LOAN AND SECURITY AGREEMENT





LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY AGREEMENT (this "Agreement")
dated as of June 19, 2008 (the "Effective
Date") between SILICON VALLEY
BANK, a California corporation with a
loan production office located at535 Fifth Avenue, 27th Floor, New York, New York 10017
("Bank"), and CHYRON CORPORATION, a New York
corporation ("Borrower"),
provides the terms on which Bank shall lend to Borrower and Borrower 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.  Borrower hereby unconditionally promises 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, Bank shall make Advances not exceeding the Availability Amount.  Amounts borrowed
under the Revolving Line 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 for Borrower's account.  Such aggregate amounts utilized hereunder
shall at all times reduce the amount otherwise available for Advances under the
Revolving Line.  The aggregate amount
available to be used for the issuance of Letters of Credit may not exceed
(i) the lesser of (A) the Revolving Line or (B) the Borrowing Base, minus
(ii) the outstanding principal amount of any Advances (including any amounts
used for Cash Management Services and 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.  If, on the Revolving Line Maturity Date,
there are any outstanding Letters of Credit, then on such date Borrower shall
provide to Bank cash collateral in an amount equal to 105% 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 said 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").  Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably request.  Borrower further
agrees to be bound by the regulations and interpretations of the issuer of any
Letters of Credit guarantied by Bank and opened for Borrower's account or by
Bank's interpretations of any Letter of Credit issued by Bank for Borrower's
account, and Borrower understands and agrees that Bank shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit
or any modifications, amendments, or supplements thereto.






(b)           The obligation of Borrower 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.  













 






(c)                Borrower 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 Borrower
of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at 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.






(d)           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
(10.0%) 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, Borrower may
enter into foreign exchange contracts with Bank under which 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 in a maximum aggregate amount equal to One
Hundred Fifty Thousand Dollars ($150,000.00) (such maximum shall be the "FX Reserve").  The aggregate amount of FX Forward Contracts
at any one time may not exceed ten (10) times the amount of the FX
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 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.  Borrower may use up to One Million Five
Hundred Dollars ($1,500,000.00), inclusive of Credit Extensions relating to
Sections 2.1.3 and 2.1.4 of 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").  Any amounts Bank pays on behalf of Borrower
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.


 2.1.5.                Equipment
Advances.


(a)                Availability.  Subject to the terms and conditions of this
Agreement, during the Draw Period, Bank shall make advances (each, an "Equipment Advance" and,
collectively, "Equipment Advances")
not exceeding the Equipment Line. 
Equipment Advances may only be used to finance Eligible Equipment
purchased within one hundred twenty days (120) days (determined based upon the
applicable invoice date of such Eligible Equipment) before the date of each
Equipment Advance.  Notwithstanding the
foregoing, the initial Equipment Advance (the "Initial Equipment Advance") hereunder may be used to reimburse
Borrower for Eligible Equipment purchased on or after January 1, 2008, provided
that such Initial Equipment Advance is made within ten (10) days of the
Effective Date.  All Eligible Equipment
must have been new when purchased by Borrower, except for such Eligible
Equipment that is disclosed in writing to Bank by Borrower, and that Bank in
its sole discretion has agreed to finance, prior to being financed by Bank.  No Equipment Advance may exceed one hundred
percent (100.0%) of the total invoice for Eligible Equipment (excluding taxes,
shipping, warranty charges, freight discounts and installation expenses
relating to such Eligible Equipment except to the extent such are allowed to be
financed pursuant hereto as Other Equipment). 
Unless otherwise agreed to by Bank, not more than twenty-five percent
(25%) of the proceeds of the Equipment Line shall be used to finance Other
Equipment.  Each Equipment Advance must
be in an amount equal to the lesser of Two Hundred Thousand Dollars
($200,000.00) or the amount that has not yet been drawn under the Equipment
Line.  After repayment, no Equipment
Advance may be reborrowed.


(b)                Repayment.  Each Equipment Advance shall be payable in
(i) thirty-six (36) consecutive equal monthly installments of principal plus
(ii) monthly payments of accrued interest at the rate set forth in Section
2.3(a)(ii), beginning on the Payment Date of the month following the Funding
Date of such Equipment Advance and continuing on the Payment Date of each month
thereafter.  All unpaid principal and
interest on each Equipment Advance shall be due and payable in full on the
applicable Equipment Maturity Date.




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(c)                Prepayment Upon an Event of
Loss.  Borrower shall bear the risk
of any loss, theft, destruction, or damage of or to the Financed
Equipment.  If, during the term of this
Agreement, any item of Financed Equipment becomes obsolete or is lost, stolen,
destroyed, damaged beyond repair, rendered permanently unfit for use, or seized
by a governmental authority for any reason for a period ending beyond the
Equipment Maturity Date with respect to such Financed Equipment (an "Event of Loss"), then, within ten
(10) days following such Event of Loss, Borrower shall (i) pay to Bank on
account of the Obligations all accrued interest to the date of the prepayment,
plus all outstanding principal owing with respect to the Financed Equipment
subject to the Event of Loss; or (ii) if no Event of Default has occurred and
is continuing, at Borrower's option, repair or replace any Financed Equipment
subject to an Event of Loss provided the repaired or replaced Financed
Equipment is of equal or like value to the Financed Equipment subject to an
Event of Loss and provided further that Bank has a first priority perfected
security interest in such repaired or replaced Financed Equipment.  Any partial prepayment of an Equipment
Advance paid by Borrower on account of an Event of Loss shall be applied to
prepay amounts owing for such Equipment Advance in inverse order of maturity.


 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 exceeds the lesser of either the Revolving
Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash such
excess.


 2.3          Payment
of Interest on the Credit Extensions.


(a)           Interest Rate.


(i)                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 the greater of (A) one and one half of one percentage
points (1.50%) above the Prime Rate and (B) six and one half of one percent
(6.50%), which interest shall be payable monthly in accordance with Section
2.3(f) below.


(ii)                Equipment Advances.  Subject to Section 2.3(b), the principal amount
outstanding for each Equipment Advance shall accrue interest at a floating per
annum rate equal to the greater of (A) two percentage points (2.0%) above the
Prime Rate and (B) seven percent (7.0%), which interest shall 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 (5.0%) above the rate that is
otherwise applicable thereto (the "Default
Rate").  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)           360-Day Year.  Interest shall be computed on the basis of a
360-day year for the actual number of days elapsed.


(e)           Debit of Accounts.  Bank may debit any of Borrower's deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due.  These debits shall not constitute a set-off.


(f)                Payments.  Unless otherwise provided, interest is
payable monthly on the Payment Date of each month.  Payments of principal and/or interest received after 12:00 p.m.
Eastern 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 is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue.




2.4          Fees.  Borrower
shall pay to Bank:  


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(a)                Revolving Line Commitment Fee.  A fully earned, non‐refundable
Revolving Line commitment fee of Seven Thousand Five Hundred Dollars
($7,500.00), on the Effective Date;


(b)                Equipment Line Commitment Fee.  A fully earned, non‐refundable
Equipment Line commitment fee of Six Thousand Two Hundred Fifty Dollars
($6,250.00), on the Effective Date;


(c)           Letter of Credit Fee.  Bank's customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance, each anniversary
of the issuance, and the renewal of such Letter of Credit by Bank; and


(d)           Bank Expenses.  All Bank Expenses (including reasonable
attorneys' fees and expenses, plus expenses, for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due.




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 Borrower shall consent to
or shall have delivered, 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 to which it is a party;




(b)           its Operating
Documents and a good standing certificate of Borrower certified by the
Secretary of State of the State of New York as of a date no earlier than thirty
(30) days prior to the Effective Date; 




(c)           duly executed original signatures to
the completed Borrowing Resolutions for Borrower;




(d)                Intentionally omitted;




(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 executed
by Borrower;




(g)           a legal opinion of Borrower's counsel
dated as of the Effective Date together with the duly executed original
signatures thereto;




(h)           evidence satisfactory to Bank that
the insurance policies required by Section 6.5 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; and




(i)            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:




(a)           except as otherwise provided in
Section 3.4(a), timely receipt of an executed Payment/Advance Form;




(b)           the
representations and warranties in Section 5 shall be true in all material
respects on the date of the Payment/Advance Form 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 Borrower's representation and warranty
on that date that the representations and warranties in Section 5 remain true 




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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 reasonable discretion,
there has not been any material impairment in the general affairs, management,
results of operation, financial condition or the prospect of repayment of the
Obligations, or there has not been any material adverse deviation by Borrower
from the most recent business plan of Borrower presented to and accepted by
Bank.




3.3                Covenant
to Deliver. 


Borrower agrees to deliver to Bank each item required
to be delivered to Bank under this Agreement as a condition to any Credit
Extension.  Borrower expressly agrees
that a Credit Extension made prior to the receipt by Bank of any such item
shall not constitute a waiver by Bank of Borrower's obligation to deliver such
item, and any such Credit Extension in the absence of a required item shall be
made in Bank's sole discretion.




3.4                Procedures for Borrowing.


(a)                Advances.  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), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 noon Eastern time on the
Funding Date of the Advance.  Together
with any such electronic or facsimile notification, Borrower shall deliver to
Bank by electronic mail or facsimile a completed Payment/Advance Form executed
by a Responsible Officer or his or her designee.  Bank may rely on any telephone notice given by a person whom Bank
believes is a Responsible Officer or 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.


(b)                Equipment Advances.  Subject to the prior satisfaction of all
other applicable conditions to the making of an Equipment Advance set forth in
this Agreement, to obtain an Equipment Advance, Borrower must notify Bank
(which notice shall be irrevocable) by electronic mail or facsimile no later
than 12:00 p.m. Eastern time one (1) Business Day before the proposed Funding
Date.  The notice shall be a
Payment/Advance Form, must be signed by a Responsible Officer or designee, and
shall include a copy of the invoice for the Equipment being financed.  If Borrower satisfies the conditions of each
Equipment Advance, Bank shall disburse such Equipment Advance by transfer to
the Designated Deposit Account.




4                CREATION OF SECURITY INTEREST


 4.1          Grant
of Security Interest.  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.  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
Borrower shall acquire a commercial tort claim, Borrower shall promptly notify
Bank in a writing signed by 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 Borrower's
sole cost and expense, release its Liens in the Collateral and all rights
therein shall revert to Borrower.


4.2                Authorization
to File Financing Statements.  Borrower hereby authorizes Bank to file
financing statements, without notice to 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.  




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5                REPRESENTATIONS AND
WARRANTIES




Borrower
represents and warrants as follows: 


5.1          Due
Organization, Authorization; Power and Authority.  Borrower and
each of its Subsidiaries are duly existing and in good standing as Registered Organizations
in their respective jurisdictions of formation and are qualified and licensed
to do business and are in good standing in any jurisdiction in which the
conduct of their business or their ownership of property requires that they 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 (the "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.




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.  In the event that Borrower, after the date hereof, intends to
store or otherwise deliver any portion of the Collateral to a bailee, then
Borrower will first receive the written consent of Bank and such bailee must
execute and deliver a bailee agreement in form and substance satisfactory to
Bank in its sole discretion.




All
Financed Equipment is new, except for such Financed Equipment that has been
disclosed in writing to Bank by Borrower as "used" and that Bank, in
its sole discretion, has agreed to finance. 
All Inventory is in all material respects of good and marketable
quality, free from material defects.




Except as noted on the Perfection Certificate, Borrower is not a party to,
nor is bound by, any material license or other material agreement with respect
to which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower's interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Bank's right to sell any Collateral. 
Borrower shall provide written notice to Bank within ten (10) days of entering
or becoming bound by any such license or agreement (other than over-the-counter
software that is commercially available to the public).  




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Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for (x) all such
licenses or agreements to be deemed "Collateral" and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement, whether now existing or entered into in
the future, and (y) Bank to have the ability in the event of a liquidation of
any Collateral to dispose of such Collateral in accordance with Bank's rights
and remedies under this Agreement and the other Loan Documents.


 5.3                Accounts
Receivable.  For any Eligible Account in any Borrowing Base Certificate, all
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing such 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.  After 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 Borrowing Base Certificate.  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.


 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 Two Hundred Thousand Dollars ($200,000.00).


 5.5          No
Material Deviation in Financial Statements.  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 


7





 


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, to purchase Eligible Equipment, 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).




6                AFFIRMATIVE COVENANTS




Borrower
shall do all of the following:


 6.1                Government
Compliance.  




(a)           Maintain its and all its
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 Borrower's business or operations.  Borrower 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 Borrower's business.




(b)           Obtain all of the Governmental
Approvals necessary for the performance by Borrower of its 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. 
Borrower shall promptly provide copies of any such obtained Governmental
Approvals to Bank.


 6.2                Financial
Statements, Reports, Certificates.




(a)           Deliver to Bank:  (i) as soon as available, but no later than
thirty (30) days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's and each of
its Subsidiary's operations for such month certified by a Responsible Officer
and in a form acceptable to Bank; (ii) as soon as available, but no later
than ninety (90) days after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm acceptable to Bank in its
reasonable discretion; (iii) within five (5) business days of delivery,
copies of all statements, reports and notices made available to Borrower's
security holders or to any holders of Subordinated Debt to the extent such
notices are not publicly available; (iv) a prompt report of any legal actions
pending or threatened against Borrower or any of its Subsidiaries that could
result in damages or costs to Borrower or any of its Subsidiaries of Two
Hundred Thousand Dollars ($200,000.00) or more; and (v) budgets, sales projections, operating plans as Borrower may
prepare in the normal course and Bank shall from time to time request in its
good faith judgment, and other financial information reasonably requested by
Bank.




(b)           Within thirty (30) days after the
last day of each month, deliver to Bank a duly completed Borrowing Base
Certificate signed by a Responsible Officer, with aged listings of accounts
receivable and accounts payable (by invoice date).




(c)           Within thirty (30) days after the
last day of each month, deliver to Bank with the monthly financial statements, a duly completed Compliance Certificate
signed by a Responsible Officer setting forth calculations showing compliance
with the financial covenants set forth in this Agreement.




8









 




(d)           Allow Bank to audit Borrower's
Collateral at Borrower's expense.  Such
audits shall be conducted no more often than once every twelve (12) months
unless an Event of Default has occurred and is continuing.  Borrower hereby agrees that the first such
audit shall be conducted within ninety (90) days of the Effective Date.


 6.3                Inventory;
Returns.  Keep all Inventory in good and marketable condition, free from
material defects.  Returns and
allowances between Borrower and its Account Debtors shall follow Borrower's
customary practices as they exist at the Effective Date.  Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000.00).


6.4          Taxes;
Pensions.  Timely file, and require each of its
Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely file, all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower
and each of its 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 of Borrower 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.


 


6.5                Insurance.  Keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower's industry and location 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 relating to Collateral shall have a lender's loss payable endorsement
showing Bank as the sole loss payee and waive subrogation against Bank, and 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 must give Bank at least twenty (20) days notice before canceling,
amending, or declining to renew its policy. 
At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. 
Except as otherwise provided in Section 2.1.5(c), proceeds payable under
any policy shall, at Bank's option, be payable to Bank on account of the
Obligations.  Notwithstanding the
foregoing, (a) so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
up to Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any
loss, but not exceeding Five Hundred Thousand Dollars ($500,000.00) in the
aggregate for all losses under all casualty policies in any one year, toward
the replacement or repair of destroyed or damaged property; provided that any
such replaced or repaired property (i) shall be of equal or like value as
the replaced or repaired Collateral and (ii) shall be deemed Collateral in
which Bank has been granted a first priority security interest, and (b) after
the occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Bank, be payable to
Bank on account of the Obligations.  If
Borrower fails to obtain insurance as required under this Section 6.5 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 6.5, and take any action under the policies Bank deems
prudent.




6.6                Operating Accounts.




(a)           Maintain its and its Subsidiaries'
and its parent's primary operating and other deposit accounts with Bank.  In addition, all of Borrower's and its
Subsidiaries' and its parent's cash or securities in excess of that amount used
for Borrower's and such Subsidiary's and parent's current operations shall be
maintained with Bank or Bank's affiliates, provided, however, Borrower may
maintain accounts with other financial institutions or brokerages so long as
the aggregate balance of such funds does not exceed Three Hundred Fifty
Thousand Dollars ($350,000.00) (the "Non-SVB Accounts").  Except for funds held in Non-SVB Accounts,
any Guarantor shall maintain all depository, operating and securities accounts
with Bank, or SVB Securities.  




(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 Borrower or
Guarantor at any time maintains, 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 the Non-SVB Accounts, or deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrower's employees and identified to Bank by Borrower as
such.




9









 




6.7                Financial Covenants.  Borrower
shall maintain at all times, to be tested as of the last day of each month,
unless otherwise noted:


(a)           Adjusted Quick Ratio.  An Adjusted Quick Ratio of at least 1.25 to
1.0.




(b)           Tangible Net Worth.  To be tested as of
the last day of each of Borrower's fiscal quarters, Tangible Net Worth of at
least Six Million Five Hundred Thousand Dollars ($6,500,000.00),  Notwithstanding the foregoing, the amount
required in the prior sentence shall increase by an amount equal to sixty
percent (60.0%) of the sum of the (i) gross proceeds received by Borrower from
the sale of its equity or the incurrence of Subordinated Debt after the
Effective Date, and (ii) any positive quarterly Net Income earned by Borrower
during any of Borrower's fiscal quarters ending after the Effective Date.




6.8                Protection of Intellectual
Property Rights.  Borrower shall use commercially reasonable
efforts to:  (a) protect, defend and
maintain the validity and enforceability of its intellectual property; (b)
promptly advise Bank in writing of material infringements of its intellectual
property; and (c) not allow any intellectual property material to Borrower's
business to be abandoned, forfeited or dedicated to the public without Bank's
written consent, which consent shall not be unreasonably withheld.




6.9                Litigation Cooperation.  From the date
hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower
and its officers, employees and agents and 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 Borrower.




6.10        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
Borrower or any of its Subsidiaries.




7                NEGATIVE COVENANTS




Borrower
shall not do any of the following without Bank's prior written consent, which
consent shall not be unreasonably withheld:


 7.1                Dispositions.  Convey,
sell, lease, transfer or otherwise dispose of (collectively, "Transfer"), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, except
for Transfers (a) of Inventory in the ordinary course of business; (b) of
worn‐out or obsolete Equipment that does not constitute Financed
Equipment; (c) in connection with Permitted Liens and Permitted Investments;
and (d) of non-exclusive licenses for the use of the property of Borrower
or its Subsidiaries in the ordinary course of business.


 7.2          Changes
in Business, Management, Ownership, or Business Locations. 
(a) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower and such
Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) enter into any transaction or series
of related transactions in which the stockholders of Borrower
who were not stockholders immediately prior to the first such transaction own
more than forty percent (40.0%) of the voting stock of Borrower
immediately after giving effect to such transaction or related series of such
transactions (other than by the sale of Borrower's equity securities in
a public offering or to venture capital investors so long as Borrower
identifies to Bank the venture capital investors prior to the closing of the
transaction).  Borrower shall not,
without at least ten (10) 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 Fifty Thousand Dollars
($50,000.00) in Borrower's assets or property), (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. 
Notwithstanding the foregoing, Borrower may, without Bank's consent,
maintain demo units at customer sites in the ordinary course of business
consistent with Borrower's existing practices.


 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 


10





 


the capital stock or property of another Person.  A Subsidiary may merge
or consolidate into another Subsidiary or into 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 Borrower or any
Subsidiary from assigning, mortgaging, pledging, granting a security interest
in or upon, or encumbering any of 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 6.6(b) hereof.


 7.7                Distributions;
Investments.  (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock; 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 Borrower, except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person.


 7.9                Subordinated
Debt.  (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 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 Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.




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.  Borrower fails 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 grace period
shall not apply to payments due on the Maturity Date).  During the cure period, the failure to cure
the payment default is not an Event of Default (but no Credit Extension will be
made during the cure period);


 8.2                Covenant
Default.  




11









 




(a)
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5,
6.6, 6.7, or violates any covenant in Section 7; or




(b)
Borrower fails or neglects 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, has 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 Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower 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).  Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (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 Borrower or of any entity under control of Borrower (including a
Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice of
lien, levy, or assessment is filed against any of 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; and 




(b)
(i) any material portion of 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 Borrower from conducting any part of its
business; 


 8.5                Insolvency  (a) Borrower
is unable to pay its debts (including trade debts) as they become due or
otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against 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);


 8.6          Other
Agreements.  There is a default in any agreement to which Borrower or any
Guarantor is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of Two Hundred Thousand Dollars
($200,000.00) or that could have a material adverse effect on Borrower's or any
Guarantor's business;  


 8.7                Judgments.  One or more
judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Thousand Dollars
($200,000.00) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered
against Borrower and shall remain unsatisfied, unvacated, or unstayed for a
period of thirty (30) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction, vacation, or stay of such
judgment, order, or decree);




8.8                Misrepresentations.  Borrower or
any Person acting for 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.  A default or breach occurs under any agreement between Borrower
and any creditor of Borrower that signed a subordination, intercreditor, or
other similar agreement with Bank, or any creditor that has signed such an
agreement with Bank breaches any terms of such agreement;


8.10                Guaranty. 
(a) Any guaranty of any Obligations terminates or ceases for any reason to be in
full force and effect; (b) any Guarantor does not perform any obligation or
covenant under any guaranty of the Obligations; (c) any circumstance described
in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor, or
(d) the death, liquidation, winding up, or termination of existence of any
Guarantor; or (e) (i) a 


12





 


material impairment in the perfection or priority of Bank's Lien in the
collateral provided by Guarantor or in the value of such collateral or (ii) a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations occurs with respect to any Guarantor; or


8.11                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 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 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 Borrower's benefit under this Agreement or under any other agreement
between Borrower and Bank;




(c)           demand that Borrower (i) deposits
cash with Bank in an amount equal to the aggregate amount of any Letters of
Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower 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;




(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 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.  Borrower
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. 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 Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of 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,
Borrower's labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, 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, 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;




13









 




(j)            demand and receive possession of
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.  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 Borrower's name on any checks or other forms of payment or
security; (b) sign 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 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.  Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign 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 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 Borrower fails to obtain the insurance called for by Section
6.5 or fails to pay any premium thereon or fails to pay any other amount which
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 applicable rate charged by Bank, and secured by the
Collateral.  Bank will make reasonable
efforts to provide Borrower 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.




9.4                Application
of Payments and Proceeds.  Borrower 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 Borrower to Bank or otherwise received by Bank under
this Agreement when any such allocation or application is not specified
elsewhere in this Agreement.  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 Borrower or other Persons legally entitled thereto;
Borrower 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.  Borrower bears 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 Borrower 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 Bank 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 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.  


 14





 


9.7          Demand
Waiver.  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 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 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.




If
to Borrower:      


Chyron
Corporation
                5 Hub Drive
                Melville, New York  11747
                Attn:  Jerry Kieliszak Senior Vice President and
CFO
                Fax:  (631) 845-2058
                Email:  jerryk@chyron.com




with
a copy to:      


Mintz,
Levin, Cohn, Ferris, Glovsky & Popeo, P.C.
                One Financial Center
                Boston, Massachusetts  02110
                Attn:   Scott Samuels
                Fax:    (617) 542-2241
                Email:  ssamuels@mintz.com


If to Bank:              


Silicon
Valley Bank 
                535 Fifth Avenue, 27th
Floor
                New York, New York  10017
                Attn: Mr. Michael Moretti
                Fax:  (212) 688-5994
                Email:  MMoretti@svb.com




with a copy to:      


Riemer
& Braunstein, LLP
                Three Center Plaza
                Boston, Massachusetts  02108
                Attn:  David A. Ephraim, Esquire
                Fax:   (617) 880-3456
                Email: DEphraim@riemerlaw.com




11           CHOICE OF LAW, VENUE, JURY TRIAL
WAIVER AND JUDICIAL REFERENCE




New York law governs the Loan Documents without regard to
principles of conflicts of law. 
Borrower and Bank each submit to the exclusive jurisdiction of the State
and Federal courts in New York; 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. 
Borrower expressly submits and consents in advance to such jurisdiction
in any action or suit commenced in any such court, and 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. 
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 Borrower at the address set forth in Section 10 of this Agreement
and that service so made shall be deemed completed upon 




15







 




the earlier to occur of 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, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS 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.




12                GENERAL PROVISIONS


 12.1                Successors
and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower 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 Borrower,
to sell, transfer, 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.


 12.2                Indemnification.  Borrower
agrees 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")
asserted by any other party in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by
such Indemnified Person from, following, or arising from transactions between
Bank and Borrower (including reasonable attorneys' fees and expenses), except
for Claims and/or losses directly caused by such Indemnified Person's gross
negligence or willful misconduct.


 12.3        Time
of Essence.  Time is of the essence for the performance of all Obligations in
this Agreement.


 12.4                Severability
of Provisions.  Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.


12.5                Correction
of Loan Documents.  Bank may correct patent errors and fill in
any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.


 12.6                Amendments
in Writing; Integration.  All amendments to this Agreement must be in
writing and signed by both Bank and Borrower. 
This Agreement and 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 this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents.


12.7                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,
are an original, and all taken together, constitute one Agreement.


 12.8        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
Borrower in Section 12.2 to indemnify Bank shall survive until the statute of
limitations with respect to such claim or cause of action shall have run.




12.9                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 commercially reasonable efforts to obtain
such 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 




16









 




restrictive than those contained herein.  Confidential information does
not include information that either: (i) is 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) is 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 any purpose, including,
without limitation, for the development of client databases, reporting
purposes, and market analysis, so long as Bank does not disclose Borrower's
identity or the identity of any person associated with Borrower unless
otherwise expressly permitted by this Agreement.  The provisions of the immediately preceding sentence shall
survive the termination of this Agreement.


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




13                DEFINITIONS


 


13.1                Definitions.  As used in
this Agreement, the following 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 Borrower.




"Account Debtor"
is any "account debtor" as defined in the Code with such additions to
such term as may hereafter be made.




"Adjusted Quick Ratio" is a ratio
of (a) Quick Assets to (b) Current Liabilities minus Deferred Revenue.


"Advance" or "Advances" means an advance (or
advances) under the Revolving Line.




"Affiliate" of any Person is a
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 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 Borrower.




"Borrower" is defined in the
preamble hereof.




17









 




"Borrower's Books" are all
Borrower's books and records including ledgers, federal and state tax returns,
records regarding 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
(80.0%) of Eligible Accounts, as determined by Bank from Borrower's most recent
Borrowing Base Certificate; 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 Base Certificate" is
that certain certificate in the form attached hereto as Exhibit C.




"Borrowing Resolutions" are, with
respect to any Person, those resolutions adopted by such Person's board of
directors and delivered by such Person to Bank approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby,
together with a certificate executed by its secretary on behalf of such Person
certifying that (a) such Person has the authority to execute, deliver, and
perform its obligations under each of the Loan Documents to which it is a
party, (b) that attached as Exhibit A to such certificate is a true,
correct, and complete copy of the resolutions then in full force and effect
authorizing and ratifying the execution, delivery, and performance by such
Person of the Loan Documents to which it is a party, (c) the name(s) of the
Person(s) authorized to execute the Loan Documents on behalf of such Person,
together with a sample of the true signature(s) of such Person(s), and
(d) that Bank may conclusively rely on such certificate unless and until
such Person shall have delivered to Bank a further certificate canceling or
amending such prior certificate.




"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; and (d) money
market funds at least ninety-five percent (95%) of the assets of which
constitute Cash Equivalents of the kinds described in clauses (a) through (c)
of this definition.


 "Cash Management Services" is defined in Section 2.1.4.




"Claims" is defined in Section
12.2.




"Code" is the Uniform Commercial
Code, as the same may, from time to time, be enacted and in effect in the State
of New York; 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 New York, 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 Borrower 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 D.




"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 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 




18









 




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 Borrower
maintains a Deposit Account or the securities intermediary or commodity
intermediary at which Borrower maintains a Securities Account or a Commodity
Account, Borrower, and Bank pursuant to which Bank obtains control (within the
meaning of the Code) over such Deposit Account, Securities Account, or
Commodity Account.




"Credit Extension" is any Advance,
Equipment Advance, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for
Borrower's benefit.




"Current Liabilities" are all
obligations and liabilities of Borrower to Bank, plus, without duplication, the
aggregate amount of Borrower's Total Liabilities that mature within one (1)
year.




"Default Rate"
is defined in Section 2.3(b).




"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 Borrower's deposit account, account number 3300433681,
maintained with Bank.




"Dollars," "dollars" and
"$" each mean lawful money
of the United States.




"Draw Period"
is the period of time from the Effective Date through the earlier to occur of
(a) May 31, 2009, or (b) an Event of Default.




"Effective Date"
is defined in the preamble of this Agreement.




"Eligible Accounts" means Accounts
which arise in the ordinary course of Borrower's business that meet all
Borrower's representations and warranties in Section 5.3.  Bank reserves the right 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 agrees otherwise 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;




(d)                Accounts billed and/or payable
outside of the United States;




(e)                Accounts owing from an Account
Debtor to the extent that 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 Borrower in the ordinary course of its
business;




(f)                Accounts for which the Account
Debtor is Borrower's Affiliate, officer, employee, or agent;




19









 




(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 Borrower exceed
twenty-five percent (25%) of all Accounts, for the amounts that exceed that
percentage, unless Bank approves in writing;




(i)                Accounts owing from an Account
Debtor which is a United States government entity or any department, agency, or
instrumentality thereof unless 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 that has not been invoiced or 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 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
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 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, 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 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 Borrower's business;




(r)                Accounts for which Borrower has
permitted Account Debtor's payment to extend beyond ninety (90) days;




(s)                Accounts subject to chargebacks
or others payment deductions taken by an Account Debtor (but only to the extent
the chargeback is determined invalid and subsequently collected by Borrower);




(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 for which Bank in its
good faith business judgment determines collection to be doubtful; and




(v)           other Accounts Bank deems ineligible
in the exercise of its good faith business judgment.




"Eligible Equipment" is the following to the extent it complies
with all of Borrower's representations and warranties to Bank, is acceptable to
Bank in all respects, is located at the location of Borrower's chief executive
office or such other location of which Bank has approved in writing, and is
subject to a first priority Lien in favor of 




20









 




Bank: (a) computer equipment, office equipment, and furnishings, subject to
the limitations set forth herein, and (b) Other Equipment.  




"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.




"Equipment Advance" is defined in Section
2.1.5(a).




"Equipment Line" is an Equipment Advance or Equipment
Advances in an aggregate amount of up to One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00).




"Equipment Maturity Date" is, for
each Equipment Advance, the first calendar day of the month that is thirty-six
(36) months after the month in which such Equipment Advance was made.




"ERISA" is the Employee Retirement
Income Security Act of 1974, and its regulations.




"Event of Default"
is defined in Section 8.




"Event of Loss"
is defined in Section 2.1.5(c). 




"Financed Equipment" is all present
and future Eligible Equipment in which Borrower has any interest which is
financed by an Equipment Advance.




"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 on account of Borrower 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 Borrower 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 copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under
applicable law, any applications therefor, whether registered or not, any trade
secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill,
franchise agreements, purchase orders, customer lists, route lists, telephone
numbers, domain names, claims, income and other tax refunds, security and other
deposits, 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.




21









 




"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.




"Guarantor" is any present or future guarantor of
the Obligations.




"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 12.2.




"Initial Equipment Advance" is
defined in Section 2.1.5(a).




"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.




"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 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.




"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(a).




"Letter of Credit Reserve" has the
meaning set forth in Section 2.1.2(d).




"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, any subordination agreement, any
note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement between Borrower any Guarantor 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 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 Borrower
shall fail to comply with one or more of the financial covenants in Section 6
during the next succeeding financial reporting period.




"Maturity Date" is, as applicable,
the Revolving Line Maturity Date or the Equipment Maturity Date.




"Net Income" means, as calculated
for Borrower for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower for such period taken as a single
accounting period.




"Non-SVB Accounts" is defined in
Section 6.6(a).




"Obligations" are Borrower's
obligation to pay when due any debts, principal, interest, Bank Expenses and
other amounts Borrower owes Bank now or later, whether under this Agreement,
the Loan Documents, or otherwise,  




22







 




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 Borrower assigned
to Bank, and the performance of Borrower's 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.




"Other Equipment" is leasehold
improvements, intangible property such as transferable software licenses, and
other similar property and soft costs approved by Bank, including sales taxes,
freight discounts and installation expenses. 




"Payment/Advance Form" is that
certain form attached hereto as Exhibit B.




"Payment Date" is the first (1st)
calendar day of each month.




"Perfection Certificate" is defined
in Section 5.1.




"Permitted Indebtedness" is:




(a)                Borrower's 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 secured by
Permitted Liens; and




(f)                extensions, refinancings,
modifications, amendments and restatements of any items of Permitted
Indebtedness (a) through (d) above, provided that the principal amount thereof
is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be.




"Permitted
Investments" are:




(a)                Investments shown on the
Perfection Certificate and existing on the Effective Date; 




(b)           Cash Equivalents; and




(c)                Investments
permitted by Borrower's investment policy, as amended from time to time,
provided that such investment policy (and any such amendment thereto) has been
approved by Bank.




"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 not delinquent or being contested in
good faith and for which 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;




23









 




(c)                purchase money Liens (i) on
Equipment (other than Financed Equipment) acquired or held by Borrower incurred
for financing the acquisition of the Equipment securing no more than One
Million Two Hundred Fifty Thousand Dollars ($1,250,000.00), inclusive of all
outstanding Equipment Advances hereunder, in the aggregate amount outstanding,
or (ii) existing on Equipment (other than Financed Equipment) when acquired, if
the Lien is confined to the property and improvements and the proceeds of the
Equipment; 




(d)           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; 





(e)           leases or subleases of real property
granted in the ordinary course of business, and leases, subleases, non-exclusive
licenses or sublicenses of property (other than real property or intellectual
property) granted in the ordinary course of Borrower's business, if the
leases, subleases, licenses and sublicenses do not prohibit granting Bank a
security interest;




(f)            non-exclusive license of
intellectual property granted to third parties in the ordinary course of
business; and




(g)           Liens arising from judgments, decrees
or attachments in circumstances not constituting an Event of Default under
Section 8.4 or 8.7.




"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 Bank's most recently announced "prime rate," even
if it is not Bank's lowest rate.




"Quick
Assets" is, on any date, Borrower's unrestricted cash and net billed
accounts receivable determined according to GAAP.




"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.




"Responsible
Officer" is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.




"Revolving
Line" is an Advance or Advances in an amount equal to One Million Five
Hundred Thousand Dollars ($1,500,000.00).




"Revolving
Line Maturity Date" is June 18, 2009.




"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.




"Subordinated Debt" is indebtedness
incurred by Borrower subordinated to all of 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" means, with respect to
any Person, any Person of which more than 50.0% of the voting stock or other
equity interests (in the case of Persons other than corporations) is owned or
controlled directly or indirectly by such Person or one or more of Affiliates
of such Person.




24









 




"Tangible Net Worth" is, on any
date, the total assets of Borrower minus (a) any amounts attributable to
(i) goodwill, (ii) intangible items including unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research
and development expenses except prepaid expenses, (iii) notes, accounts
receivable and other obligations owing to Borrower from its officers or other
Affiliates, and (iv) reserves not already deducted from assets, minus
(b) Total Liabilities, plus (c) Subordinated Debt.




"Total Liabilities" is on any day,
obligations that should, under GAAP, be classified as liabilities on Borrower's
consolidated balance sheet, including all Indebtedness and current portion of
Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all
other Subordinated Debt.




"Transfer" is defined in Section
7.1. 


 


[Signature
page follows.]












25



 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the Effective Date.




BORROWER:




CHYRON CORPORARTION




	
  By:

  	
  /s/ Jerry Kieliszak

  
	
  Name:

  	
  Jerry Kieliszak

  
	
  Title:

  	
  Senior Vice President &
  Chief Financial Officer

  
	

  	

  
	

  	

  
	
  BANK:

  
	

  	

  
	
  SILICON VALLEY BANK

  
	

  	

  
	
  By:

  	
  /s/ Melissa Stepanis

  
	
  Name:

  	
  Melissa Stepanis

  
	
  Title:

  	
  Vice President

  



  

1













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 (except as provided below),
commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
certificates of deposit, 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.




Notwithstanding
the foregoing, the Collateral does not include:  (a) any of the following, whether now owned or hereafter acquired,
any copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published
or unpublished, any patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues,
extensions, and continuations-in-part of the same, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, and the goodwill of the business of Borrower
connected with and symbolized thereby, know-how, operating manuals, trade
secret rights, rights to unpatented inventions, and any claims for damage by
way of any past, present, or future infringement of any of the foregoing;
provided, however, the Collateral shall include all Accounts, license and
royalty fees and other revenues, proceeds, or income arising out of or relating
to any of the foregoing; or (b) any equipment whose purchase is financed by any
other lender (either by loan or by lease), solely to the extent the security
agreement with such lender prohibits junior liens on such equipment, and only
until the lien held by such other lender is terminated or released with respect
to such equipment.




Pursuant
to the terms of a certain negative pledge arrangement with Bank, Borrower has
agreed not to encumber any of its copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and
any claims for damage by way of any past, present, or future infringement of
any of the foregoing, without Bank's prior written consent.








1



 


EXHIBIT B - LOAN
PAYMENT/ADVANCE REQUEST FORM


Deadline for same day processing is Noon E.S.T.*


 


Fax To: 
                                        Date:
_____________________






Loan Payment:


CHYRON CORPORATION


 


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 Borrower's 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, E.S.T. 




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
#:                              





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


1












EXHIBIT C - BORROWING BASE CERTIFICATE




Borrower: Chyron Corporation

Lender:   Silicon Valley Bank

Commitment Amount:                $1,500,000.00




	
  ACCOUNTS RECEIVABLE

  	

  	

  
	
  1.                   
  Accounts Receivable (invoiced) Book Value as of
  ____________________

  	
  $

  	
   

  
	
  2.                   
  Additions (please explain on reverse)

  	
  $

  	
   

  
	
  3.                   
  TOTAL ACCOUNTS RECEIVABLE

  	
  $

  	
   

  
	

  	

  	

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	

  	

  
	
  4.                   
  Amounts over 90 days due

  	
  $

  	
   

  
	
  5.                   
  Balance of 50% over 90 day accounts

  	
  $

  	
   

  
	
  6.                   
  Foreign Accounts

  	
  $

  	
   

  
	
  7.                   
  Foreign Invoiced Accounts

  	
  $

  	
   

  
	
  8.                   
  Contra/Customer Deposit Accounts

  	
  $

  	
   

  
	
  9.                   
  Intercompany/Employee Accounts

  	
  $

  	
   

  
	
  10.                
  Credit balances over 90 days

  	
  $

  	
   

  
	
  11.                
  Concentration Limits

  	
  $

  	
   

  
	
  12.                
  U.S. Governmental Accounts

  	
  $

  	
   

  
	
  13.                
  Promotion or Demo Accounts; Guaranteed Sale or Consignment
  Sale Accounts

  	
  $

  	
   

  
	
  14.                
  Accounts with Progress/Milestone/Pre-billings; Contract
  Accounts

  	
  $

  	
   

  
	
  15.                
  Accounts for Retainage Billings

  	
  $

  	

  
	
  16.                
  Trust Accounts

  	
  $

  	

  
	
  17.                
  Bill and Hold Accounts

  	
  $

  	

  
	
  18.                
  Unbilled Accounts

  	
  $

  	

  
	
  19.                
  Non-Trade Accounts

  	
  $

  	

  
	
  20.                
  Accounts with Extended Term Invoices 

  	
  $

  	

  
	
  21.                
  Accounts subject to Chargebacks

  	
  $

  	

  
	
  22.                
  Disputed Accounts

  	
  $

  	

  
	
  23.                
  Other (please explain on reverse)

  	
  $

  	

  
	
  24.                
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
  $

  	

  
	
  25.                
  Eligible Accounts (#3 minus #24)

  	
  $

  	

  
	
  26.                
  ELIGIBLE AMOUNT OF ACCOUNTS (80.0% of #25)

  	
  $

  	

  
	

  	

  	

  
	
  BALANCES

  	

  	

  
	
  27.                
  Maximum Loan Amount

  	
  $

  	

  
	
  28.                
  Total Funds Available (Lesser of #27 or #26)

  	
  $

  	

  
	
  29.                
  Present balance owing on Line of Credit

  	
  $

  	

  
	
  30.                
  Outstanding under Sublimits

  	
  $

  	

  
	
  31.                
  RESERVE POSITION (#28 minus #29 and #30)

  	
  $

  	

  





[Continued on following page.]

1











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




	
  COMMENTS:



  By:
  ___________________________

  Authorized
  Signer

  Date:                                                           

  	
  BANK USE ONLY

  Received by: _____________________

  authorized
  signer

  Date:  
  __________________________

  Verified: ________________________

  authorized
  signer

  Date: ___________________________

  Compliance Status:              Yes         No

  












2



 


EXHIBIT D - COMPLIANCE
CERTIFICATE




 


TO: SILICON
VALLEY BANK                                                   Date:                                       


FROM:  CHYRON
CORPORATION




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


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

  
	

  
	
  Reporting Covenant

  	
  Required

  	
  Complies

  
	

  	

  	

  
	
  Monthly financial statements with 

  Compliance Certificate

  	
  Monthly within 30 days

  	
  Yes   No

  
	
  Annual financial statement (CPA
  Audited)

  	
  FYE within 90 days

  	
  Yes   No

  
	
  Borrowing Base Certificate (with A/R
  & A/P Agings)

  	
  Monthly within 30 days

  	
  Yes   No

  
	

  
	
  Financial Covenant

  	
  Required

  	
  Actual

  	
  Complies

  
	

  	

  	

  	

  
	
  Maintain at all times:

  	

  	

  	

  
	

  	

  	

  	

  
	
  Adjusted Quick Ratio (to be tested on
  the last day of each month)

  	
  1.25:1.0

  	
  ____:1.0

  	
  Yes   No

  
	
  Tangible Net Worth (to be tested on
  the last day of each quarter)

  	
  $*

  	
  $________

  	
  Yes   No

  
						





*As set forth in Section
6.7(b) of the Agreement.
 3











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.")


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




	
  CHYRON CORPORATION



  By:                                                                             

  Name:                                                                        

  Title:                                                                          


  	
  BANK USE ONLY


  Received by: _____________________

  authorized signer

  Date:    _________________________


  Verified: ________________________

  authorized signer

  Date:    _________________________


  Compliance Status:           Yes     No

  



  

4













Schedule 1 to Compliance
Certificate


Financial Covenants of
Borrower


 


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




Dated:                ____________________






I.              Adjusted Quick Ratio (Section 6.7(a))


Required:                1.25:1.00



Actual:                   ____:1.00




	
  A.

  	
  Aggregate
  value of the unrestricted cash of Borrower

  	
  $              

   

  
	
  B.

  	
  Aggregate
  value of the net billed accounts receivable of Borrower

  	
  $              

   

  
	
  C.

  	
  Quick
  Assets (the sum of lines A through B)

  	
  $              

   

  
	
  D.

  	
  Aggregate
  value of Obligations to Bank

  	
  $              

   

  
	
  E.

  	
  Aggregate
  value of liabilities of Borrower (including all Indebtedness) that mature
  within one (1) year and current portion of Subordinated Debt permitted by Bank
  to be paid by Borrower

  	
   

        $        

   

  
	
  F.

  	
  Current
  Liabilities (the sum of lines D and E)  

  	
  $              

   

  
	
  G

  	
  Deferred
  Revenue


  	
  $              

   

  
	
  H

  	
  Line
  F minus line G

  	
  $              

   

  
	
  I.

  	
  Adjusted
  Quick Ratio (line C divided by line H)

  	
                  

  







Is
line I equal to or greater than 1.25:1.00?




                                  No, not in
compliance                                                                                           Yes, in compliance






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


Required:                $_________
(as set forth in Section 6.7(b))




Actual:                   $_________




  No,
not in compliance                                                                                          Yes, in compliance






1080644.5






5