Exhibit 10.2

 

RADVIEW SOFTWARE, INC.

LOAN AND SECURITY AGREEMENT

 

This LOAN AND SECURITY AGREEMENT is entered into as of May 25, 2005, by and
between Comerica Bank (“Bank”) and RADVIEW SOFTWARE, INC. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower.  This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.             DEFINITIONS AND CONSTRUCTION.

 

1.1   DEFINITIONS.  AS USED IN THIS AGREEMENT, ALL CAPITALIZED TERMS SHALL HAVE
THE DEFINITIONS SET FORTH ON EXHIBIT A.  ANY TERM USED IN THE CODE AND NOT
DEFINED HEREIN SHALL HAVE THE MEANING GIVEN TO THE TERM IN THE CODE.

 

1.2   ACCOUNTING TERMS.  ANY ACCOUNTING TERM NOT SPECIFICALLY DEFINED ON EXHIBIT
A SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP AND ALL CALCULATIONS SHALL BE MADE
IN ACCORDANCE WITH GAAP.  THE TERM “FINANCIAL STATEMENTS” SHALL INCLUDE THE
ACCOMPANYING NOTES AND SCHEDULES.

 

2.             LOAN AND TERMS OF PAYMENT.

 

2.1   CREDIT EXTENSIONS.

 

(A)   PROMISE TO PAY.  BORROWER PROMISES TO PAY TO BANK, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE AGGREGATE UNPAID PRINCIPAL AMOUNT OF ALL CREDIT
EXTENSIONS MADE BY BANK TO BORROWER, TOGETHER WITH INTEREST ON THE UNPAID
PRINCIPAL AMOUNT OF SUCH CREDIT EXTENSIONS AT RATES IN ACCORDANCE WITH THE TERMS
HEREOF.

 

(B)   ADVANCES UNDER REVOLVING LINE.

 

(I)            AMOUNT.  SUBJECT TO AND UPON THE TERMS AND CONDITIONS OF THIS
AGREEMENT, (1) BORROWER MAY REQUEST ADVANCES IN AN AGGREGATE OUTSTANDING AMOUNT
NOT TO EXCEED THE LESSER OF (A) THE REVOLVING LINE OR (B) THE BORROWING BASE,
AND (2) AMOUNTS BORROWED PURSUANT TO THIS SECTION 2.1(B) MAY BE REPAID AND
REBORROWED AT ANY TIME PRIOR TO THE REVOLVING MATURITY DATE, AT WHICH TIME ALL
ADVANCES UNDER THIS SECTION 2.1(B) SHALL BE IMMEDIATELY DUE AND PAYABLE. 
BORROWER MAY PREPAY ANY ADVANCES WITHOUT PENALTY OR PREMIUM.

 

(II)           FORM OF REQUEST.  WHENEVER BORROWER DESIRES AN ADVANCE, BORROWER
WILL NOTIFY BANK BY FACSIMILE TRANSMISSION OR TELEPHONE NO LATER THAN 3:00 P.M.
PACIFIC TIME (1:00 P.M. PACIFIC TIME FOR WIRE TRANSFERS), ON THE BUSINESS DAY
THAT THE ADVANCE IS TO BE MADE.  EACH SUCH NOTIFICATION SHALL BE PROMPTLY
CONFIRMED BY A PAYMENT/ADVANCE FORM IN SUBSTANTIALLY THE FORM OF EXHIBIT C. 
BANK IS AUTHORIZED TO MAKE ADVANCES UNDER THIS AGREEMENT, BASED UPON
INSTRUCTIONS RECEIVED

 

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FROM A RESPONSIBLE OFFICER OR A DESIGNEE OF A RESPONSIBLE OFFICER, OR WITHOUT
INSTRUCTIONS IF IN BANK’S DISCRETION SUCH ADVANCES ARE NECESSARY TO MEET
OBLIGATIONS WHICH HAVE BECOME DUE AND REMAIN UNPAID.  BANK SHALL BE ENTITLED TO
RELY ON ANY TELEPHONIC NOTICE GIVEN BY A PERSON WHO BANK REASONABLY BELIEVES TO
BE A RESPONSIBLE OFFICER OR A DESIGNEE THEREOF, AND BORROWER SHALL INDEMNIFY AND
HOLD BANK HARMLESS FOR ANY DAMAGES OR LOSS SUFFERED BY BANK AS A RESULT OF SUCH
RELIANCE.  BANK WILL CREDIT THE AMOUNT OF ADVANCES MADE UNDER THIS
SECTION 2.1(B) TO BORROWER’S DEPOSIT ACCOUNT.

 

2.2   OVERADVANCES.  IF THE AGGREGATE AMOUNT OF THE OUTSTANDING ADVANCES EXCEEDS
THE LESSER OF THE REVOLVING LINE OR THE BORROWING BASE AT ANY TIME, BORROWER
SHALL IMMEDIATELY PAY TO BANK, IN CASH, THE AMOUNT OF SUCH EXCESS.

 

2.3   INTEREST RATES, PAYMENTS, AND CALCULATIONS.

 

(A)   INTEREST RATES.

 

(I)            ADVANCES.  EXCEPT AS SET FORTH IN SECTION 2.3(B), THE ADVANCES
SHALL BEAR INTEREST, ON THE OUTSTANDING DAILY BALANCE THEREOF, AT A VARIABLE
RATE EQUAL TO 1.25% ABOVE THE PRIME RATE.

 

(B)   LATE FEE; DEFAULT RATE.  IF ANY PAYMENT IS NOT MADE WITHIN 10 DAYS AFTER
THE DATE SUCH PAYMENT IS DUE, BORROWER SHALL PAY BANK A LATE FEE EQUAL TO THE
LESSER OF (I) 5% OF THE AMOUNT OF SUCH UNPAID AMOUNT OR (II) THE MAXIMUM AMOUNT
PERMITTED TO BE CHARGED UNDER APPLICABLE LAW.  ALL OBLIGATIONS SHALL BEAR
INTEREST, FROM AND AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT, AT A RATE EQUAL TO 5 PERCENTAGE POINTS ABOVE THE INTEREST RATE
APPLICABLE IMMEDIATELY PRIOR TO THE OCCURRENCE OF THE EVENT OF DEFAULT.

 

(C)   PAYMENTS.  INTEREST HEREUNDER SHALL BE DUE AND PAYABLE ON THE FIRST
CALENDAR DAY OF EACH MONTH DURING THE TERM HEREOF.  BANK SHALL, AT ITS OPTION,
CHARGE SUCH INTEREST, ALL BANK EXPENSES, AND ALL PERIODIC PAYMENTS AGAINST ANY
OF BORROWER’S DEPOSIT ACCOUNTS OR AGAINST THE REVOLVING LINE, IN WHICH CASE
THOSE AMOUNTS SHALL THEREAFTER ACCRUE INTEREST AT THE RATE THEN APPLICABLE
HEREUNDER.  ANY INTEREST NOT PAID WHEN DUE SHALL BE COMPOUNDED BY BECOMING A
PART OF THE OBLIGATIONS, AND SUCH INTEREST SHALL THEREAFTER ACCRUE INTEREST AT
THE RATE THEN APPLICABLE HEREUNDER.  ALL PAYMENTS SHALL BE FREE AND CLEAR OF ANY
TAXES, WITHHOLDINGS, DUTIES, IMPOSITIONS OR OTHER CHARGES, TO THE END THAT BANK
WILL RECEIVE THE ENTIRE AMOUNT OF ANY OBLIGATIONS PAYABLE HEREUNDER, REGARDLESS
OF SOURCE OF PAYMENT.

 

(D)   COMPUTATION.  IN THE EVENT THE PRIME RATE IS CHANGED FROM TIME TO TIME
HEREAFTER, THE APPLICABLE RATE OF INTEREST HEREUNDER SHALL BE INCREASED OR
DECREASED, EFFECTIVE AS OF THE DAY THE PRIME RATE IS CHANGED, BY AN AMOUNT EQUAL
TO SUCH CHANGE IN THE PRIME RATE.  ALL INTEREST CHARGEABLE UNDER THE LOAN
DOCUMENTS SHALL BE COMPUTED ON THE BASIS OF A 360 DAY YEAR FOR THE ACTUAL NUMBER
OF DAYS ELAPSED.

 

2.4   CREDITING PAYMENTS.  PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT, BANK
SHALL CREDIT A WIRE TRANSFER OF FUNDS, CHECK OR OTHER ITEM OF PAYMENT TO SUCH
DEPOSIT ACCOUNT OR OBLIGATION AS BORROWER SPECIFIES, EXCEPT THAT TO THE EXTENT
BORROWER USES THE ADVANCES TO PURCHASE COLLATERAL, BORROWER’S REPAYMENT OF THE
ADVANCES SHALL APPLY ON A “FIRST-IN-FIRST-OUT” BASIS SO THAT THE PORTION OF THE
ADVANCES USED TO PURCHASE A PARTICULAR ITEM OF COLLATERAL SHALL BE PAID IN THE
CHRONOLOGICAL ORDER THE BORROWER PURCHASED THE COLLATERAL.  AFTER THE OCCURRENCE
OF AN EVENT OF DEFAULT, BANK SHALL HAVE THE RIGHT, IN ITS SOLE DISCRETION, TO
IMMEDIATELY APPLY ANY WIRE TRANSFER OF FUNDS, CHECK, OR OTHER ITEM OF PAYMENT
BANK MAY RECEIVE TO CONDITIONALLY REDUCE OBLIGATIONS, BUT SUCH APPLICATIONS OF
FUNDS SHALL NOT BE CONSIDERED A PAYMENT ON ACCOUNT UNLESS SUCH PAYMENT IS OF
IMMEDIATELY AVAILABLE FEDERAL FUNDS OR UNLESS AND UNTIL SUCH CHECK OR OTHER ITEM
OF PAYMENT IS HONORED WHEN PRESENTED FOR PAYMENT.

 

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NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY WIRE TRANSFER OR
PAYMENT RECEIVED BY BANK AFTER 12:00 NOON PACIFIC TIME SHALL BE DEEMED TO HAVE
BEEN RECEIVED BY BANK AS OF THE OPENING OF BUSINESS ON THE IMMEDIATELY FOLLOWING
BUSINESS DAY.  WHENEVER ANY PAYMENT TO BANK UNDER THE LOAN DOCUMENTS WOULD
OTHERWISE BE DUE (EXCEPT BY REASON OF ACCELERATION) ON A DATE THAT IS NOT A
BUSINESS DAY, SUCH PAYMENT SHALL INSTEAD BE DUE ON THE NEXT BUSINESS DAY, AND
ADDITIONAL FEES OR INTEREST, AS THE CASE MAY BE, SHALL ACCRUE AND BE PAYABLE FOR
THE PERIOD OF SUCH EXTENSION.

 

2.5   FEES.  BORROWER SHALL PAY TO BANK THE FOLLOWING:

 

(A)   FACILITY FEE.  ON THE CLOSING DATE, A FEE EQUAL TO $12,500 (INCLUDING
$5,000 OF WHICH BANK RECEIVED BEFORE THE CLOSING DATE), WHICH SHALL BE
NONREFUNDABLE;

 

(B)   BANK EXPENSES.  ON THE CLOSING DATE, ALL BANK EXPENSES INCURRED THROUGH
THE CLOSING DATE, AND, AFTER THE CLOSING DATE, ALL BANK EXPENSES, AS AND WHEN
THEY BECOME DUE.

 

2.6   TERM.  THIS AGREEMENT SHALL BECOME EFFECTIVE ON THE CLOSING DATE AND,
SUBJECT TO SECTION 13.7, SHALL CONTINUE IN FULL FORCE AND EFFECT FOR SO LONG AS
ANY OBLIGATIONS REMAIN OUTSTANDING OR BANK HAS ANY OBLIGATION TO MAKE CREDIT
EXTENSIONS UNDER THIS AGREEMENT.  NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE
THE RIGHT TO TERMINATE ITS OBLIGATION TO MAKE CREDIT EXTENSIONS UNDER THIS
AGREEMENT IMMEDIATELY AND WITHOUT NOTICE UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT.

 

2.7   LOCKBOX.  AS OF THE DATE WHICH IS 90 DAYS AFTER THE CLOSING DATE, BORROWER
SHALL OPEN AND SHALL THEREAFTER MAINTAIN A LOCKBOX AT BANK (THE “LOCKBOX”). 
ONCE OPENED, BORROWER SHALL AT ALL TIMES THEREAFTER, UNLESS OTHERWISE DIRECTED
BY BANK IN WRITING, CAUSE ALL REMITTANCES MADE BY ANY ACCOUNT DEBTOR FOR ANY
ACCOUNTS TO BE MADE TO THE LOCKBOX.  UNLESS OTHERWISE DIRECTED BY BANK IN
WRITING, ALL INVOICES AND OTHER INSTRUCTIONS SUBMITTED BY BORROWER TO AN ACCOUNT
DEBTOR RELATING TO ACCOUNT PAYMENTS SHALL DESIGNATE THE LOCKBOX AS THE PLACE TO
WHICH SUCH PAYMENTS SHALL BE MADE.

 

3.             CONDITIONS OF LOANS.

 

3.1   CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.  THE OBLIGATION OF BANK
TO MAKE THE INITIAL CREDIT EXTENSION IS SUBJECT TO THE CONDITION PRECEDENT THAT
BANK SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO BANK, THE
FOLLOWING:

 

(A)   THIS AGREEMENT;

 

(B)   AN OFFICER’S CERTIFICATE OF BORROWER WITH RESPECT TO INCUMBENCY AND
RESOLUTIONS AUTHORIZING THE EXECUTION AND DELIVERY OF THIS AGREEMENT;

 

(C)   A FINANCING STATEMENT;

 

(D)   AN INTELLECTUAL PROPERTY SECURITY AGREEMENT;

 

(E)   UNCONDITIONAL GUARANTIES AND INCUMBENCY CERTIFICATES, WITH RESOLUTIONS TO
GUARANTEE, AND IN THE CASE OF PARENT, GRANT A SECURITY INTEREST IN COLLATERAL,
FROM PARENT, RADVIEW SOFTWARE (UK) LTD., AND RADVIEW SOFTWARE GMBH;

 

(F)    A THIRD PARTY SECURITY AGREEMENT, INTELLECTUAL PROPERTY SECURITY
AGREEMENT, SHARE PLEDGE AGREEMENT AND STOCK POWERS (WITH RESPECT TO SHARES OF
STOCK OF BORROWER), AND SUBORDINATION AGREEMENT FROM PARENT;

 

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(G)   EVIDENCE OF TERMINATION OF PARENT’S DEBENTURE IN FAVOR OF BANK HAPOALIM,
EVIDENCE OF CANCELLATION AND TERMINATION OF ANY REGISTERED PLEDGE AGAINST PARENT
IN FAVOR OF BANK HAPOALIM, AND REQUISITE CONSENTS FROM THE INVESTMENT CENTER OF
THE ISRAELI MINISTRY OF INDUSTRY AND TRADE;

 

(H)   SHARE CERTIFICATES EVIDENCING 100% OF OUTSTANDING STOCK OF BORROWER;

 

(I)    AGREEMENT TO PROVIDE INSURANCE;

 

(J)    PAYMENT OF THE FEES AND BANK EXPENSES THEN DUE SPECIFIED IN SECTION 2.5;

 

(K)   CURRENT SOS REPORTS INDICATING THAT EXCEPT FOR PERMITTED LIENS, THERE ARE
NO OTHER SECURITY INTERESTS OR LIENS OF RECORD IN THE COLLATERAL;

 

(L)    AN AUDIT OF THE COLLATERAL, THE RESULTS OF WHICH SHALL BE SATISFACTORY TO
BANK;

 

(M)  CURRENT FINANCIAL STATEMENTS, INCLUDING AUDITED STATEMENTS FOR PARENT’S
MOST RECENTLY ENDED FISCAL YEAR, TOGETHER WITH AN UNQUALIFIED OPINION, COMPANY
PREPARED CONSOLIDATED AND CONSOLIDATING BALANCE SHEETS AND INCOME STATEMENTS FOR
THE MOST RECENTLY ENDED MONTH IN ACCORDANCE WITH SECTION 6.2, AND SUCH OTHER
UPDATED FINANCIAL INFORMATION AS BANK MAY REASONABLY REQUEST;

 

(N)   CURRENT COMPLIANCE CERTIFICATE IN ACCORDANCE WITH SECTION 6.2;

 

(O)   A WARRANT TO PURCHASE PARENT’S ORDINARY SHARES IN FORM AND SUBSTANCE
SATISFACTORY TO BANK; AND

 

(P)   SUCH OTHER DOCUMENTS OR CERTIFICATES, AND COMPLETION OF SUCH OTHER
MATTERS, AS BANK MAY REASONABLY DEEM NECESSARY OR APPROPRIATE.

 

3.2   CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.  THE OBLIGATION OF BANK TO
MAKE EACH CREDIT EXTENSION, INCLUDING THE INITIAL CREDIT EXTENSION, IS FURTHER
SUBJECT TO THE FOLLOWING CONDITIONS:

 

(A)   TIMELY RECEIPT BY BANK OF THE PAYMENT/ADVANCE FORM AS PROVIDED IN SECTION
2.1; AND

 

(B)   THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 5 SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE DATE OF SUCH
PAYMENT/ADVANCE FORM AND ON THE EFFECTIVE DATE OF EACH CREDIT EXTENSION AS
THOUGH MADE AT AND AS OF EACH SUCH DATE, AND NO EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING, OR WOULD EXIST AFTER GIVING EFFECT TO SUCH CREDIT
EXTENSION (PROVIDED, HOWEVER, THAT THOSE REPRESENTATIONS AND WARRANTIES
EXPRESSLY REFERRING TO ANOTHER DATE SHALL BE TRUE, CORRECT AND COMPLETE IN ALL
MATERIAL RESPECTS AS OF SUCH DATE).  THE MAKING OF EACH CREDIT EXTENSION SHALL
BE DEEMED TO BE A REPRESENTATION AND WARRANTY BY BORROWER ON THE DATE OF SUCH
CREDIT EXTENSION AS TO THE ACCURACY OF THE FACTS REFERRED TO IN THIS SECTION
3.2.

 

4.             CREATION OF SECURITY INTEREST.

 

4.1   GRANT OF SECURITY INTEREST.  BORROWER GRANTS AND PLEDGES TO BANK A
CONTINUING SECURITY INTEREST IN THE COLLATERAL TO SECURE PROMPT REPAYMENT OF ANY
AND ALL OBLIGATIONS AND TO SECURE PROMPT PERFORMANCE BY BORROWER OF EACH OF ITS
COVENANTS AND DUTIES UNDER THE LOAN DOCUMENTS.  EXCEPT AS SET FORTH IN THE
SCHEDULE, SUCH SECURITY INTEREST CONSTITUTES A VALID, FIRST PRIORITY SECURITY
INTEREST IN THE PRESENTLY EXISTING COLLATERAL, AND WILL CONSTITUTE A VALID,
FIRST PRIORITY SECURITY INTEREST IN LATER-ACQUIRED

 

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COLLATERAL.  NOTWITHSTANDING ANY TERMINATION, BANK’S LIEN ON THE COLLATERAL
SHALL REMAIN IN EFFECT FOR SO LONG AS ANY OBLIGATIONS ARE OUTSTANDING.

 

4.2   PERFECTION OF SECURITY INTEREST.  BORROWER AUTHORIZES BANK TO FILE AT ANY
TIME FINANCING STATEMENTS, CONTINUATION STATEMENTS, AND AMENDMENTS THERETO THAT
(I) EITHER SPECIFICALLY DESCRIBE THE COLLATERAL OR DESCRIBE THE COLLATERAL AS
ALL ASSETS OF BORROWER OF THE KIND PLEDGED HEREUNDER, AND (II) CONTAIN ANY OTHER
INFORMATION REQUIRED BY THE CODE FOR THE SUFFICIENCY OF FILING OFFICE ACCEPTANCE
OF ANY FINANCING STATEMENT, CONTINUATION STATEMENT, OR AMENDMENT, INCLUDING
WHETHER BORROWER IS AN ORGANIZATION, THE TYPE OF ORGANIZATION AND ANY
ORGANIZATIONAL IDENTIFICATION NUMBER ISSUED TO BORROWER, IF APPLICABLE.  ANY
SUCH FINANCING STATEMENTS MAY BE SIGNED BY BANK ON BEHALF OF BORROWER, AS
PROVIDED IN THE CODE, AND MAY BE FILED AT ANY TIME IN ANY JURISDICTION WHETHER
OR NOT REVISED ARTICLE 9 OF THE CODE IS THEN IN EFFECT IN THAT JURISDICTION. 
BORROWER SHALL FROM TIME TO TIME ENDORSE AND DELIVER TO BANK, AT THE REQUEST OF
BANK, ALL NEGOTIABLE COLLATERAL AND OTHER DOCUMENTS THAT BANK MAY REASONABLY
REQUEST, IN FORM SATISFACTORY TO BANK, TO PERFECT AND CONTINUE PERFECTED BANK’S
SECURITY INTERESTS IN THE COLLATERAL AND IN ORDER TO FULLY CONSUMMATE ALL OF THE
TRANSACTIONS CONTEMPLATED UNDER THE LOAN DOCUMENTS.  BORROWER SHALL HAVE
POSSESSION OF THE COLLATERAL, EXCEPT WHERE EXPRESSLY OTHERWISE PROVIDED IN THIS
AGREEMENT OR WHERE BANK CHOOSES TO PERFECT ITS SECURITY INTEREST BY POSSESSION
IN ADDITION TO THE FILING OF A FINANCING STATEMENT.  WHERE COLLATERAL IS IN
POSSESSION OF A THIRD PARTY BAILEE, BORROWER SHALL TAKE SUCH STEPS AS BANK
REASONABLY REQUESTS FOR BANK TO (I) OBTAIN AN ACKNOWLEDGMENT, IN FORM AND
SUBSTANCE SATISFACTORY TO BANK, OF THE BAILEE THAT THE BAILEE HOLDS SUCH
COLLATERAL FOR THE BENEFIT OF BANK, (II) OBTAIN “CONTROL” OF ANY COLLATERAL
CONSISTING OF INVESTMENT PROPERTY, DEPOSIT ACCOUNTS, LETTER-OF-CREDIT RIGHTS OR
ELECTRONIC CHATTEL PAPER (AS SUCH ITEMS AND THE TERM “CONTROL” ARE DEFINED IN
REVISED ARTICLE 9 OF THE CODE) BY CAUSING THE SECURITIES INTERMEDIARY OR
DEPOSITARY INSTITUTION OR ISSUING BANK TO EXECUTE A CONTROL AGREEMENT IN FORM
AND SUBSTANCE SATISFACTORY TO BANK.  BORROWER WILL NOT CREATE ANY CHATTEL PAPER
WITHOUT PLACING A LEGEND ON THE CHATTEL PAPER ACCEPTABLE TO BANK INDICATING THAT
BANK HAS A SECURITY INTEREST IN THE CHATTEL PAPER.  BORROWER FROM TIME TO TIME
MAY DEPOSIT WITH BANK SPECIFIC CASH COLLATERAL TO SECURE SPECIFIC OBLIGATIONS;
BORROWER AUTHORIZES BANK TO HOLD SUCH SPECIFIC BALANCES IN PLEDGE AND TO DECLINE
TO HONOR ANY DRAFTS THEREON OR ANY REQUEST BY BORROWER OR ANY OTHER PERSON TO
PAY OR OTHERWISE TRANSFER ANY PART OF SUCH BALANCES FOR SO LONG AS THE SPECIFIC
OBLIGATIONS ARE OUTSTANDING.

 

4.3   RIGHT TO INSPECT.  BANK (THROUGH ANY OF ITS OFFICERS, EMPLOYEES, OR
AGENTS) SHALL HAVE THE RIGHT, UPON REASONABLE PRIOR NOTICE, FROM TIME TO TIME
DURING BORROWER’S USUAL BUSINESS HOURS BUT NO MORE THAN TWICE A YEAR (UNLESS AN
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING), TO INSPECT BORROWER’S BOOKS
AND TO MAKE COPIES THEREOF AND TO CHECK, TEST, AND APPRAISE THE COLLATERAL IN
ORDER TO VERIFY BORROWER’S FINANCIAL CONDITION OR THE AMOUNT, CONDITION OF, OR
ANY OTHER MATTER RELATING TO, THE COLLATERAL.

 

5.             REPRESENTATIONS AND WARRANTIES.

 

BORROWER REPRESENTS AND WARRANTS AS FOLLOWS:

 

5.1   DUE ORGANIZATION AND QUALIFICATION.  BORROWER AND EACH SUBSIDIARY IS A
CORPORATION DULY EXISTING UNDER THE LAWS OF THE STATE IN WHICH IT IS
INCORPORATED AND QUALIFIED AND LICENSED TO DO BUSINESS IN ANY STATE IN WHICH THE
CONDUCT OF ITS BUSINESS OR ITS OWNERSHIP OF PROPERTY REQUIRES THAT IT BE SO
QUALIFIED, EXCEPT WHERE THE FAILURE TO DO SO WOULD NOT REASONABLY BE EXPECTED TO
CAUSE A MATERIAL ADVERSE EFFECT.

 

5.2   DUE AUTHORIZATION; NO CONFLICT.  THE EXECUTION, DELIVERY, AND PERFORMANCE
OF THE LOAN DOCUMENTS ARE WITHIN BORROWER’S POWERS, HAVE BEEN DULY AUTHORIZED,
AND ARE NOT IN CONFLICT WITH NOR CONSTITUTE A BREACH OF ANY PROVISION CONTAINED
IN BORROWER’S ARTICLES OF INCORPORATION OR BYLAWS, NOR WILL THEY CONSTITUTE AN
EVENT OF DEFAULT UNDER ANY MATERIAL AGREEMENT BY WHICH BORROWER IS BOUND.

 

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BORROWER IS NOT IN DEFAULT UNDER ANY AGREEMENT BY WHICH IT IS BOUND, EXCEPT TO
THE EXTENT SUCH DEFAULT WOULD NOT REASONABLY BE EXPECTED TO CAUSE A MATERIAL
ADVERSE EFFECT.

 

5.3   COLLATERAL.  BORROWER HAS RIGHTS IN OR THE POWER TO TRANSFER THE
COLLATERAL, AND ITS TITLE TO THE COLLATERAL IS FREE AND CLEAR OF LIENS, ADVERSE
CLAIMS, AND RESTRICTIONS ON TRANSFER OR PLEDGE EXCEPT FOR PERMITTED LIENS.  ALL
COLLATERAL IS LOCATED SOLELY IN THE COLLATERAL STATES.  THE ELIGIBLE ACCOUNTS
ARE BONA FIDE EXISTING OBLIGATIONS.  OTHER THAN MAINTENANCE RELATED CONTRACTS
THAT ARE BILLED IN ADVANCE, THE PROPERTY OR SERVICES GIVING RISE TO SUCH
ELIGIBLE ACCOUNTS HAS BEEN DELIVERED OR RENDERED TO THE ACCOUNT DEBTOR OR ITS
AGENT FOR IMMEDIATE SHIPMENT TO AND UNCONDITIONAL ACCEPTANCE BY THE ACCOUNT
DEBTOR.  BORROWER HAS NOT RECEIVED NOTICE OF ACTUAL OR IMMINENT INSOLVENCY
PROCEEDING OF ANY ACCOUNT DEBTOR WHOSE ACCOUNTS ARE INCLUDED IN ANY BORROWING
BASE CERTIFICATE AS AN ELIGIBLE ACCOUNT.  ALL INVENTORY IS IN ALL MATERIAL
RESPECTS OF GOOD AND MERCHANTABLE QUALITY, FREE FROM ALL MATERIAL DEFECTS,
EXCEPT FOR INVENTORY FOR WHICH ADEQUATE RESERVES HAVE BEEN MADE.  EXCEPT AS SET
FORTH IN THE SCHEDULE, NONE OF THE COLLATERAL IS MAINTAINED OR INVESTED WITH A
PERSON OTHER THAN BANK OR BANK’S AFFILIATES.

 

5.4   INTELLECTUAL PROPERTY COLLATERAL.  BORROWER IS THE SOLE OWNER OF THE
INTELLECTUAL PROPERTY COLLATERAL, EXCEPT FOR LICENSES GRANTED BY BORROWER TO ITS
CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS.  TO THE BEST OF BORROWER’S
KNOWLEDGE, EACH OF THE COPYRIGHTS, TRADEMARKS AND PATENTS IS VALID AND
ENFORCEABLE, AND NO PART OF THE INTELLECTUAL PROPERTY COLLATERAL HAS BEEN JUDGED
INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART, AND NO CLAIM HAS BEEN MADE TO
BORROWER THAT ANY PART OF THE INTELLECTUAL PROPERTY COLLATERAL VIOLATES THE
RIGHTS OF ANY THIRD PARTY EXCEPT TO THE EXTENT SUCH CLAIM WOULD NOT REASONABLY
BE EXPECTED TO CAUSE A MATERIAL ADVERSE EFFECT.  EXCEPT AS SET FORTH IN THE
SCHEDULE, BORROWER’S RIGHTS AS A LICENSEE OF INTELLECTUAL PROPERTY DO NOT GIVE
RISE TO MORE THAN 5% OF ITS GROSS REVENUE IN ANY GIVEN MONTH, INCLUDING WITHOUT
LIMITATION REVENUE DERIVED FROM THE SALE, LICENSING, RENDERING OR DISPOSITION OF
ANY PRODUCT OR SERVICE.

 

5.5   NAME; LOCATION OF CHIEF EXECUTIVE OFFICE.  EXCEPT AS DISCLOSED IN THE
SCHEDULE, BORROWER HAS NOT DONE BUSINESS UNDER ANY NAME OTHER THAN THAT
SPECIFIED ON THE SIGNATURE PAGE HEREOF, AND ITS EXACT LEGAL NAME IS AS SET FORTH
IN THE FIRST PARAGRAPH OF THIS AGREEMENT.  THE CHIEF EXECUTIVE OFFICE OF
BORROWER IS LOCATED IN THE CHIEF EXECUTIVE OFFICE STATE AT THE ADDRESS INDICATED
IN SECTION 10 HEREOF.

 

5.6   LITIGATION.  EXCEPT AS SET FORTH IN THE SCHEDULE, THERE ARE NO ACTIONS OR
PROCEEDINGS PENDING BY OR AGAINST BORROWER OR ANY SUBSIDIARY BEFORE ANY COURT OR
ADMINISTRATIVE AGENCY IN WHICH AN ADVERSE DECISION WOULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

 

5.7   NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.  ALL CONSOLIDATED AND
CONSOLIDATING FINANCIAL STATEMENTS RELATED TO ANY OF THE BORROWER PARTIES THAT
ARE DELIVERED BY OR ON BEHALF OF ANY BORROWER PARTY TO BANK FAIRLY PRESENT IN
ALL MATERIAL RESPECTS BORROWER’S AND PARENT’S CONSOLIDATED AND CONSOLIDATING
FINANCIAL CONDITION AS OF THE DATE THEREOF AND BORROWER’S AND PARENT’S
CONSOLIDATED AND CONSOLIDATING RESULTS OF OPERATIONS FOR THE PERIOD THEN ENDED. 
THERE HAS NOT BEEN A MATERIAL ADVERSE CHANGE IN THE CONSOLIDATED OR IN THE
CONSOLIDATING FINANCIAL CONDITION OF BORROWER SINCE THE DATE OF THE MOST RECENT
OF SUCH FINANCIAL STATEMENTS SUBMITTED TO BANK.

 

5.8   SOLVENCY, PAYMENT OF DEBTS.  BORROWER IS ABLE TO PAY ITS DEBTS (INCLUDING
TRADE DEBTS) AS THEY MATURE; THE FAIR SALEABLE VALUE OF BORROWER’S ASSETS
(INCLUDING GOODWILL MINUS DISPOSITION COSTS) EXCEEDS THE FAIR VALUE OF ITS
LIABILITIES (EXCLUDING INTERCOMPANY LIABILITIES TO PARENT); AND BORROWER IS NOT
LEFT WITH UNREASONABLY SMALL CAPITAL AFTER THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

5.9   COMPLIANCE WITH LAWS AND REGULATIONS.  BORROWER AND EACH SUBSIDIARY HAVE
MET THE MINIMUM FUNDING REQUIREMENTS OF ERISA WITH RESPECT TO ANY EMPLOYEE
BENEFIT PLANS SUBJECT TO ERISA.  NO EVENT HAS OCCURRED RESULTING FROM BORROWER’S
FAILURE TO COMPLY WITH ERISA THAT IS REASONABLY LIKELY

 

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TO RESULT IN BORROWER’S INCURRING ANY LIABILITY THAT COULD HAVE A MATERIAL
ADVERSE EFFECT.  BORROWER IS NOT AN “INVESTMENT COMPANY” OR A COMPANY
“CONTROLLED” BY AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE INVESTMENT
COMPANY ACT OF 1940.  BORROWER IS NOT ENGAGED PRINCIPALLY, OR AS ONE OF THE
IMPORTANT ACTIVITIES, IN THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF
PURCHASING OR CARRYING MARGIN STOCK (WITHIN THE MEANING OF REGULATIONS T AND U
OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM).  BORROWER HAS COMPLIED
IN ALL MATERIAL RESPECTS WITH ALL THE PROVISIONS OF THE FEDERAL FAIR LABOR
STANDARDS ACT.  BORROWER IS IN COMPLIANCE WITH ALL ENVIRONMENTAL LAWS,
REGULATIONS AND ORDINANCES EXCEPT WHERE THE FAILURE TO COMPLY IS NOT REASONABLY
LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  BORROWER HAS NOT VIOLATED ANY
STATUTES, LAWS, ORDINANCES OR RULES APPLICABLE TO IT, THE VIOLATION OF WHICH
WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.  BORROWER AND
EACH SUBSIDIARY HAVE FILED OR CAUSED TO BE FILED ALL TAX RETURNS REQUIRED TO BE
FILED, AND HAVE PAID, OR HAVE MADE ADEQUATE PROVISION FOR THE PAYMENT OF, ALL
TAXES REFLECTED THEREIN EXCEPT THOSE BEING CONTESTED IN GOOD FAITH WITH ADEQUATE
RESERVES UNDER GAAP OR WHERE THE FAILURE TO FILE SUCH RETURNS OR PAY SUCH TAXES
WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

5.10 SUBSIDIARIES.  BORROWER DOES NOT OWN ANY STOCK, PARTNERSHIP INTEREST OR
OTHER EQUITY SECURITIES OF ANY PERSON, EXCEPT FOR PERMITTED INVESTMENTS.

 

5.11 GOVERNMENT CONSENTS.  BORROWER AND EACH SUBSIDIARY HAVE OBTAINED ALL
CONSENTS, APPROVALS AND AUTHORIZATIONS OF, MADE ALL DECLARATIONS OR FILINGS
WITH, AND GIVEN ALL NOTICES TO, ALL GOVERNMENTAL AUTHORITIES THAT ARE NECESSARY
FOR THE CONTINUED OPERATION OF BORROWER’S BUSINESS AS CURRENTLY CONDUCTED,
EXCEPT WHERE THE FAILURE TO DO SO WOULD NOT REASONABLY BE EXPECTED TO CAUSE A
MATERIAL ADVERSE EFFECT.

 

5.12 INBOUND LICENSES.  EXCEPT AS DISCLOSED ON THE SCHEDULE, OR AFTER THE DATE
OF THIS AGREEMENT, AS DISCLOSED IN WRITING TO BANK, BORROWER IS NOT A PARTY TO,
NOR IS BOUND BY: (A) ANY AGREEMENT THAT PROHIBITS OR OTHERWISE RESTRICTS
BORROWER FROM GRANTING A SECURITY INTEREST IN BORROWER’S INTEREST ANY OF ITS
PROPERTY; OR (B) ANY MATERIAL LICENSE.

 

5.13 FULL DISCLOSURE.  NO REPRESENTATION, WARRANTY OR OTHER STATEMENT MADE BY
BORROWER IN ANY CERTIFICATE OR WRITTEN STATEMENT FURNISHED TO BANK TAKEN
TOGETHER WITH ALL SUCH CERTIFICATES AND WRITTEN STATEMENTS FURNISHED TO BANK
CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED IN SUCH CERTIFICATES OR
STATEMENTS NOT MISLEADING, IT BEING RECOGNIZED BY BANK THAT THE PROJECTIONS AND
FORECASTS PROVIDED BY BORROWER IN GOOD FAITH AND BASED UPON REASONABLE
ASSUMPTIONS ARE NOT TO BE VIEWED AS FACTS AND THAT ACTUAL RESULTS DURING THE
PERIOD OR PERIODS COVERED BY ANY SUCH PROJECTIONS AND FORECASTS MAY MATERIALLY
DIFFER FROM THE PROJECTED OR FORECASTED RESULTS.

 

6.             AFFIRMATIVE COVENANTS.

 

BORROWER COVENANTS THAT, UNTIL PAYMENT IN FULL OF ALL OUTSTANDING OBLIGATIONS,
AND FOR SO LONG AS BANK MAY HAVE ANY COMMITMENT TO MAKE A CREDIT EXTENSION
HEREUNDER, BORROWER SHALL DO ALL OF THE FOLLOWING:

 

6.1   GOOD STANDING AND GOVERNMENT COMPLIANCE.  BORROWER SHALL MAINTAIN ITS AND
EACH OF ITS SUBSIDIARIES’ CORPORATE EXISTENCE AND GOOD STANDING IN THE BORROWER
STATE, SHALL MAINTAIN QUALIFICATION AND GOOD STANDING IN EACH OTHER JURISDICTION
IN WHICH THE FAILURE TO SO QUALIFY WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT, AND SHALL FURNISH TO BANK THE ORGANIZATIONAL
IDENTIFICATION NUMBER ISSUED TO BORROWER BY THE AUTHORITIES OF THE STATE IN
WHICH BORROWER IS ORGANIZED, IF APPLICABLE.  BORROWER SHALL MEET, AND SHALL
CAUSE EACH SUBSIDIARY TO MEET, THE MINIMUM FUNDING REQUIREMENTS OF ERISA WITH
RESPECT TO ANY EMPLOYEE BENEFIT PLANS SUBJECT TO ERISA.  BORROWER SHALL

 

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COMPLY IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE ENVIRONMENTAL LAWS, AND
MAINTAIN ALL MATERIAL PERMITS, LICENSES AND APPROVALS REQUIRED THEREUNDER WHERE
THE FAILURE TO DO SO WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.  BORROWER SHALL COMPLY, AND SHALL CAUSE EACH SUBSIDIARY TO COMPLY, WITH
ALL STATUTES, LAWS, ORDINANCES AND GOVERNMENT RULES AND REGULATIONS TO WHICH IT
IS SUBJECT, AND SHALL MAINTAIN, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES TO
MAINTAIN, IN FORCE ALL LICENSES, APPROVALS AND AGREEMENTS, THE LOSS OF WHICH OR
FAILURE TO COMPLY WITH WHICH WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

 

6.2   FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.  BORROWER SHALL DELIVER TO
BANK AT BOTH THE EL SEGUNDO AND THE BOSTON OFFICES REFERENCED IN SECTION 10: 
(I) AS SOON AS AVAILABLE, BUT IN ANY EVENT WITHIN 45 DAYS AFTER THE END OF EACH
QUARTER, PARENT’S REPORT ON FORM 10-Q FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, AND WITHIN 30 DAYS AFTER THE END OF EACH QUARTER A COMPANY PREPARED
CONSOLIDATED AND CONSOLIDATING BALANCE SHEET AND INCOME STATEMENT COVERING
BORROWER’S AND PARENT’S OPERATIONS DURING SUCH PERIOD, IN A FORM REASONABLY
ACCEPTABLE TO BANK AND CERTIFIED BY A RESPONSIBLE OFFICER; (II) AS SOON AS
AVAILABLE, BUT IN ANY EVENT WITHIN 120 DAYS AFTER THE END OF PARENT’S FISCAL
YEAR, A REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT PREPARED IN
ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED, TOGETHER WITH AN OPINION WHICH IS
UNQUALIFIED OR OTHERWISE CONSENTED TO IN WRITING BY BANK ON SUCH FINANCIAL
STATEMENTS OF AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM REASONABLY
ACCEPTABLE TO BANK; (III) COPIES OF ALL STATEMENTS, REPORTS AND NOTICES SENT OR
MADE AVAILABLE GENERALLY BY BORROWER OR PARENT TO ITS SECURITY HOLDERS OR TO ANY
HOLDERS OF SUBORDINATED DEBT; (IV) PROMPTLY UPON RECEIPT OF NOTICE THEREOF, A
REPORT OF ANY LEGAL ACTIONS PENDING OR THREATENED AGAINST ANY BORROWER PARTY
THAT COULD RESULT IN DAMAGES OR COSTS TO SUCH PERSON OF $250,000 OR MORE; (V)
PROMPTLY UPON RECEIPT, EACH MANAGEMENT LETTER PREPARED BY PARENT’S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTING FIRM REGARDING BORROWER’S OR PARENT’S MANAGEMENT
CONTROL SYSTEMS; (VI) AS SOON AS AVAILABLE, BUT IN ANY EVENT BY DECEMBER 31 OF
EACH YEAR, AN ANNUAL BUDGET AND FORECAST FOR THE FOLLOWING YEAR; (VII) SUCH
BUDGETS, SALES PROJECTIONS, OPERATING PLANS OR OTHER FINANCIAL INFORMATION
GENERALLY PREPARED BY BORROWER IN THE ORDINARY COURSE OF BUSINESS AS BANK MAY
REASONABLY REQUEST FROM TIME TO TIME; AND (VIII) WITHIN 30 DAYS OF THE LAST DAY
OF EACH FISCAL QUARTER, A REPORT SIGNED BY BORROWER, IN FORM REASONABLY
ACCEPTABLE TO BANK, LISTING ANY APPLICATIONS OR REGISTRATIONS THAT BORROWER OR
ANY OTHER BORROWER PARTY HAS MADE OR FILED IN RESPECT OF ANY PATENTS, COPYRIGHTS
OR TRADEMARKS AND THE STATUS OF ANY OUTSTANDING APPLICATIONS OR REGISTRATIONS,
AS WELL AS ANY MATERIAL CHANGE IN BORROWER’S INTELLECTUAL PROPERTY COLLATERAL,
INCLUDING BUT NOT LIMITED TO ANY SUBSEQUENT OWNERSHIP RIGHT OF BORROWER IN OR TO
ANY TRADEMARK, PATENT OR COPYRIGHT NOT SPECIFIED IN EXHIBITS A, B, AND C OF ANY
INTELLECTUAL PROPERTY SECURITY AGREEMENT DELIVERED TO BANK BY BORROWER IN
CONNECTION WITH THIS AGREEMENT.

 

(A)   WITHIN 30 DAYS AFTER THE LAST DAY OF EACH MONTH, BORROWER SHALL DELIVER TO
BANK AT BOTH THE EL SEGUNDO AND THE BOSTON OFFICES REFERENCED IN SECTION 10, (I)
A BORROWING BASE CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER IN SUBSTANTIALLY
THE FORM OF EXHIBIT D HERETO, TOGETHER WITH AGED LISTINGS BY INVOICE DATE OF
ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE AND (II) A COMPLIANCE CERTIFICATE
CERTIFIED AS OF THE LAST DAY OF THE APPLICABLE MONTH AND SIGNED BY A RESPONSIBLE
OFFICER IN SUBSTANTIALLY THE FORM OF EXHIBIT E HERETO.

 

(B)   AS SOON AS POSSIBLE AND IN ANY EVENT WITHIN 3 BUSINESS DAYS AFTER BECOMING
AWARE OF THE OCCURRENCE OR EXISTENCE OF AN EVENT OF DEFAULT HEREUNDER, A WRITTEN
STATEMENT OF A RESPONSIBLE OFFICER SETTING FORTH DETAILS OF THE EVENT OF
DEFAULT, AND THE ACTION WHICH BORROWER HAS TAKEN OR PROPOSES TO TAKE TO REMEDY
SUCH EVENT OF DEFAULT.

 

(C)   BANK SHALL HAVE A RIGHT FROM TIME TO TIME HEREAFTER TO AUDIT BORROWER’S
ACCOUNTS AND APPRAISE COLLATERAL AT BORROWER’S REASONABLE EXPENSE, PROVIDED THAT
SUCH AUDITS WILL BE CONDUCTED NO MORE OFTEN THAN EVERY 6 MONTHS UNLESS AN EVENT
OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

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Borrower or Parent may deliver to Bank on an electronic basis any certificates,
reports or information required pursuant to this Section 6.2, and Bank shall be
entitled to rely on the information contained in the electronic files, provided
that Bank in good faith believes that the files were delivered by a Responsible
Officer.  If Borrower or Parent delivers this information electronically, it
shall also deliver to Bank by U.S. Mail, reputable overnight courier service,
hand delivery, facsimile or .pdf file within 5 Business Days of submission of
the unsigned electronic copy the certification of monthly financial statements,
the intellectual property report, the Borrowing Base Certificate and the
Compliance Certificate, each bearing the physical signature of the Responsible
Officer.

 

6.3   INVENTORY; RETURNS.  BORROWER SHALL KEEP ALL INVENTORY IN GOOD AND
MERCHANTABLE CONDITION, FREE FROM ALL MATERIAL DEFECTS EXCEPT FOR INVENTORY FOR
WHICH ADEQUATE RESERVES HAVE BEEN MADE.  RETURNS AND ALLOWANCES, IF ANY, AS
BETWEEN BORROWER AND ITS ACCOUNT DEBTORS SHALL BE ON THE SAME BASIS AND IN
ACCORDANCE WITH THE USUAL CUSTOMARY PRACTICES OF BORROWER, AS THEY EXIST ON THE
CLOSING DATE.  BORROWER SHALL PROMPTLY NOTIFY BANK OF ALL RETURNS AND RECOVERIES
AND OF ALL DISPUTES AND CLAIMS INVOLVING MORE THAN $100,000.

 

6.4   TAXES.  BORROWER SHALL MAKE, AND CAUSE EACH SUBSIDIARY TO MAKE, DUE AND
TIMELY PAYMENT OR DEPOSIT OF ALL MATERIAL FEDERAL, STATE, AND LOCAL TAXES,
ASSESSMENTS, OR CONTRIBUTIONS REQUIRED OF IT BY LAW, INCLUDING, BUT NOT LIMITED
TO, THOSE LAWS CONCERNING INCOME TAXES, F.I.C.A., F.U.T.A. AND STATE DISABILITY,
AND WILL EXECUTE AND DELIVER TO BANK, ON DEMAND, PROOF SATISFACTORY TO BANK
INDICATING THAT BORROWER OR A SUBSIDIARY HAS MADE SUCH PAYMENTS OR DEPOSITS AND
ANY APPROPRIATE CERTIFICATES ATTESTING TO THE PAYMENT OR DEPOSIT THEREOF;
PROVIDED THAT BORROWER OR A SUBSIDIARY NEED NOT MAKE ANY PAYMENT IF THE AMOUNT
OR VALIDITY OF SUCH PAYMENT IS CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS AND IS RESERVED AGAINST (TO THE EXTENT REQUIRED BY GAAP) BY
BORROWER.

 

6.5   INSURANCE.

 

(A)   BORROWER, AT ITS EXPENSE, SHALL KEEP THE COLLATERAL INSURED, OR SHALL
CAUSE PARENT TO KEEP THE COLLATERAL INSURED UNDER A GLOBAL POLICY FOR ALL
BORROWER PARTIES, AGAINST LOSS OR DAMAGE BY FIRE, THEFT, EXPLOSION, SPRINKLERS,
AND ALL OTHER HAZARDS AND RISKS, AND IN SUCH AMOUNTS, AS ORDINARILY INSURED
AGAINST BY OTHER OWNERS IN SIMILAR BUSINESSES CONDUCTED IN THE LOCATIONS WHERE
BORROWER’S BUSINESS IS CONDUCTED ON THE DATE HEREOF.  BORROWER SHALL ALSO
MAINTAIN, OR SHALL CAUSE PARENT TO MAINTAIN, LIABILITY AND OTHER INSURANCE IN
AMOUNTS AND OF A TYPE THAT ARE CUSTOMARY TO BUSINESSES SIMILAR TO BORROWER’S.

 

(B)   ALL SUCH POLICIES OF INSURANCE SHALL BE IN SUCH FORM, WITH SUCH COMPANIES,
AND IN SUCH AMOUNTS AS REASONABLY SATISFACTORY TO BANK.  ALL POLICIES OF
PROPERTY INSURANCE SHALL CONTAIN A LENDER’S LOSS PAYABLE ENDORSEMENT, IN A FORM
SATISFACTORY TO BANK, SHOWING BANK AS AN ADDITIONAL LOSS PAYEE, AND ALL
LIABILITY INSURANCE POLICIES SHALL SHOW BANK AS AN ADDITIONAL INSURED AND
SPECIFY THAT THE INSURER MUST GIVE AT LEAST 20 DAYS NOTICE TO BANK BEFORE
CANCELING ITS POLICY FOR ANY REASON.  UPON BANK’S REQUEST, BORROWER SHALL
DELIVER TO BANK CERTIFIED COPIES OF THE POLICIES OF INSURANCE AND EVIDENCE OF
ALL PREMIUM PAYMENTS.  IF NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
PROCEEDS PAYABLE UNDER ANY CASUALTY POLICY WILL, AT BORROWER’S OPTION, BE
PAYABLE TO BORROWER TO REPLACE THE PROPERTY SUBJECT TO THE CLAIM, PROVIDED THAT
ANY SUCH REPLACEMENT PROPERTY SHALL BE DEEMED COLLATERAL IN WHICH BANK HAS BEEN
GRANTED A FIRST PRIORITY SECURITY INTEREST.  IF AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, ALL PROCEEDS PAYABLE UNDER ANY SUCH POLICY SHALL, AT BANK’S
OPTION, BE PAYABLE TO BANK TO BE APPLIED ON ACCOUNT OF THE OBLIGATIONS.

 

6.6   PRIMARY DEPOSITORY.  BORROWER SHALL MAINTAIN ALL ITS DEPOSITORY,
OPERATING, AND INVESTMENT ACCOUNTS WITH BANK OR BANK’S AFFILIATES, PROVIDED THAT
BORROWER MAY MAINTAIN UP TO: (A)

 

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$250,000 IN THE AGGREGATE AT BANK OF AMERICA FOR UP TO 90 DAYS AFTER THE CLOSING
DATE; AND (B) $136,000 IN THE AGGREGATE HELD AT JP MORGAN BANK UNTIL AUGUST 15,
2005.

 

6.7   FINANCIAL COVENANTS.  BORROWER SHALL AT ALL TIMES MAINTAIN THE FOLLOWING
FINANCIAL RATIOS AND COVENANTS:

 

(A)   MINIMUM CASH.  A BALANCE OF CASH OF BORROWER: (A) ON THE CLOSING DATE,
PRIOR TO THE INITIAL CREDIT EXTENSION, OF THREE HUNDRED THOUSAND DOLLARS
($300,000), AND (B) AT ALL TIMES FROM AND AFTER THE CLOSING DATE, OF NOT LESS
THAN ONE MILLION TWO HUNDRED THOUSAND DOLLARS ($1,200,000) (THE “REQUIRED
BALANCE”) IN MONEY MARKET ACCOUNT #1892864073 AT BANK; PROVIDED, HOWEVER, UPON
DELIVERY BY PARENT TO BANK OF EXECUTED ACCOUNT CONTROL AND SUBORDINATION
AGREEMENTS IN FAVOR OF BANK, IN FORM AND CONTENT SATISFACTORY TO BANK IN ITS
SOLE DISCRETION, WITH RESPECT TO PARENT’S DEPOSIT AND INVESTMENT ACCOUNTS, THE
REQUIRED BALANCE SHALL BE REDUCED TO ONE MILLION DOLLARS ($1,000,000).  SUCH
MONEY MARKET ACCOUNT AND ALL AMOUNTS HELD THEREIN, TOGETHER WITH ALL PROCEEDS
THEREOF, INTEREST PAID THEREON, AND SUBSTITUTIONS THEREFOR, AND ALL ACCOUNTS,
SECURITIES, INSTRUMENTS, SECURITIES ENTITLEMENTS AND FINANCIAL ASSETS ARISING
OUT OF ANY OF THE FOREGOING, ARE THE “CASH COLLATERAL”.  BORROWER GRANTS AND
PLEDGES TO BANK A CONTINUING SECURITY INTEREST IN ALL PRESENTLY EXISTING AND
HEREAFTER ACQUIRED OR ARISING CASH COLLATERAL, IN ORDER TO SECURE PROMPT
REPAYMENT OF ANY AND ALL OBLIGATIONS.  BANK SHALL RETAIN CONTROL OVER THE CASH
COLLATERAL UP TO THE REQUIRED BALANCE TO SECURE THE OBLIGATIONS UNTIL THE
OBLIGATIONS HAVE BEEN SATISFIED IN FULL.  BORROWER HEREBY AUTHORIZES BANK TO
PLACE RESTRICTIONS ON BORROWER’S ABILITY TO WITHDRAW AMOUNTS FROM ACCOUNTS
HOLDING THE CASH COLLATERAL IN ORDER TO ENSURE THAT SUCH REQUIRED BALANCE IS
MAINTAINED.  BORROWER AUTHORIZES BANK TO EXECUTE AND/OR FILE SUCH DOCUMENTS, AND
TAKE SUCH ACTIONS, AS BANK DETERMINES REASONABLE TO PERFECT ITS SECURITY
INTEREST IN THE CASH COLLATERAL.  SUCH SECURITY INTEREST CONSTITUTES A VALID,
FIRST PRIORITY SECURITY INTEREST IN THE CASH COLLATERAL, AND WILL CONSTITUTE A
VALID, FIRST PRIORITY SECURITY INTEREST IN CASH COLLATERAL ACQUIRED AFTER THE
DATE HEREOF.  NOTWITHSTANDING TERMINATION OF THIS AGREEMENT, BANK’S LIEN ON THE
CASH COLLATERAL SHALL REMAIN IN EFFECT FOR SO LONG AS ANY OBLIGATIONS ARE
OUTSTANDING.

 

(B)   NET LOSS.  NET LOSS (AS DEFINED BELOW) SHALL NOT BE GREATER THAN (I)
($996,000) FOR THE QUARTER ENDED MARCH 31, 2005, (II) ($642,000) FOR THE QUARTER
ENDING JUNE 30, 2005, (III) ($787,000) FOR THE QUARTER ENDING SEPTEMBER 30,
2005, AND (IV) ($299,000) FOR THE QUARTER ENDING DECEMBER 31, 2005.  THIS
COVENANT WILL BE RESET BY BANK FOR PERIODS THEREAFTER BASED ON UPDATED
PROJECTIONS APPROVED BY BORROWER’S AND PARENT’S BOARD OF DIRECTORS FOR THE NEXT
FISCAL YEAR, WHICH SHALL BE ACCEPTABLE TO BANK AND DELIVERED TO BANK BY DECEMBER
31 OF EACH YEAR.  AS USED HEREIN, “NET LOSS” MEANS NET LOSS OF PARENT MEASURED
ON A CONSOLIDATED BASIS IN ACCORDANCE WITH GAAP.

 

6.8   REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.

 

(A)   BORROWER SHALL REGISTER OR CAUSE TO BE REGISTERED ON AN EXPEDITED BASIS
(TO THE EXTENT NOT ALREADY REGISTERED) WITH THE UNITED STATES PATENT AND
TRADEMARK OFFICE OR THE UNITED STATES COPYRIGHT OFFICE, AS THE CASE MAY BE,
THOSE REGISTRABLE INTELLECTUAL PROPERTY RIGHTS NOW OWNED OR HEREAFTER DEVELOPED
OR ACQUIRED BY BORROWER, TO THE EXTENT THAT BORROWER, IN ITS REASONABLE BUSINESS
JUDGMENT, DEEMS IT APPROPRIATE TO SO PROTECT SUCH INTELLECTUAL PROPERTY RIGHTS.

 

(B)   BORROWER SHALL PROMPTLY GIVE BANK WRITTEN NOTICE OF ANY APPLICATIONS OR
REGISTRATIONS OF INTELLECTUAL PROPERTY RIGHTS FILED WITH THE UNITED STATES
PATENT AND TRADEMARK OFFICE, INCLUDING THE DATE OF SUCH FILING AND THE
REGISTRATION OR APPLICATION NUMBERS, IF ANY.

 

(C)   BORROWER SHALL (I) GIVE BANK NOT LESS THAN 30 DAYS PRIOR WRITTEN NOTICE OF
THE FILING OF ANY APPLICATIONS OR REGISTRATIONS WITH THE UNITED STATES COPYRIGHT
OFFICE, INCLUDING THE TITLE OF SUCH INTELLECTUAL PROPERTY RIGHTS TO BE
REGISTERED, AS SUCH TITLE WILL APPEAR ON SUCH APPLICATIONS OR

 

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REGISTRATIONS, AND THE DATE SUCH APPLICATIONS OR REGISTRATIONS WILL BE FILED;
(II) PRIOR TO THE FILING OF ANY SUCH APPLICATIONS OR REGISTRATIONS, EXECUTE SUCH
DOCUMENTS AS BANK MAY REASONABLY REQUEST FOR BANK TO MAINTAIN ITS PERFECTION IN
SUCH INTELLECTUAL PROPERTY RIGHTS TO BE REGISTERED BY BORROWER; (III) UPON THE
REQUEST OF BANK, EITHER DELIVER TO BANK OR FILE SUCH DOCUMENTS SIMULTANEOUSLY
WITH THE FILING OF ANY SUCH APPLICATIONS OR REGISTRATIONS; (IV) UPON FILING ANY
SUCH APPLICATIONS OR REGISTRATIONS, PROMPTLY PROVIDE BANK WITH A COPY OF SUCH
APPLICATIONS OR REGISTRATIONS TOGETHER WITH ANY EXHIBITS, EVIDENCE OF THE FILING
OF ANY DOCUMENTS REQUESTED BY BANK TO BE FILED FOR BANK TO MAINTAIN THE
PERFECTION AND PRIORITY OF ITS SECURITY INTEREST IN SUCH INTELLECTUAL PROPERTY
RIGHTS, AND THE DATE OF SUCH FILING.

 

(D)   BORROWER SHALL EXECUTE AND DELIVER SUCH ADDITIONAL INSTRUMENTS AND
DOCUMENTS FROM TIME TO TIME AS BANK SHALL REASONABLY REQUEST TO PERFECT AND
MAINTAIN THE PERFECTION AND PRIORITY OF BANK’S SECURITY INTEREST IN THE
INTELLECTUAL PROPERTY COLLATERAL.

 

(E)   BORROWER SHALL (I) PROTECT, DEFEND AND MAINTAIN THE VALIDITY AND
ENFORCEABILITY OF THE TRADE SECRETS, TRADEMARKS, PATENTS AND COPYRIGHTS, (II)
USE COMMERCIALLY REASONABLE EFFORTS TO DETECT INFRINGEMENTS OF THE TRADEMARKS,
PATENTS AND COPYRIGHTS AND PROMPTLY ADVISE BANK IN WRITING OF MATERIAL
INFRINGEMENTS DETECTED AND (III) NOT ALLOW ANY MATERIAL TRADEMARKS, PATENTS OR
COPYRIGHTS TO BE ABANDONED, FORFEITED OR DEDICATED TO THE PUBLIC WITHOUT THE
WRITTEN CONSENT OF BANK, WHICH SHALL NOT BE UNREASONABLY WITHHELD.

 

(F)    BANK MAY AUDIT BORROWER’S INTELLECTUAL PROPERTY COLLATERAL TO CONFIRM
COMPLIANCE WITH THIS SECTION 6.8, PROVIDED SUCH AUDIT MAY NOT OCCUR MORE OFTEN
THAN TWICE PER YEAR, UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING. 
BANK SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO TAKE, AT BORROWER’S SOLE
EXPENSE, ANY ACTIONS THAT BORROWER IS REQUIRED UNDER THIS SECTION 6.8 TO TAKE
BUT WHICH BORROWER FAILS TO TAKE, AFTER 15 DAYS’ NOTICE TO BORROWER.  BORROWER
SHALL REIMBURSE AND INDEMNIFY BANK FOR ALL REASONABLE COSTS AND REASONABLE
EXPENSES INCURRED IN THE REASONABLE EXERCISE OF ITS RIGHTS UNDER THIS SECTION
6.8.

 

6.9   CONSENT OF INBOUND LICENSORS.  PRIOR TO ENTERING INTO OR BECOMING BOUND BY
ANY MATERIAL LICENSE, BORROWER SHALL:  (I) PROVIDE WRITTEN NOTICE TO BANK OF THE
MATERIAL TERMS OF SUCH LICENSE OR AGREEMENT WITH A DESCRIPTION OF ITS LIKELY
IMPACT ON BORROWER’S BUSINESS OR FINANCIAL CONDITION; AND (II) IN GOOD FAITH USE
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN THE CONSENT OF, OR WAIVER BY, ANY
PERSON WHOSE CONSENT OR WAIVER IS NECESSARY FOR BORROWER’S INTEREST IN SUCH
LICENSES OR CONTRACT RIGHTS TO BE DEEMED COLLATERAL AND FOR BANK TO HAVE A
SECURITY INTEREST IN IT THAT MIGHT OTHERWISE BE RESTRICTED BY THE TERMS OF THE
APPLICABLE LICENSE OR AGREEMENT, WHETHER NOW EXISTING OR ENTERED INTO IN THE
FUTURE, INCLUDING OBTAINING AN EXECUTED CONSENT TO SECURITY INTEREST AND
ASSIGNMENT OF LICENSE AGREEMENT ON BANK’S STANDARD FORM, PROVIDED, HOWEVER, THAT
THE FAILURE TO OBTAIN ANY SUCH CONSENT OR WAIVER SHALL NOT CONSTITUTE A DEFAULT
UNDER THIS AGREEMENT.

 

6.10   ADDITIONAL GUARANTIES AND COLLATERAL SECURITY.  BORROWER SHALL CAUSE:

 

(a)           each Subsidiary and each Parent Subsidiary not in existence on the
Closing Date or acquired by Borrower or Parent after the Closing Date (a “New
Subsidiary”), to execute and deliver to Bank as soon as reasonably practicable
and in any event within ten (10) days after the formation, acquisition or change
in status thereof, an unconditional guaranty of the Obligations and any other
agreements, deliverables, or actions requested by Bank in connection therewith,
each of which documents shall be in form and substance satisfactory to Bank,
along with any documents requested by Bank to; and

 

(b)           each owner of the capital stock of any such New Subsidiary to
execute and deliver promptly and in any event within three (3) days after the
formation or acquisition of such New

 

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Subsidiary such documents and share certificates as may be requested by Bank in
order for Bank to take and perfect a security interest in the capital stock of
the New Subsidiary (but only 65% of the voting stock of any foreign Subsidiary)
provided that Borrower need not provide a guaranty of any Inactive Subsidiary
for so long as such Inactive Subsidiary is not carrying on business and has
assets of less than $10,000.

 

6.11 FURTHER ASSURANCES.  AT ANY TIME AND FROM TIME TO TIME BORROWER SHALL
EXECUTE AND DELIVER SUCH FURTHER INSTRUMENTS AND TAKE SUCH FURTHER ACTION AS MAY
REASONABLY BE REQUESTED BY BANK TO EFFECT THE PURPOSES OF THIS AGREEMENT.

 

7.             NEGATIVE COVENANTS.

 

BORROWER COVENANTS AND AGREES THAT, SO LONG AS ANY CREDIT HEREUNDER SHALL BE
AVAILABLE AND UNTIL THE OUTSTANDING OBLIGATIONS ARE PAID IN FULL OR FOR SO LONG
AS BANK MAY HAVE ANY COMMITMENT TO MAKE ANY CREDIT EXTENSIONS, BORROWER WILL NOT
DO ANY OF THE FOLLOWING WITHOUT BANK’S PRIOR WRITTEN CONSENT:

 

7.1   DISPOSITIONS.  CONVEY, SELL, LEASE, LICENSE, TRANSFER OR OTHERWISE DISPOSE
OF (COLLECTIVELY, TO “TRANSFER”), OR PERMIT ANY OF ITS SUBSIDIARIES TO TRANSFER,
ALL OR ANY PART OF ITS BUSINESS OR PROPERTY, OR MOVE CASH BALANCES ON DEPOSIT
WITH BANK TO ACCOUNTS OPENED AT ANOTHER FINANCIAL INSTITUTION, OTHER THAN
PERMITTED TRANSFERS.

 

7.2   CHANGE IN NAME, LOCATION, EXECUTIVE OFFICE, OR EXECUTIVE MANAGEMENT;
CHANGE IN BUSINESS; CHANGE IN FISCAL YEAR; CHANGE IN CONTROL.  CHANGE ITS NAME
OR THE BORROWER STATE OR RELOCATE ITS CHIEF EXECUTIVE OFFICE WITHOUT 30 DAYS
PRIOR WRITTEN NOTIFICATION TO BANK; REPLACE ITS CHIEF EXECUTIVE OFFICER OR CHIEF
FINANCIAL OFFICER WITHOUT 30 DAYS PRIOR WRITTEN NOTIFICATION TO BANK IF THE
FURNISHING OF SUCH PRIOR NOTIFICATION IS REASONABLY PRACTICABLE; ENGAGE IN ANY
BUSINESS, OR PERMIT ANY OF ITS SUBSIDIARIES TO ENGAGE IN ANY BUSINESS, OTHER
THAN OR REASONABLY RELATED OR INCIDENTAL TO THE BUSINESSES CURRENTLY ENGAGED IN
BY BORROWER; CHANGE ITS FISCAL YEAR END; HAVE A CHANGE IN CONTROL.

 

7.3   MERGERS OR ACQUISITIONS.  MERGE OR CONSOLIDATE, OR PERMIT ANY OF ITS
SUBSIDIARIES TO MERGE OR CONSOLIDATE, WITH OR INTO ANY OTHER BUSINESS
ORGANIZATION (OTHER THAN MERGERS OR CONSOLIDATIONS OF A SUBSIDIARY INTO ANOTHER
SUBSIDIARY OR INTO BORROWER), OR ACQUIRE, OR PERMIT ANY OF ITS SUBSIDIARIES TO
ACQUIRE, ALL OR SUBSTANTIALLY ALL OF THE CAPITAL STOCK OR PROPERTY OF ANOTHER
PERSON EXCEPT WHERE (I) SUCH TRANSACTIONS DO NOT IN THE AGGREGATE EXCEED
$250,000 DURING ANY FISCAL YEAR, (II) NO EVENT OF DEFAULT HAS OCCURRED, IS
CONTINUING OR WOULD EXIST AFTER GIVING EFFECT TO SUCH TRANSACTIONS, (III)SUCH
TRANSACTIONS DO NOT RESULT IN A CHANGE IN CONTROL, AND (IV) BORROWER IS THE
SURVIVING ENTITY.

 

7.4   INDEBTEDNESS.  CREATE, INCUR, ASSUME, GUARANTEE OR BE OR REMAIN LIABLE
WITH RESPECT TO ANY INDEBTEDNESS, OR PERMIT ANY SUBSIDIARY SO TO DO, OTHER THAN
PERMITTED INDEBTEDNESS, OR PREPAY ANY INDEBTEDNESS OR TAKE ANY ACTIONS WHICH
IMPOSE ON BORROWER AN OBLIGATION TO PREPAY ANY INDEBTEDNESS, EXCEPT INDEBTEDNESS
TO BANK.

 

7.5   ENCUMBRANCES.  CREATE, INCUR, ASSUME OR ALLOW ANY LIEN WITH RESPECT TO ANY
OF ITS PROPERTY, OR ASSIGN OR OTHERWISE CONVEY ANY RIGHT TO RECEIVE INCOME,
INCLUDING THE SALE OF ANY ACCOUNTS, OR PERMIT ANY OF ITS SUBSIDIARIES SO TO DO,
EXCEPT FOR PERMITTED LIENS, OR COVENANT TO ANY OTHER PERSON THAT BORROWER IN THE
FUTURE WILL REFRAIN FROM CREATING, INCURRING, ASSUMING OR ALLOWING ANY LIEN WITH
RESPECT TO ANY OF BORROWER’S PROPERTY.

 

7.6   DISTRIBUTIONS.  PAY ANY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTION OR
PAYMENT ON ACCOUNT OF OR IN REDEMPTION, RETIREMENT OR PURCHASE OF ANY CAPITAL
STOCK, EXCEPT THAT BORROWER MAY (I) REPURCHASE THE STOCK OF FORMER EMPLOYEES
PURSUANT TO STOCK REPURCHASE AGREEMENTS AS LONG AS AN EVENT OF DEFAULT DOES NOT
EXIST PRIOR TO SUCH REPURCHASE OR WOULD NOT EXIST AFTER GIVING EFFECT TO SUCH
REPURCHASE,

 

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AND (II) REPURCHASE THE STOCK OF FORMER EMPLOYEES PURSUANT TO STOCK REPURCHASE
AGREEMENTS BY THE CANCELLATION OF INDEBTEDNESS OWED BY SUCH FORMER EMPLOYEES TO
BORROWER REGARDLESS OF WHETHER AN EVENT OF DEFAULT EXISTS.

 

7.7   INVESTMENTS.  DIRECTLY OR INDIRECTLY ACQUIRE OR OWN, OR MAKE ANY
INVESTMENT IN OR TO ANY PERSON, OR PERMIT ANY OF ITS SUBSIDIARIES SO TO DO,
OTHER THAN PERMITTED INVESTMENTS, OR MAINTAIN OR INVEST ANY OF ITS PROPERTY WITH
A PERSON OTHER THAN BANK OR BANK’S AFFILIATES OR PERMIT ANY SUBSIDIARY TO DO SO
UNLESS SUCH PERSON HAS ENTERED INTO A CONTROL AGREEMENT WITH BANK, IN FORM AND
SUBSTANCE SATISFACTORY TO BANK, OR SUFFER OR PERMIT ANY SUBSIDIARY TO BE A PARTY
TO, OR BE BOUND BY, AN AGREEMENT THAT RESTRICTS SUCH SUBSIDIARY FROM PAYING
DIVIDENDS OR OTHERWISE DISTRIBUTING PROPERTY TO BORROWER.

 

7.8   TRANSACTIONS WITH AFFILIATES.  DIRECTLY OR INDIRECTLY ENTER INTO OR PERMIT
TO EXIST ANY MATERIAL TRANSACTION WITH ANY AFFILIATE OF BORROWER EXCEPT FOR
TRANSACTIONS THAT ARE IN THE ORDINARY COURSE OF BORROWER’S BUSINESS, UPON FAIR
AND REASONABLE TERMS THAT ARE NO LESS FAVORABLE TO BORROWER THAN WOULD BE
OBTAINED IN AN ARM’S LENGTH TRANSACTION WITH A NON-AFFILIATED PERSON.

 

7.9   SUBORDINATED DEBT.  MAKE ANY PAYMENT IN RESPECT OF ANY SUBORDINATED DEBT,
OR PERMIT ANY OF ITS SUBSIDIARIES TO MAKE ANY SUCH PAYMENT, EXCEPT IN COMPLIANCE
WITH THE TERMS OF SUCH SUBORDINATED DEBT (INCLUDING TERMS PROHIBITING SUCH
PAYMENTS IN THE APPLICABLE SUBORDINATION AGREEMENT IN FAVOR OF BANK), OR AMEND
ANY PROVISION AFFECTING BANK’S RIGHTS CONTAINED IN ANY DOCUMENTATION RELATING TO
THE SUBORDINATED DEBT WITHOUT BANK’S PRIOR WRITTEN CONSENT.

 

7.10 INVENTORY AND EQUIPMENT.  STORE THE INVENTORY OR THE EQUIPMENT WITH A
BAILEE, WAREHOUSEMAN, OR SIMILAR THIRD PARTY UNLESS THE THIRD PARTY HAS BEEN
NOTIFIED OF BANK’S SECURITY INTEREST AND BANK (A) HAS RECEIVED AN ACKNOWLEDGMENT
FROM THE THIRD PARTY THAT IT IS HOLDING OR WILL HOLD THE INVENTORY OR EQUIPMENT
FOR BANK’S BENEFIT OR (B) IS IN POSSESSION OF THE WAREHOUSE RECEIPT, WHERE
NEGOTIABLE, COVERING SUCH INVENTORY OR EQUIPMENT.  EXCEPT FOR INVENTORY SOLD IN
THE ORDINARY COURSE OF BUSINESS AND EXCEPT FOR SUCH OTHER LOCATIONS AS BANK MAY
APPROVE IN WRITING, BORROWER SHALL KEEP THE INVENTORY AND EQUIPMENT ONLY AT THE
LOCATION SET FORTH IN SECTION 10 AND SUCH OTHER LOCATIONS OF WHICH BORROWER
GIVES BANK PRIOR WRITTEN NOTICE AND AS TO WHICH BANK FILES A FINANCING STATEMENT
WHERE NEEDED TO PERFECT ITS SECURITY INTEREST.

 

7.11 NO INVESTMENT COMPANY; MARGIN REGULATION.  BECOME OR BE CONTROLLED BY AN
“INVESTMENT COMPANY,” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940,
OR BECOME PRINCIPALLY ENGAGED IN, OR UNDERTAKE AS ONE OF ITS IMPORTANT
ACTIVITIES, THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF PURCHASING OR
CARRYING MARGIN STOCK, OR USE THE PROCEEDS OF ANY CREDIT EXTENSION FOR SUCH
PURPOSE.

 

8.             EVENTS OF DEFAULT.

 

ANY ONE OR MORE OF THE FOLLOWING EVENTS SHALL CONSTITUTE AN EVENT OF DEFAULT BY
BORROWER UNDER THIS AGREEMENT:

 

8.1   PAYMENT DEFAULT.  IF BORROWER FAILS TO PAY ANY OF THE OBLIGATIONS WHEN
DUE;

 

8.2   COVENANT DEFAULT.

 

(A)   IF BORROWER FAILS TO PERFORM ANY OBLIGATION UNDER ARTICLE 6 OR VIOLATES
ANY OF THE COVENANTS CONTAINED IN ARTICLE 7 OF THIS AGREEMENT; OR

 

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(B)   IF BORROWER FAILS OR NEGLECTS TO PERFORM OR OBSERVE ANY OTHER MATERIAL
TERM, PROVISION, CONDITION, COVENANT CONTAINED IN THIS AGREEMENT, IN ANY OF THE
LOAN DOCUMENTS, OR IN ANY OTHER PRESENT OR FUTURE AGREEMENT BETWEEN BORROWER AND
BANK AND AS TO ANY DEFAULT UNDER SUCH OTHER TERM, PROVISION, CONDITION OR
COVENANT THAT CAN BE CURED, HAS FAILED TO CURE SUCH DEFAULT WITHIN 10 DAYS AFTER
BORROWER RECEIVES NOTICE THEREOF OR ANY OFFICER OF BORROWER BECOMES AWARE
THEREOF; PROVIDED, HOWEVER, THAT IF THE DEFAULT CANNOT BY ITS NATURE BE CURED
WITHIN THE 10 DAY PERIOD OR CANNOT AFTER DILIGENT ATTEMPTS BY BORROWER BE CURED
WITHIN SUCH 10 DAY PERIOD, AND SUCH DEFAULT IS LIKELY TO BE CURED WITHIN A
REASONABLE TIME, THEN BORROWER SHALL HAVE AN ADDITIONAL REASONABLE PERIOD (WHICH
SHALL NOT IN ANY CASE EXCEED 30 DAYS) TO ATTEMPT TO CURE SUCH DEFAULT, AND
WITHIN SUCH REASONABLE TIME PERIOD THE FAILURE TO HAVE CURED SUCH DEFAULT SHALL
NOT BE DEEMED AN EVENT OF DEFAULT BUT NO CREDIT EXTENSIONS WILL BE MADE;

 

8.3   MATERIAL ADVERSE CHANGE.  IF THERE OCCURS A MATERIAL ADVERSE CHANGE IN
BORROWER’S PROSPECTS, BUSINESS OR FINANCIAL CONDITION, OR IF THERE IS A MATERIAL
IMPAIRMENT IN THE PROSPECT OF REPAYMENT OF ANY PORTION OF THE OBLIGATIONS OR A
MATERIAL IMPAIRMENT IN THE PERFECTION, VALUE OR PRIORITY OF BANK’S SECURITY
INTERESTS IN THE COLLATERAL;

 

8.4   ATTACHMENT.  IF ANY MATERIAL PORTION OF BORROWER’S ASSETS IS ATTACHED,
SEIZED, SUBJECTED TO A WRIT OR DISTRESS WARRANT, OR IS LEVIED UPON, OR COMES
INTO THE POSSESSION OF ANY TRUSTEE, RECEIVER OR PERSON ACTING IN A SIMILAR
CAPACITY AND SUCH ATTACHMENT, SEIZURE, WRIT OR DISTRESS WARRANT OR LEVY HAS NOT
BEEN REMOVED, DISCHARGED OR RESCINDED WITHIN 10 DAYS, OR IF BORROWER IS
ENJOINED, RESTRAINED, OR IN ANY WAY PREVENTED BY COURT ORDER FROM CONTINUING TO
CONDUCT ALL OR ANY MATERIAL PART OF ITS BUSINESS AFFAIRS, OR IF A JUDGMENT OR
OTHER CLAIM BECOMES A LIEN OR ENCUMBRANCE UPON ANY MATERIAL PORTION OF
BORROWER’S ASSETS, OR IF A NOTICE OF LIEN, LEVY, OR ASSESSMENT IS FILED OF
RECORD WITH RESPECT TO ANY OF BORROWER’S ASSETS BY THE UNITED STATES GOVERNMENT,
OR ANY DEPARTMENT, AGENCY, OR INSTRUMENTALITY THEREOF, OR BY ANY STATE, COUNTY,
MUNICIPAL, OR GOVERNMENTAL AGENCY, AND THE SAME IS NOT PAID WITHIN TEN DAYS
AFTER BORROWER RECEIVES NOTICE THEREOF, PROVIDED THAT NONE OF THE FOREGOING
SHALL CONSTITUTE AN EVENT OF DEFAULT WHERE SUCH ACTION OR EVENT IS STAYED OR AN
ADEQUATE BOND HAS BEEN POSTED PENDING A GOOD FAITH CONTEST BY BORROWER (PROVIDED
THAT NO CREDIT EXTENSIONS WILL BE MADE DURING SUCH CURE PERIOD);

 

8.5   INSOLVENCY.  IF BORROWER BECOMES INSOLVENT, OR IF AN INSOLVENCY PROCEEDING
IS COMMENCED BY BORROWER, OR IF AN INSOLVENCY PROCEEDING IS COMMENCED AGAINST
BORROWER AND IS NOT DISMISSED OR STAYED WITHIN 30 DAYS (PROVIDED THAT NO CREDIT
EXTENSIONS WILL BE MADE PRIOR TO THE DISMISSAL OF SUCH INSOLVENCY PROCEEDING);

 

8.6   OTHER AGREEMENTS.  IF THERE IS A DEFAULT OR OTHER FAILURE TO PERFORM IN
ANY AGREEMENT TO WHICH BORROWER IS A PARTY WITH A THIRD PARTY OR PARTIES
RESULTING IN A RIGHT BY SUCH THIRD PARTY OR PARTIES, WHETHER OR NOT EXERCISED,
TO ACCELERATE THE MATURITY OF ANY INDEBTEDNESS IN AN AMOUNT IN EXCESS OF
$100,000 OR THAT WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

 

8.7   SUBORDINATED DEBT.  IF BORROWER MAKES ANY PAYMENT ON ACCOUNT OF
SUBORDINATED DEBT, EXCEPT TO THE EXTENT THE PAYMENT IS ALLOWED UNDER ANY
SUBORDINATION AGREEMENT ENTERED INTO WITH BANK;

 

8.8   JUDGMENTS.  IF A JUDGMENT OR JUDGMENTS FOR THE PAYMENT OF MONEY IN AN
AMOUNT, INDIVIDUALLY OR IN THE AGGREGATE, OF AT LEAST $100,000 SHALL BE RENDERED
AGAINST BORROWER AND SHALL REMAIN UNSATISFIED AND UNSTAYED FOR A PERIOD OF 10
DAYS (PROVIDED THAT NO CREDIT EXTENSIONS WILL BE MADE PRIOR TO THE SATISFACTION
OR STAY OF THE JUDGMENT);

 

8.9   MISREPRESENTATIONS.  IF ANY MATERIAL MISREPRESENTATION OR MATERIAL
MISSTATEMENT EXISTS NOW OR HEREAFTER IN ANY WARRANTY OR REPRESENTATION SET FORTH
HEREIN OR IN ANY CERTIFICATE DELIVERED TO BANK

 

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BY ANY RESPONSIBLE OFFICER PURSUANT TO THIS AGREEMENT OR TO INDUCE BANK TO ENTER
INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

8.10   GUARANTY. IF ANY GUARANTY OF OR PLEDGE OF SECURITY IN SUPPORT OF ALL OR A
PORTION OF THE OBLIGATIONS (COLLECTIVELY, A “GUARANTY”) CEASES FOR ANY REASON TO
BE IN FULL FORCE AND EFFECT, OR ANY GUARANTOR OR PLEDGOR FAILS TO PERFORM ANY
OBLIGATION UNDER ANY GUARANTY OR A SECURITY OR PLEDGE AGREEMENT (COLLECTIVELY,
THE “GUARANTY DOCUMENTS”), OR ANY EVENT OF DEFAULT OCCURS UNDER ANY GUARANTY
DOCUMENT OR ANY GUARANTOR REVOKES OR PURPORTS TO REVOKE A GUARANTY, OR ANY
MATERIAL MISREPRESENTATION OR MATERIAL MISSTATEMENT EXISTS NOW OR HEREAFTER IN
ANY WARRANTY OR REPRESENTATION SET FORTH IN ANY GUARANTY DOCUMENT OR IN ANY
CERTIFICATE DELIVERED TO BANK IN CONNECTION WITH ANY GUARANTY DOCUMENT, OR IF
ANY OF THE CIRCUMSTANCES DESCRIBED IN SECTIONS 8.3 THROUGH 8.9 OCCUR WITH
RESPECT TO ANY GUARANTOR OR PLEDGOR.

 

9.             BANK’S RIGHTS AND REMEDIES.

 

9.1   RIGHTS AND REMEDIES.  UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT, BANK MAY, AT ITS ELECTION, WITHOUT NOTICE OF ITS ELECTION AND
WITHOUT DEMAND, DO ANY ONE OR MORE OF THE FOLLOWING, ALL OF WHICH ARE AUTHORIZED
BY BORROWER:

 

(A)   DECLARE ALL OBLIGATIONS, WHETHER EVIDENCED BY THIS AGREEMENT, BY ANY OF
THE OTHER LOAN DOCUMENTS, OR OTHERWISE, IMMEDIATELY DUE AND PAYABLE (PROVIDED
THAT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT DESCRIBED IN SECTION 8.5
(INSOLVENCY), ALL OBLIGATIONS SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT
ANY ACTION BY BANK);

 

(B)   TO THE EXTENT ANY LETTERS OF CREDIT HAVE BEEN ISSUED BY OR THROUGH BANK,
DEMAND THAT BORROWER  (I) DEPOSIT CASH WITH BANK IN AN AMOUNT EQUAL TO THE
AMOUNT OF SUCH LETTERS OF CREDIT REMAINING UNDRAWN, AS COLLATERAL SECURITY FOR
THE REPAYMENT OF ANY FUTURE DRAWINGS UNDER SUCH LETTERS OF CREDIT, AND (II) PAY
IN ADVANCE ALL LETTER OF CREDIT FEES SCHEDULED TO BE PAID OR PAYABLE OVER THE
REMAINING TERM OF THE LETTERS OF CREDIT, AND BORROWER SHALL PROMPTLY DEPOSIT AND
PAY SUCH AMOUNTS;

 

(C)   CEASE ADVANCING MONEY OR EXTENDING CREDIT TO OR FOR THE BENEFIT OF
BORROWER UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT BETWEEN BORROWER AND
BANK;

 

(D)   SETTLE OR ADJUST DISPUTES AND CLAIMS DIRECTLY WITH ACCOUNT DEBTORS FOR
AMOUNTS, UPON TERMS AND IN WHATEVER ORDER THAT BANK REASONABLY CONSIDERS
ADVISABLE;

 

(E)   MAKE SUCH PAYMENTS AND DO SUCH ACTS AS BANK CONSIDERS NECESSARY OR
REASONABLE TO PROTECT ITS SECURITY INTEREST IN THE COLLATERAL.  BORROWER AGREES
TO ASSEMBLE THE COLLATERAL IF BANK SO REQUIRES, AND TO MAKE THE COLLATERAL
AVAILABLE TO BANK AS BANK MAY DESIGNATE.  BORROWER AUTHORIZES BANK TO ENTER THE
PREMISES WHERE THE COLLATERAL IS LOCATED, TO TAKE AND MAINTAIN POSSESSION OF THE
COLLATERAL, OR ANY PART OF IT, AND TO PAY, PURCHASE, CONTEST, OR COMPROMISE ANY
ENCUMBRANCE, CHARGE, OR LIEN WHICH IN BANK’S DETERMINATION APPEARS TO BE PRIOR
OR SUPERIOR TO ITS SECURITY INTEREST AND TO PAY ALL EXPENSES INCURRED IN
CONNECTION THEREWITH.  WITH RESPECT TO ANY OF BORROWER’S OWNED PREMISES,
BORROWER HEREBY GRANTS BANK A LICENSE TO ENTER INTO POSSESSION OF SUCH PREMISES
AND TO OCCUPY THE SAME, WITHOUT CHARGE, IN ORDER TO EXERCISE ANY OF BANK’S
RIGHTS OR REMEDIES PROVIDED HEREIN, AT LAW, IN EQUITY, OR OTHERWISE;

 

(F)    SET OFF AND APPLY TO THE OBLIGATIONS ANY AND ALL (I) BALANCES AND
DEPOSITS OF BORROWER OR ANY GUARANTOR HELD BY BANK, INCLUDING THE REQUIRED
BALANCE AND ANY OTHER CASH, CERTIFICATES OF DEPOSIT, MONEY MARKET ACCOUNTS, OR
DEPOSIT ACCOUNTS HELD BY BANK AS COLLATERAL, AND (II) INDEBTEDNESS AT ANY TIME
OWING TO OR FOR THE CREDIT OR THE ACCOUNT OF BORROWER HELD BY BANK;

 

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(G)   SHIP, RECLAIM, RECOVER, STORE, FINISH, MAINTAIN, REPAIR, PREPARE FOR SALE,
ADVERTISE FOR SALE, AND SELL (IN THE MANNER PROVIDED FOR HEREIN) THE
COLLATERAL.  BANK IS HEREBY GRANTED A LICENSE OR OTHER RIGHT, SOLELY PURSUANT TO
THE PROVISIONS OF THIS SECTION 9.1, TO USE, WITHOUT CHARGE, BORROWER’S LABELS,
PATENTS, COPYRIGHTS, RIGHTS OF USE OF ANY NAME, TRADE SECRETS, TRADE NAMES,
TRADEMARKS, SERVICE MARKS, AND ADVERTISING MATTER, OR ANY PROPERTY OF A SIMILAR
NATURE, AS IT PERTAINS TO THE COLLATERAL, IN COMPLETING PRODUCTION OF,
ADVERTISING FOR SALE, AND SELLING ANY COLLATERAL AND, IN CONNECTION WITH BANK’S
EXERCISE OF ITS RIGHTS UNDER THIS SECTION 9.1, BORROWER’S RIGHTS UNDER ALL
LICENSES AND ALL FRANCHISE AGREEMENTS SHALL INURE TO BANK’S BENEFIT;

 

(H)   SELL THE COLLATERAL AT EITHER A PUBLIC OR PRIVATE SALE, OR BOTH, BY WAY OF
ONE OR MORE CONTRACTS OR TRANSACTIONS, FOR CASH OR ON TERMS, IN SUCH MANNER AND
AT SUCH PLACES (INCLUDING BORROWER’S PREMISES) AS BANK DETERMINES IS
COMMERCIALLY REASONABLE, AND APPLY ANY PROCEEDS TO THE OBLIGATIONS IN WHATEVER
MANNER OR ORDER BANK DEEMS APPROPRIATE.  BANK MAY SELL THE COLLATERAL WITHOUT
GIVING ANY WARRANTIES AS TO THE COLLATERAL.  BANK MAY SPECIFICALLY DISCLAIM ANY
WARRANTIES OF TITLE OR THE LIKE.  THIS PROCEDURE WILL NOT BE CONSIDERED
ADVERSELY TO AFFECT THE COMMERCIAL REASONABLENESS OF ANY SALE OF THE
COLLATERAL.  IF BANK SELLS ANY OF THE COLLATERAL UPON CREDIT, BORROWER WILL BE
CREDITED ONLY WITH PAYMENTS ACTUALLY MADE BY THE PURCHASER, RECEIVED BY BANK,
AND APPLIED TO THE INDEBTEDNESS OF THE PURCHASER.  IF THE PURCHASER FAILS TO PAY
FOR THE COLLATERAL, BANK MAY RESELL THE COLLATERAL AND BORROWER SHALL BE
CREDITED WITH THE PROCEEDS OF THE SALE;

 

(I)    BANK MAY CREDIT BID AND PURCHASE AT ANY PUBLIC SALE;

 

(J)    APPLY FOR THE APPOINTMENT OF A RECEIVER, TRUSTEE, LIQUIDATOR OR
CONSERVATOR OF THE COLLATERAL, WITHOUT NOTICE AND WITHOUT REGARD TO THE ADEQUACY
OF THE SECURITY FOR THE OBLIGATIONS AND WITHOUT REGARD TO THE SOLVENCY OF
BORROWER, ANY GUARANTOR OR ANY OTHER PERSON LIABLE FOR ANY OF THE OBLIGATIONS;
AND

 

(K)   ANY DEFICIENCY THAT EXISTS AFTER DISPOSITION OF THE COLLATERAL AS PROVIDED
ABOVE WILL BE PAID IMMEDIATELY BY BORROWER.

 

Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

 

9.2   POWER OF ATTORNEY.  EFFECTIVE ONLY UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, BORROWER HEREBY IRREVOCABLY APPOINTS BANK
(AND ANY OF BANK’S DESIGNATED OFFICERS, OR EMPLOYEES) AS BORROWER’S TRUE AND
LAWFUL ATTORNEY TO:  (A) SEND REQUESTS FOR VERIFICATION OF ACCOUNTS OR NOTIFY
ACCOUNT DEBTORS OF BANK’S SECURITY INTEREST IN THE ACCOUNTS; (B) ENDORSE
BORROWER’S NAME ON ANY CHECKS OR OTHER FORMS OF PAYMENT OR SECURITY THAT MAY
COME INTO BANK’S POSSESSION; (C) SIGN BORROWER’S NAME ON ANY INVOICE OR BILL OF
LADING RELATING TO ANY ACCOUNT, DRAFTS AGAINST ACCOUNT DEBTORS, SCHEDULES AND
ASSIGNMENTS OF ACCOUNTS, VERIFICATIONS OF ACCOUNTS, AND NOTICES TO ACCOUNT
DEBTORS; (D) DISPOSE OF ANY COLLATERAL; (E) MAKE, SETTLE, AND ADJUST ALL CLAIMS
UNDER AND DECISIONS WITH RESPECT TO BORROWER’S POLICIES OF INSURANCE; (F) SETTLE
AND ADJUST DISPUTES AND CLAIMS RESPECTING THE ACCOUNTS DIRECTLY WITH ACCOUNT
DEBTORS, FOR AMOUNTS AND UPON TERMS WHICH BANK DETERMINES TO BE REASONABLE; (G)
ENTER INTO A SHORT-FORM  INTELLECTUAL PROPERTY SECURITY AGREEMENT CONSISTENT
WITH THE TERMS OF THIS AGREEMENT FOR RECORDING PURPOSES ONLY OR MODIFY, IN ITS
SOLE DISCRETION, ANY INTELLECTUAL PROPERTY SECURITY AGREEMENT ENTERED INTO
BETWEEN BORROWER AND BANK WITHOUT FIRST OBTAINING BORROWER’S APPROVAL OF OR
SIGNATURE TO SUCH MODIFICATION BY AMENDING EXHIBITS A, B, AND C, THEREOF, AS
APPROPRIATE, TO INCLUDE REFERENCE TO ANY RIGHT, TITLE OR INTEREST IN ANY
COPYRIGHTS, PATENTS OR TRADEMARKS ACQUIRED BY BORROWER AFTER THE EXECUTION
HEREOF OR TO DELETE ANY REFERENCE TO ANY RIGHT, TITLE OR INTEREST IN ANY
COPYRIGHTS, PATENTS OR TRADEMARKS IN WHICH BORROWER NO LONGER HAS OR CLAIMS TO
HAVE ANY RIGHT, TITLE OR INTEREST; AND (H) FILE, IN ITS SOLE

 

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DISCRETION, ONE OR MORE FINANCING OR CONTINUATION STATEMENTS AND AMENDMENTS
THERETO, RELATIVE TO ANY OF THE COLLATERAL WITHOUT THE SIGNATURE OF BORROWER
WHERE PERMITTED BY LAW; PROVIDED BANK MAY EXERCISE SUCH POWER OF ATTORNEY TO
SIGN THE NAME OF BORROWER ON ANY OF THE DOCUMENTS DESCRIBED IN CLAUSES (G) AND
(H) ABOVE, REGARDLESS OF WHETHER AN EVENT OF DEFAULT HAS OCCURRED.  THE
APPOINTMENT OF BANK AS BORROWER’S ATTORNEY IN FACT, AND EACH AND EVERY ONE OF
BANK’S RIGHTS AND POWERS, BEING COUPLED WITH AN INTEREST, IS IRREVOCABLE UNTIL
ALL OF THE OBLIGATIONS HAVE BEEN FULLY REPAID AND PERFORMED AND BANK’S
OBLIGATION TO PROVIDE ADVANCES HEREUNDER IS TERMINATED.

 

9.3   ACCOUNTS COLLECTION.  AT ANY TIME AFTER THE OCCURRENCE AND DURING THE
CONTINUATION OF AN EVENT OF DEFAULT, BANK MAY NOTIFY ANY PERSON OWING FUNDS TO
BORROWER OF BANK’S SECURITY INTEREST IN SUCH FUNDS AND VERIFY THE AMOUNT OF SUCH
ACCOUNT.  BORROWER SHALL COLLECT ALL AMOUNTS OWING TO BORROWER FOR BANK, RECEIVE
IN TRUST ALL PAYMENTS AS BANK’S TRUSTEE, AND IMMEDIATELY DELIVER SUCH PAYMENTS
TO BANK IN THEIR ORIGINAL FORM AS RECEIVED FROM THE ACCOUNT DEBTOR, WITH PROPER
ENDORSEMENTS FOR DEPOSIT.

 

9.4   BANK EXPENSES.  IF BORROWER FAILS TO PAY ANY AMOUNTS OR FURNISH ANY
REQUIRED PROOF OF PAYMENT DUE TO THIRD PERSONS OR ENTITIES, AS REQUIRED UNDER
THE TERMS OF THIS AGREEMENT, THEN BANK MAY DO ANY OR ALL OF THE FOLLOWING AFTER
REASONABLE NOTICE TO BORROWER:  (A) MAKE PAYMENT OF THE SAME OR ANY PART
THEREOF; (B) SET UP SUCH RESERVES UNDER THE REVOLVING LINE AS BANK DEEMS
NECESSARY TO PROTECT BANK FROM THE EXPOSURE CREATED BY SUCH FAILURE; OR (C)
OBTAIN AND MAINTAIN INSURANCE POLICIES OF THE TYPE DISCUSSED IN SECTION 6.5 OF
THIS AGREEMENT, AND TAKE ANY ACTION WITH RESPECT TO SUCH POLICIES AS BANK DEEMS
PRUDENT.  ANY AMOUNTS SO PAID OR DEPOSITED BY BANK SHALL CONSTITUTE BANK
EXPENSES, SHALL BE IMMEDIATELY DUE AND PAYABLE, AND SHALL BEAR INTEREST AT THE
THEN APPLICABLE RATE HEREINABOVE PROVIDED, AND SHALL BE SECURED BY THE
COLLATERAL.  ANY PAYMENTS MADE BY BANK SHALL NOT CONSTITUTE AN AGREEMENT BY BANK
TO MAKE SIMILAR PAYMENTS IN THE FUTURE OR A WAIVER BY BANK OF ANY EVENT OF
DEFAULT UNDER THIS AGREEMENT.

 

9.5   BANK’S LIABILITY FOR COLLATERAL.  BANK HAS NO OBLIGATION TO CLEAN UP OR
OTHERWISE PREPARE THE COLLATERAL FOR SALE. SO LONG AS BANK COMPLIES WITH
REASONABLE BANKING PRACTICES, SHALL NOT LIABLE FOR: (A) THE SAFEKEEPING OF THE
COLLATERAL; (B) ANY LOSS OR DAMAGE TO THE COLLATERAL; (C) ANY DIMINUTION IN THE
VALUE OF THE COLLATERAL; OR (D) ANY ACT OR DEFAULT OF ANY CARRIER, WAREHOUSEMAN,
BAILEE, OR OTHER PERSON.  EXCEPT AS SPECIFICALLY SET FORTH IN THE PRECEDING
SENTENCE, ALL RISK OF LOSS, DAMAGE OR DESTRUCTION OF THE COLLATERAL SHALL BE
BORNE BY BORROWER.

 

9.6   NO OBLIGATION TO PURSUE OTHERS.  BANK HAS NO OBLIGATION TO ATTEMPT TO
SATISFY THE OBLIGATIONS BY COLLECTING THEM FROM ANY OTHER PERSON LIABLE FOR THEM
AND BANK MAY RELEASE, MODIFY OR WAIVE ANY COLLATERAL PROVIDED BY ANY OTHER
PERSON TO SECURE ANY OF THE OBLIGATIONS, ALL WITHOUT AFFECTING BANK’S RIGHTS
AGAINST BORROWER.  BORROWER WAIVES ANY RIGHT IT MAY HAVE TO REQUIRE BANK TO
PURSUE ANY OTHER PERSON FOR ANY OF THE OBLIGATIONS.

 

9.7   REMEDIES CUMULATIVE.  BANK’S RIGHTS AND REMEDIES UNDER THIS AGREEMENT, THE
LOAN DOCUMENTS, AND ALL OTHER AGREEMENTS SHALL BE CUMULATIVE.  BANK SHALL HAVE
ALL OTHER RIGHTS AND REMEDIES NOT INCONSISTENT HEREWITH AS PROVIDED UNDER THE
CODE, BY LAW, OR IN EQUITY.  NO EXERCISE BY BANK OF ONE RIGHT OR REMEDY SHALL BE
DEEMED AN ELECTION, AND NO WAIVER BY BANK OF ANY EVENT OF DEFAULT ON BORROWER’S
PART SHALL BE DEEMED A CONTINUING WAIVER.  NO DELAY BY BANK SHALL CONSTITUTE A
WAIVER, ELECTION, OR ACQUIESCENCE BY IT.  NO WAIVER BY BANK SHALL BE EFFECTIVE
UNLESS MADE IN A WRITTEN DOCUMENT SIGNED ON BEHALF OF BANK AND THEN SHALL BE
EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
IT WAS GIVEN.  BORROWER EXPRESSLY AGREES THAT THIS SECTION 9.7 MAY NOT BE WAIVED
OR MODIFIED BY BANK BY COURSE OF PERFORMANCE, CONDUCT, ESTOPPEL OR OTHERWISE.

 

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9.8   DEMAND; PROTEST.  EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, BORROWER
WAIVES DEMAND, PROTEST, NOTICE OF PROTEST, NOTICE OF DEFAULT OR DISHONOR, NOTICE
OF PAYMENT AND NONPAYMENT AND ANY OTHER NOTICES RELATING TO THE OBLIGATIONS.

 

10.           NOTICES.

 

UNLESS OTHERWISE PROVIDED IN THIS AGREEMENT, ALL NOTICES OR DEMANDS BY ANY PARTY
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION
HEREWITH SHALL BE IN WRITING AND (EXCEPT FOR FINANCIAL STATEMENTS AND OTHER
INFORMATIONAL DOCUMENTS WHICH MAY BE SENT BY FIRST-CLASS MAIL, POSTAGE PREPAID)
SHALL BE PERSONALLY DELIVERED OR SENT BY A RECOGNIZED OVERNIGHT DELIVERY
SERVICE, CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, OR BY
TELEFACSIMILE TO BORROWER OR TO BANK, AS THE CASE MAY BE, AT ITS ADDRESSES SET
FORTH BELOW:

 

IF TO BORROWER:

 

RADVIEW SOFTWARE, INC.

 

 

7 NEW ENGLAND EXECUTIVE PARK

 

 

BURLINGTON, MA 01803

 

 

ATTN: CHIEF FINANCIAL OFFICER

 

 

FAX: (781) 238-8875

 

 

 

WITH A COPY TO:

 

FULBRIGHT & JAWORSKI L.L.P.

 

 

666 FIFTH AVENUE

 

 

NEW YORK, NY

 

 

ATTN: NEIL GOLD

 

 

FAX: (212) 318-3400

 

 

 

IF TO BANK:

 

COMERICA BANK

 

 

2321 ROSECRANS AVE., SUITE 5000

 

 

EL SEGUNDO, CA 90245

 

 

ATTN: MANAGER

 

 

FAX: (310) 297-2290

 

 

 

WITH A COPY TO:

 

COMERICA BANK

 

 

100 FEDERAL STREET, 28TH FLOOR

 

 

BOSTON, MA 02110

 

 

ATTN: CHRIS LLOYD

 

 

FAX: (617) 757-6310

 

THE PARTIES HERETO MAY CHANGE THE ADDRESS AT WHICH THEY ARE TO RECEIVE NOTICES
HEREUNDER, BY NOTICE IN WRITING IN THE FOREGOING MANNER GIVEN TO THE OTHER.

 

11.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.  JURISDICTION SHALL LIE IN THE STATE OF CALIFORNIA.  BANK AND
BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED.  EACH OF THEM, AFTER CONSULTING OR HAVING HAD
THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
ANY LITIGATION BASED UPON OR

 

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ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM.  THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
EACH OF THEM.

 

12.           REFERENCE PROVISION.

 

The parties prefer that any dispute between them be resolved in litigation
subject to a Jury Trial Waiver as set forth in Section 11 of this Agreement, but
the availability of that process is in doubt because of the opinion of the
California Court of Appeal in Grafton Partners LP v. Superior Court, 9
Cal.Rptr.3d 511.   This Reference Provision will be applicable until the
California Supreme Court completes its review of that case, and will continue to
be applicable if either that court or a California Court of Appeal publishes a
decision holding that a pre-dispute Jury Trial Waiver provision similar to that
contained in the Loan Documents is invalid or unenforceable.  Delay in
requesting appointment of a referee pending review of any such decision, or
participation in litigation pending review, will not be deemed a waiver of this
Reference Provision.

 

12.1 MECHANICS.

 

(A)   OTHER THAN (I) NONJUDICIAL FORECLOSURE OF SECURITY INTERESTS IN REAL OR
PERSONAL PROPERTY,  (II) THE APPOINTMENT OF A RECEIVER OR (III) THE EXERCISE OF
OTHER PROVISIONAL REMEDIES (ANY OF WHICH MAY BE INITIATED PURSUANT TO APPLICABLE
LAW), ANY CONTROVERSY, DISPUTE OR CLAIM (EACH, A “CLAIM”) BETWEEN THE PARTIES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT
OR AGREEMENT BETWEEN THE BANK AND THE UNDERSIGNED (COLLECTIVELY IN THIS SECTION,
THE “LOAN DOCUMENTS”), WILL BE RESOLVED BY A REFERENCE PROCEEDING IN CALIFORNIA
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 638 ET SEQ. OF THE CALIFORNIA CODE
OF CIVIL PROCEDURE (“CCP”), OR THEIR SUCCESSOR SECTIONS, WHICH SHALL CONSTITUTE
THE EXCLUSIVE REMEDY FOR THE RESOLUTION OF ANY CLAIM, INCLUDING WHETHER THE
CLAIM IS SUBJECT TO THE REFERENCE PROCEEDING.  EXCEPT AS OTHERWISE PROVIDED IN
THE LOAN DOCUMENTS, VENUE FOR THE REFERENCE PROCEEDING WILL BE IN THE SUPERIOR
COURT OR FEDERAL DISTRICT COURT IN THE COUNTY OR DISTRICT WHERE VENUE IS
OTHERWISE APPROPRIATE UNDER APPLICABLE LAW (THE “COURT”).

 

(B)   THE REFEREE SHALL BE A RETIRED JUDGE OR JUSTICE SELECTED BY MUTUAL WRITTEN
AGREEMENT OF THE PARTIES.  IF THE PARTIES DO NOT AGREE, THE REFEREE SHALL BE
SELECTED BY THE PRESIDING JUDGE OF THE COURT (OR HIS OR HER REPRESENTATIVE).  A
REQUEST FOR APPOINTMENT OF A REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED
BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE
RELIEF IS NOT GRANTED.  THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL THE
POWERS PROVIDED BY LAW.  EACH PARTY SHALL HAVE ONE PEREMPTORY CHALLENGE PURSUANT
TO CCP §170.6.  PENDING APPOINTMENT OF THE REFEREE, THE COURT HAS POWER TO ISSUE
TEMPORARY OR PROVISIONAL REMEDIES.

 

(C)   THE PARTIES AGREE THAT TIME IS OF THE ESSENCE IN CONDUCTING THE REFERENCE
PROCEEDINGS.  ACCORDINGLY, THE REFEREE SHALL BE REQUESTED TO (A) SET THE MATTER
FOR A STATUS AND TRIAL-SETTING CONFERENCE WITHIN FIFTEEN (15) DAYS AFTER THE
DATE OF SELECTION OF THE REFEREE, (B) IF PRACTICABLE, TRY ALL ISSUES OF LAW OR
FACT WITHIN NINETY (90) DAYS AFTER THE DATE OF THE CONFERENCE AND (C) REPORT A
STATEMENT OF DECISION WITHIN TWENTY (20) DAYS AFTER THE MATTER HAS BEEN
SUBMITTED FOR DECISION.  ANY DECISION RENDERED BY THE REFEREE WILL BE FINAL,
BINDING AND CONCLUSIVE, AND JUDGMENT SHALL BE ENTERED PURSUANT TO CCP §644.

 

(D)   THE REFEREE WILL HAVE POWER TO EXPAND OR LIMIT THE AMOUNT AND DURATION OF
DISCOVERY.   THE REFEREE MAY SET OR EXTEND DISCOVERY DEADLINES OR CUTOFFS FOR
GOOD CAUSE, INCLUDING A PARTY’S FAILURE TO PROVIDE REQUESTED DISCOVERY FOR ANY
REASON WHATSOEVER.  UNLESS OTHERWISE ORDERED, NO

 

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PARTY SHALL BE ENTITLED TO “PRIORITY” IN CONDUCTING DISCOVERY, DEPOSITIONS MAY
BE TAKEN BY EITHER PARTY UPON SEVEN (7) DAYS WRITTEN NOTICE, AND ALL OTHER
DISCOVERY SHALL BE RESPONDED TO WITHIN FIFTEEN (15) DAYS AFTER SERVICE.  ALL
DISPUTES RELATING TO DISCOVERY WHICH CANNOT BE RESOLVED BY THE PARTIES SHALL BE
SUBMITTED TO THE REFEREE WHOSE DECISION SHALL BE FINAL AND BINDING.

 

12.2         Procedures.  Except as expressly set forth in this Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding.  All proceedings and hearings conducted before the
referee, except for trial, shall be conducted without a court reporter, except
that when any party so requests, a court reporter will be used at any hearing
conducted before the referee, and the referee will be provided a courtesy copy
of the transcript.  The party making such a request shall have the obligation to
arrange for and pay the court reporter.  Subject to the referee’s power to award
costs to the prevailing party, the parties will equally share the cost of the
referee and the court reporter at trial.

 

12.3         Application of Law. The referee shall be required to determine all
issues in accordance with existing case law and the statutory laws of the State
of California.  The rules of evidence applicable to proceedings at law in the
State of California will be applicable to the reference proceeding.  The referee
shall be empowered to enter equitable as well as legal relief, provide all
temporary or provisional remedies, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a trial,
including without limitation motions for summary judgment or summary
adjudication .  The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference.  The referee’s decision shall be entered by the Court as a
judgment or an order in the same manner as if the action had been tried by the
Court.  The parties reserve the right to appeal from the final judgment or order
or from any appealable decision or order entered by the referee.  The parties
reserve the right to findings of fact, conclusions of laws, a written statement
of decision, and the right to move for a new trial or a different judgment,
which new trial, if granted, is also to be a reference proceeding under this
provision.

 

12.4         Repeal. If the enabling legislation which provides for appointment
of a referee is repealed (and no successor statute is enacted), any dispute
between the parties that would otherwise be determined by reference procedure
will be resolved and determined by arbitration.  The arbitration will be
conducted by a retired judge or Justice, in accordance with the California
Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. 
The limitations with respect to discovery set forth above shall apply to any
such arbitration proceeding.

 

12.5         THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER
THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY, AND
THAT THEY ARE IN EFFECT WAIVING THEIR RIGHT TO TRIAL BY JURY IN AGREEING TO THIS
REFERENCE PROVISION.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY
AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO
ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR
THE LOAN DOCUMENTS.

 

13.           GENERAL PROVISIONS.

 

13.1 SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BIND AND INURE TO THE BENEFIT
OF THE RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS OF EACH OF THE PARTIES AND
SHALL BIND ALL PERSONS WHO BECOME BOUND AS A DEBTOR TO THIS AGREEMENT; PROVIDED,
HOWEVER, THAT NEITHER THIS AGREEMENT NOR ANY RIGHTS

 

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HEREUNDER MAY BE ASSIGNED BY BORROWER WITHOUT BANK’S PRIOR WRITTEN CONSENT,
WHICH CONSENT MAY BE GRANTED OR WITHHELD IN BANK’S SOLE DISCRETION.  BANK SHALL
HAVE THE RIGHT WITHOUT THE CONSENT OF OR NOTICE TO BORROWER TO SELL, TRANSFER,
NEGOTIATE, OR GRANT PARTICIPATION IN ALL OR ANY PART OF, OR ANY INTEREST IN,
BANK’S OBLIGATIONS, RIGHTS AND BENEFITS HEREUNDER.

 

13.2 INDEMNIFICATION.  BORROWER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS BANK
AND ITS OFFICERS, EMPLOYEES, AND AGENTS AGAINST:  (A) ALL OBLIGATIONS, DEMANDS,
CLAIMS, AND LIABILITIES CLAIMED OR ASSERTED BY ANY OTHER PARTY IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; AND (B) ALL LOSSES OR BANK
EXPENSES IN ANY WAY SUFFERED, INCURRED, OR PAID BY BANK, ITS OFFICERS, EMPLOYEES
AND AGENTS AS A RESULT OF OR IN ANY WAY ARISING OUT OF, FOLLOWING, OR
CONSEQUENTIAL TO TRANSACTIONS BETWEEN BANK AND BORROWER WHETHER UNDER THIS
AGREEMENT, OR OTHERWISE (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS FEES
AND EXPENSES), EXCEPT FOR LOSSES CAUSED BY BANK’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

 

13.3 TIME OF ESSENCE.  TIME IS OF THE ESSENCE FOR THE PERFORMANCE OF ALL
OBLIGATIONS SET FORTH IN THIS AGREEMENT.

 

13.4 SEVERABILITY OF PROVISIONS.  EACH PROVISION OF THIS AGREEMENT SHALL BE
SEVERABLE FROM EVERY OTHER PROVISION OF THIS AGREEMENT FOR THE PURPOSE OF
DETERMINING THE LEGAL ENFORCEABILITY OF ANY SPECIFIC PROVISION.

 

13.5 AMENDMENTS IN WRITING, INTEGRATION. ALL AMENDMENTS TO OR TERMINATIONS OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MUST BE IN WRITING.  ALL PRIOR
AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS, WARRANTIES, AND NEGOTIATIONS
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS, IF ANY, ARE MERGED INTO THIS AGREEMENT AND THE
LOAN DOCUMENTS.

 

13.6 COUNTERPARTS.  THIS AGREEMENT 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 AGREEMENT.

 

13.7 SURVIVAL.  ALL COVENANTS, REPRESENTATIONS AND WARRANTIES MADE IN THIS
AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT SO LONG AS ANY OBLIGATIONS
REMAIN OUTSTANDING OR BANK HAS ANY OBLIGATION TO MAKE ANY CREDIT EXTENSION TO
BORROWER.  THE OBLIGATIONS OF BORROWER TO INDEMNIFY BANK WITH RESPECT TO THE
EXPENSES, DAMAGES, LOSSES, COSTS AND LIABILITIES DESCRIBED IN SECTION 13.2 SHALL
SURVIVE UNTIL ALL APPLICABLE STATUTE OF LIMITATIONS PERIODS WITH RESPECT TO
ACTIONS THAT MAY BE BROUGHT AGAINST BANK HAVE RUN.

 

13.8 CONFIDENTIALITY.  IN HANDLING ANY CONFIDENTIAL INFORMATION, BANK AND ALL
EMPLOYEES AND AGENTS OF BANK SHALL EXERCISE THE SAME DEGREE OF CARE THAT BANK
EXERCISES WITH RESPECT TO ITS OWN PROPRIETARY INFORMATION OF THE SAME TYPES TO
MAINTAIN THE CONFIDENTIALITY OF ANY NON-PUBLIC INFORMATION THEREBY RECEIVED OR
RECEIVED PURSUANT TO THIS AGREEMENT EXCEPT THAT DISCLOSURE OF SUCH INFORMATION
MAY BE MADE (I) TO THE SUBSIDIARIES OR AFFILIATES OF BANK IN CONNECTION WITH
THEIR PRESENT OR PROSPECTIVE BUSINESS RELATIONS WITH BORROWER, (II) TO
PROSPECTIVE TRANSFEREES OR PURCHASERS OF ANY INTEREST IN THE LOANS, PROVIDED
THAT THEY HAVE ENTERED INTO A COMPARABLE CONFIDENTIALITY AGREEMENT IN FAVOR OF
BORROWER AND HAVE DELIVERED A COPY TO BORROWER, (III) AS REQUIRED BY LAW,
REGULATIONS, RULE OR ORDER, SUBPOENA, JUDICIAL ORDER OR SIMILAR ORDER, (IV) AS
MAY BE REQUIRED IN CONNECTION WITH THE EXAMINATION, AUDIT OR SIMILAR
INVESTIGATION OF BANK AND (V) AS BANK MAY DETERMINE IN CONNECTION WITH THE
ENFORCEMENT OF ANY REMEDIES HEREUNDER.  CONFIDENTIAL INFORMATION HEREUNDER SHALL
NOT INCLUDE INFORMATION THAT EITHER:  (A) IS IN THE PUBLIC DOMAIN OR IN THE
KNOWLEDGE OR POSSESSION OF BANK WHEN DISCLOSED TO BANK, OR BECOMES PART OF THE
PUBLIC DOMAIN AFTER DISCLOSURE TO BANK THROUGH NO FAULT OF BANK; OR (B) IS
DISCLOSED  TO BANK BY A THIRD

 

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PARTY, PROVIDED BANK DOES NOT HAVE ACTUAL KNOWLEDGE THAT SUCH THIRD PARTY IS
PROHIBITED FROM DISCLOSING SUCH INFORMATION.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

 

 

RADVIEW SOFTWARE, INC.

 

 

 

 

 

 

 

 

By:

/s/ CHRISTOPHER DINEEN

 

 

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

COMERICA BANK

 

 

 

 

 

 

 

 

By:

/s/ PAULA HOWELL

 

 

 

 

 

Title:

SVP

 

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EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract
rights, payment intangibles and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower’s Books relating to any of the foregoing.

 

“Advance” or “Advances” means a cash advance or cash advances under the
Revolving Line.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners (if such Person is a partnership or
similar entity).

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses, whether generated in-house or by outside counsel)
incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents;  reasonable Collateral audit fees; and Bank’s
reasonable attorneys’ fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.

 

“Borrower State” means New Jersey, the state under whose laws Borrower is
organized.

 

“Borrower’s Books” means all of Borrower’s books and records including: 
ledgers; records concerning Borrower’s assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment, containing such information.

 

“Borrowing Base” means an amount equal to $1,000,000 plus 75% of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower.

 

“Borrower Party” or “Borrower Parties” means, individually or collectively, as
applicable, Parent and the Parent Subsidiaries, including Borrower and its
Subsidiaries.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California or the Commonwealth of Massachusetts are
authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” shall mean a transaction 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.

 

“Chief Executive Office State” means Massachusetts, where Borrower’s chief
executive office is located.

 

“Closing Date” means the date of this Agreement.

 

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

 

“Collateral” means the property described on Exhibit B attached hereto and all
Negotiable Collateral and Intellectual Property Collateral to the extent not
described on Exhibit B, except to the extent any such property (i) is
nonassignable by its terms without the consent of the licensor thereof or
another party (but only to the extent such prohibition on transfer is
enforceable under applicable law, including, without limitation, Sections 9406
and 9408 of the Code), (ii) the granting of a security interest therein is
contrary to applicable law, provided that upon the cessation of any such
restriction or prohibition, such property shall automatically become part of the
Collateral, or (iii) constitutes the capital stock of a controlled foreign
corporation (as defined in the IRC), in excess of 65% of the voting power of all
classes of capital stock of such controlled foreign corporations entitled to
vote.

 

“Collateral State” means the state or states where the Collateral is located,
which are California, Massachusetts, New Jersey, and Texas.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business.  The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.

 

“Credit Extension” means each Advance, or any other extension of credit by Bank
to or for the benefit of Borrower hereunder.

 

“Eligible Accounts” means those Accounts that arise in the ordinary course of
Borrower’s business that comply with all of Borrower’s representations and
warranties to Bank set forth in Section 5.3; provided, that Bank may change the
standards of eligibility by giving Borrower 30 days prior written notice. 
Unless otherwise agreed to by Bank, Eligible Accounts shall not include the
following:

 

(A)                                  ACCOUNTS THAT THE ACCOUNT DEBTOR HAS FAILED
TO PAY IN FULL WITHIN 90 DAYS OF INVOICE DATE;

 

(B)                                 CREDIT BALANCES OVER 90 DAYS;

 

(C)                                  ACCOUNTS WITH RESPECT TO AN ACCOUNT DEBTOR,
25% OF WHOSE ACCOUNTS THE ACCOUNT DEBTOR HAS FAILED TO PAY WITHIN 90 DAYS OF
INVOICE DATE;

 

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(D)                                 ACCOUNTS WITH RESPECT TO AN ACCOUNT DEBTOR,
INCLUDING SUBSIDIARIES AND AFFILIATES, WHOSE TOTAL OBLIGATIONS TO BORROWER
EXCEED 25% OF ALL ACCOUNTS, TO THE EXTENT SUCH OBLIGATIONS EXCEED THE
AFOREMENTIONED PERCENTAGE, EXCEPT AS APPROVED IN WRITING BY BANK;

 

(E)                                  ACCOUNTS WITH RESPECT TO WHICH THE ACCOUNT
DEBTOR DOES NOT HAVE ITS PRINCIPAL PLACE OF BUSINESS IN THE UNITED STATES,
EXCEPT FOR ELIGIBLE FOREIGN ACCOUNTS;

 

(F)                                    ACCOUNTS WITH RESPECT TO WHICH THE
ACCOUNT DEBTOR IS THE UNITED STATES OR ANY DEPARTMENT, AGENCY, OR
INSTRUMENTALITY OF THE UNITED STATES;

 

(G)                                 ACCOUNTS WITH RESPECT TO WHICH BORROWER IS
LIABLE TO THE ACCOUNT DEBTOR FOR GOODS SOLD OR SERVICES RENDERED BY THE ACCOUNT
DEBTOR TO BORROWER, BUT ONLY TO THE EXTENT OF ANY AMOUNTS OWING TO THE ACCOUNT
DEBTOR AGAINST AMOUNTS OWED TO BORROWER;

 

(H)                                 ACCOUNTS WITH RESPECT TO WHICH GOODS ARE
PLACED ON CONSIGNMENT, GUARANTEED SALE, SALE OR RETURN, SALE ON APPROVAL, BILL
AND HOLD, DEMO OR PROMOTIONAL, OR OTHER TERMS BY REASON OF WHICH THE PAYMENT BY
THE ACCOUNT DEBTOR MAY BE CONDITIONAL;

 

(I)                                     ACCOUNTS WITH RESPECT TO WHICH THE
ACCOUNT DEBTOR IS AN OFFICER, EMPLOYEE, AGENT OR AFFILIATE OF BORROWER;

 

(J)                                     ACCOUNTS THAT HAVE NOT YET BEEN BILLED
TO THE ACCOUNT DEBTOR  OR THAT RELATE TO DEPOSITS (SUCH AS GOOD FAITH DEPOSITS)
OR OTHER PROPERTY OF THE ACCOUNT DEBTOR HELD BY BORROWER FOR THE PERFORMANCE OF
SERVICES OR DELIVERY OF GOODS WHICH BORROWER HAS NOT YET PERFORMED OR DELIVERED;

 

(K)                                  PRE-BILLED ACCOUNTS, OTHER THAN CONTRACTS
FOR SOFTWARE MAINTENANCE, WHICH SHALL BE INCLUDED;

 

(L)                                     ACCOUNTS WITH RESPECT TO WHICH THE
ACCOUNT DEBTOR DISPUTES LIABILITY OR MAKES ANY CLAIM WITH RESPECT THERETO AS TO
WHICH BANK BELIEVES, IN ITS SOLE DISCRETION, THAT THERE MAY BE A BASIS FOR
DISPUTE (BUT ONLY TO THE EXTENT OF THE AMOUNT SUBJECT TO SUCH DISPUTE OR CLAIM),
OR IS SUBJECT TO ANY INSOLVENCY PROCEEDING, OR BECOMES INSOLVENT, OR GOES OUT OF
BUSINESS;

 

(M)                               ACCOUNTS THE COLLECTION OF WHICH BANK
REASONABLY DETERMINES AFTER INQUIRY AND CONSULTATION WITH BORROWER TO BE
DOUBTFUL; AND

 

(N)                                 RETENTIONS AND HOLD-BACKS.

 

“Eligible Foreign Accounts” means Accounts with respect to which the account
debtor does not have its principal place of business in the United States and
that are (i) supported by one or more letters of credit in an amount and of a
tenor, and issued by a financial institution, acceptable to Bank, (ii) insured
by the Export Import Bank of the United States, (iii) generated by an account
debtor with its principal place of business in Canada, provided that the Bank
has perfected its security interest in the appropriate Canadian province, or
(iv) approved by Bank on a case-by-case basis.  All Eligible Foreign Accounts
must be calculated in U.S. Dollars.

 

“Environmental Laws” means all laws, rules, regulations, orders and the like
issued by any federal state, local foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to
any hazardous materials or wastes, toxic substances, flammable, explosive or
radioactive materials, asbestos or other similar materials.

 

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“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

 

“Event of Default” has the meaning assigned in Article 8.

 

 “GAAP” means generally accepted accounting principles, consistently applied, as
in effect from time to time in the United States of America.

 

“Inactive Subsidiary” means any Subsidiary that is not actively carrying on
business and that has assets of less than $10,000.

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

 

“Intellectual Property Collateral” means all of Borrower’s right, title, and
interest in and to the following:

 

(A)                                  COPYRIGHTS, TRADEMARKS AND PATENTS;

 

(B)                                 ANY AND ALL TRADE SECRETS, AND ANY AND ALL
INTELLECTUAL PROPERTY RIGHTS IN COMPUTER SOFTWARE AND COMPUTER SOFTWARE PRODUCTS
NOW OR HEREAFTER EXISTING, CREATED, ACQUIRED OR HELD;

 

(C)                                  ANY AND ALL DESIGN RIGHTS WHICH MAY BE
AVAILABLE TO BORROWER NOW OR HEREAFTER EXISTING, CREATED, ACQUIRED OR HELD;

 

(D)                                 ANY AND ALL CLAIMS FOR DAMAGES BY WAY OF
PAST, PRESENT AND FUTURE INFRINGEMENT OF ANY OF THE RIGHTS INCLUDED ABOVE, WITH
THE RIGHT, BUT NOT THE OBLIGATION, TO SUE FOR AND COLLECT SUCH DAMAGES FOR SAID
USE OR INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS IDENTIFIED ABOVE;

 

(E)                                  ALL LICENSES OR OTHER RIGHTS TO USE ANY OF
THE COPYRIGHTS, PATENTS OR TRADEMARKS, AND ALL LICENSE FEES AND ROYALTIES
ARISING FROM SUCH USE TO THE EXTENT PERMITTED BY SUCH LICENSE OR RIGHTS;

 

(F)                                    ALL AMENDMENTS, RENEWALS AND EXTENSIONS
OF ANY OF THE COPYRIGHTS, TRADEMARKS OR PATENTS; AND

 

(G)                                 ALL PROCEEDS AND PRODUCTS OF THE FOREGOING,
INCLUDING WITHOUT LIMITATION ALL PAYMENTS UNDER INSURANCE OR ANY INDEMNITY OR
WARRANTY PAYABLE IN RESPECT OF ANY OF THE FOREGOING.

 

“Inventory” means all present and future inventory in which Borrower has any
interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or
limited liability company interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.

 

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“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

 

 “Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

 

 “Loan Documents” means, collectively, this Agreement, any note or notes
executed by Borrower, and any other document, instrument or agreement entered
into in connection with this Agreement, all as amended or extended from time to
time.

 

“Material Adverse Effect” means a material adverse effect on (i) the business
operations, condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents, (iii)
Borrower’s interest in, or the value, perfection or priority of Bank’s security
interest in the Collateral.

 

“Material License” means any license or other agreement of Borrower (other than
licenses for off-the-shelf software in the ordinary course of Borrower’s
Business): (a) with Parent, any Subsidiary, Parent Subsidiary or any other
Affiliate of Borrower; and (b) with any non-Affiliate, that is material to
Borrower’s business or that gives rise to, or the absence of which would result
in a loss of, more than five percent (5%) of Borrower’s gross revenues in any
given month, including revenue derived from the sale, licensing, rendering or
disposition of any product or service.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of
credit of which it is a beneficiary, drafts, instruments (including promissory
notes), securities, documents of title, and chattel paper, and Borrower’s Books
relating to any of the foregoing.

 

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

 

“Parent” means RadView Software Ltd., a company formed under the laws of Israel.

 

“Parent Subsidiary” means any corporation, partnership or limited liability
company, joint venture or other Person in which (i) any general partnership
interest or (ii) more than 50% of the stock, limited liability company interest
or joint venture of which by the terms thereof ordinary voting power to elect
the Board of Directors, managers or trustees of the entity (or similar governing
body), at the time as of which any determination is being made, is owned by
Parent, either directly or through an Affiliate.

 

“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.

 

“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

 

“Permitted Indebtedness” means:

 

(A)                                  INDEBTEDNESS OF BORROWER IN FAVOR OF BANK
ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

--------------------------------------------------------------------------------

 

(B)                                 INDEBTEDNESS EXISTING ON THE CLOSING DATE
AND DISCLOSED IN THE SCHEDULE;

 

(C)                                  INDEBTEDNESS NOT TO EXCEED $250,000 IN THE
AGGREGATE IN ANY FISCAL YEAR OF BORROWER SECURED BY A LIEN DESCRIBED IN CLAUSE
(C) OF THE DEFINED TERM “PERMITTED LIENS,” PROVIDED SUCH INDEBTEDNESS DOES NOT
EXCEED THE LESSER OF THE COST OR FAIR MARKET VALUE OF THE EQUIPMENT FINANCED
WITH SUCH INDEBTEDNESS;

 

(D)                                 SUBORDINATED DEBT;

 

(E)                                  INDEBTEDNESS TO TRADE CREDITORS INCURRED IN
THE ORDINARY COURSE OF BUSINESS;

 

(F)                                    INDEBTEDNESS TO PARENT CONSISTING OF
INTERCOMPANY JOURNAL ENTRIES MADE IN CONNECTION WITH TRANSFER PRICING
TRANSACTIONS, PROVIDED THAT ALL SUCH TRANSACTIONS ARE CASHLESS; AND

 

(G)                                 EXTENSIONS, REFINANCINGS AND RENEWALS OF ANY
ITEMS OF PERMITTED INDEBTEDNESS, PROVIDED THAT THE PRINCIPAL AMOUNT IS NOT
INCREASED OR THE TERMS MODIFIED TO IMPOSE MORE BURDENSOME TERMS UPON BORROWER OR
ITS SUBSIDIARY, AS THE CASE MAY BE.

 

“Permitted Investment” means:

 

(A)                                  INVESTMENTS EXISTING ON THE CLOSING DATE
DISCLOSED IN THE SCHEDULE;

 

(B)                                 (I) MARKETABLE DIRECT OBLIGATIONS ISSUED OR
UNCONDITIONALLY GUARANTEED BY THE UNITED STATES OF AMERICA OR ANY AGENCY OR ANY
STATE THEREOF MATURING WITHIN ONE YEAR FROM THE DATE OF ACQUISITION THEREOF,
(II) COMMERCIAL PAPER MATURING NO MORE THAN ONE 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, (III) BANK’S CERTIFICATES OF
DEPOSIT MATURING NO MORE THAN ONE YEAR FROM THE DATE OF INVESTMENT THEREIN, AND
(IV) BANK’S MONEY MARKET ACCOUNTS;

 

(C)                                  REPURCHASES OF STOCK FROM FORMER EMPLOYEES
OR DIRECTORS OF BORROWER UNDER THE TERMS OF APPLICABLE REPURCHASE AGREEMENTS (I)
IN AN AGGREGATE AMOUNT NOT TO EXCEED $100,000 IN ANY FISCAL YEAR, PROVIDED THAT
NO EVENT OF DEFAULT HAS OCCURRED, IS CONTINUING OR WOULD EXIST AFTER GIVING
EFFECT TO THE REPURCHASES, OR (II) IN ANY AMOUNT WHERE THE CONSIDERATION FOR THE
REPURCHASE IS THE CANCELLATION OF INDEBTEDNESS OWED BY SUCH FORMER EMPLOYEES TO
BORROWER REGARDLESS OF WHETHER AN EVENT OF DEFAULT EXISTS;

 

(D)                                 INVESTMENTS ACCEPTED IN CONNECTION WITH
PERMITTED TRANSFERS;

 

(E)                                  LOANS TO PARENT MADE AFTER THE CLOSING DATE
TO THE EXTENT NECESSARY TO FUND PARENT’S OPERATING EXPENSES INCURRED IN THE
ORDINARY COURSE OF BUSINESS (THE “PARENT ADVANCES”), PROVIDED THAT NO PARENT
ADVANCE SHALL BE DEEMED A PERMITTED INVESTMENT (AND SUCH PARENT ADVANCE SHALL BE
PROHIBITED HEREUNDER) IF, AS OF THE DATE SUCH ADVANCE IS TO BE FUNDED AND AFTER
GIVING EFFECT TO SUCH ADVANCE, THE AGGREGATE AMOUNT OF ALL FUNDED PARENT
ADVANCES WOULD EXCEED THE SUM OF:  (I) THE AGGREGATE AMOUNT OF CASH TRANSFERS
FROM PARENT TO BORROWER OCCURRING AFTER THE CLOSING DATE AND PRIOR TO THE
FUNDING OF SUCH PARENT ADVANCE (TO THE EXTENT THE OBLIGATION RESULTING FROM SUCH
TRANSFER IS SUBORDINATED DEBT), PLUS (II) EITHER (A) TWO HUNDRED THOUSAND
DOLLARS ($200,000) IF SUCH PARENT ADVANCE IS TO BE FUNDED PRIOR TO DECEMBER 31,
2005; OR (B) NINE HUNDRED EIGHTY THOUSAND DOLLARS ($980,000) IF SUCH PARENT
ADVANCE IS TO BE FUNDED AFTER DECEMBER 31, 2005 BUT PRIOR TO THE FIRST
ANNIVERSARY OF THE CLOSING DATE.

 

--------------------------------------------------------------------------------

(F)                                    INVESTMENTS IN AFFILIATES AND
SUBSIDIARIES NOT TO EXCEED $10,000 IN THE AGGREGATE IN ANY FISCAL YEAR;

 

(G)                                 INVESTMENTS NOT TO EXCEED $50,000 IN THE
AGGREGATE IN ANY FISCAL YEAR CONSISTING OF (I) TRAVEL ADVANCES AND EMPLOYEE
RELOCATION LOANS AND OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY COURSE OF
BUSINESS, AND (II) LOANS TO EMPLOYEES, OFFICERS OR DIRECTORS RELATING TO THE
PURCHASE OF EQUITY SECURITIES OF BORROWER OR ITS SUBSIDIARIES PURSUANT TO
EMPLOYEE STOCK PURCHASE PLAN AGREEMENTS APPROVED BY BORROWER’S BOARD OF
DIRECTORS;

 

(H)                                 INVESTMENTS (INCLUDING DEBT OBLIGATIONS)
RECEIVED IN CONNECTION WITH THE BANKRUPTCY OR REORGANIZATION OF CUSTOMERS OR
SUPPLIERS AND IN SETTLEMENT OF DELINQUENT OBLIGATIONS OF, AND OTHER DISPUTES
WITH, CUSTOMERS OR SUPPLIERS ARISING IN THE ORDINARY COURSE OF BORROWER’S
BUSINESS;

 

(I)                                     INVESTMENTS CONSISTING OF NOTES
RECEIVABLE OF, OR PREPAID ROYALTIES AND OTHER CREDIT EXTENSIONS, TO CUSTOMERS
AND SUPPLIERS WHO ARE NOT AFFILIATES, IN THE ORDINARY COURSE OF BUSINESS,
PROVIDED THAT THIS SUBPARAGRAPH (H) SHALL NOT APPLY TO INVESTMENTS OF BORROWER
IN ANY SUBSIDIARY; AND

 

(J)                                     JOINT VENTURES OR STRATEGIC ALLIANCES IN
THE ORDINARY COURSE OF BORROWER’S BUSINESS CONSISTING OF THE NON-EXCLUSIVE
LICENSING OF TECHNOLOGY, THE DEVELOPMENT OF TECHNOLOGY OR THE PROVIDING OF
TECHNICAL SUPPORT, PROVIDED THAT ANY CASH INVESTMENTS BY BORROWER DO NOT EXCEED
$50,000 IN THE AGGREGATE IN ANY FISCAL YEAR.

 

“Permitted Liens” means the following:

 

(A)                                  ANY LIENS EXISTING ON THE CLOSING DATE AND
DISCLOSED IN THE SCHEDULE (EXCLUDING LIENS TO BE SATISFIED WITH THE PROCEEDS OF
THE ADVANCES) OR ARISING UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS;

 

(B)                                 LIENS FOR TAXES, FEES, ASSESSMENTS OR OTHER
GOVERNMENTAL CHARGES OR LEVIES, EITHER NOT DELINQUENT OR BEING CONTESTED IN GOOD
FAITH BY APPROPRIATE PROCEEDINGS AND FOR WHICH BORROWER MAINTAINS ADEQUATE
RESERVES, PROVIDED THE SAME HAVE NO PRIORITY OVER ANY OF BANK’S SECURITY
INTERESTS;

 

(C)                                  LIENS NOT TO EXCEED $250,000 IN THE
AGGREGATE (I) UPON OR IN ANY EQUIPMENT (OTHER THAN EQUIPMENT FINANCED BY AN
EQUIPMENT ADVANCE) ACQUIRED OR HELD BY BORROWER OR ANY OF ITS SUBSIDIARIES TO
SECURE THE PURCHASE PRICE OF SUCH EQUIPMENT OR INDEBTEDNESS INCURRED SOLELY FOR
THE PURPOSE OF FINANCING THE ACQUISITION OR LEASE OF SUCH EQUIPMENT, OR (II)
EXISTING ON SUCH EQUIPMENT AT THE TIME OF ITS ACQUISITION, PROVIDED THAT THE
LIEN IS CONFINED SOLELY TO THE PROPERTY SO ACQUIRED AND IMPROVEMENTS THEREON,
AND THE PROCEEDS OF SUCH EQUIPMENT;

 

(D)                                 LIENS INCURRED IN CONNECTION WITH THE
EXTENSION, RENEWAL OR REFINANCING OF THE INDEBTEDNESS SECURED BY LIENS OF THE
TYPE DESCRIBED IN CLAUSES (A) THROUGH (E) ABOVE, PROVIDED THAT ANY EXTENSION,
RENEWAL OR REPLACEMENT LIEN SHALL BE LIMITED TO THE PROPERTY ENCUMBERED BY THE
EXISTING LIEN AND THE PRINCIPAL AMOUNT OF THE INDEBTEDNESS BEING EXTENDED,
RENEWED OR REFINANCED DOES NOT INCREASE; AND

 

(E)                                  LIENS ARISING FROM JUDGMENTS, DECREES OR
ATTACHMENTS IN CIRCUMSTANCES NOT CONSTITUTING AN EVENT OF DEFAULT UNDER SECTIONS
8.4 (ATTACHMENT) OR 8.8 (JUDGMENTS).

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition
by Borrower or any Subsidiary of:

 

--------------------------------------------------------------------------------

 

(A)                                  INVENTORY IN THE ORDINARY COURSE OF
BUSINESS;

 

(B)                                 LICENSES AND SIMILAR ARRANGEMENTS FOR THE
USE OF THE PROPERTY OF BORROWER OR ITS SUBSIDIARIES IN THE ORDINARY COURSE OF
BUSINESS;

 

(C)                                  WORN-OUT OR OBSOLETE EQUIPMENT NOT FINANCED
WITH THE PROCEEDS OF EQUIPMENT ADVANCES; OR

 

(D)                                 OTHER ASSETS OF BORROWER OR ITS SUBSIDIARIES
THAT DO NOT IN THE AGGREGATE EXCEED $50,000 DURING ANY FISCAL YEAR.

 

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

 

“Prime Rate” means the variable rate of interest, per annum, most recently
announced by Bank, as its “prime rate,” whether or not such announced rate is
the lowest rate available from Bank.

 

 “Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower.

 

“Revolving Line” means a Credit Extension of up to $2,000,000.

 

“Revolving Maturity Date” means May 24, 2006.

 

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of each
Collateral State, Chief Executive Office State and the Borrower State and other
applicable federal, state or local government offices identifying all current
security interests filed in the Collateral and Liens of record as of the date of
such report.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in
writing to the debt owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank).

 

“Subsidiary” means any corporation, partnership or limited liability company,
joint venture or other Person in which (i) any general partnership interest or
(ii) more than 50% of the stock, limited liability company interest or joint
venture of which by the terms thereof ordinary voting power to elect the Board
of Directors, managers or trustees of the entity (or similar governing body), at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.

 

 “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.

 

--------------------------------------------------------------------------------

 

DEBTOR

 

RADVIEW SOFTWARE, INC.

 

 

 

SECURED PARTY:

 

COMERICA BANK

 

EXHIBIT B

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

 

(a)          all accounts (including health-care-insurance receivables), chattel
paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

 

(b)         all common law and statutory copyrights and copyright registrations,
applications for registration, now existing or hereafter arising, in the United
States of America or in any foreign jurisdiction, obtained or to be obtained on
or in connection with any of the foregoing, or any parts thereof or any
underlying or component elements of any of the foregoing, together with the
right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to sue in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;

 

(c)          all trademarks, service marks, trade names and service names and
the goodwill associated therewith, together with the right to trademark and all
rights to renew or extend such trademarks and the right (but not the obligation)
of Secured Party to sue in its own name and/or in the name of the Debtor for
past, present and future infringements of trademark;

 

(d)         all (i) patents and patent applications filed in the United States
Patent and Trademark Office or any similar office of any foreign jurisdiction,
and interests under patent license agreements, including, without limitation,
the inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or  licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and

 

(e)          any and all cash proceeds and/or noncash proceeds of any of the
foregoing, including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time, including revised Division 9 of
the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991
(S.B. 45), Section 35, operative July 1, 2001.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

TECHNOLOGY & LIFE SCIENCES DIVISION
LOAN ANALYSIS
LOAN ADVANCE/PAYDOWN REQUEST FORM

DEADLINE FOR NEXT DAY PROCESSING IS 3:30 P.M. Eastern Time
DEADLINE FOR WIRE TRANSFERS IS 3:30 P.M. Eastern Time

 

TO: Loan Analysis

 

DATE:

 

TIME:

 

FAX #: (650) 846-6840

 

 

 

 

 

FROM:

RADVIEW SOFTWARE, INC.

 

TELEPHONE REQUEST (For Bank Use Only):

 

Borrower’s Name

 

 

 

 

 

The following person is authorized to request the loan payment transfer/loan
advance on the designated account and is known to me.

FROM:

 

 

 

 

Authorized Signer’s Name

 

FROM:

 

 

 

 

Authorized Signature (Borrower)

 

Authorized Request & Phone #

PHONE #:

 

 

 

 

 

 

Received by (Bank) & Phone #

FROM

 

 

 

ACCOUNT#:

 

 

 

(please include Note number, if applicable)

 

 

TO ACCOUNT #:

 

 

Authorized Signature (Bank)

(please include Note number, if applicable)

 

 

 

 

 

REQUESTED TRANSACTION TYPE

REQUESTED DOLLAR AMOUNT

For Bank Use Only

 

 

 

PRINCIPAL INCREASE* (ADVANCE)

$

 

 

Date Rec’d:

PRINCIPAL PAYMENT (ONLY)

$

 

 

Time:

 

 

Comp. Status:

YES

NO

OTHER INSTRUCTIONS:

Status Date:

 

Time:

 

Approval:

 

 

 

 

All representations and warranties of Borrower stated in the Loan Agreement are
true, correct and complete in all material respects as of the date of the
telephone request for and advance confirmed by this Borrowing Certificate,
including without limitation the representation that Borrower has paid for and
owns the equipment financed by the Bank; provided, however, that those
representations and warranties the date expressly referring to another date
shall be true, correct and complete in all material respects as of such date.

 

--------------------------------------------------------------------------------

*IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE?  (PLEASE CIRCLE ONE)

YES

NO

 

If YES, the Outgoing Wire Transfer Instructions must be completed below.

 

 

 

 

OUTGOING WIRE TRANSFER INSTRUCTIONS

Fed Reference Number

Bank Transfer Number

 

 

 

 

The items marked with an asterisk (*) are required to be completed.

 

 

*Beneficiary Name

 

*Beneficiary Account Number

 

 

--------------------------------------------------------------------------------

 

*Beneficiary Address

 

Currency Type

US DOLLARS ONLY

*ABA Routing Number (9 Digits)

 

*Receiving Institution Name

 

*Receiving Institution Address

 

*Wire Account

$

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

BORROWING BASE CERTIFICATE

 

Borrower: RADVIEW SOFTWARE, INC.

 

Lender: Comerica Bank

 

 

 

Commitment Amount: $2,000,000

 

 

 

ACCOUNTS RECEIVABLE

 

 

 

 

1.             Accounts Receivable Book Value as of      

 

 

$

 

 

2.             Additions (please explain on reverse)

 

 

$

 

 

3.             TOTAL ACCOUNTS RECEIVABLE

 

 

$

 

 

 

 

 

 

 

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

 

 

 

 

4.             Amounts over 90 days due

$

 

 

 

 

5.             Balance of 25% over 90 day accounts

$

 

 

 

 

6.             Concentration Limits

$

 

 

 

 

7.             Foreign Accounts

$

 

 

 

 

8.             Governmental Accounts

$

 

 

 

 

9.             Contra Accounts

$

 

 

 

 

10.           Demo Accounts

$

 

 

 

 

11.           Intercompany/Employee Accounts

$

 

 

 

 

12.           Other (please explain on reverse)

$

 

 

 

 

13.           TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

 

 

$

 

 

14.           Eligible Accounts (#3 minus #13)

 

 

$

 

 

15.           LOAN VALUE OF ACCOUNTS ($1,000,000 plus 75% of #14)

 

 

$

 

 

 

 

 

 

 

BALANCES

 

 

 

 

16.           Maximum Loan Amount

 

 

$

2,000,000

 

17.           Total Funds Available [Lesser of #16 or #15]

 

 

$

 

 

18.           Present balance owing on Line of Credit

 

 

$

 

 

19.           RESERVE POSITION (#17 minus #18)

 

 

$

 

 

 

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.

 

RADVIEW SOFTWARE, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Authorized Signer

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D
COMPLIANCE CERTIFICATE

TO:                                                                           
COMERICA BANK

 

FROM:                                                         RADVIEW SOFTWARE,
INC.

 

The undersigned authorized officer of RADVIEW SOFTWARE, INC. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in
complete compliance for the period ending                 with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct as of the date hereof. 
Attached herewith are the required documents supporting the above
certification.  The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

 

Required

 

 

 

 

 

Complies

 

 

 

 

 

 

 

 

 

 

 

Quarterly financial statements (10Q)

 

Quarterly within 45 days

 

 

 

Yes

 

No

 

Annual (CPA Audited) (10K)

 

FYE within 120 days

 

 

 

Yes

 

No

 

A/R & A/P Agings, Borrowing Base Cert.

 

Monthly within 30 days

 

 

 

Yes

 

No

 

A/R Audit

 

Initial and Semi-Annual

 

 

 

Yes

 

No

 

IP Report

 

Quarterly within 30 days

 

 

 

Yes

 

No

 

Total amount of Borrower’s Cash

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of Borrower’s Cash at Bank & affiliates

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of Parent’s Cash

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of Parent’s Cash at Bank & affiliates

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of RadView (UK) Cash

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of RadView (UK) Cash at Bank & affiliates

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of RadView GmbH Cash

 

Amount:

$

 

 

 

 

Yes

 

No

 

Total amount of RadView GmbH Cash at Bank & affiliates

 

Amount:

$

 

 

 

 

Yes

 

No

 

Projections

 

Dec. 31

 

 

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

Financial Covenant

 

Required

 

Actual

 

 

 

Complies

 

 

 

 

 

 

 

 

 

 

 

Minimum Cash at Bank

 

$300,000 (Closing Date)

 

$

 

 

Yes

 

No

 

 

 

$1,200,000 (thereafter)

 

 

 

 

 

 

 

Maximum Net Loss

 

See Section 6.7(b)

 

$

 

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

Comments Regarding Exceptions: See Attached.

 

BANK USE ONLY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Received by:

 

 

Sincerely,

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

Verified:

 

 

SIGNATURE

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date:

 

 

TITLE

 

 

 

 

 

 

 

 

Compliance Status

 

 

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

DATE

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

SCHEDULE OF EXCEPTIONS

 

--------------------------------------------------------------------------------

 

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

 

I certify that I am the duly elected and qualified Secretary of RadView
Software, Inc., a New Jersey corporation; that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.

 

Copy of Resolutions:

 

Be it Resolved, That:

 

1.               Any one (1) of the following                                
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:

 

(a)          Negotiate and procure loans, letters of credit and other credit or
financial accommodations from Comerica Bank (“Bank”), a Michigan banking
corporation, including, without limitation, that certain Loan and Security
Agreement dated as of May 25, 2005, as may subsequently be amended from time to
time.

 

(b)         Discount with the Bank, commercial or other business paper belonging
to the Corporation made or drawn by or upon third parties, without limit as to
amount;

 

(c)          Purchase, sell, exchange, assign, endorse for transfer and/or
deliver certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation;

 

(d)         Give security for any liabilities of the Corporation to the Bank by
grant, security interest, assignment, lien, deed of trust or mortgage upon any
real or personal property, tangible or intangible of the Corporation; and

 

(e)          Execute and deliver in form and content as may be required by the
Bank any and all notes, evidences of Indebtedness, applications for letters of
credit, guaranties, subordination agreements, loan and security agreements,
financing statements, assignments, liens, deeds of trust, mortgages, trust
receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2.               Said Bank be and it is authorized and directed to pay the
proceeds of any such loans or discounts as directed by the persons so authorized
to sign, whether so payable to the order of any of said persons in their
individual capacities or not, and whether such proceeds are deposited to the
individual credit of any of said persons or not;

 

3.               Any and all agreements, instruments and documents previously
executed and acts and things previously done to carry out the purposes of these
Resolutions are ratified, confirmed and approved as the act or acts of the
Corporation.

 

4.               These Resolutions shall continue in force, and the Bank may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Bank,
until notice to the contrary in writing is duly served on the Bank (such notice
to have no effect on any action previously taken by the Bank in reliance on
these Resolutions).

 

5.               Any person, corporation or other legal entity dealing with the
Bank may rely upon a certificate signed by an officer of the Bank to effect that
these Resolutions and any agreement, instrument or document executed pursuant to
them are still in full force and effect and binding upon the Corporation.

 

6.               The Bank may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Bank.

 

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which

 

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the Corporation is a party or by which it is bound; and that neither the
articles of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.

 

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

 

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

 

NAME (Type or Print)

 

TITLE

 

SIGNATURE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on May 25,
2005.

 

 

 

 

 

 

 

Secretary

 

 

 

 

 

***

 

 

The Above Statements are Correct.

 

 

 

SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE. A SHAREHOLDER OTHER THAN SECRETARY
WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

 

Failure to complete the above when the Secretary is authorized to sign alone
shall constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.

 

--------------------------------------------------------------------------------

 

COMERICA BANK

Member FDIC

 

ITEMIZATION OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Revolver)

 

Name(s):  RADVIEW SOFTWARE,
INC.                                                                       
Date: May 25, 2005

 

 

$

credited to deposit account No.                      when Advances are requested
or disbursed to Borrower by cashiers check or wire transfer

 

Amounts paid to others on your behalf:

$

to Comerica Bank for Facility Fee

$ 

to Comerica Bank for accounts receivable audit (estimate)

$ 

to Bank counsel fees and expenses

$

to                    

$

to                    

$2,000,000

TOTAL (AMOUNT FINANCED)

 

Upon consummation of this transaction, this document will also serve as the
authorization for Comerica Bank to disburse the loan proceeds as stated above.

 

 

 

 

 

 

Signature

 

Signature

 

--------------------------------------------------------------------------------

 

AGREEMENT TO PROVIDE INSURANCE

 

TO:         COMERICA
BANK                                                                            
Date:  May 25, 2005

Attn:  Deni M. Snider,  MC 4770

75 E. Trimble Road

San Jose, CA 
95131                                                                           
Borrower:  RADVIEW SOFTWARE, INC.

 

In consideration of a loan in the amount of $2,000,000, secured by all tangible
personal property including inventory and equipment.

 

I/We agree to obtain adequate insurance coverage to remain in force during the
term of the loan.

 

I/We also agree to advise the below named agent to add Comerica Bank as lender’s
loss payable on the new or existing insurance policy, and to furnish Bank at
above address with a copy of said policy/endorsements and any subsequent renewal
policies.

 

I/We understand that the policy must contain:

 

1.             Fire and extended coverage in an amount sufficient to cover:

 

(a)           The amount of the loan, OR

 

(b)           All existing encumbrances, whichever is greater,

 

But not in excess of the replacement value of the improvements on the real
property.

 

2.                                       Lender’s “Loss Payable” Endorsement
Form 438 BFU in favor of Comerica Bank, or any other form acceptable to Bank.

 

INSURANCE INFORMATION

 

Insurance Co./Agent                                                          
Telephone No.:

 

Agent’s Address:

 

Signature of Obligor:

 

 

 

Signature of Obligor:

 

 

FOR BANK USE ONLY

 

INSURANCE VERIFICATION: Date:

 

 

 

Person Spoken to:

 

 

Policy Number:

 

 

Effective From:

 

To:

 

 

Verified by:

 

 

--------------------------------------------------------------------------------

 

COMERICA BANK

 

 

AUTOMATIC DEBIT AUTHORIZATION

Member FDIC

 

 

 

 

 

To:  Comerica Bank

 

Re:  Loan #                             

 

You are hereby authorized and instructed to charge account No.
                         in the name of RADVIEW SOFTWARE, INC.

for principal, interest and other payments due on above referenced loan as set
forth below and credit the loan referenced above.

 

ý            Debit each interest payment as it becomes due according to the
terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

ý            Debit each principal payment as it becomes due according to the
terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

ý            Debit each payment for Bank Expenses as it becomes due according to
the terms of the Loan and Security Agreement and any renewals or amendments
thereof.

 

This Authorization is to remain in full force and effect until revoked in
writing.

 

 

Borrower Signature

Date

 

 

 

May 25, 2005

 

--------------------------------------------------------------------------------

 

Phone:

COMERICA BANK

Fax

CLIENT AUTHORIZATION

 

General Authorization

 

I hereby authorize Comerica Bank to use my company name, logo, and information
relating to our banking relationship in its marketing and advertising campaigns
which is intended for Comerica Bank’s customers, prospects and shareholders.

 

Comerica Bank will forward any advertising or article including client for prior
review and approval.

 

 

 

Signature

 

 

 

 

 

Printed Name

Title

 

 

 

 

 

Company

 

 

 

 

 

Mailing Address

 

 

 

 

 

City, State, Zip Code

 

 

 

 

 

Phone Number

 

 

 

 

 

Fax Number

 

 

 

 

 

E-Mail

 

 

 

 

 

Date

 

 

--------------------------------------------------------------------------------

 

Secured Party:  Comerica Bank

 

Debtor:  RADVIEW SOFTWARE, INC.

 

EXHIBIT A to UCC Financing Statement

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

 

(a)          all accounts (including health-care-insurance receivables), chattel
paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

 

(b)         all common law and statutory copyrights and copyright registrations,
applications for registration, now existing or hereafter arising, in the United
States of America or in any foreign jurisdiction, obtained or to be obtained on
or in connection with any of the foregoing, or any parts thereof or any
underlying or component elements of any of the foregoing, together with the
right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to sue in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;

 

(c)          all trademarks, service marks, trade names and service names and
the goodwill associated therewith, together with the right to trademark and all
rights to renew or extend such trademarks and the right (but not the obligation)
of Secured Party to sue in its own name and/or in the name of the Debtor for
past, present and future infringements of trademark;

 

(d)         all (i) patents and patent applications filed in the United States
Patent and Trademark Office or any similar office of any foreign jurisdiction,
and interests under patent license agreements, including, without limitation,
the inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or  licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and

 

(e)          any and all cash proceeds and/or noncash proceeds of any of the
foregoing, including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time, including revised Division 9 of
the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991
(S.B. 45), Section 35, operative July 1, 2001.

 

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