Exhibit 10.1

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CREDIT AND SECURITY AGREEMENT

BY AND AMONG

INFOTECH USA, INC.,
a New Jersey corporation
AS BORROWER

INFOTECH USA, INC.,
a Delaware corporation

AND

INFORMATION TECHNOLOGY SERVICES, INC.,
a New York corporation
AS GUARANTORS

AND

WELLS FARGO BUSINESS CREDIT, INC.,
AS LENDER

JUNE 29, 2004

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TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS       1                    Section 1.1  Definitions  1  
         Section 1.2  Other Definitional Terms; Rules of Interpretation  13    
      ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY  14          
         Section 2.1  Revolving Advances  14            Section 2.2  Procedures
for Requesting Revolving Advances  14            Section 2.3  Increased Costs;
Capital Adequacy; Indemnification  15            Section 2.4  IBM L/C  16  
         Section 2.5  Special Account  16            Section 2.6  Payment of
Amounts Drawn Under the IBM L/C; Obligation of
Reimbursement  17            Section 2.7  Obligations Absolute  17  
         Section 2.8  [Intentionally omitted]  18            Section 2.9 
Interest; Default Interest; Participations; Clearance Days; Usury  18  
         Section 2.10  Fees  19            Section 2.11  Time for Interest
Payments; Payment on Non-Banking Days;
Computation of Interest and Fees  21            Section 2.12  Lockboxes and
Collateral Accounts; Application of Payments  21            Section 2.13 
Discretionary Nature of this Facility; Termination by the Lender;
Automatic Renewal  22            Section 2.14  Voluntary Prepayment; Termination
of the Credit Facility by the
Borrower  23            Section 2.15  Mandatory Prepayments  23  
         Section 2.16  Revolving Advances to Pay Obligations  23  
         Section 2.17  Use of Proceeds  23            Section 2.18  Liability
Records  23           ARTICLE III SECURITY INTEREST; OCCUPANCY; SETOFF  23      
             Section 3.1  Grant of Security Interest  23            Section 3.2 
Notification of Account Debtors and Other Obligors  24            Section 3.3 
Assignment of Insurance  24            Section 3.4  Occupancy  24  
         Section 3.5  License  25            Section 3.6  Financing Statement 
25            Section 3.7  Setoff  26            Section 3.8  Collateral  26  
         Section 3.9  Termination of Lien  26          

ARTICLE IV CONDITIONS OF WILLINGNESS TO CONSIDER LENDING  26          
         Section 4.1  Conditions Precedent to Lender's Willingness to Consider
Making
the Initial Revolving Advance and Cause the Issuance of the IBM
L/C  26            Section 4.2  Conditions Precedent to All Revolving Advances
and the IBM L/C  29           ARTICLE V REPRESENTATIONS AND WARRANTIES  29      
             Section 5.1  Existence and Power; Name; Chief Executive Office;
Inventory
and Equipment Locations; Federal Employer Identification
Number  29            Section 5.2  Capitalization  29            Section 5.3 
Authorization of Borrowing; No Conflict as to Law or Agreements  29  
         Section 5.4  Legal Agreements  30            Section 5.5  Subsidiaries 
30            Section 5.6  Financial Condition; No Adverse Change  30  
         Section 5.7  Litigation  30            Section 5.8  Regulation U  30  
         Section 5.9  Taxes  30            Section 5.10  Titles and Liens  31  
         Section 5.11  Intellectual Property Rights  31            Section 5.12 
Plans  32            Section 5.13  Default  32            Section 5.14 
Environmental Matters  32            Section 5.15  Submissions to Lender  33  
         Section 5.16  Financing Statements  33            Section 5.17  Rights
to Payment  33            Section 5.18  Financial Solvency  34  
         Section 5.19  GE Financing Statements  34            Section 5.20 
Dormancy and Dissolution of Finch and Murrray Products, Inc.  34          
ARTICLE VI COVENANTS  34                    Section 6.1  Reporting Requirements 
34            Section 6.2  Financial Covenants  38            Section 6.3 
Permitted Liens; Financing Statements  38  

–ii–

         Section 6.4  Indebtedness  39            Section 6.5  Guaranties  40  
         Section 6.6  Investments and Subsidiaries  41            Section 6.7 
Debt and Royalty Payments; Dividends and Distributions  41            Section
6.8  Salaries  42            Section 6.9  [Intentionally omitted]  42  
         Section 6.10  Books and Records; Inspection and Examination  42  
         Section 6.11  Account Verification  42            Section 6.12 
Compliance with Laws  42            Section 6.13  Payment of Taxes and Other
Claims  43            Section 6.14  Maintenance of Properties  43  
         Section 6.15  Insurance  43            Section 6.16  Preservation of
Existence  44            Section 6.17  Delivery of Instruments, etc.  44  
         Section 6.18  Sale or Transfer of Assets; Suspension of Business
Operations  44            Section 6.19  Consolidation and Merger; Asset
Acquisitions  44            Section 6.20  Sale and Leaseback  44  
         Section 6.21  Restrictions on Nature of Business  44            Section
6.22  Accounting  45            Section 6.23  Discounts, etc.  45  
         Section 6.24  Plans  45            Section 6.25  Place of Business;
Name  45            Section 6.26  Constituent Documents; S Corporation Status 
45            Section 6.27  Performance by the Lender  45            Section
6.28  Financial Statements and Covenants  46            Section 6.29  Affiliate
Transactions  46            Section 6.30  Application of ADS Loan Payments; Cash
Collateral  46           ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES  47
                   Section 7.1  Events of Default  47            Section 7.2 
Rights and Remedies  49            Section 7.3  Certain Notices  50          
ARTICLE VIII MISCELLANEOUS  50                    Section 8.1  No Waiver;
Cumulative Remedies; Compliance with Laws  50            Section 8.2 
Amendments, Etc.  50            Section 8.3  Addresses for Notices  50  
         Section 8.4  Further Documents  52            Section 8.5  Costs and
Expenses  52            Section 8.6  Indemnity  52            Section 8.7 
Participants  53            Section 8.8  Execution in Counterparts;
Telefacsimile Execution  53            Section 8.9  Retention of Obligors'
Records  53            Section 8.10  Binding Effect; Assignment; Complete
Agreement; Exchanging
Information  53            Section 8.11  Severability of Provisions  54  
         Section 8.12  Headings  54            Section 8.13  Construction  54  
         Section 8.14  Publicity  54            Section 8.15  Governing Law;
Jurisdiction, Venue; Waiver of Jury Trial  54  

–iii–

TABLE OF EXHIBITS AND SCHEDULES

Exhibit A   Form of Revolving Note   Exhibit B  Form of IBM L/C  Exhibit C  Form
of Compliance Certificate  Exhibit D  Form of Notice of Borrowing  Exhibit E 
Closing Document Checklist  Exhibit F  Form of Bill and Hold Sale Letter 
Schedule 5.1  Trade Names, Chief Executive Office, Principal Place of Business,
and Locations of Collateral  Schedule 5.2  Capitalization and Organizational
Chart  Schedule 5.5  Subsidiaries  Schedule 5.7  Litigation  Schedule 5.11 
Intellectual Property Disclosures  Schedule 5.12  Plans  Schedule 5.17 
Defenses, Set-Offs and Counterclaims  Schedule 6.3  Existing Liens  Schedule
6.4  Existing Indebtedness  Schedule 6.5  Existing Guaranties  Schedule 6.8 
Existing Compensation Arrangements 

–iv–

CREDIT AND SECURITY AGREEMENT

Dated as of June 29, 2004

        INFOTECH USA, INC., a New Jersey corporation (the “Borrower”), as
borrower, INFOTECH USA, INC., a Delaware corporation (“Parent”), and INFORMATION
TECHNOLOGY SERVICES, INC., a New York corporation (“ITSI”), as guarantors, and
WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the “Lender”), as
lender, hereby agree as follows:

ARTICLE I
DEFINITIONS

        Section 1.1    Definitions. For all purposes of this Agreement, except
as otherwise expressly provided, the following terms shall have the meanings
assigned to them in this Section or in the Section referenced after such term:

          “Accounts” means, with respect to any Obligor, all of such Obligor’s
accounts, as such term is defined in the UCC, including each and every right of
such Obligor to the payment of money, whether such right to payment now exists
or hereafter arises, whether such right to payment arises out of a sale, lease
or other disposition of goods or other property, out of a rendering of services,
out of a loan, out of the overpayment of taxes or other liabilities, or
otherwise arises under any contract or agreement, whether such right to payment
is created, generated or earned by such Obligor or by some other person who
subsequently transfers such person’s interest to such Obligor, whether such
right to payment is or is not already earned by performance, and howsoever such
right to payment may be evidenced, together with all other rights and interests
(including all Liens) which such Obligor may at any time have by law or
agreement against any account debtor or other obligor obligated to make any such
payment or against any property of such account debtor or other obligor; all
including but not limited to all present and future accounts, contract rights,
loans and obligations receivable, chattel papers, bonds, notes and other debt
instruments, tax refunds and rights to payment in the nature of general
intangibles.

          “ADS” means Applied Digital Solutions, Inc., a Missouri corporation,
and its successors and assigns.

          “ADS Loan Documents” means, collectively: (a) that certain Term Note,
dated June 27, 2003, in the amount of $1,000,000, executed by ADS and payable to
Parent; (b) that certain Commercial Loan Agreement, dated June 27, 2003, between
ADS and Parent, as amended by the First Amendment dated on or about the date
hereof; (c) that certain Stock Pledge Agreement, dated June 27, 2003, between
ADS and Parent; and (d) all other agreements, documents and instruments executed
and/or delivered in connection with any of the foregoing, in each case as the
same may be amended, modified, supplemented, restated or replaced from time to
time.

          “ADS Loan” means the term loan in the original principal amount of
$1,000,000 made by Parent to ADS pursuant to the ADS Loan Documents.

          “Advance” means a Revolving Advance.

          “Affiliate” or “Affiliates” means: (a) with respect to the Borrower:
each Guarantor; ADS; the respective successors of the foregoing; and any other
Person controlled by, controlling or under common control with the Borrower,
including each Subsidiary of the Borrower, if any; and (b) with respect to each
of Parent and ITSI: the Borrower; each other Guarantor; ADS; and the respective
successors of the foregoing; and any other Person controlled by, controlling or
under common control with Parent or ITSI, including a Subsidiary of Parent or
ITSI, if any. For purposes of this definition, “control,” when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

          “Agreement” means this Credit and Security Agreement, as amended,
modified, supplemented or restated from time to time.

          “Availability” means, at any time, an amount equal to the Borrowing
Base, minus the outstanding principal balance of Revolving Advances.

          “Banking Day” means a day on which the Federal Reserve Bank of New
York is open for business.

          “Base Rate” means the rate of interest publicly announced from time to
time by Wells Fargo Bank National Association at its principal office in San
Francisco as its “prime rate”, with the understanding that the “prime rate” is
one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for
loans making reference thereto.

          “Book Net Worth” means the owners’ equity of the Obligors and their
consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP. If, as a result of a change in GAAP or otherwise, the Obligors shall be
required to write-off or reduce all or a portion of their intangible assets
consisting of goodwill, an amount equal to the lesser of (a) the aggregate
amount of goodwill written-off or reduced and (b) $2,154,000 shall thereafter
continue to be included in the Obligors’ assets for purposes of computing Book
Net Worth only.

          “Borrowing Base” means at any time and subject to change from time to
time in the Lender’s sole discretion, the lesser of:

  (a)

the Maximum Line; or

  (b)

the sum of:

(i)  

up to 85% of Eligible Accounts less the Dilution Reserve; plus

– 2 –

(ii)  

up to 100% of the amount of available funds on deposit in the Pledged Account;
provided, that, at all times the Lender shall have an exclusive and perfected
security interest in the Pledged Account and all monies deposited therein; minus

(iii)  

the IBM Availability Block; minus

(iv)  

any Reserves.

          “Capital Expenditures” means for a period, any expenditure of money or
incurrence of a liability during such period for the lease, purchase,
construction or other acquisition of, or improvement or addition to, any capital
or fixed asset.

          “Change of Control” means the occurrence of any of the following
events:

  (a)

(i) Parent shall cease to own, beneficially and of record, 100% of the capital
stock of each of the Borrower and ITSI, on a fully-diluted basis; or (ii) ADS
shall cease to own, beneficially and of record, at least 25% of the voting power
of the capital stock of Parent, on a fully-diluted basis; or

  (b)

During any one-year period, individuals who at the beginning of such period
constituted the board of Directors of any Obligor (together with any new
Directors whose election to such board of Directors, or whose nomination for
election by the owners of such Obligor, was approved by a vote of 66-2/3% of the
Directors then still in office who were either Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
Directors of such Obligor, as the case may be, then in office; or

  (c)

Sebastian Perez or Robert Patterson shall cease to actively manage each
Obligor’s day-to-day business activities, in his capacity as president or chief
financial officer, as the case may be, of each Obligor.

          “Collateral” means, collectively: (a) all of each Obligor’s Accounts,
chattel paper, deposit accounts, documents, Equipment, General Intangibles,
goods, instruments, Inventory, Investment Property, letter-of-credit rights,
letters of credit; (b) all monies of any Obligor on deposit in any Collateral
Account; and (c) all items of any Obligor in any lockbox; together with: (i) all
substitutions and replacements for and products of any of the foregoing; (ii) in
the case of all goods, all accessions thereto; (iii) all accessories,
attachments, parts, equipment and repairs now or hereafter attached or affixed
to or used in connection with any of the foregoing; (iv) all warehouse receipts,
bills of lading and other documents of title now or hereafter covering any of
the foregoing; (v) all collateral subject to the Lien of any Security Document;
(vi) any money, or other assets of any Obligor that now or hereafter come into
the possession, custody, or control of the Lender; (vii) all sums on deposit in
the Special Account; and (viii) proceeds of any and all of the foregoing.

– 3 –

          “Collateral Access Agreement” means an agreement in writing, in form
and substance reasonably satisfactory to the Lender and the other party thereto,
from a lessor of premises to an Obligor, or any other person to whom any
Collateral (including, Inventory, Equipment, bills of lading or other documents
of title) is consigned or who has custody, control or possession of any such
Collateral or is otherwise the owner or operator of, or mortgagee with respect
to, any premises on which any of such Collateral is located, pursuant to which
such lessor, consignee or other person acknowledges the first priority security
interest of the Lender in such Collateral, agrees to waive or subordinate to the
Lender’s security interest (which subordination shall include provisions for a
prohibition on the exercise by such lessor, consignee or other person of its
remedies and a waiver of the right to require marshaling acceptable to the
Lender) any and all claims such lessor, consignee or other person may, at any
time, have against such Collateral, whether for processing, storage or
otherwise, and agrees to permit the Lender access to, and the right to remain
on, the premises of such lessor, consignee or other person, for such period of
time as Lender reasonably determines is necessary or desirable, so as to
exercise the Lender’s rights and remedies and otherwise deal with such
Collateral and in the case of any person who at any time has custody, control or
possession of any bills of lading or other documents of title, agrees to hold
such bills of lading or other documents as bailee for the Lender and to follow
all commercially reasonable written instructions of the Lender with respect
thereto.

          “Collateral Account” means, a cash collateral account under the
exclusive dominion and control of the Lender established pursuant to the Lockbox
and Collection Account Agreement or any other agreement into which all cash,
checks, notes, drafts and other similar items relating to or constituting
proceeds of or payments made in respect of any Collateral shall be deposited,
including, without limitation, through the related Lockbox.

          “Constituent Documents” means with respect to any Person, as
applicable, such Person’s certificate of incorporation, articles of
incorporation, by-laws, certificate of formation, articles of organization,
limited liability company agreement, management agreement, operating agreement,
shareholder agreement, partnership agreement or similar document or agreement
governing such Person’s existence, organization or management or concerning
disposition of ownership interests of such Person or voting rights among such
Person’s owners.

          “Credit Facility” means the discretionary credit facility being made
available to the Borrower by the Lender under Article II.

          “Debt” means, with respect to a Person as of a given date, all items
of indebtedness or liability which in accordance with GAAP would be included in
determining total liabilities as shown on the liabilities side of a balance
sheet for such Person and shall also include the aggregate payments required to
be made by such Person at any time under any lease that is considered a
capitalized lease under GAAP.

          “Debt to Book Net Worth Ratio” means as of a given date, the ratio of
the Obligors’ Debt to the Obligors’ Book Net Worth, determined in each case on a
consolidated basis.

– 4 –

          “Default” means an event that, with giving of notice or passage of
time or both, would constitute an Event of Default.

          “Default Period” means any period of time beginning on the day an
Event of Default occurs and ending on the date that such Event of Default has
been cured or waived.

          “Default Rate” means an annual interest rate equal to three percent
(3%) over the Floating Rate, which interest rate shall change when and as the
Floating Rate changes.

          “Dilution Reserve” means, as of any date of determination, a reserve
in an amount equal to: (a) the aggregate amount of Eligible Accounts, as of such
date of determination; multiplied by (b) the historic dilution for all of the
Borrower’s Accounts for any period prior to such date of determination as is
selected by the Lender in its sole discretion, exercised in a commercially
reasonable manner, expressed as a percentage, as determined by the Lender in its
sole discretion, exercised in a commercially reasonable manner, pursuant to its
periodic examination of the Borrower’s collateral reports and/or books and
records, minus five percentage points.

          “Director” means, with respect to a Person, a director if such Person
is a corporation, a manager, managing member or other governor if such Person is
a limited liability company, or a general partner if such Person is a
partnership.

          “Eligible Accounts” means all unpaid Accounts of the Borrower arising
from the sale of goods or the performance of services, net of any credits, but
excluding any such Accounts having any of the following characteristics:

               (i)   That portion of Accounts unpaid 91 days or more after the
invoice date or 61 days or more after the original due date (without reducing
such amount by the amount of any credit balances);

             (ii)    That portion of Accounts that is disputed or subject to a
claim of offset or a contra account;

             (iii)    That portion of Accounts not yet earned by the final
delivery of goods or rendition of services, as applicable, by the Borrower to
the applicable customer, including, retainage, progress billings, and that
portion of Accounts for which an invoice has not been sent to the applicable
account debtor;

             (iv)    Accounts constituting (i) proceeds of copyrightable
material unless such copyrightable material shall have been registered with the
United States Copyright Office, or (ii) proceeds of patentable inventions unless
such patentable inventions have been registered with the United States Patent
and Trademark Office;

             (v)    Accounts owed by any unit of government, whether foreign or
domestic (exclusive, however, of Accounts owed by any unit of state or local
government whose Accounts are not subject to a statutory counterpart to

– 5 –

the federal Assignment of Claims Act); provided, however, that there shall be
included in Eligible Accounts that portion of Accounts owed by such units of
government for which the Borrower has provided evidence reasonably satisfactory
to the Lender that (A) the Lender has a first priority perfected security
interest in such Accounts and (B) such Accounts may be enforced by the Lender
directly against such unit of government under all applicable laws;

             (vi)    Accounts owed by an account debtor located outside the
United States which are not (A) backed by a bank letter of credit naming the
Lender as beneficiary or assigned to the Lender, in the Lender’s possession or
control, and with respect to which a control agreement concerning the
letter-of-credit rights is in effect, and acceptable to the Lender in all
respects, in its sole discretion, or (B) covered by a foreign receivables
insurance policy acceptable to the Lender in its sole discretion;

             (vii)    Accounts owed by an account debtor that is insolvent, is
the subject of bankruptcy proceedings or has gone out of business or otherwise
ceased operations;

             (viii)     Accounts owed by an Owner, Subsidiary, Affiliate,
Officer, Director or employee of any Obligor;

             (ix)    Accounts not subject to a duly perfected security interest
in the Lender’s favor or which are subject to any Lien in favor of any Person
other than the Lender (including, without limitation, any equitable Lien that
may arise in connection with a payment or performance bond);

             (x)    That portion of Accounts that has been restructured,
extended, amended or modified;

             (xi)    That portion of Accounts that constitutes advertising,
finance charges or service charges;

             (xii)    Otherwise Eligible Accounts owed by an account debtor
(other than Hackensack University Hospital), to the extent that the balance of
such otherwise Eligible Accounts exceeds 15% of the aggregate amount of all
Accounts;

             (xiii)    Otherwise Eligible Accounts owed by Hackensack University
Hospital, to the extent that the balance of such otherwise Eligible Accounts
(other than Accounts arising out of bill and hold sales) exceeds the lesser of:
(a) 30% of the aggregate amount of all Accounts; and (b) $1,500,000;

             (xiv)    Accounts arising out of sales of samples or bill and hold
sales prior to shipment; provided, however, that the Lender may, at any time and
from time to time, in its sole discretion, agree that one or more Accounts
arising out of bill and hold sales are not ineligible pursuant to this clause
(xiv), provided that: (a) the Lender shall have received with respect to each
such Account a copy of the

– 6 –

applicable purchase order and an agreement in writing from the applicable
account debtor, in the form of Exhibit F hereto, confirming the unconditional
obligation of such account debtor to take the goods related to such Account and
pay the invoice related to such Account (in the case of an Account existing on
the Funding Date, such purchase order and agreement shall be delivered to the
Lender on or before the 10th day after the Funding Date) and (b) the aggregate
amount of Eligible Accounts that arose out of bill and hold sales shall not at
any time exceed $1,000,000;

             (xv)     Accounts owed by an account debtor, regardless of whether
otherwise eligible, if 33% or more of the total amount due under Accounts owing
from such debtor is ineligible;

             (xvi)     Accounts arising out of sales to Persons to whom the
Borrower owes an obligation to the extent the amount of such obligations has not
been deducted in determining the face amount of such Accounts;

             (xvii)    Accounts owed by an account debtor, regardless of whether
otherwise eligible, to the extent of the aggregate amount of deposits received
by the Borrower from such account debtor that have not yet been earned by the
final delivery of goods;

             (xviii)     Accounts that are denominated in a currency other than
U.S. dollars;

             (xix)    Accounts not in full conformity with the representations
and warranties in Section 5.17; and

             (xx)    Accounts, or portions thereof, otherwise deemed ineligible
by the Lender in its sole discretion, exercised in a commercially reasonable
manner.

          “Environmental Law” means any federal, state, local or other
governmental statute, regulation, law or ordinance dealing with the protection
of human health and the environment.

          “Equipment” means, with respect to any Obligor, all of such Obligor’s
equipment, as such term is defined in the UCC, whether now owned or hereafter
acquired and wherever located, including but not limited to all present and
future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
equipment, office and recordkeeping equipment, parts, tools, supplies, and
including specifically the goods described in any equipment schedule or list
herewith or hereafter furnished to the Lender by such Obligor.

        “ERISA” means the Employee Retirement Income Security Act of 1974.

          “ERISA Affiliate” means any trade or business (whether or not
incorporated) that is a member of a group which includes any Obligor and which
is treated as a single employer under Section 414 of the IRC.

– 7 –

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

          “Excess Availability” means, as of any date, the amount, as determined
by the Lender, equal to the aggregate amount available on such date for
borrowing by the Borrower under the Borrowing Base, minus (i) the amount of all
outstanding and unpaid Obligations on such date, minus (ii) the aggregate amount
of all outstanding and unpaid trade payables and other payment obligations of
the Borrower which are more than ninety (90) days past invoice date as of such
date, minus (iii) without duplication, the aggregate amount of checks issued by
the Borrower to pay trade payables and other payment obligations which are more
than ninety (90) days past invoice date as of such date, but not yet sent, minus
(iv) without duplication, if the combined balance of all cash accounts of the
Borrower are a credit on its books (as opposed to a debit), the amount of such
credit on such date.

          “Financial Covenants” means the covenants set forth in Section 6.2.

          “Floating Rate” means an annual interest rate equal to the sum of the
Base Rate plus three percent (3%), which interest rate shall change when and as
the Base Rate changes; provided, however, that if, for the fiscal year ending in
September 2004, the Net Income of the Obligors and their respective consolidated
Subsidiaries, on a consolidated basis, determined in accordance with GAAP, shall
be equal to or exceed $10,000, as set forth in the annual audited financial
statements of the Obligors and their respective consolidated Subsidiaries
received by the Lender pursuant to Section 6.1(a), then the Floating Rate shall
be reduced by one-half of one percent (½%) within thirty (30) calendar days
after the Lender’s receipt of such audited annual financial statements for such
fiscal year, provided no Default or Event of Default shall have occurred and be
continuing. In no event shall the Floating Rate be reduced to an annual interest
rate that is less than the Base Rate plus 2½%.

          “Funding Date” has the meaning given in Section 2.1.

          “GAAP” means generally accepted accounting principles, applied on a
basis consistent with the accounting practices applied in the financial
statements described in Section 5.6.

          “GE Debt” means Subordinated Debt of the Borrower owing to GE
Commercial Distribution Finance Corporation and incurred after the Funding Date
on terms acceptable to the Lender.

          “General Intangibles” means, with respect to any Obligor, all of such
Obligor’s general intangibles, as such term is defined in the UCC, whether now
owned or hereafter acquired, including all present and future Intellectual
Property Rights, customer or supplier lists and contracts, manuals, operating
instructions, permits, franchises, the right to use such Obligor’s name, and the
goodwill of such Obligor’s business.

          “Guarantors” means, collectively, Parent, ITSI and each other Person
now or hereafter executing a Guaranty.

– 8 –

          “Guaranty” means any agreement to perform or pay all or any portion of
the Obligations in favor of and in form and substance satisfactory to the Lender
together with all amendments, modifications and supplements thereto.

          “Hazardous Substances” means pollutants, contaminants, hazardous
substances, hazardous wastes, petroleum and fractions thereof, and all other
chemicals, wastes, substances and materials listed in, regulated by or
identified in any Environmental Law.

          “IBM Availability Block” means: (a) so long as the IBM L/C shall not
have expired or been terminated and returned to the Lender, $600,000; and (b) at
all times after the IBM L/C shall have expired or been terminated and returned
to the Lender, zero (-0-).

          “IBM Debt” means all of the Debt, obligations and liabilities of the
Borrower to IBM Credit LLC pursuant to (a) that certain Agreement for Wholesale
Financing between the Borrower and IBM Credit LLC and (b) all other agreements,
documents and instruments executed in connection therewith, in each case as the
same may be amended, modified, supplemented, restated or replaced from time to
time.

          “IBM L/C” means an Irrevocable Letter of Credit, substantially in the
form of Exhibit B hereto, in the amount of $600,000, issued by an Issuer, for
the account of the Borrower and the benefit of IBM Credit LLC, as the same may
be amended, modified, supplemented, restated or replaced from time to time.

          “IBM L/C Application” means an application and agreement for letters
of credit with respect to the IBM L/C in the Issuer’s standard form.

          “Infringe” means, when used with respect to Intellectual Property
Rights, any infringement or other violation of Intellectual Property Rights.

          “Intellectual Property Rights” means all actual or prospective rights
arising in connection with any intellectual property or other proprietary
rights, including all rights arising in connection with copyrights, patents,
service marks, trade dress, trade secrets, trademarks, trade names or mask
works.

          “Inventory” means, with respect to any Obligor, all of such Obligor’s
inventory, as such term is defined in the UCC, whether now owned or hereafter
acquired, whether consisting of whole goods, spare parts or components, supplies
or materials, whether acquired, held or furnished for sale, for lease or under
service contracts or for manufacture or processing, and wherever located.

          “Investment Property” means, with respect to any Obligor, all of such
Obligor’s investment property, as such term is defined in the UCC, whether now
owned or hereafter acquired and wherever located, including but not limited to
all securities, security entitlements, securities accounts, commodity contracts,
commodity accounts, stocks, bonds, mutual fund shares, money market shares and
U.S. Government securities.

          “IRC” means the Internal Revenue Code of 1986.

– 9 –

          “Issuer” means the issuer of the IBM L/C.

          “Licensed Intellectual Property” has the meaning given in Section
5.11(c).

          “Lien” means any security interest, mortgage, deed of trust, pledge,
lien, charge, encumbrance, title retention agreement or analogous instrument or
device, including the interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a Person, whether now owned or hereafter acquired
and whether arising by agreement or operation of law.

          “Loan Documents” means this Agreement, the Revolving Note, the
Security Documents, each Guaranty, the IBM L/C Application, and all other
documents, instruments, agreements and certificates at any time executed in
connection with any of the foregoing, in each case as amended, modified,
supplemented or restated from time to time.

           “Lockbox” has the meaning given in the Lockbox and Collection Account
Agreement. “Lockbox and Collection Account Agreement” means the Special Lockbox
Deposit Agreement, dated or about the date hereof, among the Borrower, the
Lender and the Lockbox Bank.

           “Lockbox Bank” means Bank of New York.

           “Material Adverse Effect” means any of the following:

             (i)    a material adverse effect on the business, operations,
results of operations, prospects, assets, liabilities or financial condition of
any Obligor or any Guarantor;

             (ii)    a material adverse effect on the ability of any Obligor or
any Guarantor, to perform its obligations under the Loan Documents;

             (iii)    a material adverse effect on the ability of the Lender to
enforce the Obligations or to realize the intended benefits of the Security
Documents, including a material adverse effect on the validity or enforceability
of any Loan Document or of any rights against any Obligor or any Guarantor, or
on the status, existence, perfection, priority (subject to Permitted Liens) or
enforceability of any Lien securing payment or performance of the Obligations;
or

             (iv)    any claim against any Obligor (other than any claim,
action, suit or proceeding set forth on Schedule 5.7 attached hereto) which is
not fully covered by insurance and which, if determined adversely to such
Obligor, would cause such Obligor to be liable to pay an amount exceeding
$100,000, or would be an event described in clause (i), (ii) or (iii) above.

– 10 –

        “Maturity Date” has the meaning given in Section 2.13.

        “Maximum Line” means $4,000,000.

          “Multiemployer Plan” means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any Obligor or any ERISA Affiliate contributes or
is obligated to contribute.

          “Net Income (Loss)” means, for any period, the after-tax net income
(or loss) of the Obligors and their consolidated Subsidiaries from continuing
operations for such period, as determined on a consolidated basis in accordance
with GAAP.

          “Note” means the Revolving Note.

          “Obligations” means, collectively, each Revolving Advance, the
Revolving Note, the Obligation of Reimbursement and each and every other debt,
liability and obligation of every type and description arising under or pursuant
to any Loan Document which an Obligor may now or at any time hereafter owe to
the Lender, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it arises in a transaction involving the
Lender alone or in a transaction involving other creditors of an Obligor, and
whether it is direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, or sole, joint, several or
joint and several, and including all indebtedness, obligations and liabilities
of an Obligor arising under any Loan Document or guaranty between such Obligor
and the Lender or by such Obligor in favor of the Lender, whether now in effect
or hereafter entered into.

          “Obligor” means each of the Borrower, ITSI and Parent and “Obligors”
means, collectively, the Borrower, ITSI and Parent.

          “Officer” means, with respect to a Person, an officer if such Person
is a corporation, a manager or managing member if such Person is a limited
liability company, or a partner if such Person is a partnership.

          “Original Maturity Date” means June 29, 2007.

          “Owned Intellectual Property” has the meaning given in Section
5.11(a).

          “Owner” means, with respect to any Obligor, each Person having legal
or beneficial title to an ownership interest in such Obligor or a right to
acquire such an interest.

          “Pension Plan” means a pension plan (as defined in Section 3(2) of
ERISA) maintained for employees of any Obligor or any ERISA Affiliate and
covered by Title IV of ERISA.

          “Permitted Liens” has the meaning given in Section 6.3(a).

– 11 –

          “Person” means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

          “Plan” means an employee benefit plan (as defined in Section 3(3) of
ERISA) maintained for employees of any Obligor or any ERISA Affiliate.

          “Pledge and Security Agreement” means, with respect to any deposit
account, an agreement, in form and substance satisfactory to the Lender,
pursuant to which the owner of such account pledges and collaterally assigns to
the Lender all of such owner’s right, title and interest in and to such account
and the monies on deposit therein, as security for the Obligations.

          “Pledged Account” means a deposit account of Parent with Wells Fargo
Bank or one of its affiliates, which has been pledged by Parent to the Lender
pursuant to a Pledge and Security Agreement and which is subject to a written
agreement, in form and substance satisfactory to the Lender, among Parent, the
Lender and Wells Fargo Bank or such affiliate, as applicable, which provides,
among other things, that the Lender shall have the sole right to withdraw the
monies on deposit therein until such time as: (a) the Credit Facility shall have
been terminated; (b) all Obligations shall have been paid and satisfied in full;
(c) the IBM L/C shall have expired or been returned by IBM Credit LLC to the
Issuer for cancellation; and (d) the requirements of Section 3.9 shall have been
satisfied.

          “Premises” means all premises where any Obligor conducts its business
and has any rights of possession, including the premises described in Schedule
5.1 attached hereto.

          “Reportable Event” means a reportable event (as defined in Section
4043 of ERISA), other than an event for which the 30-day notice requirement
under ERISA has been waived in regulations issued by the Pension Benefit
Guaranty Corporation.

          “Reserves” means such amounts as the Lender may establish, maintain
and revise from time to time, in its sole discretion, exercised in a
commercially reasonable manner, reducing the amount of Revolving Advances which
would otherwise be available to the Borrower under the Borrowing Base provided
for herein, including, without limitation, reserves for retainages, cash sales,
cancellation charges, excise taxes, warranty liability, credit memo lag,
accounts payable that remain unpaid 90-days or more past the invoice date
thereof, held checks, credit memos and delinquent taxes.

          “Revolving Advance” has the meaning given in Section 2.1.

          “Revolving Note” means the Borrower’s revolving promissory note, in
the principal amount of $4,000,000, payable to the order of the Lender, in
substantially the form of Exhibit A hereto, and any note or notes issued in
substitution therefor.

          “Security Documents” means this Agreement, the Lockbox and Collection
Account Agreement, the Stock Pledge Agreement and any other document delivered
to the Lender from time to time to secure the Obligations, in each case as
amended, modified, supplemented or restated from time to time.

– 12 –

          “Security Interest” has the meaning given in Section 3.1.

          “Special Account” means a specified cash collateral account maintained
by a financial institution acceptable to the Lender in connection with the IBM
L/C, as contemplated by Section 2.5.

          “Stock Pledge Agreement” means a Stock Pledge Agreement made by Parent
in favor of the Lender, in form and substance satisfactory to the Lender,
pursuant to which Parent grants to the Lender a first-priority Lien on all of
Parent’s right, title and interest in and to the capital stock of the Borrower
and ITSI.

          “Subordination Agreement” means an agreement, in form and substance
satisfactory to the Lender, pursuant to which any Debt of an Obligor and any
Lien on the assets or properties of an Obligor securing such Debt is
subordinated to the Obligations as to right and time of payment and to the
Lender’s Lien on such assets or properties.

          “Subordinated Debt” means any Debt of an Obligor that is subject to a
Subordination Agreement.

          “Subsidiary” means any Person of which more than 50% of the
outstanding shares of capital stock or other equity interests having general
voting power under ordinary circumstances to elect a majority of the board of
Directors or similar governing body of such Person, irrespective of whether or
not at the time stock or other equity interests of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency, is at the time directly or indirectly owned by an Obligor, by an
Obligor and one or more other Subsidiaries, or by one or more other
Subsidiaries.

          “Termination Date” means the earliest of (i) the Maturity Date, (ii)
the date the Borrower terminates the Credit Facility, or (iii) the date the
Lender demands payment of the Obligations.

          “UCC” means the Uniform Commercial Code as in effect in the state
designated in Section 8.15 as the state whose laws shall govern this Agreement,
or in any other state whose laws are held to govern this Agreement or any
portion hereof.

        Section 1.2    Other Definitional Terms; Rules of Interpretation. The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP. All
terms defined in the UCC and not otherwise defined herein have the meanings
assigned to them in the UCC. References to Articles, Sections, subsections,
Exhibits, Schedules and the like, are to Articles, Sections and subsections of,
or Exhibits or Schedules attached to, this Agreement unless otherwise expressly
provided. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. Unless the context in which used
herein otherwise clearly requires, “or” has the inclusive meaning

– 13 –

represented by the phrase “and/or”. Defined terms include in the singular number
the plural and in the plural number the singular. Reference to any agreement
(including the Loan Documents), document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof (and, if applicable, in accordance with the
terms hereof and the other Loan Documents), except where otherwise explicitly
provided, and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor. Reference to any law, rule, regulation, order, decree, requirement,
policy, guideline, directive or interpretation means as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect on the
determination date, including rules and regulations promulgated thereunder.

ARTICLE II
AMOUNT AND TERMS OF THE CREDIT FACILITY

        Section 2.1    Revolving Advances. The Lender may, in its sole
discretion, make advances to the Borrower from time to time from the date all of
the conditions set forth in Sections 4.1 and 4.2 are first satisfied (the
“Funding Date”) to the Termination Date, on the terms and subject to the
conditions herein set forth (each, a “Revolving Advance”). The Lender shall not
consider any request for a Revolving Advance to the extent the amount of the
requested Revolving Advance exceeds Availability. The Borrower’s obligation to
repay the Revolving Advances shall be evidenced by the Revolving Note and shall
be secured by the Collateral as provided in Article III. Within the limits set
forth in this Section 2.1, the Borrower may request Revolving Advances, prepay
Revolving Advances pursuant to Section 2.14 and request additional Revolving
Advances.

        Section 2.2    Procedures for Requesting Revolving Advances. The
Borrower shall comply with the following procedures in requesting Revolving
Advances:

        (a)        Time for Requests. The Borrower may request a Revolving
Advance not later than 11:00 a.m., New York time, on the Banking Day which is
the date such Revolving Advance is to be made. Each such request shall be
effective upon receipt by the Lender, shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by the Borrower if so
requested by the Lender (such confirmation to be in the form of Exhibit D),
shall be made by (i) an Officer of the Borrower, (ii) a person designated as the
Borrower’s agent by an Officer of the Borrower in a writing delivered to the
Lender or (iii) a person whom the Lender reasonably believes to be an Officer of
the Borrower or such a designated agent. The Borrower shall repay all Revolving
Advances even if the Lender does not receive such confirmation and even if the
person requesting a Revolving Advance was not in fact authorized to do so. Any
request for a Revolving Advance, whether written or telephonic, shall be deemed
to be a representation by the Borrower that the conditions set forth in Section
4.2 have been satisfied as of the time of the request and the time the Revolving
Advance is made.

        (b)        Disbursement. Upon fulfillment of the applicable conditions
set forth in Article IV and the Lender’s determination to make the Advance, the
Lender shall disburse the proceeds of the requested Advance by wire transfer to
the Borrower’s demand deposit account maintained with Fleet Bank, N.A. unless
the Lender and the Borrower shall agree in writing to another manner of
disbursement.

– 14 –

        Section 2.3    Increased Costs; Capital Adequacy; Indemnification.

        (a)        Increased Costs; Capital Adequacy. If the Lender determines
at any time that its Return has been reduced as a result of any Rule Change, or
if the Lender has been notified by any other Related Lender that such Related
Lender’s Return has been reduced as a result of any Rule Change, the Lender may
so notify the Borrower and require the Borrower, beginning fifteen (15) days
after such notice, to pay it the amount necessary to restore its and/or such
other Related Lender’s Return to what it would have been had there been no Rule
Change. For purposes of this Section 2.3:

             (i)    “Capital Adequacy Rule” means any law, rule, regulation,
guideline, directive, requirement or request regarding capital adequacy, or the
interpretation or administration thereof by any governmental or regulatory
authority, central bank or comparable agency, whether or not having the force of
law, that applies to any Related Lender, including rules requiring financial
institutions to maintain total capital in amounts based upon percentages of
outstanding loans, binding loan commitments and letters of credit.

             (ii)    “Reserve Rule” means Regulation D of the Board of Governors
of the Federal Reserve System and any other law, rule, regulation, guideline,
directive, requirement or request regarding (A) taxes, duties or other charges
or exemptions with respect to Revolving Advances, and (B) reserves imposed by
the Board of Governors of the Federal Reserve System, special deposits or
similar requirements against assets of, deposits with or for the account of, or
credit extended by, any Related Lender, and any other condition affecting any
Related Lender’s making, maintaining or funding of Revolving Advances, or the
interpretation or administration thereof by any governmental or regulatory
authority, central bank or comparable agency, whether or not having the force of
law, that applies to any Related Lender.

             (iii)    “L/C Rule” means any law, rule, regulation, guideline,
directive, requirement or request regarding letters of credit, or the
interpretation or administration thereof by any governmental or regulatory
authority, central bank or comparable agency, whether or not having the force of
law, that applies to any Related Lender, including those that impose taxes,
duties or other similar charges, or mandate reserves, special deposits or
similar requirements against assets of, deposits with or for the account of, or
credit extended by any Related Lender, on letters of credit.

             (iv)    “Related Lender” includes the Lender, any parent of the
Lender, any assignee of any interest of the Lender hereunder and any participant
in the Credit Facility.

             (v)    “Return”, for any period, means the percentage determined by
dividing (i) the sum of interest and ongoing fees earned by the Lender under
this Agreement during such period, by (ii) the average capital and reserves the
Lender is required to maintain during such period as a result of its being a
party to this

– 15 –

Agreement, as determined by the Lender based upon its total capital and reserve
requirements and a reasonable attribution formula that takes account of the
Capital Adequacy Rules, Reserve Rules and L/C Rules then in effect, costs of
issuing, making or maintaining any Advance or letter of credit and amounts
received or receivable under this Agreement or the Note with respect to any
Advance or letter of credit. Return may be calculated for each calendar quarter
and for the shorter period between the end of a calendar quarter and the date of
termination in whole of this Agreement.

             (vi)     “Rule Change” means any change in any Capital Adequacy
Rule, Reserve Rule or L/C Rule occurring after the date of this Agreement, or
any change in the interpretation or administration thereof by any governmental
or regulatory authority, but the term does not include any changes that at the
Funding Date are scheduled to take place under the existing Capital Adequacy
Rules, Reserve Rules or L/C Rules or any increases in the capital that any
Related Lender is required to maintain to the extent that the increases are
required due to a regulatory authority’s assessment of such Related Lender’s
financial condition.

The initial notice sent by the Lender shall be sent as promptly as practicable
after the Lender learns that its or any other Related Lender’s Return has been
reduced, shall include a demand for payment of the amount necessary to restore
the Lender’s or such other Related Lender’s Return for the quarter in which the
notice is sent, and shall state in reasonable detail the cause for the reduction
in its or such other Related Lender’s Return and its or such other Related
Lender’s calculation of the amount of such reduction. Thereafter, the Lender may
send a new notice during each calendar quarter setting forth the calculation of
the reduced Return for that quarter and including a demand for payment of the
amount necessary to restore its and/or any other Related Lender’s Return for
that quarter. The Lender’s calculation in any such notice shall be conclusive
and binding absent demonstrable error.

        Section 2.4    IBM L/C. On or after the date on which all of the
conditions set forth in Sections 4.1 and 4.2 are first satisfied, the Lender
may, in its sole discretion, cause an Issuer to issue the IBM L/C.

        The IBM L/C, if issued, shall be issued pursuant to the IBM L/C
Application entered into between the Borrower and the Lender for the benefit of
the Issuer, completed in a manner satisfactory to the Lender and the Issuer. The
terms and conditions set forth in the IBM L/C Application shall supplement the
terms and conditions hereof, but if the terms of the IBM L/C Application and the
terms of this Agreement are inconsistent, the terms hereof shall control.

        Section 2.5    Special Account. If the Credit Facility is terminated for
any reason while the IBM L/C is outstanding, the Borrower shall thereupon pay
the Lender in immediately available funds for deposit in the Special Account an
amount equal to the sum of: (a) the undrawn face amount of the IBM L/C; plus (b)
the unpaid amount of the Obligation of Reimbursement. The Special Account shall
be an interest bearing account maintained for the Lender by any financial
institution acceptable to the Lender. Any interest earned on amounts deposited
in the Special Account shall be credited to the Special Account. The Lender may
apply amounts on deposit in the Special Account at any time or from time to time
to the Obligations in

– 16 –

the Lender’s sole discretion. The Borrower may not withdraw any amounts on
deposit in the Special Account as long as: (x) the IBM L/C has not expired or
been returned by IBM Credit LLC to the Issuer for cancellation or any
Obligations remain outstanding; and (y) the Lender maintains a security interest
therein. The Lender agrees to transfer any balance in the Special Account to the
Borrower when the IBM L/C has either expired or been returned to the Issuer for
cancellation and the Obligations have been paid in full or the Lender is
required to release its security interest in the Special Account under
applicable law.

        Section 2.6    Payment of Amounts Drawn Under the IBM L/C; Obligation of
Reimbursement. The Borrower acknowledges that the Lender, as co-applicant, will
be liable to the Issuer for reimbursement of any and all draws under the IBM L/C
and for all other amounts required to be paid under the IBM L/C Application.
Accordingly, the Borrower shall pay to the Lender any and all amounts required
to be paid under the IBM L/C Application, when and as required to be paid
thereby, and the amounts designated below, when and as designated:

        (a)        The Borrower shall pay to the Lender on the day any draft is
honored under the IBM L/C a sum equal to all amounts drawn under such letter of
credit plus any and all reasonable charges and expenses that the Issuer or the
Lender may pay or incur relative to such draw and the IBM L/C Application, plus
interest on all such amounts, charges and expenses as set forth below (the
Borrower’s obligation to pay all such amounts is herein referred to as the
“Obligation of Reimbursement”).

        (b)        Whenever a draft is submitted under the IBM L/C, the Borrower
authorizes the Lender to make a Revolving Advance in the amount of the
Obligation of Reimbursement and to apply the proceeds of such Revolving Advance
thereto. Such Revolving Advance shall be repayable in accordance with the terms
of this Agreement and be treated in all other respects as a Revolving Advance
hereunder.

        (c)        If a draft is submitted under the IBM L/C when the Borrower
is unable, because a Default Period exists or for any other reason, to obtain a
Revolving Advance to pay the Obligation of Reimbursement, the Borrower shall pay
to the Lender on demand and in immediately available funds, the amount of the
Obligation of Reimbursement together with interest, accrued from the date of the
draft until payment in full at the Default Rate. Notwithstanding the Borrower’s
inability to obtain a Revolving Advance for any reason, the Lender is
irrevocably authorized, in its sole discretion, to make a Revolving Advance in
an amount sufficient to discharge the Obligation of Reimbursement and all
accrued but unpaid interest thereon.

        (d)        The Borrower’s obligation to pay any Revolving Advance made
under this Section 2.6, shall be evidenced by the Revolving Note and shall bear
interest as provided in Section 2.9.

        Section 2.7    Obligations Absolute. The Borrower’s obligations arising
under Section 2.6 shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of Section 2.6, under all
circumstances whatsoever, including (without limitation) the following
circumstances:

– 17 –

        (a)        any lack of validity or enforceability of the IBM L/C or any
other agreement or instrument relating to the IBM L/C (collectively the “Related
Documents”);

        (b)        any amendment or waiver of or any consent to departure from
all or any of the Related Documents;

        (c)        the existence of any claim, setoff, defense or other right
which the Borrower may have at any time, against the beneficiary or any
transferee of the IBM L/C (or any persons or entities for whom the beneficiary
or any such transferee may be acting), or other person or entity, whether in
connection with this Agreement, the transactions contemplated herein or in the
Related Documents or any unrelated transactions;

        (d)        any statement or any other document presented under the IBM
L/C proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect whatsoever;

        (e)        payment by or on behalf of the Issuer under the IBM L/C
against presentation of a draft or certificate which does not strictly comply
with the terms of the IBM L/C; or

        (f)        any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.

         Section 2.8    [Intentionally omitted].

         Section 2.9    Interest; Default Interest; Participations; Clearance
Days; Usury.

        (a)        Interest Rate. Except as set forth in Subsections (b) and
(e), the outstanding principal balance of the Revolving Advances shall bear
interest at the Floating Rate.

        (b)        Default Interest Rate. Upon notice to the Borrower from the
Lender from time to time, the principal of the Revolving Advances outstanding
from time to time shall bear interest at the Default Rate, beginning on the
first day of the applicable Default Period and ending on and including the last
day of such Default Period. The Lender’s election to charge the Default Rate
shall be in its sole discretion and shall not be a waiver of any of its other
rights and remedies. The Lender’s election to charge interest at the Default
Rate for less than the entire period during which the Default Rate may be
charged shall not be a waiver of its right to later charge the Default Rate for
the entire such period.

        (c)        Clearance Days. Notwithstanding Section 2.12(b)(ii), interest
at the interest rate applicable under this Section 2.9 shall accrue on the
amount of all payments (even if in the form of immediately available federal
funds) for two (2) days for clearance.

        (d)        Participations. If any Person shall acquire a participation
in the Revolving Advances and/or the Obligation of Reimbursement, the Borrower
shall be obligated to the Lender to pay the full amount of all interest
calculated under this Section 2.9, along with all other fees, charges and other
amounts due under this Agreement, regardless if such Person elects to accept
interest with respect to its participation at a lower rate than that calculated
under this Section 2.9, or otherwise elects to accept less than its pro rata
share of such fees, charges and other amounts due under this Agreement.

– 18 –

        (e)        Usury. In any event no rate change shall be put into effect
which would result in a rate greater than the highest rate permitted by law.
Notwithstanding anything to the contrary contained in any Loan Document, all
agreements which either now are or which shall become agreements between the
Borrower and the Lender are hereby limited so that in no contingency or event
whatsoever shall the total liability for payments in the nature of interest,
additional interest and other charges exceed the applicable limits imposed by
any applicable usury laws. If any payments in the nature of interest, additional
interest and other charges made under any Loan Document are held to be in excess
of the limits imposed by any applicable usury laws, it is agreed that any such
amount held to be in excess shall be considered payment of principal hereunder,
and the indebtedness evidenced hereby shall be reduced by such amount so that
the total liability for payments in the nature of interest, additional interest
and other charges shall not exceed the applicable limits imposed by any
applicable usury laws, in compliance with the desires of the Borrower and the
Lender. This provision shall never be superseded or waived and shall control
every other provision of the Loan Documents and all agreements between the
Borrower and the Lender, or their successors and assigns.

        Section 2.10   Fees.

        (a)        Origination Fee. The Borrower shall pay the Lender a fully
earned and non-refundable origination fee of $40,000, which fee shall be due and
payable upon the execution of this Agreement.

        (b)        Facility Fee. The Borrower shall pay the Lender a fully
earned and non-refundable facility fee of $15,000 on each anniversary of the
Funding Date. In the event that the Credit Facility is terminated for any reason
prior to the Maturity Date, a pro-rata portion of the facility fee which would
have been due on the anniversary of the Funding Date immediately following the
Termination Date shall be due and payable on the Termination Date.

        (c)        Unused Line Fee. In the event the sum of the average closing
daily unpaid balances of all Revolving Advances plus the amount of the IBM
Availability Block is less than the Maximum Line, then the Borrower shall pay
the Lender a fee at a rate per annum equal to one-half of one percent (0.5%) on
the amount by which the Maximum Line exceeds such sum. Such fee shall be fully
earned and payable and charged to the Borrower’s account on the first day of
each month with respect to the prior month. In the event that the Credit
Facility is terminated on any day other than the first day of a month, the
unused line fee for the month in which the Credit Facility is terminated shall
be calculated for the portion of that month which elapsed prior to termination
and shall be payable on the Termination Date.

        (d)        Minimum Loan Fee. In the event the average closing daily
unpaid balances of all Revolving Advances during any calendar month is less than
$1,500,000, the Borrower shall pay the Lender a fee at a rate per annum equal to
the Floating Rate applicable to Revolving Advances on the amount by which
$1,500,000 exceeds such average closing daily unpaid balances. Such fee shall be
fully earned and payable and charged to the Borrower’s account on the first day
of each month with respect to the prior month.

– 19 –

        (e)        Audit Fees. The Borrower shall pay the Lender, on demand,
audit fees in connection with any audits or inspections conducted by or on
behalf of the Lender of any Collateral or the Borrower’s, ITSI’s and/or Parent’s
operations or business at the standard rates established from time to time by
the Lender as its audit fees applicable to all of its borrowers (which fees are
currently $850 per eight-hour day per auditor), together with all actual
out-of-pocket costs and expenses incurred in conducting any such audit or
inspection. Notwithstanding anything to the contrary contained herein, the
Borrower shall not be required to pay audit fees hereunder with respect to more
than one audit each calendar quarter, so long as no Default or Event of Default
shall have occurred and be continuing.

        (f)        Letter of Credit Fee. The Borrower shall pay the Lender a fee
(the “Letter of Credit Fee”) with respect to the IBM L/C, accruing on a daily
basis and computed at the annual rate of two percent (2%) of the aggregate
amount that may be drawn under the IBM L/C assuming compliance with all
conditions for drawing thereunder (the “Aggregate Face Amount”). The Letter of
Credit Fee shall accrue from and including the date of issuance of the IBM L/C
until such date as the IBM L/C shall terminate in full by its terms or be
returned to the Lender, and the Letter of Credit Fee shall be due and payable
monthly in arrears and on the Termination Date; provided, however, that during
each Default Period, in the Lender’s sole discretion and without waiving any of
its other rights and remedies, the Letter of Credit Fee shall increase to five
percent (5%) of the Aggregate Face Amount. The Letter of Credit Fee shall be in
addition to any and all fees, commissions and charges of the issuer of the IBM
L/C with respect to or in connection with the IBM L/C.

        (g)        Letter of Credit Administrative Fees. The Borrower shall pay
the Lender, on written demand, the administrative fees charged by the Issuer in
connection with honoring drafts under the IBM L/C, amendments thereto, transfers
thereof and all other activity with respect to the IBM L/C at the then current
rates charged by the Issuer for such services rendered on behalf of customers of
the Issuer generally.

        (h)        Termination Fees. If the Credit Facility is terminated (i) by
the Lender during a Default Period that begins before a Maturity Date or (ii) by
the Borrower (A) as of a date other than a Maturity Date or (B) as of a Maturity
Date, but without the Lender having received written notice of such termination
from the Borrower at least 60 days prior to such Maturity Date, then, the
Borrower shall pay to the Lender a fee in an amount equal to a percentage of the
Maximum Line as follows: (A) three percent (3%) if the termination occurs on or
before the first anniversary of the Funding Date; (B) one and one-half percent
(1.5%) if the termination occurs after the first anniversary of the Funding Date
but on or before the second anniversary of the Funding Date; and (C) one-half of
one percent (0.5%) if the termination occurs after the second anniversary of the
Funding Date. No termination fee shall be payable in connection with the
termination of the Credit Facility by the Lender pursuant to this Agreement at
any time other than during a Default Period.

– 20 –

        (i)        CSI Fees. The Borrower shall pay the Lender all fees charged
to the Lender by Collateral Services, Inc. in connection with the analysis of
the Borrower’s Accounts. Such fees are currently $150 per month.

        (j)        Bill and Hold Account Fee. For each Account that arose out of
a bill and hold sale (whether such Account is in existence on the Funding Date
or created thereafter and whether or not such Account is an Eligible Account)
the Borrower shall pay the Lender a fee equal to one percent (1%) of the amount
of such Account, which fee shall be due and payable on the date such Account is
created.

        (k)        Other Fees. The Lender may from time to time, upon five (5)
days prior notice to the Borrower during a Default Period, charge reasonable
additional fees for Revolving Advances made in excess of Availability, for late
delivery of reports, in lieu of imposing interest at the Default Rate, and for
other reasons. The Borrower’s request for a Revolving Advance at any time after
such notice is given and such five (5) day period has elapsed shall constitute
the Borrower’s agreement to pay the fees described in such notice.

        Section 2.11    Time for Interest Payments; Payment on Non-Banking Days;
Computation of Interest and Fees.

        (a)        Time For Interest Payments. Interest shall be due and payable
in arrears on the first day of each month and on the Termination Date.

        (b)        Payment on Non-Banking Days. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Banking Day, such
payment may be made on the next succeeding Banking Day, and such extension of
time shall in such case be included in the computation of interest on the
Revolving Advances or the fees hereunder, as the case may be.

        (c)        Computation of Interest and Fees. Interest accruing on the
outstanding principal balance of the Revolving Advances and fees hereunder
outstanding from time to time shall be computed on the basis of actual number of
days elapsed in a year of 360 days.

        Section 2.12    Lockboxes and Collateral Accounts; Application of
Payments

        (a)        Collateral Account.

             (i)    The Borrower shall instruct all of its account debtors to
make all payments in respect of the Borrower’s Accounts directly to the Lockbox.
If, notwithstanding such instructions, the Borrower receives any payments in
respect of its Accounts, the Borrower shall deposit such payments (including,
without limitation, customer deposits) into the Borrower’s Collateral Account.
The Borrower shall also promptly (and in any event, no later than on the Banking
Day immediately following the date of receipt thereof), deposit all other cash
proceeds of Collateral received by the Borrower directly to the Borrower’s
Collateral Account. Until so deposited, the Borrower shall hold all such
payments and cash proceeds in trust for and as the property of the Lender and
shall not commingle such property with any of its other funds or property. All
deposits in a Collateral Account shall constitute proceeds of Collateral and
shall not constitute payment

– 21 –

of the Obligations. All of the invoices, account statements and other written or
oral communications of the Borrower directing, instructing, demanding or
requesting payment of any Account or any other amount constituting Collateral or
proceeds of Collateral shall conspicuously direct that all payments be made to
the Lockbox, and shall include the address and other applicable information
relating to the Lockbox.

             (ii)    All items deposited in a Collateral Account shall be
subject to final payment. If any such item is returned uncollected, the Borrower
will immediately pay (x) the Lender or (y) for items deposited in the Collateral
Account, the bank maintaining such account, the amount of that item, or such
bank at its discretion may charge any uncollected item to the Borrower’s
commercial account or other account. The Borrower shall be liable as an endorser
on all items deposited in its Collateral Account, whether or not in fact
endorsed by the Borrower.

        (b)        Application of Payments.

             (i)    In accordance with the Lockbox and Collection Account
Agreement, funds in each Collateral Account will be transferred to the Lender’s
general account for payment of the Obligations. Amounts deposited in a
Collateral Account shall not be subject to withdrawal by any Obligor, except
after full payment and discharge of all Obligations. The Lender shall apply
funds received in its general account to the Obligations in such order and
amounts as the Lender, in its discretion, shall determine.

             (ii)    All payments to the Lender shall be made in immediately
available funds and shall be applied to the Obligations upon receipt by the
Lender. Funds received from the Collateral Account shall be deemed to be
immediately available. The Lender may hold all payments not constituting
immediately available funds for three (3) additional days before applying them
to the Obligations.

        (c)        Excess Funds. If, at any time, the aggregate amount of funds
in the Collateral Account shall exceed the Obligations, the Lender shall
promptly remit such excess to the Borrower.

        Section 2.13    Discretionary Nature of this Facility; Termination by
the Lender; Automatic Renewal. This Agreement contains the terms and conditions
upon which the Lender presently expects to make Revolving Advances to the
Borrower. Each Revolving Advance shall be made in the Lender’s sole discretion,
and the Lender need not show that an adverse change has occurred in any
Obligor’s condition, financial or otherwise, or that any of the conditions of
Article IV have not been met, in order to refuse to make any requested Revolving
Advance or to demand payment of the Obligations. The Lender may at any time
terminate the Credit Facility whereupon the Lender shall no longer consider
requests for Revolving Advances under this Agreement. Unless terminated by the
Lender at any time or by the Borrower pursuant to Section 2.14, the Credit
Facility shall remain in effect until the Original Maturity Date and,
thereafter, shall automatically renew for successive one year periods (the
Original Maturity Date and each anniversary date thereof to which the Credit
Facility has been automatically renewed, is herein referred to as a “Maturity
Date”).

– 22 –

        Section 2.14    Voluntary Prepayment; Termination of the Credit Facility
by the Borrower. Except as otherwise provided herein, the Borrower may prepay
the Revolving Advances in whole at any time or from time to time in part. The
Borrower may terminate the Credit Facility at any time if it (i) gives the
Lender at least 30 days’ prior written notice and (ii) pays the Lender
termination fees in accordance with Section 2.10(h). Subject to termination of
the Credit Facility, payment and performance of all Obligations, expiration or
cancellation of the IBM L/C and return as the IBM L/C to the Lender and
compliance with Section 3.9, the Lender shall, at the Obligors’ expense, release
or terminate the Security Interest and the Security Documents.

        Section 2.15    Mandatory Prepayments(a) . Without notice or demand, if
the outstanding principal balance of the Revolving Advances shall at any time
exceed the Borrowing Base, the Borrower shall immediately prepay the Revolving
Advances to the extent necessary to eliminate such excess. Except as otherwise
expressly provided herein, any payment received by the Lender under this Section
2.15 or under Section 2.14 shall be applied to the Obligations, in such order
and in such amounts as the Lender, in its discretion, may from time to time
determine.

        Section 2.16    Revolving Advances to Pay Obligations. Notwithstanding
anything in Section 2.1, the Lender may, in its discretion at any time or from
time to time, without the Borrower’s request and even if the conditions set
forth in Section 4.2 would not be satisfied, make one or more Revolving Advances
for the account of the Borrower in an amount equal to the portion of the
Obligations from time to time due and payable. The proceeds of each Revolving
Advance made pursuant to this Section shall be used only to pay the Obligations
then due and payable.

        Section 2.17    Use of Proceeds. The Borrower shall use the proceeds of
Revolving Advances made on the Funding Date: (a) to pay in full all Debt owing
by the Borrower to IBM Credit LLC and (b) for ordinary working capital purposes.

        Section 2.18    Liability Records. The Lender may maintain from time to
time, at its discretion, records as to the Obligations. All entries made on any
such record shall be presumed correct until the Borrower establishes the
contrary. Upon the Lender’s written demand, the Borrower will admit and certify
in writing the exact principal balance of the Obligations that the Borrower then
asserts to be outstanding. Any billing statement or accounting rendered by the
Lender shall be conclusive and fully binding on the Borrower unless the Borrower
gives the Lender specific written notice of exception within 30 days after
receipt.

ARTICLE III
SECURITY INTEREST; OCCUPANCY; SETOFF

        Section 3.1    Grant of Security Interest. Each Obligor hereby pledges,
assigns, and grants to the Lender a lien on and security interest in
(collectively, for all of the Obligors, referred to as the “Security Interest”)
all of such Obligor’s right, title and interest in, to and under the Collateral,
as security for the payment and performance of the Obligations. Upon request by
the Lender, each Obligor will grant the Lender a security interest in all
commercial tort claims it may have against any Person.

– 23 –

        Section 3.2    Notification of Account Debtors and Other Obligors. The
Lender may, at any time during a Default Period, notify any account debtor or
other person obligated to pay the amount due under an Account that such right to
payment has been assigned or transferred to the Lender for security and shall be
paid directly to the Lender. The applicable Obligor will join in giving such
notice if the Lender so requests. At any time after the applicable Obligor or
the Lender gives such notice to an account debtor or other obligor, but only for
so long as a Default Period exists, the Lender may, but need not, in the
Lender’s name or in such Obligor’s name, (a) demand, sue for, collect or receive
any money or property at any time payable or receivable on account of, or
securing, any such right to payment, or grant any extension to, make any
compromise or settlement with or otherwise agree to waive, modify, amend or
change the obligations (including collateral obligations) of any such account
debtor or other obligor; and (b) as such Obligor’s agent and attorney-in-fact,
notify the United States Postal Service to change the address for delivery of
such Obligor’s mail to any address designated by the Lender, otherwise intercept
such Obligor’s mail, and receive, open and dispose of such Obligor’s mail,
applying all Collateral as permitted under this Agreement and holding all other
mail for such Obligor’s account or forwarding such mail to such Obligor’s last
known address.

        Section 3.3    Assignment of Insurance. As additional security for the
payment and performance of the Obligations, each Obligor hereby assigns to the
Lender any and all monies (including proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of such
Obligor with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business
records or valuable papers pertaining thereto, and each Obligor hereby directs
the issuer of any such policy to pay all such monies directly to the Lender. At
any time during a Default Period, the Lender may (but need not), in the Lender’s
name or in the applicable Obligor’s name, execute and deliver proof of claim,
receive all such monies, endorse checks and other instruments representing
payment of such monies, and adjust, litigate, compromise or release any claim
against the issuer of any such policy.

        Section 3.4    Occupancy.

        (a)        Each Obligor hereby irrevocably grants to the Lender the
right to take exclusive possession of the Premises at any time during a Default
Period.

        (b)        The Lender may use the Premises only to hold, process,
manufacture, sell, use, store, liquidate, realize upon or otherwise dispose of
goods that are Collateral and for other purposes that the Lender may in good
faith deem to be related or incidental purposes.

        (c)        The Lender’s right to hold the Premises shall cease and
terminate upon the earlier of (i) payment in full and discharge of all
Obligations and termination of the Credit Facility, or (ii) final sale or
disposition of all goods constituting Collateral and delivery of all such goods
to purchasers.

– 24 –

        (d)        The Lender shall not be obligated to pay or account for any
rent or other compensation for the possession, occupancy or use of any of the
Premises; provided, however, that if the Lender does pay or account for any rent
or other compensation for the possession, occupancy or use of any of the
Premises, the Borrower shall reimburse the Lender promptly for the full amount
thereof. In addition, the Borrower will pay, or reimburse the Lender for, all
taxes, fees, duties, imposts, charges and expenses at any time incurred by or
imposed upon the Lender by reason of the execution, delivery, existence,
recordation, performance or enforcement of this Agreement or the provisions of
this Section 3.4.

        Section 3.5    License. Without limiting the generality of any other
Security Document, each Obligor hereby grants to the Lender a non-exclusive,
worldwide and royalty-free license to use or otherwise exploit all Intellectual
Property Rights of such Obligor for the purpose of: (a) completing the
manufacture of any in-process materials during any Default Period so that such
materials become saleable Inventory; and (b) selling, leasing or otherwise
disposing of any or all Collateral during any Default Period.

        Section 3.6    Financing Statement. Each Obligor authorizes the Lender
to file from time to time where permitted by law, such financing statements
against collateral described as “all personal property” or describing specific
items of collateral including commercial tort claims as the Lender deems
necessary or useful to perfect the Security Interest. A carbon, photographic or
other reproduction of this Agreement or of any financing statements signed by
any Obligor is sufficient as a financing statement and may be filed as a
financing statement in any state to perfect the security interests granted
hereby. For this purpose, the following information is set forth:

  Name and address of the Borrower:  

  InfoTech USA, Inc.
7 Kingsbridge Road
Fairfield, New Jersey 07004
Federal Employer Identification No.: 13-3174501  

  Name and address of each other Obligor:  

  Information Technology Services, Inc.
7 Kingsbridge Road
Fairfield, New Jersey 07004
Federal Employer Identification No.: 11-2547530  

  InfoTech USA, Inc.
7 Kingsbridge Road
Fairfield, New Jersey 07004
Federal Employer Identification No.: 11-2889809  

– 25 –

  Name and address of Secured Party:  

  Wells Fargo Business Credit, Inc.
119 West 40th Street
New York, New York 10018
Federal Employer Identification No. 41-1237652  

        Section 3.7     Setoff. The Lender may at any time or from time to time,
at its sole discretion and without demand and without notice to anyone, setoff
any liability owed to any Obligor by the Lender, whether or not due, against any
Obligation, whether or not due. In addition, each other Person holding a
participating interest in any Obligations shall have the right to appropriate or
setoff any deposit or other liability then owed by such Person to any Obligor,
whether or not due, and apply the same to the payment of said participating
interest, as fully as if such Person had lent directly to such Obligor the
amount of such participating interest.

        Section 3.8    Collateral. This Agreement does not contemplate a sale of
accounts, contract rights or chattel paper, and, as provided by law, the
Borrower is entitled to any surplus and shall remain liable for any deficiency.
The Lender’s duty of care with respect to Collateral in its possession (as
imposed by law) shall be deemed fulfilled if it exercises reasonable care in
physically keeping such Collateral, or in the case of Collateral in the custody
or possession of a bailee or other third person selected by the Lender,
exercises reasonable care in the selection of such bailee or other third person,
and the Lender need not otherwise preserve, protect, insure or care for any
Collateral. The Lender shall not be obligated to preserve any rights any Obligor
may have against prior parties, to realize on the Collateral at all or in any
particular manner or order or to apply any cash proceeds of the Collateral in
any particular order of application. The Lender has no obligation to clean-up or
otherwise prepare the Collateral for sale. Each Obligor waives any right it may
have to require the Lender to pursue any third person for any of the
Obligations.

        Section 3.9    Termination of Lien. The Liens and rights granted to the
Lender hereunder and under any other Loan Documents and the financing statements
filed in connection herewith or therewith shall continue in full force and
effect, notwithstanding the termination of this Agreement or the fact that the
Borrower’s account may from time to time be temporarily in a zero or credit
position, until all of the following conditions have been satisfied: (a) the
Credit Facility has been terminated; (b) all of the Obligations of each Obligor
have been paid and performed in full; (c) the IBM L/C has expired or been
returned to the Lender by IBM Credit LLC for cancellation thereof; (d) each
Obligor has furnished the Lender with an indemnification satisfactory to the
Lender with respect thereto; and (e) each Obligor has executed and delivered to
the Lender a release of any and all claims which such Obligor may have or
thereafter have under this Agreement or any other Loan Documents. Accordingly,
each Obligor waives any rights which it may have under the UCC to demand the
filing of termination statements with respect to the Collateral, and the Lender
shall not be required to send or authorize the filing of such termination
statements to any Obligor, or to file them or authorize them to be filed with
any filing office, unless and until the conditions of this Section have been
satisfied.

ARTICLE IV
CONDITIONS OF WILLINGNESS TO CONSIDER LENDING

        Section 4.1    Conditions Precedent to Lender’s Willingness to Consider
Making the Initial Revolving Advance and Cause the Issuance of the IBM L/C. The
Lender’s willingness to consider making the initial Advance hereunder or to
cause the IBM L/C to be issued shall be subject to the conditions precedent
that: (i) the Lender shall have received all of the following documents, each in
form and substance satisfactory to the Lender; and (ii) all of the other
conditions set forth below shall have been satisfied:

– 26 –

        (a)        This Agreement, duly executed and delivered by each Obligor.

        (b)        The Revolving Note, duly executed and delivered by the
Borrower.

        (c)        True and correct copies of all leases pursuant to which any
Obligor is leasing any of the Premises, together with such Collateral Access
Agreements with respect thereto as may be required by the Lender.

        (d)        True and correct copies of any and all agreements pursuant to
which any Obligor’s property is in the possession of a Person other than such
Obligor, together with (i) an acknowledgment and waiver of liens from each
consignee, bailee, processor and subcontractor who has possession of any
Obligor’s goods from time to time, (ii) UCC financing statements sufficient to
protect such Obligor’s and the Lender’s interests in such goods, and (iii) UCC
searches showing that no other secured party has filed a financing statement
against such Person and covering property similar to such Obligor’s other than
such Obligor, or if there exists any such secured party, evidence that each such
secured party has received notice from such Obligor and the Lender sufficient to
protect such Obligor’s and the Lender’s interests in such Obligor’s goods from
any claim by such secured party.

        (e)        An acknowledgment and waiver of liens from each warehouse in
which any Obligor is storing Inventory.

        (f)        A Guaranty, duly executed and delivered by each of Parent and
ITSI.

        (g)        The Stock Pledge Agreement, duly executed and delivered by
Parent, together with all certificates of the Borrower’s and ITSI’s capital
stock and undated stock powers with respect thereto.

        (h)        A collateral assignment in favor of the Lender of all of
Parent’s rights, title and interest in, to and under the ADS Loan Documents,
consented to by ADS, together with the originals of all of the ADS Loan
Documents, including, without limitation, Certificate No. 3471 evidencing
750,000 shares of the common stock of Digital Angel Corporation, which shares
are owned by ADS and have been pledged to Parent to secure the ADS Loan.

        (i)        The Lockbox and Collection Account Agreement, duly executed
and delivered by the Borrower and the Lockbox Bank.

        (j)        The results of current searches of appropriate filing offices
showing that (i) no state or federal tax liens have been filed and remain in
effect against any Obligor, (ii) no financing statements or assignments of
patents, trademarks or copyrights have been filed and remain in effect against
any Obligor except those financing statements and assignments of patents,
trademarks or copyrights relating to Permitted Liens or to Liens held by Persons
who have agreed in writing that upon receipt of proceeds of the initial
Revolving Advances, they will deliver and/or authorize the filing of UCC
releases and/or terminations and releases of such assignments of patents,
trademarks or copyrights reasonably satisfactory to the Lender, and (iii) the
Lender has duly filed all financing statements necessary to perfect the Liens of
the Lender under the Loan Documents, to the extent such Liens are capable of
being perfected by filing.

– 27 –

        (k)        A certificate of each Obligor’s Secretary or Assistant
Secretary, certifying as to (i) the resolutions of such Obligor’s Directors
authorizing the execution, delivery and performance of the Loan Documents, (ii)
the accuracy and completeness of such Obligor’s Constituent Documents attached
thereto, and (iii) the name, title and signatures of such Obligor’s officers or
agents authorized to execute and deliver the Loan Documents and other
instruments, agreements and certificates, including Advance requests, on its
behalf.

        (l)        A current certificate issued by the Secretary of State of
each Obligor’s state of incorporation certifying that such Obligor is in
compliance with all applicable organizational requirements of such state.

        (m)        Evidence that each Obligor is duly licensed or qualified to
transact business in all jurisdictions where the character of the property owned
or leased or the nature of the business transacted by it makes such licensing or
qualification necessary.

        (n)        A certificate of an officer of each Obligor confirming the
representations and warranties set forth in Article V.

        (o)        An opinion of counsel to each Obligor, addressed to the
Lender.

        (p)        Certificates of the insurance required hereunder, with all
hazard insurance containing the Lender’s loss payable endorsement in the
Lender’s favor and with all liability insurance naming the Lender as an
additional insured.

        (q)        Payment of the fees and commissions due under Section 2.10
through the date of the initial Advance and expenses incurred by the Lender
through such date and required to be paid by the Borrower under Section 8.5,
including all legal expenses incurred through the date of this Agreement.

        (r)        No material adverse change in the business or condition
(financial or otherwise) of any Obligor shall have occurred since the date of
the most recent financial statements of the Obligors and their respective
consolidated Subsidiaries received prior to the Funding Date by the Lender.

        (s)        After giving effect to the transactions contemplated to occur
on the Funding Date (including the funding of all Revolving Advances), the
satisfaction of all obligations owing to IBM Credit LLC and the payment of all
fees and expenses of the Lender and all other Persons payable on the Funding
Date, Excess Availability shall be not less than $350,000.

        (t)        A payoff letter from IBM Credit LLC, together with such other
documents, instruments and agreements as may be reasonably required by the
Lender (including, without limitation, UCC termination statements) to effectuate
the release of the Lien of IBM Credit LLC on any of the Obligors’ assets or
properties and to evidence the discharge of all debts, liabilities and
obligations of each Obligor to IBM Credit LLC.

– 28 –

        (u)        All other documents listed on the Closing Document Checklist
attached hereto as Exhibit E.

        Section 4.2    Conditions Precedent to All Revolving Advances and the
IBM L/C. The Lender will not consider any request for an Advance or cause the
IBM L/C to be issued unless:

        (a)        the representations and warranties contained in Article V are
correct on and as of the date of such Advance or issuance of the IBM L/C as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date; and

        (b)        no event has occurred and is continuing, or would result from
the making of such Advance or issuance of the IBM L/C, which constitutes a
Default or an Event of Default.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

        Each Obligor represents and warrants to the Lender as follows:

        Section 5.1    Existence and Power; Name; Chief Executive Office;
Inventory and Equipment Locations; Federal Employer Identification Number. The
Borrower is a corporation, duly organized, validly existing and in good standing
under the laws of the State of New Jersey. ITSI is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
New York. Parent is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Obligor is duly licensed
or qualified to transact business in all jurisdictions where the character of
the property owned or leased or the nature of the business transacted by it
makes such licensing or qualification necessary. Each Obligor has all requisite
power and authority to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under, the Loan
Documents. During its existence, each Obligor has done business solely under the
names set forth in Schedule 5.1 and all of each Obligor’s records relating to
its business or the Collateral are kept at the locations set forth in Schedule
5.1. Each Obligor’s chief executive office and principal place of business is
located at the address set forth in Schedule 5.1. All Inventory and Equipment is
located at that location or at one of the other locations listed in Schedule
5.1. Each Obligor’s federal employer identification number is correctly set
forth in Section 3.6.

        Section 5.2    Capitalization. Schedule 5.2 constitutes a correct and
complete list of all Owners of each Obligor and each Subsidiary of each Obligor
owning five percent (5%) or more of the capital stock of such Obligor or
Subsidiary including, with respect to each such Owner, the number of shares of
each Obligor and/or such Subsidiaries owned, beneficially and/or of record by
such Owner and the percentage interest in each Obligor and/or such Subsidiaries
on a fully diluted basis owned by such Owner, and an organizational chart
showing the ownership structure of each Obligor and all Subsidiaries of each
Obligor.

        Section 5.3    Authorization of Borrowing; No Conflict as to Law or
Agreements. The execution, delivery and performance by each Obligor of the Loan
Documents and the borrowings from time to time hereunder have been duly
authorized by all necessary corporate action on the part of each Obligor and do
not and will not: (i) require any consent or approval of any Obligor’s Owners;
(ii) require any authorization, consent or approval by, or registration,
declaration or

– 29 –

filing with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorizations, consents, approvals, registrations, declarations,
filings or notices as have been obtained, accomplished or given prior to the
date hereof; (iii) violate any provision of any law, rule or regulation
(including Regulation X of the Board of Governors of the Federal Reserve System)
or of any order, writ, injunction or decree presently in effect having
applicability to any Obligor or of any Obligor’s Constituent Documents; (iv)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other material agreement, lease or instrument to which
any Obligor is a party or by which it or its properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than the Security Interest) upon or with respect to any of the properties
now owned or hereafter acquired by any Obligor.

        Section 5.4    Legal Agreements. This Agreement, and each of the other
Loan Documents to which it is a party, constitutes the legal, valid and binding
obligation of each Obligor, enforceable against such Obligor in accordance with
its respective terms.

        Section 5.5    Subsidiaries. Except as set forth in Schedule 5.5 hereto,
none of the Obligors or any Subsidiaries of the Obligors have any Subsidiaries.

        Section 5.6    Financial Condition; No Adverse Change. The Obligors have
furnished to the Lender the audited financial statements of the Obligors and
their respective consolidated Subsidiaries for the fiscal year ended September
30, 2003 and the unaudited financial statements of the Obligors and their
respective consolidated Subsidiaries for the fiscal-year-to-date period ended
March 31, 2004, and those statements fairly present each Obligor’s financial
condition on the dates thereof and the results of their operations and cash
flows for the periods then ended and were prepared in accordance with GAAP.
Since the date of the audited financial statements referred to in the preceding
sentence, no event has occurred which has had a Material Adverse Effect.

        Section 5.7    Litigation. Except as set forth on Schedule 5.7 hereto,
there are no actions, suits or proceedings pending or, to any Obligor’s
knowledge, threatened against or affecting any Obligor or any of its Affiliates
or the properties of any Obligor or any of its Affiliates before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.

        Section 5.8    Regulation U. No Obligor is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.

        Section 5.9    Taxes. Each Obligor has paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by each of them. Each Obligor has filed (or has obtained appropriate
extensions for the filing of) all federal, state and local tax returns which to
the knowledge of the Officers of such Obligor are required to be filed, and each
Obligor has paid or caused to be paid to the respective taxing authorities all
taxes as shown on said returns or on any assessment received by any of them to
the extent such taxes have become due.

– 30 –

        Section 5.10    Titles and Liens. Each Obligor has good, legal and
marketable title to all Collateral in which it has granted the Security
Interest, free and clear of all Liens other than Permitted Liens. No financing
statement naming any Obligor as debtor is on file in any office except to
perfect only Permitted Liens.

         Section 5.11    Intellectual Property Rights.

        (a)        Owned Intellectual Property. Schedule 5.11 contains a
complete list of all patents, applications for patents, trademarks, applications
for trademarks, service marks, applications for service marks, mask works, trade
dress and copyrights for which any Obligor is the owner (the “Owned Intellectual
Property”). Except as disclosed on Schedule 5.11, (i) the applicable Obligor
owns the Owned Intellectual Property free and clear of all restrictions
(including covenants not to sue a third party), court orders, injunctions,
decrees, writs or Liens, whether by written agreement or otherwise, (ii) no
Person other than the applicable Obligor owns or has been granted any right in
the Owned Intellectual Property, (iii) all Owned Intellectual Property is valid,
subsisting and enforceable and (iv) the applicable Obligor has taken all
commercially reasonable action necessary to maintain and protect the Owned
Intellectual Property.

        (b)        [Intentionally omitted].

        (c)        Intellectual Property Rights Licensed from Others. Schedule
5.11 contains a complete list of all agreements under which any Obligor has
licensed Intellectual Property Rights from another Person (“Licensed
Intellectual Property”) other than readily available, non-negotiated licenses of
computer software and other intellectual property used solely for performing
accounting, word processing and similar administrative tasks (“Off-the-shelf
Software”) and a summary of any ongoing payments the applicable Obligor is
obligated to make with respect thereto. Except as disclosed on Schedule 5.11 and
in written agreements copies of which have been given to the Lender, the
Obligors’ licenses to use the Licensed Intellectual Property are free and clear
of all restrictions, Liens, court orders, injunctions, decrees, or writs,
whether by written agreement or otherwise. Except as disclosed on Schedule 5.11,
none of the Obligors is obligated or under any liability whatsoever to make any
payments of a material nature by way of royalties, fees or otherwise to any
owner of, licensor of, or other claimant to, any Intellectual Property Rights.

        (d)        Other Intellectual Property Needed for Business. Except for
Off-the-shelf Software and as disclosed on Schedule 5.11, the Owned Intellectual
Property and the Licensed Intellectual Property constitute all Intellectual
Property Rights used or necessary to conduct each Obligor’s business as it is
presently conducted or as such Obligor reasonably foresees conducting it.

        (e)        Infringement. Except as disclosed on Schedule 5.11, none of
the Obligors has any knowledge of, or received any written claim or notice
alleging, any Infringement of another Person’s Intellectual Property Rights
(including any written claim that any Obligor must license or refrain from using
the Intellectual Property Rights of any third party) nor, to any Obligor’s
knowledge, is there any threatened claim or any reasonable basis for any such
claim.

– 31 –

        Section 5.12    Plans. Except as disclosed on Schedule 5.12, none of the
Obligors or any ERISA Affiliate (i) maintains or has maintained any Pension
Plan, (ii) contributes or has contributed to any Multiemployer Plan or (iii)
provides or has provided post-retirement medical or insurance benefits with
respect to employees or former employees (other than benefits required under
Section 601 of ERISA, Section 4980B of the IRC or applicable state law). None of
the Obligors or any ERISA Affiliate has received any notice or has any knowledge
to the effect that it is not in full compliance with all of the requirements of
ERISA, the IRC or applicable state law with respect to any Plan. No Reportable
Event exists in connection with any Pension Plan. Each Plan which is intended to
qualify under the IRC is so qualified, and no fact or circumstance exists which
may have an adverse effect on the Plan’s tax-qualified status. None of the
Obligors or any ERISA Affiliate has (i) any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the IRC) under any Plan,
whether or not waived, (ii) any liability under Section 4201 or 4243 of ERISA
for any withdrawal, partial withdrawal, reorganization or other event under any
Multiemployer Plan or (iii) any liability or knowledge of any facts or
circumstances which could result in any liability to the Pension Benefit
Guaranty Corporation, the Internal Revenue Service, the Department of Labor or
any participant in connection with any Plan (other than routine claims for
benefits under the Plan).

        Section 5.13    Default. Each Obligor is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which (beyond any applicable grace and cure periods provided therein) would
have a Material Adverse Effect.

        Section 5.14    Environmental Matters.

        (a)        To the best of the Obligors’ actual knowledge, without
independent investigation or inquiry, and except as set forth in any reports,
assessments, audits or other materials that were obtained by or on behalf of, or
delivered to, the Lender prior to the Funding Date, there are not present in, on
or under any of the Premises any Hazardous Substances in such form or quantity
as to create any material liability or obligation for any Obligor or the Lender
under the common law of any jurisdiction or under any Environmental Law, and no
Hazardous Substances have ever been stored, buried, spilled, leaked, discharged,
emitted or released in, on or under any of the Premises in such a way as to
create any such material liability.

        (b)        None of the Obligors has disposed of Hazardous Substances in
such a manner as to create any material liability under any Environmental Law.

        (c)        No Obligor has received any written requests, claims,
notices, investigations, demands, administrative proceedings, hearings or
litigation, relating in any way to any of the Premises or any Obligor, alleging
material liability under, violation of, or noncompliance with any Environmental
Law or any license, permit or other authorization issued pursuant thereto which
in each case has not been cured or otherwise resolved. To the best of the
Obligors’ actual knowledge, without independent investigation or inquiry, and
except as set forth in any reports, assessments, audits or other materials that
were obtained by or on behalf of, or delivered to, the Lender prior to the
Funding Date, no such matter is threatened or impending.

– 32 –

        (d)        To the best of the Obligors’ actual knowledge, without
independent investigation or inquiry, and except as set forth in any reports,
assessments, audits or other materials that were obtained by or on behalf of, or
delivered to, the Lender prior to the Funding Date, each Obligor’s businesses
are and have in the past always been conducted in accordance in all material
respects with all Environmental Laws and all licenses, permits and other
authorizations required pursuant to any Environmental Law and necessary for the
lawful and efficient operation of such businesses are in each Obligor’s
possession and are in full force and effect. No permit required under any
Environmental Law for the operation of any Obligor’s business is scheduled to
expire within 12 months and no Obligor has received written notice from any
issuer thereof of any threat that any such permit will be withdrawn, terminated,
limited or materially changed.

        (e)        To the best of the Obligors’ actual knowledge, without
independent investigation or inquiry, and except as set forth in any reports,
assessments, audits or other materials that were obtained by or on behalf of, or
delivered to, the Lender prior to the Funding Date, none of the Premises are or
ever have been listed on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System or any
similar federal, state or local list, schedule, log, inventory or database.

        (f)        The Obligors have delivered to Lender all environmental
assessments, audits, reports, permits, licenses and other documents in their
possession describing or relating in any way to the Premises or any Obligor’s
businesses.

        Section 5.15    Submissions to Lender. All financial and other
information provided to the Lender by or on behalf of any Obligor in connection
with the credit facilities contemplated hereby is (i) true and correct in all
material respects, (ii) does not omit any material fact necessary to make such
information not misleading and, (iii) as to projections, valuations or proforma
financial statements, present a good faith opinion as to such projections,
valuations and proforma condition and results.

        Section 5.16    Financing Statements. The Obligors have authorized the
filing of financing statements sufficient when filed to perfect the Security
Interest and the other security interests created by the Security Documents.
When such financing statements are filed in the offices noted therein, the
Lender will have a valid and perfected security interest in all Collateral which
is capable of being perfected by filing financing statements. None of the
Collateral is or will become a fixture on real estate, unless a sufficient
fixture filing is in effect with respect thereto.

        Section 5.17    Rights to Payment. Except as set forth on Schedule 5.17
hereto, each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in any Obligor’s records
pertaining thereto as being obligated to pay such obligation.

– 33 –

        Section 5.18    Financial Solvency. Both before and after giving effect
to all of the transactions contemplated by the Loan Documents, no Obligor:

        (a)        was or will be insolvent, as that term is used and defined in
Section 101 (32) of the United States Bankruptcy Code and Section 2 of the
Uniform Fraudulent Transfer Act;

        (b)        has unreasonably small capital or is engaged or about to
engage in a business or a transaction for which any remaining assets of such
Obligor are unreasonably small;

        (c)        by executing, delivering or performing its obligations under
the Loan Documents or other documents to which it is a party or by taking any
action with respect thereto, intends to, nor believes that it will, incur debts
beyond its ability to pay them as they mature;

        (d)        by executing, delivering or performing its obligations under
the Loan Documents or other documents to which it is a party or by taking any
action with respect thereto, intends to hinder, delay or defraud either its
present or future creditors; and

        (e)        at this time contemplates filing a petition in bankruptcy or
for an arrangement or reorganization or similar proceeding under any law of any
jurisdiction, nor is the subject of any actual, pending or threatened
bankruptcy, insolvency or similar proceedings under any law of any jurisdiction.

        Section 5.19    GE Financing Statements. As of the Funding Date, none of
the Obligors has authenticated or authorized the filing of any Uniform
Commercial Code financing statement covering any of the Collateral other than
Uniform Commercial Code financing statements (a) listing IBM Credit LLC as
secured party, all of which are being terminated as contemplated hereby, (b)
listing Fischer-Anderson, L.C. as secured party and covering certain equipment
and (c) listing the Lender as secured party.

        Section 5.20    Dormancy and Dissolution of Finch and Murrray Products,
Inc. Finch and Murray Products, Inc., a Subsidiary of the Borrower, (a) is not
engaged in any business and has no assets, (b) will not at any time in the
future engage in any business or have any assets and (c) is in the process of
being dissolved by the Borrower.

ARTICLE VI
COVENANTS

        So long as any Obligations shall remain unpaid, or the Credit Facility
shall remain in effect, the Obligors will comply or cause compliance with the
following requirements, unless the Lender shall otherwise consent in writing:

        Section 6.1    Reporting Requirements. The Obligors will deliver, or
cause to be delivered, to the Lender each of the following, which shall be in
form and detail acceptable to the Lender:

        (a)        Annual Audited Financial Statements. As soon as available,
and in any event within 90 days after the end of each fiscal year (commencing
with the fiscal year ending in September 2004) of the Obligors, the Obligors
will deliver, or cause to be delivered, to the

– 34 –

Lender, the audited annual financial statements of the Obligors and their
respective consolidated Subsidiaries, together with the unqualified opinion of
independent certified public accountants selected by the Obligors and reasonably
acceptable to the Lender, which annual financial statements shall include a
balance sheet as at the end of such fiscal year and the related statements of
income, retained earnings and cash flows for the fiscal year then ended,
prepared on a consolidated basis, all in reasonable detail and stating in
comparative form the figures for the prior fiscal year, and prepared in
accordance with GAAP, together with (i) copies of all management letters
prepared by such accountants; (ii) a report signed by such accountants stating
that in making the investigations necessary for said opinion they obtained no
knowledge, except as specifically stated, of any Default or Event of Default and
all relevant facts in reasonable detail to evidence, and the computations as to,
whether or not the Financial Covenants have been complied with; and (iii) a
certificate of each Obligor’s president and chief financial officer,
substantially in the form of Exhibit C hereto, stating that such financial
statements have been prepared in accordance with GAAP, fairly represent the
financial position and the results of operations of each Obligor and its
consolidated Subsidiaries, and whether or not such officer has knowledge of the
occurrence of any Default or Event of Default and, if so, stating in reasonable
detail the facts with respect thereto.

        (b)        Quarterly Internal Financial Statements. As soon as available
and in any event within 45 days after the end of each fiscal quarter (beginning
with the fiscal quarter ending in June 2004 the Obligors will deliver, or cause
to be delivered, to the Lender an unaudited/internal balance sheet and
statements of income and retained earnings of the Obligors and their respective
consolidated Subsidiaries as at the end of and for such quarter and for the year
to date period then ended, prepared on a consolidated basis, in reasonable
detail and stating in comparative form the figures for the corresponding date
and periods in the previous year, all prepared in accordance with GAAP, subject
to year-end audit adjustments; and accompanied by a certificate of each
Obligor’s president and chief financial officer, substantially in the form of
Exhibit C hereto, stating (i) that such financial statements have been prepared
in accordance with GAAP, subject to year-end audit adjustments and fairly
represent the financial position and the results of its operations of such
Obligor and its consolidated Subsidiaries, (ii) whether or not such officer has
knowledge of the occurrence of any Default or Event of Default not theretofore
reported and remedied and, if so, stating in reasonable detail the facts with
respect thereto, and (iii) all relevant facts in reasonable detail to evidence,
and the computations as to, whether or not the Financial Covenants have been
complied with.

        (c)        Collateral Reports.

             (i)    Within 10 days after the end of each month or more
frequently if the Lender so requires, the Borrower will deliver to the Lender
summary and detailed agings of the Borrower’s accounts receivable and its
accounts payable, a certified perpetual inventory report, a calculation of the
Borrower’s Accounts and Eligible Accounts (including separate calculations of
the Accounts and Eligible Accounts that arose out of bill and hold sales), and
information and reports regarding such other business matters as the Lender may
reasonably request, in each case as at the end of such month or shorter time
period.

– 35 –

             (ii)    No less than once a week or more frequently if the Lender
so requires, the Borrower will deliver to the Lender: (A) copies of all entries
to the sales journal and cash receipts journal of the Borrower; (B) a report
which sets forth the aggregate amount of outstanding Accounts and Eligible
Accounts that arose out of bill and hold sales and the aggregate amount of such
Accounts and Eligible Accounts unpaid 91 days or more after the invoice date
thereof or 61 days or more after the original due date thereof; (C), a copy of
each credit memo of the Borrower in an amount greater than or equal to $6,000 or
more and (D) copies of shipping invoices and documents relating to sales in
amounts greater than or equal to $6,000 or more.

             (iii)    Each report required under the foregoing clauses (i) and
(ii) shall be certified by the Borrower’s president and chief financial officer.

        (d)        Projections. At least 30 days before the beginning of each
fiscal year of the Obligors, the Obligors will deliver, or cause to be
delivered, to the Lender the projected balance sheets and income statements of
the Obligors and their respective consolidated Subsidiaries prepared on a
consolidated and consolidating basis for each month of such year, each in
reasonable detail, representing the Obligors’ good faith projections and
certified by each Obligor’s president and chief financial officer as being the
most accurate projections available and identical to the projections used by the
Obligors for internal planning purposes, together with a statement of underlying
assumptions and such supporting schedules and information as the Lender may in
its discretion reasonably require.

        (e)        Litigation. Immediately after the commencement thereof, each
Obligor will deliver to the Lender notice in writing of all litigation and of
all proceedings before any governmental or regulatory agency affecting such
Obligor (i) of the type described in Section 5.14(c) or (ii) which seek a
monetary recovery against such Obligor in excess of $100,000.

        (f)        Defaults. As promptly as practicable (but in any event not
later than five business days) after an Officer of any Obligor obtains knowledge
of the occurrence of any Default or Event of Default, such Obligor will deliver
to the Lender notice of such occurrence, together with a detailed statement by a
responsible Officer of such Obligor of the steps being taken by such Obligor to
cure the effect thereof.

        (g)        Plans. As soon as possible, and in any event within 30 days
after any Obligor knows that any Reportable Event with respect to any Pension
Plan has occurred, such Obligor will deliver to the Lender a statement of such
Obligor’s chief financial officer setting forth details as to such Reportable
Event and the action which such Obligor proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event to the Pension
Benefit Guaranty Corporation. As soon as possible, and in any event within 10
days after any Obligor fails to make any quarterly contribution required with
respect to any Pension Plan under Section 412(m) of the IRC, such Obligor will
deliver to the Lender a statement of such Obligor’s chief financial Officer
setting forth details as to such failure and the action which such Obligor
proposes to take with respect thereto, together with a copy of any notice of
such failure required to be provided to the Pension Benefit Guaranty
Corporation. As soon as possible, and in any event with 10 days after any
Obligor knows that it has or is reasonably expected to have any liability under
Section 4201 or 4243 of ERISA for any withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan, such Obligor will
deliver to the Lender a statement of such Obligor’s chief financial officer
setting forth details as to such liability and the action which such Obligor
proposes to take with respect thereto.

– 36 –

        (h)        Disputes. Promptly upon knowledge thereof, the Borrower will
deliver to the Lender notice of (i) any disputes or claims by the Borrower’s
customers exceeding $20,000 individually or $100,000 in the aggregate during any
fiscal year; (ii) each credit memo in an amount greater than or equal to $6,000;
and (iii) any goods returned to or recovered by the Borrower.

        (i)        Officers and Directors. Promptly upon knowledge thereof, each
Obligor will deliver to the Lender notice of any change in the persons
constituting such Obligor’s Officers and Directors.

        (j)        Collateral. Promptly upon knowledge thereof, each Obligor
will deliver to the Lender notice of any loss of or damage to any Collateral in
excess of $25,000 or of any substantial adverse change in any Collateral or the
prospect of payment thereof, in each case involving an amount in excess of
$25,000.

        (k)        Commercial Tort Claims. Promptly upon knowledge thereof, each
Obligor will deliver to the Lender notice of any commercial tort claim such
Obligor brings against any Person, including the name and address of each
defendant, a summary of the facts, an estimate of the applicable Obligor’s
damages, copies of any complaint or demand letter submitted by such Obligor, and
such other information as the Lender may reasonably request.

        (l)        Intellectual Property.

             (i)    Each Obligor will give the Lender 30 days’ prior written
notice of its intent to acquire material Intellectual Property Rights; except
for transfers permitted under Section 6.17, each Obligor will give the Lender 30
days’ prior written notice of its intent to dispose of material Intellectual
Property Rights; and upon request, shall provide the Lender with copies of all
applicable documents and agreements.

             (ii)    Promptly upon knowledge thereof, each Obligor will deliver
to the Lender notice of (A) any Infringement of its Intellectual Property Rights
by others, (B) claims that such Obligor is Infringing another Person’s
Intellectual Property Rights and (C) any threatened cancellation, termination or
material limitation of its Intellectual Property Rights.

             (iii)    Promptly upon receipt, each Obligor will give the Lender
copies of all registrations and filings with respect to its Intellectual
Property Rights.

        (m)        Reports to Owners. Promptly upon their distribution, each
Obligor will deliver to the Lender copies of all financial statements, reports
and proxy statements which such Obligor shall have sent to its Owners.

– 37 –

        (n)        SEC Filings. Promptly after the sending or filing thereof,
each Obligor will deliver to the Lender copies of all regular and periodic
reports which such Obligor shall have filed with or sent to the Securities and
Exchange Commission or any national securities exchange.

        (o)        Violations of Law. Promptly upon knowledge thereof, each
Obligor will deliver to the Lender notice of such Obligor’s violation of any
law, rule or regulation, the non-compliance with which could have a Material
Adverse Effect.

        (p)        Other Reports. From time to time, with reasonable promptness,
each Obligor will deliver to the Lender any and all receivables schedules,
collection reports, deposit records, equipment schedules, copies of invoices to
account debtors, shipment documents and delivery receipts for goods sold, and
such other material, reports, records or information as the Lender may
reasonably request.

         Section 6.2    Financial Covenants.

        (a)        Maximum Debt to Book Net Worth Ratio. The Obligors will
maintain a Debt to Book Net Worth Ratio of not more than 0.80 to 1.00,
determined as at the end of each fiscal quarter.

        (b)        Minimum Book Net Worth. The Obligors will maintain a Book Net
Worth of not less than $7,300,000, determined as at the end of each fiscal
quarter.

        (c)        Minimum Net Income. The Obligors will achieve Net Income on a
cumulative quarterly basis of not less than eighty percent (80%) of the
projected cumulative Net Income of the Obligors for such period, as set forth in
the projections for such period delivered to the Lender. The Obligors’ failure
to deliver projections to the Lender pursuant to Section 6.1(d) that are
acceptable to the Lender, in its sole discretion, shall constitute an Event of
Default. The Lender acknowledges its receipt of the Obligors’ projections for
the period beginning on January 1, 2004 and ending on December 31, 2004, and
confirms that such projections are acceptable. Nothing herein shall affect the
obligation of the Obligors to deliver to the Lender acceptable projections for
the Obligors’ fiscal year ending in September 2005, as required by Section
6.1(d).

        (d)        Capital Expenditures. The Obligors will not incur or contract
to incur Capital Expenditures of more than $50,000 in the aggregate during any
fiscal year, or more than $10,000 in any one transaction.

         Section 6.3    Permitted Liens; Financing Statements.

        (a)        None of the Obligors will create, incur or suffer to exist
any Lien upon or of any of its assets, now owned or hereafter acquired;
excluding, however, from the operation of the foregoing, the following
(collectively, “Permitted Liens”):

             (i)    in the case of any Obligor’s real property, covenants,
restrictions, rights, easements and minor irregularities in title which do not
materially interfere with such Obligor’s business or operations as presently
conducted;

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             (ii)    Liens in existence on the date hereof and listed in
Schedule 6.3 hereto, securing Debt permitted under Section 6.4;

             (iii)    the Security Interest and Liens created by the Security
Documents;

             (iv)    purchase money Liens on machinery or equipment of any
Obligor relating to the acquisition thereof, provided that: (x) the amount of
such Liens shall not exceed the lesser of cost or fair market value of the
related machinery or equipment; (y) the amount of such acquisitions shall not
exceed $10,000 for any one purchase or $50,000 in the aggregate for all Obligors
during any fiscal year; and (z) no Default Period is in existence at the time
of, or would exist immediately after, any such acquisition; and

             (v)    Liens securing the GE Debt; provided, that, all of such
Liens are created and perfected after the creation and perfection of the
Lender’s Lien hereunder and are subject to a Subordination Agreement.

        (b)        None of the Obligors will amend any financing statements in
favor of the Lender except as permitted by law. Any authorization by the Lender
to any Person to amend financing statements in favor of the Lender shall be in
writing.

        Section 6.4    Indebtedness. None of the Obligors will incur, create,
assume or permit to exist any Debt, including, without limitation, any
indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money or letters of credit issued on a Obligor’s behalf, or any
other indebtedness or liability evidenced by notes, bonds, debentures or similar
obligations, except:

        (a)        Debt arising hereunder;

        (b)        the IBM Debt; provided, that: (i) the amount of such Debt
shall at no time exceed the amount available to be drawn under the IBM L/C; (ii)
all proceeds of the IBM Debt shall be used by the Borrower solely to purchase
inventory from time to time; and (iii) no Obligor shall, directly or indirectly,
(A) amend, modify, alter or change the terms of such Debt or any agreement,
document or instrument related thereto as in effect on the Funding Date, except,
that, an Obligor may, after prior written notice to the Lender, amend, modify,
alter or change the terms thereof so as to extend the maturity thereof, or defer
the timing of any payments in respect thereof, or to forgive or cancel any
portion of such Debt (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Debt, or set aside or otherwise
deposit or invest any sums for such purpose; and (iv) each Obligor shall furnish
to the Lender copies of all notices or demands in connection with such Debt
either received by such Obligor or on its behalf, promptly after the receipt
thereof, or sent by such Obligor or on its behalf, concurrently with the sending
thereof, as the case may be;

        (c)        Debt of each Obligor (other than the IBM Debt) in existence
on the date hereof and listed in Schedule 6.4 hereto; provided, that: (i) no
Obligor shall, directly or indirectly, (A) amend, modify, alter or change the
terms of any such Debt or any agreement, document or instrument related thereto
as in effect on the Funding Date, except, that, an Obligor may, after

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prior written notice to the Lender, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such Debt
(other than pursuant to payments thereof), or to reduce the interest rate or any
fees in connection therewith, or (B) redeem, retire, defease, purchase or
otherwise acquire such Debt, or set aside or otherwise deposit or invest any
sums for such purpose; and (ii) each Obligor shall furnish to the Lender copies
of all notices or demands in connection with such Debt either received by such
Obligor or on its behalf, promptly after the receipt thereof, or sent by such
Obligor or on its behalf, concurrently with the sending thereof, as the case may
be;

        (d)        Debt relating to Permitted Liens under clause (iv) of Section
6.3;

        (e)        the GE Debt; provided, that: (i) on the date that any portion
of the GE Debt is incurred, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing; (ii) the aggregate amount of
the GE Debt shall at no time exceed $250,000 and all of the terms of the GE Debt
shall be satisfactory to the Lender; (iii) the Lender shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise relating to the GE Debt; (iv) all proceeds of the GE
Debt shall be used by the Borrower solely to purchase inventory from time to
time; (v) no Obligor shall, directly or indirectly, (A) amend, modify, alter or
change the terms of any such Debt or any agreement, document or instrument
related thereto, except, that, an Obligor may, after prior written notice to the
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Debt (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Debt, or set
aside or otherwise deposit or invest any sums for such purpose; and (vi) each
Obligor shall furnish to the Lender copies of all notices or demands in
connection with such Debt either received by such Obligor or on its behalf,
promptly after the receipt thereof, or sent by such Obligor or on its behalf,
concurrently with the sending thereof, as the case may be;

        (f)        unsecured trade payables incurred in the ordinary course of
an Obligor’s business in connection with obtaining goods, materials or services
that are not overdue by more than ninety (90) days, unless being contested in
good faith; and

        (g)        Debt owing to ADS in respect of unreimbursed business
expenses incurred by ADS on behalf of the Obligors in the ordinary course of
business, provided, that, the aggregate amount of such Debt shall at no time
exceed $50,000.

        Section 6.5    Guaranties. None of the Obligors will assume, guarantee,
endorse or otherwise become directly, indirectly or contingently liable in
connection with any obligations of any other Person, except:

        (a)        the endorsement of negotiable instruments by any Obligor for
deposit or collection or similar transactions in the ordinary course of
business;

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        (b)        guaranties, endorsements and other direct, indirect or
contingent liabilities in connection with the obligations of other Persons, in
existence on the date hereof and listed in Schedule 6.5 hereto; and

        (c)        the guaranty by Parent and ITSI of the Obligations.

        Section 6.6    Investments and Subsidiaries. None of the Obligors will
purchase or hold beneficially any stock or other securities or evidences of
indebtedness of, make or permit to exist any loans or advances to, or make any
investment or acquire any interest whatsoever in, any other Person, including
any Affiliate, any Officer, Director or Owner of any Obligor, or partnership or
joint venture, except:

        (a)        investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America having a
maturity of one year or less, commercial paper issued by U.S. corporations rated
“A-1” or “A-2” by Standard & Poors Corporation or “P-1” or “P-2” by Moody’s
Investors Service or certificates of deposit or bankers’ acceptances having a
maturity of one year or less issued by members of the Federal Reserve System
having deposits in excess of $100,000,000 (which certificates of deposit or
bankers’ acceptances are fully insured by the Federal Deposit Insurance
Corporation);

        (b)        travel advances or loans to any Obligor’s Officers and
employees not exceeding at any one time an aggregate for all Obligors of
$10,000;

        (c)        advances in the form of progress payments, prepaid rent not
exceeding one (1) month or security deposits;

        (d)        current investments in the Subsidiaries in existence on the
date hereof and listed in Schedule 5.5 hereto; and

        (e)        the ADS Loan, provided, that: (i) such loan shall at all
times be made pursuant to the terms of the ADS Loan Documents in effect on the
Funding Date; and (ii) all payments of interest on the ADS Loan and, to the
extent required under Section 6.30 hereof, payments of principal of the ADS
Loan, shall, in each case, be made directly to the Lender by wire transfer of
immediately available funds to an account designated by the Lender, for
application by the Lender in accordance with Section 6.30 hereof.

         Section 6.7   Debt and Royalty Payments; Dividends and Distributions.

        (a)        None of the Obligors will make any payments in respect of any
Obligor’s Debt (other than the Obligations) or in respect of any Licensed
Intellectual Property, except that:

             (i)    the Obligors may make payments in respect of trade accounts
payable and other operating expenses incurred in the ordinary course of their
business;

             (ii)    the Obligors may make payments in respect of any capital
leases permitted under this Agreement;

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             (iii)    the Obligors may continue to make payments in respect of
Licensed Intellectual Property on the same terms that exist with respect thereto
on the Funding Date; and

             (iv)    the Borrower may make regularly scheduled payments of
principal and interest in respect of the IBM Debt and the GE Debt, so long as no
Default or Event of Default shall have occurred and be continuing.

        (b)        None of the Obligors will declare, pay or make any dividends
(other than dividends payable solely in stock of an Obligor) on any class of its
stock or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make any distribution or capital
withdrawal in respect thereof, either, directly or indirectly.

        Section 6.8    Salaries. Except in connection with certain compensation
arrangements in existence on the Funding Date, as fully described on Schedule
6.8 hereto, no Obligor will pay excessive or unreasonable salaries, bonuses,
commissions, consultant fees or other compensation; or increase the salary,
bonus, commissions, consultant fees or other compensation of any Director,
Officer or consultant, or any member of their respective families, by more than
10% in any one year, either individually or for all such persons in the
aggregate, or pay any such increase from any source other than profits earned in
the year of payment. In no event shall any salaries, bonuses, commissions,
consultant fees or other compensation be paid if such payment would cause an
Event of Default to occur.

       Section 6.9    [Intentionally omitted].

        Section 6.10    Books and Records; Inspection and Examination. Each
Obligor will keep accurate books of record and account for itself pertaining to
the Collateral and pertaining to such Obligor’s business and financial condition
and such other matters as the Lender may from time to time request in which true
and complete entries will be made in accordance with GAAP and, upon the Lender’s
request, will permit any officer, employee, attorney or accountant for the
Lender to audit, review, make extracts from or copy any and all company and
financial books and records of such Obligor at all times during ordinary
business hours, to send and discuss with account debtors and other obligors
requests for verification of amounts owed to such Obligor, and to discuss such
Obligor’s affairs with any of its Directors, Officers, employees or agents. Each
Obligor hereby irrevocably authorizes all accountants and third parties to
disclose and deliver to the Lender, at such Obligor’s expense, all financial
information, books and records, work papers, management reports and other
information in their possession regarding such Obligor. Each Obligor will permit
the Lender, and its employees, accountants, attorneys or agents, to examine and
inspect any Collateral or any other property of such Obligor at any time, upon
one (1) Banking Days’ prior notice, during ordinary business hours.

        Section 6.11    Account Verification. The Lender may at any time and
from time to time send or require any Obligor to send requests for verification
of accounts or notices of assignment to account debtors and other obligors. The
Lender may also at any time and from time to time telephone account debtors and
other obligors to verify accounts.

       Section 6.12    Compliance with Laws.

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        (a)        Each Obligor will (i) comply with the requirements of
applicable laws, rules and regulations, the non-compliance with which would have
a Material Adverse Effect and (ii) use and keep the Collateral, and require that
others use and keep the Collateral, only for lawful purposes, without violation
of any federal, state or local law, statute or ordinance.

        (b)        Without limiting the foregoing undertakings, each Obligor
specifically agrees that it will comply with all applicable Environmental Laws
and obtain and comply with all permits, licenses and similar approvals required
by any Environmental Laws, and will not generate, use, transport, treat, store
or dispose of any Hazardous Substances in such a manner as to create any
material liability or obligation under the common law of any jurisdiction or any
Environmental Law.

        Section 6.13    Payment of Taxes and Other Claims. Each Obligor will pay
or discharge, when due, (a) all taxes, assessments and governmental charges
levied or imposed upon it or upon its income or profits, upon any properties
belonging to it (including the Collateral) or upon or against the creation,
perfection or continuance of the Security Interest, prior to the date on which
penalties attach thereto, (b) all federal, state and local taxes required to be
withheld by it, and (c) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon any properties of an Obligor;
provided, that no Obligor shall be required to pay any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which proper reserves have been
made.

       Section 6.14    Maintenance of Properties.

       (a)        Each Obligor will keep and maintain the Collateral and all of
its other properties necessary or useful in its business in good condition,
repair and working order (normal wear and tear excepted) and will from time to
time replace or repair any worn, defective or broken parts; provided, however,
that nothing in this Section 6.14 shall prevent any Obligor from discontinuing
the operation and maintenance of any of its properties if such discontinuance
is, in such Obligor’s judgment, desirable in the conduct of such Obligor’s
business and not disadvantageous in any material respect to the Lender. Each
Obligor will take all commercially reasonable steps necessary to protect and
maintain its Intellectual Property Rights.

       (b)        Each Obligor will defend the Collateral against all Liens,
claims or demands of all Persons (other than the Lender) claiming the Collateral
or any interest therein. Each Obligor will keep all Collateral free and clear of
all Liens except Permitted Liens. Each Obligor will take all commercially
reasonable steps necessary to prosecute any Person Infringing its Intellectual
Property Rights and to defend itself against any Person accusing it of
Infringing any Person’s Intellectual Property Rights.

        Section 6.15    Insurance. Each Obligor will obtain and at all times
maintain insurance with responsible and reputable insurers, in such amounts and
against such risks as may from time to time be reasonably required by the
Lender, but in all events in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which such Obligor operates. Without limiting the
generality of the foregoing, each Obligor will at all times maintain business
interruption insurance including coverage for force majeure and keep all
tangible Collateral insured against

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risks of fire (including so-called extended coverage), theft, collision (for
Collateral consisting of motor vehicles) and such other risks and in such
amounts as the Lender may reasonably request, with any loss payable to the
Lender to the extent of its interest, and all policies of such insurance shall
contain a lender’s loss payable endorsement for the Lender’s benefit. All
policies of liability insurance required hereunder shall name the Lender as an
additional insured.

        Section 6.16    Preservation of Existence. Each Obligor will preserve
and maintain its existence and all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business and shall conduct
its business in an orderly, efficient and regular manner.

        Section 6.17    Delivery of Instruments, etc. Upon request by the
Lender, each Obligor will promptly deliver to the Lender in pledge all
instruments, documents and chattel paper constituting Collateral, duly endorsed
or assigned by such Obligor.

        Section 6.18    Sale or Transfer of Assets; Suspension of Business
Operations. None of the Obligors will sell, lease, assign, transfer or otherwise
dispose of (i) the stock of any Subsidiary, (ii) all or a substantial part of
its assets, or (iii) any Collateral or any interest therein (whether in one
transaction or in a series of transactions) to any other Person other than the
sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations. None of the Obligors will transfer any
part of its ownership interest in any Intellectual Property Rights or permit any
agreement under which it has licensed Licensed Intellectual Property to lapse,
except that an Obligor may transfer such rights or permit such agreements to
lapse if it shall have reasonably determined that the applicable Intellectual
Property Rights are no longer useful in its business. If any Obligor transfers
any Intellectual Property Rights for value, such Obligor will pay over the
proceeds to the Lender for application to the Obligations. None of the Obligors
will license any other Person to use any of such Obligor’s Intellectual Property
Rights, except that each Obligor may grant licenses in the ordinary course of
its business in connection with sales of Inventory or provision of services to
its customers.

        Section 6.19    Consolidation and Merger; Asset Acquisitions. None of
the Obligors will consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all the assets of any
other Person.

        Section 6.20    Sale and Leaseback. None of the Obligors will enter into
any arrangement, directly or indirectly, with any other Person whereby such
Obligor shall sell or transfer any real or personal property, whether now owned
or hereafter acquired, and then or thereafter rent or lease as lessee such
property or any part thereof or any other property which such Obligor intends to
use for substantially the same purpose or purposes as the property being sold or
transferred.

        Section 6.21    Restrictions on Nature of Business. None of the Obligors
will engage in any line of business materially different from that presently
engaged in by such Obligor or purchase, lease or otherwise acquire assets not
related to its business.

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        Section 6.22    Accounting. None of the Obligors will adopt any material
change in accounting principles other than as required by GAAP. None of the
Obligors will adopt, permit or consent to any change in its fiscal year.

        Section 6.23    Discounts, etc. None of the Obligors will grant any
discount, credit or allowance to any customer of such Obligor or accept any
return of goods sold, in each case with respect to any Account in an amount
greater than or equal to $25,000, if such action would not be consistent with
past practices. After notice from the Lender, none of the Obligors will grant
any discount, credit or allowance to any customer of such Obligor or accept any
return of goods sold. None of the Obligors will at any time modify, amend,
subordinate, cancel or terminate the obligation of any account debtor or other
obligor of such Obligor.

        Section 6.24    Plans. Unless disclosed to the Lender pursuant to
Section 5.12, none of the Obligors or any ERISA Affiliate will (i) adopt,
create, assume or become a party to any Pension Plan, (ii) incur any obligation
to contribute to any Multiemployer Plan, (iii) incur any obligation to provide
post-retirement medical or insurance benefits with respect to employees or
former employees (other than benefits required by law) or (iv) amend any Plan in
a manner that would materially increase its funding obligations.

        Section 6.25    Place of Business; Name. None of the Obligors will
transfer its chief executive office or principal place of business, or move,
relocate, close or sell any business location unless: (a) the Lender shall have
received not less than thirty (30) days’ prior written notice thereof; and (b)
the Lender shall have received a Collateral Access Agreement with respect to any
new location on or prior to the date any Obligor takes possession thereof. None
of the Obligors will permit any tangible Collateral or any records pertaining to
the Collateral to be located in any state or area in which a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. None of the Obligors will
change its name unless: (a) the Lender shall have received not less than thirty
(30) days prior written notice from such Obligor of such proposed change in its
name, which notice shall accurately set forth the new name; and (b) the Lender
shall have received copies of the related amendment to the articles or
certificate of incorporation of such Obligor certified by the Secretary of State
of the jurisdiction of organization of such Obligor as soon as it is available.
None of the Obligors will change its jurisdiction of organization.

         Section 6.26   Constituent Documents; S Corporation Status. None of the
Obligors will amend its Constituent Documents.

        Section 6.27    Performance by the Lender. If any Obligor at any time
fails to perform or observe any of the foregoing covenants contained in this
Article VI or elsewhere herein, and if such failure shall continue for a period
of ten calendar days after the Lender gives such Obligor written notice thereof
(or in the case of the agreements contained in Sections 6.13 and 6.15,
immediately upon the occurrence of such failure, without notice or lapse of
time), the Lender may, but need not, perform or observe such covenant on behalf
and in the name, place and stead of such Obligor (or, at the Lender’s option, in
the Lender’s name) and may, but need not, take any and all other actions which
the Lender may reasonably deem necessary to cure or correct such failure
(including the payment of taxes, the satisfaction of Liens, the performance of
obligations owed to account debtors or other obligors, the procurement and
maintenance of insurance, the

– 45 –

execution of assignments, security agreements and financing statements, and the
endorsement of instruments); and the Obligors shall thereupon pay to the Lender
on demand the amount of all monies expended and all costs and expenses
(including reasonable attorneys’ fees and legal expenses) incurred by the Lender
in connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Lender, together with interest
thereon from the date expended or incurred at the Default Rate. To facilitate
the Lender’s performance or observance of such covenants of each Obligor, each
Obligor hereby irrevocably appoints the Lender, or the Lender’s delegate, acting
alone, as such Obligor’s attorney in fact (which appointment is coupled with an
interest) with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file in the name and on behalf
of such Obligor any and all instruments, documents, assignments, security
agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed
by such Obligor under this Section 6.27.

        Section 6.28    Financial Statements and Covenants. In the event that
Parent or ITSI commences any business activity or operations, other than of the
kind conducted by Parent or ITSI, as the case may be, on the Funding Date or
reasonably related thereto, then, immediately upon the occurrence of such event,
and at all times thereafter, automatically and without further notice from or
demand by the Lender, the results of operations of Parent or ITSI, as
applicable, shall be excluded (a) from each of the financial statements
delivered to the Lender pursuant to Section 6.1 and (b) when calculating Net
Income or Book Net Worth for any period or date ending or occurring thereafter.

        Section 6.29    Affiliate Transactions. No Obligor will enter into, or
be a party to, or permit any Subsidiary of such Obligor to enter into or be a
party to, any transaction with any Affiliate of such Obligor or any holder of
stock or other ownership interest in such Obligor except in the ordinary course
of and pursuant to the reasonable requirements of such Obligor’s or such
Subsidiary’s business and upon fair and reasonable terms which are no less
favorable to such Obligor or such Subsidiary than would be obtained in a
comparable arm’s length transaction with a Person not an Affiliate of, or holder
of stock or other ownership interest in, such Obligor or such Subsidiary.

        Section 6.30    Application of ADS Loan Payments; Cash Collateral.
Parent shall deliver or cause to be delivered directly to the Lender principal
and interest payments made in respect of the ADS Loan, $500,000 of which will be
held by the Lender as cash collateral to secure the Obligations (the “Cash
Collateral”), in each case in accordance with the terms of this Section 6.30.
Parent shall cause all payments of interest on the ADS Loan and the first
$500,000 of payments of principal of the ADS Loan to be delivered directly to
the Lender by wire transfer of immediately available funds. Each payment of
interest received by the Lender pursuant to the preceding sentence shall be
applied by the Lender to the Obligations in such order as the Lender, in its
sole discretion, shall determine, unless prior to the Lender’s receipt of such
interest payment, the Lender shall have received written notice from the Parent
instructing the Lender to hold the amount of such interest payment as cash
collateral to secure the Obligations. The aggregate amount of interest payments
on the ADS Loan received by the Lender and held as cash collateral pursuant to
the preceding sentence shall reduce, dollar-for-dollar, the amount of principal
payments required to be delivered to the Lender pursuant to the second sentence
of this Section 6.30. Concurrently with the delivery of any of the Cash
Collateral to the Lender, Parent shall execute and deliver to the Lender such
agreements, documents and instruments (including, without limitation, a Pledge
and Security Agreement and account control agreement) as the Lender shall
require in order to perfect the Lender’s security interest in such Cash
Collateral.

– 46 –

ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES

        Section 7.1    Events of Default. Notwithstanding that the Lender may
demand immediate payment of the Obligations at any time, whether or not a
Default Period then exists, and without waiving or limiting in any respect the
Lender’s right to so demand payment of the Obligations at any time, this
Agreement sets forth a non-exclusive list of certain critical events after the
occurrence of which the Lender expects that it would demand immediate payment of
the Obligations and exercise its remedies. “Event of Default”, wherever used
herein, means any one of the following events:

        (a)        Default in the payment of (i) the Obligations on demand or
(ii) any portion of the Obligations that otherwise becomes due and payable and
such default continues for five (5) days after the due date thereof;

        (b)        Default in the performance, or breach, of any covenant or
agreement of the Borrower or any Guarantor contained in this Agreement or any
other Loan Document;

        (c)        Any ownership interest in the Borrower or ITSI shall become
subject to a Lien (other than the Lien thereon in favor of the Lender) or a
Change of Control shall occur;

        (d)        [Intentionally omitted];

        (e)        Any Obligor shall be or become insolvent, or admit in writing
its inability to pay its debts as they mature, or make an assignment for the
benefit of creditors; or any Obligor shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for it or for all or
any substantial part of its property; or such receiver, trustee or similar
officer shall be appointed without the application or consent of such Obligor,
as the case may be; or any Obligor shall institute (by petition, application,
answer, consent or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or any such
proceeding shall be instituted (by petition, application or otherwise) against
any Obligor; or any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against any of the property of any
Obligor;

        (f)        A petition shall be filed by or against any Obligor under the
United States Bankruptcy Code naming such Obligor as debtor and the same shall
not be dismissed within thirty (30) days after such filing or such Obligor shall
file an answer admitting or not contesting such petition or indicates its
consent to, acquiescence in or approval of, any such petition or the relief
requested is granted sooner;

        (g)        [Intentionally omitted];

– 47 –

        (h)        Any representation or warranty made by any Obligor (or any
Officer of any Obligor) in this Agreement or any other Loan Document, or in any
agreement, certificate, instrument or financial statement or other statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement or any other Loan Document shall prove to have been incorrect in any
material respect when deemed to be made;

        (i)        The rendering against any Obligor of an arbitration award,
final judgment, decree or order for the payment of money in excess of $20,000
which is not fully covered by insurance and the continuance of such arbitration
award, judgment, decree or order unsatisfied and in effect for any period of 30
consecutive days without being vacated or effectively stayed;

        (j)        A default under any bond, debenture, note or other evidence
of material indebtedness of any Obligor owed to any Person other than the
Lender, or under any indenture or other instrument under which any such evidence
of indebtedness has been issued or by which it is governed, or under any
material lease or other contract, or with respect to the IBM Debt or the GE
Debt, in any case with respect to an amount greater than or equal to $100,000 or
more and the expiration of the applicable period of grace, if any, specified in
such evidence of indebtedness, indenture, other instrument, lease or contract;

        (k)        Any Reportable Event, which the Lender determines in good
faith would constitute grounds for the termination of any Pension Plan or for
the appointment by the appropriate United States District Court of a trustee to
administer any Pension Plan, shall have occurred and be continuing 30 days after
written notice to such effect shall have been given to the applicable Obligor by
the Lender; or a trustee shall have been appointed by an appropriate United
States District Court to administer any Pension Plan; or the Pension Benefit
Guaranty Corporation shall have instituted proceedings to terminate any Pension
Plan or to appoint a trustee to administer any Pension Plan; or any Obligor or
ERISA Affiliate shall have filed for a distress termination of any Pension Plan
under Title IV of ERISA; or any Obligor or ERISA Affiliate shall have failed to
make any quarterly contribution required with respect to any Pension Plan under
Section 412(m) of the IRC, which the Lender determines in good faith would by
itself, or in combination with any such failures that the Lender reasonably
determines are likely to occur in the future, result in the imposition of a Lien
on any Obligor’s assets in favor of the Pension Plan; or any withdrawal, partial
withdrawal, reorganization or other event occurs with respect to a Multiemployer
Plan which results or could reasonably be expected to result in a material
liability of any Obligor to the Multiemployer Plan under Title IV of ERISA.

        (l)        An event of default shall occur under any Loan Document
(other than this Agreement);

        (m)        Any Obligor shall liquidate, dissolve, terminate or suspend
its business operations or otherwise fail to operate its business in the
ordinary course, or sell or attempt to sell all or substantially all of its
assets, without the Lender’s prior written consent;

        (n)        Default in the payment of any amount owed by any Obligor to
the Lender other than any indebtedness arising hereunder;

– 48 –

        (o)        Any Guarantor shall repudiate, purport to revoke or fail to
perform its obligations under a Guaranty;

        (p)        Any event or circumstance with respect to any Obligor or
Guarantor shall occur such that the Lender shall believe in good faith that the
prospect of payment of all or any part of the Obligations or the performance by
such Obligor or Guarantor under the Loan Documents is impaired or any event
shall occur or circumstance shall arise which has a Material Adverse Effect;

        (q)        [Intentionally omitted];

        (r)        The Lender shall in good faith deem itself insecure or unsafe
or shall in good faith fear a material diminution in value, or removal or waste
of a material portion, of the Collateral;

        (s)        The indictment of any Obligor, or any other Person, under any
criminal statute, or commencement of any criminal or civil proceeding against
any Obligor, or any other Person, pursuant to which statute or proceeding
penalties or remedies sought or available include forfeiture of any of the
property of any Obligor; or

        Section 7.2    Rights and Remedies. As provided in Section 2.13, the
Lender may, at any time, refuse to make any requested Advance, demand payment of
the Revolving Advances and other Obligations and/or terminate the Credit
Facility, whether or not a Default Period then exists. In addition, during any
Default Period, the Lender may exercise any or all of the following rights and
remedies:

        (a)        the Lender may, by notice to the Borrower, declare the
Obligations to be forthwith due and payable, whereupon all Obligations shall
become and be immediately due and payable, without presentment, notice of
dishonor, protest or further notice of any kind, all of which each Obligor
hereby expressly waives;

        (b)        the Lender may, without notice to any Obligor and without
further action, apply any and all money owing by the Lender to any Obligor to
the payment of the Obligations;

        (c)        the Lender may exercise and enforce any and all rights and
remedies available upon default to a secured party under the UCC, including the
right to take possession of the Collateral, or any evidence thereof, proceeding
without judicial process or by judicial process (without a prior hearing or
notice thereof, which each Obligor hereby expressly waives) and the right to
sell, lease or otherwise dispose of any or all of the Collateral (with or
without giving any warranties as to the Collateral, title to the Collateral or
similar warranties), and, in connection therewith, each Obligor will on demand
assemble the Collateral and make it available to the Lender at the Premises or,
if the Collateral is not located on or at the Premises or the Lender is not able
to gain access to the Premises, at a place in the State of New Jersey to be
designated by the Lender which is reasonably convenient to both parties;

        (d)        the Lender may make written demand upon the Borrower and,
immediately upon such demand, the Borrower will pay to the Lender in immediately
available funds for deposit in the Special Account pursuant to Section 2.5 an
amount equal to the aggregate maximum amount available to be drawn under the IBM
L/C, assuming compliance with all conditions for drawing thereunder;

– 49 –

        (e)        the Lender may exercise and enforce its rights and remedies
under the Loan Documents; and

        (f)        the Lender may exercise any other rights and remedies
available to it by law or agreement.

        Notwithstanding the foregoing, upon the occurrence of an Event of
Default described in subsections (e) or (f) of Section 7.1, the Obligations
shall be immediately due and payable automatically without presentment, demand,
protest or notice of any kind. If the Lender sells any of the Collateral on
credit, the Obligations will be reduced only to the extent of payments actually
received. If the purchaser fails to pay for the Collateral, the Lender may
resell the Collateral and shall apply any proceeds actually received to the
Obligations.

        Section 7.3    Certain Notices. If notice to any Obligor of any intended
disposition of Collateral or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 8.3) at least five calendar days
before the date of intended disposition or other action.

ARTICLE VIII
MISCELLANEOUS

        Section 8.1    No Waiver; Cumulative Remedies; Compliance with Laws. No
failure or delay by the Lender in exercising any right, power or remedy under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law. The Lender may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral.

        Section 8.2    Amendments, Etc. No amendment, modification, or waiver of
any provision of any Loan Document or consent to any departure by any Obligor
therefrom or any release of a Security Interest shall be effective unless the
same shall be in writing and signed by the Lender and the Obligors, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on any Obligor in
any case shall entitle any Obligor to any other or further notice or demand in
similar or other circumstances.

        Section 8.3    Addresses for Notices. Except as otherwise expressly
provided herein, all notices, requests, demands and other communications
provided for under the Loan Documents shall be in writing and shall be (a)
personally delivered, (b) sent by first class United States mail, (c) sent by
overnight courier of national reputation, or (d) transmitted by telecopy, in
each case addressed or telecopied to the party to whom notice is being given at
its address or telecopier number as set forth below:

– 50 –

  If to any Obligor:  

  c/o Infotech USA, Inc.
7 Kingsbridge Road
Fairfield, New Jersey 07004
Telecopier: (973) 227-8955
Attn: Mr. Robert Patterson  

  With a copy to:  

  Wolff & Samson PC
One Boland Drive
West Orange, New Jersey 07052
Telecopier: (973) 530-2213
Attn: Morris Bienenfeld, Esq.  

  If to the Lender:  

  Wells Fargo Business Credit, Inc.
119 West 40th Street
New York, New York 10018
Telecopier: (646) 728-3279
Attn: Mr. Sal Mutone  

  With a copy to:  

  Wolf, Block, Schorr and Solis-Cohen LLP
250 Park Avenue
New York, New York 10177
Telecopier: (212) 986-0604
Attn: Robert Stein, Esq.  

or, as to each party, at such other address or telecopier number as may
hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) three (3) Banking Days after
the date deposited in the mail if delivered by mail, (c) the Banking Day
following the date sent if sent by overnight courier, or (d) the date of
transmission if delivered by telecopy, except that notices or requests to the
Lender pursuant to any of the provisions of Article II shall not be effective
until received by the Lender. All requests under Section 9-210 of the UCC (i)
shall be made in a writing signed by a person authorized to request an Advance
under Section 2.2(a), (ii) shall be personally delivered, sent by registered or
certified mail, return receipt requested, or by overnight courier of national
reputation (iii) shall be deemed to be sent when received by the Lender and (iv)
shall otherwise comply with the requirements of Section 9-210. Each Obligor
requests that the Lender respond to all such requests which on their face appear
to come from an authorized individual and releases the Lender from any liability
for so responding. The Obligors shall pay Lender the maximum amount allowed by
law for responding to such requests.

– 51 –

        Section 8.4    Further Documents. Each Obligor will from time to time
execute and deliver or endorse any and all instruments, documents, conveyances,
assignments, security agreements, financing statements, control agreements and
other agreements and writings that the Lender may reasonably request in order to
secure, protect, perfect or enforce the Security Interest or the Lender’s rights
under the Loan Documents (but any failure to request or assure that any Obligor
executes, delivers or endorses any such item shall not affect or impair the
validity, sufficiency or enforceability of the Loan Documents or the Security
Interest, regardless of whether any such item was or was not executed, delivered
or endorsed in a similar context or on a prior occasion).

        Section 8.5    Costs and Expenses. The Obligors shall pay on demand all
costs and expenses, including reasonable attorneys’ fees, incurred by the Lender
in connection with the Obligations, this Agreement, the Loan Documents and the
IBM L/C and any other document or agreement related hereto or thereto, and the
transactions contemplated hereby or thereby, including all such costs, expenses
and fees incurred in connection with the negotiation, preparation, execution,
amendment, administration, performance, collection and enforcement of the
Obligations and all such documents and agreements and the creation, perfection,
protection, satisfaction, foreclosure or enforcement of the Security Interest.

        Section 8.6    Indemnity. In addition to the payment of expenses
pursuant to Section 8.5, the Obligors shall indemnify, defend and hold harmless
the Lender, and any of its participants, parent corporations, subsidiary
corporations, affiliated corporations, successor corporations, and all present
and future officers, directors, employees, attorneys and agents of the foregoing
(the “Indemnitees”) from and against any of the following (collectively,
“Indemnified Liabilities”):

             (i)    any and all transfer taxes, documentary taxes, assessments
or charges made by any governmental authority by reason of the execution and
delivery of the Loan Documents or the making of the Revolving Advances for which
any Indemnitee is liable;

             (ii)    any claim, loss or damage to which any Indemnitee may be
subjected if any representation or warranty contained in Section 5.14 proves to
be incorrect in any respect or as a result of any violation of the covenant
contained in Section 6.12; and

             (iii)    any and all other liabilities, losses, damages, penalties,
judgments, suits, claims, costs and expenses of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel) in connection with
the foregoing and any other investigative, administrative or judicial
proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against any such Indemnitee, in
any manner related to or arising out of or in connection with the making of the
Revolving Advances and the Loan Documents or the use or intended use of the
proceeds of the Revolving Advances.

– 52 –

If any investigative, judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee’s written
request, the Obligors, or counsel designated by the Obligors and reasonably
satisfactory to the Indemnitee, will resist and defend such action, suit or
proceeding to the extent and in the manner directed by the Indemnitee, at the
Obligors’ sole cost and expense. Each Indemnitee will use its best efforts to
cooperate in the defense of any such action, suit or proceeding. If the
foregoing undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, the Obligors shall
nevertheless make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
The Obligors’ obligation under this Section 8.6 shall survive the termination of
this Agreement and the discharge of the Obligor’s other obligations hereunder.

        Section 8.7    Participants. The Lender and its participants, if any,
are not partners or joint venturers, and the Lender shall not have any liability
or responsibility for any obligation, act or omission of any of its
participants. All rights and powers specifically conferred upon the Lender may
be transferred or delegated to any of the Lender’s participants, successors or
assigns.

        Section 8.8    Execution in Counterparts; Telefacsimile Execution. This
Agreement and the other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same instrument. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.

        Section 8.9    Retention of Obligors’ Records. The Lender shall have no
obligation to maintain any electronic records or any documents, schedules,
invoices, agings, or other papers delivered to the Lender by any Obligor or in
connection with the Loan Documents for more than four months after receipt by
the Lender.

        Section 8.10    Binding Effect; Assignment; Complete Agreement;
Exchanging Information. The Loan Documents shall be binding upon and inure to
the benefit of each Obligor and the Lender and their respective successors and
assigns, except that no Obligor shall have the right to assign its rights
thereunder or any interest therein without the Lender’s prior written consent.
To the extent permitted by law, each Obligor waives and will not assert against
any assignee any claims, defenses or set-offs which such Obligor could assert
against the Lender. This Agreement, together with the Loan Documents, comprises
the complete and integrated agreement of the parties on the subject matter
hereof and supersedes all prior agreements, written or oral, on the subject
matter hereof. Without limiting the Lender’s right to share information
regarding the Obligors and their Affiliates with the Lender’s participants,
accountants, lawyers and other advisors, the Lender, Wells Fargo & Company, and
all direct and indirect subsidiaries of Wells Fargo & Company, may exchange
among themselves any and all information they may have in their possession
regarding the Obligors and their Affiliates, and each Obligor waives any right
of confidentiality it may have with respect to such exchange of such
information.

– 53 –

        Section 8.11    Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

        Section 8.12    Headings. Article, Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.

        Section 8.13    Construction. The parties acknowledge that each party
and its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits thereto.

        Section 8.14    Publicity. The Lender may, without the consent of any
Obligor, make appropriate announcements of the financial arrangement entered
into by and among the Obligors and the Lender, including, without limitation,
announcements which are commonly known as tombstones, in such publications and
to such selected parties as the Lender shall deem appropriate.

        Section 8.15    Governing Law; Jurisdiction, Venue; Waiver of Jury
Trial. The Loan Documents shall be governed by and construed in accordance with
the substantive laws of the State of New York, without giving effect to
conflicts of laws principles. The parties hereto hereby (i) consent to the
personal jurisdiction of the State and Federal courts located in the State of
New York in connection with any controversy related to this Agreement; (ii)
waive any argument that venue in any such forum is not convenient, (iii) agree
that any litigation initiated by the Lender or any Obligor in connection with
this Agreement or the other Loan Documents may be venued in either the State or
Federal courts located in New York County, New York; and (iv) agree that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

EACH OBLIGOR WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF
PROCESS UPON SUCH OBLIGOR MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO SUCH OBLIGOR AT ITS ADDRESS APPEARING ON THE
LENDER’S RECORDS, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS
AFTER THE SAME SHALL HAVE BEEN SO MAILED.

THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
ON OR PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

– 54 –

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

  BORROWER:

  INFOTECH USA, INC.,
    a New Jersey corporation

By:   /s/ J. Robert Patterson

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

Name:    J. Robert Patterson Title:    Secretary and Treasurer

  GUARANTORS:

  INFOTECH USA, INC.,
    a Delaware corporation

By:   /s/ J. Robert Patterson

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

Name:    J. Robert Patterson Title:    Chief Financial Officer, Vice President
   and Treasurer

  INFORMATION TECHNOLOGY SERVICES, INC.,
    a New York corporation

By:     /s/  J. Robert Patterson

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

Name:    J. Robert Patterson Title:    Chief Financial Officer, Vice President
   and Treasurer

  LENDER:

  WELLS FARGO BUSINESS CREDIT, INC.,
    a Minnesota corporation

By:   /s/ Sal Mutone

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

Name:    Sal Mutone Title:    Vice President

– 55 –