organized under the laws of the United States or any state or territory thereof or the District of Columbia.

“GAAP” means generally accepted accounting principles consistently applied and used consistently with prior practices.

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

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

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

"International Sublimit" means One Million Dollars ($1,000,000).

“Lender” means WESTERN ALLIANCE BANK, an Arizona corporation, and its successors and assigns.

"Letter of Credit" has the meaning set forth in Section 1.8.

"Letter of Credit Obligations" means, at any time, the sum of, without duplication, (i) the maximum amount available to be drawn on all outstanding Letters of Credit issued by Lender or by Lender’s Affiliate and (ii) the aggregate amount of all amounts drawn and unreimbursed with respect to Letters of Credit issued by Lender or by Lender’s Affiliate.

“Material Adverse Change” means a material adverse change in (i) the business operations or financial condition of Borrower (or any guarantor) and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents or (iii) the value or priority of Lender’s security interests in the Collateral.

“Maturity Date” means two years from the Closing Date or such earlier date as Lender shall have declared the Obligations immediately due and payable pursuant to Section 7.2; provided that the Maturity Date may be extended by mutual written agreement of Borrower and Lender.

“Month End” means the last calendar day of each Monthly Period.

“Monthly Period” means each fiscal month of the Borrower.

“Obligations” means all liabilities and obligations of Borrower to Lender of any kind or nature, present or future, arising under or in connection with this Agreement, any Credit Card Services Agreement, or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument, whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without limitation, all Credit Extensions, Finance Charges, fees, interest, expenses, professional fees and reasonable attorneys’ fees.

“Overadvance” means at any time an amount equal to the greater of (a) the amounts (if any) by which the total amount of the outstanding Advances (including deemed Advances with respect to the International Sublimit and the total amount of the Credit Card Limit) exceeds the lesser of the Credit Limit or the Borrowing Base, (b) the amounts (if any) by which the total amount of the outstanding deemed Advances with respect to the International Sublimit exceeds the International Sublimit, or (c) the amounts (if any) by which the total amount of the Credit Card Services exceeds the Credit Card Limit.

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

“Permitted Acquisition” means: a transaction under which Borrower acquires by merger, stock purchase, asset purchase or otherwise substantially all of the assets of, or all of the equity interests in, any Person or makes investments in any Person during the term of this Agreement without Lender’s consent; provided however, that each of the following conditions precedent is satisfied:

“Permitted Dissolution” means Borrower’s dissolution of any Dormant Subsidiary or any foreign Subsidiary of which all or substantially all of such foreign Subsidiary’s assets were sold pursuant to the Permitted Transaction, in each case, so long as any remaining assets of such Dormant Subsidiary or foreign Subsidiary are transferred to Borrower prior to any such dissolution.

“Permitted Distributions” are:

“Permitted Exclusive Licenses” has the meaning set forth in Section 4.8.

“Permitted Indebtedness” means:

“Permitted Investments” means:

(b)    Cash Equivalents and Lender’s money market accounts.

“Permitted Liens” means the following but only with respect to property not consisting of Receivables:

“Permitted Transaction” is defined in Section 4.8.

"Person" shall mean any individual, sole proprietorship, partnership, limited liability partnership, joint venture, company, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, firm, joint stock company, estate, entity or government (whether national, federal, provincial, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof), and shall include such Person's successors and assigns.

“Prime Rate” means the greater of five percent (5.0%) per year or the Prime Rate published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Lender as its Prime Rate. Lender may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Prime Rate.

“Receivable Amount” means as to any Receivable, the amount due from the Account Debtor after deducting all discounts, credits, offsets, payments or other deductions of any nature whatsoever, whether or not claimed by the Account Debtor.

“Receivables” means Borrower’s rights to payment arising in the ordinary course of Borrower’s business, including accounts, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, and banker’s acceptances.

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

“Subordinated Debt” means indebtedness of Borrower that is expressly subordinated to the indebtedness of Borrower owed to Lender pursuant to a subordination agreement satisfactory in form and substance to Lender.

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

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

“Transfer” has the meaning set forth in Section 4.8.

“UCC” means the California Uniform Commercial Code, as amended or supplemented from time to time.

“Zero Balance Account” means any deposit account subject to a daily zero balance sweep or similar control to the extent entering into an account control agreement with respect to such account would unlink or otherwise materially conflict with the zero balance sweep or similar controls in place for such account, including those accounts identified as zero balance accounts (ZBAs) in the Perfection Certificate.

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement on the day and year above written.