Exhibit 4.5


 


AMENDMENT NO. 4

TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


 


AMENDMENT NO. 4 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of October 28,
2010 (this “Amendment”), among InfoLogix, Inc., a Delaware
corporation (“Parent Borrower”), InfoLogix Systems Corporation, a
Delaware corporation (“ISC”), Embedded Technologies, LLC, a Delaware
limited liability company (“Embedded”), Opt Acquisition LLC, a
Pennsylvania limited liability company (“Opt”), and InfoLogix—DDMS, Inc.,
a Delaware corporation (“DDMS”) (Parent Borrower, ISC, Embedded,
Opt and DDMS are each referred to herein as a “Borrower” and
collectively as “Borrowers”) and Hercules Technology Growth Capital, Inc.,
a Maryland corporation (“Lender”). 
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in (a) the Loan Agreement referred to below or (b) in
the event that such terms are not defined in the Loan Agreement, the Loan
Documents (as defined in the Loan Agreement).


 


RECITALS


 


WHEREAS, on November 20, 2009, Borrowers and Lender
entered into that certain Amended and Restated Loan and Security Agreement (as
amended, restated, supplemented or otherwise modified and in effect from time
to time, the “Loan Agreement”), pursuant to which, subject to the terms
and conditions set forth therein, Lender made advances and other extensions of
credit available to Borrowers.


 


WHEREAS, Events of
Default exist under (a) Section 9.1 and Section 9.2 of the Loan
Agreement as a result of a breach of Section 2.1(c) and Section 2.6(a)(i) of
the Loan Agreement, (b) Section 9.2 of the Loan Agreement as a result
of a breach of Section 7.20(d) of the Loan Agreement for the month of
February 2010, March 2010, April 2010, May 2010, July 2010
and August 2010, (c) Section 9.2 of the Loan Agreement as a
result of a breach of Section 7.20(a) of the Loan Agreement for the
Three Month Measurement Period ending December 2009, January 2010, February 2010,
March 2010, April 2010, May 2010, June 2010, July 2010
and August 2010, (d) Section 9.2 of the Loan Agreement as a
result of a breach of Section 7.20(b) of the Loan Agreement for the
Twelve Month Measurement Period ending June 30, 2010 and (e) Section 9.2
of the Loan Agreement as a result of a breach of Section 7.20(c) of
the Loan Agreement for the Twelve Month Measurement Period ending June 30,
2010; such Events of Default described in clauses (a), (b), (c),
(d) and (e) are herein referred to as the “Specified
Events of Default”.


 


WHEREAS, (a) as evidenced by that certain letter
agreement between the Lender and the Borrowers (i) dated September 10,
2010, the Lender made, on September 13, 2010, an Overadvance (the “Initial
Overadvance”) to the Borrowers in the amount of $500,000, (ii) dated October 1,
2010, the Lender made an Overadvance to the Borrowers in the amount of $500,000
and (iii) dated October 8, 2010, the Lender made an Overadvance to
the Borrowers in the amount of $1,000,000 and (b) on October 28,
2010, the Lender made an Overadvance to the Borrowers in the amount of
$1,400,000.


 


WHEREAS, Borrowers have requested that Lender (a) provide
a term loan in an original principal amount of $500,000 to refinance the
Initial Overadvance and (b) amend certain terms and provisions of the Loan
Agreement.


 


WHEREAS, Lender is agreeable to amend the terms of the Loan
Agreement as herein provided, subject to the terms and conditions of this
Amendment.


 

















 


NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:


 


AGREEMENTS


 


§1.          Amendments to Loan Agreement and Exhibits Thereto.  The Loan Agreement and Exhibits thereto are
hereby amended as provided in the marked pages of the Loan Agreement and
such Exhibits attached hereto as Exhibit A.


 


§2.          Ratification of Loan Documents, Etc.  Each Borrower hereby adopts again, ratifies
and confirms in all respects, as its own act and deed: (i) each of the
Loan Agreement and the other Loan Documents to which such Borrower is a party; (ii) the
grant of a security interest under the Loan Agreement and the other Loan
Document in the Collateral, together with any and all UCC financing statements,
United States Patent and Trademark Office recordings, United States Copyright
Office recordings, and other instruments or documents previously executed in
connection therewith to create, evidence, perfect or preserve the priority of
such security interest and Lien in favor of Lender; (iii) each of the
other instruments or documents delivered in connection with the Loan Agreement
or any of the Loan Documents and purported to be executed by it and
acknowledges that all of the foregoing Loan Documents and other instruments,
documents, filings and recordings shall continue in full force and effect.  Each pledgor under a Pledge Agreement hereby
adopts again, ratifies and confirms in all respects, as its own act and deed,
each pledge granted by such pledgor thereunder. 
By its signature below, each Borrower hereby consents to this Amendment,
and after taking into account this Amendment, acknowledges that this Amendment
shall not alter, release, discharge or otherwise affect any of its obligations
under any Loan Document under which such Borrower acts as a secondary obligor,
if any.


 


§3.          Representations and Warranties.  Each
Borrower hereby represents and warrants to Lender as follows:


 


(a)           The execution and delivery of this Amendment and the
performance of the Loan Agreement, as amended by this Amendment, by the
Borrowers and the transactions contemplated hereby (i) are within the
corporate or company authority of each Borrower, as applicable, (ii) have
been duly authorized by all necessary corporate and company proceedings, as
applicable, (iii) do not and will not contravene with (A) any
provision of law, statute, rule, regulation, order, writ, judgment, injunction,
decree or award binding on such Borrower or any of its Subsidiaries or (B) such
Borrower’s certificate or articles of incorporation or formation, other charter
documents, by-laws or limited liability company agreements, other company
agreements, or any stock or membership provision or any amendment thereof or (C) the
provisions of any contract or agreement binding upon such Borrower.


 


(b)           The execution and delivery of this Amendment and
performance of the Loan Agreement, as amended by this Amendment, by the
Borrowers and the transactions contemplated hereby are valid and legally
binding obligations of each Borrower, enforceable against each such Borrower in
accordance with the respective terms and provisions hereof.


 


(c)           No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or subdivision thereof, is required to be obtained in connection
with the execution and delivery of this Amendment, the performance by Borrowers
and their Subsidiaries of 


 

















 


their obligations under this Amendment and the Loan
Agreement as amended hereby or the legality, validity, binding effect or
enforceability of any of the Loan Documents.


 


(d)           Each of the representations and warranties of such
Borrower contained in the Loan Agreement as amended hereby or in any document
or instrument delivered pursuant to or in connection with the Loan Agreement as
amended hereby are true and correct in all material respects (other than to the
extent that any representation and warranty is already qualified by
materiality, in which case, such representation and warranty shall be true and
correct) as of the date hereof.


 


(e)           Other than the Specified Events of Default, after taking
into account this Amendment, no Event of Default has occurred and is
continuing, and no event has occurred and is continuing that, with the passage
of time or giving of notice, or both, would constitute an Event of Default.


 


§4.          Conditions to Effectiveness.  This Amendment shall become effective as of
the date first written above upon the receipt by Lender of each of the
following items:


 


(a)           Lender shall have received a duly executed copy of this
Amendment by Borrowers.


 


(b)           Lender shall have received a duly executed Term Note D by
Borrowers.


 


(c)           Lender shall have received a duly executed registration
rights agreement by Parent Borrower in favor of Lender in the form of Exhibit B
attached hereto.


 


(d)           Lender shall have received copies, certified by the
Secretary or Assistant Secretary (or the equivalent thereof) of each Borrower,
in each case, of its certificate of incorporation or formation, as applicable
(each certified by the Secretary of State of the State of such Borrower’s
incorporation or formation, as applicable, as of a recent date), its by-laws or
limited liability company agreement, as applicable, (or, to the extent that
there have been no amendments or modifications to such documents since the date
such documents were last delivered to Lender, and such documents remain in full
force and effect, Lender shall have received a certification with respect
thereto), its Board of Directors’ resolutions and of resolutions or actions of
any other body authorizing the execution of the Loan Documents to which such
Borrower is a party, the incumbency of its officers authorized to sign the Loan
Documents, which shall identify by name and title and bear the signatures of
the authorized officers and any other officers of such Borrower authorized to
sign the Loan Documents to which such Borrower is a party (or, to the extent
that the authorized officers of the applicable Person remains the same as the
certification received as of the Closing Date, Lender shall have received a
certification with respect thereto), which such documents shall be in form and
substance reasonably satisfactory to Lender and upon which certificate Lender
shall be entitled to rely until informed of any change in writing by such
Borrower.


 


(e)           Borrowers shall have paid in immediately available funds (i) all
costs, internal charges and out-of-pocket expenses (including reasonable
attorneys’ fees and expenses) of Lender and (ii) all reasonable fees and
expenses of Morgan, Lewis & Bockius LLP, counsel to Lender.


 


(f)            Lender shall have received such other documents as Lender
or its counsel may have reasonably requested.


 


§5.          Effect of Amendment.  Except as expressly set forth herein, this
Amendment does not constitute an amendment of any term or condition of the Loan
Agreement or any other Loan Document, and all such terms and conditions shall
remain in full force and effect and are hereby 


 

















 


ratified and confirmed in all respects.  Nothing contained in this Amendment shall be
construed to imply a willingness on the part of Lender to grant any similar or
other future amendments of any of the terms and conditions of the Loan
Agreement or the other Loan Documents. 
Nothing contained in this Amendment shall in any way prejudice, impair
or otherwise adversely affect any rights or remedies of Lender under the Loan
Agreement, as amended, or any other Loan Document generally and specifically in
respect of the Specified Events of Default . 
Nothing contained in this Amendment shall be construed to constitute a
waiver or forbearance of the Specified Events of Default, which shall continue
to exist following the effectiveness of this Amendment and for which Lender
shall continue to have all rights and remedies of Lender under the Loan
Documents in respect thereof.  This
Amendment shall constitute a Loan Document.


 


§6.          Release.  Each Borrower, on behalf of itself and its
affiliates, and its or their successors, assigns and agents, hereby expressly
forever waives, releases and discharges any and all claims (including, without
limitation, cross-claims, counterclaims, and rights of setoff and recoupment),
causes of action (whether direct or derivative in nature), demands, suits,
costs, liabilities, responsibilities, disputes, obligations, expenses and
damages (collectively, the “Claims”) any of them may have or allege to
have as of the date of this Amendment (and all defenses that may arise out of
any of the foregoing) of any nature, description, or kind whatsoever, based in
whole or in part on facts, whether actual, contingent or otherwise, now known,
unknown, or subsequently discovered, whether arising in law, at equity or
otherwise, against either Lender or Holder, or any of their respective
subsidiaries, affiliates, agents, principals, managers, managing members,
members, stockholders, “controlling persons” (within the meaning of the United
States federal securities laws), directors, officers, employees, attorneys,
consultants, advisors, agents, trusts, trustors, beneficiaries, heirs,
executors and administrators of each of the foregoing (collectively, the “Released
Parties”) arising out of the Existing Agreement, the Existing Loan
Documents, the Existing Warrant Agreement, the Loan Agreement, the Loan
Documents and any or all of the actions and transactions contemplated hereby or
thereby, including any actual or alleged performance or non-performance of any
of the Released Parties under the Existing Agreement, the Existing Loan
Documents, the Existing Warrant Agreement, the Loan Agreement and the Loan
Documents; provided that nothing in this Amendment shall be deemed to
release Lender from any of its obligations under the Loan Agreement or Holder
from any of its obligations under the Existing Warrant Agreement.  Each Borrower hereby acknowledges that the
agreements in this Section 6 are intended to be in full
satisfaction of all or any alleged injuries or damages arising in connection
with the Claims.  In entering into this
Amendment, each Borrower expressly disclaims any reliance on any
representations, acts, or omissions by any of the Released Parties and hereby
agrees and acknowledges that the validity and effectiveness of the releases set
forth above does not depend in any way on any such representation, acts and/or
omissions or the accuracy, completeness, or validity thereof.  The provisions of this Section 6
shall survive (i) the entry into the Loan Agreement and the Loan
Documents, the payment in full of all Secured Obligations of Borrowers under or
in respect of the Loan Agreement and the other Loan Documents and all other
amounts owing thereunder and the termination of all such Loan Documents and (ii) the
exercise by Holder of any and all of its rights under the Existing Warrant
Agreement.


 


§7.          Miscellaneous.


 


(a)           Governing Law. 
This Amendment has been negotiated and delivered to Lender in the State
of California, and shall have been accepted by Lender in the State of
California.  This Amendment shall be governed
by, and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.


 

















 


(b)           Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent that
the reference requirement of Section 7(c) is not applicable)
arising in or under or related to this Amendment may be brought in any state or
federal court located in the State of California.  By execution and delivery of this Amendment,
each party hereto generally and unconditionally: (a) consents to
nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives
any objection as to jurisdiction or venue in Santa Clara County, State of
California; (c) agrees not to assert any defense based on lack of
jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees
to be bound by any judgment rendered thereby in connection with this
Amendment.  Service of process on any
party hereto in any action arising out of or relating to this Amendment shall
be effective if given in accordance with the requirements for notice set forth
in Section 11.2 of the Loan Agreement, and shall be deemed effective and
received as set forth in Section 11.2 of the Loan Agreement.  Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
either party to bring proceedings in the courts of any other jurisdiction.


 


(c)           Mutual Waiver of Jury Trial / Judicial Reference.


 


(i)            Because disputes arising in connection with complex
financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal
laws to apply (rather than arbitration rules), the parties desire that their
disputes be resolved by a judge applying such applicable laws.  EACH OF BORROWER AND LENDER SPECIFICALLY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION,
CLAIM, CROSS CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “SECTION 7 CLAIMS”) ASSERTED BY BORROWER AGAINST
LENDER OR ITS ASSIGNEE OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Section 7
Claims, including Section 7 Claims that involve Persons other than
Borrowers and Lender; Section 7 Claims that arise out of or are in any way
connected to the relationship between any Borrower and Lender; and any Section 7
Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Amendment.


 


(ii)           If the waiver of jury trial set forth in Section 7(c)(i) is
ineffective or unenforceable, the parties agree that all Section 7 Claims
shall be resolved by reference to a private judge sitting without a jury,
pursuant to Code of Civil Procedure Section 638, before a mutually
acceptable referee or, if the parties cannot agree, a referee selected by the
Presiding Judge of the Santa Clara County, California.  Such proceeding shall be conducted in Santa
Clara County, California, with California rules of evidence and discovery
applicable to such proceeding.


 


(iii)          In the event Section 7 Claims are to be resolved by
judicial reference, either party may seek from a court identified in Section 7(b),
any prejudgment order, writ or other relief and have such prejudgment order,
writ or other relief enforced to the fullest extent permitted by law
notwithstanding that all Section 7 Claims are otherwise subject to
resolution by judicial reference.


 


(d)           Counterparts. 
This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. 
Delivery of an executed counterpart of a signature page of this
Amendment by facsimile or other electronic methods shall be effective as
delivery of a manually executed counterpart of this Amendment.


 

















 


(e)           Payment of Fees. 
Each Borrower hereby agrees to pay Lender, on demand by Lender, all
Lender Expenses and all other professional fees set forth in Section 11.11
of the Loan Agreement.


 


[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]


 

















 


IN WITNESS WHEREOF, Borrowers and Lender have
duly executed and delivered this Amendment No. 4 to Amended and Restated Loan
and Security Agreement as of the day and year first above written.


 


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David T. Gulian

  
	
   

  	
   

  	
  David
  T. Gulian, President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX
  SYSTEMS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David T. Gulian

  
	
   

  	
   

  	
  David
  T. Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPT
  ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  InfoLogix
  Systems Corporation, its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMBEDDED
  TECHNOLOGIES, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  InfoLogix
  Systems Corporation, its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David T. Gulian

  
	
   

  	
   

  	
  David
  T. Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX
  — DDMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  David T. Gulian

  
	
   

  	
   

  	
  David
  T. Gulian, President

  



 

















 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HERCULES
  TECHNOLOGY GROWTH CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:
  

  	
  /s/
  K. Nicholas Martitsch

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name: 

  	
  K.
  Nicholas Martitsch

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  Associate
  General Counsel

  



 

















 


Exhibit A


 
















 


Exhibit A to [Amendments]Amendment
No. 1 No. 2 and No. 3 4 to Amended and
Restated Loan and


Security Agreement


 


AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT is made and dated as of November 20, 2009 and is
entered into by and among InfoLogix, Inc., a Delaware corporation (“Parent
Borrower”), InfoLogix Systems Corporation, a Delaware corporation (“ISC”),
Embedded Technologies, LLC, a Delaware limited liability company (“Embedded”),
Opt Acquisition LLC, a Pennsylvania limited liability company (“Opt”), and
InfoLogix—DDMS, Inc., a Delaware corporation (“DDMS”) (Parent Borrower, ISC,
Embedded, Opt and DDMS are each referred to herein as a “Borrower” and
collectively as “Borrowers”) and Hercules Technology Growth Capital,
Inc., a Maryland corporation (“Lender”).


 


RECITALS


 


A.            Under the Existing Agreement (as
defined below), Borrowers requested Lender to make available to them (i) a term
loan (the “Existing Term Loan”) in an initial aggregate principal amount
of $12,500,000 (the “Existing Term Loan Commitment”) and (ii) a
revolving facility (the “Existing Revolving Loan”) in an initial
aggregate principal amount of $12,500,000 (the “Existing Revolving Loan
Commitment”); and


 


B.            Under the First Amendment to Existing
Agreement, dated as of November 19, 2008, the Existing Revolving Loan
Commitment Amount was reduced to an aggregate principal amount of $9,000,000;
and


 


C.            As of the date hereof and
immediately prior to giving effect to this Agreement, the Existing Secured
Obligations equal $22,725,811.89, of which (i) $9,102,836 constitutes the
aggregate principal amount of all Existing Revolving Loans, (ii) $11,768,582
constitutes the aggregate principal amount of the Existing Term Loan, (iii)
$68,422 constitutes the aggregate accrued and unpaid interest on all Existing
Revolving Loans, (iv) $98,521 constitutes the aggregate accrued and unpaid
interest on the Existing Term Loan, (v) $160,000 constitutes that unpaid
portion of the Restructuring Fee under and as defined in the Existing Agreement
and (vi) $1,527,450.89 constitutes all other outstanding Existing Secured
Obligations; and


 


D.            As of the date hereof and
immediately prior to giving effect to this Agreement, Lender assigned to
Hercules Technology I, LLC a portion of its interest in the Existing Term Loan
equal to $5,000,000, and substantially contemporaneously therewith, Hercules
Technology I, LLC cancelled such $5,000,000 in exchange for 67,294,751 shares
of common Capital Stock of Parent Borrower at par $0.00001; and


 


E.             In connection with the negotiations to restructure the
Existing Agreement, Borrowers have requested that Lender amend and restate the
Existing Agreement and restructure the Existing Term Loan and the Existing
Revolving Commitments and continue such loans hereunder as follows: (i) a term
loan A(the “Term Loan A”) in an initial aggregate principal amount of
$5,500,000 (the “Term Loan A Commitment”), (ii) a term loan B(the “Term
Loan  B”) in an initial aggregate
principal amount of $5,000,000 (the “Term Loan B Commitment”)  and
(iii) a revolving facility (the “Revolving Loan”) in an initial
aggregate principal of $12,000,000 (the “Revolving Loan Commitment”);
and


 

















 


F. Lender is willing to
amend and restate the Existing Agreement and restructure the Existing Term and
Existing Revolving Commitments as herein provided on the terms and conditions
set forth in this Agreement.


 


AGREEMENT


 


NOW, THEREFORE, each Borrower and Lender agree as
follows:


 


SECTION 1. DEFINITIONS, RULES OF
CONSTRUCTION AND ACKNOWLEDGMENTS


 


1.1. Definitions. Unless otherwise defined
herein, the following capitalized terms shall have the following meanings:


 


“90-Day VWAP Price” means, as of
the date of determination, the price per share of common Capital Stock of
Parent Borrower equal to: (A) the ninety (90) day volume weighted average
price per share of Parent Borrower’s common Capital Stock, determined by
reference to the closing price on an Approved Exchange of such common Capital
Stock during such period, so long as, as of the date of determination, the
common Capital Stock of the  Parent
Borrower is listed an Approved Exchange or (B) in accordance with the
Valuation  Procedures, in the event the
common Capital Stock of Parent Borrower has ceased to be  listed on an Approved Exchange.


 


“2009 Recapitalization” means the
recapitalization of the Parent Borrower’s Capital Stock pursuant to that
certain Debt Conversion Agreement.


 


“Account Control
Agreement(s)” means any agreement in form, scope and substance
satisfactory to Lender entered into by Lender, any Borrower and a third party
bank or other institution (including a securities intermediary) in which such
Borrower maintains a deposit account or securities account and which grants
Lender a perfected first priority security interest in the subject account or
accounts.


 


“ACH Authorization” means the ACH
Debit Authorization Agreement in substantially the form of Exhibit I.


 


“Acquisition Agreement” means the
acquisition agreement entered into in connection with a Permitted Acquisition.


 


“Acquisition Documents” means the
Acquisition Agreement and each other agreement, instrument, side letter or
other document executed and delivered in connection with a Permitted
Acquisition.


 


“Adjusted 30-Day VWAP Price” means, as of
the date of determination, the price per share of common Capital Stock of
Parent Borrower equal to: (A) the thirty (30) day volume weighted average price
of Parent Borrower’s common Capital Stock, determined by reference to: the
closing price of such common Capital Stock as listed on the Approved Exchange
during such period, multiplied by eighty percent (80%), so long as, as
of the date of determination, the common Capital Stock of the Parent Borrower
is listed an Approved Exchange or (B) in


 


2

















 


in
each case to the extent treated as interest in accordance with GAAP, and (b)
the portion of rent expense under capitalized leases that is treated as
interest in accordance with GAAP, in each case, of or by Parent Borrower and
its Subsidiaries on a consolidated basis for the most recently completed
Measurement Period. For purposes of calculating the Consolidated Interest
Coverage Ratio, interest shall be included herein to the extent paid in cash or
required to be paid in cash.


 


“Consolidated Interest
Coverage Ratio” means, as of the date of determination, the ratio of
(a) Consolidated Adjusted EBITDA for the most recently completed Three Month
Measurement Period to (b) Consolidated Interest Expense for such Three Month
Measurement Period.


 


“Consolidated Total Leverage
Ratio” means, as of the date of determination, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) Consolidated Adjusted EBITDA for the
most recently completed Twelve Month Measurement Period.


 


“Contingent Obligation” means, as
applied to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to (i) any indebtedness, letter of
credit or other obligation of another, including any such obligation directly
or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse
by that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit, corporate credit cards or merchant services issued for the account of
that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest
rate collar agreement, or other agreement or arrangement designated to protect
a Person against fluctuation in interest rates, currency exchange rates or
commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that
such amount shall not in any event exceed the maximum amount of the obligations
under the guarantee or other support arrangement.


 


“Converted Adjusted Debt
Amount” means, as of the date of determination, an amount
equal to fifty percent (50%) of the aggregate outstanding principal amount of
the Term Loan B.


 


“Converted Debt Amount” means, as of
the date of determination, the aggregate outstanding principal amount of the
Term Loan B.


 


“Converted Term Loan C Debt
Amount” means, as of the date of determination, the
aggregate outstanding principal amount of the Term Loan C.


 


“Converted Term Loan D Debt
Amount” means, as of the date of determination, the aggregate outstanding
principal amount of the Term Loan D.


 


“Copyright License” means any written agreement
granting any right to use any Copyright or Copyright registration, now owned or
hereafter acquired by any Borrower or in which any Borrower now holds or
hereafter acquires any interest.


 


7

















 


“Equipment Term Loan Lockbox”
means a lockbox maintained with a financial institution acceptable to
Lender in its sole discretion and in the name of Lender.


 


“Equipment Term Loan
Maturity Date” means December 31, 2010.


 


“Equipment Term Loan Note” means a
promissory note in substantially the form of Exhibit B-4.


 


“Event of Default” has the meaning
given to it in Section 9.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended.


 


“Existing Agreement” means that certain Loan and
Security Agreement dated as of May 1, 2008 among the Borrowers and Lender, as
amended prior to the date hereof and as further amended and restated by this
Agreement.


 


“Existing Loan Documents” means those
certain “Loan Documents” executed and delivered in connection with the Existing
Agreement from time to time.


 


“Existing Revolving Loan” has the meaning
ascribed to such term in the Recitals hereto.


 


“Existing Revolving Loan
Commitment” has the meaning ascribed to such term in the
Recitals hereto.


 


“Existing Secured
Obligations” means all “Secured Obligations” arising under the
Existing Agreement.


 


“Existing Term Loan” has the meaning
ascribed to such term in the Recitals hereto.


 


“Existing Term Loan
Commitment” has the meaning ascribed to such term in the
Recitals hereto.


 


“Facility Charge” means an amount equal to
$450,000.


 


“Financial Statements” has the meaning
given to it in Section 7.1.


 


“First Amendment” means Amendment
No. 1 to Amended and Restated Loan and Security Agreement, dated as of February
19, 2010, among Borrowers and Lender.


 


“First Amendment Effective
Date” means February 19, 2010.


 


“Fourth Amendment” means
Amendment No. 4 to Amended and Restated Loan  and Security Agreement,
dated as of October 28, 2010, among Borrowers and Lender.


 


“Fourth Amendment Effective
Date” means October 28, 2010.


 


“GAAP” means generally accepted
accounting principles in the United States of America, as in effect from time
to time.


 


11

















 


“Measurement Period” means, at any
date of determination, the most recently completed Twelve Month Measurement
Period or Three Month Measurement Period, of Borrowers, as applicable.


 


“Nasdaq” means The Nasdaq Stock
Market, LLC.


 


“Note(s)” means, collectively, the
Revolving Notes, the Term Notes A, Term Notes B, the Term Notes C; the Term Notes D and/or the
Equipment Term Loan Note.


 


“Opt” has the meaning ascribed to
such term in the Preamble hereof.


 


“Overadvance” or “Overadvances” has
the meaning ascribed to such terms in Section 2.1(c) hereof.


 


[“Overadvance Period” means a
period of up to twenty-eight (28) consecutive calendar days following the
making of an Overadvance under Section 2.1(c) hereof.]


 


[“Overadvance
Clean Down Period” means, with respect to any Overadvance and as of the date of
determination, a period of fourteen (14) consecutive calendar days following
the date which is last day of an Overadvance Period for the initial Overadvance
made during such Overadvance Period.]


 


“Parent Borrower” has the meaning ascribed to
such term in the Preamble hereof.


 


“Patent License” means any
written agreement granting any right with respect to any invention on which a
Patent is in existence or a Patent application is pending, in which agreement
Parent Borrower or a Subsidiary now holds or hereafter acquires any interest.


 


“Patent Security Agreement” means a patent
security agreement executed and delivered by Borrowers and Lender, as such may
be amended, restated or otherwise modified from time to time.


 


“Patents” means all
letters patent of, or rights corresponding thereto, in the United States or in
any other country, all registrations and recordings thereof, and all
applications for letters patent of, or rights corresponding thereto, in the
United States or any other country.


 


“Permitted Acquisition” means the
purchase or the acquisition in a single transaction or a series of related
transactions of (a) all of the Capital Stock in any Person that, upon the consummation
thereof, will be a Domestic Subsidiary wholly-owned directly by the Parent
Borrower or one or more of its wholly-owned Domestic Subsidiaries (including as
a result of a merger or consolidation), or (b) all or substantially all of the
assets of a Person (in each case of clause (a) and (b), the “Acquired
Assets”), provided that, in each case the following conditions are met:


 


(i) no fact or condition
exists, or would result from such acquisition, that would (or would, with the
passage of time or the giving of notice, or both) constitute an Event of
Default;


 


14

















 


easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business so long as they do
not materially impair the value or marketability of the related property; (xiv)
Liens on cash or Cash Equivalents securing obligations permitted under clause
(vii) of the definition of Permitted Indebtedness; and (xv) Liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clauses (i) through (xi) above,
provided, that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced (as may have
been reduced by any payment thereon) does not increase.


 


“Permitted Transfers” means (i) sales
of inventory in the ordinary course of business, (ii) non-exclusive licenses
and similar arrangements for the use of Intellectual Property in the ordinary
course of business and licenses that could not result in a legal transfer of
title of the licensed property but that may be exclusive in respects other than
territory and that may be exclusive as to territory only as to discreet
geographical areas outside of the United States in the ordinary course of
business, (iii) dispositions of worn-out, obsolete or surplus equipment at fair
market value in the ordinary course of business, (iv) other transfers of assets
having a fair market value of not more than $300,000 in the aggregate in any
fiscal year, provided, that Borrowers shall be required to make
mandatory prepayments of the Term Loans and the Equipment Term Loan, in
accordance with the provisions of Section 2.6(a)(v) herein, in the
amounts by which the fair market value of any transfers of assets contemplated
by clause (iv) herein exceed $230,000 in the aggregate in any fiscal
year, and (v) the sale of US Patent 6,121,960 and South Korean Patent
KR10-1999-7001648, entitled “Touch Screen Systems and Methods” (together, the “Touch
Screen Patents”) pursuant to that certain Patent Purchase Agreement between
Embedded and Intellectual Ventures Fund 68, LLC, dated as of June 8, 2010, provided,
that concurrently with receipt of proceeds of the sale of the Touch Screen
Patents, such proceeds shall be applied as follows: first, to repay the
Discretionary Credit advanced by Lender and outstanding as of such date or
reasonably anticipated to be outstanding after the date of such sale; and
second, thereafter to the repayment of the Secured Obligations in Lender’s
discretion. No Term Loan Prepayment Charge shall be required for any prepayment
of the Term Loans contemplated  under
clause (v) of this [Section 2.6(a)(v)]definition.


 


“Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.


 


“Pledge Agreements” means,
collectively, (a) that certain Pledge Agreement, dated as of May 1, 2008,
executed and delivered by each Borrower pledging its respective interest as
applicable, in DDMS, ISC, Embedded and Opt and (b) any other pledge agreement
executed and delivered pursuant to the terms hereof, as each such agreement may
be amended, restated or otherwise modified from time to time.


 


“Preferred Stock” means at any
given time any equity security issued by Parent Borrower that has any rights,
preferences or privileges senior to Parent Borrower’s common stock.


 


“Proposed Share Price” has the meaning
given to such term in the definition of “Valuation Procedures”.


 


18

















 


“Secured Obligations” means each
Borrower’s obligations under this Agreement and any Loan Document, including
any obligation, of any kind or nature, to pay any amount now owing or later
arising to Lender (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable), whether or not
evidenced by any note, agreement or other instrument. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Borrower, in any Insolvency
Proceeding, whether or not allowed in such case or proceeding), fees, attorneys’
fees and any other sum chargeable to any Borrower under this Agreement or any
of the other Loan Documents.


 


“Securities” means, collectively,
(i) the Term Loan B, (ii) the shares of common Capital Stock of Parent Borrower
issued to Lender pursuant to Section 2.5(a)(iii) and Section 2.9 hereof,
(iii) the Term Loan C[and], (iv) the shares of common Capital Stock of
Parent Borrower issued to Lender pursuant to Section 2.10 hereof, (v) the
Term Loan D and (vi) the shares of common Capital Stock of Parent Borrower
issued to Lender pursuant to Section 2.11 
hereof.


 


“Securities Act” refers to the Securities Act
of 1933, as amended.


 


“Security Documents” means,
collectively, Section 3 of this Agreement, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement, the Pledge
Agreements, the Account Control Agreements, the Collateral Assignments of
Acquisition Documents, the Reaffirmation Agreement, all UCC Financing
Statements and any other documents executed or to be executed in connection
with the foregoing or purporting to grant security interests and Liens on the
assets of the applicable Borrower in favor of Lender, as the same may from time
to time be amended, modified, supplemented or restated.


 


“Subordinated Indebtedness” means
Indebtedness subordinated to the Secured Obligations in amounts and on terms
and conditions satisfactory to Lender in its discretion and subject to
subordination provisions or agreements satisfactory to Lender in its
discretion, including without limitation, the HIA Indebtedness.


 


“Subordinated Indebtedness
Documents” means any and all documents executed by Parent
Borrower or any of its Subsidiaries giving rise to or otherwise executed in
connection with the Subordinated Indebtedness, including without limitation,
any and all promissory notes, loan agreements, security agreements, and any and
all collateral and ancillary documents.


 


“Subsidiary” means an
entity, whether corporate, partnership, limited liability company, joint
venture or otherwise, in which Parent Borrower owns or controls, directly or
indirectly, 50% or more of the outstanding voting securities, including each
entity listed on Schedule 1 hereto.


 


“Term Loan A” has the meaning ascribed to
such term in the Recitals hereto.


 


“Term Loan A Commitment” has the meaning
ascribed to such term in the Recitals hereto.


 


20

















 


“Term Loan A Interest Rate” means, for any
day, (i) for the period commencing on the Closing Date and continuing through
but not including the first anniversary of the Closing Date, twelve percent
(12%) per annum, (ii) for the period commencing on the date which is the first
anniversary of the Closing Date and continuing through but not including the
second anniversary of the Closing Date, eighteen percent (18%) per annum, and
(iii) thereafter, fifteen percent (15%) per annum.


 


“Term Loan A Maturity Date” means November
1, 2013.


 


“Term Loan B” has the meaning
ascribed to such term in the Recitals hereto.


 


“Term Loan B Commitment” has the meaning
ascribed to such term in the Recitals hereto.


 


“Term Loan B Conversion
Notice” has the meaning ascribed to such term in Section
2.9(a).


 


“Term Loan B Conversion Opt
Out Fee” means $12,500,000.


 


“Term Loan B Conversion
Price” means $0.0743, provided that, if at any time while this
Agreement is outstanding the common Capital Stock of the Parent Borrower is
subdivided or combined the “Term Loan B Conversion Price” shall be
proportionately adjusted.


 


“Term Loan B Conversion
Right Termination Date” means the date which is one hundred and
eighty (180) days following the Closing Date.


 


“Term Loan B Interest Rate” means, for any
day, (i) for the period commencing on the Closing Date and continuing through
but not including the first anniversary of the Closing Date, fourteen and one
half percent (14.5%) per annum, (ii) for the period commencing on the date
which is the first anniversary of the Closing Date and continuing through but
not including the second anniversary of the Closing Date, twenty and one half
percent (20.5%) per annum, and (iii) thereafter, seventeen and one half percent
(17.5%) per annum.


 


“Term Loan B Maturity Date” means November
1, 2014.


 


“Term Loan C” means the term
loan made to the Borrowers on the Second Amendment Effective Date in the
original principal amount of $[1,350,000.]1,350,000 pursuant
to Section 2.2(e) hereof.


 


“Term Loan C Commitment” means
$1,350,000.


 


“Term Loan C Conversion
Notice” has the meaning ascribed to such term in Section
2.10(a


 


“Term Loan C Conversion Price” means $3.276, provided
that, if at any time while this Agreement is outstanding the common Capital
Stock of the Parent Borrower is subdivided or combined the “Term Loan C
Conversion Price” shall be proportionately adjusted.


 


21

















 


“Term Loan C Interest Rate” means, for any
day, eight percent (8.0%) per annum.


 


“Term Loan C Maturity Date” means April 1,
2013.


 


“Term Loan D” means the term
loans made to the Borrowers in the aggregate principal amount of up to $500,000
pursuant to Section 2.2(f) hereof.


 


“Term Loan D Commitment” means $500,000.


 


“Term Loan D Conversion
Notice” has the meaning ascribed to such term in Section 2.11(a).


 


“Term Loan D Conversion Price” means $3.30, provided
that, if at any time while this Agreement is outstanding the common Capital
Stock of the Parent Borrower is subdivided or combined the “Term Loan D
Conversion Price” shall be proportionately adjusted.


 


“Term Loan D Interest Rate”
means, for any day, eighteen percent (18.0%) per annum.


 


“Term Loan D Maturity Date” means September 13,
2011.


 


“Term Loan Prepayment Charge”
means the prepayment charges described in Section 2.6(c) hereof.


 


“Term Loans” means,
collectively, the Term Loan A, the Term Loan B, the Term Loan C and the
Term Loan [C]D.


 


“Term Note A” means a promissory note in
substantially the form of Exhibit B-1.


 


“Term Note B” means a promissory note in substantially
the form of Exhibit B-2.


 


“Term Note C” means a promissory note in
substantially the form of Exhibit B-5.


 


“Term Note D” means a promissory note in
substantially the form of Exhibit B-6.


 


“Three Month Measurement
Period” means, at any date of determination, the most
recently completed three fiscal months of Borrowers.


 


“Trademark License” means any written agreement
granting any right to use any Trademark or Trademark registration, now owned or
hereafter acquired by any Borrower or in which Borrower now holds or hereafter
acquires any interest.


 


“Trademark Security Agreement” means a
trademark security agreement executed and delivered by the Borrowers and Lender
as such may be amended, restated or otherwise modified from time to time.


 


“Trademarks” means all trademarks
(registered, common law or otherwise) and any applications in connection
therewith, including registrations, recordings and applications in the


 


22

















 


and a Borrowing Base Certificate (with such
Borrowing Base Certificate reflecting any adjustments in eligibility criteria
requested by Lender whether or not any notice period in respect of such
adjustment shall have then elapsed); provided, however that if Borrowers
have submitted a Borrowing Base Certificate dated as of a date not more than 3
Business Days prior to the submission of the Advance Request, then the Parent
Borrower shall not be required to submit a new Borrowing Base Certificate in
connection with such Advance Request unless adjustments are required to reflect
any adjustments in the eligibility criteria requested by Lender whether or not
any notice period in respect of such adjustments shall have then elapsed.
Lender shall fund the Revolving Advance in the manner requested by the Advance
Request, provided that each of the conditions precedent to such
Revolving Advance is satisfied as of the requested Advance Date.


 


(c)           Overadvance Facility. Anything in this Agreement to
the contrary notwithstanding, at the request of Parent Borrower, Lender [shall]may,
in its sole  discretion, make or
expressly permit to remain outstanding any Revolving Loan Advance to Borrowers
in amounts that cause the aggregate outstanding principal balance of the
Revolving Loans to exceed the Borrowing Base (any such excess Revolving Loan
Advance are herein referred to individually as an “Overadvance” and
collectively as “Overadvances”)[, provided that (i) the aggregate
principal amount of all such Overadvances outstanding shall not exceed $500,000
at any time; (ii) an Overadvance may be outstanding for no more than
twenty-eight (28) consecutive calendar days; and (iii) no Overadvance shall be
made or permitted to exist at any time (A) during the Overadvance Clean Down
Period (and Borrower shall repay such Overadvances no later than the Business
Day immediately preceding the first day of each Overadvance Clean Down Period
as provided in Section 2.6(a)(iii)) or (B) that an Event of Default then exists
or would arise as a result of such Overadvance]. Overadvances may be made
even if the conditions to lending set forth in Section 4 have not been
met. All Overadvances shall constitute Revolving Loans and bear interest at the
Revolving Interest Rate applicable for Overadvances. [For purposes of this
Section 2.1(c), (x) the aggregate principal amount of all Overadvances shall
not exceed $500,000 at any time; and (y) no]No Overadvance shall
cause the aggregate principal amount of all Revolving Loans to exceed the
Revolving Loan Maximum Amount.  Overadvances,
together with all accrued  interest, fees
and other Secured Obligations on or relating to Overadvances, shall be  due and payable on demand. The Borrowers
acknowledge and agree that the 
outstanding amount of Overadvances outstanding on October 28, 2010
is  $6,585,587.76.


 


(d)           Interest. Subject to the
provisions of Section 2.1(c) Section 2.3 and Section 2.4, the
principal balance of the Revolving Loan shall bear interest thereon from the
initial Revolving Loan Advance Date for such Revolving Loan Advance, calculated
at the floating Revolving Interest Rate based upon a year consisting of 360
days, as applicable, and payable for the actual number of days elapsed.


 


25

















 


the
Equipment Purchase Order(s) not approved by Lender or as Lender may otherwise
determine in its sole discretion. Lender shall fund the Equipment Term Loan
Advance requested as herein provided, provided that each of the
conditions precedent to such Equipment Term Loan Advance is satisfied as of the
requested Advance Date, unless otherwise agreed to in writing by Lender.


 


(iii) Interest. Subject to the provisions of Section
2.3 and Section 2.4, the outstanding principal balance of the
Equipment Term Loan shall bear interest thereon from the First Amendment
Effective Date at the Equipment Term Loan Interest Rate based on a month
consisting of 30 days with interest computed daily based on the actual number
of days elapsed.


 


(e)            Term Loan C.


 


i.              Term
Loan C. Subject to the terms and conditions of this Agreement, on the
Second Amendment Effective Date, the Lender shall fund the Term Loan C in the
amount of the Term Loan C Commitment, the proceeds of which shall be used to
repay, in part, outstanding Overadvances on such date. Upon the funding of the
Term Loan C hereunder, the Term Loan C Commitment shall be permanently
terminated.


 


ii.             Interest
on the Term Loan C. Subject to the provisions of Section 2.3 and Section
2.4, the principal balance of the Term Loan C shall bear interest thereon
from the Second Amendment Effective Date at the Term Loan C Interest Rate based
on a year consisting of 360 days with interest computed daily based on the
actual number of days elapsed.


 


(f)             Term Loan D.


 


i.              Term
Loan D. Subject to the terms and conditions of this Agreement, the Lender shall
fund the Term Loan D on the Fourth Amendment Effective Date in an amount equal
to the Term Loan D Commitment, the proceeds of which shall be used to repay the
Overadvance made by the Lender September 13, 2010.


 


Upon the funding of the Term
Loan D hereunder, the Term Loan D Commitment shall be permanently terminated.


 


ii.             Interest
on the Term Loan D. Subject to the provisions of Section 2.3 and Section 2.4,
the principal balance of the Term Loan D shall 
bear interest thereon from the date of funding thereof at the Term Loan
D  Interest Rate based on a year
consisting of 360 days with interest computed 
daily based on the actual number of days elapsed: provided that, (x)
10.0%  of the Term Loan D Interest Rate
shall, subject to Section 2.5(a)(v), be paid 
in cash and (y) 8.0% of the Term Loan D Interest Rate shall be paid in kind
by adding such amounts to the principal amount of the Term Loan D on the  first Business Day of each calendar month.


 


2.3. Maximum Interest. Notwithstanding any
provision in this Agreement, the Notes, or any other Loan Document, it is the
parties’ intent not to contract for, charge or receive interest


 


27

















 


at a rate that is greater
than the maximum rate permissible by law that a court of competent jurisdiction
shall deem applicable hereto (which under the laws of the State of California
shall be deemed to be the laws relating to permissible rates of interest on
commercial loans) (the “Maximum Rate”). If a court of competent
jurisdiction shall finally determine that Borrowers have actually paid to
Lender an amount of interest in excess of the amount that would have been
payable if all of the Secured Obligations had at all times borne interest at
the Maximum Rate, then such excess interest actually paid by Borrowers shall be
applied as follows: first, to the payment of all Lender Expenses; second, to
the payment of accrued and unpaid interest on the Loans, to be apportioned pro
rata amongst the Loans; third, to the payment of principal outstanding
on the Term Loan A to be applied pro rata to remaining installments of such
Term Loan, fourth, to the payment of principal outstanding on the Term
Loan B, fifth, to the payment of principal outstanding on the Revolving Loans, sixth,
to the payment of principal outstanding on the Equipment Term Loan, seventh,
to the payment of principal outstanding on the Term Loan C, eighth, to
the payment of principal outstanding on the Term Loan D, ninth, to the
payment of any and all other Secured Obligations; and [ninth]
tenth, following the payment in full in cash of all Secured Obligations,
the excess (if any) shall be refunded to Borrowers or as a court of competent
jurisdiction may direct.


 


2.4. Default Interest. In
the event any payment is not paid on the scheduled payment date, an amount
equal to five percent (5%) of the past due amount shall be payable on demand.
In addition, upon the occurrence and during the continuation of an Event of
Default hereunder, all Secured Obligations (including, without limitation,
principal, interest, compounded interest and professional fees) shall bear
interest at a rate per annum equal to the rate set forth in Section  2.1(d), Section 2.2(c), Section 2.2(d)(iii),
Section 2.2(e)(ii) or Section 2.2([e]f (ii) ,  as
applicable, plus three percent (3%) per annum (the “Default Rate”) and
shall be payable upon demand. In the event any interest is not paid when due
hereunder, at the Lender’s option, in its sole discretion, delinquent interest
and interest accruing at the Default Rate: (x) shall be paid in cash on demand
thereof, and/or (y) shall be paid in kind by adding such amounts to the
principal amount of the Term Loan B, notwithstanding on which Loan such
delinquent interest and interest accruing at the Default Rate has accrued, and
shall thereafter bear interest on interest, compounded at the rate set forth in
Section 2.2(c)(ii) and be subject to the conversion rights of the Lender
set forth in Section 2.9 and/or (z) through the issuance of additional
shares of common Capital Stock of Parent Borrower to Lender or any designee of
Lender, the number of such additional shares to be determined by Lender by
dividing the amount of the accrued interest to be converted into common Capital
Stock of the Parent Borrower by the Adjusted 60-Day Average Price, determined
by Lender as of the date of Lender’s election for the issuance of additional
shares as provided in this Section 2.4. In the event that the Parent
Borrower and Lender do not agree on the Proposed Share Price, Lender in its
sole discretion may, by a subsequent written notice to Borrowers, elect to
receive payment in cash and/or in kind by adding such amounts to the principal
amounts of the Term Loan B as of the original date of demand therefor. The
issuance of such common Capital Stock of Parent Borrower to Lender or any
designee of Lender, which stock certificates may include appropriate
restrictive legends to the extent applicable, shall be made no more than ten
(10) Business Days following the date of demand therefor or, as applicable, ten
(10) Business Days following the final determination of the share price as a
result of the Valuation Procedures. Parent Borrower shall have the right to pay
cash in lieu of any fractional shares to be issued pursuant to this Section
2.4. For the avoidance of doubt, interest on an Overadvance made in
accordance with Section 2.1(c) shall not


 


28

















 


kind by adding such amounts to the principal amounts
of the Term Loan B as of such interest payment date. The issuance of such
common Capital Stock of Parent Borrower to Lender or any designee of Lender,
which stock certificates may include appropriate restrictive legends to the
extent applicable, shall be made no more than ten (10) Business Days following
the applicable interest payment date or, as applicable, ten (10) Business Days
following the final determination of the share price as a result of the
Valuation Procedures. Parent Borrower shall have the right to pay cash in lieu
of any fractional shares to be issued pursuant to this Section 2.5(a)(iii). In
the event that Lender has not delivered a notice as provided herein selecting
the method of payment for any interest payment, Borrowers shall pay Lender
accrued interest in cash on the applicable interest payment date.


 


iv.             Notwithstanding subparagraph
(a)(i) to the contrary and solely with respect to interest payments on the
Term Loan C, on the applicable interest payment date and at Lender’s election
in its sole discretion by written notice to Borrowers at least one (1) Business
Day prior to such interest payment date, Borrowers will pay interest on the
Term Loan C, in whole or in part as determined by Lender in its sole
discretion, by paying such accrued interest (x) in cash, and/or (y) in kind by
adding such amounts to the principal amount of the Term Loan C as of such
interest payment date.


 


v.              Notwithstanding
subparagraph (a)(i) to the contrary and solely with respect to interest
payments on the Term Loan D, on the applicable interest payment date and at
Lender’s election in its sole discretion by written notice to Borrowers at
least one (1) Business Day prior to such interest payment date, Borrowers will
pay interest on the Term Loan D that would otherwise be paid in cash pursuant
to Section 2.2(f)(ii), in whole or in part as determined by Lender in its sole
discretion, by paying such accrued interest (x) in cash, and/or (y) in kind by
adding such amounts to the  principal
amount of the Term Loan D as of such interest payment date.


 


vi.             Notwithstanding
anything herein to the contrary, the Borrowers hereby acknowledge and agree
that the interest payment due on October 1, 2010 with respect to the
Overadvance made by the Lender to the Borrowers on September 13, 2010, was paid
in kind by adding such amounts  to the
principal amount of the Revolving Loans.


 


vii.            Borrowers shall
make all payments under this Agreement without setoff, recoupment or deduction
and regardless of any counterclaim or defense. Lender will initiate debit
entries to the relevant Borrower’s account as authorized on the ACH
Authorization on each payment date of all scheduled obligations payable to
Lender under the Revolving Loan, the Term Loans and the Equipment Term Loan.


 


(b)             Revolving Loan Maturity Date. The entire principal
balance of the Revolving Loan, together with all accrued interest, fees and
other Secured Obligations on


 


30

















 


or
relating to the Revolving Loan, shall be repaid in full on the Revolving Loan
Maturity Date; provided that, Overadvances, together with all accrued
interest, fees and other Secured Obligations on or relating to Overadvances,
shall be due and payable on demand.


 


(c)            Term Loan Amortization; Term Loan Maturity Date;
Equipment Term Loan Maturity Date.


 


i.              Borrowers shall repay the
outstanding principal under the Term Loan A on the first Business Day of each
calendar month, commencing December 1, 2010, in equal monthly installments
equal to $152,777.78.


 


ii.             The entire principal balance of the
Term Loan A, together with all accrued interest, fees and other Secured
Obligations on or relating to the Term Loan A, shall be repaid in full on the
Term Loan A Maturity Date.


 


iii.            The entire principal balance of the
Term Loan B, together with all accrued interest, fees and other Secured
Obligations on or relating to the Term Loan B, shall be repaid in full on the
Term Loan B Maturity Date.


 


iv.            The entire principal balance of the
Equipment Term Loan, together with all accrued interest, fees and other Secured
Obligations on or relating to the Equipment Term Loan, shall be repaid in full
on the Equipment Term Loan Maturity Date.


 


v.             The entire principal balance of the
Term Loan C, together with all accrued interest, fees and other Secured
Obligations on or relating to the Term Loan C, shall be repaid in full on the
Term Loan C Maturity Date.


 


vi.            The
entire principal balance of the Term Loan D, together with all accrued
interest, fees and other Secured Obligations on or relating to the Term Loan D,
shall be repaid in full on the Term Loan D Maturity Date.


 


2.6.           Prepayments.


 


(a)            Mandatory Prepayments.


 


i.              In the event the aggregate
Revolving Loan Advances at any time exceed the Maximum Revolving Loan Amount,
Borrowers shall repay the amount of that excess to Lender within three (3)
Business Days of the date such excess arose.


 


ii.             Subject to Section 2.1(c), in the event the
aggregate Revolving Loan Advances at any time exceed the then current Borrowing
Base, Borrowers shall repay the amount of that excess to Lender within three
(3) Business Days of the date such excess arose.


 


31

















 


iii.              [Intentionally Omitted].


 


iv.            On or prior to the forty-fifth
(45th) day of each fiscal quarter, commencing with the fiscal quarter ending
March 31, 2010, Borrowers shall prepay the principal amount of the Term Loans
and accrued and unpaid interest thereon in an amount equal to (A) seventy five
percent (75%) of Consolidated Excess Cash Flow in the event that the
Consolidated Total Leverage Ratio as at such fiscal quarter end date,
calculated based on a Twelve Month Measurement Period, is equal to or greater
than 3.0 to 1.0 and (B) fifty percent (50%) of Consolidated Excess Cash Flow in
the event that the Consolidated Total Leverage Ratio as at such fiscal quarter
end date, calculated based on a Twelve Month Measurement Period, is less than
3.0 to 1.0. Such prepayments to be applied to the Term Loan A, the Term Loan B,
the Term Loan C and the Term Loan [C]D as follows: first, to
the payment of principal outstanding on the Term Loan A to be applied pro rata
to installments of such Term Loan A; second, to the payment of accrued
interest on the Term Loan A; third, to the payment of principal
outstanding on the Term Loan B; fourth, to the payment of accrued
interest on the Term Loan B; fifth, to the payment of principal outstanding on
the Term Loan C; sixth, to the payment of accrued interest on the Term
Loan C[, seventh, ];  seventh, to the payment of principal outstanding
on the Term Loan D;  eighth, to the
payment of accrued interest on the Term Loan D; ninth, to the payment of
Lender’s accrued costs, expenses, professional fees (including, without
limitation, all Lender Expenses) and any other Secured Obligations on or
relating to the Term Loans; and [eighth]tenth, after all Secured
Obligations on or relating to the Term Loans have been repaid, the excess (if
any) shall be refunded to the Borrowers or as a court of competent jurisdiction
may direct. Notwithstanding Section 2.6(c) and except as otherwise
provided in the immediately preceding sentence, no Term Loan Prepayment Charge
shall be required for any prepayment of the Term Loans under this Section
2.6(a)(iv).


 


v.             On the date of any Permitted Transfer that results in a
required prepayment pursuant to clause (iv) of the definition of “Permitted
Transfer”, Borrowers shall prepay the principal amount of the Term Loans and
the Equipment Term Loan and accrued and unpaid interest thereon as follows:
first, to the payment of principal outstanding on the Term Loan A to be applied
pro rata to installments of such Term Loan A, second, to the payment of
accrued interest on the Term Loan A, third, to the payment of principal
outstanding on the Term Loan B, fourth, to the payment of accrued
interest on the Term Loan B, fifth, to the payment of principal outstanding on
the Equipment Term Loan, sixth, to the payment of accrued interest on
the Equipment Term Loan, seventh, to the payment of principal
outstanding on the Term Loan C[ and eighth], eighth, to the  payment of accrued interest on the Term Loan
C, ninth, to the payment of principal outstanding on the Term Loan D, and
tenth, to the payment of accrued interest on the Term Loan [C]D.
No Term Loan Prepayment Charge


 


32

















 


iii.              Upon at least five (5) Business
Days prior written notice to Lender, Borrowers may prepay the Equipment Term
Loan in whole or in part from time to time without premium or penalty, together
with all accrued and unpaid interest thereon.


 


iv.             Upon at least five (5) Business
Days prior written notice to Lender, Borrowers may prepay, in whole (or in part
with the prior consent of Lender in its sole and absolute discretion), the Term
Loan C, together with all accrued and unpaid interest thereon. No Term Loan
Prepayment Charge shall be required for any prepayment of the Term Loan C under
this Section 2.6(b)(iv).


 


v.              Upon at least five (5) Business
Days prior written notice to Lender, Borrowers may prepay, in whole (or in part
with the prior consent of Lender in its sole and absolute discretion), the Term
Loan D, together with all accrued and unpaid interest thereon. No Term Loan
Prepayment Charge shall be required for any prepayment of the Term Loan D under
this Section 2.6(b)(v).


 


(c)            Term
Loan Prepayment Charge.


 


i.                Upon any repayment, prepayment
or acceleration of either the Term Loan A and/or the Term Loan B pursuant to Section
2.6(b), Section 2.9(b  and Section
10.1, as applicable, Borrowers shall pay a prepayment charge equal to the
following percentage of the Term Loan A and the Term Loan B being prepaid: (A)
five percent (5.0%) if such payment is made or required to be made prior to the
date that is the first anniversary of the Closing Date; (B) three percent
(3.0%) if such payment is made or required to be made on or after the date that
is the first anniversary of the Closing Date but prior to the date that is the
second anniversary of the Closing Date; and (C) one percent (1.0%) thereafter.


 


ii.               In the event the Borrowers repay
or prepay in full the aggregate outstanding principal amount of the Term Loan A
and/or the Term Loan B, together with all accrued interest thereon and all
other Secured Obligations arising in respect thereof, or upon acceleration of
the Term Loan A and/or the Term Loan B, in each case, at any time on or after
the date which is six (6) months following the Closing Date and on or prior to
the first anniversary of the Closing Date, Borrowers shall pay a prepayment
charge equal to the Yield Revenue Amount. The prepayment charged described in
this clause (c)(ii) of this Section 2.6 is in additional to, and
not in lieu of, any prepayment charge arising under clause (c) (i) of
this Section 2.6.


 


iii.              Borrowers agree that the Term Loan Prepayment Charge is
a reasonable calculation of Lender’s lost profits in view of the difficulties
and impracticality of determining actual damages resulting from an early
repayment of the applicable Term Loan.


 


34
















 


2.9.
Limited Term Loan B Equity Conversion Right.


 


(a)           Voluntary Conversion. At
Lender’s option, in its sole discretion, Lender may, at any time and from time
to time, elect to convert, in whole or in part, the Converted Debt Amount into
common Capital Stock of Parent Borrower. In the event Lender so elects to
convert all or any portion of the Converted Debt Amount into common Capital
Stock of Parent Borrower, Lender will provide Parent Borrower ten (10) Business
Days advance written notice thereof (such notice to state that it is a “Term
Loan  B Conversion Notice”). Prior to
the date identified in such Term Loan B Conversion Notice, Parent Borrower (A)
shall deliver to Lender or any designee of Lender identified in such Term Loan
B Conversion Notice one or more stock certificates, which stock certificates
may include appropriate restrictive legends to the extent applicable,
evidencing the shares of common Capital Stock of Parent Borrower that are to be
issued to Lender or its designee as provided in such Term Loan B Conversion
Notice, and (B) pay Lender in cash with respect to that portion of the
Converted Debt Amount identified in the Term Loan B Conversion Notice attributable
to[  be converted into shares of
common Capital Stock of Parent Borrower] all accrued and unpaid interest on
the Converted Debt Amount (subject to Lender’s election under Sections 2.4
and 2.5(a)(iii)); the Term Loan Prepayment Charge described in Section
2.6(c)(ii), and all other fees and Secured Obligations outstanding with
respect thereto; provided, that such date for delivery of the stock
certificates and payments of amounts herein shall be no earlier than ten (10)
Business Days prior to the date identified for the effectiveness of such
conversion in the Term Loan B Conversion Notice. The determination of the
number of shares of common Capital Stock of Parent Borrower to be issued and
delivered to Lender or its designee as provided herein shall initially be
calculated by Lender and identified in such Term Loan B Conversion Notice as follows:
(i) the Converted Debt Amount identified by Lender in such Term Loan B
Conversion Notice to be converted into common Capital Stock of Parent Borrower,
divided by (ii) the Term Loan B Conversion Price. In the event of any
dispute in the calculation of the number of shares of common Capital Stock of
Borrower to be issued and delivered to Lender or its designee as identified in
such Term Loan B Conversion Notice, Borrowers and Lender agree to review Lender’s
calculation and determine such number of shares in good faith and without
delay. Parent Borrower shall have the right to pay cash in lieu of any
fractional shares to be issued pursuant to this Section 2.9(a).


 


(b)           Mandatory Conversion.


 


i. In the event that the
90-Day VWAP Price of common Capital Stock of Parent Borrower equals or exceeds
a price per share equal to the Term Loan B Conversion Price multiplied by five
(5) and no Event of Default then exists or would arise as a result thereof and
the Parent Borrower is listed on an Approved Exchange (hereinafter, the “Mandatory
Conversion Event”), then, without any notice or any other action required
by Lender or otherwise, the Converted Debt Amount shall be converted
automatically into common Capital Stock of Parent Borrower. Parent Borrower
shall promptly (but in any event within ten (10) Business Days of the date on
which the Mandatory Conversion Event first occurred) (A) deliver to Lender or
its designee one or more stock


 


37

















 


certificates, which stock certificates may include
appropriate restrictive legends to the extent applicable, evidencing the shares
of common Capital Stock of Parent Borrower that are to be issued to Lender or
its designee as required pursuant to this Section 2.9(b)(i) and (B) pay
Lender in cash all accrued and unpaid interest (including interest accrued but
not yet capitalized and subject to Lender’s 
election under Sections 2.4 and 2.5(a)(iii)) on the Converted Debt
Amount to and until the date of the Mandatory Conversion Event and such other
fees and Secured Obligations outstanding with respect thereto.


 


ii.             Notwithstanding Section 2.9(b)(i) to the
contrary, in the event that a Mandatory Conversion Event arises on or prior to
the date which is six (6) months following the Closing Date, then, at Borrowers’
option upon at least two (2) Business Days prior written notice to Lender
thereof (such notice to state that it is a “Section 2.9(b)(ii) Option
Conversion Notice”), Borrowers shall have the option to convert the
Converted Adjusted Debt Amount into shares of common Capital Stock of Parent
Borrower in lieu of the amounts otherwise required pursuant to Section
2.9(b)(i), provided that Parent Borrower shall promptly (but in any event
within ten (10) Business Days of the date on which the Mandatory Conversion
Event occurred) (A) deliver to Lender or its designee one or more stock
certificates, which stock certificates may include appropriate restrictive
legends to the extent applicable, evidencing the shares of common Capital Stock
of Parent Borrower that are to be issued to Lender or its designee as required
pursuant to this Section 2.9(b)(ii) and (B) pay Lender in cash an amount
equal to all accrued and unpaid interest on the Converted Adjusted Debt Amount
to and until the date of the date of repayment (subject to Lender’s election
under Sections 2.4 and 2.5(a)(iii)), the Term Loan Prepayment Charge
applicable to the Converted Adjusted Debt Amount and all other fees and other
Secured Obligations applicable to the Converted Adjusted Debt Amount. Following
such conversion of the Converted Adjusted Debt Amount, the remaining aggregate
principal amount of the Term Loan B, all accrued and unpaid interest thereon
(including interest accrued but not yet capitalized) and all other fees and Secured
Obligations with respect thereto shall remain outstanding as Secured
Obligations hereunder.


 


iii.            Notwithstanding Section 2.9(b)(i) to the contrary,
in the event that (x) a Mandatory Conversion Event arises after the date which
is six (6) months following the Closing Date but before (and not including) the
first anniversary of the Closing Date and (y) Borrowers have not previously
exercised the option of the Borrowers to convert the Converted Adjusted Debt
Amount into shares of common Capital Stock of Parent Borrower as provided in Section
2.9(b)(ii), then, at Borrowers’ option upon at least two (2) Business Days
prior written notice to Lender thereof (such notice to state that it is a”
Section 2.9(b)(iii) Option Conversion Notice”), Borrowers shall have the
option to convert the Converted Adjusted Debt Amount into shares of common
Capital Stock of Parent Borrower in lieu of the amounts otherwise required
pursuant to Section 2.9(b)(i); provided that Parent Borrower shall
promptly (but in any event within ten (10) Business Days of the date on which
the Mandatory Conversion Event occurred) (A) deliver


 


38

















 


to Lender or its designee
one or more stock certificates, which stock certificates may include appropriate
restrictive legends to the extent applicable, evidencing the shares of common
Capital Stock of Parent Borrower that are to be issued to Lender or its
designee as required pursuant to this Section 2.9(b)(iii) and (B) pay
Lender in cash an amount equal to all accrued and unpaid interest on the
Converted Adjusted Debt Amount (including interest accrued but not yet
capitalized and subject to Lender’s election under Sections 2.4 and
2.5(a)(iii)) to and until the date of repayment, the Term Loan B Conversion
Opt Out Fee, the Term Loan Prepayment Charge applicable to the Converted
Adjusted Debt Amount and all other fees and other Secured Obligations
applicable to the Converted Adjusted Debt Amount. Following such conversion and
the payment of amounts required pursuant to this Section 2.9(b)(iii), the
remaining outstanding principal amount of the Term Loan B in an amount of
$2,500,000 shall be deemed cancelled and repaid in full.


 


iv.            Notwithstanding Section 2.9(b)(i) to the contrary,
in the event that (x) a Mandatory Conversion Event exists during or arises
after the date which is six (6) months following the Closing Date but before
(and not including) the first anniversary of the Closing Date and (y) Borrowers
have previously exercised the option of the Borrowers to convert the Converted
Adjusted Debt Amount into shares of common Capital Stock of Parent Borrower as
provided in Section 2.9(b)(ii), then, at Borrowers’ option upon at least
two (2) Business Days prior written notice to Lender thereof (such notice to
state that it is a “Section 2.9(b (iv 
Prepayment Notice”), Borrowers shall have option to prepay the Term
Loan B as hereinafter provided. Within five (5) Business Days of the date
Borrowers’ “Section 2.9(b)(iv) Prepayment Notice” is received by the Lender
(and in any event prior to the first anniversary of the Closing Date),
Borrowers shall pay Lender in full in cash an amount equal to the aggregate
outstanding principal amount of the Term Loan B, all accrued and unpaid
interest thereon (including interest accrued but not yet capitalized and
subject to Lender’s election under Sections 2.4 and 2.5(a)(iii)), the Term
Loan B Conversion Opt Out Fee, the Term Loan Prepayment Charge applicable to
Term Loan B being prepaid and all other fees and other Secured Obligations
applicable to the Term Loan B, provided upon payment of the amounts
required pursuant to this Section 2.9(b)(iv), the outstanding principal
amount on the Term Loan B in an amount equal to $2,500,000 shall be deemed
cancelled and repaid in full.


 


v.             For purposes of determining the number of shares of
common Capital Stock of Parent Borrower to be issued as provided in this paragraph
(b), Lender shall promptly (A) (but in any event within five (5) Business
Days of the occurrence Mandatory Conversion Event) calculate such number as
follows: (x) the Converted Debt Amount, divided by (y) the Term Loan B
Conversion Price; or (B) (but in any event within two (2) Business Days of
receiving a “Section 2.9(b)(ii) Option Conversion Notice” or a “Section 2.9(b)(iii)
Option Conversion Notice”) calculate such number as follows: (x) the Converted
Adjusted Debt Amount, divided by (y) the Term Loan B Conversion Price.
The failure of or delay by the Lender to so provide the foregoing calculation
shall not abrogate or


 


39

















 


limit, in any manner, the Borrowers obligations
under this Section 2.9. In the event of any dispute in the calculation
of the number of shares of common Capital Stock of Borrower to be issued and
delivered to Lender or its designee as provided in this Section 2.9(b), Borrowers
and Lender agree to review the calculation and determine such number of shares
in good faith and without delay. Parent Borrower shall have the right to pay
cash in lieu of any fractional shares to be issued pursuant to this Section
2.9(b).


 


(c)           Term Loan B as Secured
Obligations. Until such time as Lender has received the duly executed stock
certificates evidencing the shares of common Capital Stock of Parent Borrower
described in paragraphs (a) and (b) of this Section 2.9, the
Converted Debt Amount and the Converted Adjusted Debt Amount shall constitute
Secured Obligations hereunder for all purposes, and upon delivery of such stock
certificates, the applicable portion of the Converted Debt Amount or the
Converted Adjusted Debt Amount shall be cancelled.


 


(d)           Termination of Conversion Rights. Notwithstanding
the foregoing in this Section 2.9 to the contrary, in the event that a
Refinancing Event occurs prior to the Term Loan B Conversion Right Termination
Date, the rights granted to Lender under this Section 2.9 shall
thereafter automatically terminate, provided that, and for the avoidance
of doubt, the termination of the rights granted to Lender under this Section
2.9 shall not abrogate or limit in any manner (i) any voluntary conversion
demand of Lender arising under paragraph (a) hereof and/or any mandatory
conversion obligation of Borrowers arising under paragraph (b) hereof,
in either case, that arose prior to the Term Loan B Conversion Right
Termination Date, and (ii) the prior issuance of any common Capital Stock of
Parent Borrower to Lender or its designee pursuant to the terms of this Section
2.9.


 


2.10.
Term Loan C Equity Conversion Right.


 


(a) Voluntary Conversion. At Lender’s option,
in its sole discretion, Lender may, at any time and from time to time, elect to
convert, in whole or in part, the Converted Term Loan C Debt Amount into common
Capital Stock of Parent Borrower. In the event Lender so elects to convert all
or any portion of the Converted Term Loan C Debt Amount into common Capital
Stock of Parent Borrower, Lender will provide Parent Borrower ten (10) Business
Days advance written notice thereof (such notice to state that it is a “Term
Loan C Conversion Notice”). Prior to the date identified in such Term Loan
C Conversion Notice, Parent Borrower (A) shall deliver to Lender or any
designee of Lender identified in such Term Loan C Conversion Notice one or more
stock certificates, which stock certificates may include appropriate
restrictive legends to the extent applicable, evidencing the shares of common
Capital Stock of Parent Borrower that are to be issued to Lender or its
designee as provided in such Term Loan C Conversion Notice, and (B) pay Lender
in cash with respect to that portion of the Converted Term Loan C Debt Amount
identified in the Term Loan C Conversion Notice attributable to[be
converted into shares of common Capital Stock of Parent Borrower] all
accrued and unpaid interest on the Converted Term Loan C Debt Amount (subject
to Lender’s  election under Sections 2.4
and 2.5(a)(iv)) and all other fees and Secured Obligations


 


40

















 


outstanding with respect
thereto; provided, that such date for delivery of the stock certificates
and payments of amounts herein shall be no earlier than ten (10) Business Days
prior to the date identified for the effectiveness of such conversion in the
Term Loan C Conversion Notice. The determination of the number of shares of common
Capital Stock of Parent Borrower to be issued and delivered to Lender or its
designee as provided herein shall initially be calculated by Lender and
identified in such Term Loan C Conversion Notice as follows: (i) the Converted
Term Loan C Debt Amount identified by Lender in such Term Loan C Conversion
Notice to be converted into common Capital Stock of Parent Borrower, divided
by (ii) the Term Loan C Conversion Price. In the event of any dispute in
the calculation of the number of shares of common Capital Stock of Parent Borrower
to be issued and delivered to Lender or its designee as identified in such Term
Loan C Conversion Notice, Borrowers and Lender agree to review Lender’s
calculation and determine such number of shares in good faith and without delay.
Parent Borrower shall have the right to pay cash in lieu of any fractional
shares to be issued pursuant to this Section 2.10(a).


 


(b) Term Loan C as Secured Obligations. Until
such time as Lender has received the duly executed stock certificates evidencing
the shares of common Capital Stock of Parent Borrower described in paragraph
(a) of this Section 2.10, the Converted Term Loan C Debt Amount
shall constitute Secured Obligations hereunder for all purposes, and upon
delivery of such stock certificates, the applicable portion of the Converted
Term Loan C Debt Amount shall be cancelled.


 


2.11. Term Loan D Equity
Conversion Right.


 


(a) Voluntary Conversion. At Lender’s option, in its
sole discretion, Lender may, at any time and from time to time, elect to
convert, in whole or in part, the Converted Term Loan D Debt Amount into common
Capital Stock of Parent Borrower. In the event Lender so elects to convert all
or any portion of the Converted Term Loan D Debt Amount into common Capital
Stock of Parent Borrower, Lender will provide Parent Borrower ten (10) Business
Days advance  written notice thereof
(such notice to state that it is a “Term Loan D Conversion  Notice”). Prior to the date identified in
such Term Loan D Conversion Notice, Parent Borrower (A) shall deliver to Lender
or any designee of Lender identified in such Term Loan D Conversion Notice one
or more stock certificates, which stock certificates may include appropriate
restrictive legends to the extent applicable, evidencing the shares of common
Capital Stock of Parent Borrower that are to be 
issued to Lender or its designee as provided in such Term Loan D
Conversion  Notice, and (B) pay Lender in
cash with respect to that portion of the Converted  Term Loan D Debt Amount identified in the
Term Loan D Conversion Notice 
attributable to all accrued and unpaid interest on the Converted Term
Loan D Debt Amount (subject to Lender’s election under Sections 2.4 and
2.5(a)(v)) and all other  fees and
Secured Obligations outstanding with respect thereto; provided, that such  date for delivery of the stock certificates
and payments of amounts herein shall be 
no earlier than ten (10) Business Days prior to the date identified for
the effectiveness of such conversion in the Term Loan D Conversion Notice. The  determination of the number of shares of
common Capital Stock of Parent


 


41

















 


Borrower to be issued and delivered to Lender or its
designee as provided herein  shall
initially be calculated by Lender and identified in such Term Loan D  Conversion Notice as follows: (i) the
Converted Term Loan D Debt Amount 
identified by Lender in such Term Loan D Conversion Notice to be converted
into  common Capital Stock of Parent
Borrower, divided by (ii) the Term Loan D 
Conversion Price. In the event of any dispute in the calculation of the
number of shares of common Capital Stock of Borrower to be issued and delivered
to Lender  or its designee as identified
in such Term Loan D Conversion Notice, Borrowers and  Lender agree to review Lender’s calculation
and determine such number of shares  in
good faith and without delay. Parent Borrower shall have the right to pay cash
in  lieu of any fractional shares to be
issued pursuant to this Section 2.11(a).


 


(b) Term Loan D as Secured
Obligations. Until such time as Lender has 
received the duly executed stock certificates evidencing the shares of
common Capital Stock of Parent Borrower described in paragraph (a) of this
Section 2.11, the Converted Term Loan D Debt Amount shall constitute Secured
Obligations hereunder for all purposes, and upon delivery of such stock
certificates, the applicable portion of the Converted Term Loan D Debt Amount
shall be cancelled.


 


SECTION 3. SECURITY INTEREST


 


3.1. Collateral Grant. As security for the
prompt, complete and indefeasible payment when due (whether on the payment
dates or otherwise) of all the Secured Obligations, each Borrower hereby
reaffirms its grant to Lender of, and hereby grants to Lender, a security
interest in all of such Borrower’s personal property, wherever located, now
owned or hereafter acquired, including the following, and all proceeds and
products thereof (collectively, the “Collateral”): (a) accounts
(including health-care insurance receivables); (b) chattel paper (whether
tangible or electronic); (c) fixtures; (d) general intangibles (including
without limitation all Intellectual Property and payment intangibles); (e)
instruments (including promissory notes); (f) documents (including, if
applicable, electronic documents); (g) securities and all other investment
property (but excluding thirty-five percent (35%) of the Capital Stock of any
foreign Subsidiary); (h) deposit accounts excluding payroll and trust accounts;
(i) Cash; (j) commercial tort claims; (k) goods (including inventory, equipment
and any accessions thereto); (l) letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing); (m) supporting obligations; and
(n) any other contract rights or rights to the payment of money, insurance
claims and proceeds. Notwithstanding the foregoing, it is the intention of the
parties to the Agreement that the term “Collateral” shall exclude (1) “intent-to-use”
trademarks until such time as a Borrower begins to use such trademarks; and (2)
any item of general intangibles that is now or hereafter held by a Borrower,
solely in the event and to the extent that: (i) the grant of such security
interest shall constitute or result in (A) the abandonment, invalidation or
unenforceability of any right, title or interest of any Borrower therein or
result in any Borrower’s loss of use of such asset or (B) a breach or
termination pursuant to the terms of, or a default under, any such investment
property or general intangible, in each case other than (i) to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable Law (including the Bankruptcy
Code) or principles of equity or (ii) with respect to payment intangibles; provided,
however, that the grant of the security interests contained in this Section
3


 


42
















 


7.16. Modification of
Material Agreements. Parent Borrower will not, and will not permit any of
its respective Subsidiaries to, (a) consent to any amendment,
supplement, waiver or other modification of, any Material Agreements (unless
such change is of an immaterial or ministerial nature) without the prior
written consent of Lender or (b) from and after  September 13, 2010, enter into any
agreements with respect to severance payments to any  Person, unless (i) the severance
payments related thereto would be made pursuant to  contractual arrangements that exist on September 13,
2010 or (ii) the aggregate amount of all such other severance payments
related thereto that may be made would not exceed  $15,000, without the prior written consent of
the Lender.


 


7.17. Account
Eligibility. Parent Borrower shall notify Lender promptly (but in any event
within one (1) day thereof) of any event or circumstance which to any
Borrower’s knowledge would cause Lender to consider then existing accounts of
more than $100,000 as no longer constituting Eligible Accounts.


 


7.18. Compliance with
Laws. Parent Borrower shall and shall cause each of its respective
Subsidiaries to, comply with (a) the applicable laws and regulations
wherever its business is conducted to the extent to which the non-compliance of
such laws and regulations could not reasonably be expected to result in a
Material Adverse Effect, (b) the provisions of its Governing Documents, (c) all
agreements and instruments by which it and any of its properties may be bound
to the extent to which the non-compliance of such laws and regulations could
not reasonably be expected to result in a Material Adverse Effect and (d) all
applicable decrees, orders and judgments.


 


7.19. TD Bank Account. Borrowers shall not
maintain cash and any other deposits in any account with TD Bank, including,
without limitation, account number 37-3956192, in an amount in excess of $100
in the aggregate for all such accounts unless and until TD Bank, the applicable
Borrower and Lender have entered into an Account Control Agreement.


 


60

















 


(b)           Consolidated Total Leverage Ratio.
The Borrowers shall not permit the Consolidated Total Leverage Ratio for
any Twelve Month Measurement Period ending during any fiscal quarter,
commencing with the quarter ending June 30, 2010, to be greater than the
ratio set forth below opposite such Measurement Period ending date:


 


	
  Measurement Period Ending

  	
   

  	
  Consolidated Total

  Leverage Ratio

  
	
  June 30, 2010

  	
   

  	
  6.00:1.00

  
	
  September 30, 2010

  	
   

  	
  6.00:1.00

  
	
  December 31, 2010

  	
   

  	
  5.00:1.00

  
	
  March 31, 2011

  	
   

  	
  4.00:1.00

  
	
  June 30, 2011

  	
   

  	
  3.00:1.00

  
	
  September 30, 2011

  	
   

  	
  2.50:1.00

  
	
  December 31, 2011

  	
   

  	
  2.00:1.00

  
	
  March 31, 2012

  	
   

  	
  1.75:1.00

  
	
  June 30, 2012 and
  thereafter

  	
   

  	
  1.50:1.00

  



 


(c)           Consolidated Fixed Charge Coverage
Ratio. The Borrowers shall not permit the Consolidated Fixed Charge
Coverage Ratio for any Twelve Month Measurement Period ending during any fiscal
quarter, commencing with the quarter ending June 30, 2010, to be less than
the ratio set forth below opposite such Measurement Period ending date:


 


	
  Measurement Period Ending

  	
   

  	
  Consolidated Fixed

  Charge Coverage

  Ratio

  
	
  June 30, 2010

  	
   

  	
  0.75:1.00

  
	
  September 30, 2010

  	
   

  	
  0.75:1.00

  
	
  December 31, 2010

  	
   

  	
  1.00:1.00

  
	
  March 31, 2011

  	
   

  	
  1.00:1.00

  
	
  June 30, 2011

  	
   

  	
  1.25:1.00

  
	
  September 30, 2011

  	
   

  	
  1.25:1.00

  
	
  December 31, 2011

  	
   

  	
  1.50:1.00

  
	
  March 31, 2012

  	
   

  	
  1.50:1.00

  
	
  June 30, 2012 and
  thereafter

  	
   

  	
  2.00:1.00

  



 


(d)           Minimum Cash On Hand. The
Borrowers shall not permit at any time its unrestricted Cash on hand to be less
than $1,000,000.


 


7.21. Use of Proceeds. Borrowers will use the
proceeds from each of the Term Loan A, the Term Loan B and the Revolving Loan (i) to
continue existing debt of the Parent Borrower on the Closing Date, (ii) to
fund Permitted Acquisitions and (iii) for general corporate and working
capital purposes. Borrowers will use the proceeds from the Equipment Term Loan
solely to purchase equipment subject to Equipment Purchase Orders approved by
Lender in its sole discretion. Borrowers will solely use the proceeds from the
Term Loan C to repay, in part, outstanding Overadvances on the date of funding
of the Term Loan C.  Borrowers will
use the


 


62

















 


proceeds from the Term Loan D to repay the Overadvance made by the
Lender on September 13, 2010.


 


7.22. Reservation of
Capital Stock. Parent Borrower shall, (a) at all times after January 31,
2010, reserve for the issuance of additional shares of common Capital Stock
pursuant to the terms of Section 2.5(a)(iii) and Section 2.9
hereof, [and shall,] (b) at all times after the
Second Amendment Effective Date, in addition to the foregoing (and not in lieu
thereof) reserve for the issuance of additional shares of common Capital Stock
pursuant to the terms of Section 2.4 and Section [2.10.]
2.10 and (c) at all times after the Fourth Amendment Effective Date,
in  addition to the foregoing (and not in
lieu thereof) reserve for the issuance of additional shares of common Capital
Stock pursuant to the terms of Section 2.11. In addition to the
foregoing, Parent Borrower shall, at all times, have a sufficient number of
authorized shares so as to permit the issuance of the shares of common Capital
Stock as provided under Section 2.4, Section 2.5(a)(iii), Section [2.9]
2.9, Section 2.10 and Section [2.10.] 2.11.


 


7.23. Post Closing Requirements.


 


(a)           Budget. On or before a date
which is ninety (90) days following the Closing Date, Borrowers shall deliver
to Lender a budget for the 2010 fiscal year, such budget to be in form and substance,
and with such supporting documentation and underlying assumptions, as
reasonably acceptable to Lender.


 


(b)           TD Bank Accounts. On or before
January 15, 2010, Borrowers shall enter into, and cause TD Bank to enter
into, an Account Control Agreement with Lender or deliver to Lender, evidence
satisfactory to Lender, that all TD Bank accounts have been closed.


 


7.24. Equipment Term Loan
Lockbox. On or before March 1, 2010, Borrowers shall establish a
lockbox with a financial institution acceptable to Lender in its sole
discretion and in the name of Lender, and Borrowers shall enter into, and cause
the financial institution where such lockbox is maintained to enter into, a
control agreement in form, scope and substance acceptable to Lender with
respect to such lockbox. At all times the Equipment Term Loan Lockbox shall be
subject to a control agreement acceptable to Lender, and Borrowers shall have
no right to terminate such lockbox arrangements without the prior written
consent of Lender.


 


7.25. Equipment Accounts;
Invoices for Equipment Accounts. All payments on Equipment Accounts shall
be made to the Equipment Term Loan Lockbox. All invoices for equipment giving
rise to Equipment Accounts shall clearly direct all account debtors to remit
all payments in respect of such equipment to the Equipment Term Loan Lockbox.


 


7.26. Equipment Account
Factoring. At Lender’s request, Borrowers shall promptly enter into one or
more factoring arrangement(s) acceptable to Lender with respect to some or
all of the Equipment Accounts. Amounts received from such factoring
arrangements shall be paid directly to Lender as Lender directs and applied by
Lender to Secured Obligations on or relating to the Equipment Term Loan as
determined by Lender in its sole discretion.


 


7.27. Fourth Amendment Post Closing Covenants.


 


63

















 


(a)           Within five (5) days of the
Fourth Amendment Effective Date, the Borrowers shall provide the Lender with a
detailed report, including supporting documentation that may be requested by
the Lender, evidencing each cost cutting action that the Borrowers have taken
in 2010, including, without limitation, a detailed listing of headcount and
expense type.


 


(b)           Promptly upon the request of the
Lender, the Borrowers shall provide evidence to the Lender of satisfactory
progress of negotiations among the Parent Borrower and the holders of the HIA
Indebtedness.


 


SECTION 8.
INTENTIONALLY DELETED.


 


SECTION 9.
EVENTS OF DEFAULT


 


The occurrence of any one or more of the following
events shall be an Event of Default:


 


9.1. Payments. Any Borrower fails to pay any
amount due under this Agreement, the Notes or any of the other Loan Documents
on the due date; or


 


9.2. Covenants. Any Borrower breaches or
defaults in the performance of any covenant or Secured Obligation under this
Agreement, the Notes, or any of the other Loan Documents, and (a) with
respect to a default under any covenant under this Agreement (other than under Sections
2.6(a)(vi), 6, 7.1, 7.2, 7.3, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.17, 7.19,
7.20, 7.21, 7.22, 7.23, 7.24, [7.25 or] 7.25, 7.26  or 7.27) such default continues for
more than fifteen (15) days after the earlier of the date on which (i) Lender
has given notice of such default to Parent Borrower and (ii) Parent
Borrower has actual knowledge of such default, or (b) with respect to a
default under Section 7.20(d) arising solely as a result of an
ACH debit entry by Lender the sole purpose of which is to pay out of pocket
expenses of Lender, such default continues for more than five (5) days
after the earlier of the date on which (i) Lender has given notice of such
default to Parent Borrower and (ii) Parent Borrower has actual knowledge
of such default, or (c) with respect to a default under any of Sections
2.6(a)(vi), 6, 7.1, 7.2, 7.3, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.17, 7.19,
7.20 (other than as expressly provided in clause (b) of this Section 9.2),
7.21, 7.22, 7.23, 7.24, [7.25]7.25, 7.26 or [7.26,]7.27,
the occurrence of such default; or


 


9.3. Material Adverse Effect. A circumstance
has occurred that has had a Material Adverse Effect; or


 


9.4. Other Loan Documents. The occurrence of
any default under any Loan Document or any other agreement between any Borrower
and Lender and such default continues for more than fifteen (15) days after the
earlier of (a) Lender has given notice of such default to Parent Borrower,
or (b) Parent Borrower has actual knowledge of such default; or


 


9.5. Representations. Any representation or
warranty made by any Borrower in any Loan Document shall have been false or
misleading in any material respect; or


 


9.6. Insolvency. Any Borrower (A) (i) shall
make an assignment for the benefit of creditors; or (ii) shall be unable
to pay its debts as they become due, or be unable to pay or perform under the
Loan Documents; or (iii) shall file a voluntary petition in bankruptcy; or
(iv)


 


64

















 


include
such Assignee, and such Assignee shall be vested with all rights, powers and
remedies of Lender hereunder with respect to the interest so assigned; but with
respect to any such interest not so transferred, Lender shall retain all
rights, powers and remedies hereby given. No such assignment by Lender shall relieve
any Borrower of any of its obligations hereunder. Lender agrees that, upon
receipt of a Borrower’s written request, in the event of any transfer by it of
the Note(s), it will endorse thereon a notation as to the portion of the
principal of the Note(s), which shall have been paid at the time of such
transfer and as to the date to which interest shall have been last paid
thereon.


 


11.14. Revival of Secured
Obligations. This Agreement and the Loan Documents shall remain in full
force and effect and continue to be effective if any petition is filed by or
against any Borrower for liquidation or reorganization, if such Borrower
becomes insolvent or makes an assignment for the benefit of creditors, if a
receiver or trustee is appointed for all or any significant part of such
Borrower’s assets, or if any payment or transfer of Collateral is recovered
from Lender. The Loan Documents, the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Lender, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Lender or by any obligee of the
Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and
reinstated except to the extent of the full and final payment to Lender in
Cash.


 


11.13. Counterparts. This
Agreement and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an
original, but all of which counterparts shall constitute but one and the same
instrument.


 


11.16. No Third Party
Beneficiaries. No provisions of the Loan Documents are intended, nor will
be interpreted, to provide or create any third-party beneficiary rights or any
other rights of any kind in any person other than Lender and Borrowers unless
specifically provided otherwise herein, and, except as otherwise so provided,
all provisions of the Loan Documents will be personal and solely among Lender
and the Borrowers.


 


11.17. Publicity. With
Parent Borrower’s prior consent, which shall not be unreasonably withheld or
delayed, Lender may use any Borrower’s name and logo, and include a brief
description of the relationship between any Borrower and Lender, in Lender’s
marketing materials.


 


11.18. Representations and Warranties of Lender. Solely
in respect of (a) the Securities described in clause (i) and
clause (ii) of the definition of “Securities,” Lender represents
and warrants the following as of the Closing Date; [and,](b) solely
in respect of the Securities described in clause (iii) and clause
(iv) of the definition of “Securities,” Lender represents and warrants
the following as of the Second Amendment Effective Date and (c) solely
in respect


 


71

















 


of the Securities described in clause (v) and
clause (vi) of the definition of “Securities,” Lender represents and
warrants the following as of the Fourth Amendment Effective Date:


 


(a)           Investment
Intent. Lender understands that the Securities it receives hereunder are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law. Lender is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to Lender’s right at all times to sell or otherwise dispose
of all or any part of such securities in compliance with applicable federal and
state securities laws. Lender does not have any agreement or understanding,
directly or indirectly, with any person or entity to distribute the Securities.


 


(b)           Lender’s
Status. At the time Lender was offered the Securities, Lender was, and at
the date hereof Lender is, an “accredited investor” as defined in Rule 3~1(a) under
the Securities Act. Lender is not a registered broker-dealer or agent thereof
under Section 13 of the Exchange Act.


 


(c)           General
Solicitation. Lender is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.


 


(d)           Access
to Information. Lender acknowledges that it has reviewed the Disclosure
Documents and has been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from, representatives of
Parent Borrower concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities, (ii) access
to information about Parent Borrower and its Subsidiaries and their respective
financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment and (iii) the
opportunity to obtain such additional information that Parent Borrower
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment.


 


(e)           Independent
Investment Decision. Lender has independently evaluated the merits of its
decision to purchase the Securities pursuant to this Agreement, and confirms
that it has not relied on the advice of Parent Borrower or any of its advisors.
Lender has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. Lender understands that it must bear the economic
risk of this investment in the Securities indefinitely, and it is able to bear
such risk and is able to afford a complete loss of such investment.


 


(f)            Legend. Lender acknowledges
that the certificates evidencing the Securities will be imprinted with a legend
in substantially the following form:


 


72

















 


11.20. Limitation on Debt
Conversion. Notwithstanding anything contained in this  Agreement to the contrary, in no event shall
debt be converted hereunder on or after the Fourth Amendment Effective Date into
an amount equal to 20% or more of the common Capital Stock of Parent Borrower
or 20% or more of the voting power of the Parent Borrower, in each case,
outstanding as of the Fourth Amendment Effective Date.


 


(SIGNATURES
TO FOLLOW)


 


74

















 


Table of Exhibits and Schedules


 


	
  Exhibit A:

  	
   

  	
  Advance Request

  Attachment to Advance Request

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1:

  	
   

  	
  Term Note A

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2:

  	
   

  	
  Term Note B

  
	
   

  	
   

  	
   

  
	
  Exhibit B-3:

  	
   

  	
  Revolving Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B-4

  	
   

  	
  Equipment Term Loan Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B-5

  	
   

  	
  Term Note C

  
	
   

  	
   

  	
   

  
	
  Exhibit B-6                                                                 
  Term Note D

  
	
   

  	
   

  	
   

  
	
  Exhibit C:

  	
   

  	
  Name, Locations, and Other
  Information for Borrowers

  
	
   

  	
   

  	
   

  
	
  Exhibit D:

  	
   

  	
  Borrowers’ Patents,
  Trademarks, Copyrights and Licenses

  
	
   

  	
   

  	
   

  
	
  Exhibit E:

  	
   

  	
  Borrowers’ Deposit
  Accounts and Investment Accounts

  
	
   

  	
   

  	
   

  
	
  Exhibit F:

  	
   

  	
  Compliance Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit G:

  	
   

  	
  Joinder Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit H:

  	
   

  	
  Borrowing Base Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit I:

  	
   

  	
  ACH Debit Authorization
  Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit J:

  	
   

  	
  Form of Collateral
  Assignment of Acquisition Documents

  
	
   

  	
   

  	
   

  
	
  Exhibit K

  	
   

  	
  Form of Registration
  Rights Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  Subsidiaries

  
	
  Schedule 1A

  	
   

  	
  Existing Permitted
  Indebtedness

  
	
  Schedule 1B

  	
   

  	
  Existing Permitted
  Investments

  
	
  Schedule 1C

  	
   

  	
  Existing Permitted Liens

  
	
  Schedule 5.3

  	
   

  	
  Consents, Etc.

  
	
  Schedule 5.5

  	
   

  	
  Actions Before
  Governmental Authorities

  
	
  Schedule 5.8

  	
   

  	
  Tax Matters

  
	
  Schedule 5.9

  	
   

  	
  Intellectual Property
  Claims

  
	
  Schedule 5.10

  	
   

  	
  Intellectual Property

  
	
  Schedule 5.11

  	
   

  	
  Borrower Products

  
	
  Schedule 5.14

  	
   

  	
  Capitalization and
  Subsidiaries

  
	
  Schedule 7.14

  	
   

  	
  Deposit Accounts

  



 

















 


[(Other than the continuation of the Specified
Events of Default, each as defined in the [Second]Fourth Amendment),](1) each
Borrower represents that the conditions precedent to the Advance set forth in
the Agreement are satisfied and shall be satisfied upon the making of such
Advance, including but not limited to: (i) that no event that has had a
Material Adverse Effect has occurred and is continuing; (ii) that the representations
and warranties set forth in the Agreement are and shall be true and correct in
all material respects on and as of the Advance Date (other than to the extent
that any representation and warranty is already qualified by materiality, in
which case, such representation and warranty shall be true and correct as of
such date) with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an
earlier date; (iii) that each Borrower is in compliance in all material
respects with all the terms and provisions set forth in each Loan Document on
its part to be observed or performed; and (iv) that as of the Advance
Date, no fact or condition exists that would (or would, with the passage of
time, the giving of notice, or both) constitute an Event of Default under the
Loan Documents. Each Borrower understands and acknowledges that Lender has the
right to review the financial information supporting this representation and,
based upon such review in its reasonable discretion, Lender may decline to fund
the requested Advance.


 


Each Borrower hereby represents that no Borrower’s
corporate and limited liability company status and locations have changed since
the date of this Agreement or, if the Attachment to this Advance Request is
completed, are as set forth in the Attachment to this Advance Request Borrower
agrees to notify Lender promptly before the funding of the Loan if any of the
matters which have been represented above shall not be true and correct on the
Borrowing Date and if Lender has received no such notice before the Advance
Date then the statements set forth above shall be deemed to have been made and
shall be deemed to be true and correct as of the Advance Date.


 


BORROWERS:


 


Executed as of [                                                           ],
20[    ].


 


	
   

  	
  INFOLOGIX, INC., ON BEHALF OF ITSELF

  AND INFOLOGIX SYSTEMS CORPORATION

  OPT ACQUISITION LLC

  EMBEDDED TECHNOLOGIES, LLC

  INFOLOGIX — DDMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title: 

  	
   

  



 






(1) 
To be included to the extent applicable.


 


79
















 


EXHIBIT B-5


 


FORM OF
TERM NOTE C


 


THIS
TERM NOTE C AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) NOR UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, ASSIGNED (OTHER THAN BY
COLLATERAL ASSIGNMENT) OR OTHERWISE TRANSFERRED (OTHER THAN BY COLLATERAL
ASSIGNMENT OR PLEDGE) UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) PARENT
BORROWER RECEIVES AN OPINION OF COUNSEL TO PARENT BORROWER OR OTHER COUNSEL TO
THE HOLDER OF SUCH NOTE WHICH OTHER COUNSEL IS SATISFACTORY TO PARENT BORROWER
THAT SUCH NOTE AND/OR COMMON STOCK MAY BE SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED, WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.


 


	
  $1,350,000

  	
  Date:

  	
  ,20[  ]

  



 

















 


FOR VALUE RECEIVED, each of
InfoLogix, Inc., a Delaware corporation, InfoLogix System
Corporation, a Delaware corporation, Embedded Technologies, LLC a Delaware
Limited Liability Company, Opt Acquisition LLC a Pennsylvania limited liability
company, and InfoLogix-DDMS, Inc, a Delaware corporation, jointly and
severally (each a “Borrower” and collectively, the “Borrowers”) hereby
promises to pay to the order of Hercules Technology Growth Capital, Inc.,
a Maryland corporation or the holder of this Term Note [B]C (the “Lender”)
at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or such other
place of payment as the holder of this Term Note [B]C (this “Note”)
may specify from time to time in writing, in lawful money of the United
States of America, the principal amount of One Million Three Hundred Fifth
Thousand Dollars ($1,350,000) or such other principal amount as Lender has
advanced to Borrowers, together with interest thereon (whether as cash interest
or payment in kind interest), all as provided in the Loan Agreement referred to
below.


 


This Note is a Term Note C
referred to in, and is executed and delivered in connection with, that certain
Amended and Restated Loan and Security Agreement dated November 20, 2009,
by and among Borrowers and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All payments shall be made in accordance with the Loan Agreement. All
terms defined in the Loan Agreement shall have the same definitions when used
herein, unless otherwise defined herein. An Event of Default under the Loan
Agreement shall constitute a default under this Note. The obligations evidenced
by this Note may be converted into shares of common Capital Stock as provided
by the terms of the Loan Agreement.


 


Each Borrower waives presentment and demand for
payment, notice of dishonor, protest and notice of protest under the UCC or any
applicable law. Each Borrower agrees to make all


 

















 


EXHIBIT B-6


 


FORM OF TERM NOTE D


 


THIS TERM NOTE D AND THE COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”) NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE
SOLD, ASSIGNED (OTHER THAN BY COLLATERAL ASSIGNMENT) OR OTHERWISE TRANSFERRED
(OTHER THAN BY COLLATERAL ASSIGNMENT OR PLEDGE) UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) PARENT BORROWER RECEIVES AN OPINION OF COUNSEL
TO PARENT BORROWER OR OTHER COUNSEL TO THE HOLDER OF SUCH NOTE WHICH OTHER
COUNSEL IS SATISFACTORY TO PARENT BORROWER THAT SUCH NOTE AND/OR COMMON STOCK MAY BE
SOLD, ASSIGNED OR OTHERWISE TRANSFERRED, WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.


 


	
  $500,000                                                                                                                         
                                 Date:
                        ,
  20[   ]

  



 


FOR VALUE RECEIVED, each of InfoLogix, Inc., a Delaware
corporation, InfoLogix System Corporation, a Delaware corporation,
Embedded Technologies, LLC a Delaware Limited Liability Company, Opt
Acquisition LLC a Pennsylvania limited liability company, and InfoLogix-DDMS, Inc,
a Delaware corporation, jointly and severally (each a “Borrower” and
collectively, the “Borrowers”) hereby promises to pay to the order of Hercules
Technology Growth Capital, Inc., a Maryland corporation or the holder of
this Term Note D (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo
Alto, CA 94301 or such other place of payment as the holder of this Term Note D
(this “Note”) may specify from time to time in writing, in lawful money of the
United States of America, the principal amount of Five Hundred Thousand Dollars
($500,000) or such other principal amount as Lender has advanced to Borrowers,
together with interest thereon (whether as cash interest or payment in kind
interest), all as provided in the Loan Agreement referred to below.


 


This Note is a Term Note D referred to in, and is executed
and delivered in connection with, that certain Amended and Restated Loan and
Security Agreement dated November 20, 2009, by and among Borrowers and
Lender (as the same may from time to time be amended, modified or supplemented
in accordance with its terms, the “Loan Agreement”), and is entitled to the
benefit and security of the Loan Agreement and the other Loan Documents (as
defined in the Loan Agreement), to which reference is made for a statement of
all of the terms and conditions thereof. 
All payments shall be made in accordance with the Loan Agreement.  All terms defined in the Loan Agreement shall
have the same definitions when used herein, unless otherwise defined
herein.  An Event of Default under the
Loan Agreement shall constitute a default under this Note.  The obligations evidenced by this Note may be
converted into shares of common Capital Stock as provided by the terms of the
Loan Agreement.


 

















 


Each Borrower waives presentment and demand for payment,
notice of dishonor, protest and notice of protest under the UCC or any
applicable law.  Each Borrower agrees to
make all payments under this Note without setoff, recoupment or deduction and
regardless of any counterclaim or defense. 
This Note has been negotiated and delivered to Lender and is payable in
the State of California.  This Note shall
be governed by and construed and enforced in accordance with, the laws of the
State of California, excluding any conflicts of law rules or principles
that would cause the application of the laws of any other jurisdiction.


 


[Remainder
of Page Intentionally Left Blank]


 

















 


	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian, President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
  By: InfoLogix Systems Corporation, its sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  By: InfoLogix Systems Corporation, its sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX — DDMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian, President