Exhibit 10.1

FIRST LOAN MODIFICATION AGREEMENT (DOMESTIC)

This First Loan Modification Agreement (Domestic) (this “Loan Modification
Agreement”) is entered into as of the First Loan Modification Effective Date
(Domestic), by and between SILICON VALLEY BANK, a California corporation, with
its principal place of business at 3003 Tasman Drive, Santa Clara, California
95054 and with a loan production office located at 380 Interlocken Crescent,
Suite 600, Broomfield, Colorado 80021(“Bank”), STEREOTAXIS, INC., a Delaware
corporation (“Stereotaxis”), and STEREOTAXIS INTERNATIONAL, INC., a Delaware
limited liability company, each with offices located at 4320 Forest Park Avenue,
Suite 100, St. Louis, Missouri 63108 (“International”, and together with
Stereotaxis, individually and collectively, jointly and severally, “Borrower”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of March 11, 2009,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of March 11, 2009 (as may be amended from time to time, the “Loan Agreement”)
and a certain Export-Import Bank Loan and Security Agreement, dated as of
March 11, 2009 (as may be amended from time to time, the “EXIM Bank Loan and
Security Agreement”), in each case between Borrower and Bank. Capitalized terms
used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement and the EXIM Bank Loan and
Security Agreement (together with any other collateral security granted to Bank,
the “Security Documents”).

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

 

  A. Modifications to Loan Agreement.

 

  1 The Loan Agreement shall be amended by deleting the following text appearing
as Section 6.9(a) thereof in its entirety:

“(a) Tangible Net Worth. Borrower shall maintain a minimum Tangible Net Worth of
no less than (i) $1.00 for the monthly periods ending February 28, 2009 and
March 31, 2009; (ii) ($3,000,000) for the monthly periods ending April 30,
2009, May 31, 2009 and June 30, 2009; (iii) ($8,000,000) for the monthly periods
ending July 31, 2009 and August 31, 2009; (iv) ($6,500,000) for the monthly
period ending September 30, 2009; (v) ($11,000,000) for the monthly periods
ending October 31, 2009 and November 30, 2009; (vi) ($6,500,000) for the monthly
period ending December 31, 2009; (vii) ($12,000,000) for the monthly periods
ending January 31, 2010 and February 28, 2010; and (viii) ($8,000,000) for the
month ending March 31, 2010.”

and inserting in lieu thereof the following:

“(a) Tangible Net Worth. Borrower shall maintain a minimum Tangible Net Worth of
no less than (i) $1.00 for the monthly periods ending February 28, 2009 and
March 31, 2009; (ii) ($3,000,000) for the monthly periods ending April 30,
2009, May 31, 2009 and June 30, 2009; (iii) ($8,000,000) for the monthly periods
ending July 31, 2009 and August 31, 2009; (iv) ($6,500,000) for the monthly
period ending September 30, 2009; (v) $3,903,001for the monthly periods ending
October 31, 2009 through and including August 31, 2010; (vi) $1,903,000 for the
monthly periods ending September 30, 2010 through and including the monthly
period ending November 30, 2010; and (vii) ($97,000) for the monthly period
ending December 31, 2010 and each monthly period thereafter provided further,
than in the event that Guaranteed Advances

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are no longer available under the Guaranteed Line, the foregoing covenant levels
shall be adjusted by Bank, in its good faith business judgment. Such Tangible
Net Worth requirements set forth above shall be increased by fifty percent
(50%) of the net proceeds from issuances of equity securities of the Borrower
and/or Subordinated Debt issued after the First Loan Modification Effective Date
(Domestic).”

 

  2 The Loan Agreement shall be amended by inserting the following new
Section 7.11 immediately following Section 7.10 thereof:

“7.11 Mark-to-Market Warrant Expense. At any time, permit the aggregate
mark-to-market expense required in accordance with GAAP, with respect to any
outstanding warrants of the Borrower and its Subsidiaries, to exceed Four
Million Five Hundred Thousand Dollars ($4,500,000).”

 

  3 The Loan Agreement shall be amended by adding the following definitions to
Section 13.1 thereof, each in its appropriate alphabetical order:

“First Loan Modification Effective Date (Domestic)” is December     , 2009.”

 

  4 The Loan Agreement shall be amended by deleting the following definitions
from Section 13.1 thereof, each in its entirety:

““Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
aggregate of (X) the Borrowing Base plus (Y) the Guaranteed Line; minus (b) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit plus an amount equal to the Letter of Credit Reserves); minus
(c) the FX Reserve; minus (d) the outstanding principal balance of any Advances
(including any amounts used for Cash Management Services); minus (e) the
outstanding principal balance of any Guaranteed Advances. The aggregate amount
of all Credit Extensions (other than outstanding principal under the Equipment
Line) under this Agreement outstanding at any time, together with all
outstanding Advances (as defined in the EXIM Loan Agreement) under the EXIM Loan
Agreement outstanding at any time shall not exceed Twenty Five Million Dollars
($25,000,000).

“Revolving Line” is an Advance or Advances (including, without limitation,
Guaranteed Advances and Advances made pursuant to the EXIM Loan Agreement) in an
aggregate amount outstanding at any time under this Agreement and the EXIM Loan
Agreement of up to Twenty Five Million Dollars ($25,000,000).

“Revolving Line Maturity Date” is March 31, 2010.

“Streamline Period” is, on and after the Effective Date, the period
(i) beginning immediately after the forty-fifth (45th) consecutive day in which
the Borrower has, for each such consecutive day, maintained unrestricted cash at
Bank in an amount greater than the aggregate amount of all outstanding
Indebtedness, including, without limitation, all Credit Extensions, of Borrower
owed to Bank (the “Streamline Balance”), and (ii) ending on the first day
thereafter in which the Borrower does not maintain the Streamline Balance.

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower
and its Subsidiaries plus (a) Subordinated Debt plus (b) outstanding Guaranteed
Advances minus (c) any amounts attributable to (i) goodwill, (ii) intangible
items including unamortized debt discount and expense, patents, trade and
service marks and names, copyrights and capitalized research and development
expenses (except prepaid expenses), (iii) notes, accounts receivable and other

 

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obligations owing to Borrower from its officers or other Affiliates, and
(iv) reserves not already deducted from assets, minus (d) Total Liabilities plus
(e) any mark-to-market expense incurred in accordance with GAAP as a result of
mark-to-market adjustments of the value of warrants of the Borrower.”

and inserting in lieu thereof the following:

““Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
aggregate of (X) the Borrowing Base plus (Y) the Guaranteed Line; minus (b) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit plus an amount equal to the Letter of Credit Reserves); minus
(c) the FX Reserve; minus (d) the outstanding principal balance of any Advances
(including any amounts used for Cash Management Services); minus (e) the
outstanding principal balance of any Guaranteed Advances. The aggregate amount
of all Credit Extensions (other than outstanding principal under the Equipment
Line) under this Agreement outstanding at any time, together with all
outstanding Advances (as defined in the EXIM Loan Agreement) under the EXIM Loan
Agreement outstanding at any time shall not exceed Thirty Million Dollars
($30,000,000).

“Revolving Line” is an Advance or Advances (including, without limitation,
Guaranteed Advances and Advances made pursuant to the EXIM Loan Agreement) in an
aggregate amount outstanding at any time under this Agreement and the EXIM Loan
Agreement of up to Thirty Million Dollars ($30,000,000).

“Revolving Line Maturity Date” is March 31, 2011.

“Streamline Period” is, on and after the Effective Date, the period
(i) beginning immediately after the forty-fifth (45th) consecutive day in which
the Borrower has, for each such consecutive day, maintained unrestricted cash at
Bank, in an amount greater than the aggregate amount of all outstanding
Indebtedness, including all Credit Extensions of Borrower owed to Bank, other
than any outstanding Guaranteed Advances under the Guaranteed Line that are
secured by the Alafi Letter of Credit (the “Streamline Balance”), and
(ii) ending on the first day thereafter in which the Borrower does not maintain
the Streamline Balance. Borrower shall be required to maintain the Streamline
Balance for forty-five (45) consecutive days, in Bank’s reasonable business
judgment, prior to entering into a subsequent Streamline Period. Borrower shall
provide prior-written notice of its intention to enter into a Streamline Period.

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower
and its Subsidiaries plus (a) Subordinated Debt plus (b) outstanding Guaranteed
Advances minus (c) any amounts attributable to (i) goodwill, (ii) intangible
items including unamortized debt discount and expense, patents, trade and
service marks and names, copyrights and capitalized research and development
expenses (except prepaid expenses), (iii) notes, accounts receivable and other
obligations owing to Borrower from its officers or other Affiliates, and
(iv) reserves not already deducted from assets, minus (d) Total Liabilities plus
(e) up to Four Million Five Hundred Thousand Dollars ($4,500,000) of any
mark-to-market expense incurred in accordance with GAAP as a result of
mark-to-market adjustments of the value of warrants of the Borrower.”

 

  5 The Compliance Certificate attached as Exhibit B to the Loan Agreement is
hereby deleted and replaced with Exhibit A attached hereto.

4. FEES. Borrower shall pay to Bank a modification fee equal to Three Hundred
Seventy Five Thousand Dollars ($375,000), which fee shall be due on the date
hereof and shall be deemed fully earned as of the date hereof.

 

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Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.

5. CONDITIONS PRECEDENT. Borrower hereby agrees that the following documents
shall be delivered to the Bank prior to or concurrently with the First Loan
Modification Effective Date (Domestic), each in form and substance satisfactory
to the Bank (collectively, the “Conditions Precedent”):

 

  A. copies, certified by a duly authorized officer of the Borrower to be true
and complete as of the date hereof, of each of (i) the governing documents of
the Borrower as in effect on the date hereof (but only to the extent modified
since last delivered to the Bank (ii) the resolutions of the Borrower
authorizing the execution and delivery of this Loan Modification Agreement, the
other documents executed in connection herewith and the Borrower’s performance
of all of the transactions contemplated hereby, and (iii) an incumbency
certificate giving the name and bearing a specimen signature of each individual
who shall be so authorized;

 

  B. a certificate from the Secretary of State of the applicable State of
organization of a recent date as to the Borrower’s existence and good standing;

 

  C. the Export-Import Bank First Loan Modification Agreement, executed by each
Borrower, in form and substance acceptable to Bank, in its sole discretion;

 

  D. the Borrower Agreement (as defined in the EXIM Bank Loan and Security
Agreement), executed by each Borrower;

 

  E. an updated Economic Impact Certificate, executed by each Borrower;

 

  F. an updated Joint Application Form (EXIM), completed and executed by each
Borrower;

 

  G. a certain First Amendment to Promissory Note, executed by each Borrower, in
form and substance acceptable to Bank, in its sole discretion;

 

  H. a duly executed Landlord’s Consent from the landlord of the Borrower’s
leased premises located at 7351 Kirkwood Road, Maple Grove, Minnesota 55369, in
form and substance acceptable to Bank, in its sole discretion;

 

  I. duly executed Bailee’s Waivers from Pilot (Tiger Logistics) and Healthware
Europe BV, in form and substance acceptable to Bank, in its sole discretion; and

 

  J. updated property insurance and liability insurance certificates, in form
and substance acceptable to Bank, in its sole discretion.

6. ADDITIONAL COVENANTS. Borrower is not a party to, nor is bound by, any
license or other agreement with respect to which Borrower is the licensee
(a) that prohibits or otherwise restricts Borrower from granting a security
interest in Borrower’s interest in such license or agreement or any other
property, or (b) for which a default under or termination of could interfere
with the Bank’s right to sell any Collateral. Borrower shall provide written
notice to Bank within ten (10) days of entering or becoming bound by any such
license or agreement (other than over-the-counter software that is commercially
available to the public). Borrower shall take such steps as Bank requests to
obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for (x) all such licenses or contract rights to be deemed “Collateral”
and for Bank to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such license or agreement
(such consent or authorization may include a licensor’s agreement to a
contingent assignment of the license to Bank if Bank determines that is
necessary in its good faith judgment), whether now existing or entered into in
the future, and (y) Bank to have the ability in the event of a liquidation of
any Collateral to dispose of such Collateral in accordance with Bank’s rights
and remedies under the Loan Agreement and the other Loan Documents. In addition,
the Borrower hereby certifies that no Collateral is in the possession of any
third party bailee (such as at a warehouse). In the event that Borrower, after
the date hereof, intends to store or otherwise deliver the Collateral to such a
bailee,

 

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then Borrower shall first receive, the prior written consent of Bank and such
bailee must acknowledge in writing that the bailee is holding such Collateral
for the benefit of Bank.

7. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank’s interest
in the Collateral, including a notice that any disposition of the Collateral, by
either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.

8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

9. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.

10. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.

11. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

12. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this
Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to
Bank, a lien, security interest and right of set off as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank (including a Bank subsidiary) or in transit to
any of them. At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

13. CONFIDENTIALITY. Bank may use confidential information for the development
of databases, reporting purposes, and market analysis, so long as such
confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly permitted by Borrower. The provisions of the
immediately preceding sentence shall survive the termination of the Loan
Agreement.

14. JURISDICTION/VENUE/TRIAL WAIVER. Borrower accepts for itself and in
connection with its properties, unconditionally, the exclusive jurisdiction of
any state or federal court of competent jurisdiction in the State of Illinois in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement. NOTWITHSTANDING THE FOREGOING, THE
BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE THE BANK’S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY. TO THE EXTENT
PERMITTED BY APPLICABLE LAW,

 

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BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS LOAN MODIFICATION AGREEMENT, THE
LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH
OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH
PARTIES TO ENTER INTO THIS LOAN MODIFICATION AGREEMENT. EACH PARTY HAS REVIEWED
THIS WAIVER WITH ITS COUNSEL.

15. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as a sealed instrument under the laws of the State of Illinois as of the First
Loan Modification Effective Date (Domestic).

 

BORROWER: STEREOTAXIS, INC. By  

/s/ Daniel J. Johnston

Title:  

Daniel J. Johnston

Name:  

CFO

STEREOTAXIS INTERNATIONAL, INC. By  

/s/ Daniel J. Johnston

Name:  

Daniel J. Johnston

Title:  

CFO

BANK: SILICON VALLEY BANK By  

/s/ Adam Glick

Name:  

Adam Glick

Title:  

Relationship Manager

First Loan Modification Effective Date (Domestic): December 15, 2009

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EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO:           

 

SILICONVALLEY BANK

  Date:                     

FROM:    

 

STEREOTAXIS,INC. and STEREOTAXIS INTERNATIONAL, INC.

The undersigned authorized officer of StereoTaxis, Inc., a Delaware corporation
and StereoTaxis International, Inc. (collectively, jointly and severally, the
“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is
in complete compliance for the period ending                      with all
required covenants except as noted below, (2) there are no Events of Default,
(3) all representations and warranties in the Agreement are true and correct in
all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned certifies
that these are prepared in accordance with generally GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes. The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.

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

 

Reporting Covenant

  

Required

  

Complies

Monthly financial statements with Compliance Certificate    Monthly within 30
days    Yes         No Annual financial statement (CPA Audited) + CC    FYE
within 120 days    Yes         No 10-Q, 10-K and 8-K    Within 5 days after
filing with SEC    Yes         No

A/R & A/P Agings, Deferred Revenue and Inventory

Reports

   Monthly within 30 days    Yes         No Transaction Reports    Weekly,
within 5 days*    Yes         No Projections    Annually within 30 days prior to
FYE    Yes         No

 

* Monthly during a Streamline Period, within 5 days after the end of each month

The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)

 

  

 

Financial Covenant

  

Required

  

Actual

  

Complies

Maintain as indicated:

        

Minimum Tangible Net Worth** (tested monthly)

   $                 $                 Yes         No

 

** See Section 6.9 of the Loan Agreement

 

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The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

 

 

 

 

 

STEREOTAXIS, INC.     BANK USE ONLY STEREOTAXIS INTERNATIONAL, INC.            
Received by:  

 

By:  

 

      AUTHORIZED SIGNER Name:  

 

    Date:  

 

Title:  

 

            Verified:  

 

        AUTHORIZED SIGNER       Date:  

 

      Compliance Status:   Yes         No

 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:                     

I. Tangible Net Worth (Section 6.9(a))

Required: Borrower shall maintain a minimum Tangible Net Worth of no less than
(i) $1.00 for the monthly periods ending February 28, 2009 and March 31, 2009;
(ii) ($3,000,000) for the monthly periods ending April 30, 2009, May 31, 2009
and June 30, 2009; (iii) ($8,000,000) for the monthly periods ending July 31,
2009 and August 31, 2009; (iv) ($6,500,000) for the monthly period ending
September 30, 2009; (v) $3,903,001 for the monthly periods ending October 31,
2009 through and including August 31, 2010; (vi) $1,903,000 for the monthly
periods ending September 30, 2010 through and including the monthly period
ending November 30, 2010; and (vii) ($97,000) for the monthly period ending
December 31, 2010 and each monthly period thereafter provided further, than in
the event that Guaranteed Advances are no longer available under the Guaranteed
Line, the foregoing covenant levels shall be adjusted by Bank, in its good faith
business judgment. Such Tangible Net Worth requirements set forth above shall be
increased by fifty percent (50%) of the net proceeds from issuances of equity
securities of the Borrower and/or Subordinated Debt issued after the First Loan
Modification Effective Date (Domestic).

Actual:

 

A.

   Consolidated total assets of Borrower and its Subsidiaries    $             

B.

   Subordinated Debt    $             

C.

   Outstanding Guaranteed Advances    $             

D.

   Adjusted Assets [line A plus line B plus line C]    $             

E.

   Amounts attributable to Goodwill    $             

F.

   Intangible items including unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and capitalized research and
development expenses (except prepaid expenses)    $             

G.

   Notes, accounts receivable and other obligations owing to Borrower from its
officers or other Affiliates    $             

H.

   Reserves not already deducted from assets    $             

I.

   Intangible assets [line E plus line F plus line G plus line H]    $
            

J.

   Total Liabilities    $             

K.

   Up to $4,500,000 mark-to-market expense incurred in accordance with GAAP as a
result of mark-to-market adjustments of the value of Warrants of the Borrower   
$             

L.

   TANGIBLE NET WORTH [line D minus line I minus line J plus line K]    $
            

Is line L equal to or greater than (less than) $            ?

              No, not in compliance                                          
                                                      Yes, in compliance

 

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