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Execution Version JOINDER AND FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Joinder and Fifth Amendment to Loan and Security Agreement (this
“Amendment”) dated as of March 14, 2016, is by between SILICON VALLEY BANK, a
California corporation with a loan production office located at 275 Grove
Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”), ROSETTA STONE LTD., a
Virginia corporation (“Borrower”), and LEXIA LEARNING SYSTEMS LLC, a Delaware
limited liability company (“New Borrower”). W I T N E S S E T H: WHEREAS,
Borrower and Bank are party to that certain Loan and Security Agreement dated as
of October 28, 2014, as amended by a certain First Amendment to Loan and
Security Agreement dated March 31, 2015, as further amended by a certain Second
Amendment to Loan and Security Agreement dated May 1, 2015, as further amended
by a certain Third Amendment to Loan and Security Agreement dated June 26, 2015,
and as further amended by a certain Fourth Amendment to Loan and Security
Agreement dated December 29, 2015 (as amended, modified, supplemented or
restated and in effect from time to time, the “Loan Agreement”); and WHEREAS,
Borrower has requested that Bank agree to modify and amend certain terms and
conditions of the Loan Agreement. NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows: 1. Capitalized Terms. All capitalized terms
used herein and not otherwise defined shall have the same meaning herein as in
the Loan Agreement. 2. Joinder and Assumption. New Borrower is a wholly-owned
Subsidiary of Borrower. New Borrower hereby joins the Loan Agreement and each of
the other appropriate Loan Documents, and agrees to comply with and be bound by
all of the terms, conditions and covenants of the Loan Agreement and each of the
other appropriate Loan Documents, as if New Borrower were originally named a
“Borrower” and/or a “Debtor” therein. Without limiting the generality of the
preceding sentence, New Borrower hereby assumes and agrees to pay and perform
when due all present and future indebtedness, liabilities and obligations of
Borrower under the Loan Agreement, including, without limitation, the
Obligations. From and after the date hereof, all references in the Loan
Documents to “Borrower” and/or “Debtor” shall be deemed to refer to and include
New Borrower. Further, all present and future Obligations of Borrower shall be
deemed to refer to all present and future Obligations of New Borrower. New
Borrower acknowledges that the Obligations are due and owing to Bank from
Borrower including, without limitation, New Borrower, without any defense,
offset or counterclaim of any kind or nature whatsoever as of the date hereof.
3. Grant of Security Interest. To secure the payment and performance of all of
the Obligations, New Borrower hereby grants to Bank a continuing lien upon and
security interest in all of New Borrower’s now existing or hereafter arising
rights and interest in the Collateral, whether now owned or existing or
hereafter created, acquired, or arising, and wherever located, including,
without limitation, all of New Borrower’s assets listed on Exhibit A attached
hereto

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2 and all of New Borrower’s books and records relating to the foregoing and any
and all claims, rights and interests in any of the above and all substitutions
for, additions, attachments, accessories, accessions and improvements to and
replacements, products, proceeds and insurance proceeds of any or all of the
foregoing. New Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first
priority perfected security interest in the Collateral (subject only to
Permitted Liens). New Borrower hereby authorizes Bank to file financing
statements, without notice to New Borrower, with all appropriate jurisdictions
in order to perfect or protect Bank’s Lien hereunder and under the other Loan
Documents. Such financing statements may indicate the Collateral as “all assets
of the Debtor” or words of similar effect, or as being of an equal or lesser
scope, or with greater detail, all in Bank’s discretion. 4. Subrogation and
Similar Rights. Borrower (in each case including, without limitation, New
Borrower) waives any suretyship defenses available to it under the Code or any
other applicable law. Borrower waives any right to require Bank to: (i) proceed
against any other Borrower or any other Person; (ii) proceed against or exhaust
any security; or (iii) pursue any other remedy. Bank may exercise or not
exercise any right or remedy it has against any Borrower or any security it
holds (including the right to foreclose by judicial or non-judicial sale)
without affecting any Borrower’s liability. Notwithstanding any other provision
of this Agreement, the Loan Agreement, or any other Loan Documents, Borrower
irrevocably subordinates to the prior payment in full of the Obligations and the
termination of the Bank’s commitment to make Advances to Borrower and agrees not
to assert or enforce prior to the payment in full of the Obligations and the
termination of the Bank’s commitment to make Advances to Borrower, all rights
that it may have at law or in equity (including, without limitation, any law
subrogating such Borrower to the rights of Bank under the Loan Agreement), to
seek contribution, indemnification or any other form of reimbursement from any
other Borrower or any other Person now or hereafter primarily or secondarily
liable for any of the Obligations, for any payment made by a Borrower with
respect to the Obligations in connection with the Loan Agreement or otherwise
and all rights that it might have to benefit from, or to participate in, any
security for the Obligations as a result of any payment made by any Borrower
with respect to the Obligations in connection with the Loan Agreement or
otherwise. If any payment is made to any Borrower in contravention of this
section, such Borrower shall hold such payment in trust for Bank and such
payment shall be promptly delivered to Bank for application to the Obligations,
whether matured or unmatured. Either Borrower may, acting singly, request
Advances under the Loan Agreement. Each Borrower hereby appoints the other as
agent for the other for all purposes under the Loan Agreement, including with
respect to requesting Advances thereunder. Each Borrower shall be jointly and
severally obligated to repay all Advances made under the Loan Agreement or any
other Loan Documents, regardless of which Borrower actually received said
Advances, as if each Borrower directly received all Advances. 5. Borrowing Base
Restrictions. Until Bank has conducted an inspection of New Borrower’s Accounts,
assets, and books and records, with results satisfactory to Bank in its
reasonable discretion, the Accounts of New Borrower will not be included in the
calculation of Borrowing Base, and none will be included in any Transaction
Report submitted by Borrower. 6. Amendments to Loan Agreement.

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3 (a) Section 2.1.1(a) (Revolving Advances; Availability). Section 2.1.1(a) is
amended in its entirety and replaced with the following: “(a) Availability.
Subject to the terms and conditions of this Agreement, Bank shall make Advances
not exceeding the Availability Amount. Amounts borrowed under the Revolving Line
may be repaid and, prior to the Revolving Line Maturity Date, reborrowed,
subject to the applicable terms and conditions precedent herein.” (b) Section
2.1.2 (Letters of Credit). The following new Section 2.1.2 is hereby inserted
immediately following Section 2.1.1: “2.1.2 Letters of Credit. a) As part of the
Revolving Line, Bank shall issue or have issued Letters of Credit denominated in
Dollars or a Foreign Currency for Borrower’s account. The aggregate Dollar
Equivalent of the face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit and any Letter of Credit Reserve) shall at
all times reduce the amount otherwise available for Advances under the Revolving
Line and may not exceed Four Million Dollars ($4,000,000). b) If, on the
Revolving Line Maturity Date (or the effective date of any termination of this
Agreement), there are any outstanding Letters of Credit, then on such date
Borrower shall provide to Bank cash collateral in an amount equal to (x) if such
Letters of Credit are denominated in Dollars, then at least one hundred five
percent (105%) and (y) if such Letters of Credit are denominated in a Foreign
Currency, then at least one hundred ten percent (110%), of the aggregate Dollar
Equivalent of the face amount of all such Letters of Credit plus all interest,
fees, and costs due or estimated by Bank to become due in connection therewith,
to secure all of the Obligations relating to such Letters of Credit. All Letters
of Credit shall be in form and substance acceptable to Bank in its sole
discretion and shall be subject to the terms and conditions of Bank’s standard
Application and Letter of Credit Agreement (the “Letter of Credit Application”).
Borrower agrees to execute any further documentation in connection with the
Letters of Credit as Bank may reasonably request. Borrower further agrees to be
bound by the regulations and interpretations of the issuer of any Letters of
Credit guarantied by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letter of Credit issued by Bank for Borrower’s account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto. c) The obligation of Borrower
to immediately reimburse Bank for drawings made under Letters of Credit shall be
absolute, unconditional, and

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4 irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application. d)
Borrower may request that Bank issue a Letter of Credit payable in a Foreign
Currency. If a demand for payment is made under any such Letter of Credit, Bank
shall treat such demand as an Advance to Borrower of the Dollar Equivalent of
the amount thereof (plus fees and charges in connection therewith such as wire,
cable, SWIFT or similar charges). e) To guard against fluctuations in currency
exchange rates, upon the issuance of any Letter of Credit payable in a Foreign
Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the
Revolving Line in an amount equal to ten percent (10%) of the face amount of
such Letter of Credit. The amount of the Letter of Credit Reserve may be
adjusted by Bank from time to time to account for fluctuations in the exchange
rate. The availability of funds under the Revolving Line shall be reduced by the
amount of such Letter of Credit Reserve for as long as such Letter of Credit
remains outstanding.” (c) Section 2.2 (General Provisions Relating to the
Advances). Section 2.2 is amended in its entirety and replaced with the
following: “2.2 Reserved.” (d) Section 2.3 (Overadvances). Section 2.3 is
amended in its entirety and replaced with the following: “2.3 Overadvances. If,
at any time, the outstanding principal amount of the Advances exceeds the lesser
of either the Revolving Line or the Borrowing Base, Borrower shall immediately
pay to Bank in cash the amount of such excess (such excess, the “Overadvance”).
Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower
agrees to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.” (e) Section 2.4 (Payment of Interest on the
Advances). Section 2.4 is amended in its entirety and replaced with the
following: “2.4 Payment of Interest on the Advances. (a) Advances. Subject to
Section 2.4(b), the principal amount outstanding under the Revolving Line shall
accrue interest at a floating per annum rate equal to the Prime Rate plus one
percent (1.00%); provided, however, during a Streamline Period, the principal
amount outstanding under the Revolving Line shall accrue interest at a floating
per annum rate equal to the Prime Rate. In each case, interest shall be payable
quarterly in accordance with Section 2.4(d) below. (b) Default Rate. Upon the
occurrence and during the continuance of an Event of Default, Obligations shall
bear interest at a rate per annum which is two percentage points (2.0%) above
the rate that would otherwise be applicable

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5 thereto (the “Default Rate”). Payment or acceptance of the increased interest
provided in this Section 2.4(b) is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Bank. (c) Adjustment to Interest Rate.
Changes to the interest rate of any Advance based on changes to the Prime Rate
shall be effective on the effective date of any change to the Prime Rate and to
the extent of any such change. (d) Payment; Interest Computation. Interest is
payable quarterly on the last calendar day of each quarter and shall be computed
on the basis of a 360- day year for the actual number of days elapsed. In
computing interest on any Advance, the date of the making of such Advance shall
be included and the date of payment shall be excluded; provided, however, that
if any Advance is repaid on the same date on which it is made, such day shall be
included in computing interest on such Advance.” (f) Section 2.5(c) (Fees;
Unused Revolving Line Facility Fee). Section 2.5(c) is amended in its entirety
and replaced with the following: “(c) Unused Revolving Line Facility Fee.
Payable quarterly in arrears on the first day of each calendar quarter occurring
after the Effective Date and on the Revolving Line Maturity Date, a fee (the
“Unused Revolving Line Facility Fee”) in an amount equal to forty-five
hundredths of one percent (0.45%) per annum of the average unused portion of the
Revolving Line, as determined by Bank (which determination shall, absent
manifest error in calculation, be presumed correct). The unused portion of the
Revolving Line, for purposes of this calculation, shall be calculated on a
calendar year basis and shall equal the difference between (i) the Revolving
Line, and (ii) the average for the period of the daily closing balance of the
Revolving Line Advances outstanding;” (g) Section 3.2(a) and (b) (Conditions
Precedent to all Advances). Sections 3.2(a) and (b) are amended in their
entirety and replaced with the following: “(a) timely receipt of an executed
Transaction Report (which Transaction Report will not be required if such
Advance is made to satisfy Obligations which have become due); (b) the
representations and warranties in this Agreement shall be true, accurate, and
complete in all material respects on the date of the Transaction Report and on
the Funding Date of each Advance; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date; and” (h) Section 3.4(a) (Procedures for Borrowing). Section
3.4(a) is amended in its entirety and replaced with the following:

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6 “(a) Subject to the prior satisfaction of all other applicable conditions to
the making of an Advance set forth in this Agreement, an Advance shall be made
upon Borrower’s irrevocable written notice delivered to Bank by electronic mail
in the form of a Transaction Report executed by an Authorized Signer or without
instructions if any Advance is necessary to meet Obligations which have become
due. Such Transaction Report must be received by Bank prior to 12:00 p.m.
Eastern time on the Funding Date of the Advance, specifying the amount of the
Advance.” (i) Section 3.5, Section 3.6 and Section 3.7 of the Loan Agreement are
deleted in their entirety. (j) Section 5.12 (Accounts Receivable). The following
new Section 5.12 is hereby inserted immediately following Section 5.11: “5.12
Accounts Receivable. (a) For each Account with respect to which Advances are
requested, on the date each Advance is requested and made, such Account shall be
an Eligible Account. (b) All statements made and all unpaid balances appearing
in all invoices, instruments and other documents evidencing the Eligible
Accounts are and shall be true and correct and all such invoices, instruments
and other documents, and all of Borrower's Books are genuine and in all respects
what they purport to be. All sales and other transactions underlying or giving
rise to each Eligible Account shall comply in all material respects with all
applicable laws and governmental rules and regulations. Borrower has no
knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor
whose accounts are Eligible Accounts in any Transaction Report. To the best of
Borrower’s knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to all Eligible Accounts are genuine, and
all such documents, instruments and agreements are legally enforceable in
accordance with their terms.” (k) Section 6.2(a) and (b) (Financial Statements,
Reports, Certificates). Section 6.2(a) and (b) are amended in their entirety and
replaced with the following: “(a) Monthly or Quarterly Financial Statements. (i)
If there are Advances outstanding under the Revolving Line, as soon as
available, but no later than thirty (30) days after the last day of each month
or (ii) if there are no Advances outstanding under the Revolving Line, as soon
as available but no later than forty-five (45) days after the end of each fiscal
quarter, a company prepared consolidated balance sheet and income statement
covering Ultimate Parent and each of its consolidated Subsidiary’s operations
for such month or fiscal quarter, as applicable, certified by a Responsible
Officer and in a form reasonably acceptable to Bank (the “Monthly Financial
Statements”); (b) Monthly or Quarterly Compliance Certificate. Together with the
Monthly Financial Statements (or quarterly, as applicable), a duly completed
Compliance

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7 Certificate signed by a Responsible Officer, certifying, as of the end of such
calendar month or fiscal quarter, as applicable, as to whether the Credit
Parties were in compliance with all of the terms and conditions of this
Agreement, and, if a Default or Event of Default exists, specifying the details
thereof any action taken or proposed to be taken with respect thereto, and
setting forth calculations of the financial covenants set forth in Section 6.8;”
(l) Section 6.2 (Financial Statements, Reports, Certificates). The following new
Section 6.2(h) and (i) are hereby inserted immediately following subsection (g):
“(h) a Transaction Report (and any schedules related thereto) (i) with each
request for an Advance, (ii) on the first Business Day of each month and the
fifteenth (15) day of each month when a Streamline Period is not in effect and
there are Advances outstanding under the Revolving Line, (iii) within thirty
(30) days after the end of each month when a Streamline Period is in effect and
there are Advances outstanding under the Revolving Line, and (iv) within
forty-five (45) days after the end of each fiscal quarter if there are no
Advances outstanding under the Revolving Line; and (i) (x) on the first Business
Day of each month and the fifteenth (15) day of each month when a Streamline
Period is not in effect and there are Advances outstanding under the Revolving
Line, (y) within thirty (30) days after the end of each month when a Streamline
Period is in effect and there are Advances outstanding under the Revolving Line,
and (z) within forty-five (45) days after the end of each fiscal quarter if
there are no Advances outstanding under the Revolving Line, (A) accounts
receivable agings, aged by invoice date, (B) accounts payable report, listed by
invoice date, and outstanding or held check registers, if any, and (C)
reconciliations of accounts receivable agings (aged by invoice date), and
general ledger, in each case as of the last day of the most recent month or
fiscal quarter, as applicable.” (m) Section 6.4 (Collection of Accounts).
Section 6.4 is amended in its entirety and replaced with the following: “6.4.
Accounts Receivable. (a) Schedules and Documents Relating to Accounts. Borrower
shall deliver to Bank Transaction Reports and schedules of collections, as
provided in Section 6.2, on Bank’s standard forms; provided, however, that
Borrower’s failure to execute and deliver the same shall not affect or limit
Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s
failure to advance or lend against a specific Account affect or limit Bank’s
Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank
with copies of all contracts, orders, invoices, and other similar documents, and
all shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave rise
to such Accounts included in a Transaction Report. In addition, if an Event of
Default has occurred and is continuing, Borrower shall deliver to Bank, on its
request, the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property

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8 evidencing or securing any such Accounts, in the same form as received, with
all necessary indorsements, and copies of all credit memos. Nothing in this
Section 6.4(a) shall obligate Borrower to deliver any item that is privileged
attorney client communication. (b) Disputes. Borrower shall promptly notify Bank
of all disputes or claims relating to Accounts included in a Transaction Report.
Borrower may forgive (completely or partially), compromise, or settle any such
Account for less than payment in full, or agree to do any of the foregoing so
long as (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, in arm’s-length transactions, and reports
the same to Bank in the regular reports provided to Bank; (ii) no Default or
Event of Default has occurred and is continuing; and (iii) after taking into
account all such discounts, settlements and forgiveness, the total outstanding
Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.
(c) Collection of Accounts. Each Credit Party shall direct Account Debtors to
deliver or transmit all proceeds of Accounts into a lockbox account (with
respect to check receipts) or such other “blocked account” as may be specified
by Bank (either such account, the “Cash Collateral Account”). Whether or not an
Event of Default has occurred and is continuing, Borrower shall immediately
deliver all payments on and proceeds of Accounts to the Cash Collateral Account.
Such payments and proceeds shall be (X) prior to the occurrence and continuance
of an Event of Default, (i) during a Streamline Period, transferred to the
Designated Deposit Account or (ii) if a Streamline Period is not in effect,
applied to immediately reduce the Obligations, and (Y) following the occurrence
and continuance of an Event of Default, applied pursuant to Section 9.4. (d)
Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, excluding Inventory that
Borrower has consigned to Account Debtors in the ordinary course of business,
Borrower shall promptly (i) determine the reason for such return, (ii) issue a
credit memorandum to the Account Debtor in the appropriate amount, and (iii)
provide a copy of such credit memorandum to Bank, upon request from Bank. In the
event any attempted return occurs after the occurrence and during the
continuance of any Event of Default, Borrower shall hold the returned Inventory
in trust for Bank, and immediately notify Bank of the return of the Inventory.
(e) Verification. Bank may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Accounts, either in the name of Borrower or Bank or such other name as Bank
may choose, and notify any Account Debtor of Bank’s security interest in such
Account.

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9 (f) No Liability. Bank shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gives rise to an Account, or for any error, act,
omission, or delay of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account, or for settling any Account in
good faith for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower's obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve Bank from
liability for its own gross negligence or willful misconduct.” (n) Section 6.15
(Remittance of Proceeds). The following new Section 6.15 is hereby inserted
immediately following Section 6.14: “6.15 Remittance of Proceeds. Except (i) as
otherwise provided in Section 6.4(c), (ii) if a Streamline Period is in effect,
(iii) if no Advances are outstanding under the Revolving Line, or (iv) in
respect of a Permitted Transfer, deliver, in kind, all proceeds arising from the
disposition of any Collateral to Bank in the original form in which received by
Borrower not later than the following Business Day after receipt by Borrower, to
be applied to the Obligations (a) prior to an Event of Default, pursuant to the
terms of Section 2.6(b) hereof, and (b) after the occurrence and during the
continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof;
provided that, if no Event of Default has occurred and is continuing, Borrower
shall not be obligated to remit to Bank the proceeds of the sale of worn out or
obsolete Equipment disposed of by Borrower in good faith in an arm’s length
transaction for an aggregate purchase price of One Hundred Thousand Dollars
($100,000) or less (for all such transactions in any fiscal year). Borrower
agrees that it will not commingle proceeds of Collateral with any of Borrower’s
other funds or property, but will hold such proceeds separate and apart from
such other funds and property and in an express trust for Bank. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere
in this Agreement.” (o) Section 13.1 (Definitions). The following terms and
their respective definitions set forth in Section 13.1 are amended in their
entirety and replaced with the following: “Adjusted EBITDA” means (a) GAAP Net
Income plus (b) Interest Expense (less interest income), (c) income tax benefit
and expense, (c) depreciation, (d) amortization and (e) stock-based compensation
expense, (f) other non-operating expense (less other income) (as such amount is
shown on the “Other income and (expense)” line item below the operating income
line in the Ultimate Parent's relevant income statement, determined in
accordance with GAAP), (g) goodwill impairment, (h) the change in Deferred
Revenue (excluding acquired Deferred Revenue), less (i) the change in deferred
commissions, (j) any items related to the litigation with Google Inc., (k)
restructuring and related wind down costs, consulting and other related costs
associated with development and implementation of Borrower’s revised business
strategy, severance costs and transaction and other costs associated with
mergers and acquisitions, and (l) all adjustments related to recording the
non-cash tax valuation allowance for deferred tax

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10 assets (with items (k) and (l) not to exceed an aggregate amount of
$8,500,000 for the twelve (12) month period following the Fifth Amendment
Effective Date). “Availability Amount” is (a) the lesser of (i) the Revolving
Line (which, for the avoidance of doubt, is reduced by the face amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve)) or (ii) the amount available under the
Borrowing Base minus (b) the outstanding principal balance of any Advances.
“Revolving Line Maturity Date” is January 1, 2018. (p) Section 13.1
(Definitions). The following new terms and their respective definitions are
hereby inserted into Section 13.1, each in their respective alphabetical order:
“Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts, as determined
by Bank from Borrower’s most recent Transaction Report (provided, however,
Eligible Accounts with respect to clauses (b), (c), (d) and (q) shall not
include Accounts in excess of ninety (90) days of invoice date to the extent the
aggregate amount of such Accounts exceeds ten percent (10%) of Eligible
Accounts), plus (b) during a Non-Formula Period, the Non-Formula Amount;
provided, however, that Bank has the right to decrease the foregoing percentage
in its good faith business judgment upon prior consultation with Borrower to
mitigate the impact of events, conditions, contingencies, or risks which may
adversely affect the Collateral or its value; provided, further that in the
event Bank exercises such right to decrease the foregoing percentage, such
circumstance shall not in and of itself constitute a Material Adverse Change or
create an inference that a Material Adverse Change has occurred. “Cash
Collateral Account” is defined in Section 6.4(c). “Eligible Accounts” means
Accounts which arise in the ordinary course of Borrower’s business that meet all
Borrower’s representations and warranties in Section 5.12, (minus any discounts,
credits, reserves for bad debt, customer adjustments, or other offsets which
relate to such Accounts). Bank reserves the right at any time upon prior
consultation with Borrower to adjust any of the criteria set forth below and to
establish new criteria in its good faith business judgment. Unless Bank
otherwise agrees in writing, Eligible Accounts shall not include: a) Accounts
for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent; b) Accounts that the Account Debtor has not paid within one hundred
twenty (120) days of invoice date regardless of invoice payment period terms; c)
Accounts with credit balances over one hundred twenty (120) days from invoice
date;

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11 d) Accounts owing from an Account Debtor if fifty percent (50%) or more of
the Accounts owing from such Account Debtor have not been paid within one
hundred twenty (120) days of invoice date; e) Accounts owing from an Account
Debtor which does not have its principal place of business in the United States
or such other jurisdictions approved by Bank in writing in its sole and absolute
discretion on a case-by-case basis; f) Accounts billed from and/or payable to
Borrower outside of the United States unless Bank has a first priority,
perfected security interest or other enforceable Lien in such Accounts under all
applicable laws, including foreign laws (sometimes called foreign invoiced
accounts); g) Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise - sometimes called “contra” accounts, accounts
payable, customer deposits or credit accounts); h) Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended; i) Accounts for demonstration or
promotional equipment, or in which goods are consigned, or sold on a “sale
guaranteed”, “sale or return”, “sale on approval”, or other terms if Account
Debtor’s payment may be conditional; j) Accounts owing from an Account Debtor
where goods or services have not yet been rendered to the Account Debtor
(sometimes called memo billings or pre- billings), other than any such Accounts
with respect to which Borrower has recorded Deferred Revenue; k) Accounts
subject to contractual arrangements between Borrower and an Account Debtor where
payments shall be scheduled or due according to completion or fulfillment
requirements where the Account Debtor has a right of offset for damages suffered
as a result of Borrower’s failure to perform in accordance with the contract
(sometimes called contracts accounts receivable, progress billings, milestone
billings, or fulfillment contracts); l) Accounts owing from an Account Debtor
the amount of which may be subject to withholding based on the Account Debtor’s
satisfaction of Borrower’s complete performance (but only to the extent of the
amount withheld; sometimes called retainage billings); m) Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory trust;

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12 n) Accounts owing from an Account Debtor that has been invoiced for goods
that have not been shipped to the Account Debtor unless Bank, Borrower, and the
Account Debtor have entered into an agreement acceptable to Bank wherein the
Account Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred, and
(iii) it owes payment for such goods in accordance with invoices from Borrower
(sometimes called “bill and hold” accounts); o) Accounts for which the Account
Debtor has not been invoiced; p) Accounts that represent non-trade receivables
or that are derived by means other than in the ordinary course of Borrower’s
business; q) Accounts for which Borrower has permitted Account Debtor’s payment
to extend beyond one hundred twenty (120) days; r) Accounts arising from
chargebacks, debit memos or other payment deductions taken by an Account Debtor;
s) Accounts arising from product returns and/or exchanges (sometimes called
“warranty” or “RMA” accounts); t) Accounts in which the Account Debtor disputes
liability or makes any claim (but only up to the disputed or claimed amount), or
if the Account Debtor is subject to an Insolvency Proceeding, or becomes
insolvent, or goes out of business; u) Accounts owing from an Account Debtor,
whose total obligations to Borrower exceed twenty-five percent (25%) of all
Accounts, except for Amazon.com, Inc., for which such percentage is forty
percent (40%), for the amounts that exceed that percentage, unless Bank approves
in writing; and v) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful, including, without limitation, accounts
represented by “refreshed” or “recycled” invoices. “Fifth Amendment Effective
Date” is March 14, 2016. “Initial Audit” is Bank’s inspection of Borrower’s
Accounts, the Collateral, and Borrower’s books and records, with results
satisfactory to Bank in its reasonable discretion. “Letter of Credit
Application” is defined in Section 2.1.2(b). “Letter of Credit Reserve” is
defined in Section 2.1.2(e). “Liquidity” is, at any time, the sum of (a) the
aggregate amount of unrestricted cash held at such time by Borrower in Deposit
Accounts or Securities Accounts

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13 maintained with Bank or its Affiliates plus (b) the Availability Amount
(excluding the Non-Formula Amount from the Borrowing Base). “Monthly Financial
Statements” is defined in Section 6.2(a). “Non-Formula Amount” is Five Million
Dollars ($5,000,000) “Non-Formula Period” is, on and after the Fifth Amendment
Effective Date, provided no Event of Default has occurred and is continuing, the
period (a) commencing on the first day of the month following the day that
Borrower provides to Bank a written report that Borrower has, for each
consecutive day in the immediately preceding calendar month, Liquidity in an
amount at all times greater than Twenty Five Million Dollars ($25,000,000) (the
“Non-Formula Balance”); and (b) terminating on the earlier to occur of (i) the
occurrence of an Event of Default, and (ii) the first day thereafter in which
Borrower fails to maintain the Non-Formula Balance, subject, however, to Bank’s
reasonable determination made within a reasonable time after its receipt of the
relevant report that Borrower has maintained the requisite Liquidity in the
relevant time periods. “Streamline Period” is, on and after the Fifth Amendment
Effective Date, provided no Event of Default has occurred and is continuing, the
period (a) commencing on the first day of the month following the day that
Borrower provides to Bank a written report that Borrower has, for each
consecutive day in the immediately preceding calendar month, Liquidity in an
amount at all times greater than Seventeen Million Five Hundred Thousand Dollars
($17,500,000) (the “Streamline Balance”); and (b) terminating on the earlier to
occur of (i) the occurrence of an Event of Default, and (ii) the first day
thereafter in which Borrower fails to maintain the Streamline Balance. Upon the
termination of a Streamline Period, Borrower must maintain the Streamline
Balance each consecutive day for one (1) calendar month prior to entering into a
subsequent Streamline Period. Borrower shall give Bank prior written notice of
Borrower’s election to enter into any such Streamline Period, and each such
Streamline Period shall commence on the first day of the monthly period
following the date the Bank determines, in its reasonable discretion, that the
Streamline Balance has been achieved, subject, however, in each such case to
Bank’s reasonable determination made within a reasonable time after receipt of
the relevant report that Borrower has maintained the requisite Liquidity in the
relevant time periods. “Transaction Report” is that certain report of
transactions and schedule of collections in the form attached hereto as Exhibit
B, with appropriate insertions. (q) Section 13.1 (Definitions). The following
terms and their respective definitions are hereby deleted from Section 13.1 in
their entirety: “Current Liabilities” are all Obligations of Borrower to Bank,
plus, without duplication, the aggregate amount of total liabilities of Ultimate
Parent and its Subsidiaries that mature within one (1) year, minus Deferred
Revenue. “LIBOR” means, with respect to each day during each Interest Period
pertaining to ) a LIBOR Advance the rate per annum determined by Bank by
reference to the ICE

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14 Benchmark Administration (or any successor thereto if the ICE Benchmark
Administration is no longer making a LIBOR rate available for deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period in Dollars, determined as of approximately 11:00 A.M.
(London, England time) two (2) Business Days prior to the beginning of such
Interest Period (as set forth by Reuters or any successor thereto or any other
commercially available service selected by Bank which provides quotations of
LIBOR. In the event that Bank determines that LIBOR is not available, “LIBOR”
shall be determined by reference to the rate per annum equal to the offered
quotation rate to first class banks in the London interbank market by Bank for
deposits (for delivery on the first day of the relevant Interest Period) in
Dollars of amounts in same day funds comparable to the principal amount of the
applicable Advance for which LIBOR is then being determined with maturities
comparable to such period, as of approximately 11:00 A.M. (London, England time)
two (2) Business Days prior to the beginning of such Interest Period. “LIBOR
Advance” means an Advance that bears interest based at the LIBOR Rate. “LIBOR
Rate” means, for each Interest Period in respect of LIBOR Advances comprising
part of the same Advances, an interest rate per annum (rounded upward, if
necessary, to the nearest 0.0001%) equal to LIBOR for such Interest Period
divided by one (1) minus the Reserve Requirement for such Interest Period.
“LIBOR Rate Margin” is two and one-quarter percent (2.25%). “Notice of
Borrowing” means a notice given by Borrower to Bank in accordance with Section
3.4(a), substantially in the form of Exhibit B, with appropriate insertions.
“Notice of Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5, substantially in the form of Exhibit C, with
appropriate insertions. “Prime Rate Advance” means an Advance that bears
interest based at the Prime Rate. “Prime Rate Margin” is one and one-quarter
percent (1.25%). “Quarterly Financial Statements” is defined in Section 6.2(a).
“Quick Assets” is, on any date, Ultimate Parent’s consolidated, unrestricted
cash and Cash Equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP. “Regulatory
Change” means, with respect to Bank, any change on or after the date of this
Agreement in United States federal, state, or foreign laws or regulations,
including Regulation D of the Board of Governors of the Federal Reserve System
of the United States (or any successor), or the adoption or making on or after
such date of any interpretations, directives, or requests applying to a class of
lenders including Bank, of or

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15 under any United States federal or state, or any foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
“Reserve Requirement” for any day as applied to a LIBOR Advance, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including basic, supplemental,
marginal and emergency reserves) under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System. (r) Exhibit B, Exhibit D and Exhibit
E to the Loan Agreement are hereby amended in their entireties and replaced by
Exhibit B, Exhibit D and Exhibit E attached hereto. (s) Exhibit C of the Loan
Agreement is hereby deleted in its entirety. 7. Conditions Precedent to
Effectiveness. This Amendment shall not be effective until each of the following
conditions precedent have been fulfilled to the satisfaction of Bank: (a) This
Amendment shall have been duly executed and delivered by the respective parties
hereto. Bank shall have received a fully executed copy hereof. (b) All necessary
consents and approvals to this Amendment shall have been obtained by Borrower.
(c) After giving effect to this Amendment, no Default or Event of Default shall
have occurred and be continuing. (d) Bank shall have received the fees costs and
expenses required to be paid pursuant to Section 10 of this Amendment (including
the reasonable and documented fees and disbursements of legal counsel required
to be paid thereunder). 8. Post-Closing Requirements. Failure by Borrower to
comply with any of the following within the time period indicated, or such
longer period as Bank may agree in its reasonable discretion, shall constitute
an immediate Event of Default for which no cure or grace periods apply: (a)
Within seven (7) days after the Fifth Amendment Effective Date, Borrower shall
deliver to Bank a certificate of good standing for each Credit Party certified
by the Secretary of State of such Credit Party’s respective state of formation,
together with duly executed signatures to a completed Borrowing Resolution for
each Borrower; (b) Within ten (10) days after the Fifth Amendment Effective
Date, Borrower shall provide Bank with evidence satisfactory to Bank that the
insurance policies and

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16 endorsements thereto required by Section 6.6 of the Loan Agreement are in
full force and effect; (c) Within thirty (30) days after the Fifth Amendment
Effective Date, Borrower shall deliver to Bank a landlord consent in favor of
Bank for 300-310 Baker Avenue, Concord, MA 01742 by the landlord thereof,
together with the duly executed original signatures thereto; (d) Within thirty
(30) days after the Fifth Amendment Effective Date, Borrower shall deliver to
Bank an updated Perfection Certificate, together with the duly executed
signatures thereto, and take whatever actions Bank may deem reasonably necessary
after Bank’s review of such updated Perfection Certificate in order for Bank to
obtain, perfect and maintain a first priority security interest (subject to
Permitted Liens) in all Collateral referenced therein; and (e) Within forty-five
(45) days after the Fifth Amendment Effective Date, Bank shall have completed
the Initial Audit; provided, however, prior to the completion thereof and review
by Bank to its reasonable satisfaction, no Advances under the Revolving Line
shall be made by Bank. 9. Representations and Warranties. Borrower hereby
represents and warrants to Bank as follows: (a) This Amendment is, and each
other Loan Document to which it is or will be a party, when executed and
delivered by Borrower, will be the legally valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
and equitable principals (whether enforcement is sought by proceedings in equity
or at law). (b) Its representations and warranties set forth in this Amendment,
the Loan Agreement, as amended by this Amendment and after giving effect hereto,
and the other Loan Documents to which it is a party are (i) to the extent
qualified by materiality, true and correct in all respects and (ii) to the
extent not qualified by materiality, true and correct in all material respects,
in each case, on and as of the date hereof, as though made on such date (except
to the extent that such representations and warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects as of such earlier date). (c) The
execution and delivery by Borrower of this Amendment, the performance by
Borrower of its obligations hereunder and the performance of Borrower under the
Loan Agreement, as amended by this Amendment, (i) have been duly authorized by
all necessary organizational action on the part of Borrower and (ii) will not
(A) violate any provisions of the certificate of incorporation or formation or
organization or by-laws or limited liability company agreement or limited
partnership agreement of Borrower or (B) constitute a violation by Borrower of
any applicable material Requirement of Law.

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17 Borrower acknowledges that Bank has acted in good faith and have conducted in
a commercially reasonable manner their relationships with Borrower in connection
with this Amendment and in connection with the other Loan Documents. Borrower
understands and acknowledges that Bank is entering into this Amendment in
reliance upon, and in partial consideration for, the above representations,
warranties, and acknowledgements, and agrees that such reliance is reasonable
and appropriate. 10. Payment of Costs and Expenses Borrower shall pay to Bank a
fully-earned, non- refundable amendment fee equal to Sixty Two Thousand Five
Hundred Dollars ($62,500), which fee shall be paid on the Fifth Amendment
Effective Date. In addition, Borrower shall pay to Bank all reasonable costs and
out-of-pocket expenses of every kind in connection with the preparation,
negotiation, execution and delivery of this Amendment and any documents and
instruments relating hereto or thereto (which costs include, without limitation,
the reasonable and documented fees and expenses of any attorneys retained by
Bank). 11. Choice of Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each party hereto submits to
the exclusive jurisdiction of the State and Federal courts in the Southern
District of the State of New York; provided, however, that nothing in the Loan
Agreement as amended by this Amendment shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of such Agent. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AMENDMENT, THE
OTHER LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT,
BREACH OF DUTY AND ALL OTHER CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AMENDMENT, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 12. Counterpart Execution. This
Amendment may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Amendment. Delivery of an executed counterpart
of this Amendment by telefacsimile or by e-mail transmission of an Adobe file
format document (also known as a PDF file) shall be equally as effective as
delivery of an original executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by telefacsimile or by
e-mail transmission of an Adobe file format document (also known as a PDF file)
also shall deliver an original executed counterpart of this Amendment but the
failure to

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18 deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment. 13. Effect on Loan
Documents. (a) The amendments set forth herein shall be limited precisely as
written and shall not be deemed (a) to be a forbearance, waiver, or modification
of any other term or condition of the Loan Agreement or of any Loan Documents or
to prejudice any right or remedy which Bank may now have or may have in the
future under or in connection with the Loan Documents; (b) to be a consent to
any future consent or modification, forbearance, or waiver to the Loan Agreement
or any other Loan Document, or to any waiver of any of the provisions thereof;
or (c) to limit or impair Bank’s right to demand strict performance of all terms
and covenants as of any date. Borrower hereby ratifies and reaffirms its
obligations under the Loan Agreement and the other Loan Documents to which it is
a party and agrees that none of the amendments or modifications to the Loan
Agreement set forth in this Amendment shall impair Borrower’s obligations under
the Loan Documents or Bank’s rights under the Loan Documents. Borrower hereby
further ratifies and reaffirms the validity and enforceability of all of the
Liens heretofore granted, pursuant to and in connection with the Loan Agreement
or any other Loan Document, to Bank as collateral security for the obligations
under the Loan Documents, in accordance with their respective terms, and
acknowledges that all of such Liens, and all collateral heretofore pledged as
security for such obligations, continues to be and remain collateral for such
obligations from and after the date hereof. Borrower acknowledges and agrees
that the Loan Agreement and each other Loan Document is still in full force and
effect and acknowledges as of the date hereof that Borrower has no defenses to
enforcement of the Loan Documents. Borrower waives any and all defenses to
enforcement of the Loan Agreement as amended hereby and each other Loan
Documents that might otherwise be available as a result of this Amendment of the
Loan Agreement. To the extent any terms or provisions of this Amendment conflict
with those of the Loan Agreement or other Loan Documents, the terms and
provisions of this Amendment shall control. (b) To the extent that any terms and
conditions in any of the Loan Documents shall contradict or be in conflict with
any terms or conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or amended
accordingly to reflect the terms and conditions of the Loan Agreement as
modified or amended hereby. (c) This Amendment is a Loan Document. 14. Entire
Agreement. This Amendment constitutes the entire agreement between Borrower and
Bank pertaining to the subject matter contained herein and supersedes all prior
agreements, understandings, offers and negotiations, oral or written, with
respect hereto and no extrinsic evidence whatsoever may be introduced in any
judicial or arbitration proceeding, if any, involving this Amendment. All of the
terms and provisions of this Amendment are hereby incorporated by reference into
the Loan Agreement, as applicable, as if such terms and provisions were set
forth in full therein, as applicable. All references in the Loan Agreement to
“this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import shall
mean the Loan Agreement as amended hereby.

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19 15. Release. Borrower may have certain Claims against the Released Parties,
as those terms are defined below, regarding or relating to the Loan Agreement or
the other Loan Documents. Bank and Borrower desire to resolve each and every one
of such Claims in conjunction with the execution of this Amendment and thus
Borrower makes the releases contained in this Section 10. In consideration of
Bank entering into this Amendment, Borrower hereby fully and unconditionally
releases and forever discharges Bank and its directors, officers, employees,
subsidiaries, branches, affiliates, attorneys, agents, representatives,
successors and assigns and all persons, firms, corporations and organizations
acting on any of their behalf (collectively, the “Released Parties”), of and
from any and all claims, allegations, causes of action, costs or demands and
liabilities, of whatever kind or nature, from the beginning of the world to the
date on which this Amendment is executed, whether known or unknown, liquidated
or unliquidated, fixed or contingent, asserted or unasserted, foreseen or
unforeseen, matured or unmatured, suspected or unsuspected, anticipated or
unanticipated, which Borrower has, had, claims to have had or hereafter claims
to have against the Released Parties by reason of any act or omission on the
part of the Released Parties, or any of them, occurring prior to the date on
which this Amendment is executed, including all such loss or damage of any kind
heretofore sustained or that may arise as a consequence of the dealings among
the parties up to and including the date on which this Amendment is executed,
including the administration or enforcement of the Loans, the Obligations, the
Loan Agreement or any of the Loan Documents (collectively, all of the foregoing,
the “Claims”). Borrower represents and warrants that it has no knowledge of any
claim by it against the Released Parties or of any facts or acts of omission of
the Released Parties which on the date hereof would be the basis of a claim by
Borrower against the Released Parties which is not released hereby. Borrower
represents and warrants that the foregoing constitutes a full and complete
release of all Claims. 16. Severability. The provisions of this Amendment are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Amendment in
any jurisdiction. [SIGNATURE PAGES FOLLOW]

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1 EXHIBIT A – COLLATERAL DESCRIPTION The Collateral consists of all of New
Borrower’s right, title and interest in and to the following personal property:
All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and All Credit Party’s Books
relating to the foregoing, and any and all claims, rights and interests in any
of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing; provided, however, that
notwithstanding anything to the contrary contained in the foregoing, the
security interests created by this Agreement shall not extend to, and the term
“Collateral” (including all of the individual items comprising Collateral) shall
not include, any Excluded Collateral.

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1 EXHIBIT B TRANSACTION REPORT

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Transaction Report Company name Rosetta Report number Report date Gross A/R
Balance -$ Unbilled A/R Balance -$ Beg Loan Balance -$ Unrestricted Cash at SVB
-$ Today's Loan Advance Request -$ SALES JOURNAL Invoices: Credit Memos: -$
Misc. Adj. - Sales related: -$ Net New Invoices -$ CASH RECEIPTS JOURNAL A/R
Collections: Collections applied to Loan: Net Collections Applied to Loan -$
RESERVES / LC Sublimit Misc. if applicable -$ General Input Sheet Confidential |
Rev. 01-26-10 svb.com 1893192.1 1958682.1

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Rosetta Transaction Report Report No: 0 Date January 0, 1900 ACCOUNTS RECEIVABLE
COLLATERAL Beginning A/R Balance Per Previous Report -$ Add: Sales for Period -$
Add: Credit Memos -$ Miscellaneous Adjustments Less: Collections for Period
(adjustment to number to tie back to AR) -$ Ending Accounts Receivable Balance
-$ Deduct: Ineligible Accounts Receivable -$ Total Eligible Accounts Receivable
-$ COMPUTATION OF BORROWING AVAILABILITY Gross A/R Advance Rate 80% -$ Unbilled
A/R Advance Rate 80% -$ Lower of Calculated Availability or Line limit
25,000,000$ -$ Reserves / LC Sublimit (if applicable): -$ Net Borrowing
Availability: Before Loans -$ COMPUTATION OF LOAN Beginning Loan Balance -$
Less: Collections Applied to Loan -$ Misc. Adjustments -$ Ending Loan Balance -
Before Loan Request -$ Unused Borrowing Availability Before Loan Request -$
Unrestricted Cash at SVB -$ Liquidity -$ NF Availability -$ Total Availability
-$ New Loan Request: The undersigned hereby requests a loan advance in the
amount shown adjacent hereto. Please deposit loan proceeds to my: SVB Checking
Account Advance = -$ New Loan Balance - After Loan Advance -$ Remaining Unused
Borrowing Availability - After Loan Request -$ The above described Collateral is
subject to a security interest in favor of SILICON VALLEY BANK pursuant to the
terms and conditions of a Loan & Security Agreement's, as executed by and
between SILICON VALLEY BANK and the undersigned. Transaction Report and Loan
Request Confidential | Rev. 01-26-10 svb.com 1893192.1 1958682.1

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INELIGIBLE CALCULATION Rosetta As of: 1/0/1900 Report No: 0 Date 1/0/1900
Ineligibles As of Intercompany / Affiliate / Employee 120 Days Past Invoice Date
-$ Credit Balances over 120 Days Balance of 50% over 120 Day Accounts (Cross-Age
or Current Affected) Foreign Account Debtor Accounts Foreign Invoiced and/or
Collected Accounts Contra / Customer Deposit Accounts Concentration Limits U.S.
Government Accounts Promotion or Demo Accounts; Guaranteed Sale or Consignment
Sale Accounts Accounts with Memo or Pre-Billings; Contract Accounts; Accounts
with Progress / Milestone Billings Accounts for Retainage Billings Trust /
Bonded Accounts Bill and Hold Accounts Unbilled Accounts Non-Trade Accounts (If
not already deducted above) Accounts with Extended Term Invoices (Net 120+)
Chargebacks Accounts / Debit Memos Product Returns/Exchanges Disputed Accounts;
Insolvent Account Debtor Accounts Deferred Revenue Other Total Ineligible
Accounts: (to BBC) -$ Ineligible Calculation Confidential | Rev. 01-26-10
svb.com 1893192.1 1958682.1

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1 EXHIBIT D COMPLIANCE CERTIFICATE TO: SILICON VALLEY BANK Date: FROM: ROSETTA
STONE LTD. and LEXIA LEARNING SYSTEMS LLC The undersigned authorized officer of
Rosetta Stone Ltd. and Lexia Learning Systems LLC (each and together, jointly
and severally, “Borrower”) certifies that under the terms and conditions of the
Loan and Security Agreement between Borrower and Bank (the “Agreement”): (1)
Each Credit party is in complete compliance for the period ending
_______________ with all required covenants except as noted below; (2) there are
no Events of Default; (3) all representations and warranties in the Agreement
are true and correct in all material respects on this date except as noted
below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; (4) each
Credit Party and each of its Subsidiaries, has timely filed all required tax
returns and reports, and each Credit Party and each of its Subsidiaries has
timely paid all foreign, federal, state and local taxes, assessments, deposits
and contributions owed by such Credit Party or Subsidiary except as otherwise
permitted pursuant to the terms of Section 5.8 of the Agreement; and (5) no
Liens have been levied or claims made against any Credit Party or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank. Attached are the
required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period
to the next except as explained in an accompanying letter or footnotes. The
undersigned acknowledges that no borrowings may be requested at any time or date
of determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement. Please indicate
compliance status by circling Yes/No under “Complies” column. Reporting
Covenants Required Complies Monthly or Quarterly financial statements with
Compliance Certificate Monthly within 30 days when there are Advances
outstanding; quarterly within 45 days when there are no Advances outstanding Yes
No Annual financial statement (CPA Audited) with Compliance Certificate FYE
within 90 days Yes No 10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes
No Projections FYE within 90 days Yes No A/R Agings & A/P Report Bi-weekly when
a Streamline Period is not in effect and there are Advances outstanding; monthly
within 30 days when a Streamline Period is in effect and there are Advances
outstanding; quarterly within 45 days when there are no Advances outstanding Yes
No Transaction Reports Bi-weekly when a Streamline Period is not in effect and
there are Advances outstanding; monthly within 30 days when a Streamline Period
is in effect and there are Advances outstanding; quarterly within 45 days when
there are no Advances outstanding; and with Yes No

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2 each request for an Advance The following Intellectual Property was registered
(or a registration application submitted) after the Effective Date (if
registrations, state “None”)
___________________________________________________________________________________________
Financial Covenants Required Actual Complies Achieve on a Quarterly Basis:
Minimum Liquidity $12,500,000 $ Yes No Minimum EBITDA * $ Yes No *See Section
6.8(b) Streamline Period Applies Liquidity > $17,500,000 Yes No Non-Formula
Period Applies Liquidity > $25,000,000 Yes No The following financial covenant
analyses and information set forth in Schedule 1 attached hereto are true and
accurate as of the date of this Certificate. Other Matters Have there been any
amendments of or other changes to the capitalization table of the Credit Parties
and to the Operating Documents of any Credit Party or any of its Subsidiaries
since the date of the most recently delivered Compliance Certificate? If yes,
provide copies of any such amendments or changes with this Compliance
Certificate to the extent not previously delivered to Bank. Yes No The following
are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
-------------------------------------------------------------------------------------------------------------------------------
ROSETTA STONE LTD. LEXIA LEARNING SYSTEMS LLC By: Name: Title: BANK USE ONLY
Received by: _____________________ AUTHORIZED SIGNER Date:
_________________________ Verified: ________________________ AUTHORIZED SIGNER
Date: _________________________ Compliance Status: Yes No

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1 Schedule 1 to Compliance Certificate Financial Covenants of Borrower In the
event of a conflict between this Schedule and the Loan Agreement, the terms of
the Loan Agreement shall govern. Dated: ____________________ I. Liquidity
(Section 6.8(a)) Required: $12,500,000 Actual: A. Aggregate value of the
unrestricted cash maintained in Deposit Accounts or Securities Accounts at Bank
or its Affiliates $ B. Availability Amount (excluding the Non-Formula Amount
from the Borrowing Base) $ C. Liquidity (line A plus line B) $ Is line C equal
to or greater than $12,500,000? No, not in compliance Yes, in compliance

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2 II. ADJUSTED EBITDA (Section 6.8(b)) Required: Period Adjusted EBITDA Three
(3) month period ending March 31, 2016 ($17,500,000) Six (6) month period ending
June 30, 2016 ($24,500,000) Nine (9) month period ending September 30, 2016
($14,000,000) Twelve (12) month period ending December 31, 2016 ($9,000,000)
Twelve (12) month period ending March 31, 2017, and quarterly for each twelve
(12) month period thereafter ($7,500,000) Actual (for the cumulative period
referenced): A. Net Income $ B. To the extent included in the determination of
Net Income 1. Interest Expense $ 2. Income tax benefit and expense $ 3.
Depreciation expense $ 4. Amortization expense $ 5. Stock-based compensation
expense $ 6. other non-operating expense (less other income) (as such amount is
shown on the “Other income and (expense)”" line item below the operating income
line in the Ultimate Parent's relevant income statement, determined in
accordance with GAAP) $ 7. Goodwill impairment $ 8. Change in Deferred Revenue $
9. Change in deferred commissions $ 10. items related to the litigation with
Google Inc.

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3 11. restructuring and related wind down costs, consulting and other related
costs associated with development and implementation of Borrower’s revised
business strategy, severance costs and transaction and other costs associated
with mergers and acquisitions (not to exceed an aggregate amount, when added to
the adjustments listed in line 12, of $8,500,000 for the twelve (12) month
period following the Fifth Amendment Effective Date) $ 12. adjustments related
to recording the non-cash tax valuation allowance for deferred tax assets (not
to exceed an aggregate amount, when added to the costs listed in line 11, of
$8,500,000 for the twelve (12) month period following the Fifth Amendment
Effective Date) $ 13. Total Line B: The sum of lines 1 through 8 minus lines 9
through 12 $ C. ADJUSTED EBITDA (line A plus line B) $ Is line C at least (loss
not worse than) $______________? No, not in compliance Yes, in compliance

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4 EXHIBIT E FINANCIAL COVENANTS Achieve on a consolidated basis with respect to
Ultimate Parent and its Subsidiaries: (a) Liquidity. Maintain at all times, to
be certified to Bank as of the last day of each month, Liquidity equal to or
greater than Twelve Million Five Hundred Thousand Dollars ($12,500,000). (b)
Adjusted EBITDA. Adjusted EBITDA, measured on a cumulative basis as of the end
of each fiscal quarter during the periods specified below, of at least (loss not
worse than) the following: Period Adjusted EBITDA Three (3) month period ending
March 31, 2016 ($17,500,000) Six (6) month period ending June 30, 2016
($24,500,000) Nine (9) month period ending September 30, 2016 ($14,000,000)
Twelve (12) month period ending December 31, 2016 ($9,000,000) Twelve (12) month
period ending March 31, 2017, and quarterly for each trailing twelve (12) month
period thereafter ($7,500,000) 1954360.5

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