Exhibit 10.16.1

LOAN AND SECURITY AGREEMENT

CRYSTALTECH WEB HOSTING, INC.

NEWTEK SMALL BUSINESS FINANCE INC.

(as Borrowers)

and

CAPITAL ONE, N.A. (as “Lender”)

Dated as of April 30, 2010

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This Loan and Security Agreement (“Agreement”) is dated this 30th day of April,
2010, by and between CRYSTALTECH WEB HOSTING, INC., a New York corporation
(“CrystalTech”), with NEWTEK SMALL BUSINESS FINANCE INC., a New York corporation
(“NSBF,” each of CrystalTech and NSBF a “Borrower” and together the Borrowers),
and CAPITAL ONE, N.A. (“Lender”).

BACKGROUND

A. Borrowers desire to establish financing arrangements with Lender and Lender
is willing to make loans and extensions of credit to Borrower under the terms
and provisions hereinafter set forth.

B. The parties desire to define the terms and conditions of their relationship
in writing.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

SECTION I. DEFINITIONS AND INTERPRETATION

1.1. Terms Defined: As used in this Agreement, the following terms have the
following respective meanings:

Account - All of the “accounts” (as that term is defined in the UCC) of
Borrower, whether now existing or hereafter arising.

Advance(s) - Any monies advanced or credit extended to Borrower by Lender
hereunder, including, without limitation, cash advances.

Affiliate - With respect to any Person, (a) any Person which, directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person, or
(iii) any person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the Capital Stock having ordinary voting power for the election of
directors (or comparable equivalent) of such Person, or (y) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise. Control may be by ownership, contract, or otherwise.

Approved Forms means the forms of SBA 7(a) Note Receivable Documents, approved
and used by Borrower in the conduct of its business, together with such changes
and modifications or additions thereto from time to time as allowed by this
Agreement or as required by the SBA.

Asset Sale - The sale, transfer, lease, license or other disposition by
Borrower, or by any Subsidiary of Borrower, to any Person other than Borrower,
of any Property now owned, or hereafter acquired, of any nature whatsoever in
any transaction or series of related transactions. An Asset Sale includes, but
is not limited to, a merger, consolidation, division, conversion, dissolution or
liquidation.

Authorized Officer - Any officer (or comparable equivalent) of Borrower
authorized by specific resolution of Borrower to request Advances or execute
Quarterly Compliance Certificates as set forth in the incumbency certificate
referred to in Section 4.1(d) of this Agreement.

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Availability - means as of any date of determination as to either Term Loan, the
lesser of (i) the Maximum Term Loan Amount (relative to such loan) and (ii) the
Borrowing Base, in each case, less the sum of the Term Loan then outstanding.

Bank Affiliate - Any bank that is controlled by Lender. A bank shall be deemed
controlled by Lender if (i) Lender, directly or indirectly, or acting through
one or more other Persons, owns, controls or has power to vote twenty-five
percent (25%) or more of any class of voting securities of the bank; or
(ii) Lender controls in any manner the election of a majority of the directors
or trustees of the bank.

Base Rate - The applicable interest rate set forth in the applicable Note.

Blocked Account - See Section 6.13.

Blocked Account Agreement - means a blocked account agreement between the
Borrowers and the Lender as required herein.

Borrowing Base - Means with respect to Term Loan A, as of any date of
determination by Lender, from time to time, an amount equal to the sum at such
time of (i) 70 % of the outstanding principal balance of Borrower’s Eligible SBA
7(a) Note Receivables, (ii) 50 % of the aggregate amount of accrued and unpaid
interest on Borrower’s Performing SBA 7(a) Note Receivables and (iii) 75% of the
outstanding principal balance of Borrower’s Eligible SBA 7(a) Loans held for
Sale, in each case, less any Reserves. For the avoidance of doubt, the Borrowing
Base does not include payments or obligation due to the Borrower from the SBA.

Borrowing Base Certificate - See Exhibit A.

Borrowing Notice - a written notice to the Lender requesting disbursement of the
Term Loans hereunder.

Business Day - A day other than Saturday or Sunday or a national banking holiday
when Lender is open for business in Nassau County, State of New York.

Capitalized Lease Obligations - Any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP, consistently applied.

Capital Expenditures - For any period, the aggregate of all expenditures
(including that portion of Capitalized Lease Obligations attributable to that
period, which have not been financed) made in respect of the purchase,
construction or other acquisition of fixed or capital assets, determined in
accordance with GAAP.

Capital Stock - Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
other ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.

Cash Management System - Section 2.4(b).

 

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CCCRE means CCC Real Estate Holding Co. LLC, a Delaware limited liability
company.

Closing - Section 4.6.

Closing Date - Section 4.6.

Collateral - All of the Property and interests in Property described in
Section 3.1 of this Agreement and all other Property and interests in Property
that now or hereafter secure payment of the Obligations and satisfaction by
Borrower of all covenants and undertakings contained in this Agreement and the
other Loan Documents.

Credit Parties means Parent, each Borrower (and any subsidiaries), each
Guarantor and CCCRE.

Default - Any event, act, condition or occurrence which with notice, or lapse of
time or both, would constitute an Event of Default hereunder.

Distribution - a transfer of cash by Borrower to its equity holder(s).

Environmental Laws - Any and all Federal, foreign, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees and any
and all common law requirements, rules and bases of liability regulating,
relating to or imposing liability or standards of conduct concerning pollution,
protection of the environment, or the impact of pollutants, contaminants or
toxic or hazardous substances on human health or the environment, as now or may
at any time hereafter be in effect.

EBITDA - Means net income (loss) plus goodwill impairment (incurred prior to the
date hereof), interest, taxes (or less tax benefit), depreciation and
amortization determined in accordance with GAAP, plus cash actually received but
excluded from the GAAP calculation of EBITDA solely due to the effect of FAS
166. For purposes of determining the EBITDA for Newtek Business Services, Inc.
net income shall be reduced by the amount of income from tax credits, increased
by the other than temporary decline in investments, and reduced (if a gain) or
increased (if a loss) of net change in the fair market value of credits in lieu
of cash and notes payable in credits in lieu of cash and shall exclude the
effect of any minority interests.

ERISA - The Employee Retirement Income Security Act of 1974, as the same may be
amended, from time to time.

Event of Default - Section 8.1.

Expenses - Section 9.6.

FAS 166 - Statement of Financial Accounting Standards No. 166 Accounting for
Transfers of Financial Assets an amendment of FASB Statement No. 140 dated, June
2009

Facility Fee - Section 2.7(a).

 

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Fixed Charge Coverage Ratio - (calculated for Parent on a consolidated basis, as
of the end of any calendar quarter) shall mean EBITDA for the previous four
(4) calendar quarters, less capital expenditures plus only through the period
ending September 30, 2010, SBA principal payment collections (net of cash
deployed for new SBA loans) during the previous four (4) calendar quarters,
divided by the sum of the amounts paid during the previous four (4) calendar
quarters for (i) principal of long term debt, (ii) interest (iii) dividends and
(iv) treasury stock redemptions. For the purposes of the foregoing, during the
nine calendar month period following the closing date, items (i) and (ii) in the
denominator will be annualized until December 31, 2010; thereafter all will be
on a trailing twelve month basis.

FIRREA means the Federal Financial Institution Reform, Recovery and Enforcement
Act of 1989, as amended.

FTA means Colson Services Corp., as fiscal and transfer agent for the SBA and as
the SBA’s agent to hold the original SBA 7(a) Loan Notes pursuant to the
Multi-Party Agreement, and as bailee for Lender for purposes of perfecting
Lender’s security interest in the original SBA 7(a) Loan Notes pursuant to the
Multi-Party Agreement, or any other Person designated by the SBA or Lender,
subject to the consent of the SBA in accordance with the terms of the
Multi-Party Agreement to perform the same or similar function

Funded Debt The sum of all indebtedness of the Borrower for borrowed money
including the current and long term portions thereof, and all other indebtedness
for which interest is charged including capital leases and subordinated debt.

GAAP - Generally accepted accounting principles as in effect on the Closing Date
applied in a manner consistent with the most recent audited financial statements
of Borrower furnished to Lender and described in Section 5.7 herein.

Governmental Authority - Any federal, state or local government or political
subdivision, or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury, or
arbitration.

Guarantor - Each of Newtek Business Services, Inc. a corporation organized under
the laws of the State of New York, Universal Processing Services of Wisconsin
LLC (d/b/a Newtek Merchant Solutions) a limited liability company organized
under the laws of the State of Wisconsin, Small Business Lending, Inc. a
corporation organized under the laws of the State of Delaware, CCCRE and any
other Person who may hereafter guaranty, as surety, all of the Obligations.

Guarantor Security Agreement - That certain guarantor security agreement to be
executed by each Guarantor in favor of Lender, in form and substance
satisfactory to Lender, on or prior to the Closing Date.

Guaranty Agreement - That certain guaranty agreement to be executed by each
Guarantor in favor of Lender, in form and substance satisfactory to Lender, on
or prior to the Closing Date.

 

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Hazardous Substances - Any substances defined or designated as hazardous or
toxic waste, hazardous or toxic material, hazardous or toxic substance or
similar term, under any Environmental Law.

Hedging Agreements - Any Interest Hedging Instrument or any other interest rate
protection agreement, foreign currency exchange agreement, commodity purchase or
option agreement, or any other interest rate hedging device or swap agreement
(as defined in 11 U.S.C. § 101 et seq.).

Indebtedness - Of any Person at any date, without duplication, (i) all
indebtedness of such Person for borrowed money (including with respect to
Borrower, the Obligations) or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (ii) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (iii) all Capitalized Lease Obligations of such Person,
(iv) the face amount of all letters of credit issued for the account of such
Person and all drafts drawn thereunder, (v) all obligations of other Persons
which such Person has guaranteed, (vi) Disqualified Stock, (vii) all Obligations
of such Person under Hedging Agreements, and (viii) all liabilities secured by
any Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.

Interest Hedging Instrument - Any documentation evidencing any interest rate
swap, interest “cap” or “collar” or any other interest rate hedging device or
swap agreement (as defined in 11 U.S.C. § 101 et seq.) between Borrower and
Lender (or any Affiliate of Lender).

Inventory - All of the “inventory” (as that term is defined in the UCC) of
Borrower, whether now existing or hereafter acquired or created.

IRS - Internal Revenue Service.

Lien - Any interest of any kind or nature in property securing an obligation
owed to, or a claim of any kind or nature in property by, a Person other than
the owner of the Property, whether such interest is based on the common law,
statute, regulation or contract, and including, but not limited to, a security
interest or lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt, a lease, consignment or bailment for security purposes, a
trust, or an assignment. For the purposes of this Agreement, Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.

Loans - The unpaid balance of the Term Loans.

Loan Documents - Collectively, this Agreement, the Note(s), each Guaranty, each
Guarantor Security Agreements, the Blocked Account Agreement, Trust Account
Agreement, the Multi-Party Agreement and all agreements, instruments and
documents executed and/or delivered in connection therewith, all as may be
supplemented, restated, superseded, amended or replaced from time to time.

Material Adverse Effect - An occurrence or state of events which results in a
material adverse effect upon (a) the business, assets, properties, financial
condition, stockholders’ equity, contingent liabilities, prospects, material
agreements or results of operations of Borrower or any

 

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Guarantor, taken as a whole, or (b) Borrower’s or any Guarantor’s ability to pay
the Obligations in accordance with the terms hereof, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights and remedies of Lender hereunder or thereunder.

Maturity Date - May 1, 2015.

Maximum Term Loan A Availability - As of the date of determination thereof, an
amount equal to the lesser of (a) the Maximum Term Loan A Amount or (b) the
Borrowing Base. For each determination date after the closing the Maximum Term
Loan A Amount shall be reduced by the total scheduled payments which were due to
have been made prior to such date.

Maximum Term Loan A Amount - The sum of Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00).

Maximum Term Loan B Amount - The sum of Two Million Five Hundred Thousand
Dollars ($2,500,000.00).

Maximum Term Loan B Availability - The lesser of (a) Two Million Five Hundred
Thousand Dollars ($2,500,000.00) or (b) the outstanding balance under
CrystalTech’s existing credit facility with the Lender which is being refinanced
hereunder.

Maximum Term Loan Amount - Fifteen Million Dollars ($15,000,000.00).

Multi-Party Agreement - Means the Multi-Party Agreement by and among NSBF,
Parent, CCCRE, Lender, FTA, and the SBA, dated April 30, 2010, as the same may
be supplemented, modified or amended from time to time.

Note(s) - Individually and collectively, as applicable, Term Note A and Term
Note B.

Note Participation - A participation interest in a SBA 7(a) Loan.

Obligations - All existing and future debts, liabilities and obligations of
every kind or nature at any time owing by Borrower to Lender, whether under this
Agreement, or any other existing or future instrument, document or agreement,
between Borrower or Lender, whether joint or several, related or unrelated,
primary or secondary, matured or contingent, due or to become due (including
debts, liabilities and obligations obtained by assignment), and whether
principal, interest, fees, indemnification obligations hereunder or Expenses
(specifically including interest accruing after the commencement of any
bankruptcy, insolvency or similar proceeding with respect to Borrower, whether
or not a claim for such post-commencement interest is allowed), including,
without limitation, debts, liabilities and obligations in respect of the Term
Loans and any extensions, modifications, substitutions, increases and renewals
thereof; any amount payable by Borrower or any Subsidiary of Borrower pursuant
to an Interest Hedging Instrument; the payment of all amounts advanced by Lender
to preserve, protect and enforce rights hereunder and in the Collateral; and all
Expenses incurred by Lender. Without limiting the generality of the foregoing,
Obligations shall include any other debts, liabilities or obligations owing to
Lender in connection with any cash management, or other services (including
electronic funds transfers or automated clearing house transactions) provided by
Lender to Borrower, as well as any other loan, advances or extension of credit,
under any existing or future loan agreement, promissory note, or other
instrument, document or agreement between Borrower and Lender.

 

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Parent - Newtek Business Services Inc.

PBGC - The Pension Benefit Guaranty Corporation.

Performing SBA 7(a) Note Receivables - Means an SBA 7(a) Loan as to which all
scheduled payments of principal and interest are current or no more than sixty
one (61) days past due but in no event more than two payments past due.

Permitted Capcos - Wilshire DC Partners, LLC, Wilshire Alabama Partners, LLC,
Wilshire Louisiana BIDCO, LLC, Wilshire Texas Partners I, LLC

Permitted Disposition - Means (a) sales of SBA 7(a) Guaranteed Note Receivables,
(b) sales of SBA 7(a) Non-Guaranteed Note Receivables, (c) sales of Note
Participations, (d) sales to SBA of the SBA 7(a) Non-Guaranteed Note Receivable
portion of any SBA 7(a) Note Receivable with respect to which SBA also holds the
SBA 7(a) Guaranteed Note Receivable portion thereof, and (e) other dispositions
of SBA 7(a) Note Receivables or the collateral therefor, in each case to the
extent required or permitted by SBA in accordance with SBA Rules and
Regulations; provided that (i) any sales of SBA 7(a) Guaranteed Note Receivables
or any sales of Note Participations in any SBA 7(a) Guaranteed Note Receivables
may not be for an amount less than par, and (ii) any sale of a SBA 7(a)
Non-Guaranteed Note Receivable or any sales of Note Participations in any SBA
7(a) Non-Guaranteed Note Receivable may not be for an amount less than the value
attributable to the applicable SBA 7(a) Non-Guaranteed Note Receivable, or the
participated portion thereof, in the Borrowing Base as of the date of such sale.

Permitted Indebtedness - (a) Indebtedness to Lender in connection with the Term
Loans, or otherwise pursuant to the Loan Documents; (b) trade payables incurred
in the ordinary course of Borrower’s business; (c) purchase money Indebtedness
(including Capitalized Lease Obligations) hereafter incurred by Borrower to
finance the purchase of fixed assets; provided that, (i) such Indebtedness
incurred in any fiscal year shall not exceed (x) as to NSBF $200,000.00 and
(y) as to CrystalTech $100,000.00, (ii) such purchase money Indebtedness shall
not exceed the purchase price of the assets funded and (iii) no such purchase
money Indebtedness may be refinanced for a principal amount in excess of the
principal amount outstanding at the time of such refinancing, and
(d) Indebtedness existing on the Closing Date that is identified and described
on Schedule “1.1(a)” attached hereto and made part hereof and (e) and
Indebtedness of NSBF to another Credit Party or the Permitted Capcos provided
the same is (i) at all times unsecured, (ii) fully subordinated to the Lender,
(iii) less than $3,000,000 in the aggregate at any time.

Permitted Investments - (a) investments and advances existing on the Closing
Date that are disclosed on Schedule “5.10(a)”, (b) (i) obligations issued or
guaranteed by the United States of America or any agency thereof,
(ii) commercial paper with maturities of not more than 180 days and a published
rating of not less than A-1 or P-1 (or the equivalent rating) by a nationally
recognized investment rating agency, (iii) certificates of time deposit and
bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(A) such bank has a combined capital and surplus of at least $500,000,000, or
(B) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or

 

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the equivalent rating) by a nationally recognized investment rating agency, and
(iv) U.S. money market funds that invest solely in obligations issued or
guaranteed by the United States of America or an agency thereof.

Permitted Liens – (a) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, and other like persons not yet due; (b) Liens incurred or deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance, social security and other like laws;
(c) Liens on fixed assets securing purchase money Indebtedness permitted under
Section 7.6; provided that, (i) such Lien attached to such assets concurrently,
or within 20 days of the acquisition thereof, and only to the assets so
acquired, and (ii) a description of the asset acquired is furnished to Lender in
writing; and (d) Liens existing on the Closing Date and shown on Schedule
“1.1(b)” attached hereto and made part hereof.

Person – An individual, partnership, corporation, trust, limited liability
company, limited liability partnership, unincorporated association or
organization, joint venture or any other entity.

Pledge Agreement means the Pledge Agreement(s) of even date herewith executed by
Pledgors in favor of Lender, and any pledge agreements entered into after the
Closing Date by any Credit Party (as required by the Agreement or any other Loan
Document).

Pledgors means Parent, Small Business Finance Inc., and each other Person, if
any, that executes a pledge agreement or other similar agreement in favor of
Lender in connection with the transactions contemplated by the Agreement and the
other Loan Documents.

Property – Any interest of Borrower in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

Quarterly Compliance Certificate – Section 6.10.

Regulation D – Regulation D of the Board of Governors of the Federal Reserve
System comprising Part 204 of Title 12, Code of Federal Regulations, as amended,
and any successor thereto.

REO Property means Real Estate owned by Borrower or any other Credit Party,
which Real Estate has been acquired and is owned by such Credit Party as a
result of foreclosure or acceptance by such Credit Party of a deed in lieu of
foreclosure, or similar transaction, whether previously constituting SBA 7(a)
Note Receivable Collateral or otherwise), together with all of such Credit
Party’s now owned or hereafter acquired interests in the improvements thereon,
the fixtures attached thereto and the easements appurtenant thereto.

Required Procedures means procedures, including credit and underwriting
standards, loan to value ratio limitations and the use of Approved Forms with
respect to the financing and servicing of SBA 7(a) Note Receivables as in effect
on the Closing Date, together with such changes and modifications thereto from
time to time as shall be required by SBA Rules and Regulations or as have been
approved in writing by Lender, in Lender’s reasonable credit judgment.

Reserves means with respect to the Borrowing Base of NSBF such other reserves
against Eligible SBA 7(a) Note Receivables, or Borrowing Availability of
Borrower that Lender may,

 

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in its reasonable credit judgment, establish from time to time. Without limiting
the generality of the foregoing, Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable
exercise of Lender’s credit judgment. At minimum the following Reserves shall
apply:

(i) a 25% reserve against any SBA 7(a) Loan which is 31-61 days past due

SBA – means the United States Small Business Administration or any other federal
agency administering the SBA Act.

SBA Act – means the Small Business Act of 1953, as the same may be amended from
time to time.

SBA Guaranteed Percentage – means with respect to any SBA 7(a) Note Receivable,
a fraction, (i) the numerator of which is the SBA Guaranteed Note Receivable
with respect to such SBA 7(a) Note Receivable, and (ii) the denominator of which
is the SBA 7(a) Note Receivable.

SBA Lender’s License – means that authority given to a lender by the SBA to make
SBA 7(a) Loans as permitted under the SBA Act, as amended and further authorized
by the SBA in CFR Title 13 Part 120-470 and 471, as amended.

SBA Reduced Guaranty Ineligible Amount – means, with respect to any SBA Reduced
Guaranty Receivable originated on or after the Closing Date if retained on the
books of Borrower, an amount equal to (a) such SBA Reduced Guaranty Receivable,
less (b) the sum of (i) the SBA 7(a) Guaranteed Note Receivable, and (ii) the
product of (x) such SBA Reduced Guaranty Receivable and (y) a percentage equal
to one-third of the SBA Guaranteed Percentage of such SBA Reduced Guaranty
Receivable.

SBA Reduced Guaranty Receivable – means each Eligible SBA 7(a) Note Receivable
which has a SBA Guaranteed Percentage less than 75%.

SBA Rules and Regulations – means the SBA Act, as amended, any other legislation
binding on SBA relating to financial transactions, any Loan Guaranty Agreement,
all rules and regulations promulgated from time to time under the SBA Act, and
SBA Standard Operating Procedures and any Official Notices issued by the SBA,
all as from time to time in effect.

SBA 7(a) Guaranteed Note Receivable – means that portion of any SBA 7(a) Note
Receivable that is actually guaranteed by the SBA.

SBA 7(a) Loan Notes – means any promissory notes that at any time evidence SBA
7(a) Loans.

SBA 7(a) Loan Obligor – means any Person, other than the SBA, who is or may
become obligated to Borrower under an SBA 7(a) Loan.

SBA 7(a) Loans – means any loans made by Borrower (or its predecessors in
interest) to small businesses and partially guaranteed by the SBA, all
originated in accordance with the SBA Rules and Regulations and pursuant to the
authorization contained in Section 7(a) of the SBA Act.

 

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SBA 7(a) Non-Guaranteed Note Receivable – means that portion of any SBA 7(a)
Note Receivable that is not guaranteed by the SBA.

SBA 7(a) Note Receivable – means the obligation of an SBA 7(a) Loan Obligor to
pay an SBA 7(a) Loan made by Borrower (or its predecessors in interest) to such
SBA 7(a) Loan Obligor, whether or not evidenced by a promissory note or other
instrument.

SBA 7(a) Note Receivable Collateral – means any and all property or interests in
property, whether personal property (including without limitation accounts,
chattel paper, instruments, documents, deposit accounts, contract rights,
general intangibles, inventory or equipment) or real property, or both, whether
owned by an SBA 7(a) Loan Obligor or any other Person, that secures an SBA 7(a)
Note Receivable or an SBA 7(a) Loan Obligor’s obligations under an SBA 7(a) Loan
Note or SBA 7(a) Note Receivable Document, and all supporting obligations in
respect thereof.

SBA 7(a) Note Receivable Documents – means, with respect to any SBA 7(a) Note
Receivable, all original documents, instruments, and chattel paper, executed or
delivered to or for the account of Borrower by the applicable SBA 7(a) Loan
Obligor and evidencing such SBA 7(a) Note Receivable.

SBA Standard Operating Procedures and Official Notices – means Public Law
85-536, as amended; those Rules and Regulations, as defined in 13 CFR Part 120,
“Business Loans” and 13 CFR Part 121, “Size Standards”; Standard Operating
Procedures, (SOP) 50-10 for loan processing, 50-50 for loan servicing and 50-51
for loan liquidation as may be published and or amended from time to time by the
SBA.

Subsidiary – With respect to any Person at any time, (i) any corporation more
than fifty percent (50%) of whose voting stock is legally and beneficially owned
by such Person or owned by a corporation more than fifty percent (50%) of whose
voting stock is legally and beneficially owned by such Person; (ii) any trust of
which a majority of the beneficial interest is at such time owned directly or
indirectly, beneficially or of record, by such Person or one or more
Subsidiaries of such Person; and (iii) any partnership, joint venture, limited
liability company or other entity of which ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at such time owned directly or indirectly,
beneficially or of record, by, or which is otherwise controlled directly,
indirectly or through one or more intermediaries by, such Person or one or more
Subsidiaries of such Person.

Term Loans – Means collectively Term Loan A and Term Loan B.

Term Note A – means that certain promissory note executed by the Borrowers
evidencing Term Loan A.

Term Note B – means that certain promissory note executed by the Borrowers
evidencing Term Loan B.

 

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Trust Account – shall have the meaning ascribed to it in the Trust Account
Agreement.

Trust Account Agreement – shall mean that certain Trust Account Agreement, dated
as of the Closing Date, by and between the Borrower and the Trustee, as the same
may be amended, supplemented or otherwise modified from time to time.

Trust Account Reconciliation – a detailed reconciliation of all deposits into
the Trust Account for the subject period identifying the source of funds and the
nature of the underlying obligation so as to distinguish payments due to be made
to the SBA or the FTA, payments of principal or interest under SBA7(a) Loans,
and Servicing Fees

UCC – The Uniform Commercial Code as adopted in the state where Lender’s office
identified in Section 9.8 is located, as the same may be amended from time to
time.

Other Capitalized Terms – Any other capitalized terms used without further
definition herein shall have the respective meaning set forth in the UCC.

1.2. Accounting Principles: Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP,
consistently applied, to the extent applicable, except as otherwise expressly
provided in this Agreement.

1.3. Construction: No doctrine of construction of ambiguities in agreements or
instruments against the interests of the party controlling the drafting shall
apply to any Loan Documents.

SECTION II. THE LOANS

2.1. Term Loan Facility – Description:

a. Term Loan Amount. On the Closing Date, the Lender agrees to make the
following Loans to the Borrowers:

i. a term loan in an original principal amount equal to the Maximum Term Loan A
Availability as of the Closing Date (“Term Loan A”); and

ii. a term loan in an original principal amount equal to the Maximum Term Loan B
Availability as of the Closing Date (“Term Loan B”).

Borrower shall not have any right to reborrow any portion of the Term Loans
which are repaid or prepaid from time to time.

b. On the Maturity Date, unless having been sooner accelerated by Lender
pursuant to the terms hereof, and without impairing any rights under
Section 3.1, all sums owing hereunder shall be due and payable in full.

2.2. Eligible SBA 7(a) Note Receivables.

a. All of the SBA 7(a) Note Receivables owned by Borrower which are reflected in
the most recent Borrowing Base Certificate delivered by Borrower to Lender shall
be “Eligible SBA

 

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7(a) Note Receivables” for purposes of this Agreement, except any SBA 7(a) Note
Receivable to which any of the exclusionary criteria set forth below applies.
Lender shall have the right to establish, modify or eliminate Reserves against
Eligible SBA 7(a) Note Receivables from time to time in its reasonable credit
judgment. In addition, Lender reserves the right, at any time and from time to
time after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust advance rates with respect to Eligible SBA
7(a) Note Receivables, in its reasonable credit judgment; provided that Lender
shall provide twenty-five (25) days prior written notice to Borrower with
respect to any adjustment of existing criteria or establishment of new criteria
that would have the effect of making less credit available.

b. Eligible SBA 7(a) Note Receivables shall not include any SBA 7(a) Note
Receivable of Borrower:

i. as to which all conditions precedent to the effectiveness of the SBA guaranty
with respect to the applicable SBA 7(a) Loan have not been met;

ii. to the extent that the SBA 7(a) Loan has not been disbursed by Borrower to
or for the account of the SBA 7(a) Loan Obligor; provided, that at the
discretion of Lender, the disbursement requirements of this clause (b) may be
deemed satisfied on the condition subsequent that the subject disbursements are
actually made to the SBA 7(a) Loan Obligor on the same Business Day as the date
of the Term Loan made hereunder;

iii. with respect to which Borrower has not perfected its security interests and
Liens in all underlying collateral for the applicable SBA 7(a) Loan; provided,
that at the discretion of Lender, the perfection requirements of this clause
(c) may be deemed satisfied if escrow arrangements reasonably acceptable to
Lender are in place to insure that all steps necessary for such perfection will
be accomplished promptly, and in any event within seven (7) Business Days
following the disbursement by Borrower of the proceeds of such SBA 7(a) Loan;

iv. with respect to which the applicable SBA 7(a) Loan does not conform to all
requirements of the SBA applicable to the initial approval and guaranty by the
SBA thereof;

v. with respect to which the applicable SBA 7(a) Loan, SBA 7(a) Loan Notes or
SBA 7(a) Note Receivable Documents do not comply in all material respects with
Applicable Laws;

vi. with respect to which an event or condition has occurred that would release
the SBA from its obligations to Borrower with respect to the applicable SBA 7(a)
Loan, or the SBA has rejected the applicable SBA 7(a) Loan or the applicable SBA
7(a) Note Receivable Documents in any respect;

vii. with respect to which the applicable SBA 7(a) Loan was not originated by
the Borrower or Commercial Capital Corp.;

viii. with respect to which the applicable SBA 7(a) Loan does not conform in all
material respects to Borrower’s written credit and underwriting guidelines,
including, without limitation, the Required Procedures as in effect on the date
the applicable SBA 7(a) Loan was underwritten, copies of which have been
previously delivered to Lender;

ix. with respect to which the insurance coverage required by the applicable SBA
Note Receivable Documents has been cancelled or lapsed or Borrower has not been
named as loss payee or additional insured, as applicable, with respect thereto;

x. to the extent that the outstanding principal amount of any SBA 7(a)
Guaranteed Note Receivable exceeded the maximum amount permitted by the SBA Act
at the time the applicable SBA 7(a) Loan was underwritten;

 

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xi. to the extent that the outstanding principal amount of any SBA 7(a)
Non-Guaranteed Note Receivable exceeded the maximum amount permitted by the SBA
Act at the time the applicable SBA 7(a) Loan was underwritten, or if the
aggregate outstanding principal amount of both the SBA 7(a) Guaranteed Note
Receivable portion and the SBA 7(a) Non-Guaranteed Note Receivable portion of
the same SBA 7(a) Loan exceeded the maximum amount permitted by the SBA Act at
the time the applicable SBA 7(a) Loan was underwritten, to the extent of such
excess;

xii. with respect to which the applicable SBA 7(a) Loan Obligor is the subject
of an insolvency proceeding or a case commenced under the Bankruptcy Code;

xiii. with respect to which any payment of interest, principal or any other
amount due under the applicable SBA 7(a) Loan is more than 61 days past due;

xiv. with respect to which the applicable SBA 7(a) Loan is not a valid, legally
enforceable obligation of the SBA 7(a) Loan Obligor or is subject to any offset
or other defense on the part of such SBA 7(a) Loan Obligor or to any claim on
the part of the SBA 7(a) Loan Obligor denying liability;

xv. with respect to which the subject SBA 7(a) Note Receivable is subject to any
Lien, except for the Lien of Lender and the interest of the SBA pursuant to the
applicable Loan Guaranty Agreement;

xvi. to the extent that the subject SBA 7(a) Note Receivable has been sold
pursuant to a Note Participation;

xvii. with respect to which the applicable SBA 7(a) Loan is not evidenced by
legal documentation in form and substance satisfactory to Lender; provided, that
legal documentation that conforms in all material respects to forms provided by
the SBA, standard forms of mortgages or deeds of trust provided by Borrower’s
local counsel for use in specific jurisdictions, or other forms of documents
previously approved by Lender shall be presumed to be satisfactory to Lender;

xviii. with respect to which the applicable SBA 7(a) Loan is made to an
employee, officer, agent, director, stockholder, or Affiliate of Borrower or any
Affiliate of any thereof;

xix. with respect to which the applicable SBA 7(a) Loan has been turned over to
the SBA or any other Person for servicing or collection;

xx. with respect to which the applicable SBA 7(a) Loan and the respective rights
of the SBA, Lender, NSBF, and FTA with respect thereto are not subject to the
terms of the Multi-Party Agreement or such other agreement with SBA and Borrower
that Lender, in its sole discretion, deems acceptable;

xxi. as to which any of the representations or warranties in the Loan Documents
with respect to the SBA 7(a) Loan are untrue;

xxii. to the extent that any SBA 7(a) Note Receivable together with all other
SBA 7(a) Note Receivables in any one industry, as determined by the applicable
NAICS four digit code (except for the Retail Trade industry which shall be
measured for this purpose as independent industries under NAICS codes 44 and
45), exceeds ten percent (10%) as of the end of each Fiscal Quarter (or,
collectively, with respect to the Full-Service Restaurant and Limited-Service
Eating Places industries (NAICS codes 7221 and 7222), as of the end of each
Fiscal Quarter, fifteen percent (15%); with respect to the Traveler
Accommodation industry (NAICS code 7211), as of the end of each Fiscal Quarter
thirty percent (30%); and, with respect to the Auto Repair and Maintenance
(including car wash) industry (NAICS code 8111), as of the end of each Fiscal
Quarter, ten percent (10%)) of all Eligible SBA 7(a) Note Receivables;

 

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xxiii. as to which Lender’s Lien and any security in support thereof is not a
first priority perfected Lien in favor of Lender;

xxiv. with respect to which the SBA 7(a) Loan Note has been released from the
possession of the FTA in excess of 10 calendar days or has been released from
the possession of the FTA pursuant to the SBA’s prior written consent or
instruction as contemplated by Section 8(e) of the Multi-Party Agreement;

xxv. to the extent that any SBA 7(a) Note Receivable is in excess of a loan to
collateral value ratio of 90%, as determined by Lender in a manner consistent
with the Required Procedures;

xxvi. as to which any amounts payable have been deferred within the last ninety
(90) days or as to which any amounts payable have been deferred more than twice
within the last twelve (12) months;

xxvii. with respect to any SBA Reduced Guaranty Receivable, to the extent of the
SBA Reduced Guaranty Ineligible Amount;

xxviii. with respect to which any SBA 7(a) Loan that is not secured by any SBA
7(a) Note Receivable Collateral other than a first priority Lien on commercial
real property, to the extent that the outstanding principal balance of such SBA
7(a) Loan, , exceeds seventy percent (70%) of the fair market value of such
commercial real property;

xxix. with respect to which any SBA 7(a) Loan which is secured exclusively
commercial real property to the extent NSBF’s lien is not a first priority
mortgage lien.

xxx. in the reasonable credit judgment of Lender, to the extent that any SBA
7(a) Note Receivable is secured by real property as to which there are potential
industry-wide liabilities and Environmental Liabilities;

xxxi. where any Credit Party currently has established a reserve on it own books
and records with respect to the applicable SBA 7(a) Loan (including without
limitation all such SBA 7(a) Loans with current reserves as set forth on
Schedule 2.2(b) xxxi); or

xxxii. that is otherwise unacceptable to Lender in its reasonable credit
judgment.

2.3. [Intentionally Omitted.]

2.4. Payments:

a. Except to the extent otherwise set forth in this Agreement (or in the case of
an Interest Hedging Instrument under the applicable agreements), all payments of
principal and of interest on the Loans and all Expenses, fees, indemnification
obligations and all other charges and any other Obligations of Borrower not made
by automatic transfers from the Blocked Account or Borrowers accounts maintained
with the Lender , shall be made to Lender at its office at 275 Broadhollow Road,
Melville, New York 11747, in United States dollars, in immediately available
funds. Lender shall have the unconditional right and discretion (and Borrower
hereby authorizes Lender) to charge Borrower’s operating and/or deposit
account(s) for all of Borrower’s Obligations as they become due from time to
time under this Agreement including, without limitation, interest, principal,
fees, indemnification obligations and reimbursement of Expenses, provided that
Lender may not charge the Trust Account in a manner inconsistent with the Trust
Account Agreement. Any payments received prior to 2:00 p.m. Eastern time on any
Business Day shall be deemed received on such Business Day. Any payments
(including any payment in full of the Obligations), received after 2:00 p.m.
Eastern time on any Business Day shall be deemed received on the immediately
following Business Day.

 

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b. On or prior to April 29, 2010, NSBF shall establish and maintain until the
Obligations have been indefeasibly paid in full, the cash management system
described in Exhibit B (the “Cash Management System”).

2.5. Payment of Interest and Principal:

a. Interest. Interest shall be paid on the unpaid principal balance under each
Term Loan, subject to the terms hereof, at the per annum rate equal to the Base
Rate. Changes in the interest rate applicable to each Term Loan shall become
effective on the same day that there is a change in the Base Rate. Interest on
the Term Loans shall be payable monthly (such other interval as required under
the applicable Note), in arrears, in accordance with the Notes, beginning on the
first day of the first full calendar month after the Closing Date.

b. Principal

i. Scheduled Repayments. There shall become due and payable, and Borrowers shall
repay the Term Loans through scheduled payments on each date set forth on
Schedule 2.5 attached hereto. Notwithstanding the payment schedules set forth
above, the outstanding principal amount of the Term Loans shall become
immediately due and payable in full on the Maturity Date. With respect to Term
Loan A, on the fifteenth (15th) day of each month Lender shall debit the Blocked
Account for the next due principal payment and accrued interest as set forth on
Schedule 2.5, plus any Mandatory Prepayment which has not previously been paid.
If the balance contained within such blocked account exceeds the amount of the
next due principal and interest payments (inclusive of any then due Mandatory
Prepayment), and no Event of Default shall have occurred, Borrower shall be free
to transfer funds from the Trust Account to its Operating Account consistent
with Exhibit B hereto. Principal payments from the Blocked Account in excess of
the current installments shall be applied in inverse order of maturity to the
remaining payments due under Term Loan A. If on a payment date the balance in
the Blocked Account is less than the next due principal payment, the Borrowers
shall remit the balance of such payment to the lender on such payment date and
consistent with the Cash Management System the Borrowers shall replenish the
Blocked Account so that at all times it has a minimum balance at least equal to
the next succeeding scheduled installment of principal and interest on Term Loan
A.

ii. Mandatory Prepayments. There shall become due and payable and Borrowers
shall prepay the Term Loans in an amount equal to the following:

(a) The net proceeds of from any issuance of equity or debt securities other
than Permitted Indebtedness of either Borrower;

(b) Any insurance or condemnation proceeds received in connection with a
casualty event, condemnation or other loss;

(c) All net sales proceeds associated with the disposition of any of either
Borrower’s assets other than the proceeds from the sale by NSBF of the
guaranteed portion of any new SBA 7(a) Loans;

 

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(d) The amount by which the then outstanding balance under Term Loan A exceeds
the Borrowing Base;

(e) All collections by NSBF on SBA Loans in excess of scheduled principal
payments and interest due thereunder including without limitation any
pre-payments of outstanding SBA Loans which shall be applied first to Term Loan
A until paid in full and thereafter to Term Loan B; and

(f) All net sale proceeds from the sale or disposition of REO Property.

c. Optional Prepayments. The Term Loans may be prepaid in full or in part at any
time; provided, however, that Borrowers shall have given Lender at least ten
(10) days prior written notice of the date of such prepayment.

d. All Prepayments. Except as this Agreement may specifically provide otherwise,
all prepayments of the Term Loans shall be applied by Lender to the Obligations
in such order and manner as Lender may elect; provided, however, that
prepayments made pursuant to Section 2.5(d), (e) and (f) shall be applied to
payments due under the Term Loan A in inverse order of maturity until the Term
Loans have been repaid in full. No prepayment, whether mandatory or optional,
shall alter the payments required to be made under Schedule 2.5 except as
otherwise provided for herein.

2.6. Additional Interest Provisions:

a. Interest on the Loans shall be calculated on the basis of a year of three
hundred sixty (360) days but charged for the actual number of days elapsed.

b. After the occurrence and during the continuance of an Event of Default
hereunder, the per annum effective rate of interest on all outstanding principal
under the Loans, shall be increased by five hundred (500) basis points. All such
increases may be applied retroactively to the date of the occurrence of the
Event of Default. Borrower agrees that the default rate payable to Lender is a
reasonable estimate of Lender’s damages and is not a penalty.

c. All contractual rates of interest chargeable on outstanding principal under
the Loans shall continue to accrue and be paid even after Default, an Event of
Default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of
any kind or the happening of any event or occurrence similar or dissimilar.

d. In no contingency or event whatsoever shall the aggregate of all amounts
deemed interest hereunder and charged or collected pursuant to the terms of this
Agreement exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such court determines Lender has charged or received interest
hereunder in excess of the highest applicable rate, Lender shall apply, in its
sole discretion, and set off such excess interest received by Lender against
other Obligations due or to become due and such rate shall automatically be
reduced to the maximum rate permitted by such law.

 

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2.7. Fees and Charges:

a. Borrower shall pay a fully earned non-refundable facility fee equal to one
hundred fifty (150) basis points on the Maximum Term Loan Amount (the “Facility
Fee”).

b. Borrower shall unconditionally pay to Lender a late charge equal to five
percent (5%) of any and all payments of principal or interest on the Loans that
is not paid within fifteen (15) days of the due date. Such late charge shall be
due and payable regardless of whether Lender has accelerated the Obligations.
Borrower agrees that any late fee payable to Lender is a reasonable estimate of
Lender’s damages and is not a penalty.

2.8. Prepayments: Borrower may prepay the Loans in whole or in part at any time
or from time to time, without penalty or premium (other than any breakage fees
associated with terminating any Hedging Instruments or LIBOR contracts). Any
prepayment shall be accompanied by all accrued and unpaid interest.

2.9. Use of Proceeds: The extensions of credit under and proceeds of the Term
Loans shall be used to (a) refinance existing indebtedness of CrystalTech to the
Lender and (b) to refinance existing indebtedness of NSBF to General Electric
Capital Corporation.

2.10. Capital Adequacy: If any present or future law, governmental rule,
regulation, policy, guideline, directive or similar requirement (whether or not
having the force of law) imposes, modifies, or deems applicable any capital
adequacy, capital maintenance or similar requirement which affects the manner in
which Lender allocates capital resources to its commitments (including any
commitments hereunder), and as a result thereof, in the reasonable opinion of
Lender, the rate of return on Lender’s capital with regard to the Loans is
reduced to a level below that which Lender would have achieved but for such
circumstances, then in such case and upon notice from Lender to Borrower, from
time to time, Borrower shall pay Lender such additional amount or amounts as
shall compensate Lender for such reduction in Lender’s rate of return. A notice
to Borrower from Lender as to the amount of that reduction and showing the basis
of the computation thereof submitted by Lender to Borrower shall be presumptive
evidence of the matters set forth therein.

SECTION III. COLLATERAL

3.1. Collateral: As security for the payment of the Obligations, and
satisfaction by the Borrowers of all covenants and undertakings contained in
this Agreement and the other Loan Documents:

a. Each Borrower hereby assigns and grants to Lender, a continuing Lien on and
first priority security interest in, upon and to all assets of such Borrower
(other than NSBF’s SBA Lender’s License), including any Real Property and
including but not limited to the following Property, all whether now owned or
hereafter acquired, created or arising and wherever located:

i. Accounts - All Accounts;

ii. Chattel Paper - All Chattel Paper;

iii. Documents - All Documents;

 

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iv. Instruments–All Instruments;

v. Inventory–All Inventory;

vi. General Intangibles – All General Intangibles;

vii. Equipment – All Equipment,

viii. Fixtures – All Fixtures;

ix. Deposit Accounts – All Deposit Accounts;

x. Goods – All Goods;

xi. Letter of Credit Rights – All Letter of Credit Rights;

xii. Supporting Obligations – All Supporting Obligations;

xiii. Investment Property – All Investment Property;

xiv. Commercial Tort Claims – All Commercial Tort Claims identified and
described on Schedule “5.20” (as amended or supplemented from time to time);

xv. Property in Lender’s Possession – All Property of Borrower, now or hereafter
in Lender’s possession; and

xvi. Proceeds – The Proceeds (including, without limitation, insurance
proceeds), whether cash or non-cash, of all of the foregoing property described
in clauses (i) through (viii).

3.2. Lien Documents: At Closing and thereafter as Lender deems necessary,
Borrower shall execute and/or deliver to Lender, or have executed and delivered
(all in form and substance satisfactory to Lender and its counsel):

a. Financing statements pursuant to the UCC, which Lender may file in the
jurisdiction where Borrower is organized and in any other jurisdiction that
Lender deems appropriate;

b. Any other agreements, documents, instruments and writings, including, without
limitation, intellectual property security agreements, required by Lender to
evidence, perfect or protect the Liens and security interests in the Collateral
or as Lender may reasonably request from time to time.

3.3. Other Actions:

a. In addition to the foregoing, Borrower shall do anything further that may be
reasonably required by Lender to secure Lender and effectuate the intentions and
objects of this Agreement, including, without limitation, the execution and
delivery of security agreements, contracts

 

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and any other documents required hereunder. At Lender’s reasonable request,
Borrower shall also immediately deliver (with execution by Borrower of all
necessary documents or forms to reflect, implement or enforce the Liens
described herein), or cause to be delivered to Lender all items for which Lender
must receive possession to obtain a perfected security interest, including
without limitation, all notes (other than SBA(7)a Notes which have been or are
delivered to the FTA pursuant to the Multi-Party Agreement ), stock powers,
letters of credit, certificates and documents of title, Chattel Paper, Warehouse
Receipts, Instruments, and any other similar instruments constituting
Collateral.

b. Lender is hereby authorized to file financing statements and amendments to
financing statements without Borrower’s signature, in accordance with the UCC.
Borrower hereby authorizes Lender to file all such financing statements and
amendments to financing statements describing the Collateral in any filing
office as Lender, in its sole discretion may determine, including financing
statements listing “All Assets” in the collateral description therein. Borrower
agrees to comply with the requests of Lender in order for Lender to have and
maintain a valid and perfected first security interest in the Collateral
including, without limitation, executing and causing any other Person to execute
such documents as Lender may require to obtain Control over all Deposit
Accounts, Letter of Credit Rights and Investment Property.

3.4. Searches, Certificates:

a. Lender shall, prior to or at Closing, and thereafter as Lender may reasonably
determine from time to time, at Borrower’s expense, obtain the following
searches (the results of which are to be consistent with the warranties made by
Borrower in this Agreement):

i. UCC searches with the Secretary of State and local filing office of each
state where Borrower (and Guarantor) is organized, maintains its executive
office, a place of business, or assets; and

ii. judgment, state and federal tax lien and corporate tax lien searches, in all
applicable filing offices of each state searched under subparagraph (i) above.

b. Each Borrower shall, prior to or at Closing and at its expense, obtain and
deliver to Lender good standing certificates showing each Borrower and each
corporate Guarantor to be in good standing in its state of organization and in
each other state in which it is doing and presently intends to do business for
which qualification is required.

3.5. Landlord’s and Warehouseman’s Waivers: Each Borrower will cause each owner
of any premises occupied by each Borrower or to be occupied by such Borrower and
each warehouseman of any warehouse, where, in either event Collateral is held,
to execute and deliver to Lender an instrument, in form and substance
satisfactory to Lender, under which such owner(s) or warehouseman subordinates
its/his/their interests in and waives its/his/their right to distrain on or
foreclose against the Collateral and agrees to allow Lender to remain on such
premises to dispose of or deal with any Collateral located thereon.

 

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3.6. Filing Security Agreement: A carbon, photographic or other reproduction or
other copy of this Agreement or of a financing statement is sufficient as and
may be filed in lieu of a financing statement.

3.7. Power of Attorney: With respect to each Borrower, each of the officers of
Lender is hereby irrevocably made, constituted and appointed the true and lawful
attorney for Borrower (without requiring any of them to act as such) with full
power of substitution to do the following: (a) endorse the name of Borrower upon
any and all checks, drafts, money orders and other instruments for the payment
of monies that are payable to Borrower and constitute collections on Borrower’s
Accounts or proceeds of other Collateral; (b) execute and/or file in the name of
Borrower any financing statements, schedules, assignments, instruments,
documents and statements that Borrower is obligated to give Lender hereunder or
is necessary to perfect (or continue or evidence the perfection of such security
interest or Lien) Lender’s security interest or Lien in the Collateral; and
(c) during the continuance of an Event of Default, do such other and further
acts and deeds in the name of Borrower that Lender may reasonably deem necessary
or desirable to enforce any Account or other Collateral.

SECTION IV. CLOSING AND CONDITIONS PRECEDENT TO ADVANCE

Closing under this Agreement is subject to the following conditions precedent
(all instruments, documents and agreements to be in form and substance
satisfactory to Lender and Lender’s counsel):

4.1. Resolutions, Opinions, and Other Documents: Borrowers shall have delivered,
or caused to be delivered to Lender the following:

a. this Agreement, each Note and each of the other Loan Documents all properly
executed;

b. financing statements and each of the other documents to be executed and/or
delivered by Borrower or any other Person pursuant to this Agreement;

c. certified copies of (i) resolutions of each Borrower and each Guarantor’s
board of directors or managing members (as applicable) authorizing the
execution, delivery and performance of this Agreement, the Note to be issued
hereunder and each of the other Loan Documents required to be delivered by any
Section hereof and (ii) each Borrower’s and each Guarantor’s articles or
certificate of incorporation and by-laws or certificate of formation and
shareholders’ agreement or operating agreement, as applicable;

d. an incumbency certificate for each Borrower and each Guarantor identifying
all Authorized Officers, with specimen signatures;

e. a written opinion of Borrowers’ independent counsel addressed to Lender and
opinions of such other counsel as Lender deems reasonably necessary;

f. such financial statements, reports, certifications and other operational
information as Lender may reasonably require, satisfactory in all respects to
Lender;

 

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g. certification by the president of each Borrower that there has not occurred
any Material Adverse Effect in the operations and condition (financial or
otherwise) of such Borrower since September 30, 2009;

h. payment by the Borrowers of all fees including, without limitation, the
Lender’s fees and expenses associated with the Loans;

i. searches and certificates required under Section 3.4;

j. an initial Borrowing Notice and Borrowing Base Certificate dated the Closing
Date with a minimum Availability under Term Loan A of $500,000 after
satisfaction of the NSBF’s indebtedness to General Electric Capital Corporation;

k. a pledge agreement from (i) the Parent pledging all of the capital stock of
Borrower (owned by it), Small Business Finance Inc, the other Guarantor (ii)
Small Business Finance Inc pledging all of the capital stock of CCCRE and all of
the capital stock of each NSBF (owned by it) and (iii) CrystalTech pledging all
of the capital stock of CT Hosting, LLC as collateral;

l. [omitted];

m. a payoff letter from General Electric Capital Corporation

n. the Multi-Party Agreement together with any required consent of the SBA and;

o. such other documents reasonably required by Lender.

4.2. Absence of Certain Events: At the Closing Date, no Default or Event of
Default hereunder shall have occurred and be continuing.

4.3. Warranties and Representations at Closing: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all respects on the Closing Date with the
same effect as though made on and as of that date. Borrower shall not have taken
any action or permitted any condition to exist which would have been prohibited
by any Section hereof.

4.4. Compliance with this Agreement: Each Borrower shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by the Borrowers before or at the
Closing Date.

4.5. Officers’ Certificate: Lender shall have received a certificate dated the
Closing Date and signed by the chief financial officer of each Borrower and
Parent certifying that all of the conditions specified in this Section have been
fulfilled.

 

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4.6. Closing: Subject to the conditions of this Section, the Loans shall be made
available on such date (the “Closing Date”) and at such time as may be mutually
agreeable to the parties contemporaneously with the execution hereof (“Closing”)
at the Bank’s office at 1001 Avenue of the Americas New York, NY 10018.

4.7. Waiver of Rights: By completing the Closing hereunder, or by making
Advances hereunder, Lender does not thereby waive a breach of any warranty or
representation made by Borrower hereunder or under any agreement, document, or
instrument delivered to Lender or otherwise referred to herein, and any claims
and rights of Lender resulting from any breach or misrepresentation by Borrower
are specifically reserved by Lender.

4.8. Maintenance of Deposit Accounts: So long as any part of the Indebtedness is
outstanding, each Borrower and each Guarantor shall maintain its primary
business deposit accounts with Lender.

SECTION V. REPRESENTATIONS AND WARRANTIES

To induce Lender to complete the Closing and make the Loans to Borrower(s), each
Borrower warrants and represents to Lender that (except where context
specifically refers to a specific Borrower, all references and representations
in this section to Borrower shall mean as to each Borrower):

5.1. Corporate Organization and Validity:

a. Each Borrower (i) is a corporation, duly organized and validly existing under
the laws of the state of New York, (ii) has the appropriate power and authority
to operate its business and to own its Property and (iii) is duly qualified, is
validly existing and in good standing and has lawful power and authority to
engage in the business it conducts in each state where the nature and extent of
its business requires qualification, except where the failure to so qualify does
not nor could not reasonably be predicted to have a Material Adverse Effect. A
list of all states and other jurisdictions where Borrower is qualified to do
business is shown on Schedule “5.1” attached hereto and made part hereof.

b. The making and performance of this Agreement and the other Loan Documents
will not violate any law, government rule or regulation, court or administrative
order or other such order, or the charter, minutes or bylaw provisions of such
Borrower, or of such Borrower’s shareholder’s agreement, operating agreement or
partnership agreement, as applicable, or violate or result in a default
(immediately or with the passage of time) under any contract, agreement or
instrument to which such Borrower is a party, or by which such Borrower is
bound. Neither Borrower is in violation of any term of any agreement or
instrument to which it is a party or by which it may be bound which violation
has caused or is reasonably likely to cause a Material Adverse Effect, or of its
charter, minutes or bylaw provisions, or of such Borrower’s operating agreement
or partnership agreement, as applicable.

c. Each Borrower has all requisite power and authority to enter into and perform
this Agreement and to incur the obligations herein provided for, and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and the other Loan Documents as applicable.

 

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d. This Agreement, the Notes to be issued hereunder, and all of the other Loan
Documents, when delivered, will be valid and binding upon each Borrower, and
enforceable in accordance with their respective terms except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles.

5.2. Places of Business: The only places of business of Borrowers, and the
places where Borrowers keep and intend to keep their Property, are at the
addresses shown on Schedule “5.2” attached hereto and made part hereof.

5.3. Pending Litigation: There are no judgments or judicial or administrative
orders or proceedings pending, or to the knowledge of either Borrower,
threatened, against Borrower in any court or before any Governmental Authority
relating to a claim in excess of $100,000 (except for any proceeding relating to
any license or seeking injunctive relief as to which no dollar threshold shall
apply) except as shown on Schedule “5.3” attached hereto and made part hereof,
other than counterclaims arising solely out of routine collection matters
brought by Borrowers against any Person. To the knowledge of Borrowers, there
are no investigations (civil or criminal) pending or threatened against either
Borrower in any court or before any Governmental Authority. Neither Borrower is
in default with respect to any order of any Governmental Authority. To the
knowledge of Borrowers, no shareholder or executive officer of either Borrower
has been indicted in connection with or convicted of engaging in any criminal
conduct, or is currently subject to any lawsuit or proceeding or under
investigation in connection with any anti-racketeering or other conduct or
activity which may result in the forfeiture of any property to any Governmental
Authority.

5.4. Title to Properties: Each Borrower has good and marketable title in fee
simple (or its equivalent under applicable law) to all the Property it purports
to own, free from Liens and free from the claims of any other Person, except for
Permitted Liens.

5.5. Governmental Consent: Neither the nature of either Borrower or of its
business or Property, nor any relationship between either Borrower and any other
Person, nor any circumstance affecting such Borrower in connection with the
issuance or delivery of this Agreement, the Note or any other Loan Documents is
such as to require a consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority on the part of
Borrower (other than as to NSBF with respect to the SBA.

5.6. Taxes: All tax returns required to be filed by Borrower in any jurisdiction
have been filed, and all taxes, assessments, fees and other governmental charges
upon Borrower, or upon any of its Property, income or franchises, which are
shown to be due and payable on such returns have been paid, except for those
taxes being contested in good faith with due diligence by appropriate
proceedings for which appropriate reserves have been maintained under GAAP and
as to which no Lien has been entered. Borrower is not aware of any proposed
additional tax assessment or tax to be assessed against or applicable to
Borrower.

5.7. Financial Statements: The annual management prepared balance sheet of each
Borrower as of December 31, 2008, and the related statements of profit and loss,
stockholder’s equity and cash flow as of such (complete copies of which have
been delivered to Lender), and the interim consolidated (if applicable) balance
sheet of each Borrower as of September 30, 2009, and the related statements of
profit and loss, stockholder’s equity and cash flow as of such date have been
prepared in accordance

 

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with GAAP and present fairly the financial position of such Borrower as of such
dates and the results of its operations for such periods. The fiscal year for
each Borrower currently ends on December 31. Each Borrower’s federal tax
identification number and state organizational identification number for UCC
purposes are as shown on Schedule “5.7” attached hereto and made part hereof.
All projections provided to the Lender represent Borrower’s best estimate of
Borrower’s (and Parent’s or any consolidated entity’s) consolidated future
financial performance as of the date thereof and the assumptions contained
therein are believed by Borrower to be fair and reasonable in light of current
business conditions

5.8. Full Disclosure: The financial statements referred to in Section 5.7 of
this Agreement do not, nor does any other written statement of either Borrower
to Lender in connection with the negotiation of the Loans, contain any untrue
statement of a material fact. Such statements do not omit a material fact, the
omission of which would make the statements contained therein misleading. There
is no fact known to either Borrower which has not been disclosed in writing to
Lender which has or is reasonably likely to have a Material Adverse Effect.

5.9. Subsidiaries: Neither Borrower has any Subsidiaries or Affiliates, except
as shown on Schedule “5.9” attached hereto and made part hereof.

5.10. Investments, Guarantees, Contracts, etc.:

a. Each Borrower does not own or hold equity or long term debt investments in,
or have any outstanding advances to, any other Person, except as shown on
Schedule “5.10(a),” attached hereto and made part hereof.

b. Each Borrower has not entered into any leases for real or personal Property
(whether as landlord or tenant or lessor or lessee), except as shown on Schedule
“5.10(b),” attached hereto and made part hereof.

c. Each Borrower is not a party to any contract or agreement, or subject to any
charter or other corporate restriction, which has or is reasonably likely to
have a Material Adverse Effect.

d. Each Borrower, except as otherwise specifically provided in this Agreement,
has not agreed or consented to cause or permit any of its Property whether now
owned or hereafter acquired to be subject in the future (upon the happening of a
contingency or otherwise), to a Lien not permitted by this Agreement.

5.11. Government Regulations, etc.:

a. The use of the proceeds of and each Borrower’s issuance of the Note will not
directly or indirectly violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations U, T and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Each Borrower
does not own or intend to carry or purchase any “margin stock” within the
meaning of said Regulation U.

 

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b. Each Borrower has obtained all licenses, permits, franchises or other
governmental authorizations necessary for the ownership of its Property and for
the conduct of its business.

c. As of the date hereof, no employee benefit plan (“Pension Plan”), as defined
in Section 3(2) of ERISA, maintained by either Borrower or under which either
Borrower could have any liability under ERISA (i) has failed to meet the minimum
funding standards established in Section 302 of ERISA, (ii) has failed to comply
in a material respect with all applicable requirements of ERISA and of the
Internal Revenue Code, including all applicable rulings and regulations
thereunder, (iii) has engaged in or been involved in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code which
would subject either Borrower to any material liability, or (iv) has been
terminated if such termination would subject either Borrower to any material
liability. Borrower has not assumed, or received notice of a claim asserted
against either Borrower for, withdrawal liability (as defined in Section 4207 of
ERISA) with respect to any multi employer pension plan and is not a member of
any Controlled Group (as defined in ERISA). Each Borrower has timely made all
contributions when due with respect to any multi employer pension plan in which
it participates and no event has occurred triggering a claim against either
Borrower for withdrawal liability with respect to any multi employer pension
plan in which either Borrower participates. All Employee Benefit Plans and multi
employer pension plans in which Borrower participates are shown on Schedule
“5.11(c)” attached hereto and made part hereof.

d. Neither Borrower is in violation of or receipt of written notice that it is
in violation of any applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town, municipality, county or of any
other jurisdiction, or of any agency, or department thereof, (including, without
limitation, Environmental Laws or government procurement regulations), a
violation of which causes or is reasonably likely to cause a Material Adverse
Effect.

e. Each Borrower (and Guarantor) is current with all reports and documents
required to be filed with any state or federal securities commission or similar
agency and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.

5.12. Business Interruptions: Within five (5) years prior to the date hereof,
none of the business, Property or operations of either Borrower has been
materially and adversely affected in any way by any casualty, strike, lockout,
combination of workers, order of the United States of America, or any state or
local government, or any political subdivision or agency thereof, directed
against such Borrower. There are no pending or, to either Borrower’s knowledge,
threatened labor disputes, strikes, lockouts or similar occurrences or
grievances affecting Borrowers. No labor contract of either Borrower is
scheduled to expire prior to the Maturity Date.

5.13. Names and Intellectual Property:

a. Within five (5) years prior to the Closing Date, neither Borrower has
conducted business under or used any other name (whether corporate or assumed)
except for the names shown on Schedule “5.13(a)” attached hereto and made part
hereof. Except to the extent that Borrowers may conduct business under a name
utilizing the word “Newtek” the ownership of which is with Guarantor, each
Borrower is the sole owner of all names listed on such Schedule “5.13(a)” and
any and all business done and all invoices issued in such trade names are
Borrower’s sales, business and invoices. Each trade name of Borrower, including
business conducted under a name utilizing the word “Newtek”, represents a
division or trading style of such Borrower and not a separate Subsidiary or
Affiliate or independent entity.

 

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b. All trademarks, service marks, patents or copyrights which each Borrower
uses, plans to use or has a right to use are shown on Schedule “5.13(b)”
attached hereto and made part hereof and such Borrower has the legal authority
to use such intellectual property in the conduct of its business. Borrower is
not in violation of any rights of any other Person with respect to such
Property.

c. Except as shown on Schedule “5.13(c)” attached hereto and made part hereof,
(i) each Borrower does not require any copyrights, patents, trademarks or other
intellectual property, or any license(s) to use any patents, trademarks or other
intellectual property (other than software licenses generally available) in
order to provide services to its customers in the ordinary course of business;
and (ii) Lender will not require any copyrights, patents, trademarks or other
intellectual property or any licenses to use the same in order to provide such
services after the occurrence of an Event of Default.

5.14. Other Associations: Neither Borrower is engaged in has interest in any
joint venture or partnership with any other Person except as shown on Schedule
“5.14,” attached hereto and made part hereof.

5.15. Environmental Matters: Except as shown on Schedule “5.15,” attached hereto
and made part hereof:

a. To each Borrower’s knowledge after due inquiry, no Property presently owned,
leased or operated by such Borrower contains, or has previously contained, any
Hazardous Substances in amounts or concentrations which (i) constitute or
constituted a violation of, or (ii) could give rise to liability under, any
Environmental Law.

b. To each Borrower’s knowledge after due inquiry, each Borrower is in
compliance, and, for the duration of all applicable statutes of limitations
periods, has been in compliance with all applicable Environmental Laws, and
there is no contamination at, under or about any properties presently owned,
leased, or operated by such Borrower or violation of any Environmental Law with
respect to such properties which could reasonably be expected to interfere with
any of their continued operations or reasonably be expected to impair the fair
saleable value thereof.

c. No Borrower has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws and no Borrower has knowledge that any
such notice will be received or is being threatened.

d. Hazardous Substances have not been transported or disposed of in a manner or
to a location which are reasonably likely to give rise to liability of a
Borrower under any Environmental Law.

e. No judicial proceeding or governmental or administrative action is pending,
or to the knowledge of either Borrower, threatened under any Environmental Law
to which either Borrower is, or to either Borrower’s knowledge will be, named as
a party, nor are there any consent decrees or

 

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other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding, the implementation of which
is reasonably likely to have a Material Adverse Effect on either Borrower’s
business, financial condition, Property or prospects under any Environmental
Law.

5.16. Regulation O: No director, executive officer or principal shareholder of
Borrower or any Guarantor is a director, executive officer or principal
shareholder of Lender. For the purposes hereof the terms “director” “executive
officer” and “principal shareholder” (when used with reference to Lender), have
the respective meanings assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.

5.17. Capital Stock: The authorized and outstanding Capital Stock of each
Borrower is as shown on Schedule “5.17” attached hereto and made part hereof.
All of the Capital Stock of Borrowers has been duly and validly authorized and
issued and is fully paid and non-assessable and has been sold and delivered to
the holder thereof in compliance with, or under valid exemption from, all
Federal and state laws and the rules and regulations of all Governmental
Authorities governing the sale and delivery of securities. Except for the rights
and obligations shown on Schedule “5.17,” there are no subscriptions, warrants,
options, calls, commitments, rights or agreements by which either Borrower or
any of the shareholders of either Borrower is bound relating to the issuance,
transfer, voting or redemption of shares of its Capital Stock or any pre-emptive
rights held by any Person with respect to the shares of Capital Stock of such
Borrower. Except as shown on Schedule “5.17,” neither Borrower has issued any
securities convertible into or exchangeable for shares of its Capital Stock or
any options, warrants or other rights to acquire such shares or securities
convertible into or exchangeable for such shares.

5.18. Solvency: After giving effect to the transactions contemplated under this
Agreement, each Borrower is solvent, is able to pay its debts as they become
due, and has capital sufficient to carry on its business and all businesses in
which it is about to engage, and now owns Property having a value both at fair
valuation and at present fair salable value greater than the amount required to
pay such Borrower’s debts. No Borrower will not be rendered insolvent by the
execution and delivery of this Agreement or any of the other Loan Documents
executed in connection with this Agreement or by the transactions contemplated
hereunder or thereunder.

5.19. Perfection and Priority: This Agreement and the other Loan Documents are
effective to create in favor of Lender legal, valid and enforceable Liens in all
right, title and interest of each Borrower in the Collateral, and when financing
statements have been filed in the offices of the jurisdictions shown on Schedule
“5.19,” attached hereto and made part hereof under each Borrower’s name, each
Borrower will have granted to Lender, and Lender will have perfected first
priority Liens in the Collateral, superior in right to any and all other Liens,
existing or future.

5.20. Commercial Tort Claims: As of the Closing Date, neither Borrower is a
party to any Commercial Tort Claims, except as shown on Schedule “5.20” attached
hereto and made part hereof.

5.21. Letter of Credit Rights: As of the Closing Date, no Borrower has any
rights under an outstanding letter of credit, except as shown on Schedule
“5.21,” attached hereto and made part hereof.

 

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5.22. Deposit Accounts: All deposit accounts of Borrower are shown on Schedule
“5.22,” attached hereto and made part hereof.

5.23. Eligible SBA 7(a) Note Receivables. Unless otherwise set forth on Schedule
“5.23” each Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA
7(a) Non-Guaranteed Note Receivable (i) represents bona fide existing
obligations created by the lending of money by Borrower to SBA 7(a) Loan
Obligors in the ordinary course of Borrower’s business, and (ii) is
unconditionally owed to Borrower without defenses, disputes, offsets or
counterclaims, or rights of return or cancellation and is secured by SBA 7(a)
Note Receivable Collateral in accordance with the Required Procedures. Each
Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA 7(a)
Non-Guaranteed Note Receivable has been documented on Approved Forms in
accordance with the Required Procedures. Unless otherwise clearly disclosed to
Lender in writing prior to submission to Lender for evaluation for eligibility,
Borrower has not received notice of (a) actual or imminent bankruptcy,
insolvency, or material impairment of the financial condition of any SBA 7(a)
Loan Obligor regarding any Eligible SBA 7(a) Guaranteed Note Receivable or any
Eligible SBA 7(a) Non-Guaranteed Note Receivable or (b) actual or threatened
litigation regarding the validity or enforceability of any Eligible SBA 7(a)
Guaranteed Note Receivable or any Eligible SBA 7(a) Non-Guaranteed Note
Receivable or the validity, enforceability or priority of any SBA 7(a) Note
Receivable Collateral. With respect to each Eligible SBA 7(a) Guaranteed Note
Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable, Borrower
has taken the steps required to perfect Borrower’s Liens in any SBA 7(a) Note
Receivable Collateral for such Eligible SBA 7(a) Guaranteed Note Receivable or
Eligible SBA 7(a) Non-Guaranteed Note Receivable, as applicable, against the
applicable SBA 7(a) Loan Obligor in all applicable jurisdictions. Unless
otherwise clearly disclosed to Lender in writing prior to or simultaneously with
submission to Lender for evaluation for eligibility, Borrower represents that it
is the sole legal and beneficial owner of each Eligible SBA 7(a) Guaranteed Note
Receivable, and that no participation interest or other ownership interest
(legal, beneficial or otherwise) has been sold or is otherwise outstanding with
respect thereto, except as is disclosed in writing to Lender.

5.24. Compliance. The Required Procedures, the SBA 7(a) Note Receivable
Documents and all actions and transactions by Borrower in connection therewith
comply in all material respects with all Applicable Laws.

SECTION VI. BORROWER’S AFFIRMATIVE COVENANTS

Each Borrower covenants that until all of the Obligations are paid and satisfied
in full, that (except where context specifically refers to a specific Borrower,
all references and representations in this section to Borrower shall mean as to
each Borrower):

6.1. Payment of Taxes and Claims: Each Borrower shall pay, before they become
delinquent, all taxes, assessments and governmental charges, or levies imposed
upon it, or upon such Borrower’s Property, and all claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other Persons,
entitled to the benefit of statutory or common law Liens which, in any case, if
unpaid, would result in the imposition of a Lien upon its Property; provided
however, that such Borrower shall not be required to pay any such tax,
assessment, charge, levy, claim or demand if the amount, applicability or
validity thereof, shall at the time, be contested in good faith and by
appropriate proceedings by such Borrower, and if such Borrower shall have set
aside on its books adequate reserves in respect thereof, if so required in
accordance with GAAP; which deferment of payment is permissible so long as no
Lien other than a Permitted Lien has been entered and such Borrower’s title to,
and its right to use, its Property are not materially adversely affected
thereby.

 

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6.2. Maintenance of Properties and Corporate Existence:

a. Property – Each Borrower shall maintain its Property in good condition
(normal wear and tear excepted) make all necessary renewals, replacements,
additions, betterments and improvements thereto and will pay and discharge when
due the cost of repairs and maintenance to its Property, and will pay all
rentals when due for all real estate leased by such Borrower.

b. Property Insurance, Public and Products Liability Insurance – Each Borrower
shall maintain insurance (i) on all insurable tangible Property against fire,
flood, casualty and such other hazards (including, without limitation, extended
coverage, workmen’s compensation, boiler and machinery, with inflation coverage
by endorsement) and (ii) against public liability, product liability and
business interruption, in each case in such amounts, with such deductibles and
with such insurers as are customarily used by companies operating in the same
industry and geographic area as Borrower. At or prior to Closing, each Borrower
shall furnish Lender with duplicate original policies of insurance or such other
evidence of insurance as Lender may require, and any certificates of insurance
shall be issued on Accord Form-27. In the event a Borrower fails to procure or
cause to be procured any such insurance or to timely pay or cause to be paid the
premium(s) on any such insurance, Lender may do so for Borrower, but Borrowers
shall continue to be liable for the same. The policies of all such casualty
insurance shall contain standard Lender’s Loss Payable Clauses (and, with
respect to liability and interruption insurance, additional insured clauses)
issued in favor of Lender under which all losses thereunder shall be paid to
Lender as Lender’s interest may appear. Such policies shall expressly provide
that the requisite insurance cannot be altered or canceled without thirty
(30) days prior written notice to Lender and shall insure Lender notwithstanding
the act or neglect of a Borrower. With respect to any single claim which exceeds
$500,000 or any series of claims in any twelve month period which in the
aggregate $1,500,000, each Borrower hereby appoints Lender as such Borrower’s
attorney-in-fact, exercisable at Lender’s option to endorse any check which may
be payable to a Borrower in order to collect the proceeds of such insurance and
any amount or amounts collected by Lender pursuant to the provisions of this
Section may be applied by Lender, in its sole discretion, to any Obligations or
to repair, reconstruct or replace the loss of or damage to Collateral as Lender
in its discretion may from time to time determine. Each Borrower further
covenants that all insurance premiums owing under its current policies have been
paid. Each Borrower shall notify Lender, immediately, upon such Borrower’s
receipt of a notice of termination, cancellation, or non-renewal from its
insurance company of any such policy. In addition NSBF shall, consistent with
the requirements of the SBA, cause each SBA 7(a) Loan Obligor to maintain NSBF
as a named as additional insured or loss payee, as appropriate, in all such
policies.

c. Financial Records – Each Borrower shall keep current and accurate books of
records and accounts in which full and correct entries will be made of all of
its business transactions, and will reflect in its financial statements adequate
accruals and appropriations to reserves, all in accordance with GAAP. Neither
Borrower shall change its fiscal year end date without the prior written consent
of Lender.

d. Corporate Existence and Rights – Borrower shall do (or cause to be done) all
things necessary to preserve and keep in full force and effect its existence,
good standing, rights and franchises.

 

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e. Compliance with Laws – Each Borrower shall be in compliance with any and all
laws, ordinances, governmental rules and regulations, and court or
administrative orders or decrees to which it is subject, whether federal, state
or local, (including, without limitation, Environmental Laws and government
procurement regulations) and shall obtain any and all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its Property or to the conduct of its businesses, which violation or failure to
obtain causes or could cause a Material Adverse Effect. Each Borrower shall
timely satisfy all assessments, fines, costs and penalties imposed (after
exhaustion of all appeals, provided a stay has been put in effect during such
appeal) by any Governmental Authority against Borrower or any Property of
Borrower. Without limiting the foregoing, NSBF shall cause the Required
Procedures, the SBA 7(a) Note Receivable Documents and all actions and
transactions by NSBF in connection therewith (a) to comply with SBA Rules and
Regulations, and (b) to comply with all other requirements of all Applicable
Laws except where the failure to comply with such other requirements of any
Applicable Law reasonably could not be expected to result in a Material Adverse
Effect.

6.3. Business Conducted: Each Borrower shall continue in the business presently
operated by it using its best efforts to maintain its customers and goodwill.
Borrower shall not engage, directly or indirectly, in any material respect in
any line of business materially different from the businesses conducted by
Borrowers immediately prior to the Closing Date.

6.4. Litigation: Borrowers shall give prompt notice to Lender of any litigation
claiming in excess of One Hundred Thousand Dollars ($100,000.00) from either
Borrower, or which is reasonably likely to have a Material Adverse Effect.

6.5. Issue Taxes: Borrowers shall pay all taxes (other than taxes based upon or
measured by any Lender’s income or revenues or any personal property tax), if
any, in connection with the issuance of the Notes and the recording of any lien
documents. The obligations of Borrowers hereunder shall survive the payment of
Borrowers’ Obligations hereunder and the termination of this Agreement.

6.6. Bank Accounts: Each Borrower and each Guarantor shall maintain their
primary depository and disbursement account(s) with Lender.

6.7. Employee Benefit Plans: Each Borrower shall (a) fund all of its Pension
Plan(s) in a manner that will satisfy the minimum funding standards of
Section 302 of ERISA, (b) furnish Lender, promptly upon Lender’s request, with
copies of all reports or other statements filed with the United States
Department of Labor, the PBGC or the IRS with respect to all Pension Plan(s), or
which Borrower, or any member of a Controlled Group, may receive from the United
States Department of Labor, the IRS or the PBGC, with respect to all such
Pension Plan(s), and (c) promptly advise Lender of the occurrence of any
reportable event (as defined in Section 4043 of ERISA, other than a reportable
event for which the thirty (30) day notice requirement has been waived by the
PBGC) or prohibited transaction (under Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) with respect to any such Pension Plan(s) and the
action which Borrower proposes to take with respect thereto. Each Borrower will
make all contributions when due with respect to any multi employer pension plan
in which it participates and will promptly advise Lender upon (x) its receipt of
notice of the assertion against such Borrower of a claim for withdrawal
liability, (y) the occurrence of any event which, to such Borrower’s knowledge,
would trigger the assertion of a claim for withdrawal liability against such
Borrower, and (z) upon the occurrence of any event which, to the Borrowers’
knowledge, would place either Borrower in a Controlled Group as a result of
which any member (including either Borrower) thereof may be subject to a claim
for withdrawal liability, whether liquidated or contingent.

 

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6.8. Financial Covenants: A. During the term of the Loan, Borrowers shall comply
with the following financial covenants which shall be tested on Parent together
with its consolidated subsidiaries:

 

  (a) A Fixed Charge Coverage Ratio of at least:

1.10:1 for the twelve month period ending June 30, 2010

1.25:1 for fiscal year 2010

1.50:1 for fiscal year 2011 and thereafter through the Maturity Date

to be tested, on a rolling four quarter basis, as of June 30, 2010 based upon
numbers for the quarter ended June 30, 2010 and, thereafter, quarterly; and

 

  (b) A minimum EBITDA of:

$4,500,000 for the twelve month period ending June 30, 2010

$6,500,000 for fiscal year 2010

$7,300,000 the twelve month period ending June 30, 2011

$8,000,000 for fiscal year 2011

$9,000,000 for fiscal year 2012

 

  (c) There shall be at least $4,000,000.00 in unrestricted cash on the
consolidated balance sheet of the Parent at all times.

B. During the term of the Loan, guarantor Universal Processing Services of
Wisconsin LLC (d/b/a Newtek Merchant Solutions) shall comply with the following
financial covenants which shall be tested on the basis of the results of the
Electronic Payment Processing segment:

 

  (a) A minimum EBITDA of:

$4,778,000 for the twelve month period ending June 30, 2010

$4,900,000 for fiscal year 2010

$5,000,000 the twelve month period ending June 30, 2011

$5,250,000 for fiscal year 2011

$5,600,000 for fiscal year 2012

C. During the term of the Loan, Borrowers shall comply with the following
respective financial covenants which shall be tested on each Borrower and their
respective consolidated subsidiaries:

 

  (a) A minimum EBITDA for NSBF of:

$1,235,000 for the twelve month period ending June 30, 2010

 

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$1,900,000 for fiscal year 2010

$2,200,000 the twelve month period ending June 30, 2011

$2,400,000 for fiscal year 2011

$2,600,000 for fiscal year 2012

 

  (b) A minimum EBITDA for CrystalTech of:

$6,159,000 for the twelve month period ending June 30, 2010

$6,591,000 for fiscal year 2010

$7,000,000 the twelve month period ending June 30, 2011

$7,300,000 for fiscal year 2011

$8,000,000 for fiscal year 2012

6.9. Financial and Business Information: Each Borrower shall deliver or cause to
be delivered to Lender the following:

a. Financial Statements and Collateral Reports: such data, reports, statements
and information, financial or otherwise, as Lender may reasonably request,
including, without limitation:

i.

(a) Within thirty (30) days after the end of each Fiscal Month, financial
information regarding the Borrowers, certified by the Chief Financial Officer of
Parent, consisting of consolidated (i) unaudited balance sheets as of the close
of such Fiscal Month and the related statements of income and cash flows for
that portion of the Fiscal Year ending as of the close of such Fiscal Month; and
(ii) unaudited statements of income and cash flows for such Fiscal Month,
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments).

(b) Within forty five (45) days after the end of each Fiscal Quarter, financial
information regarding Parent and its consolidated subsidiaries, certified by the
Chief Financial Officer of Parent, consisting of consolidated (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter; (ii) unaudited statements of income and cash flows
for such Fiscal Quarter, setting forth in comparative form the figures for the
corresponding period in the prior year and on a trailing twelve month basis, and
(iii) including an income statement for Parent on a consolidated basis by
business segment as currently reported by Parent, all prepared in accordance
with GAAP (subject to normal year-end adjustments).

(c) Within forty five (45) days after the end of each Fiscal Quarter, the actual
results of operations of Borrowers for the Fiscal Quarter and on a trailing
twelve (12) month basis, compared to the Projections for such Fiscal Quarter and
the twelve (12) month period.

 

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ii. Within ninety (90) days after the end of each Fiscal Year, audited Financial
Statements for Parent and its Subsidiaries on a consolidated basis, consisting
of balance sheets, cash flow statements and statements (including statements on
a business segment basis) of income and retained earnings and, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by an independent certified public accounting firm of
national standing and acceptable to Lender.

iii. within twenty (20) days of filing, but in no event more than fifteen
(15) days after the last permitted extension for filing without penalty, each
Borrower shall provide Lender with signed federal tax returns.

iv. Within ninety (90) days after the end of each Fiscal Year, three years
projections for each Borrower, prepared by Borrowers in light of the past
operations of its businesses, but including future payments of known contingent
liabilities, prepared on a quarterly basis for the next fiscal year and annually
for the following two years (“Projections”). The Projections shall be based upon
the same accounting principles as those used in the preparation of the financial
statements described above and the estimates and assumptions stated therein, all
of which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, reflect Borrowers’ good
faith and reasonable estimates of the future financial performance of Borrower
for the period set forth therein.

v. Within fifteen (15) days after the end of each Fiscal Month a Borrowing Base
Certificate, which shall include detailed reporting as to eligibility of any
SBA(7)a Loan Receivables.

b. Management Letters. Within five (5) Business Days after receipt thereof by
any Credit Party, copies of all management letters, exception reports or similar
letters or reports received by such Credit Party from its independent certified
public accountants.

6.10. Each Borrower further agrees that, if requested by Lender, it shall
promptly furnish Lender with copies of all reports filed with any federal, state
or local Governmental Authority;

a. Notice of Event of Default - promptly upon a director or executive officer of
the Borrower obtaining knowledge of the existence of any condition or event
which constitutes a Default or an Event of Default under this Agreement, a
written notice specifying the nature and period of existence thereof and what
action Borrower is taking (and proposes to take) with respect thereto;

b. Notice of Claimed Default - promptly upon receipt by a Borrower, notice of
default, oral or written, given to such Borrower by any creditor for
Indebtedness for borrowed money, or otherwise holding long term Indebtedness of
Borrower in excess of Fifty Thousand Dollars ($50,000.00);

c. Securities and Other Reports - if a Borrower shall be required to file
reports with the Securities and Exchange Commission pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, promptly upon its
becoming available, one copy of each financial statement, report, notice or
proxy statement sent by such Borrower to stockholders generally, and, a copy of
each

 

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regular or periodic report, and any registration statement, or prospectus in
respect thereof, filed by such Borrower with any securities exchange or with
federal or state securities and exchange commissions or any successor agency.

6.11. Officers’ Certificates - Along with each set of financial statements and
or reports delivered to Lender pursuant to Section 6.9(a) hereof, each Borrower
and each corporate Guarantor, shall deliver to Lender a certificate (“Compliance
Certificate”) from the chief financial officer, chief executive officer or
president of each Borrower and each corporate Guarantor (and as to certificates
accompanying the annual financial statements of each Borrower and each corporate
Guarantor, also certified by Borrower’s independent certified public accountant)
setting forth:

a. Event of Default - that the signer has reviewed the relevant terms of this
Agreement, and has made (or caused to be made under his/her supervision) a
review of the transactions and conditions of each Borrower and each corporate
Guarantor from the beginning of the accounting period covered by the financial
statements being delivered therewith to the date of the certificate, and that
such review has not disclosed the existence during such period of any condition
or event which constitutes a Default or an Event of Default or, if any such
condition or event exists, specifying the nature and period of existence thereof
and what action Borrowers and/or each corporate Guarantor has taken or proposes
to take with respect thereto.

b. Covenant Compliance - the information (including detailed calculations)
required in order to establish that each Borrower is in compliance with the
requirements of Section 6.8 of this Agreement, as of the end of the period
covered by the financial statements delivered.

6.12. Audits and Inspection: Borrowers shall permit any of Lender’s officers or
other representatives to visit and inspect upon reasonable notice during
business hours any of the locations of Borrowers, to examine and audit all of
Borrowers’ books of account, records, reports and other papers, to make copies
and extracts there from and to discuss its affairs, finances and accounts with
its officers, employees and independent certified public accountants all at
Borrowers’ expense at the standard rates charged by Lender for such activities,
plus Lender’s reasonable out-of-pocket expenses (all of which amounts shall be
Expenses). Borrower acknowledges that Lender intends to conduct such audits at
least twice annually.

6.13. Blocked Account: On or before the Closing Date and until the Maturity
Date, Borrowers shall establish a blocked account with the Lender (“Blocked
Account”), and deposit and/or shall cause to be deposited directly into such
Blocked Account all payments swept from the Trust Account in a manner consistent
with the Cash Management System, including any prepayments and payments with
respect to each Permitted Disposition, with respect to each SBA 7(a) Loan to be
deposited into the Blocked Account, including any Net Sale Proceeds from any
Sold Note Receivable, any Note Participation Amounts from any Note
Participation, and any Servicing Fees and (ii) all payments received for the SBA
7(a) Loans and any Permitted Dispositions.

6.14. Information to Participant: Lender may divulge to any participant,
assignee or co-lender or prospective participant, assignee or co-lender it may
obtain in the Loans or any portion thereof, all information, and furnish to such
Person copies of any reports, financial statements, certificates, and documents
obtained under any provision of this Agreement, or related agreements and
documents.

 

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6.15. Material Adverse Developments: Each Borrower agrees that immediately upon
obtaining knowledge of any development or other information outside the ordinary
course of business (and excluding matters of a general economic, financial or
political nature) which would reasonably be expected to have a Material Adverse
Effect it shall give to Lender telephonic notice specifying the nature of such
development or information and such anticipated effect. In addition, such verbal
communication shall be confirmed by written notice thereof to Lender on the same
day such verbal communication is made or the next Business Day thereafter.

6.16. Places of Business: Borrowers shall give thirty (30) days prior written
notice to Lender of any changes in the location of any of their respective
places of business, of the places where records concerning their Accounts or
where its Inventory are kept, or the establishment of any new, or the
discontinuance of any existing place of business; provided that Borrowers may
not establish any place of business outside of the United States.

6.17. Commercial Tort Claims: Borrowers will immediately notify Lender in
writing in the event that either Borrower becomes a party to or obtains any
rights with respect to any Commercial Tort Claim. Such notification shall
include information sufficient to describe such Commercial Tort Claim,
including, but not limited to, the parties to the claim, the court in which the
claim was commenced, the docket number assigned to such claim, if any, and a
detailed explanation of the events that gave rise to the claim. Each Borrower
shall execute and deliver to Lender all documents and/or agreements necessary to
grant Lender a security interest in such Commercial Tort Claim to secure the
Obligations. Borrowers authorize Lender to file (without Borrower’s signature)
initial financing statements or amendments, as Lender deems necessary to perfect
its security interest in the Commercial Tort Claim.

6.18. Letter of Credit Rights: Borrowers shall provide Lender with written
notice of any letters of credit for which a Borrower is the beneficiary.
Borrowers shall execute and deliver (or cause to be executed or delivered) to
Lender, all documents and agreements as Lender may require in order to obtain
and perfect its security interest in such letters of credit.

6.19. Inter-Company and Shareholder Loans: All inter-company loans to either
Borrower from a Guarantor, another Borrower or from any officer, director or
employee, or affiliates shall be subordinate to this Loan.

6.20. Separateness Covenant. Each Borrower agrees and covenants that:

a. Borrower will maintain Borrower’s separate existence and identity and will
take reasonable steps to make it apparent to third parties that Borrower is an
entity with assets (in particular the Pledged Shares (as defined in the Pledge
Agreement)) and liabilities distinct from those of Guarantor and the other
Borrower.

b. Not in limitation of the generality of the foregoing, Borrower agrees as
follows:

i. Borrower will not inadvertently commingle its assets in any material respects
with those of any other Person and shall take all reasonable steps to maintain
its assets in a manner that facilitates their identification and segregation
from those of Guarantor or the other Borrower;

 

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ii. (ii) Borrower shall take all reasonable steps to prevent any of Borrower’s
funds from at any time being pooled with any funds of Guarantor of the other
Borrower and shall not maintain joint bank accounts or other depository accounts
to which Guarantors of the other Borrower have access;

iii. Borrower will conduct its business in its own name and from an office
separate (or otherwise internally distinguishable) from that of Guarantor and
the other Borrower or any other Affiliate of Borrower;

iv. Borrower will maintain separate corporate records and books of account from
those of any other Person;

v. Borrower will maintain separate financial statements from those of any other
Person; provided, however, financial information about Borrower may be contained
in consolidated financial statements issued by Parent;

vi. Borrower will pay its own liabilities, including the salaries of its own
employees, consultants and agents, from its own funds and bank accounts;

vii. Borrower will compensate Guarantors and the other Borrower at market rates
for any services that such parties render to Borrower; and

viii. Borrower will observe the formalities of a corporation in all material
respects.

6.21. NSBF as Servicer. NSBF shall at its own expense service all of the SBA
7(a) Note Receivables, including (i) the billing, posting and maintaining of
complete records applicable thereto, and (ii) subject to applicable SBA Rules
and Regulations, the taking of such action with respect thereto as NSBF may deem
advisable.

6.22. Negotiable Collateral. NSBF shall cause the original of each SBA 7(a) Loan
Note to be delivered to FTA or such other Person designated in accordance with
the Multi-Party Agreement and to be dealt with as provided therein. Subject to
the Multi-Party Agreement, in the event that any other Collateral, including
proceeds, is evidenced by or consists of collateral readily negotiable, and if
and to the extent that perfection of priority of Lender’s security interest is
dependent on or enhanced by possession, the applicable Borrower shall,
immediately upon the request of Lender, shall endorse and deliver physical
possession of such negotiable collateral to Lender.

6.23. Collection of SBA 7(a) Note Receivables, Accounts, General Intangibles and
Chattel Paper. Subject in each case to the Multi-Party Agreement, at any time
after the occurrence and during the continuation of a Default or Event of
Default under this Agreement or any other Loan Document, Lender or Lender’s
designee may (a) notify SBA 7(a) Loan Obligors or other obligors that SBA 7(a)
Note Receivables, Accounts, Chattel Paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or
(b) collect the 7(a) Loan Receivables, Accounts, Chattel Paper or General
Intangibles directly and charge the collection costs and expenses to the Loan
Account. Subject in each case to the Multi-Party Agreement and Section 5.12,
NSBF agrees that it will hold in

 

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trust for Lender, as Lender’s trustee, any payments with respect to or in
connection with SBA 7(a) Note Receivables or SBA 7(a) Note Receivable Collateral
that it receives and immediately will deliver said payments with respect to or
in connection with SBA 7(a) Note Receivables or SBA 7(a) Note Receivable
Collateral to a replacement Servicer appointed or approved by the SBA or, at the
request of Lender with the SBA’s consent to Lender, in each case, in their
original form as received by NSBF.

6.24. Records. NSBF shall maintain accurate and materially complete records
regarding all SBA 7(a) Note Receivables, including without limitation all SBA
7(a) Note Receivables which have been guaranteed by the principals of the
respective SBA 7(a) Loan Obligors; provided that in no event shall such records
fail to comply with the requirements of the SBA Rules and Regulations.

6.25. Due Diligence. NSBF shall cooperate fully with Lender in connection with
Lender’s due diligence, from time to time, with respect to property proposed by
NSBF as Collateral and SBA 7(a) Note Receivable Collateral. Lender shall be
entitled to procure such appraisals, brokers’ price opinions, lien search
reports, tax filing reports, title reports, evaluations or other reports,
certifications or information as it may require in connection with its
evaluation or re-evaluation of any Collateral.

6.26. Multi-Party Agreement; Blocked Account Agreement. NSBF shall comply in a
timely manner with all of its obligations and agreements under the Multi-Party
Agreement and the Blocked Account Agreement, including without limitation,
providing complete and accurate instructions, in accordance with the terms of
the Blocked Account Agreement.

6.27. REO Property. Promptly upon acquisition of any REO Property, the
applicable Credit Party shall execute such deeds of trust, mortgages and other
documentation with respect to such Credit Party’s interest in such REO Property,
and to the extent, if any, required by SBA Rules and Regulations, obtain and
deliver or cause to be delivered to Lender, an appraisal that is compliant with
the requirements of FIRREA, a mortgagee policy of title insurance, environmental
report, engineering report or other documentation as Lender may reasonably
request in connection therewith.

6.28. Foreclosure (or Deed in Lieu) Regarding SBA 7(a) Note Receivable
Collateral: NSBF shall notify Lender of sending or recording any notice of
default on a SBA 7(a) Note Receivable within fifteen (15) days of such sending
or recording, and notify Lender thereof in writing with each Borrowing Base
Certificate delivered to Lender. NSBF shall also notify Lender in writing with
each Borrowing Base Certificate delivered to Lender, the date upon which any
notice of foreclosure sale was recorded and the initial date set for related
foreclosure sale. In the case of a notice of foreclosure sale, NSBF will also
notify Lender in writing of the recordation of any related notice of trustee
sale within five (5) days of recordation thereof, and include in such notice the
date first set for sale. Promptly upon consummation of any such foreclosure or
trustee sale, or any deed or bill of sale in lieu of foreclosure, retention of
collateral in satisfaction of debt or similar transaction, NSBF shall deliver to
Lender true and complete copies of all documentation executed (in the case of
notices, postings and the like), or to be executed (in the case of deeds, bills
of sale or other documents related to consummation of such transaction or
transfer of such property), by NSBF in respect thereof. In the event NSBF
intends or expects, by means of any such foreclosure, deed or bill of sale in
lieu of foreclosure, retention of collateral in satisfaction of debt or similar
transaction, to acquire title to any personal property included in the SBA 7(a)
Note Receivable Collateral, NSBF shall, contemporaneously upon acquiring such
title, execute and deliver to Lender such security agreements, financing
statements or other documents as may be required by Lender in order to maintain
Lender’s interest therein (NSBF hereby appoints Lender as its attorney-in-fact,
and grants Lender a special power of attorney, coupled with an interest, to
execute any such

 

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security agreements, financing statements or other documents, in NSBF’s name and
on its behalf, and file and record same as required to perfect Lender’s interest
therein). If permitted by applicable SBA rules, NSBF will not acquire title to,
or take possession of, any such real property unless NSBF has determined, based
on an environmental site assessment prepared by a credentialed consultant
acceptable to Lender who regularly conducts environmental audits, either that
such real property, including all improvements thereon, is in compliance with
all applicable Environmental Laws and that there are no circumstances present on
such real property relating to the use, management or disposal of any Hazardous
Materials for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any Environmental Law, or that the cost of
any such actions is justified and appropriate in relation to the liquidation
value of such real property.

SECTION VII. BORROWER’S NEGATIVE COVENANTS:

Each Borrower covenants that until all of the Obligations are paid and satisfied
in full and, that:

7.1. Merger, Consolidation, Dissolution or Liquidation:

a. Neither Borrower shall engage in any Asset Sale other than: (i) Inventory
sold in the ordinary course of Borrower’s business, (ii) equipment that is
replaced by other equipment of comparable or superior quality and value within
ninety (90) days of such Asset Sale, (iii) a sale of property in one transaction
or a series of transactions with a fair market value of less than One Hundred
Thousand Dollars ($100,000) during any six month period or (iv) a Permitted
Disposition.

b. No Borrower shall merge or consolidate with any other Person or commence a
dissolution or liquidation.

7.2. Acquisitions: No Borrower shall acquire all or a material portion of the
Capital Stock or assets of any Person in any transaction or in any series of
related transactions or enter into any sale and leaseback transaction.

7.3. Liens and Encumbrances: No Borrower shall: (i) execute a negative pledge
agreement with any Person covering any of its Property, or (ii) cause or permit
or agree or consent to cause or permit in the future (upon the happening of a
contingency or otherwise), its Property (including, without limitation, the
Collateral), whether now owned or hereafter acquired, to be subject to a Lien or
be subject to any claim except for Permitted Liens.

7.4. Transactions With Affiliates or Subsidiaries: No Borrower shall enter into
any transaction with any Subsidiary or other Affiliate, including, without
limitation, the purchase, sale, or exchange of Property, or the loaning or
giving of funds to any Affiliate or any Subsidiary unless: (i) such Subsidiary
or Affiliate is engaged in a business substantially related to the business
conducted by such Borrower and the transaction is in the ordinary course of and
pursuant to the reasonable requirements of such Borrower’s business and upon
terms substantially the same and no less favorable to Borrower as it would
obtain in a comparable arm’s length transactions with any Person not an
Affiliate or a Subsidiary, and so long as such transaction is not prohibited
hereunder; (ii) such transaction is intended for incidental administrative
purposes; or (iii) it is a dividend.

7.5. Guarantees: Excepting the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection (and the joint obligations to
Lender hereunder), no Borrower shall

 

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become or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker, or
otherwise, for the existing or future Indebtedness of any kind of any Person.

7.6. Distributions, Bonuses and Other Indebtedness: No Borrower shall:
(a) declare or pay any cash bonus compensation to its officers if an Event of
Default exists or would result from the payment thereof; (b) hereafter incur or
become liable for any Indebtedness other than Permitted Indebtedness; (c) make
any prepayments on any existing or future Indebtedness (other than the
Obligations); or (d) during the continuance of an Event of Default make any
distributions or dividends to Parent.

7.7. Loans and Investments: Borrowers shall not make or have outstanding loans,
advances, extensions of credit or capital contributions to, or investments in,
any Person other than Permitted Investments.

7.8. Use of Lenders’ Name: Borrowers shall not use Lender’s name in connection
with any of its business operations. Nothing herein contained is intended to
permit or authorize Borrower to make any contract on behalf of Lender.

7.9. Miscellaneous Covenants:

a. No Borrower shall become or be a party to any contract or agreement which at
the time of becoming a party to such contract or agreement materially impairs
such Borrower’s ability to perform under this Agreement, or under any other
instrument, agreement or document to which such Borrower is a party or by which
it is or may be bound.

b. No Borrower shall carry or purchase any “margin stock” within the meaning of
Regulations U, T or X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II.

7.10. Jurisdiction of Organization: Borrowers shall not change their
jurisdiction of organization.

SECTION VIII. DEFAULT

8.1. Events of Default: Each of the following events shall constitute an event
of default (“Event of Default”) (except where context specifically refers to a
specific Borrower, all references and representations in this section to
Borrower shall mean as to either Borrower):

a. Payments - if either Borrower fails to make any payment of principal or
interest, under the Obligations on the date such payment is due and payable; or

b. Other Charges - if either Borrower fails to pay any other charges, fees,
Expenses or other monetary obligations owing to Lender arising out of or
incurred in connection with this Agreement within five (5) Business Days after
the date such payment is due and payable; or

c. Particular Covenant Defaults - if either Borrower fails any covenant or
undertaking contained in this Agreement and (other than with respect to the
covenants contained in Section 6.8 and Section 7 for which no cure period shall
exist other than as set forth in 8.1(d) below), such failure continues for ten
(10) Business Days after the occurrence thereof;

 

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d. Financial Covenant Defaults - subject to the Limitation in Section 8.6 below,
if either Borrower fails to perform, comply with or observe with respect to the
covenants contained in Section 6.8, and such failure continues for five
(5) Business Days after the occurrence thereof;

e. Financial Information - if any statement, report, financial statement, or
certificate made or delivered by either Borrower or any of its officers,
employees or agents, to Lender is not true and correct, in all material
respects, when made; or

f. Uninsured Loss - if there shall occur any uninsured damage to or loss, theft,
or destruction in excess of One Hundred Thousand Dollars ($100,000.00) in the
aggregate with respect to any portion of any Property of a Borrower for which
such Borrower has not established a cash or cash equivalent reserve in the full
amount of such loss; or

g. Warranties or Representations - if any warranty, representation or other
statement by or on behalf of Borrower contained in or pursuant to this
Agreement, the other Loan Documents or in any document, agreement or instrument
furnished in compliance with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when made; or

h. Agreements with Others - (i) if either Borrower shall default beyond any
grace period in the payment of principal or interest of any Indebtedness of such
Borrower in excess of Twenty Five Thousand Dollars ($25,000.00) in the
aggregate; or (ii) if Borrower otherwise defaults under the terms of any such
Indebtedness if the effect of such default is to enable the holder of such
Indebtedness to accelerate the payment of such Borrower’s obligations, which are
the subject thereof, prior to the maturity date or prior to the regularly
scheduled date of payment;

i. Other Agreements with Lender - if a Borrower or any Guarantor breaches or
violates the terms of, or if a default (and expiration of any applicable cure
period), or an Event of Default, occurs under, any Interest Hedging Instrument
or any other existing or future agreement (related or unrelated) (including,
without limitation, the other Loan Documents) between either Borrower or any
Guarantor and Lender; or

j. Judgments - if any final judgment for the payment of money in excess of One
Hundred Thousand Dollars ($100,000.00) in the aggregate (i) which is not fully
and unconditionally covered by insurance or (ii) for which such Borrower has not
established a cash or cash equivalent reserve in the full amount of such
judgment, shall be rendered by a court of record against such Borrower and such
judgment shall continue unsatisfied and in effect for a period of thirty
(30) consecutive days without being vacated, discharged, satisfied or bonded
pending appeal; or

k. Assignment for Benefit of Creditors, etc. - if either Borrower makes or
proposes in writing, an assignment for the benefit of creditors generally,
offers a composition or extension to creditors, or makes or sends notice of an
intended bulk sale of any business or assets now or hereafter owned or conducted
by such Borrower; or

l. Bankruptcy, Dissolution, etc. - upon the commencement of any action for the
dissolution or liquidation of either Borrower, or the commencement of any
proceeding to avoid any

 

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transaction entered into by either Borrower, or the commencement of any case or
proceeding for reorganization or liquidation of either Borrower’s debts under
the Bankruptcy Code or any other state or federal law, now or hereafter enacted
for the relief of debtors, whether instituted by or against either Borrower;
provided, however, that such Borrower shall have forty-five (45) days to obtain
the dismissal or discharge of involuntary proceedings filed against it, it being
understood that during such forty-five (45) day period, Lender shall not be
obligated to make Advances hereunder and Lender may seek adequate protection in
any bankruptcy proceeding; or

m. Receiver - upon the appointment of a receiver, liquidator, custodian, trustee
or similar official or fiduciary for either Borrower or for such Borrower’s
Property; or

n. Execution Process, etc. - the issuance of any execution or distraint process
against any Property of a Borrower; or

o. Termination of Business - if a Borrower ceases any material portion of its
business operations as presently conducted; or

p. Pension Benefits, etc. - if a Borrower fails to comply with ERISA so that
proceedings are commenced to appoint a trustee under ERISA to administer such
Borrower’s employee plans or the PBGC institutes proceedings to appoint a
trustee to administer such plan(s), or a Lien is entered to secure any
deficiency or claim or a “reportable event” as defined under ERISA occurs; or

q. Investigations - a determination by Lender that it is reasonable to conclude,
based on one or more events which have occurred, such as an indictment,
announcement of formal investigation or similar event, that a Borrower is
engaged, directly or indirectly, in any type of activity which would reasonably
be likely to result in the forfeiture of property of a Borrower to any
governmental entity, federal, state or local, in an amount or of a value which
would be material to such Borrower’s financial condition or business;

r. Guaranty Agreement - if any breach or default occurs under a Guaranty
Agreement, or if a Guaranty Agreement, or any obligation to perform thereunder
is terminated; or

s. Liens - if any Lien in favor of Lender shall cease to be valid, enforceable
and perfected and prior to all other Liens other than Permitted Liens or if
either Borrower or any Governmental Authority shall assert any of the foregoing;
or

t. Material Adverse Effect - if there is any change in either Borrowers’ or any
Guarantor’s financial condition which, in Lender’s reasonable good faith
opinion, has or would be reasonably likely to have a Material Adverse Effect, or

u. Other Loan Documents - if any other Person (other than Lender) party to a
Loan Document, breaches or violates any material (as determined by the Lender)
term, provision or condition of such Loan Document.

v. SBA Status - if NSBF shall lose, or have any material limitation imposed
upon, its authority to process, close, service, collect enforce or liquidate any
SBA 7(a) Loans, which material limitation may include, but shall not be limited
to, loss of NSBF’s status as a lender under the SBA Preferred Lender Program.

 

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8.2. Cure: Nothing contained in this Agreement or the Loan Documents shall be
deemed to compel Lender to accept a cure of any Event of Default hereunder.

8.3. Rights and Remedies on Default:

a. In addition to all other rights, options and remedies granted or available to
Lender under this Agreement or the Loan Documents (each of which is also then
exercisable by Lender), or otherwise available at law or in equity, upon or at
any time after the occurrence and during the continuance of an Event of Default
Lender may, in its discretion, terminate the Loans and declare the Obligations
immediately due and payable, all without demand, notice, presentment or protest
or further action of any kind (it also being understood that the occurrence of
any of the events or conditions set forth in Sections 8.1(k),(l) or (m) shall
automatically cause an acceleration of the Obligations).

b. In addition to all other rights, options and remedies granted or available to
Lender under this Agreement or the Loan Documents (each of which is also then
exercisable by Lender), or otherwise available at law or in equity, upon or at
any time after the acceleration of the Obligations following the occurrence of
an Event of Default (other than the rights with respect to clause (iv) below
which Lender may exercise at any time after an Event of Default and regardless
of whether there is an acceleration), Lender may, in its discretion, exercise
all rights under the UCC and any other applicable law or in equity, and under
all Loan Documents permitted to be exercised after the occurrence of an Event of
Default, including the following rights and remedies (which list is given by way
of example and is not intended to be an exhaustive list of all such rights and
remedies):

i. the right to take possession of, send notices regarding and collect directly
the Collateral, with or without judicial process (including without limitation
the right to notify the United States postal authorities to redirect mail
addressed to Borrowers to an address designated by Lender); or

ii. by its own means or with judicial assistance, enter each Borrower’s premises
and take possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises in compliance with subsection (e) below, without any
liability for rent, storage, utilities or other sums, and Borrower shall not
resist or interfere with such action; or

iii. require each Borrower at such Borrower’s expense to assemble all or any
part of the Collateral (other than real estate or fixtures) and make it
available to Lender at any place designated by Lender; or

iv. take additional reserves against the Borrowing Base; or

v. the right to enjoin any violation of Section 7.1, it being agreed that
Lender’s remedies at law are inadequate.

 

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c. Each Borrower hereby agrees that a notice received by it at least seven
(7) days before the time of any intended public sale or of the time after which
any private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable inventory or Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to either Borrower. Each Borrower
covenants and agrees not to interfere with or impose any obstacle to Lender’s
exercise of its rights and remedies with respect to the Collateral, after the
occurrence of an Event of Default hereunder. Lender shall have no obligation to
clean up or prepare the Collateral for sale. If Lender sells any of the
Collateral upon credit, Borrowers will only be credited with payments actually
made by the purchaser thereof, that are received by Lender. Lender may, in
connection with any sale of the Collateral specifically disclaim any warranties
of title or the like.

8.4. Nature of Remedies: All rights and remedies granted Lender hereunder and
under the Loan Documents, or otherwise available at law or in equity, shall be
deemed concurrent and cumulative, and not alternative remedies, and Lender may
proceed with any number of remedies at the same time until all Obligations are
satisfied in full. The exercise of any one right or remedy shall not be deemed a
waiver or release of any other right or remedy, and Lender, upon or at any time
after the occurrence of an Event of Default, may proceed against Borrowers, at
any time, under any agreement, with any available remedy and in any order.

8.5. Set-Off: If any bank account of a Borrower with Lender or any participant
is attached or otherwise liened or levied upon by any third party, Lender (and
such participant) shall have and be deemed to have, without notice to such
Borrower, the immediate right of set-off and may apply the funds or amount thus
set-off against any of Borrowers’ Obligations hereunder.

8.6. Limitation on Remedies

a. Notwithstanding, anything else to the contrary contained herein, with respect
to an Event of Default under Section 6.8 A, 6.8 B, or 6.8 C (b) hereof, Lender
Agrees that it shall not, solely as it relates to Term Loan A and NSBF be
entitled to exercise its rights under Section 8.3(a) or 8.3(b), provided that,
Lender is expressly permitted to take additional reserves against the Borrowing
Base, or to impose the default rate of interest. The foregoing limitation shall
not apply if there shall have occurred any other Event of Default hereunder in
which case Lender’s right of action shall not be impaired. Furthermore during
such Event of Default nothing shall be deemed to limit Lender’s right to pursue
any action against any Guarantor of the obligations including without limit
CrystalTech.

b. Notwithstanding any provision of Section 8.3(a) and (b), any exercise of the
rights and remedies of Lender solely as it relates to Term Loan A and NSBF under
Section 8.3(a) and (b) may be subject to the provisions of the Multi-Party
Agreement.

SECTION IX. MISCELLANEOUS

9.1. Governing Law: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE WHERE LENDER’S OFFICE IDENTIFIED IN SECTION 9.8 IS LOCATED. THE
PROVISIONS OF THIS AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO
HEREIN ARE TO BE

 

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DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL
NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE
AND EFFECT.

9.2. Integrated Agreement: The Note, the other Loan Documents, all related
agreements, and this Agreement shall be construed as integrated and
complementary of each other, and as augmenting and not restricting Lender’s
rights and remedies. If, after applying the foregoing, an inconsistency still
exists, the provisions of this Agreement shall constitute an amendment thereto
and shall control.

9.3. Waiver: No omission or delay by Lender in exercising any right or power
under this Agreement or any related agreements and documents will impair such
right or power or be construed to be a waiver of any Default, or Event of
Default or an acquiescence therein, and any single or partial exercise of any
such right or power will not preclude other or further exercise thereof or the
exercise of any other right, and as to Borrowers no waiver will be valid unless
in writing and signed by Lender and then only to the extent specified.

9.4. Indemnity:

a. Each Borrower releases and shall indemnify, defend and hold harmless Lender
and its respective officers, employees and agents, of and from any claims,
demands, liabilities, obligations, judgments, injuries, losses, damages and
costs and expenses (including, without limitation, reasonable legal fees)
resulting from (i) acts or conduct of either Borrower under, pursuant or related
to this Agreement and the other Loan Documents, (ii) either Borrower’s breach or
violation of any representation, warranty, covenant or undertaking contained in
this Agreement or the other Loan Documents, (iii) either Borrower’s failure to
comply with any or all laws, statutes, ordinances, governmental rules,
regulations or standards, whether federal, state or local, or court or
administrative orders or decrees, (including without limitation Environmental
Laws, etc.), and (iv) any claim by any other creditor of either Borrower against
Lender arising out of any transaction whether hereunder or in any way related to
the Loan Documents and all costs, expenses, fines, penalties or other damages
resulting there from, unless resulting solely from acts or conduct of Lender
constituting willful misconduct or gross negligence.

b. Promptly after receipt by an indemnified party under subsection (a) above of
notice of the commencement of any action by a third party, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof. The omission so to notify the indemnifying
party shall relieve the indemnifying party from any liability which it may have
to any indemnified party under such subsection only if the indemnifying party is
unable to defend such actions as a result of such failure to so notify. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnified party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.

 

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9.5. Time: Whenever Borrowers shall be required to make any payment, or perform
any act, on a day which is not a Business Day, such payment may be made, or such
act may be performed, on the next succeeding Business Day. Time is of the
essence in Borrowers’ performance under all provisions of this Agreement and all
related agreements and documents.

9.6. Expenses of Lender: At Closing and from time to time thereafter, Borrower
will pay within five (5) Business Days of receipt of written demand of Lender
all reasonable costs, fees and expenses of Lender in connection with (i) the
analysis, negotiation, preparation, execution, administration, delivery and
termination of this Agreement, and other Loan Documents and the documents and
instruments referred to herein and therein, and any amendment, amendment and
restatement, supplement, waiver or consent relating hereto or thereto, whether
or not any such amendment, amendment and restatement, supplement, waiver or
consent is executed or becomes effective, search costs, the reasonable fees,
expenses and disbursements of counsel for Lender, any fees or expenses incurred
by Lender under Section 6.11 for which Borrowers are obligated thereunder, and
reasonable charges of any expert consultant to Lender, (ii) the enforcement of
Lender’s rights hereunder, or the collection of any payments owing from,
Borrower under this Agreement and/or the other Loan Documents or the protection,
preservation or defense of the rights of Lender hereunder and under the other
Loan Documents, and (iii) any refinancing or restructuring of the credit
arrangements provided under this Agreement and other Loan Documents in the
nature of a “work-out” or arising in connection with any insolvency or
bankruptcy proceedings (including any action Lender deems necessary to protect
its interest in such proceedings, or otherwise (including the reasonable fees
and disbursements of counsel for Lender and, with respect to clauses (ii) and
(iii), reasonable allocated costs of internal counsel) (collectively, the
“Expenses”);

9.7. Brokerage: This transaction was brought about and entered into by Lender
and Borrower acting as principals and without any brokers, agents or finders
being the effective procuring cause hereof. Each Borrower represents that it has
not committed Lender to the payment of any brokerage fee, commission or charge
in connection with this transaction. If any such claim is made on Lender by any
broker, finder or agent or other person alleging that it is based on actions of
a Borrower, a Guarantor or any affiliate, officer director or employee of either
of them, Borrower hereby indemnifies, defends and saves such party harmless
against such claim and further will defend, with counsel satisfactory to Lender,
any action or actions to recover on such claim, at Borrowers’ own cost and
expense, including such party’s reasonable counsel fees. Borrowers further agree
that until any such claim or demand is adjudicated in such party’s favor, the
amount demanded shall be deemed an Obligation of Borrowers under this Agreement.

9.8. Notices:

a. Any notices or consents required or permitted by this Agreement shall be in
writing and shall be deemed given if delivered in person to the person listed
below or by nationally recognized overnight courier, as follows, unless such
address is changed by written notice hereunder:

 

If to Lender to:   Capital One, N.A.,   1001 Avenue of the Americas   New York,
NY 10018   Attention: Brian Talty                    Senior Vice President

 

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With copies to Bank Counsel:   Moritt Hock Hamroff & Horowitz LLP   400 Garden
City Plaza, Ste. 202   Garden City, NY 11530   Attention: Marc L. Hamroff, Esq.
If to Borrower to:   CrystalTech Web Hosting, Inc.   1440 Broadway, 17th Floor  
New York, NY 10018   Attention: Barry S. Sloane   Chairman and Chief Executive
Officer   Newtek Small Business Finance, Inc.   1440 Broadway, 17th Floor   New
York, NY 10018   Attention: Peter Downs, President With copies to Borrower
Counsel:   Legal Department   Newtek Business Services, Inc.   1440 Broadway,
17th floor   New York, NY 10018

b. Any notice sent by Lender, or Borrower by any of the above methods shall be
deemed to be given when so received. Failure to send a copy to counsel shall not
invalidate any notice otherwise properly given.

c. All parties shall be fully entitled to rely upon any telecopy transmission or
other writing purported to be sent by any Authorized Officer (whether requesting
an Advance or otherwise) as being genuine and authorized.

9.9. Headings: The headings of any paragraph or Section of this Agreement are
for convenience only and shall not be used to interpret any provision of this
Agreement.

9.10. Survival: All warranties, representations, and covenants made by Borrowers
herein, or in any agreement referred to herein or on any certificate, document
or other instrument delivered by it or on its behalf under this Agreement, shall
be considered to have been relied upon by Lender, and shall survive the delivery
to Lender of the Notes, regardless of any investigation made by Lender or on its
behalf. All statements in any such certificate or other instrument prepared
and/or delivered for the benefit of Lender shall constitute warranties and
representations by Borrowers hereunder. Except as otherwise expressly provided
herein, all covenants made by Borrowers hereunder or under any other agreement
or instrument shall be deemed continuing until all Obligations are satisfied in
full. All indemnification obligations under this Agreement, including under
Section 6.5, 9.4 and 9.7, shall survive the termination of this Agreement and
payment of the Obligations for a period of two (2) years.

 

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9.11. Successors and Assigns: This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties. Borrowers may
not transfer, assign or delegate any of its duties or obligations hereunder.
Borrowers acknowledge and agree that Lender may at any time, and from time to
time, (a) sell participating interests in the Loans, and Lender’s rights
hereunder to other financial institutions, and (b) sell, transfer, or assign the
Loans and Lender’s rights hereunder, to any one or more additional banks or
financial institutions, subject (as to Lender’s rights under this clause (b)) to
Borrowers’ written consent, which consent shall not be unreasonably withheld;
provided that, no consent under this clause (b) shall be required if an Event of
Default exists at the time of such sale, transfer or assignment.

9.12. Duplicate Originals: Two or more duplicate originals of this Agreement may
be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.

9.13. Modification: No modification hereof or any agreement referred to herein
shall be binding or enforceable unless in writing and signed by both Borrowers
and Lender.

9.14. Signatories: Each individual signatory hereto represents and warrants that
he is duly authorized to execute this Agreement on behalf of his principal and
that he executes the Agreement in such capacity and not as a party.

9.15. Third Parties: No rights are intended to be created hereunder, or under
any related agreements or documents for the benefit of any third party donee,
creditor or incidental beneficiary of Borrowers. Nothing contained in this
Agreement shall be construed as a delegation to Lender of Borrowers’ duty of
performance, including, without limitation, Borrowers’ duties under any account
or contract with any other Person.

9.16. Discharge of Taxes, Borrower’s Obligations, Etc.: Lender, in its sole
discretion, shall have the right at any time, and from time to time, with at
least ten (10) days prior notice to Borrowers if Borrowers fail to do so, to:
(a) pay for the performance of any of either Borrower’s obligations hereunder,
and (b) discharge taxes or Liens, at any time levied or placed on either
Borrower’s Property in violation of this Agreement unless such Borrower is in
good faith with due diligence by appropriate proceedings contesting such taxes
or Liens and maintaining proper reserves therefor in accordance with GAAP.
Expenses and advances shall be added to the Term Loan, and bear interest at the
rate applicable to the Term Loan, until reimbursed to Lender. Such payments and
advances made by Lender shall not be construed as a waiver by Lender of a
Default or Event of Default under this Agreement.

9.17. Withholding and Other Tax Liabilities: In the event that any Lien,
assessment or tax liability against a Borrower shall arise in favor of any
taxing authority, whether or not notice thereof shall be filed or recorded as
may be required by law, Lender shall have the right (but shall not be obligated,
nor shall Lender hereby assume the duty) to pay any such Lien, assessment or tax
liability by virtue of which such charge shall have arisen; provided, however,
that Lender shall not pay any such tax, assessment or Lien if the amount,
applicability or validity thereof is being contested in good faith and by
appropriate proceedings by such Borrower. In order to pay any such Lien,
assessment or tax liability, Lender shall not be obliged to wait until such
lien, assessment or tax liability is filed before taking such action as
hereinabove set forth. Any sum or sums which Lender shall have paid for the
discharge of any such Lien shall be added to the Term Loans and shall be paid by
Borrower to Lender with interest thereon at the rate applicable to the Term
Loans, upon demand, and Lender shall be subrogated to all rights of such taxing
authority against Borrower.

 

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9.18. Consent to Jurisdiction: Borrower and Lender each hereby irrevocably
consent to the non-exclusive jurisdiction of the Courts of the state where
Lender’s office identified in Section 9.8 is located or the United States
District Court for the state where Lender’s office identified in Section 9.8 is
located in any and all actions and proceedings whether arising hereunder or
under any other agreement or undertaking. Borrowers waive any objection which
Borrowers may have based upon lack of personal jurisdiction, improper venue or
forum non conveniens. Borrowers irrevocably agree to service of process by
certified mail, return receipt requested to the address of the appropriate party
set forth herein.

9.19. Additional Documentation: Borrowers shall execute and/or re-execute, and
cause any Guarantor or other Person party to any Loan Document, to execute
and/or re-execute and to deliver to Lender or Lender’s counsel, as may be deemed
appropriate, any document or instrument signed in connection with this Agreement
which reflects manifest error in its drafting or incorrectly drafted and/or
signed, as well as any document or instrument which should have been signed at
or prior to the Closing, but which was not so signed and delivered. Borrowers
agree to comply with any written request by Lender within ten (10) days after
receipt by Borrowers of such request.

9.20. Advertisement:

i. Lender, in its sole discretion, shall have the right to announce and
publicize the financing established hereunder, as it deems appropriate, by means
and media selected by Lender. Such publication shall include all pertinent
information relating to such financing, including without limitation, the term,
purpose, pricing, loan amount, and name of Borrowers.

ii. The form and content of the published information shall be in the sole
discretion of Lender and shall be considered the sole and exclusive property of
Lender. All expenses related to publicizing the financing shall be the sole
responsibility of Lender.

9.21. Waiver of Jury Trial: BORROWERS AND LENDER EACH HEREBY WAIVE ANY AND ALL
RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING
OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT OF
ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY
PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE,
WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.

9.22. Consequential Damages: Neither Lender nor agent or attorney of Lender,
shall be liable for any consequential damages arising from any breach of
contract, tort or other wrong relating to the establishment, administration or
collection of the Obligations.

9.23. USA Patriot Act: Lender hereby notifies Borrowers that pursuant to the
requirements of USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), it is

 

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required to obtain, verify and record information that identifies Borrowers,
which information includes the name and address of Borrower and other
information that will allow Lender to identify Borrower in accordance with the
Act.

9.24. Joint and Several Obligations.

a. Borrowers is defined collectively to include all Persons constituting the
Borrowers; provided, however, that any references herein to “any Borrower”,
“each Borrower” or similar references, shall be construed as a reference to each
individual Person comprising the Borrowers. Each Person comprising Borrowers
shall be jointly and severally liable for all of the obligations of Borrowers
under this Agreement regardless of which of the Borrowers actually receives the
proceeds of the indebtedness governed hereby or the benefit of any other
extensions of credit hereunder or the benefit of any other extension of credit
under the Loan Documents, or the manner in which the Borrowers, the Lender
account therefor in their respective books and records. In addition, each entity
comprising Borrowers hereby acknowledges and agrees that all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in this Agreement shall be applicable to and shall be
binding upon and measured and enforceable individually against each Person
comprising Borrowers as well as all such Persons when taken together. By way of
illustration, but without limiting the generality of the foregoing, the terms of
Section 8.1 of this Agreement are to be applied to each individual Person
comprising the Borrowers (as well as to all such Persons taken as a whole), such
that the occurrence of any of the events described in Section 8.1 of this
Agreement as to any Person comprising the Borrowers shall constitute an Event of
Default even if such event has not occurred as to any other Persons comprising
the Borrowers or as to all such Persons taken as a whole (except as otherwise
expressly provided therein).

b. Each Borrower acknowledges that it will enjoy significant benefits from the
business conducted by the other Borrowers because of, inter alia, their combined
ability to bargain with other Persons including without limitation their ability
to receive the credit extensions under this Agreement and the other Loan
Documents on favorable terms granted by this Agreement and other Loan Documents
which would not have been available to an individual Borrower acting alone. Each
Borrower has determined that it is in its best interest to procure the credit
facilities contemplated hereunder, with the credit support of the other
Borrowers as contemplated by this Agreement and the other Loan Documents.

c. Lender has advised the Borrowers that it is unwilling to enter into this
Agreement and the other Loan Documents and make available the credit facilities
extended hereby to any Borrower unless each Borrower agrees, among other things,
to be jointly and severally liable for the due and proper payment of the
Obligations of each other Borrower under this Agreement and the other Loan
Documents. Each Borrower has determined that it is in its best interest and in
pursuit of its purposes that it so induce the Lender to extend credit pursuant
to this Agreement and the other documents executed in connection herewith
(i) because of the desirability to each Borrower of the credit facilities
hereunder and the interest rates and the modes of borrowing available hereunder,
(ii) because each Borrower requires access to funds under this Agreement for the
purposes herein set forth. Each Borrower, individually, expressly understands,
agrees and acknowledges, that the credit facilities contemplated hereunder would
not be made available on the terms herein in the absence of the collective
credit of all of the Persons constituting the Borrowers, the joint and several
liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons hereunder and under the Loan Documents. Accordingly, each
Borrower individually acknowledges that the benefit to each of the

 

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Persons comprising the Borrowers as a whole constitutes reasonably equivalent
value, regardless of the amount of the indebtedness actually borrowed by,
advanced to, or the amount of credit provided to, or the amount of collateral
provided by, any individual Borrower.

d. To the extent that applicable law otherwise would render the full amount of
the joint and several obligations of any Borrower hereunder and under the other
Loan Documents invalid or unenforceable, such Borrower’s obligations hereunder
and under the other Loan Documents shall be limited to the maximum amount which
does not result in such invalidity or unenforceability; provided, however, that
each Borrower’s obligations hereunder and under the other Loan Documents shall
be presumptively valid and enforceable to their fullest extent in accordance
with the terms hereof or thereof, as if this Section were not a part of this
Agreement.

e. To the extent that any Borrower shall make a payment under this Section of
all or any of the Obligations (other than credit facilities made to that
Borrower for which it is primarily liable) (a “Joint Liability Payment”) which,
taking into account all other Joint Liability Payments then previously or
concurrently made by any other Borrower, exceeds the amount which such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Joint Liability Payments in the same proportion that such
Borrower’s Allocable Amount (as defined below) (as determined immediately prior
to such Joint Liability Payments) bore to the aggregate Allocable Amounts of
each of the Borrowers as determined immediately prior to the making of such
Joint Liability Payments, then, following indefeasible payment in full in cash
of the Obligations and termination of the Commitments, such Borrower shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
Joint Liability Payments. As of any date of determination, the “Allocable
Amount” of any Borrower shall be equal to the maximum amount of the claim which
could then be recovered from such Borrower under this Section without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.

f. Lender is authorized, without notice or demand and without affecting the
liability of any Borrower hereunder, to, at any time and from time to time,
(i) renew, extend or otherwise increase the time for payment of the Obligations;
(ii) with the written agreement of any Borrower accelerate or otherwise change
the terms relating to the Obligations or otherwise modify, amend or change the
terms of any promissory note or other agreement, document or instrument now or
hereafter executed by any Borrower and delivered to Lender; (iii) accept partial
payments of the Obligations; (iv) take and hold security or collateral for the
payment of the Obligations or for the payment of any Guarantees of the
Obligations and exchange, enforce, waive and release any such security or
collateral; (v) apply such security or collateral and direct the order or manner
of sale thereof as Lender, in its sole discretion, may determine; and
(vi) settle, release, compromise, collect or otherwise liquidate the Obligations
and any security or collateral therefor in any manner, without affecting or
impairing the obligations of any Borrower. Except as specifically provided in
this Agreement or any of the other Loan Documents, Lender shall have the
exclusive right to determine the time and manner of application of any payments
or credits, whether received from any Borrower or any other source, and such
determination shall be binding on all Borrowers. All such payments and credits
may be applied, reversed and reapplied, in whole or in part, to any of the
Obligations as Lender shall determine in its sole discretion without affecting
the validity or enforceability of the Obligations of any other Borrower.

 

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g. Each Borrower hereby agrees that, except as hereinafter provided, its
obligations hereunder shall be unconditional, irrespective of (i) the absence of
any attempt to collect the Obligations from any obligor or other action to
enforce the same; (ii) the waiver or consent by Lender with respect to any
provision of any instrument evidencing the Obligations, or any part thereof, or
any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Lender; (iii) failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations; (iv) the institution of any proceeding under the
United States Bankruptcy Code, or any similar proceeding, by or against a
Borrower or any Lender’s election in any such proceeding of the application of
Section 1111(b)(2) of the United States Bankruptcy Code; (v) any borrowing or
grant of a security interest by a Borrower as debtor-in-possession, under
Section 364 of the United States Bankruptcy Code; (vi) the disallowance, under
Section 502 of the United States Bankruptcy Code, of all or any portion of
Lender’s claim(s) for repayment of any of the Obligations; or (vii) any other
circumstance other than payment in full of the Obligations which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.

h. Until all Obligations have been paid and satisfied in full, no payment made
by or for the account of a Borrower including, without limitation, (i) a payment
made by such Borrower on behalf of the liabilities of any other Borrower, or
(ii) a payment made by any other person under any Guarantee, shall entitle such
Borrower, by subrogation or otherwise, to any payment from any other Borrower or
from or out of any other Borrower’s property and such Borrower shall not
exercise any right or remedy against any other Borrower or any property of any
other Borrower by reason of any performance of such Borrower of its joint and
several obligations hereunder.

i. Any notice given by one Borrower hereunder shall constitute and be deemed to
be notice given by all Borrowers, jointly and severally. Notice given by Lender
to any one Borrower hereunder or pursuant to any Loan Documents in accordance
with the terms hereof or thereof shall constitute notice to each and every
Borrower. The knowledge of one Borrower shall be imputed to all Borrowers and
any consent by one Borrower shall constitute the consent of and shall bind all
Borrowers.

j. This Section is intended only to define the relative rights of Borrowers and
nothing set forth in this Section is intended to or shall impair the obligations
of Borrowers, jointly and severally, to pay any amounts as and when the same
shall become due and payable in accordance with the terms of this Agreement or
any other Loan Documents. Nothing contained in this Section shall limit the
liability of any Borrower to pay the credit facilities made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.

k. The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of each Borrower to which such
contribution and indemnification is owing. The rights of any indemnifying
Borrower against the other Borrowers under this Section shall be exercisable
upon the full and indefeasible payment of the Obligations and the termination of
the credit facilities hereunder.

l. Notwithstanding anything else herein to the contrary, the provisions of this
Section 9.24 are expressly limited such that NSBF shall not be deemed to jointly
and severally liable for the portion of the Obligations accruing solely and
exclusively under Term Loan B. The assets of NSBF are specifically not pledged
as security for Term Loan B or for the benefit of CrystalTech.

 

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9.25. Guarantor Provisions. Solely with respect to Term Loan A:

a. CrystalTech, as joint and several primary obligor of the Obligations directly
incurred by NSBF authorizes Lender, without giving notice to CrystalTech or
obtaining CrystalTech’s consent and without affecting the liability of NSBF,
from time to time to:

i. compromise, settle, renew, extend the time for payment, change the manner or
terms of payment, discharge the performance of, decline to enforce, or release
all or any of the Obligations; grant other indulgences to NSBF in respect
thereof; or modify in any manner any documents relating to the Obligations;

ii. declare all Obligations of CrystalTech due and payable upon the occurrence
and during the continuance of an Event of Default;

iii. take and hold security for the performance of the Obligations of NSBF and
exchange, enforce, waive and release any such security;

iv. subject to the Trust Agreement and the Multi-Party Agreement apply and
reapply such security and direct the order or manner of sale thereof as Lender,
in its sole discretion, may determine;

v. release, surrender or exchange any deposits or other property securing the
CrystalTech Obligations or on which Lender at any time may have a Lien; release,
substitute or add any one or more endorsers or guarantors of the Obligations of
NSBF or CrystalTech; or compromise, settle, renew, extend the time for payment,
discharge the performance of, decline to enforce, or release all or any
obligations of any such endorser or guarantor or other Person who is now or may
hereafter be liable on any Obligations or release, surrender or exchange any
deposits or other property of any such Person;

vi. apply Payments received by Lender from CrystalTech to any Obligations, in
such order as Lender shall determine, in its sole discretion; and

vii. assign this Agreement in whole or in part.

b. NSBF, as a primary obligor, and CrystalTech as joint and several obligor with
respect to the Obligations directly incurred by NSBF waives:

i. any defense based upon any legal disability or other defense of any other
Borrower, or by reason of the cessation or limitation of the liability of any
other Borrower from any cause (other than full payment of all Obligations),
including, without limitation, failure of consideration, breach of warranty,
statute of frauds, statute of limitations, accord and satisfaction, and usury;

ii. any defense based upon any legal disability or other defense of any other
guarantor or other Person;

 

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iii. any defense based upon any lack of authority of the officers, directors,
partners or agents acting or purporting to act on behalf of any other Borrower
or any principal of any other Borrower or any defect in the formation of any
other Borrower or any principal of any other Borrower;

iv. any defense based upon the application by any other Borrower of the proceeds
of the credit facilities for purposes other than the purposes represented by
such other Borrower to Lender or intended or understood by Lender or such
Borrower;

v. any defense based on such Borrower’s rights, under statute or otherwise, to
require Lender to sue any other Borrower or otherwise to exhaust its rights and
remedies against any other Borrower or any other Person or against any
collateral before seeking to enforce its right to require such Borrower to
satisfy the Obligations of any other Borrower;

vi. any defense based on Lender’s failure at any time to require strict
performance by any Borrower of any provision of the Loan Documents. Such
Borrower agrees that no such failure shall waive, alter or diminish any right of
Lender thereafter to demand strict compliance and performance therewith. Nothing
contained herein shall prevent Lender from foreclosing on any Lien, or
exercising any rights available to Lender thereunder, and the exercise of any
such rights shall not constitute a legal or equitable discharge of such
Borrower;

vii. any defense arising from any act or omission of Lender which changes the
scope of such Borrower’s risks hereunder;

viii. any defense based upon Lender’s election of any remedy against such
Borrower or any other Borrower or any of them; any defense based on the order in
which Lender enforces its remedies;

ix. any defense based on (A) Lender’s surrender, release, exchange,
substitution, dealing with or taking any additional collateral, (B) Lender’s
abstaining from taking advantage of or realizing upon any Lien or other
Guarantee, and (C) any impairment of collateral securing the Obligations,
including, without limitation, Lender’s failure to perfect or maintain a Lien in
such collateral;

x. any defense based upon Lender’s failure to disclose to such Borrower any
information concerning any other Borrower’s financial condition or any other
circumstances bearing on any other Borrower’s ability to pay the Obligations;

xi. any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;

xii. any defense based upon Lender’s election, in any proceeding instituted
under the Bankruptcy Code, of the application of Bankruptcy Code §1111(b)(2) or
any successor statute;

xiii. any defense based upon any borrowing or any grant of a security interest
under Bankruptcy Code §364;

 

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xiv. any defense based on Lender’s failure to be diligent or to satisfy any
other standard imposed on a secured party, in exercising rights with respect to
collateral securing the Obligations;

xv. except as otherwise expressly set forth herein: notice of acceptance hereof;
notice of the existence, creation or acquisition of any Obligation; notice of
any Event of Default; notice of the amount of the Obligations outstanding from
time to time; notice of any other fact which might increase such Borrower’s
risk; diligence; presentment; demand of payment; protest; filing of claims with
a court in the event of any other Borrower’s receivership or bankruptcy and all
other notices and demands to which such Borrower might otherwise be entitled
(and agrees the same shall not have to be made on the other Borrower as a
condition precedent to such Borrower’s obligations hereunder);

xvi. any defense based on errors and omissions by Lender in connection with its
administration of the credit facilities or the Loans except to the extent
constituting gross negligence or willful misconduct;

xvii. any defense based on application of fraudulent conveyance or transfer law
or shareholder distribution law to any of the Obligations or the security
therefor;

xviii. any defense based on Lender’s failure to seek relief from stay or
adequate protection in any other Borrower’s bankruptcy proceeding or any other
act or omission by and/or any Lender which impairs such Borrower’s prospective
subrogation rights;

xix. any defense based on legal prohibition of Lender’s acceleration of the
maturity of the Obligations during the occurrence of an Event of Default or any
other legal prohibition on enforcement of any other right or remedy of Lender
with respect to the Obligations and the security therefor; and

xx. any defense available to a surety under applicable law.

c. Each Borrower further agrees that its obligations hereunder shall not be
impaired in any manner whatsoever by any bankruptcy, extensions, moratoria or
other relief granted to any other Borrower pursuant to any statute presently in
force or hereafter enacted.

d. Each Borrower authorizes Lender to exercise, in its sole discretion, any
right, remedy or combination thereof which may then be available to Lender,
since it is such Borrower’s intent that the Obligations be absolute, independent
and unconditional obligations of such Borrower under all circumstances.
Notwithstanding any foreclosure of any Lien with respect to any or all of any
property securing the Obligations, whether by the exercise of the power of sale
contained therein, by an action for judicial foreclosure or by an acceptance of
a deed in lieu of foreclosure, each Borrower shall remain bound under such
Borrower’s Guarantee of the Obligations directly incurred by any other Borrower.
Notwithstanding anything else herein to the contrary, NSBF is not jointly and
severally liable for the obligation owing exclusively from any other Borrower.

 

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e. This Agreement is a primary and original obligation of each of the Borrowers
and each of the Borrowers shall be liable for all existing and future
Obligations of any other Borrower as fully as if such Obligations were directly
incurred by such Borrower.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement the day
and year first above written.

 

CRYSTALTECH WEB HOSTING, INC. By:  

/s/ Robert Cichon

Name: Robert Cichon Title: President NEWTEK SMALL BUSINESS FINANCE, INC. By:  

/s/ Peter Downs

Name: Peter Downs Title: President CAPITAL ONE, N.A., By:  

/s/ Brian Talty

Name: Brian Talty Title: Senior Vice President

 

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Schedule 2.5

Principal Payments

Term Loan A

Commencing on June 1, 2010, Borrowers will pay the Principal Amount in fifty
nine (59) consecutive monthly, principal payments of TWO HUNDRED EIGHT THOUSAND
THREE HUNDRED THIRTY THREE AND 33/100 DOLLARS ($208,333.33) with a final balloon
payment of all outstanding principal due on sixtieth (60th) month

Term Loan B

Commencing on June 1, 2010, Borrowers will pay the Principal Amount in fifty
nine (59) consecutive monthly, principal payments of THIRTY FOUR THOUSAND SEVEN
HUNDRED TWENTY TWO AND 22/100 DOLLARS ($34,722.22) with a final balloon payment
of all outstanding principal due on sixtieth (60th) month

 

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