LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of July 23, 2010
(the “Effective Date”) between SILICON VALLEY BANK, a California corporation
(“Bank”), and DERYCZ SCIENTIFIC, INC., a Nevada corporation, REPRINTS DESK,
INC., a Delaware corporation and POOLS PRESS, INC., an Illinois corporation
(each a “Borrower” and collectively “Borrowers”), provides the terms on which
Bank shall lend to Borrowers and Borrowers shall repay Bank.  The parties agree
as follows:
 
1           ACCOUNTING AND OTHER TERMS
 
Accounting terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following GAAP.  Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13.  All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.
 
2           LOAN AND TERMS OF PAYMENT
 
2.1        Promise to Pay.  Borrowers hereby unconditionally promise to pay Bank
the outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.
 
2.1.1     Revolving Advances.
 
(a)           Availability.  Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank shall make Advances not exceeding
the Availability Amount.  Amounts borrowed hereunder may be repaid and, prior to
the Revolving Line Maturity Date, reborrowed, subject to the applicable terms
and conditions precedent herein.
 
(b)           Termination; Repayment.  The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.
 
2.1.2     Letters of Credit Sublimit.
 
(a)           As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit denominated in Dollars or a Foreign Currency for a Borrower’s
account.  The aggregate Dollar Equivalent amount utilized for the issuance of
Letters of Credit shall at all times reduce the amount otherwise available for
Advances under the Revolving Line.  The aggregate Dollar Equivalent of the face
amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve) may not exceed the lesser of
(A) Five Hundred Thousand Dollars ($500,000), minus (i) the sum of all amounts
used for Cash Management Services, and minus (ii) the FX Reduction Amount, or
(B) the lesser of Revolving Line or the Borrowing Base, minus (i) the sum of all
outstanding principal amounts of any Advances (including any amounts used for
Cash Management Services), and minus (ii) the FX Reduction Amount.
 
(b)           If, on the Revolving Line Maturity Date (or the effective date of
any termination of this Agreement), there are any outstanding Letters of Credit,
then on such date Borrowers shall provide to Bank cash collateral in an amount
equal to one hundred ten percent (110%) of the Dollar Equivalent of the face
amount of all such Letters of Credit plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to such Letters of
Credit.  All Letters of Credit shall be in form and substance acceptable to Bank
in its sole discretion and shall be subject to the terms and conditions of
Bank’s standard Application and Letter of Credit Agreement (the “Letter of
Credit Application”).  Borrowers agree to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request.  Borrowers
further agree to be bound by the regulations and interpretations of the issuer
of any Letters of Credit guarantied by Bank and opened for a Borrower’s account
or by Bank’s interpretations of any Letter of Credit issued by Bank for a
Borrower’s account, and Borrowers understand and agree that Bank shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following a Borrower’s instructions or those contained in the Letters of
Credit or any modifications, amendments, or supplements thereto.
 

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(c)           The obligation of Borrowers to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
 
(d)           Borrowers may request that Bank issue a Letter of Credit payable
in a Foreign Currency.  If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrowers of the Dollar
Equivalent of the amount thereof (plus fees and charges in connection therewith
such as wire, cable, SWIFT or similar charges).
 
(e)           To guard against fluctuations in currency exchange rates, upon the
issuance of any Letter of Credit payable in a Foreign Currency, Bank shall
create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of
Credit.  The amount of the Letter of Credit Reserve may be adjusted by Bank from
time to time to account for fluctuations in the exchange rate.  The availability
of funds under the Revolving Line shall be reduced by the amount of such Letter
of Credit Reserve for as long as such Letter of Credit remains outstanding.
 
2.1.3     Foreign Exchange Sublimit.  As part of the Revolving Line, Borrowers
may enter into foreign exchange contracts with Bank under which a Borrower
commits to purchase from or sell to Bank a specific amount of Foreign Currency
(each, a “FX Forward Contract”) on a specified date (the “Settlement Date”).  FX
Forward Contracts shall have a Settlement Date of at least one (1) FX Business
Day after the contract date and shall be subject to a reserve of ten percent
(10%) of each outstanding FX Forward Contract (the “FX Reserve”).  The aggregate
amount of FX Forward Contracts at any one time may not exceed ten (10) times the
lesser of (A) Five Hundred Thousand Dollars ($500,000), minus (i) the sum of all
amounts used for Cash Management Services, and minus (ii) the Dollar Equivalent
of the face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve), or (B) the
lesser of Revolving Line or the Borrowing Base, minus (i) the sum of all
outstanding principal amounts of any Advances (including any amounts used for
Cash Management Services), and minus (ii) the Dollar Equivalent of the face
amount of any outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve).  The amount otherwise
available for Credit Extensions under the Revolving Line shall be reduced by an
amount equal to ten percent (10%) of each outstanding FX Forward Contract (the
“FX Reduction Amount”).  Any amounts needed to fully reimburse Bank for any
amounts not paid by Borrowers in connection with FX Forward Contracts will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.
 
2.1.4     Cash Management Services Sublimit.  Borrowers may use the Revolving
Line for Bank’s cash management services, which may include merchant services,
direct deposit of payroll, business credit card, and check cashing services
identified in Bank’s various cash management services agreements (collectively,
the “Cash Management Services”), in an aggregate amount not to exceed the lesser
of (A) Five Hundred Thousand Dollars ($500,000), minus (i) the Dollar Equivalent
of the face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve), and minus (ii)
the FX Reduction Amount, or (B) the lesser of Revolving Line or the Borrowing
Base, minus (i) the sum of all outstanding principal amounts of any Advances,
minus the Dollar Equivalent of the face amount of any outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve), and minus (iii) the FX Reduction Amount.  Any amounts Bank pays
on behalf of Borrowers for any Cash Management Services will be treated as
Advances under the Revolving Line and will accrue interest at the interest rate
applicable to Advances.
 
2.2        Overadvances.  If, at any time, the sum of (a) the outstanding
principal amount of any Advances (including any amounts used for Cash Management
Services), plus (b) the face amount of any outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of Credit
Reserve), plus (c) the FX Reduction Amount (such sum being an “Overadvance”)
exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrowers
shall immediately pay to Bank in cash such Overadvance.  Without limiting
Borrowers’ obligation to repay Bank any amount of the Overadvance, Borrowers
agree to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.
 
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2.3        Payment of Interest on the Credit Extensions.
 
(a)           Advances.  Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to (i) at all times when a Streamline Period is in effect, two
percentage points (2.00%) above the Prime Rate and (ii) at all times when a
Streamline Period is not in effect, four percentage points (4.00%) above the
Prime Rate, which interest shall, in either case, be payable monthly in
accordance with Section 2.3(f) below.
 
(b)           Default Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points (5.00%) above the rate that is
otherwise applicable thereto (the “Default Rate”) unless Bank otherwise elects
from time to time in its sole discretion to impose a smaller increase.  Fees and
expenses which are required to be paid by Borrowers pursuant to the Loan
Documents (including, without limitation, Bank Expenses) but are not paid when
due shall bear interest until paid at a rate equal to the highest rate
applicable to the Obligations.  Payment or acceptance of the increased interest
rate provided in this Section 2.3(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Bank.
 
(c)           Adjustment to Interest Rate.  Changes to the interest rate of any
Credit Extension based on changes to the Prime Rate shall be effective on the
effective date of any change to the Prime Rate and to the extent of any such
change.
 
(d)           Debit of Accounts.  Bank may debit any of Borrowers’ deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrowers owe Bank when due.  These debits shall
not constitute a set-off.
 
(e)           Lockbox; Account Collection Services.
 
(i)           Borrower shall direct each Account Debtor (and each depository
institution where proceeds of Accounts are on deposit) to remit payments with
respect to the Accounts to a lockbox account established with Bank or to wire
transfer payments to a cash collateral account that Bank controls (collectively,
the “Lockbox”).  It will be considered an immediate Event of Default if the
Lockbox is not set-up and operational within thirty (30) days of the Effective
Date.
 
(ii)           Provided no Event of Default exists or an event that with notice
or lapse of time will be an Event of Default, for so long as a Streamline Period
is not in effect, within three (3) Business Days of receipt of such amounts by
Bank, Bank will turn over to Borrower the proceeds of such collections, less any
amounts owing to Bank with respect to all outstanding Advances and all other
Obligations then due and owing.  Provided no Event of Default exists or an event
that with notice or lapse of time will be an Event of Default, for so long as a
Streamline Period is in effect, within three (3) Business Days of receipt of
such amounts by Bank, Bank will turn over to Borrower the proceeds of such
collections. This Section does not impose any affirmative duty on Bank to
perform any act other than as specifically set forth herein.
 
(f)           Payment; Interest Computation; Float Charge.  Interest is payable
monthly on the last calendar day of each month and shall be computed on the
basis of a 360-day year for the actual number of days elapsed.  In computing
interest, (i) all Payments received after 12:00 p.m. Pacific time on any day
shall be deemed received at the opening of business on the next Business Day,
and (ii) the date of the making of any Credit Extension shall be included and
the date of payment shall be excluded; provided, however, that if any Credit
Extension is repaid on the same day on which it is made, such day shall be
included in computing interest on such Credit Extension.  In addition, Bank
shall be entitled to charge Borrowers a “float” charge in an amount equal to
three (3) Business Days interest, at the interest rate applicable to the
Advances, if any Advances are outstanding, on all Payments received by
Bank.  Such float charge is not included in interest for purposes of computing
Minimum Monthly Interest (if any) under this Agreement.  The float charge for
each month shall be payable on the last day of the month.  Bank shall not,
however, be required to credit Borrowers’ account for the amount of any item of
payment which is unsatisfactory to Bank in its good faith business judgment, and
Bank may charge Borrowers’ Designated Deposit Account for the amount of any item
of payment which is returned to Bank unpaid.
 
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2.4        Fees.  Borrowers shall pay to Bank:
 
(a)           Commitment Fee.  A fully earned, non-refundable commitment fee of
Twenty Two Thousand Five Hundred Dollars ($22,500) on the Effective Date;
 
(b)           Letter of Credit Fee.  Bank’s customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance of such Letter of
Credit, each anniversary of the issuance during the term of such Letter of
Credit, and upon the renewal of such Letter of Credit by Bank;
 
(c)           Collateral Monitoring Fee.  A monthly collateral monitoring fee of
(i) One Thousand Dollars ($1,000) when a Streamline Period is in effect or (ii)
Two Thousand Five Hundred Dollars ($2,500) when a Streamline Period is not in
effect, in both cases, payable in arrears on the last day of each month
(prorated for any partial month at the beginning and upon termination of this
Agreement); and
 
(d)           Bank Expenses.  All Bank Expenses (including reasonable attorneys’
fees and expenses for documentation and negotiation of this Agreement) incurred
through and after the Effective Date, when due.  Bank shall notify Borrower if
Bank Expenses incurred through the Effective Date exceed Ten Thousand Dollars
($10,000).
 
2.5        Payments; Application of Payments.
 
(a)           All payments (including prepayments) to be made by Borrowers under
any Loan Document shall be made in immediately available funds in U.S. Dollars,
without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when
due.  Payments of principal and/or interest received after 12:00 p.m. Pacific
time are considered received at the opening of business on the next Business
Day.  When a payment is due on a day that is not a Business Day, the payment
shall be due the next Business Day, and additional fees or interest, as
applicable, shall continue to accrue until paid.
 
(b)           All payments with respect to the Obligations may be applied in
such order and manner as Bank shall determine in its sole discretion.  Borrowers
shall have no right to specify the order or the accounts to which Bank shall
allocate or apply any payments required to be made by Borrowers to Bank or
otherwise received by Bank under this Agreement when any such allocation or
application is not specified elsewhere in this Agreement.
 
3           CONDITIONS OF LOANS
 
3.1        Conditions Precedent to Initial Credit Extension.  Bank’s obligation
to make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation:
 
(a)           duly executed original signatures to the Loan Documents;
 
(b)           duly executed original signatures to the Control Agreement(s), if
any;
 
(c)           each Borrower’s Operating Documents and a good standing
certificate of each Borrower certified by the Secretary of State of the State of
Nevada, Delaware and/or Illinois (as applicable to each Borrower) as of a date
no earlier than thirty (30) days prior to the Effective Date;
 
(d)           duly executed original signatures to the completed Borrowing
Resolutions for each Borrower;
 
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(e)           certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;
 
(f)            the Perfection Certificate of each Borrower, together with the
duly executed original signatures thereto;
 
(g)           a landlord’s consent in favor of Bank for Borrowers’ Santa Monica
location by the respective landlord thereof, together with the duly executed
original signatures thereto;
 
(h)           evidence satisfactory to Bank that the insurance policies required
by Section 6.7 hereof are in full force and effect, together with appropriate
evidence showing lender loss payable and/or additional insured clauses or
endorsements in favor of Bank;
 
(i)            the completion of the Initial Audit with results satisfactory to
Bank in its sole and absolute discretion; and
 
(j)            payment of the fees and Bank Expenses then due as specified in
Section 2.4 hereof.
 
3.2        Conditions Precedent to all Credit Extensions.  Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following conditions precedent:
 
(a)           except as otherwise provided in Section 3.5(a), timely receipt of
an executed Transaction Report;
 
(b)           the representations and warranties in this Agreement shall be
true, accurate, and complete in all material respects on the date of the
Transaction Report and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension.  Each Credit Extension is each Borrower’s representation and warranty
on that date that the representations and warranties in this Agreement remain
true, accurate, and complete in all material respects; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; and
 
(c)           in Bank’s sole discretion, there has not been a Material Adverse
Change.
 
3.3        Intentionally Omitted.
 
3.4        Covenant to Deliver.
 
Borrowers agree to deliver to Bank each item required to be delivered to Bank
under this Agreement as a condition precedent to any Credit
Extension.  Borrowers expressly agree that a Credit Extension made prior to the
receipt by Bank of any such item shall not constitute a waiver by Bank of
Borrowers’ obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.
 
3.5        Procedures for Borrowing.  Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrowers shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the
Funding Date of the Advance.  Together with such notification, Borrowers must
promptly deliver to Bank by electronic mail or facsimile a completed Transaction
Report executed by a Responsible Officer or his or her designee.  Bank shall
credit Advances to the Designated Deposit Account.  Bank may make Advances under
this Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee.
 
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4           CREATION OF SECURITY INTEREST
 
4.1        Grant of Security Interest.  Each Borrower hereby grants Bank, to
secure the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Bank, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof.
 
4.2        Priority of Security Interest.  Each Borrower represents, warrants,
and covenants that the security interest granted herein is and shall at all
times continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens that may have superior priority to
Bank’s Lien under this Agreement).  If any Borrower shall acquire a commercial
tort claim, such Borrower shall promptly notify Bank in a writing signed by such
Borrower of the general details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to Bank.
 
If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrowers’ sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrowers.
 
4.3        Authorization to File Financing Statements.  Each Borrower hereby
authorizes Bank to file financing statements, without notice to such Borrower,
with all appropriate jurisdictions to perfect or protect Bank’s interest or
rights hereunder, including a notice that any disposition of the Collateral, by
either Borrower or any other Person, shall be deemed to violate the rights of
Bank under the Code.   Such financing statements may indicate the Collateral as
“all assets of the Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Bank’s discretion.
 
5           REPRESENTATIONS AND WARRANTIES
 
Each Borrower represents and warrants as follows:
 
5.1        Due Organization, Authorization; Power and Authority.  Borrower is
duly existing and in good standing as a Registered Organization in its
jurisdiction of formation and is qualified and licensed to do business and is in
good standing in any jurisdiction in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on
Borrower’s business.  In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and warrants to Bank that (a) Borrower’s
exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof; (b) Borrower is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational
identification number or accurately states that Borrower has none; (d) the
Perfection Certificate accurately sets forth Borrower’s place of business, or,
if more than one, its chief executive office as well as Borrower’s mailing
address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its
jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
each of its Subsidiaries is accurate and complete (it being understood and
agreed that Borrower may from time to time update certain information in the
Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement).  If Borrower is not now a
Registered Organization but later becomes one, Borrower shall promptly notify
Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.
 
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The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law, (iii)
contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect or (v) constitute an event of default under any material
agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could reasonably be expected to have a material adverse effect on Borrower’s
business.
 
5.2        Collateral.  Borrower has good title to, has rights in, and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens.  Borrower
has no deposit accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Bank in
connection herewith, or of which Borrower has given Bank notice and taken such
actions as are necessary to give Bank a perfected security interest
therein.  The Accounts are bona fide, existing obligations of the Account
Debtors.
 
The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate.  None of
the components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as permitted pursuant to Section 7.2.
 
All Inventory is in all material respects of good and marketable quality, free
from material defects.
 
Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) non-exclusive licenses granted to its customers
in the ordinary course of business, (b) over-the-counter software that is
commercially available to the public, and (c) material Intellectual Property
licensed to Borrower and noted on the Perfection Certificate.  Each Patent which
it owns or purports to own and which is material to Borrower’s business is valid
and enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  To the best of Borrower’s
knowledge, no claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such claim would not
reasonably be expected to have a material adverse effect on Borrower’s business.
 
Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is it bound by, any Restricted License.
 
5.3        Accounts Receivable.
 
(a)           For each Account with respect to which Advances are requested, on
the date each Advance is requested and made, such Account shall be an Eligible
Account.
 
(b)           All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Eligible Accounts are
and shall be true and correct and all such invoices, instruments and other
documents, and all of Borrower's Books are genuine and in all respects what they
purport to be.  Whether or not an Event of Default has occurred and is
continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s
security interest in such funds and verify the amount of such Eligible
Account.  All sales and other transactions underlying or giving rise to each
Eligible Account shall comply in all material respects with all applicable laws
and governmental rules and regulations.  Borrower has no knowledge of any actual
or imminent Insolvency Proceeding of any Account Debtor whose accounts are
Eligible Accounts in any Transaction Report.  To the best of Borrower’s
knowledge, all signatures and endorsements on all documents, instruments, and
agreements relating to all Eligible Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with
their terms.
 
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5.4        Litigation.  There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than Fifty Thousand Dollars
($50,000), individually or in the aggregate.
 
5.5        Financial Statements; Financial Condition.  All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations.  There has not been
any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
 
5.6        Solvency.  The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.
 
5.7        Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations X, T and U of the
Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Neither Borrower nor any of
its Subsidiaries is a “holding company” or an “affiliate” of a “holding company”
or a “subsidiary company” of a “holding company” as each term is defined and
used in the Public Utility Holding Company Act of 2005.  Borrower has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to have a material adverse effect on its business.  None of
Borrower’s or any of its Subsidiaries’ properties or assets has been used by
Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally.  Borrower and each of its Subsidiaries
have obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all Government
Authorities that are necessary to continue their respective businesses as
currently conducted.
 
5.8        Subsidiaries; Investments.  Borrower does not own any stock,
partnership interest or other equity securities except for Permitted
Investments.
 
5.9        Tax Returns and Payments; Pension Contributions.  Borrower 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.  Borrower may defer payment of any contested taxes, provided
that Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b)
notifies Bank in writing of the commencement of, and any material development
in, the proceedings, (c) posts bonds or takes any other steps required to
prevent the governmental authority levying such contested taxes from obtaining a
Lien upon any of the Collateral that is other than a “Permitted Lien”.  Borrower
is unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower.  Borrower has paid all amounts necessary to fund all present pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.
 
5.10      Use of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.
 
5.11      Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
 
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5.12      Definition of “Knowledge.”  For purposes of the Loan Documents,
whenever a representation or warranty is made to Borrower’s knowledge or
awareness, to the “best of” Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge, after
reasonable investigation, of the Responsible Officers.
 
6           AFFIRMATIVE COVENANTS
 
Borrowers shall do all of the following:
 
6.1        Government Compliance.
 
(a)           Maintain their and all their Subsidiaries’ legal existence and
good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on such Borrower’s
business or operations.  Borrowers shall comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject,
noncompliance with which could have a material adverse effect on a Borrower’s
business.
 
(b)           Obtain all of the Governmental Approvals necessary for the
performance by Borrowers of their obligations under the Loan Documents to which
it is a party and the grant of a security interest to Bank in all of its
property.  Borrowers shall promptly provide copies of any such obtained
Governmental Approvals to Bank.
 
6.2        Financial Statements, Reports, Certificates.  Provide Bank with the
following:
 
(a)           Weekly when a Streamline Period is not in effect, within twenty
(20) days after the last day of each month when a Streamline Period is in effect
and with each request for an Advance, a Transaction Report (and any schedules
related thereto);
 
(b)           within twenty (20) days after the end of each month, (A) monthly
accounts receivable agings, aged by invoice date, (B) monthly accounts payable
agings, aged by invoice date, and outstanding or held check registers, if any,
and (C) monthly reconciliations of accounts receivable agings (aged by invoice
date), transaction reports and general ledger.
 
(c)           as soon as available, but no later than thirty (30) days after the
last day of each month, a company prepared consolidated and consolidating
balance sheet and income statement covering Borrowers’ and each of their
Subsidiary’s operations for such month certified by a Responsible Officer and in
a form acceptable to Bank (the “Monthly Financial Statements”);
 
(d)           within thirty (30) days after the last day of each month and
together with the Monthly Financial Statements, a duly completed Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of
such month, Borrowers were in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance
with the financial covenants set forth in this Agreement and such other
information as Bank shall reasonably request, including, without limitation, a
statement that at the end of such month there were no held checks;
 
(e)           within thirty (30) days after the end of each fiscal year of
Borrowers (or more frequently as updated), (A) annual operating budgets
(including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower, and (B) annual financial projections
for the following fiscal year (on a quarterly basis) as approved by each
Borrower’s board of directors, together with any related business forecasts used
in the preparation of such annual financial projections; and
 
(f)           within five (5) days of filing, copies of all periodic and other
reports, proxy statements and other materials filed by such Borrower with the
SEC, any Governmental Authority succeeding to any or all of the functions of the
SEC or with any national securities exchange, or distributed to its
shareholders, as the case may be.  Documents required to be delivered pursuant
to the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which such
Borrower posts such documents, or provides a link thereto, on such Borrower’s
website on the Internet at such Borrower’s website address;
 
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(g)           within five (5) days of delivery, copies of all statements,
reports and notices made available to each Borrower’s security holders or to any
holders of Subordinated Debt;
 
(h)           prompt written notice of (i) any material change in the
composition of the Intellectual Property, (ii) the registration of any
copyright, including any subsequent ownership right of a Borrower in or to any
copyright, patent or trademark not shown in the IP Security Agreements or
previously disclosed in writing to Bank, and (iii) a Borrower’s knowledge of an
event that could reasonably be expected to materially and adversely affect the
value of the Intellectual Property;
 
(i)            prompt report of any legal actions pending or threatened in
writing against a Borrower or any of its Subsidiaries that could result in
damages or costs to a Borrower or any of its Subsidiaries of, individually or in
the aggregate, Fifty Thousand Dollars ($50,000) or more; and
 
(j)            other financial information reasonably requested by Bank.
 
6.3        Accounts Receivable.
 
(a)           Schedules and Documents Relating to Accounts. Borrowers shall
deliver to Bank transaction reports and schedules of collections, as provided in
Section 6.2, on Bank’s standard forms; provided, however, that Borrowers’
failure to execute and deliver the same shall not affect or limit Bank’s Lien
and other rights in all of Borrowers’ Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other
rights therein.  If requested by Bank, Borrowers shall furnish Bank with copies
(or, at Bank’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all shipping instructions, delivery receipts, bills of
lading, and other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts.  In addition, Borrowers shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary indorsements, and
copies of all credit memos.
 
(b)           Disputes.  Borrowers shall promptly notify Bank of all disputes or
claims relating to Accounts.  Borrowers may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do
any of the foregoing so long as (i) Borrowers do so in good faith, in a
commercially reasonable manner, in the ordinary course of business, in
arm’s-length transactions, and report the same to Bank in the regular reports
provided to Bank; (ii) no Event of Default has occurred and is continuing; and
(iii) after taking into account all such discounts, settlements and forgiveness,
the total outstanding Advances will not exceed the lesser of the Revolving Line
or the Borrowing Base.
 
(c)           Collection of Accounts.  Borrowers shall have the right to collect
all Accounts, unless and until an Event of Default has occurred and is
continuing.  Bank shall require that all proceeds of Accounts be deposited by
Borrowers into a lockbox account in accordance with Section 2.3(e) hereof, or
such other “blocked account” as specified by Bank, pursuant to a blocked account
agreement in such form as Bank may specify in its good faith business
judgment.  Whether or not an Event of Default has occurred and is continuing,
Borrowers shall immediately deliver all payments on and proceeds of Accounts to
an account maintained with Bank to be applied (i) prior to an Event of Default,
pursuant to the terms of Section 2.5(b) hereof, and (ii) after the occurrence
and during the continuance of an Event of Default, pursuant to the terms of
Section 9.4 hereof.
 
(d)           Returns.  Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to a Borrower, such
Borrower shall promptly (i) determine the reason for such return, (ii) issue a
credit memorandum to the Account Debtor in the appropriate amount, and (iii)
provide a copy of such credit memorandum to Bank, upon request from Bank.  In
the event any attempted return occurs after the occurrence and during the
continuance of any Event of Default, such Borrower shall promptly notify Bank of
the return of the Inventory.
 
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(e)           Verification.  Bank may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Accounts, either in the name of the relevant Borrower or Bank or such
other name as Bank may choose.
 
(f)           No Liability.  Bank shall not be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to an Account, or for any error,
act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Bank be
deemed to be responsible for any of Borrowers’ obligations under any contract or
agreement giving rise to an Account.  Nothing herein shall, however, relieve
Bank from liability for its own gross negligence or willful misconduct.
 
6.4        Remittance of Proceeds.  Except as otherwise provided in Section
6.3(c), deliver, in kind, all proceeds arising from the disposition of any
Collateral to Bank in the original form in which received by a Borrower not
later than the following Business Day after receipt by Borrower, to be applied
to the Obligations (a) prior to an Event of Default, pursuant to the terms of
Section 2.5(b) hereof, and (b) after the occurrence and during the continuance
of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided
that, if no Event of Default has occurred and is continuing, Borrowers shall not
be obligated to remit to Bank the proceeds of the sale of worn out or obsolete
Equipment disposed of by Borrowers in good faith in an arm’s length transaction
for an aggregate purchase price of $25,000 or less (for all such transactions in
any fiscal year).  Each Borrower agrees that it will maintain all proceeds of
Collateral in an account maintained with Bank.  Nothing in this Section limits
the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.
 
6.5        Taxes; Pensions.  Timely file, and require each of their Subsidiaries
to timely file, all required tax returns and reports and timely pay, and require
each of their Subsidiaries to timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrowers and each of
their Subsidiaries, except for deferred payment of any taxes contested pursuant
to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand,
appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.
 
6.6        Access to Collateral; Books and Records.  At reasonable times, on one
(1) Business Day’s notice (provided no notice is required if an Event of Default
has occurred and is continuing), Bank, or its agents, shall have the right to
inspect the Collateral and the right to audit and copy each Borrower’s
Books.  The foregoing inspections and audits shall be at Borrowers’ expense, and
the charge therefor shall be Eight Hundred Fifty Dollars ($850) per person per
day (or such higher amount as shall represent Bank’s then-current standard
charge for the same), plus reasonable out-of-pocket expenses.  In the event a
Borrower and Bank schedule an audit more than ten (10) days in advance, and such
Borrower cancels or seeks to reschedules the audit with less than ten (10) days
written notice to Bank, then (without limiting any of Bank’s rights or
remedies), Borrowers shall pay Bank a fee of One Thousand Dollars ($1,000) plus
any out-of-pocket expenses incurred by Bank to compensate Bank for the
anticipated costs and expenses of the cancellation or rescheduling.
 
6.7        Insurance.  Keep their businesses and the Collateral insured for
risks and in amounts standard for companies in Borrowers’ respective industries
and locations and as Bank may reasonably request.  Insurance policies shall be
in a form, with companies, and in amounts that are satisfactory to Bank.  All
property policies shall have a lender’s loss payable endorsement showing Bank as
lender loss payee and waive subrogation against Bank.  All liability policies
shall show, or have endorsements showing, Bank as an additional insured.  All
policies (or the loss payable and additional insured endorsements) shall provide
that the insurer shall give Bank at least twenty (20) days notice before
canceling, amending, or declining to renew its policy.  At Bank’s request,
Borrowers shall deliver certified copies of policies and evidence of all premium
payments.  Proceeds payable under any property policy shall, at Bank’s option,
be payable to Bank on account of the Obligations.  If a Borrower fails to obtain
insurance as required under this Section 6.7 or to pay any amount or furnish any
required proof of payment to third persons and Bank, Bank may make all or part
of such payment or obtain such insurance policies required in this Section 6.7,
and take any action under the policies Bank deems prudent.
 
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6.8        Operating Accounts.
 
(a)           Maintain their primary and their Subsidiaries’ primary operating
and other deposit accounts and securities accounts with Bank and Bank’s
Affiliates, which accounts shall represent at least eighty five percent (85%) of
the dollar value of Borrowers’ and such Subsidiaries accounts at all financial
institutions. 
 
(b)           Provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Bank or Bank’s Affiliates. For each Collateral Account that a
Borrower at any time maintains, such Borrower shall cause the applicable bank or
financial institution (other than Bank) at or with which any Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account in accordance with the terms hereunder which Control
Agreement may not be terminated without the prior written consent of Bank.  The
provisions of the previous sentence shall not apply to deposit accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of a Borrower’s employees and identified to Bank
by such Borrower as such.
 
6.9        Financial Covenants.
 
Maintain at all times, to be tested as of the last day of each month, unless
otherwise noted, on a consolidated basis with respect to Borrowers:
 
(a)           Quick Ratio.  A ratio of Quick Assets to Current Liabilities of at
least 0.80 to 1.0.
 
(b)           Tangible Net Worth.  A Tangible Net Worth of at least One Million
Five Hundred Thousand Dollars ($1,500,000) increasing by fifty percent (50%) of
issuances of equity after the Effective Date.
 
6.10      Protection and Registration of Intellectual Property Rights.
 
(a)           (i) Protect, defend and maintain the validity and enforceability
of its Intellectual Property; (ii) promptly advise Bank in writing of material
infringements of its Intellectual Property; and (iii) not allow any Intellectual
Property material to a Borrower’s business to be abandoned, forfeited or
dedicated to the public without Bank’s written consent.
 
(b)           If a Borrower (i) obtains any Patent, registered Trademark,
registered Copyright, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for
any Patent or the registration of any Trademark, then such Borrower shall
immediately provide written notice thereof to Bank and shall execute such
intellectual property security agreements and other documents and take such
other actions as Bank shall request in its good faith business judgment to
perfect and maintain a first priority perfected security interest in favor of
Bank in such property.  If a Borrower decides to register any Copyrights or mask
works in the United States Copyright Office, such Borrower shall: (x) provide
Bank with at least fifteen (15) days prior written notice of such Borrower’s
intent to register such Copyrights or mask works together with a copy of the
application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as Bank may
request in its good faith business judgment to perfect and maintain a first
priority perfected security interest in favor of Bank in the Copyrights or mask
works intended to be registered with the United States Copyright Office; and (z)
record such intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the Copyright or mask work
application(s) with the United States Copyright Office.  Each Borrower shall
promptly provide to Bank copies of all applications that it files for Patents or
for the registration of Trademarks, Copyrights or mask works, together with
evidence of the recording of the intellectual property security agreement
necessary for Bank to perfect and maintain a first priority perfected security
interest in such property.
 
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(c)           Provide written notice to Bank within thirty (30) days of entering
or becoming bound by any Restricted License (other than over-the-counter
software that is commercially available to the public).  Borrowers shall take
such steps as Bank requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for (i) any Restricted License 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 Restricted
License, whether now existing or entered into in the future, and (ii) 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 this
Agreement and the other Loan Documents.
 
6.11      Litigation Cooperation.  From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to
Bank, Borrowers and their officers, employees and agents and each Borrower's
books and records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to a Borrower.
 
6.12      Formation or Acquisition of Subsidiaries.  At the time that a Borrower
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Effective Date, such Borrower shall (a) cause such new
Subsidiary to provide to Bank a joinder to the Loan Agreement to cause such
Subsidiary to become a co-borrower hereunder, together with such appropriate
financing statements and/or Control Agreements, all in form and substance
satisfactory to Bank (including being sufficient to grant Bank a first priority
Lien (subject to Permitted Liens) in and to the assets of such newly formed or
acquired Subsidiary), (b) provide to Bank appropriate certificates and powers
and financing statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory to Bank, and
(c) provide to Bank all other documentation in form and substance satisfactory
to Bank which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above.  Any document,
agreement, or instrument executed or issued pursuant to this Section 6.12 shall
be a Loan Document.
 
6.13      Further Assurances.  Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement.  Deliver to Bank, within
five (5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrowers or any of
their Subsidiaries.
 
7           NEGATIVE COVENANTS
 
Borrowers shall not do any of the following without Bank’s prior written
consent:
 
7.1        Dispositions.  Convey, sell, lease, transfer, assign, or otherwise
dispose of (collectively, “Transfer”), or permit any of their Subsidiaries to
Transfer, all or any part of their businesses or property, except for Transfers
(a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) in connection with Permitted Liens and Permitted Investments.
 
7.2        Changes in Business, Management, Control, or Business Locations.  (a)
Engage in or permit any of their Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrowers and their Subsidiaries, as
applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i)
have a change in senior management; or (ii) enter into any transaction or series
of related transactions in which the stockholders of a Borrower who were not
stockholders immediately prior to the first such transaction own more than forty
percent (40%) of the voting stock of such Borrower immediately after giving
effect to such transaction or related series of such transactions (other than by
the sale of such Borrower’s equity securities in a public offering or to venture
capital investors so long as such Borrower identifies to Bank the venture
capital investors prior to the closing of the transaction and provides to Bank a
description of the material terms of the transaction).
 
No Borrower shall, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Ten Thousand
Dollars ($10,000) in such Borrower’s assets or property) or deliver any portion
of the Collateral valued, individually or in the aggregate, in excess of Ten
Thousand Dollars ($10,000) to a bailee at a location other than to a bailee and
at a location already disclosed in the Perfection Certificate, (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.  If Borrower intends to deliver
any portion of the Collateral valued, individually or in the aggregate, in
excess of Ten Thousand Dollars ($10,000) to a bailee, and Bank and such bailee
are not already parties to a bailee agreement governing both the Collateral and
the location to which Borrower intends to deliver the Collateral, then Borrower
will first receive the written consent of Bank, and such bailee shall execute
and deliver a bailee agreement in form and substance satisfactory to Bank in its
sole discretion.
 
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7.3        Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person except where (a) total cash
consideration for all such transactions does not in the aggregate exceed Five
Hundred Thousand Dollars ($500,000) during the term of this Agreement; (b) no
Event of Default has occurred and is continuing or would exist after giving
effect to the transactions; and (c) a Borrower is the surviving legal entity.  A
Subsidiary may merge or consolidate into another Subsidiary or into a Borrower.
 
7.4        Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
 
7.5        Encumbrance.  Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting any Borrower
or any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of a Borrower’s or any Subsidiary’s
Intellectual Property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Liens” herein.
 
7.6        Maintenance of Collateral Accounts.  Maintain any Collateral Account
except pursuant to the terms of Section 6.8(b) hereof.
 
7.7        Distributions; Investments.  (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock provided
that (i) a Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or otherwise in
exchange thereof, (ii) a Borrower may pay dividends solely in common stock; and
(iii) a Borrower may repurchase the stock of former employees or consultants
pursuant to stock repurchase agreements so long as an Event of Default does not
exist at the time of such repurchase and would not exist after giving effect to
such repurchase, provided such repurchase does not exceed in the aggregate Fifty
Thousand Dollars ($50,000) per fiscal year; or (b) directly or indirectly make
any Investment other than Permitted Investments, or permit any of its
Subsidiaries to do so.
 
7.8        Transactions with Affiliates.  Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of a Borrower,
except for transactions that are in the ordinary course of a Borrower’s
business, upon fair and reasonable terms that are no less favorable to such
Borrower than would be obtained in an arm’s length transaction with a
non-affiliated Person.
 
7.9        Subordinated Debt.  (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b)
amend any provision in any document relating to the Subordinated Debt which
would increase the amount thereof or adversely affect the subordination thereof
to Obligations owed to Bank.
 
7.10      Compliance.  Become an “investment company” or a company controlled by
an “investment company”, under the Investment Company Act of 1940, as amended,
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on a Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of a
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.
 
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8           EVENTS OF DEFAULT
 
Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:
 
8.1        Payment Default.  Borrowers fail to (a) make any payment of principal
or interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day cure period shall not apply to payments
due on the Revolving Line Maturity Date).  During the cure period, the failure
to make or pay any payment specified under clause (a) or (b) hereunder is not an
Event of Default (but no Credit Extension will be made during the cure period);
 
8.2        Covenant Default.
 
(a)           Borrowers fail or neglect to perform any obligation in Sections
6.2, 6.5, 6.7, 6.8, 6.9, 6.10(c) or 6.12 or violate any covenant in Section 7;
or
 
(b)           Borrowers fail or neglect to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement or
any Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, have failed to cure the default within ten (10) days after
the occurrence thereof; provided, however, that if the default cannot by its
nature be cured within the ten (10) day period or cannot after diligent attempts
by Borrowers be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrowers shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure
to cure the default shall not be deemed an Event of Default (but no Credit
Extensions shall be made during such cure period).  Cure periods provided under
this section shall not apply, among other things, to financial covenants or any
other covenants set forth in clause (a) above;
 
8.3        Material Adverse Change.  A Material Adverse Change occurs;
 
8.4        Attachment; Levy; Restraint on Business.
 
(a)           (i) The service of process seeking to attach, by trustee or
similar process, any funds of a Borrower or of any entity under the control of a
Borrower (including a Subsidiary) on deposit or otherwise maintained with Bank
or any Bank Affiliate, or (ii) a notice of lien or levy is filed against any of
a Borrower’s assets by any government agency, and the same under subclauses (i)
and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; or
 
(b)           (i) any material portion of a Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or (ii)
any court order enjoins, restrains, or prevents a Borrower from conducting any
material part of its business;
 
8.5        Insolvency.  (a) A Borrower is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b) a Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against a Borrower and not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);
 
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8.6        Other Agreements.  There is, under any agreement to which any
Borrower is a party with a third party or parties, (a) any default resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount individually or in the aggregate
in excess of Fifty Thousand Dollars ($50,000); or (b) any default by such
Borrower, the result of which could have a material adverse effect on such
Borrower’s business;
 
8.7        Judgments.  One or more final judgments, orders, or decrees for the
payment of money in an amount, individually or in the aggregate, of at least
Fifty Thousand Dollars ($50,000) (not covered by independent third-party
insurance as to which liability has been accepted by such insurance carrier)
shall be rendered against a Borrower and the same are not, within ten (10) days
after the entry thereof, discharged or execution thereof stayed or bonded
pending appeal, or such judgments are not discharged prior to the expiration of
any such stay (provided that no Credit Extensions will be made prior to the
discharge, stay, or bonding of such judgment, order, or decree);
 
8.8        Misrepresentations.  Any Borrower or any Person acting for a Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;
 
8.9        Subordinated Debt.  Any document, instrument, or agreement evidencing
any Subordinated Debt shall for any reason be revoked or invalidated or
otherwise cease to be in full force and effect, any Person shall be in breach
thereof or contest in any manner the validity or enforceability thereof or deny
that it has any further liability or obligation thereunder, or the Obligations
shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement or the applicable Subordination Agreement; or
 
8.10      Governmental Approvals.  Any Governmental Approval shall have been (a)
revoked, rescinded, suspended, modified in an adverse manner or not renewed in
the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of a
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of a Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.
 
9           BANK’S RIGHTS AND REMEDIES
 
9.1        Rights and Remedies.  While an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
 
(a)           declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
 
(b)           stop advancing money or extending credit for Borrowers’ benefit
under this Agreement or under any other agreement between Borrowers and Bank;
 
(c)           demand that Borrowers (i) deposit cash with Bank in an amount
equal to one hundred ten percent (110%) of the Dollar Equivalent of the
aggregate face amount of all Letters of Credit remaining undrawn (plus all
interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment)), to secure all of the
Obligations relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and Borrowers
shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter
of credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;
 
(d)           terminate any FX Forward Contracts;
 
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(e)           settle or adjust disputes and claims directly with Account Debtors
for amounts on terms and in any order that Bank considers advisable, notify any
Person owing a Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;
 
(f)            make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral.  Borrowers shall assemble the Collateral if Bank requests and make
it available as Bank designates.  Bank may enter premises where the Collateral
is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Each Borrower grants
Bank a license to enter and occupy any of its premises, without charge, to
exercise any of Bank’s rights or remedies;
 
(g)           apply to the Obligations any (i) balances and deposits of a
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of a Borrower;
 
(h)           ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, a
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, a Borrower’s rights under all
licenses and all franchise agreements inure to Bank’s benefit;
 
(i)            place a “hold” on any account maintained with Bank and/or deliver
a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;
 
(j)            demand and receive possession of each Borrower’s Books; and
 
(k)           exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).
 
9.2        Power of Attorney.  Each Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse such Borrower’s name on any
checks or other forms of payment or security; (b) sign such Borrower’s name on
any invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under such Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of Bank or a third party as the Code permits.  Each Borrower
hereby appoints Bank as its lawful attorney-in-fact to sign such Borrower’s name
on any documents necessary to perfect or continue the perfection of Bank’s
security interest in the Collateral regardless of whether an Event of Default
has occurred until all Obligations have been satisfied in full and Bank is under
no further obligation to make Credit Extensions hereunder.  Bank’s foregoing
appointment as each Borrower’s attorney in fact, and all of Bank’s rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.
 
9.3        Protective Payments.  If a Borrower fails to obtain the insurance
called for by Section 6.7 or fails to pay any premium thereon or fails to pay
any other amount which such Borrower is obligated to pay under this Agreement or
any other Loan Document, Bank may obtain such insurance or make such payment,
and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest rate applicable to the
Obligations, and secured by the Collateral.  Bank will make reasonable efforts
to provide Borrowers with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter.  No payments by Bank are
deemed an agreement to make similar payments in the future or Bank’s waiver of
any Event of Default.
 
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9.4        Application of Payments and Proceeds.  If an Event of Default has
occurred and is continuing, Bank may apply any funds in its possession, whether
from Borrower account balances, payments, proceeds realized as the result of any
collection of Accounts or other disposition of the Collateral, or otherwise, to
the Obligations in such order as Bank shall determine in its sole
discretion.  Any surplus shall be paid to Borrowers by credit to the Designated
Deposit Account or to other Persons legally entitled thereto; Borrowers shall
remain liable to Bank for any deficiency.  If Bank, in its good faith business
judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the
option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor.
 
9.5        Bank’s Liability for Collateral.  So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person.  Borrowers bear
all risk of loss, damage or destruction of the Collateral.
 
9.6        No Waiver; Remedies Cumulative.  Bank’s failure, at any time or
times, to require strict performance by Borrowers of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith.  No waiver hereunder shall be effective unless signed by the party
granting the waiver and then is only effective for the specific instance and
purpose for which it is given.  Bank’s rights and remedies under this Agreement
and the other Loan Documents are cumulative.  Bank has all rights and remedies
provided under the Code, by law, or in equity.  Bank’s exercise of one right or
remedy is not an election and shall not preclude Bank from exercising any other
remedy under this Agreement or other remedy available at law or in equity, and
Bank’s waiver of any Event of Default is not a continuing waiver.  Bank’s delay
in exercising any remedy is not a waiver, election, or acquiescence.
 
9.7        Demand Waiver.  Each Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which such
Borrower is liable.
 
10         NOTICES
 
All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or any Borrower may change its mailing or electronic mail address
or facsimile number by giving the other party written notice thereof in
accordance with the terms of this Section 10.
 
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If to Borrowers:
 
DERYCZ SCIENTIFIC, INC., on behalf of all Borrower
   
1524 Cloverfield Blvd., Suite E
   
Santa Monica, CA 90404
   
Attn:  General Counsel
   
Fax:  323/446-8490
   
Email: rmckilligan@reprintsdesk.com
     
If to Bank:
 
Silicon Valley Bank
   
38 Technology Drive West, Suite 150
   
Irvine CA 92618-5313
   
Attn: Brian Lowry
   
Fax:  949-790-9028
   
Email: blowry@svb.com

 
11         CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
 
California law governs the Loan Documents without regard to principles of
conflicts of law.  Borrowers and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank.  Each Borrower
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and each Borrower hereby waives any objection
that it may have based upon lack of personal jurisdiction, improper venue, or
forum non conveniens and hereby consents to the granting of such legal or
equitable relief as is deemed appropriate by such court.  Each Borrower hereby
waives personal service of the summons, complaints, and other process issued in
such action or suit and agrees that service of such summons, complaints, and
other process may be made by registered or certified mail addressed to such
Borrower at the address set forth in, or subsequently provided by such Borrower
in accordance with, Section 10 of this Agreement and that service so made shall
be deemed completed upon the earlier to occur of a Borrower’s actual receipt
thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid.
 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS 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 AGREEMENT.  EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
 
WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure Sec.Sec. 638 through 645.1, inclusive.  The private judge shall have
the power, among others, to grant provisional relief, including without
limitation, entering temporary restraining orders, issuing preliminary and
permanent injunctions and appointing receivers.  All such proceedings shall be
closed to the public and confidential and all records relating thereto shall be
permanently sealed.  If during the course of any dispute, a party desires to
seek provisional relief, but a judge has not been appointed at that point
pursuant to the judicial reference procedures, then such party may apply to the
Santa Clara County, California Superior Court for such relief.  The proceeding
before the private judge shall be conducted in the same manner as it would be
before a court under the rules of evidence applicable to judicial
proceedings.  The parties shall be entitled to discovery which shall be
conducted in the same manner as it would be before a court under the rules of
discovery applicable to judicial proceedings.  The private judge shall oversee
discovery and may enforce all discovery rules and orders applicable to judicial
proceedings in the same manner as a trial court judge.  The parties agree that
the selected or appointed private judge shall have the power to decide all
issues in the action or proceeding, whether of fact or of law, and shall report
a statement of decision thereon pursuant to California Code of Civil Procedure
Sec. 644(a).  Nothing in this paragraph shall limit the right of any party at
any time to exercise self-help remedies, foreclose against collateral, or obtain
provisional remedies.  The private judge shall also determine all issues
relating to the applicability, interpretation, and enforceability of this
paragraph.
 
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12         GENERAL PROVISIONS
 
12.1      Termination Prior to Revolving Line Maturity Date.  This Agreement may
be terminated prior to the Revolving Line Maturity Date by Borrowers, effective
three (3) Business Days after written notice of termination is given to
Bank.  Notwithstanding any such termination, Bank’s lien and security interest
in the Collateral shall continue until Borrowers fully satisfy their
Obligations.
 
12.2      Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrowers may not assign
this Agreement or any rights or obligations under it without Bank’s prior
written consent (which may be granted or withheld in Bank’s discretion).  Bank
has the right, without the consent of or notice to Borrowers, to sell, transfer,
assign, negotiate, or grant participation in all or any part of, or any interest
in, Bank’s obligations, rights, and benefits under this Agreement and the other
Loan Documents.
 
12.3      Indemnification.  Borrowers agree to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against:  (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
(including Bank Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Bank and Borrowers (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such
Indemnified Person’s gross negligence or willful misconduct.
 
12.4      Time of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.
 
12.5      Severability of Provisions.  Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
 
12.6      Correction of Loan Documents.  Bank may correct patent errors and fill
in any blanks in the Loan Documents consistent with the agreement of the parties
so long as Bank provides Borrowers with written notice of such correction and
allows Borrowers at least ten (10) days to object to such correction.  In the
event of such objection, such correction shall not be made except by an
amendment signed by both Bank and Borrowers.
 
12.7      Amendments in Writing; Waiver; Integration.  No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any
obligation under any Loan Document, shall be enforceable or admissible unless,
and only to the extent, expressly set forth in a writing signed by the party
against which enforcement or admission is sought.  Without limiting the
generality of the foregoing, no oral promise or statement, nor any action,
inaction, delay, failure to require performance or course of conduct shall
operate as, or evidence, an amendment, supplement or waiver or have any other
effect on any Loan Document.  Any waiver granted shall be limited to the
specific circumstance expressly described in it, and shall not apply to any
subsequent or other circumstance, whether similar or dissimilar, or give rise
to, or evidence, any obligation or commitment to grant any further waiver.  The
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of the Loan Documents merge into the Loan
Documents.
 
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12.8      Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute
one Agreement.
 
12.9      Survival.  All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied.  The obligation of Borrowers in Section 12.3 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.
 
12.10   Confidentiality.  In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use its best
efforts to obtain any prospective transferee’s or purchaser’s agreement to the
terms of this provision; (c) as required by law, regulation, subpoena, or other
order; (d) to Bank’s regulators or as otherwise required in connection with
Bank’s examination or audit; (e) as Bank considers appropriate in exercising
remedies under the Loan Documents; and (f) to third-party service providers of
Bank so long as such service providers have executed a confidentiality agreement
with Bank with terms no less restrictive than those contained
herein.  Confidential information does not include information that is either:
(i) in the public domain or in Bank’s possession when disclosed to Bank, or
becomes part of the public domain after disclosure to Bank; or (ii) disclosed to
Bank by a third party, if Bank does not know that the third party is prohibited
from disclosing the information.
 
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 Borrowers.  The provisions of the immediately preceding sentence
shall survive the termination of this Agreement.
 
12.11   Attorneys’ Fees, Costs and Expenses.  In any action or proceeding
between Borrowers and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.
 
12.12   Electronic Execution of Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.
 
12.13   Captions.  The headings used in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.
 
12.14   Construction of Agreement.  The parties mutually acknowledge that they
and their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.
 
12.15   Relationship.  The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement.  The parties do not
intend to create any agency, partnership, joint venture, trust, fiduciary or
other relationship with duties or incidents different from those of parties to
an arm’s-length contract.
 
12.16   Third Parties.  Nothing in this Agreement, whether express or implied,
is intended to: (a) confer any benefits, rights or remedies under or by reason
of this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.
 
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13         DEFINITIONS
 
13.1      Definitions.  As used in the Loan Documents, the word “shall” is
mandatory, the word “may” is permissive, the word “or” is not exclusive, the
words “includes” and “including” are not limiting, the singular includes the
plural, and numbers denoting amounts that are set off in brackets are
negative.  As used in this Agreement, the following capitalized terms have the
following meanings:
 
“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to a Borrower.
 
“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.
 
“Advance” or “Advances” means an advance (or advances) under the Revolving Line.
 
“Affiliate” is, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.
 
“Agreement” is defined in the preamble hereof.
 
“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
amount available under the Borrowing Base minus (b) the Dollar Equivalent amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the
FX Reduction Amount, minus (d) any amounts used for Cash Management Services,
and minus (e) the outstanding principal balance of any Advances.
 
“Bank” is defined in the preamble hereof.
 
“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrowers.
 
 “Borrowers” is defined in the preamble hereof
 
“Borrower’s Books” are all of a Borrower’s books and records including ledgers,
federal and state tax returns, records regarding a Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
 
“Borrowing Base” is eighty percent (80%) of Eligible Accounts, as determined by
Bank from Borrowers’ most recent Transaction Report; provided, however, that
Bank may decrease the foregoing percentage in its good faith business judgment
based on events, conditions, contingencies, or risks which, as determined by
Bank, may adversely affect Collateral.
 
“Borrowing Resolutions” are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit E.
 
“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.
 
 “Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.
 
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“Cash Management Services” is defined in Section 2.1.4.
 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the State of California, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrowers described
on Exhibit A.
 
“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.
 
“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.
 
“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit C.
 
“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation, in each
case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold
with recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or,
if not determinable, the maximum reasonably anticipated liability for it
determined by the Person in good faith; but the amount may not exceed the
maximum of the obligations under any guarantee or other support arrangement.
 
“Control Agreement” is any control agreement entered into among the depository
institution at which a Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which a Borrower maintains a
Securities Account or a Commodity Account, such Borrower, and Bank pursuant to
which Bank obtains control (within the meaning of the Code) over such Deposit
Account, Securities Account, or Commodity Account.
 
“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.
 
“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount
utilized for Cash Management Services, or any other extension of credit by Bank
for Borrowers’ benefit.
 
“Current Liabilities” are all obligations and liabilities of Borrowers to Bank,
plus, without duplication, the aggregate amount of Borrowers’ Total Liabilities
that mature within one (1) year.
 
“Default Rate” is defined in Section 2.3(b).
 
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“Deferred Revenue” is all amounts received or invoiced in advance of performance
under contracts and not yet recognized as revenue.
 
“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.
 
“Designated Deposit Account” is Borrowers’ deposit account, account number
_____________, maintained with Bank.
 
“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.
 
“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.
 
“Effective Date” is defined in the preamble hereof.
 
“Eligible Accounts” means Accounts which arise in the ordinary course of a
Borrower’s business that meet all Borrowers’ representations and warranties in
Section 5.3.  Bank reserves the right upon prior written notice to Borrowers at
any time after the Effective Date to adjust any of the criteria set forth below
and to establish new criteria in its good faith business judgment.  Unless Bank
otherwise agrees in writing, Eligible Accounts shall not include:
 
(a)           Accounts that the Account Debtor has not paid within ninety (90)
days of invoice date regardless of invoice payment period terms;
 
(b)           Accounts owing from an Account Debtor, fifty percent (50%) or more
of whose Accounts have not been paid within ninety (90) days of invoice date;
 
(c)           Accounts owing from an Account Debtor which does not have its
principal place of business in the United States unless Bank otherwise approves
of in writing, such approval to be granted in Bank’s sole discretion;
 
(d)           Accounts billed and/or payable outside of the United States unless
Bank has a first priority, perfected security interest or other enforceable Lien
in such Accounts under all applicable laws, including foreign laws;
 
(e)           Accounts owing from an Account Debtor to the extent that a
Borrower is indebted or obligated in any manner to the Account Debtor (as
creditor, lessor, supplier or otherwise - sometimes called “contra” accounts,
accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by a
Borrower in the ordinary course of its business;
 
(f)            Accounts for which the Account Debtor is a Borrower’s Affiliate,
officer, employee, or agent;
 
(g)           Accounts with credit balances over ninety (90) days from invoice
date;
 
(h)           Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to a Borrower exceed twenty-five percent (25%) of all
Accounts, for the amounts that exceed that percentage, unless Bank approves in
writing;
 
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(i)            Accounts owing from an Account Debtor which is a United States
government entity or any department, agency, or instrumentality thereof unless
the relevant Borrower has assigned its payment rights to Bank and the assignment
has been acknowledged under the Federal Assignment of Claims Act of 1940, as
amended;
 
(j)            Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
approval”, or other terms if Account Debtor’s payment may be conditional;
 
(k)           Accounts owing from an Account Debtor where goods or services have
not yet been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);
 
(l)            Accounts subject to contractual arrangements between a Borrower
and an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of
offset for damages suffered as a result of such Borrower’s failure to perform in
accordance with the contract (sometimes called contracts accounts receivable,
progress billings, milestone billings, or fulfillment contracts);
 
(m)           Accounts owing from an Account Debtor the amount of which may be
subject to withholding based on the Account Debtor’s satisfaction of a
Borrower’s complete performance (but only to the extent of the amount withheld;
sometimes called retainage billings);
 
(n)           Accounts subject to trust provisions, subrogation rights of a
bonding company, or a statutory trust;
 
(o)           Accounts owing from an Account Debtor that has been invoiced for
goods that have not been shipped to the Account Debtor unless Bank, the relevant
Borrower, and the Account Debtor have entered into an agreement acceptable to
Bank in its sole discretion wherein the Account Debtor acknowledges that (i) it
has title to and has ownership of the goods wherever located, (ii) a bona fide
sale of the goods has occurred, and (iii) it owes payment for such goods in
accordance with invoices from such Borrower (sometimes called “bill and hold”
accounts);
 
(p)           Accounts for which the Account Debtor has not been invoiced;
 
(q)           Accounts that represent non-trade receivables or that are derived
by means other than in the ordinary course of a Borrower’s business;
 
(r)            Accounts for which a Borrower has permitted Account Debtor’s
payment to extend beyond 90 days;
 
(s)           Accounts subject to chargebacks or others payment deductions taken
by an Account Debtor;
 
(t)            Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
 
(u)           Accounts owing from an Account Debtor with respect to which a
Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue); and
 
(v)           Accounts for which Bank in its good faith business judgment
Borrowers determines collection to be doubtful.
 
“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.
 
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“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.
 
“Event of Default” is defined in Section 8.
 
“Exchange Act” is the Securities Exchange Act of 1934, as amended.
 
“Foreign Currency” means lawful money of a country other than the United States.
 
“Funding Date” is any date on which a Credit Extension is made to or for the
account of Borrowers which shall be a Business Day.
 
“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrowers is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.
 
“FX Forward Contract” is defined in Section 2.1.3.
 
“FX Reduction Amount” is defined in Section 2.1.3.
 
“FX Reserve” is defined in Section 2.1.3.
 
“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
 
“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, options to purchase or sell real or personal property, rights
in all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.
 
“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.
 
“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
 
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
 
“Indemnified Person” is defined in Section 12.3.
 
“Initial Audit” is Bank’s inspection of each Borrower’s Accounts, each
Borrower’s Books and the other Collateral.
 
“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
 
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“Intellectual Property” means all of a Borrower’s right, title, and interest in
and to the following:
 
(a)           its Copyrights, Trademarks and Patents;
 
(b)          any and all trade secrets and trade secret rights, including,
without limitation, any rights to unpatented inventions, know-how, operating
manuals;
 
(c)          any and all source code;
 
(d)          any and all design rights which may be available to a Borrower;
 
(e)          any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and
 
(f)           all amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents.
 
“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of a Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
 
“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.
 
 “IP Agreements” are those certain Intellectual Property Security Agreements
executed and delivered by each Borrower to Bank dated as of the Effective Date.
 
“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank as set forth in Section 2.1.2.
 
“Letter of Credit Application” is defined in Section 2.1.2(b).
 
“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(e).
 
“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.
 
“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
the IP Agreements, any note, or notes or guaranties executed by any Borrower,
and any other present or future agreement between a Borrower and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.
 
 “Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of a Borrower; (c) a material impairment of the
prospect of repayment of any portion of the Obligations; or (d) Bank determines,
based upon information available to it and in its reasonable judgment, that
there is a reasonable likelihood that Borrowers shall fail to comply with one or
more of the financial covenants in Section 6 during the next succeeding
financial reporting period.
 
“Monthly Financial Statements” is defined in Section 6.2(c).
 
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“Net Cash” means the balance of Borrowers’ unrestricted cash maintained at Bank
less all Indebtedness owing from Borrowers to Bank.
 
“Obligations” are Borrowers’ obligations to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrowers owe Bank now or later,
whether under this Agreement, the other Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit (including
reimbursement obligations for drawn and undrawn letters of credit), cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrowers assigned to Bank, and to perform Borrowers’ duties
under the Loan Documents.
 
“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than 30 days prior to the Effective Date, and, (a) if
such Person is a corporation, its bylaws in current form, (b) if such Person is
a limited liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or
modifications thereto.
 
“Overadvance” is defined in Section 2.2.
 
“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.
 
“Payment” means all checks, wire transfers and other items of payment received
by Bank (including proceeds of Accounts and payment of the Obligations in full)
for credit to Borrowers’ outstanding Credit Extensions or, if the balance of the
Credit Extensions has been reduced to zero, for credit to its deposit accounts.
 
“Perfection Certificate” is defined in Section 5.1.
 
“Permitted Indebtedness” is:
 
(a)           Borrowers’ Indebtedness to Bank under this Agreement and the other
Loan Documents;
 
(b)           Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;
 
(c)           Subordinated Debt;
 
(d)          unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;
 
(e)           Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
 
(f)            Indebtedness secured by Liens permitted under clauses (a) and (c)
of the definition of “Permitted Liens” hereunder;
 
(g)           Indebtedness of one Borrower to another Borrower; and
 
(h)           extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (g) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon a Borrower or its
Subsidiary, as the case may be.
 
“Permitted Investments” are:
 
(a)           Investments (including, without limitation, Subsidiaries) existing
on the Effective Date and shown on the Perfection Certificate;
 
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(b)           (i) Investments consisting of Cash Equivalents, and (ii) any
Investments permitted by a Borrower’s investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved in writing by Bank;
 
(c)           Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of a Borrower;
 
(d)           Investments consisting of deposit accounts in which Bank has a
perfected security interest;
 
(e)           Investments accepted in connection with Transfers permitted by
Section 7.1;
 
(f)            Investments by a Borrower in another Borrower;
 
(g)           Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of a Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by such Borrower’s Board of
Directors;
 
(h)           Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business; and
 
(i)           Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (i)
shall not apply to Investments of a Borrower in any Subsidiary.
 
 “Permitted Liens” are:
 
(a)           Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;
 
(b)           Liens for taxes, fees, assessments or other government charges or
levies, either (i) not due and payable or (ii) being contested in good faith and
for which a Borrower maintains adequate reserves on its Books, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted thereunder;
 
(c)           purchase money Liens (i) on Equipment acquired or held by a
Borrower incurred for financing the acquisition of the Equipment securing no
more than Fifty Thousand Dollars ($50,000) in the aggregate amount outstanding,
or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;
 
(d)           Liens of carriers, warehousemen, suppliers, or other Persons that
are possessory in nature arising in the ordinary course of business so long as
such Liens attach only to Inventory, securing liabilities in the aggregate
amount not to exceed Fifty Thousand Dollars ($50,000) and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
 
(e)           Liens to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like obligations incurred
in the ordinary course of business (other than Liens imposed by ERISA);
 
(f)           Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
 
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(g)         leases or subleases of real property granted in the ordinary course
of a Borrower’s business (or, if referring to another Person, in the ordinary
course of such Person’s business), and leases, subleases, non-exclusive licenses
or sublicenses of personal property (other than Intellectual Property) granted
in the ordinary course of a Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if the leases,
subleases, licenses and sublicenses do not prohibit granting Bank a security
interest therein;
 
(h)         non-exclusive license of Intellectual Property granted to third
parties in the ordinary course of business;
 
(i)           Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;
and
 
(j)           Liens in favor of other financial institutions arising in
connection with a Borrower’s deposit and/or securities accounts held at such
institutions, provided that Bank has a perfected security interest in the
amounts held in such deposit and/or securities accounts.
 
“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
 
“Prime Rate” is the greater of (i) Bank’s most recently announced “prime rate,”
even if it is not Bank’s lowest rate or (ii) four percent (4.00%) per annum.
 
“Quick Assets’ is Borrowers’ unrestricted cash plus net Accounts receivable.
 
“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made
 
“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
 
“Reserves” means, as of any date of determination, such amounts as Bank may from
time to time establish and revise in its good faith business judgment, reducing
the amount of Advances and other financial accommodations which would otherwise
be available to Borrowers (a) to reflect events, conditions, contingencies or
risks which, as determined by Bank in its good faith business judgment, do or
may adversely affect (i) the Collateral or any other property which is security
for the Obligations or its value (including without limitation any increase in
delinquencies of Accounts), (ii) the assets, business or prospects of a
Borrower, or (iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Bank's good faith belief that any collateral report or financial
information furnished by or on behalf of a Borrower or to Bank is or may have
been incomplete, inaccurate or misleading in any material respect; or (c) in
respect of any state of facts which Bank determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
 
“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of a Borrower.
 
“Restricted License” is any material license or other agreement with respect to
which a Borrower is the licensee (a) that prohibits or otherwise restricts such
Borrower from granting a security interest in such 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.
 
“Revolving Line” is an Advance or Advances in an amount equal to Three Million
Dollars ($3,000,000).
 
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“Revolving Line Maturity Date” is the date three hundred sixty four (364) days
from the Effective Date.
 
“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.
 
“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.
 
“Settlement Date” is defined in Section 2.1.3.
 
“Streamline Period” means any month, where at all times during the prior
calendar month, Borrowers maintained Net Cash at Bank of at least Eight Hundred
Thousand Dollars ($800,000) at all times.
 
 “Subordinated Debt” is indebtedness incurred by a Borrower subordinated to all
of such Borrower’s now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
 
“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person.  Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of a Borrower.
 
“Tangible Net Worth” is, on any date, the stated value of the consolidated total
assets of Borrowers minus intangible assets.
 
“Total Liabilities” is on any day, obligations that should, under GAAP be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness.
 
“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of a Borrower connected
with and symbolized by such trademarks.
 
“Transaction Report” is that certain report of transactions and schedule of
collections in the form attached hereto as Exhibit D.
 
“Transfer” is defined in Section 7.1.
 
 [Signature page follows.]
 
-31-

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.
 
BORROWERS:
 
DERYCZ SCIENTIFIC, INC.
 
By  /s/ Richard McKilligan
Name:  Richard McKilligan
Title:  Chief Financial Officer

REPRINTS DESK, INC.
 
By  /s/ Peter Derycz
Name:  Peter Derycz
Title:  Chief Executive Officer

 
POOLS PRESS, INC.
 
By  /s/ Richard McKilligan
Name:  Richard McKilligan
Title:  Secretary

 
BANK:
 
SILICON VALLEY BANK
 
By  /s/ Derek Hoyt
Name:  Derek Hoyt
Title:  Deal Team Leader
 
1

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EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:
 
All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and
 
all Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
 
1

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EXHIBIT B – LOAN PAYMENT/ADVANCE REQUEST FORM
 
Deadline for same day processing is Noon Pacific Time*
 
Fax To:
Date: _____________________

 
Loan Payment:
 
DERYCZ SCIENTIFIC, INC., REPRINTS DESK, INC. and POOLS PRESS, INC.
 
From Account #____________________________
 
To Account #_______________________________
   
                                   (Deposit Account #)
 
                                     (Loan Account #)
             
Principal $________________________________
 
and/or Interest $_____________________________
             
Authorized Signature: ________________________
  Phone Number: _____________________________  
 
Print Name/Title: ___________________________
       

 
Loan Advance:
 
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
 
From Account #____________________________
 
To Account #_______________________________
   
                                   (Loan Account #)
 
                                     (Deposit Account #)
              Amount of Advance $________________________  
 
             
All Borrowers’ representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:
         
Authorized Signature: ________________________
  Phone Number: _____________________________  
 
Print Name/Title: ___________________________
       

 
Outgoing Wire Request:
Complete only if all or a portion of funds from the loan advance above is to be
wired.
Deadline for same day processing is noon, Pacific Time
 
Beneficiary Name: ___________________________ 
 
Amount of Wire: $____________________________________
Beneficiary Bank: ___________________________
 
Account Number: _____________________________________
City and State: ______________________________            
 
    Beneficiary Bank Transit (ABA) #: ______________   Beneficiary Bank Code
(Swift, Sort, Chip, etc.): ______________             (For International Wire
Only)          
Intermediary Bank: __________________________
  Transit (ABA) #: _____________________________________
For Further Credit to:
___________________________________________________________________________________
         
Special Instruction:
_____________________________________________________________________________________
         
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 
Authorized Signature: ______________________
 
2nd Signature (if required): ________________________
Print Name/Title: _________________________
 
Print Name/Title: ______________________________
Telephone #: _____________________________   Telephone #:
__________________________________

 
 

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* Unless otherwise provided for an Advance bearing interest at LIBOR.
 
1

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EXHIBIT C

COMPLIANCE CERTIFICATE
 
TO:       
  SILICON VALLEY BANK
Date: ___________________
FROM:    DERYCZ SCIENTIFIC, INC. on behalf of itself and the other Borrowers  

 
The undersigned authorized officer of DERYCZ SCIENTIFIC, INC. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrowers and Bank (the “Agreement”):
 
(1) Borrowers are 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)
Borrowers, and each of their Subsidiaries, has timely filed all required tax
returns and reports, and Borrowers have timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrowers
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 any Borrower
or any of its Subsidiaries relating to unpaid employee payroll or benefits of
which Borrowers have not previously provided written notification to Bank.

Attached are the required documents supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrowers
are 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 projections
FYE within 30 days
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings
Monthly within 20 days
Yes   No
Transaction Report
Weekly when not on Streamline,
Monthly within 20 days when on Streamline
and with each Advance request
Yes   No
 
The following Intellectual Property was registered (or a registration
application submitted) after the Effective Date
(if no registrations, state “None”)
___________________________________________________________________________________________
___________________________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
 
     
Maintain on a Monthly Basis:
     
Minimum Quick Ratio
0.80:1.0
_____:1.0
Yes   No
Minimum Tangible Net Worth
*
$_________
Yes   No

 

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

 
*at least One Million Five Hundred Thousand Dollars ($1,500,000) increasing by
fifty percent (50%) of issuances of equity after the Effective Date.

 

Streamline Period
Applies
     
Net Cash at least $800,000 at all times
Streamline Period in Effect
Yes   No
Net Cash less than $800,000 at any time
Streamline Period not in Effect
Yes   No

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.
 
The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)
 

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

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

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

 
DERYCZ SCIENTIFIC, INC. on behalf of itself and the other Borrowers
 
 
By: ___________________________
Name: _________________________
Title: __________________________
 
BANK USE ONLY
 
Received by: ___________________________
                                   authorized signer
Date: _________________________________
 
Verified: _______________________________
                                   authorized signer
Date: _________________________________
 
Compliance Status:        Yes     No

 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrowers

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.
 
Dated: ____________________

I.           Quick Ratio (Section 6.7(a))
 
Required:         0.80:1.00

Actual:
 
A.
Aggregate value of the unrestricted cash of Borrowers
$_______
     
B.
Aggregate value of the net billed accounts receivable of Borrowers
$_______
     
C.
Quick Assets (the sum of lines A and B)
$_______
     
D.
Aggregate value of Obligations to Bank
$_______
     
E.
Aggregate value of liabilities that should, under GAAP, be classified as
liabilities on Borrowers’ consolidated balance sheet, including all
Indebtedness, and not otherwise reflected in line D above that matures within
one (1) year
$_______
     
F.
Current Liabilities (the sum of lines D and E)
$_______
     
G.
Quick Ratio (line C divided by line F)
_________ 

 
 
Is line G equal to or greater than 0.80:1:00?

_______ No, not in
compliance                                                                          
_______ Yes, in compliance

II.          Tangible Net Worth (Section 6.7(b))

Required:        One Million Five Hundred Thousand Dollars ($1,500,000)
increasing by fifty percent (50%) of issuances of equity after the Effective
Date.

Actual:

A.
Aggregate stated value of total assets of Borrowers
$_______
     
B.
Aggregate value of intangible assets of Borrowers
$_______
     
C.
Tangible Net Worth (line A minus line B)
$_______

 

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

 
Is line C equal to or greater than at least One Million Five Hundred Thousand
Dollars ($1,500,000) increasing by fifty percent (50%) of issuances of equity
after the Effective Date.?
 
_______ No, not in
compliance                                                                          
_______ Yes, in compliance

 

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EXHIBIT D
 
Transaction Report
 
[EXCEL spreadsheet to be provided separately from lending officer.]
 

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EXHIBIT E

BORROWING RESOLUTIONS

[logo.jpg]

CORPORATE BORROWING CERTIFICATE
 
 
Borrower:
 
DERYCZ SCIENTIFIC, INC.
Date: June __, 2010
Bank:
 
Silicon Valley Bank
 

 
I hereby certify as follows, as of the date set forth above:
 
1.  I am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

2.  Borrower’s exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.
                                                                                                                     
                                                                        [print
name of state]

3.  Attached hereto are true, correct and complete copies of Borrower’s
Articles/Certificate of Incorporation (including amendments), as filed with the
Secretary of State of the state in which Borrower is incorporated as set forth
in paragraph 2 above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

4.  The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from Borrower.
 
Resolved, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:
 
Name
 
Title
 
Signature
 
Authorized to Add or
Remove Signatories
                         
o
                         
o
                         
o
                         
o

 
Resolved Further, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.
 

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

 
Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money.  Borrow money from Silicon Valley Bank (“Bank”).
Execute Loan Documents.  Execute any loan documents Bank requires.
Grant Security.  Grant Bank a security interest in any of Borrower’s assets.
Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.
Letters of Credit.  Apply for letters of credit from Bank.
Foreign Exchange Contracts.  Execute spot or forward foreign exchange contracts.
Issue Warrants.  Issue warrants for Borrower’s capital stock.
Further Acts.  Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

5.  The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.
 
DERYCZ SCIENTIFIC, INC.

By: ______________________________
Name: ____________________________
Title: _____________________________

           *** If the Secretary, Assistant Secretary or other certifying officer
executing above is designated by the resolutions set forth in paragraph 4 as one
of the authorized signing officers, this Certificate must also be signed by a
second authorized officer or director of Borrower.

           I, the __________________________ of Borrower, hereby certify as to
paragraphs 1 through 5 above, as of the date set forth above.
          [print title]

 
By: ______________________________
Name: ____________________________
Title: _____________________________

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BORROWING RESOLUTIONS

[logo.jpg]

CORPORATE BORROWING CERTIFICATE
 
 
Borrower:
  REPRINTS DESK, INC.
Date: June __, 2010
Bank:
  Silicon Valley Bank  

 
I hereby certify as follows, as of the date set forth above:
 
1.  I am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

2.  Borrower’s exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.
                                                                                              
                           
                                                                    [print name
of state]
 
3.  Attached hereto are true, correct and complete copies of Borrower’s
Articles/Certificate of Incorporation (including amendments), as filed with the
Secretary of State of the state in which Borrower is incorporated as set forth
in paragraph 2 above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

4.  The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from Borrower.
 
Resolved, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:
 
Name
 
Title
 
Signature
 
Authorized to Add or
Remove Signatories
                         
o
                         
o
                         
o
                         
o

 
Resolved Further, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.
 

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

 
Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money.  Borrow money from Silicon Valley Bank (“Bank”).
Execute Loan Documents.  Execute any loan documents Bank requires.
Grant Security.  Grant Bank a security interest in any of Borrower’s assets.
Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.
Letters of Credit.  Apply for letters of credit from Bank.
Foreign Exchange Contracts.  Execute spot or forward foreign exchange contracts.
Issue Warrants.  Issue warrants for Borrower’s capital stock.
Further Acts.  Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

5.  The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

REPRINTS DESK, INC.
 
By: ______________________________
Name: ____________________________
Title: _____________________________
 

           *** If the Secretary, Assistant Secretary or other certifying officer
executing above is designated by the resolutions set forth in paragraph 4 as one
of the authorized signing officers, this Certificate must also be signed by a
second authorized officer or director of Borrower.

           I, the __________________________ of Borrower, hereby certify as to
paragraphs 1 through 5 above, as of the date set forth above.
          [print title]
 

By: ______________________________
Name: ____________________________
Title: _____________________________
 

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

                                      
BORROWING RESOLUTIONS

[logo.jpg]

CORPORATE BORROWING CERTIFICATE
 
 
Borrower:
  POOLS PRESS, INC.  
Date: June __, 2010
Bank:
  Silicon Valley Bank  

 
I hereby certify as follows, as of the date set forth above:
 
1.  I am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

2.  Borrower’s exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.
                                                                      
                                                       
                                                                [print name of
state]
 
3.  Attached hereto are true, correct and complete copies of Borrower’s
Articles/Certificate of Incorporation (including amendments), as filed with the
Secretary of State of the state in which Borrower is incorporated as set forth
in paragraph 2 above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

4.  The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from Borrower.
 
Resolved, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:
 
Name
 
Title
 
Signature
 
Authorized to Add or
Remove Signatories
                         
o
                         
o
                         
o
                         
o

 
Resolved Further, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.
 

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

 
Resolved Further, that such individuals may, on behalf of Borrower:

Borrow Money.  Borrow money from Silicon Valley Bank (“Bank”).
Execute Loan Documents.  Execute any loan documents Bank requires.
Grant Security.  Grant Bank a security interest in any of Borrower’s assets.
Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.
Letters of Credit.  Apply for letters of credit from Bank.
Foreign Exchange Contracts.  Execute spot or forward foreign exchange contracts.
Issue Warrants.  Issue warrants for Borrower’s capital stock.
Further Acts.  Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

Resolved Further, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

5.  The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

POOLS PRESS, INC.
 
By: ______________________________
Name: ____________________________
Title: _____________________________      
 
 
           *** If the Secretary, Assistant Secretary or other certifying officer
executing above is designated by the resolutions set forth in paragraph 4 as one
of the authorized signing officers, this Certificate must also be signed by a
second authorized officer or director of Borrower.

           I, the __________________________ of Borrower, hereby certify as to
paragraphs 1 through 5 above, as of the date set forth above.
          [print title]
 
 
By: ______________________________
Name: ____________________________
Title: _____________________________      
 

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