Exhibit 4.1


 


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 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.


 


“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
accordance with the Valuation Procedures, in the event the common Capital Stock
of Parent Borrower has ceased to be listed on an Approved Exchange.


 


“Advance(s)” means a
Revolving Loan Advance.


 


2

















 


“Advance Date” means
the funding date of any Advance.


 


“Advance Request”
means a request for an Advance submitted by Parent Borrower on behalf of itself
and of each Borrower to Lender in substantially the form of Exhibit  A
and in form and substance satisfactory to Lender.


 


“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified. 
“Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Agreement” means
this Amended and Restated Loan and Security Agreement, as amended from time to
time.


 


“Amended Side Letter
Agreement” means that certain Amended Side Letter Agreement dated as of November 20,
2009, among the Borrowers and the Lender.


 


“Approved Exchange”
means any of Nasdaq, the New York Stock Exchange or the American Stock
Exchange, to the extent that the common Capital Stock of the Parent Borrower
shall at the date of determination be then traded and subject to an effective
listing on such exchange.


 


“Approved Projections”
means those projections of the annual operational budget of the Parent Borrower
and its Subsidiaries on a consolidated basis, balance sheets and cash flow
statements through the Term Loan B Maturity Date, delivered from time to time
in accordance with the terms of this Agreement, all in form and substance, and
with such supporting documentation and underlying assumptions, as reasonably
acceptable to Lender and approved by Lender in writing.


 


“Assignee” has the
meaning given to it in Section 11.13.


 


“Borrower” or “Borrowers”
has the meaning ascribed to such terms in the Preamble hereto.


 


“Borrower Products”
means all products, software, service offerings, technical data or technology
currently being designed, manufactured or sold by any Borrower or which any
Borrower intends to sell, license, or distribute in the future including any
products or service offerings under development, collectively, together with
all service offerings that have been licensed or distributed by any Borrower
since its respective incorporation or formation.


 


“Borrowing Base”
means 85% of Eligible Accounts.


 


“Borrowing Base
Certificate” means a borrowing base certificate substantially in the form
of Exhibit  H and in form and substance satisfactory to Lender.


 


3

















 


“Business Day” means
a day in which the banking institutions in the State of California are open for
business.


 


“Capital Stock”
means, with respect to any Person, any and all shares of capital stock, any
membership, partnership or other ownership interests or any other class of
stock or equity interests, participations or other equivalents in such Person
(however designated, whether voting or non-voting, general or limited) of such
Person’s capital, whether now outstanding or issued after the Closing Date.


 


“Cash” means all
cash, Cash Equivalents and liquid funds.


 


“Cash Equivalents”
means those items and accounts described in clause (ii) of the
definition of Permitted Investments.


 


“Change in Control”
means any (i) reorganization, recapitalization, consolidation or merger
(or similar transaction or series of related transactions) of Parent Borrower, (ii) any
sale, lease, license or transfer of any substantial part of the assets of the
Borrowers and Subsidiaries, taken as a whole, (iii) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13-d5
under the Exchange Act, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “option right”)), directly or indirectly, of
25% or more of the equity securities of Parent Borrower entitled to vote for
members of the board of directors or equivalent governing body of Parent
Borrower on a fully-diluted basis (and taking into account all such securities
that such “person” or “group” has the right to acquire pursuant to any option
right), provided that the transfer by Hercules LLC or Lender (or any
Affiliate of Hercules LLC or Lender) of the equity securities of Parent
Borrower held by Hercules LLC or Lender (or such Affiliate of Hercules LLC or
Lender) to any Person shall not be deemed a “Change in Control”, (iv) during
any period of 12 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of Parent Borrower cease to be
composed of individuals (a) who were members of that board or equivalent
governing body on the first day of such period, or (b) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (a) above constituting at the
time of the election or nomination at least a majority of that board or
equivalent governing body, or (v) Parent Borrower ceases to own 100% of
the Capital Stock of DDMS or ISC, or (vi) ISC ceases to own 100% of the
Capital Stock of Embedded or Opt. 
Notwithstanding the foregoing, the 2009 Recapitalization, the election
of a new board of directors of Parent Borrower in connection with the 2009
Recapitalization or any change in the board of directors of Parent Borrower
pursuant to Section 3.1 of the Debt Conversion Agreement that arises as a
direct result of any action taken or inaction by Hercules LLC shall not
constitute a Change in Control hereunder.


 


“Claims” has the
meaning given to it in Section 11.10.


 


“Closing Date” means
the date of this Agreement.


 


“Collateral” means
the property described in Section 3.1.


 


4

















 


“Collateral Assignments
of Acquisition Documents” means those certain Collateral Assignments of Acquisition
Documents dated as of the closing date of any Permitted Acquisition, among the
applicable Borrowers and Lender, providing for collateral assignment of the
applicable Borrower’s or Borrower’s respective rights and interests, but not
obligations, under the applicable Acquisition Documents to Lender, a form of
which document is attached hereto as Exhibit J.


 


“Confidential Information”
has the meaning given to it in Section 11.12.


 


“Consolidated Adjusted
EBITDA” means, at any date of determination, an amount equal to
consolidated net income of Parent Borrower and its Subsidiaries for the most
recently completed applicable Measurement Period, plus (a) the
following to the extent deducted in calculating such consolidated net
income:  (i) Consolidated Interest
Expenses paid or accrued in such applicable Measurement Period, (ii) the
provision for Federal, state, local and foreign income taxes payable, (iii) depreciation
and amortization expense, (iv) other non-recurring expenses reducing such
consolidated net income which do not represent a cash item in such period or
any future period, in each case of or by Parent Borrower and its Subsidiaries
for such applicable Measurement Period, (v) non-cash charges for stock
based compensation, (vi) non-recurring cash fees, costs, charges and
expenses paid during such period incurred in connection with a Permitted
Acquisition, (vii) non-recurring non-cash write-offs or write-downs of
demo Equipment not to exceed $750,000 in the aggregate (in each case of or by
the Parent Borrower and its Subsidiaries for such applicable Measurement
Period), (viii) cash severance expenses in such amounts as are consistent
with Parent Borrower’s severance plan as approved by Parent Borrower’s board of
directors and otherwise mutually agreed upon by Parent Borrower and Lender, in
Lender’s reasonable discretion, and (ix) fees, legal fees and expenses
incurred and paid in connection with the preparation and negotiation of this
Agreement and the 2009 Recapitalization; and minus (b) the
following, to the extent included in calculating such consolidated net
income:  (i) Federal, state, local
and foreign income tax credits and (ii) all non-cash items increasing
consolidated net income (in each case of or by Parent Borrower and its
Subsidiaries for such applicable Measurement Period).  For purposes of this calculation and without
duplication, with respect to any period of determination, the consolidated
adjusted EBITDA of a wholly-owned Subsidiary acquired as a result of a
Permitted Acquisition, which shall be calculated in a manner consistent with
the methodology set forth for Consolidated Adjusted EBITDA herein, may be
included in the calculation of Consolidated Adjusted EBITDA as though such
Permitted Acquisition was consummated on the first day of the applicable
Measurement Period (the “Acquired Entity EBITDA”).  The Acquired Entity EBITDA shall be
calculated by reference to the audited financial results of the acquired
entity, if available for such applicable Measurement Period, or if such audited
financial results are not available for such Measurement Period, any unaudited
financial results or management-prepared results as are approved by Lender in
respect of such acquired entity.


 


“Consolidated Excess Cash
Flow” means, as any date of determination, an amount equal to Consolidated
Adjusted EBITDA of Parent Borrower and its Subsidiaries for the most recently
completed Twelve Month Measurement Period, minus the sum (without
duplication) of: (i) capital expenditures made in cash and not financed
(other than from the proceeds of the Revolving Loans) during such period, (ii) Consolidated
Interest Expense paid in cash during such period, (iii) the aggregate
amount of Federal, state, local and foreign income taxes paid in 


 


5

















 


cash
during such period, (iv) scheduled repayments and/or voluntary or
mandatory prepayments of the Term Loans made in cash during such period.


 


“Consolidated Fixed
Charge Coverage Ratio” means, as any date of determination, the ratio of (a) Consolidated
Adjusted EBITDA for the most recently completed Twelve Month Measurement
Period, less the provision for Federal, state,
local and foreign income taxes payable for such Measurement Period, less cash capital expenditures made during such Measurement
Period to (b) Debt Services Charges for such Measurement Period (in each
case of or by Parent Borrower and its Subsidiaries for such applicable
Measurement Period).


 


“Consolidated Funded
Indebtedness” means, as of the date of determination, for Parent Borrower
and its Subsidiaries on a consolidated basis, the sum (without duplication) of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Secured Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct
obligations arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business), (e) in
respect of any capitalized lease of any Person, the capitalized amount thereof
that would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP, (f) all guarantees with respect to outstanding
Indebtedness of the types specified in clauses (a) through (e) above
of Persons other than Parent Borrower or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f) above
of any partnership or joint venture (other than a joint venture that is itself
a corporation or limited liability company) in which Parent Borrower or a
Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to Parent Borrower or such Subsidiary, provided
that Consolidated Funded Indebtedness shall not include interest rate
protection agreements except to the extent such amount is then due and payable
thereunder.


 


“Consolidated Interest
Expense” means, for any Measurement Period, the sum of (a) all
interest, premium payments, fees, charges and related expenses in connection with
borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, 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.


 


6

















 


“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.


 


“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.


 


“Copyright Security
Agreement” means a collateral grant of security interest in copyrights executed
and delivered by the Borrowers and Lender, as such may be amended, restated or
otherwise modified from time to time.


 


“Copyrights” means
all copyrights, whether registered or unregistered, held pursuant to the laws
of the United States, any State thereof, or of any other country.


 


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


 


“Debt Conversion
Agreement” means that certain Debt Conversion Agreement dated as of November 20,
2009 between Hercules LLC and Parent Borrower.


 


“Debt Services Charges”
means, for any Measurement Period, the sum of (a) Consolidated Interest
Expense paid in cash or required to be paid in cash during such Measurement
Period, plus (b) scheduled principal payments paid in cash or
required to be paid in cash on account of Consolidated Funded Indebtedness
(including, without limitation, on any of the Loans hereunder) during such
Measurement Period (in each case of or by Parent Borrower and its Subsidiaries
for such applicable Measurement Period).


 


“Default Rate” has
the meaning given to it in Section 2.4.


 


7

















 


“Delta Acquisition
Documents” means that certain Acquisition Agreement and each other
agreement, instrument, side letter or other document executed and delivered in
connection with the Permitted Acquisition of the assets of Delta Health Systems, Inc.


 


“Disclosure Documents”
means reports, forms or other information, including the SEC Reports, that
Parent Borrower has filed under the Exchange Act and which are actually
available for public review through the SEC’s EDGAR system.


 


“Domestic Subsidiary”
means any Subsidiary that is organized under the laws of any political
subdivision of the United States.


 


“Eligible Accounts”
means Accounts arising in the ordinary course of a Borrower’s business.  Lender reserves the right at any time and
from time to time after the Closing Date, to adjust any of the criteria set
forth below and to establish new criteria in its good faith credit judgment
based on a change in circumstances, events or conditions occurring following
the Closing Date with 3 Business Days prior notice to Parent Borrower.  Eligible Accounts shall not include the
following:


 


(a)           Accounts that the account debtor has failed to pay in
full within 90 days of invoice date;


 


(b)           Accounts owing by an account debtor, whose total
obligations to all Borrowers, when aggregated with those of such account debtor’s
Affiliates, exceed 50% of all accounts, to the extent those obligations exceed
that percentage, except as approved by Lender;


 


(c)           Accounts owing by an account debtor, including its
Affiliates, 35% of whose accounts the account debtor has failed to pay within
90 days of invoice date;


 


(d)           Accounts owing by an account debtor that does not have
its principal place of business in the United States unless (i) such
account is billed to an office in the United States, (ii) such account is
supported by a letter of credit satisfactory to Lender and with respect to
which Lender is named as the beneficiary of such letter of credit, and provided
further that nothing contained in Section 3.3(e) of this
Agreement shall require or permit the inclusion of any accounts owing by an
account debtor that does not have its principal place of business in the United
States as Eligible Accounts under this clause (ii) unless such
account is supported by a letter of credit naming Lender as a beneficiary, or (iii) Lender
consents in writing to such account debtor in its good faith business judgment;


 


(e)           Accounts owing by an account debtor that any Borrower
owes money, goods and/or services or is otherwise obligated to, but only to the
extent of the potential amount owed;


 


(f)            Accounts arising out of deferred revenue;


 


(g)           Accounts owing by an Affiliate of a Borrower;


 


8

















 


(h)           Accounts that are the obligation of an account debtor
that is the United States government or a political subdivision thereof, or any
state, county or municipality or department, agency or instrumentality thereof
unless the applicable Borrower, if necessary, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
Federal, state, county or municipal law restricting assignment thereof;


 


(i)            Accounts that arise with respect to goods that are
delivered on a bill-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the account
debtor is or may be conditional;


 


(j)            Accounts upon which the respective Borrower’s right to
receive payment is not absolute or is contingent;


 


(k)           Accounts owing from any Person that (i) has
disputed liability for any account owing from such Person, or (ii) has
otherwise asserted any claim, demand or liability against the Parent Borrower
or any of its Subsidiaries, whether by action, suit, counterclaim or otherwise;
provided, however that for purposes of this clause (k), such accounts
shall be excluded only to the extent of the amounts being disputed by such
Person at any date of determination;


 


(l)            Accounts that do not arise out of the sales of goods
or rendering of services in the ordinary course of the applicable Borrower’s
business;


 


(m)          Accounts payable other than in U.S. Dollars or that
are otherwise on terms other than those normal or customary in the applicable
Borrower’s business;


 


(n)           Accounts owing from any Person that shall take or be
the subject of any action or proceeding of a type described in Section 9.6
of this Agreement;


 


(o)           Accounts as to which a consent has not been obtained
or maintained as required by Lender;


 


(p)           Accounts not owned by the applicable Borrower free and
clear of all Liens  of any other Person
other than the Liens in favor of Lender;


 


(q)           Accounts not subject to a first priority Lien in favor
of Lender; and


 


(r)            Accounts the collection of which Lender determines in
its good faith credit judgment to be doubtful.


 


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


 


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


 


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


 


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


 


9
















 


“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.


 


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


 


“Hercules LLC” means
Hercules Technology I, LLC, a Delaware limited liability company.


 


“HIA” means
Healthcare Informatics Associates, Inc., a Delaware corporation.


 


“HIA Indebtedness”
means the obligations of ISC to HIA pursuant to the Subordinated Note and the
Earn Out Agreement, each as defined in the HIA Subordination Agreement.


 


“HIA Subordination
Agreement” means that certain Subordination Agreement executed and
delivered by and among Lender, ISC and HIA dated as of May 1, 2008, as the
same may be amended pursuant to the terms thereof from time to time.


 


“HIA Transaction”
means the acquisition by Parent Borrower and ISC of certain assets of
Healthcare Informatics Associates, Inc. pursuant to that certain Asset
Purchase Agreement, dated as of September 30, 2007, among Parent Borrower,
ISC, Heathcare Informatics Associates, Inc. and the stockholders
identified therein of Heathcare Infomatics Associates, Inc.


 


“Indebtedness” means
indebtedness of any kind, including (a) all indebtedness for borrowed
money or the deferred purchase price of property or services (excluding trade
credit entered into in the ordinary course of business), including
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, 


 


10

















 


debentures
or similar instruments, (c) all capital lease obligations and (d) all
Contingent Obligations.


 


“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, or proceedings seeking reorganization,
arrangement, or other similar relief.


 


“Intellectual Property”
means all of Borrowers’ Copyrights, Trademarks, Patents, Licenses, trade
secrets and inventions, mask works, Borrowers’ applications therefor and
reissues, extensions, or renewals thereof; and Borrowers’ goodwill associated
with any of the foregoing, together with Borrowers’ rights to sue for past,
present and future infringement of Intellectual Property and the goodwill
associated therewith.


 


“Investment” means
any beneficial ownership (including stock, partnership or limited liability
company interests) of or in any Person, or any loan, advance or capital
contribution to any Person or the acquisition of all, or substantially all, of
the assets of another Person.


 


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


 


“Joinder Agreements”
means for each Subsidiary not then a Borrower, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit  G.


 


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


 


“Lender Expenses” are
all out-of-pocket audit fees and expenses, costs, and expenses (including
reasonable fees and expenses of attorneys, financial advisors and other
professionals) for preparing, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred by
Lender with respect to any Borrower.


 


“License” means any
Copyright License, Patent License, Trademark License or other license of rights
or interests.


 


“Lien” means any
mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, levy, lien or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, against any
property, any conditional sale or other title retention agreement, and any
lease in the nature of a security interest, and any filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.


 


“Loan” or “Loans”
means, collectively, the Advances made under this Agreement.


 


“Loan Documents”
means this Agreement, the Notes, the ACH Authorization, the Security Documents,
the Reaffirmation Agreement, the Amended Side Letter Agreement, the Waiver and
Release Agreement, the HIA Subordination Agreement, any intercreditor
agreements, any subordination agreements and any other documents executed or to
be executed 


 


11

















 


in
connection with the Secured Obligations or the transactions contemplated
hereby, as the same may from time to time be amended, modified, supplemented or
restated.


 


“Mandatory Conversion Event”
shall have the meaning assigned to such term in Section 2.9(b).


 


“Material Adverse Effect”
means a material adverse effect upon: (i) the business, operations,
properties, assets, or financial condition of Parent Borrower and its
Subsidiaries taken as a whole; or (ii) the ability of any Borrower to
perform the Secured Obligations in accordance with the terms of the Loan
Documents, or the ability of Lender to enforce any of its rights or remedies
with respect to the Secured Obligations; or (iii) the Collateral or Lender’s
Liens on the Collateral or the priority of such Liens.


 


“Material Agreements”
means the Acquisition Documents, the charter documents (including, as
applicable and without limitation, articles of formation and by-laws) of each
of the Parent Borrower and its Subsidiaries, and the Subordinated Indebtedness
Documents.


 


“Maximum Rate” shall
have the meaning assigned to such term in Section 2.3.


 


“Maximum Revolving Loan
Amount” means $12,000,000.


 


“Maximum Term Loan A
Amount” means $5,500,000.


 


“Maximum Term Loan B
Amount” means $5,000,000.


 


“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 and/or Term Notes B.


 


“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.


 


12

















 


“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;


 


(ii)           Parent Borrower shall have delivered evidence
reasonably satisfactory to Lender that EBITDA of the Person or assets of the
Person so acquired, calculated in accordance with GAAP (without taking into
account the Consolidated Adjusted EBITDA of the Parent Borrower and its
Subsidiaries but calculated in a manner consistent with that set forth in the
definitions of Consolidated Adjusted EBITDA), for the twelve month period most
recently completed shall be greater than zero;


 


(iii)          Parent Borrower shall have delivered to Lender at
least one (1) Business Day prior to the date on which the purchase or
acquisition of the Acquired Assets is to be consummated a certificate of such
Borrower signed by an authorized officer of such Borrower, in form and
substance reasonably satisfactory to Lender, certifying that all of the
requirements set forth herein have been satisfied or will be satisfied on the
consummation of such purchase or acquisition;


 


(iv)          Parent Borrower shall have delivered to Lender at
least three (3) Business Days prior to the date on which the purchase or
acquisition of the Acquired Assets is to be consummated a draft of the Approved
Projections in form and substance satisfactory to Lender in its reasonable discretion;


 


(v)           Parent Borrower shall have delivered to Lender
evidence reasonably satisfactory to Lender that all liens and encumbrances with
respect to the Acquired Assets, other than Permitted Liens, have been
discharged in full or arrangements therefor satisfactory to Lender have been
made;


 


13

















 


(vi)          Parent Borrower shall have delivered to Lender, not
less than three (3) Business Days prior to the consummation of each
proposed acquisition, a duly executed Compliance Certificate, demonstrating
that, after giving effect to such acquisition, all covenants contained in Section 7.20
will be satisfied on a pro forma basis calculated such that the Acquired Entity
EBITDA shall be included in the calculation of Consolidated Adjusted EBITDA
pursuant to the methodology set forth in the definition of Consolidated
Adjusted EBITDA;


 


(vii)         any such newly-created or acquired Subsidiary shall
engage in a line of business similar to the lines of business conducted by
Parent Borrower and its Subsidiaries as of the Closing Date or any business
substantially related, complementary  or
incidental thereto;


 


(viii)        any such newly-created or acquired Subsidiary shall
be a Domestic Subsidiary and shall comply with the requirements of Section 7.15,
and/or, with respect to any newly-acquired assets, such assets shall be located
in the United States and owned by Parent Borrower or any Domestic Subsidiary
and Parent Borrower or the applicable Domestic Subsidiary shall comply with the
requirements of the Security Documents;


 


(ix)           Parent Borrower shall have delivered on
the closing date of each respective acquisition, as required by Lender, an
original executed Collateral Assignment of Acquisition Documents and an officer’s
certificate duly executed by Parent Borrower’s Chief Executive Officer, Chief
Financial Officer or President certifying and attaching true, correct and
complete copies of the applicable Acquisition Documents (which Acquisition
Documents shall be in form and substance reasonably acceptable to Lender),
which Acquisition Documents shall contain a provision that such Acquisition
Documents are assignable to Lender, and shall not contain any anti-assignment
or third party beneficiary provisions that could adversely affect Lender’s ability
to enforce its rights as assignee of the applicable Borrower’s rights under
such Acquisition Documents;


 


(x)            the boards of directors and (if required by
applicable law) the shareholders, or the equivalent thereof, of Parent Borrower
(or applicable Subsidiary) and the business to be acquired have approved such
acquisition; and


 


(xi)           the aggregate cash consideration paid for all
Acquired Assets shall not exceed $1,500,000.


 


“Permitted Indebtedness”
means: (i) Indebtedness of Borrowers in favor of Lender arising under this
Agreement or any other Loan Document; (ii) Indebtedness existing on the
Closing Date which is disclosed in Schedule  1A; (iii) Indebtedness
of up to $750,000 outstanding at any time secured by a lien described in clause
(vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or
fair market value of the Equipment financed with such Indebtedness; (iv) Indebtedness
incurred in the ordinary course of business with corporate credit cards that
also constitutes a Permitted Investment pursuant to clause (viii) of
such definition; (v) Subordinated Indebtedness; (vi) reimbursement
obligations in connection with letters of credit that are secured by cash or
Cash Equivalents and issued on behalf of the Parent Borrower or a Subsidiary
thereof in an amount not to exceed 


 


14

















 


$350,000
at any time outstanding; (vii) other Indebtedness in an amount not to
exceed $250,000 at any time outstanding; and (viii) extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not
increased or the terms modified to impose materially more burdensome terms upon
Parent Borrower or its Subsidiary, as the case may be.


 


“Permitted Investment”
means: (i) Investments of a Borrower in any other Person existing on the
Closing Date which are disclosed in Schedule  1B; (ii) (a) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one year from the
date of acquisition thereof, (b) commercial paper maturing no more than
one year from the date of creation thereof and currently having a rating of at
least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (c) certificates of deposit issued by any bank with
assets of at least $500,000,000 maturing no more than one year from the date of
investment therein and (d) money market accounts; (iii) repurchases
of stock from former employees, directors, or consultants of Parent Borrower
under the terms of applicable repurchase agreements at the original issuance
price of such securities in an aggregate amount not to exceed $250,000 in any
fiscal year, provided that no Event of
Default has occurred, is continuing or would exist after giving effect to the
repurchases; (iv) Investments accepted in connection with Permitted
Transfers; (v) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of each respective Borrower’s
business; (vi) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business, provided
that this subparagraph (vi) shall not apply to Investments of any
Borrower in any Subsidiary; (vii) Investments consisting of loans not
involving the net transfer on a substantially contemporaneous basis of cash
proceeds to employees, officers or directors relating to the purchase of
Capital Stock of Parent Borrower pursuant to employee stock purchase plans or
other similar agreements approved by Parent Borrower’s Board of Directors, and
loans to any employees, officers or directors of any Borrower, or the guarantee
by any Borrower of any such loans made by a third party permitted pursuant to Section 7.9(c);
(viii) Investments consisting of travel advances in the ordinary course of
business; (ix) Investments in newly-formed Subsidiaries organized in the
United States, provided that such
Subsidiaries enter into a Joinder Agreement promptly after their formation by
Parent Borrower (or applicable Subsidiary) and execute such other documents as
shall be reasonably requested by Lender; (x) Investments in subsidiaries
organized outside of the United States approved in advance in writing by
Lender; (xi) joint ventures or strategic alliances in the ordinary course of
each respective Borrower’s business consisting of the nonexclusive licensing of
technology, the development of technology or the providing of technical
support, provided that any cash Investments
by Borrowers with respect to such joint ventures or strategic alliances do not
exceed $250,000 in the aggregate in any fiscal year; (xii) additional
Investments that do not exceed $250,000 in the aggregate; and (xiii)
Investments that result in or that constitute Permitted Acquisitions.


 


“Permitted Liens”
means any and all of the following: (i) Liens in favor of Lender; (ii) Liens
existing on the Closing Date which are disclosed in Schedule  1C; (iii) Liens
for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or being contested in good faith by appropriate proceedings, provided, that Borrowers maintain adequate
reserves 


 


15

















 


therefor
in accordance with GAAP; (iv) Liens securing claims or demands of
materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like Persons arising in the ordinary course of each respective Borrower’s
business and imposed without action of such parties, provided, that the payment thereof is not yet required; (v) Liens
arising from judgments, decrees or attachments in circumstances which do not
constitute an Event of Default hereunder; (vi) the following deposits, to
the extent made in the ordinary course of business:  deposits under worker’s compensation,
unemployment insurance, social security and other similar laws, or to secure
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens arising
under ERISA or environmental liens) or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds; (vii) Liens on equipment or
software or other intellectual property constituting purchase money liens and
liens in connection with capital leases securing Indebtedness permitted in clause
(iii) of “Permitted Indebtedness”; (viii) Liens incurred in
connection with Subordinated Indebtedness; (ix) leasehold interests in
leases or subleases and licenses granted in the ordinary course of business and
not interfering in any material respect with the business of the licensor; (x) Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payment of custom duties that are promptly paid on or before the date
they become due; (xi) Liens on insurance proceeds securing the payment of
financed insurance premiums that are promptly paid on or before the date they
become due (provided that such Liens extend
only to such insurance proceeds and not to any other property or assets); (xii)
statutory and common law rights of set-off and other similar rights as to
deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (xiii) 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, and (iv) other
transfers of assets having a fair market value of not more than $500,000 in the
aggregate in any fiscal year, provided, that Borrowers shall be required
to make mandatory prepayments of the Term Loans, 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 $250,000 in the aggregate in any fiscal year.


 


16

















 


“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”.


 


“Reaffirmation Agreement”
means that certain Reaffirmation Agreement dated as of the Closing Date among
Borrowers and Lender.


 


“Refinancing Event”
means the closing of a loan with a lender other than Lender or the making of an
equity contribution by a shareholder other than Lender or any other Lender’s
affiliates, the proceeds of which are applied to pay in full in cash the
aggregate outstanding principal amount of the Term Loans, together with all
accrued interest thereon (including interest accrued but not yet capitalized)
and all other Secured Obligations arising in respect thereof (including,
without limitation the Term Loan Prepayment Charge (if applicable)).


 


“Registration Rights
Agreement” means the registration rights agreement substantially in the
form of Exhibit K duly executed by Parent Borrower in favor of
Lender.


 


“Revolving Interest Rate”
shall equal twelve percent (12%) per annum, provided that upon a
Refinancing Event the “Revolving Interest Rate” shall be reduced to the prime
rate as reported in The Wall Street Journal plus 4.0% per annum; provided,
however, any Revolving Loan constituting an Overadvance shall bear
interest at the rate equal to fifteen percent (15%) per annum.


 


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


 


“Revolving Loan Advance”
means any Revolving Loan funds advanced under this Agreement.


 


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


 


“Revolving Loan Maturity
Date” means May 1, 2011, provided that in the event Borrowers
notify Lender in writing not more than 30 days and not less than 15 days prior
to such date requesting that Lender extend the “Revolving Loan Maturity Date”
to November 1, 2011 (such written notification to state that such notice
is a “Request for Extension of Revolving Loan Maturity Date,”), then following
Lender’s written confirmation thereof to Borrowers, the 


 


17

















 


Revolving
Loan Maturity Date shall be extended to November 1, 2011, provided
that no Event of Default exists at the time of delivery of such “Request for
Extension of Revolving Loan Maturity Date” or shall exist at the time of the
extension thereof by Lender.


 


“Revolving Note”
means a promissory note in substantially the form of Exhibit  B-3.


 


“SEC Reports” means
the reports, forms or other information required to be filed by Parent Borrower
under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the twelve months preceding the date hereof (or such shorter period as
Parent Borrower was required by law to file such reports).


 


“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 bankruptcy, 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 and (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.


 


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


 


“Security Documents”
means, collectively, 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.


 


18

















 


“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.


 


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


 


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


 


“Term Loans” means,
collectively, the Term Loan A and the Term Loan B.


 


“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.


 


19
















 


“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 United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof.


 


“Twelve Month Measurement
Period” means, at any date of determination, the most recently completed
twelve consecutive calendar months of Borrowers.


 


“UCC” means the
Uniform Commercial Code as the same is, from time to time, in effect in the
State of California, provided, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Lender’s
Lien on any Collateral is governed by the Uniform Commercial Code as the same
is, from time to time, in effect in a jurisdiction other than the State of
California, then the term “UCC” shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such provisions.


 


“Valuation Procedures”,
when used in reference to determining the price per share of Parent Borrower’s
common Capital Stock, means, initially, the determination thereof in good faith
by the Board of Directors of Parent Borrower (such price per share herein
referred to as the “Proposed Share Price”) and approved by Lender, in
its reasonable business judgment.  In the
event Lender does not accept the Proposed Share Price, then Parent Borrower and
Lender shall, in good faith and at Borrowers’ expense, select an independent
valuation firm mutually acceptable to each such Person to conduct a valuation
of the share price of the Parent Borrower. 
The determination of such independent valuation firm shall be conclusive,
absent manifest error, as between the Parent Borrower and Lender for purposes
herein and all costs and expenses incurred in connection with such valuation
shall be borne by the Borrowers.


 


“Waiver and Release
Agreement” means that certain Waiver and Release Agreement, dated as of November 20,
2009, among the Loan Parties and the Lender.


 


“Yield Revenue Amount”
means, (A) with respect to the Term Loan A, an amount equal to (i) the
interest that would have accrued and been payable on the principal balance of
the Term Loan A assuming that the Term Loan A had accrued interest at a rate
per annum of 18% from the date which is six month following the Closing Date to
the date of repayment, prepayment or acceleration (such date herein referred to
as the “Determination Date”), minus (ii) the amount of interest
actually paid by the Borrowers on account of the Term Loan A from the date
which is six


 


20

















 


months
following the Closing Date to the Determination Date; and (B) with respect
to the Term Loan B, an amount equal to (i) the interest that would have
accrued and been payable on the principal balance of the Term Loan B assuming
that the Term Loan B had accrued interest at a rate per annum of 18% in cash
plus 2.5% interest in kind (by adding such amount to the outstanding principal
amount of the Term Loan B as if such payment in kind interest had been added to
the outstanding principal amount of the Term Loan B on the applicable interest
date) from the date which is six month following the Closing Date to Determination
Date, minus (ii) the amount of interest actually paid by the
Borrowers on account of the Term Loan B from the date which is six months
following the Closing Date to the Determination Date.


 


1.2.                              Rules of Construction. 
Unless otherwise specified, all references in this Agreement or any
Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex or
Schedule in or to this Agreement.  Unless
otherwise specifically provided herein, any accounting term used in this
Agreement or the other Loan Documents shall have the meaning customarily given
such term in accordance with GAAP but without giving effect to FASB 159, and
all financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and
defined in the UCC shall have the meanings given to them in the UCC.


 


1.3.                              Acknowledgement of True Loans and
Statement of Intent.  Borrowers each hereby acknowledges and
confirms that:  (a) at all relevant
times prior to and through the date of effectiveness of the Existing Agreement
and the Existing Loan Documents and continuing at all times as of the date
hereof, the unconditional and unambiguous intent of Borrowers and Lender with
the entry of the loan arrangements set forth therein was to create, establish
and maintain “true” loans among the parties thereto; and (b) as of the
Closing Date, the intent of Borrowers and Lender with the entry into this
Agreement remains to continue the existing intention that such arrangements be
treated solely as true loans.  Borrowers
expressly agree that they are waiving any right, defense, claim or cause of
action which would seek to reclassify or recharacterize any of the loans made
under the Existing Agreements and/or the Existing Loan Documents and/or
hereunder as unsecured claims, equity investments or seek to treat such loans as
anything other than first priority secured loans.  Borrowers further agree that the entire
understanding and agreement of the parties is embodied in the Existing
Agreements and the Existing Loan Documents, and no parole evidence (including,
but not limited to, any prior or contemporaneous oral or written statements,
communications or drafts) shall be admissible in any court seeking to challenge
the status of the Lenders’ loans as anything other than first priority “true
loans”.


 


SECTION 2.                       THE
LOANS


 


2.1.                              Revolving Loan.


 


(a)                                  Advances.  Subject to
the terms and conditions of this Agreement, Borrowers may, jointly and
severally, draw Revolving Loan Advances on or before the Revolving Loan
Maturity Date in an aggregate principal amount of up to the lesser of the
Borrowing Base or the Maximum Revolving Loan Amount, provided Borrowers shall


 


21

















 


request only one (1) such Revolving Loan Advance
per week, and each Revolving Loan Advance shall be in a minimum amount of
$100,000 or if the amount available to be borrowed under the Maximum Revolving
Loan Amount is less than $100,000, then such lesser amount.  Revolving Loan Advances may be repaid and
reborrowed at any time, without premium or penalty.  Existing Revolving Loans outstanding as of
the Closing Date shall be deemed Revolving Loans and Revolving Loan Advances
pursuant to this Agreement and shall be continued hereunder as Revolving Loans
and Revolving Loan Advances.


 


(b)                                 Advance Request. 
To obtain a Revolving Loan Advance, Parent Borrower, on its own behalf
and on behalf of each Borrower, shall complete, sign and deliver an Advance
Request 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 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 Overadvance shall cause the aggregate
principal amount of all Revolving Loans to exceed the Revolving Loan Maximum
Amount.


 


(d)                                 Interest.  Subject to
the provisions of Section 2.1(c) 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


 


22

















 


floating Revolving Interest Rate based upon a year
consisting of 360 days, as applicable, and payable for the actual number of
days elapsed.


 


2.2.                              Term Loans.


 


(a)                                  Term Loan A. 
On the Closing Date, a portion of the Existing Term Loan in the amount
of the Maximum Term Loan A Amount shall be continued hereunder as the Term Loan
A.


 


(b)                                 Term Loan B. 
On the Closing Date, a portion of the Existing Term Loan in the amount
of the Maximum Term Loan B Amount shall be continued hereunder as the Term Loan
B.


 


(c)                                  Interest.


 


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


 


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


 


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 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 any
and all other Secured Obligations; and seventh, following the payment in
full in cash of all Secured Obligations, the excess (if any) shall be refunded
to Borrowers.


 


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) or Section 2.2(c),
as applicable, plus three percent (3%) per annum (the “Default Rate”).


 


23

















 


In the event any interest
is not paid when due hereunder, delinquent interest shall be added to principal
and shall bear interest on interest, compounded at the rate set forth in Section 2.1(d),
Section 2.2(c) or Section 2.4, as applicable.  For the avoidance of doubt, interest on an
Overadvance made in accordance with Section 2.1(c) shall not
bear interest at the Default Rate as a result of a breach of Section 2.6(a)(ii) due
to such Overadvance being made or permitted to remain outstanding so long as
such Overadvance remains outstanding in compliance with the terms of Section 2.1(c).


 


2.5.                              Payments.


 


(a)                                  Interest; Payments Generally.


 


i.                                          Borrowers will pay cash interest on the
Loans on the first Business Day of each calendar month, commencing December 1,
2009.


 


ii.                                       Notwithstanding subparagraph (a)(i) to
the contrary and solely with respect to interest payments on the Term Loan B, (A) for
the period commencing on the Closing Date and continuing through but not
including the first anniversary of the Closing Date, on the applicable interest
payment date for the Term Loan B, Borrowers will pay accrued and unpaid
interest as follows: (1) twelve percent (12%) on the Term Loan B in cash
and (2) two and one half percent (2.5%) interest in kind by adding such
amount to the outstanding principal amount of the Term Loan B on the applicable
interest payment date; (B) for the period commencing on the first
anniversary of the Closing Date and continuing through but not including the
second anniversary of the Closing Date, on the applicable interest payment date
for the Term Loan B, Borrowers will pay accrued and unpaid interest as follows:
(1) eighteen percent (18%) on the Term Loan B in cash and (2) two and
one half percent (2.5%) interest in kind by adding such amount to the
outstanding principal amount of the Term Loan B on the applicable interest
payment date; and (C) commencing on the second anniversary of the Closing
Date and thereafter, on the applicable interest payment date for the Term Loan
B, Borrowers will pay accrued and unpaid interest as follows: (1) fifteen
percent (15%) interest on the Term Loan B in cash and (2) two and one half
percent (2.5%) interest in kind by adding such amount to the outstanding
principal amount of the Term Loan B on the applicable interest payment date.


 


iii.                                    Notwithstanding subparagraph (a)(i) or
subparagraph (a)(ii) to the contrary and solely with respect to
interest payments on the Term Loan B, at any time that Borrowers either (A) fail
to maintain a Consolidated Interest Coverage Ratio equal to or greater than
2.50 to 1.00 as of the last day of the calendar month for which financial
statements have been delivered under Section 7.1(a) hereof or (B) fail
to deliver the financial statements required under Section 7.1(a) hereof
as required under such Section, then 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 B, 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


 


24

















 


adding such amounts to the principal amount of the
Term Loan B as of such interest payment date 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
30-Day VWAP Price.  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 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.                                   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 and under the Term Loans.


 


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


 


(c)                                  Term Loan Amortization and 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.


 


25

















 


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.


 


iii.                                    The entire principal balance of the
Revolving Loan constituting an Overadvance and all accrued interest and fees on
or relating to such Revolving Loan shall be repaid in full in cash on the
Business Day immediately preceding the first day of each Overadvance Clean Down
Period.


 


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 and the Term Loan B 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 Revolving Loan Advances; sixth,
to the payment of accrued interest on the Revolving Loan Advances; seventh,
to the payment of Lender’s accrued costs, expenses, professional fees
(including, without limitation, all Lender Expenses) and any other Secured
Obligations; and eighth, after all Secured Obligations are repaid, the
excess (if any) shall be refunded to the Borrowers.  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 accrued and unpaid interest thereon as
follows:  first, to the payment of
principal outstanding


 


26

















 


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, and fourth, to the payment of accrued
interest on the Term Loan B.  No Term
Loan Prepayment Charge shall be required for any prepayment of the Term Loans
under this Section 2.6(a)(v).


 


(b)                                 Voluntary Prepayments.


 


i.                                          Borrowers may prepay the Revolving Loan
in whole or in part from time to time without premium or penalty.


 


ii.                                       Without limiting the obligations of
Borrowers under Section 2.9(b)(iii) and Section 2.9(b)(iv),
Borrowers may prepay, in whole (or in part with the prior consent of Lender in
its sole and absolute discretion), the Term Loan A and the Term Loan B at
Borrowers’ option upon at least five (5) Business Days prior written
notice to Lender, together with all accrued and unpaid interest thereon and the
Term Loan Prepayment Charge on the amount so prepaid.


 


(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 Loans, 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.


 


27
















 


(d)                                 Revolving Loan Commitment Reduction and
Termination.


 


i.                                          Borrowers may, at any time upon at least
five (5) Business Days’ notice to Lender, voluntarily terminate, in whole
(or in part solely with the consent of Lender) the Revolving Loan Commitment.


 


ii.                                       Upon any termination of the Revolving
Loan Commitment, including, without limitation, a voluntary termination or
reduction of the Revolving Loan Commitment, if required pursuant to Section 10.01
or upon the Revolving Loan Maturity Date, all Revolving Loan Advances, together
with all accrued but unpaid interest thereon, shall be immediately due and
payable in full.


 


2.7.                              Fees.


 


(a)                                  Facility Charge. 
The Facility Charge shall be fully earned and due on the Closing
Date.  Commencing on April 1, 2010
and on the first Business Day of each calendar month thereafter, Borrowers
shall pay in cash to Lender a portion of the Facility Charge equal to $37,500
until such Facility Charge is paid in full in cash, provided, that (i) in
the event the Loans are accelerated pursuant to the terms hereof, the Facility
Charge shall become payable on the date such Loans are accelerated and (ii) so
long as no Event of Default then exists or is continuing, interest shall not
accrue against the amount of the Facility Charge due but not yet paid in
accordance with the terms hereof.


 


2.8.                              Joint and Several Liability of Borrowers. 
Each Borrower is accepting joint and several liability hereunder and
under the other Loan Documents in consideration of the financial accommodations
to be provided by Lender under this Agreement, for the mutual benefit, directly
and indirectly, of each Borrower and in consideration of the undertakings of
the other Borrowers to accept joint and several liability for the Secured
Obligations.  Each Borrower, jointly and
severally, hereby irrevocably, absolutely and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several liability with
the other Borrowers, with respect to the payment and performance of all of the
Secured Obligations (including, without limitation, any Secured Obligations
arising under this Section 2.8), it being the intention of
Borrowers that all the Secured Obligations shall be the joint and several
obligations of Borrowers without preferences or distinction among them.  If and to the extent that any of Borrowers
shall fail to make any payment with respect to any of the Secured Obligations
as and when due or to perform any of the Secured Obligations in accordance with
the terms thereof, then in each such event, the other Persons composing
Borrowers will make such payment with respect to, or perform, such Secured
Obligation.  Each Borrower hereby agrees
that it will not enforce any of its rights of contribution or subrogation
against Borrowers with respect to any liability incurred by it hereunder or
under any of the other Loan Documents, any payments made by it to Lender with
respect to any of the Secured Obligations or any collateral security therefor
until such time as all of the Secured Obligations have been paid in full in
cash.  Any claim which any Borrower may
have against any other Borrower with respect to any payments to Lender
hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Secured Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Secured Obligations and, in the event of
any insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding 


 


28

















 


under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Secured Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.


 


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 to be converted into shares of common
Capital Stock of Parent Borrower all accrued and unpaid interest on the
Converted Debt Amount, 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 


 


29

















 


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 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) 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, 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


 


30

















 


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)(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) 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),
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


 


31

















 


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.


 


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 


 


32

















 


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 shall extend to, and the term “Collateral”
shall include, (i) any and all proceeds of such directly held general
intangibles, provided that the proceeds are not themselves directly held
general intangibles subject to subsection (2) above, and (ii) at
such time that the grant of such security interest shall no longer 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 general intangible, thereafter such
directly held general intangible.


 


3.2.                              Authorization
to File Financing Statements.  Each Borrower hereby irrevocably authorizes
Lender at any time and from time to time to file in any filing office in any
UCC jurisdiction any initial financing statements and amendments thereto that (a) indicate
the Collateral (i) as all assets of such Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC, or (ii) as being of
an equal or lesser scope or with greater detail, and (b) provide any other
information required by part 5 of Article 9 of the UCC for the sufficiency
or filing office acceptance of any financing statement or amendment.  Each Borrower agrees to furnish any such
information to Lender promptly upon request. 
Each Borrower also ratifies its authorization for Lender to have filed
in any UCC jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.


 


3.3.                              Other Actions.  Further to insure the attachment, perfection
and first priority (subject to Permitted Liens) of, and the ability of Lender
to enforce Lender’s Liens, each Borrower agrees, in each case at Borrowers’
expense, to take the following actions with respect to the following Collateral
and without limitation on such Borrower’s other obligations contained in this
Agreement:


 


(a)                                  Promissory
Notes and Tangible Chattel Paper.  If a Borrower shall, now or at any time
hereafter, hold or acquire any promissory notes or tangible chattel paper, such
Borrower shall, at Lender’s request, forthwith endorse, assign and deliver the
same to Lender,
accompanied by such instruments of transfer or assignment duly executed in
blank as Lender may from time to time specify.


 


(b)                                 Deposit Accounts. 
For each deposit account that a Borrower, now or at any time hereafter,
opens or maintains, such Borrower shall, prior to or concurrently with the
opening of such deposit account, pursuant to an agreement in form and substance
reasonably satisfactory to Lender, cause the depositary bank to agree to
comply, without further consent of such Borrower, at any time during the
continuance of an Event of Default with instructions from Lender to such
depositary bank directing the disposition of 


 


33

















 


funds from time to time credited to such deposit
account.  The provisions of this
paragraph shall not apply to (x) any deposit account for which a Borrower,
the depositary bank and Lender have entered into an Account Control Agreement
among such Borrower, the depositary bank and Lender for the specific purpose
set forth therein, (y) a deposit account for which Lender is the
depositary bank and is in automatic control, and (z) any deposit accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower’s salaried
employees.


 


(c)                                  Investment Property. 
If a Borrower shall, now or at any time hereafter, hold or acquire any
certificated securities, such Borrower shall forthwith endorse, assign and
deliver the same to Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as Lender may from time to time specify.  If any securities now or hereafter acquired
by a Borrower are uncertificated and are issued to such Borrower or its nominee
directly by the issuer thereof, such Borrower shall immediately notify Lender
thereof and, at Lender’s request and option, either (i) cause the issuer
to enter into an agreement under Section 8-106 of the UCC whereby the
issuer agrees with instructions originated by Lender without further consent by
any Borrower, or (ii) pursuant to an agreement in form and substance
satisfactory to Lender, arrange for Lender to become the registered owner of
the securities.  If any securities,
whether certificated or uncertificated, or other investment property now or
hereafter acquired by a Borrower are held by such Borrower or its nominee
through a securities intermediary or commodity intermediary, such Borrower
shall immediately notify Lender thereof and, at Lender’s request and option,
either (x) cause such securities intermediary or (as the case may be)
commodity intermediary to enter into an Account Control Agreement, or (y) pursuant
to an agreement in form and substance satisfactory to Lender, in the case of
financial assets or other investment property held through a securities
intermediary, arrange for Lender to become the entitlement holder with respect
to such investment property, with such Borrower being permitted, only with the
consent of Lender, to exercise rights to withdraw or otherwise deal with such
investment property.  The provisions of
this paragraph shall not apply to any financial assets credited to a securities
account for which Lender is the securities intermediary.


 


(d)                                 Collateral in the Possession of a Bailee. 
If any Collateral in excess of $100,000 is, now or at any time hereafter,
in the possession of a bailee, the applicable Borrower shall promptly notify
Lender thereof and, at Lender’s request and option, shall promptly obtain a
bailee acknowledgment and access agreement in form and substance reasonably
satisfactory to Lender.


 


(e)                                  Letter-of-credit Rights. 
If any Borrower is, now or at any time hereafter, a beneficiary under a
letter of credit in excess of $100,000, such Borrower shall promptly notify
Lender thereof and, at the request and option of Lender, such Borrower shall,
pursuant to an agreement in form and substance reasonably satisfactory to
Lender, either (i) arrange for the issuer and any confirmer of such letter
of credit to consent to an assignment to Lender of the proceeds of the letter
of credit or (ii) arrange for Lender to become the transferee beneficiary
of the letter of credit.


 


34

















 


(f)                                    Commercial Tort Claims. 
If a Borrower shall, now or at any time hereafter, hold or acquire a
commercial tort claim in an amount greater than $100,000, such Borrower shall
promptly (but in any event with two Business Days thereof) notify Lender in a
writing signed by such Borrower of the particulars thereof and grant to Lender
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Lender.


 


(g)                                 Other Actions as to any and all
Collateral.  Each Borrower further agrees, upon the
request of Lender and at Lender’s option, to take any and all other actions as
Lender may reasonably determine to be necessary or useful for the attachment,
perfection and first priority (subject to Permitted Liens) of, and the ability
of Lender to enforce, Lender’s Lien in any and all of the Collateral, including
(i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC, to the extent, if
any, that the applicable Borrower’s signature thereon is required therefor, (ii) causing
Lender’s name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, Lender’s security interest in
such Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of Lender to enforce, Lender’s security interest in such Collateral, (iv) making
commercially reasonable efforts to obtain governmental and other third party
waivers, consents and approvals, in form and substance reasonably satisfactory
to Lender, including any consent of any licensor, lessor or other person
obligated on Collateral, (v) obtaining waivers from mortgagees and
landlords in form and substance reasonably satisfactory to Lender, (vi) creating
and perfecting Liens in favor of Lender in any real property acquired after the
Closing Date, and (vii) taking all actions under any earlier versions of
the UCC or under any other law, as reasonably determined by Lender to be
applicable in any relevant UCC or other jurisdiction, including any foreign
jurisdiction.  In addition to the
foregoing, Borrowers shall on such periodic basis as Lender shall require, (w) provide
Lender with a report of all new material patentable, copyrightable or
trademarkable materials acquired or generated by each Borrower during the prior
period which the Borrowers intend to register with the United States Patent and
Trademark Office or the Library of Congress, as applicable, (x) cause (i) all
Patents and Trademarks and (ii) all Copyrights that are material to such
Borrower’s business, in each case, acquired or generated by such Borrower and
not already the subject of a registration with the appropriate filing office
(or an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Borrower’s ownership thereof, (y) cause to be prepared, executed,
and delivered to Lender supplemental schedules to the applicable Loan Documents
to identify such Patents, Copyrights and Trademarks as being subject to the
security interests created thereunder, and (z) execute and deliver to
Lender at Lender’s request Security Documents with respect to such patents,
trademarks or copyrights for filing with the appropriate filing office.


 


3.4.                              Relation to Other Security Documents. 
Concurrently with the execution of the Existing Agreement each Borrower
executed and delivered to Lender a Pledge Agreement, a


 


35

















 


Copyright Security
Agreement, a Patent Security Agreement, a Trademark Security Agreement, and a
Collateral Assignment of Acquisition Documents, pursuant to which each Borrower
granted a security interest in certain Collateral to Lender as set forth in
such agreements.  Concurrently with the
execution and delivery of this Agreement each Borrower is executing and
delivering to Lender a Reaffirmation Agreement in respect of such Security
Documents.  The provisions of such
agreements are supplemental to the provisions of this Agreement, and nothing
contained in such agreements shall derogate from any of the rights or remedies
of Lender.  Neither the delivery of, nor
anything contained in, such agreements shall be deemed to prevent or postpone
the time of attachment or perfection of any security interest in such Collateral
created hereby.


 


3.5.                              Power of Attorney. 
Each Borrower hereby irrevocably makes, constitutes, and appoints Lender
(and any of Lender’s officers, employees, or agents designated by Lender) as
such Borrower’s true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 3.2, sign the name of Borrower on
any of the documents described in Section 3.2, (b) at any time
that an Event of Default has occurred and is continuing, sign any Borrower’s
name on any invoice or bill of lading relating to the Collateral, drafts
against account debtors, or notices to account debtors, (c) at any time
that an Event of Default has occurred and is continuing, send requests for
verification of accounts, instruments, documents, chattel paper, supporting
obligations, letters of credit and proceeds of letters of credit,
letter-of-credit rights, customer lists, software, and business records related
thereto, (d) at any time that an Event of Default has occurred and is
continuing, endorse each Borrower’s name on any collection item that may come
into Lender’s possession, (e) at any time that an Event of Default has
occurred and is continuing, make, settle, and adjust all claims under each
Borrower’s policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (f) at any time that an Event
of Default has occurred and is continuing, settle and adjust disputes and
claims respecting the accounts, instruments, documents, chattel paper,
supporting obligations, letters of credit and proceeds of letters of credit,
letter-of-credit rights, customer lists, software, and business records related
thereto, or general intangibles directly with account debtors, for amounts and
upon terms that Lender determines to be reasonable, and Lender may cause to be
executed and delivered any documents and releases that Lender determines to be
necessary.  The appointment of Lender as
each Borrower’s attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Secured Obligations
(other than inchoate indemnification obligations) have been fully and finally
repaid in cash and performed and Lender’s obligations to extend credit
hereunder are terminated.


 


SECTION 4.                       CONDITIONS
PRECEDENT TO LOAN


 


The obligations of Lender to
restructure the Loans hereunder are subject to the satisfaction by Borrowers of
the following conditions:


 


4.1.                              Conditions Precedent to Closing Date
Effectiveness.  On or prior to the Closing Date, Borrowers
shall have delivered to Lender the following:


 


(a)                                  executed originals of the following
documents:


 


36
















 


i.                                          this Agreement;


 


ii.                                       the Notes;


 


iii.                                    the ACH Authorization;


 


iv.                                   the Reaffirmation Agreement; and


 


v.                                      the Waiver and Release Agreement, duly
executed by the Borrowers.


 


(b)                                executed originals of a legal opinion of
Borrowers’ counsel, in form, scope and substance reasonably satisfactory to
Lender;


 


(c)                                 executed originals of all other documents
and instruments reasonably required by Lender to effectuate the transactions
contemplated hereby or to create and perfect the Liens of Lender with respect
to all Collateral, in all cases in form and substance reasonably acceptable to
Lender;


 


(d)                                executed originals of a certificate of a
duly authorized officer of each Borrower attaching:


 


i.                                          certified copies of the Certificate of
Incorporation and the Bylaws, or Certificate of Formation and Operating
Agreement, as applicable, each as amended through the Closing Date, of each
Borrower;


 


ii.                                       certified copy of resolutions of each
Borrower’s board of directors or members or managers, as applicable, evidencing
approval of the amendment and restatement of the Existing Agreement, the Loans
and other transactions evidenced by the Loan Documents;


 


iii.                                    the title, name and specimen signature of
each officer duly authorized to sign the Loan Documents; and


 


iv.                                   a certificate of good standing for each
Borrower from its state of incorporation or formation, as applicable, and
similar certificates from all other jurisdictions in which it does business and
where the failure to be qualified would have a Material Adverse Effect;


 


(e)                                 reimbursement of Lender’s current
expenses reimbursable pursuant to this Agreement, which amounts may be deducted
from the initial Advance;


 


(f)                                   evidence of insurance, together with
endorsements identifying Lender as additional insured on all liability policies
and lender loss payee on all property policies;


 


(g)                                (i) results of UCC and intellectual
property searches and with respect to the Collateral indicating no Liens other
than Permitted Liens and otherwise in form and substance satisfactory to
Lender; and (ii) filed, stamped copy of the UCC-3 termination 


 


37

















 


statement evidencing the termination of the UCC-1
filed by Avnet, Inc. (with filing number 2009 3099188), together with
authorization from Avnet, Inc. for filing such UCC-3, in each case, in
form and substance satisfactory to Lender;


 


(h)                                an Advance Request in respect of the
Revolving Loan Advance (if any) duly executed by each Borrower’s Chief
Executive Officer, Chief Financial Officer or President or equivalent position;


 


(i)                                    [Intentionally Omitted];


 


(j)                                     [Intentionally Omitted]


 


(k)                                 (i) evidence satisfactory to Lender
in its discretion that all earn-out obligations of Borrowers and seller notes
issued by Borrowers arising in connection with the Delta Acquisition Documents
have been restructured in a manner and subject to terms and conditions and
documentation satisfactory to Lender; and (ii) an officer’s certificate,
duly executed by the Chief Executive Officer, Chief Financial Officer or
President or equivalent position, dated as of the Closing Date, certifying and
attaching, true, correct and complete copies of the documents evidencing such
restructuring, such documents to include, without limitation, the Earn Out
Agreement, dated as of May 2, 2008 (as amended) between ISC and Delta
Health Systems, Inc.


 


(l)                                    evidence satisfactory to Lender that the
Debt Conversion Agreement dated as of November 20, 2009, between Parent
Borrower and Hercules LLC has been duly executed by the parties thereto and the
transactions described therein have closed and been effectuated substantially
contemporaneously with this Agreement;


 


(m)                              executed original of the Registration
Rights Agreement duly executed by an authorized officer of the Parent Borrower;
and


 


(n)                                such other documents as Lender may
reasonably request.


 


4.2.                              All Advances. 
On each Advance Date:


 


(a)                                 Lender shall have received an Advance
Request for the relevant Advance as required by Section 2.1(b),
duly executed by each Borrower’s Chief Executive Officer, Chief Financial
Officer or equivalent position.


 


(b)                                The representations and warranties set
forth in this Agreement and each other Loan Document 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.


 


(c)                                 Each Borrower and the Borrowers,
collectively shall be in compliance in all material respects with all the terms
and provisions set forth herein and in each other Loan Document on its part to
be observed or performed, and at the time of and 


 


38

















 


immediately after such Advance no Event of Default
shall have occurred and be continuing.


 


(d)                                Each Advance Request shall be deemed to
constitute a representation and warranty by each Borrower on the relevant
Advance Date as to the matters specified in paragraphs (b) and (c) of
this Section 4.2 and as to the matters set forth in the Advance
Request.


 


(e)                                 In connection with any Advance Request
for a Revolving Loan Advance, the documents required pursuant to Section 2.1(b) hereof.


 


4.3.                              No Default.  As of the
Closing Date and each Advance Date, (i) 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 and (ii) no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing.


 


SECTION
5.                          REPRESENTATIONS
AND WARRANTIES OF BORROWERS


 


Each Borrower represents and warrants that:


 


5.1.                              Corporate Status. 
Such Borrower (other than Opt) is a corporation or limited liability
company duly organized, legally existing and in good standing under the laws of
the State of Delaware, and is duly qualified in all jurisdictions in which the
nature of its business or location of its properties require such
qualifications and where the failure to be qualified could reasonably be
expected to have a Material Adverse Effect. 
Opt is a limited liability company duly organized and subsisting under
the laws of the Commonwealth of Pennsylvania, and is duly qualified in all
jurisdictions in which the nature of its business or location of its properties
require such qualifications and where the failure to be qualified could
reasonably be expected to have a Material Adverse Effect.  Such Borrower’s present name, former names
(if any), locations, place of formation, tax identification number,
organizational identification number and other information are correctly set
forth in Exhibit  C (as may be updated by Borrowers in a written
notice (including any Compliance Certificate) provided to Lender after the
Closing Date, provided that no such update shall be deemed a waiver of
any Event of Default resulting from matters disclosed therein).


 


5.2.                              Collateral.  Such Borrower
owns the Collateral, free of all Liens, except for Permitted Liens.  Such Borrower has the power and authority to
grant to Lender a Lien in the Collateral as security for the Secured
Obligations.


 


5.3.                              Consents.  Such Borrower’s
execution, delivery and performance of the Notes, this Agreement and all other
Loan Documents, (i) have been duly authorized by all necessary corporate
or limited liability company action, as applicable, of such Borrower, (ii) will
not result in the creation or imposition of any Lien upon the Collateral, other
than Permitted Liens and the Liens created by this Agreement and the other Loan
Documents, (iii) do not violate any provisions of such Borrower’s articles
of incorporation or formation, as applicable, bylaws or operating agreement, as
applicable, or any, law, regulation, order, injunction, judgment, decree or
writ to which such Borrower is subject and (iv) except as described on Schedule 5.3, do not 


 


39

















 


violate any contract or
agreement or require the consent or approval of any other Person.  The individual or individuals executing the
Loan Documents are duly authorized to do so.


 


5.4.                              Material Adverse Effect. 
No event that has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing. 
Such Borrower is not aware of any event likely to occur that is
reasonably expected to result in a Material Adverse Effect.


 


5.5.                              Actions Before Governmental Authorities. 
Except as described on Schedule  5.5, there are no actions,
suits or proceedings at law or in equity or by or before any governmental
authority now pending or, to the knowledge of such Borrower, threatened against
or affecting such Borrower or its property.


 


5.6.                              Laws.  Such Borrower
is not in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any governmental
authority, where such violation or default could reasonably be expected to
result in a Material Adverse Effect. 
Such Borrower is not in default in any manner under any provision of any
agreement or instrument evidencing indebtedness, or any other material
agreement to which it is a party or by which it is bound or any of its
properties or assets are or may be bound where such default could reasonably be
expected to result in a Material Adverse Effect.


 


5.7.                              Information Correct and Current. 
No information, report, Advance Request, Borrowing Base Certificate,
financial statement, exhibit or schedule furnished, by or on behalf of such
Borrower to Lender in connection with any Loan Document or included therein or
delivered pursuant thereto contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were, are or will be made, not misleading at the time such statement was
made or deemed made.  Additionally, any
and all financial or business projections provided by such Borrower to Lender
shall be provided in good faith and based on reasonable assumptions at the time
made.


 


5.8.                              Tax Matters. 
Except as described on Schedule  5.8, (a) such
Borrower has filed all federal, state and local tax returns that it is required
to file, (b) such Borrower has duly paid or fully reserved for all taxes
or installments thereof (including any interest or penalties) as and when due,
which have or may become due pursuant to such returns, and (c) such
Borrower has paid or fully reserved for any tax assessment received by such
Borrower for the three (3) years preceding the Closing Date, if any
(including any taxes being contested in good faith and by appropriate
proceedings).


 


5.9.                              Intellectual Property Claims. 
Such Borrower is the sole owner of, or otherwise has the right to use,
its Intellectual Property.  Except as
described on Schedule  5.9, (i) each of the material
Copyrights, Trademarks and Patents is valid and enforceable, (ii) no
material part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and (iii) no claim has been made to
such Borrower that any material part of the Intellectual Property violates the
rights of any third party.  Exhibit
D contains a true, correct and complete list of each of such Borrower’s
Patents, registered Trademarks, registered Copyrights, and material agreements
under which such Borrower licenses Intellectual Property from third parties
(other than shrink-wrap software licenses), together with application or registration
numbers, as applicable, 


 


40

















 


owned by Parent Borrower
or any Subsidiary, in each case as of the Closing Date.  Such Borrower is not in material breach of,
nor has such Borrower failed to perform any material obligations under, any of
the contracts, licenses or agreements related to material Intellectual Property
and, to such Borrower’s knowledge, no third party to any such contract, license
or agreement is in material breach thereof or has failed to perform any
material obligations thereunder.


 


5.10.                        Intellectual Property. 
Except as described on Schedule  5.10, such Borrower has,
or in the case of any proposed business, will have, all material rights with
respect to Intellectual Property necessary in the operation or conduct of such
Borrower’s business as currently conducted and proposed to be conducted by such
Borrower.  Without limiting the
generality of the foregoing, and in the case of Licenses, except for
restrictions that are unenforceable under Division 9 of the UCC, such Borrower
has the right, to the extent required to operate such Borrower’s business, to
freely transfer, license or assign Intellectual Property without condition,
restriction or payment of any kind (other than license payments in the ordinary
course of business) to any third party, and such Borrower owns or has the right
to use, pursuant to valid licenses, all material software development tools,
library functions, compilers and all other third-party software and other items
that are used in the design, development, promotion, sale, license,
manufacture, import, export, use or distribution of Borrower Products.


 


5.11.                        Borrower Products. 
Except as described on Schedule  5.11, no material
Intellectual Property owned by such Borrower or Borrower Product has been or is
subject to any actual or, to the knowledge of such Borrower, threatened
litigation, proceeding (including any proceeding in the United States Patent
and Trademark Office or any corresponding foreign office or agency) or outstanding
decree, order, judgment, settlement agreement or stipulation that restricts in
any manner such Borrower’s use, transfer or licensing thereof or that may
affect in a material respect the validity, use or enforceability thereof.  There is no decree, order, judgment,
agreement, stipulation, arbitral award or other provision entered into in
connection with any litigation or proceeding that obligates such Borrower to
grant licenses or ownership interest in any future material Intellectual
Property related to the operation or conduct of the business of such Borrower
or Borrower Products.  Such Borrower has
not received any written notice or claim challenging or questioning such
Borrower’s ownership in any material Intellectual Property (or written notice
of any claim challenging or questioning the ownership in any licensed material
Intellectual Property of the owner thereof) or suggesting that any third party
has any claim of legal or beneficial ownership with respect thereto nor, to
such Borrower’s knowledge, is there a reasonable basis for any such claim.  Neither such Borrower’s use of its material
Intellectual Property nor the production and sale of Borrower Products
infringes the Intellectual Property or other rights of others.


 


5.12.                        Financial Accounts.  Exhibit
E (as may be updated by the Borrowers in a written notice provided to
Lender after the Closing Date, provided that no such update shall be
deemed a waiver of any Event of Default resulting from matters disclosed
therein), is a true, correct and complete list of (a) all banks and other
financial institutions at which Parent Borrower or any Subsidiary maintains
Deposit Accounts and (b) all institutions at which Parent Borrower or any
Subsidiary maintains an account holding Investment Property, and such exhibit
correctly identifies the name, address and telephone number of each bank or
other institution, the name in 


 


41

















 


which the account is
held, a description of the purpose of the account, and the complete account
number therefor.


 


5.13.                        Intentionally Deleted.


 


5.14.                        Capitalization and Subsidiaries. 
Such Borrower’s capitalization as of the Closing Date is set forth on Schedule
5.14 annexed hereto.  Such
Borrower does not own any stock, partnership interest or other securities of
any Person, except for Permitted Investments. 
Attached as Schedule  5.14 (as may be updated by Borrowers in a
written notice provided to Lender after the Closing Date, provided that
no such update shall be deemed a waiver of any Event of Default resulting from
matters disclosed therein) is a true, correct and complete list of each
Subsidiary and each other Person in which a Borrower owns any stock or other
equity interests.


 


5.15.                        Eligible Accounts. 
For any Eligible Account in any Borrowing Base Certificate, all
statements made and all unpaid balances appearing in all Borrowing Base
Certificates, invoices, instruments and other documents evidencing such
Eligible Accounts are and shall be true and correct (except for any good faith
immaterial errors promptly corrected when discovered) and all such Borrowing
Base Certificates, invoices, instruments and other documents, and all of each
Borrower’s books are genuine and in all respects what they purport to be.  All sales and other transactions underlying
or giving rise to each Eligible Account shall comply in all material respects
with all applicable laws and governmental rules and regulations.  Such Borrower has no knowledge of any actual
or imminent insolvency proceeding of any account debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  To the best of such Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Eligible Accounts are genuine, and all such documents,
instruments and agreements are legally enforceable in accordance with their
terms.


 


SECTION 6.                          INSURANCE;
INDEMNIFICATION


 


6.1.                              Coverage.  Each Borrower
shall cause to be carried and maintained commercial general liability
insurance, on an occurrence form, against risks customarily insured against in
each Borrower’s line of business.  Such
risks shall include the risks of bodily injury, including death, property
damage, personal injury, advertising injury, and contractual liability.  Each Borrower must maintain a minimum of
$2,000,000 of commercial general liability insurance for each occurrence.  Each Borrower has and agrees to maintain a
minimum of $2,000,000 of directors and officers’ insurance for each occurrence
and $5,000,000 in the aggregate.  So long
as Lender has any commitment to make any Advances to the Borrowers or there are
any Secured Obligations outstanding, each Borrower shall also cause to be
carried and maintained insurance upon the Collateral, insuring against all risks
of physical loss or damage howsoever caused, in an amount not less than the
full replacement cost of the Collateral, provided
that such insurance may be subject to standard exceptions and deductibles.  Each Borrower shall also carry and maintain a
fidelity insurance policy in an amount not less than $100,000.


 


6.2.                              Certificates. 
Each Borrower shall deliver to Lender certificates of insurance in form
and substance reasonably satisfactory to Lender that evidence such Borrower’s
compliance with its insurance obligations in Section 6.1 and the
obligations contained in this Section 6.2.  Each Borrower’s insurance certificate shall
state Lender is an additional insured for commercial 


 


42

















 


general liability, an additional
insured and a lender’s loss payee for all risk property damage insurance,
subject to the insurer’s approval, a lender’s loss payee for fidelity
insurance, and a lender’s loss payee for property insurance and additional
insured for liability insurance for any future insurance that such Borrower may
acquire from such insurer.  The Borrowers
shall deliver to Lender additional insured endorsements for liability and
lender’s loss payable endorsements for all risk property damage insurance and
fidelity, each in form and substance reasonably satisfactory to Lender.  All certificates of insurance will provide
for a minimum of thirty (30) days advance written notice to Lender of
cancellation or any other change adverse to Lender’s interests.  Any failure of Lender to scrutinize such
insurance certificates for compliance is not a waiver of any of Lender’s
rights, all of which are reserved.


 


6.3.                              Indemnity.  Each Borrower
hereby agrees to and does indemnify and hold Lender and its officers,
directors, employees, agents, attorneys, representatives, professional advisors
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including such claims, costs, expenses, damages and
liabilities based on liability in tort, including strict liability in tort),
including reasonable attorneys’ fees and disbursements and other costs of
investigation or defense (including those incurred upon any appeal), that may
be instituted or asserted against or incurred by Lender or any such Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or the administration of such credit, or
in connection with or arising out of the transactions contemplated hereunder
and thereunder, or any actions or failures to act in connection therewith, or
arising out of the handling, disposition or utilization of the Collateral, or
Lender relying on any instruction of a Borrower, or any other actions taken or
not taken by Lender hereunder or under any Loan Document, excluding in all
cases claims resulting solely from Lender’s gross negligence or willful
misconduct. Each Borrower agrees to pay, and to save Lender harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all excise, sales or other similar taxes (excluding taxes imposed on or
measured by the net income of Lender) that may be payable or determined to be
payable with respect to any of the Collateral or this Agreement.


 


SECTION 7.                          COVENANTS
OF BORROWER


 


Each Borrower agrees as follows:


 


7.1.                              Financial Reports and Compliance
Certificate.
Borrowers shall furnish to Lender the following documents and financial reports
(the “Financial Statements”), with delivery of the Financial Statements described
in subsections (a), (b) and (c), in each case to be
accompanied by the Compliance Certificate in the form attached as Exhibit F:


 


(a)                                 as soon as practicable (and in any event
within thirty (30) days) after the end of each month, unaudited interim
financial statements as of the end of such month (prepared on a consolidated
and consolidating basis, if applicable), including balance sheet and related
statements of income and cash flows, all certified by Parent Borrower’s Chief
Executive Officer or Chief Financial Officer to the effect that they have been
prepared in accordance with GAAP, except (i) for the absence of footnotes,
(ii) that they are subject to normal quarter end and year end adjustments,
and (iii) they do not contain 


 


43

















 


certain non-cash items that are customarily included
in quarterly and annual financial statements;


 


(b)                                as soon as practicable (and in any event
within forty-five (45) days) after the end of each fiscal quarter, unaudited interim
and year-to-date financial statements as of the end of such fiscal quarter
(prepared on a consolidated and consolidating basis, if applicable), including
balance sheet and related statements of income and cash flows, all certified by
Parent Borrower’s Chief Executive Officer or Chief Financial Officer to the
effect that they have been prepared in accordance with GAAP, except (i) for
the absence of footnotes, and (ii) that they are subject to normal year
end adjustments;


 


(c)                                 as soon as practicable (and in any event
within ninety (90) days) after the end of each fiscal year, (i) unqualified
audited consolidated financial statements as of the end of such year, including
balance sheet and related statements of income and cash flows, and setting
forth in comparative form the corresponding figures for the preceding fiscal
year, certified by a firm of independent certified public accountants selected
by Parent Borrower and reasonably acceptable to Lender, accompanied by any
management report from such accountants;


 


(d)                                so long as Lender has any commitment to
make any Advances to the Borrowers or there are any Secured Obligations
outstanding, as soon as practicable (and in any event within five (5) days
after the end of each calendar week (each calendar week deemed, for purposes
hereof, to end on a Friday), a Borrowing Base Certificate and agings of
accounts receivable and accounts payable;


 


(e)                                 promptly after
the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports that any Borrower has made
available to holders of its Preferred Stock and copies of any regular, periodic
and special reports or registration statements that any Borrower files with the
Securities and Exchange Commission or any Governmental Authority that may be
substituted therefor, or any national securities exchange;


 


(f)                                   promptly after
the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports that any Borrower has made
available to holders of its Capital Stock and copies of any regular, periodic
and special reports or registration statements that any Borrower files with the
Securities and Exchange Commission or any governmental authority that may be
substituted therefor, or any national securities exchange; and


 


(g)                                financial and business projections
promptly following their approval by a Borrower’s board of directors, as well
as budgets, operating plans and other financial information reasonably
requested by Lender.


 


The executed Compliance
Certificate may be sent via facsimile to Lender at (650) 473-9194 or via e-mail
to rliu@herculestech.com.  All Financial
Statements required to be delivered pursuant to clauses (a), (b) and
(c) shall be sent via e-mail to financialstatements@herculestech.com
with a copy to rliu@herculestech.com, provided,
that if e-mail is not available or sending such 


 


44

















 


Financial Statements via
e-mail is not possible, they shall be sent via facsimile to Lender at:
(866) 468-8916, attention Chief Credit Officer.


 


7.2.                              Other Notices.  Parent Borrower shall deliver to
Lender, in form and detail reasonably satisfactory to Lender:


 


(a)                                 promptly (but in any event within two (2) Business
Days after receipt or delivery thereof) all material notices and instructions
made under any Acquisition Documents;


 


(b)                                promptly (but in any event within two (2) Business
Days after receipt or delivery thereof or knowledge thereof) copies of all
written notices or claims challenging or questioning any Borrower’s
ownership in any material Intellectual Property (or written notice of any claim
challenging or questioning the ownership in any material licensed Intellectual
Property of the owner thereof) or suggesting that any third party has any claim
of legal or beneficial ownership with respect thereto;


 


(c)                                 promptly the reports specified in Section 3.3(g);
and


 


(d)                                promptly upon the occurrence of an Event
of Default, or upon the occurrence of any event that, with the passage of time
or the giving of notice, or both, would constitute an Event of Default.


 


7.3.                              Inspection Rights.


 


(a)                                 Each Borrower shall permit any
representative that Lender authorizes, including without limitation its
attorneys, financial and other professional advisors and accountants, to
inspect the Collateral and examine and make copies and abstracts of the books
of account and records of such Borrower at reasonable times and upon reasonable
notice during normal business hours.  In
addition, any such representative shall have the right to meet with management
and officers of such Borrower to discuss such books of account and
records.  In addition, Lender shall be
entitled at reasonable times and intervals to consult with and advise the management
and officers of each Borrower concerning significant business issues affecting
such Borrower and to communicate directly with financial advisors retained by
Borrowers.  Such consultations shall not
unreasonably interfere with Borrower’s business operations.  The parties intend that any advice,
recommendations or participation by Lender with respect to any business issues
shall not be deemed to give Lender, nor be deemed an exercise by Lender of,
control over any Borrower’s management or policies.


 


(b)                                Prior to the occurrence of an Event of
Default not more frequently than one time in each calendar quarter, and
following the occurrence of an Event of Default, more frequently as determined
by Lender, upon the request of Lender, Borrowers will obtain and deliver to
Lender, or, if Lender so elects, will cooperate with Lender in Lender’s
obtaining, a report of an independent collateral auditor satisfactory to Lender
with respect to the Accounts included in the Borrowing Base, which report shall
indicate whether or not the information set forth in the Borrowing Base
Certificate most recently delivered is accurate and complete in all material
respects based upon a review by such 


 


45

















 


auditors (including verification with respect to the
amount, aging, identity and credit of the respective account debtors and the
billing practices of Parent Borrower or its applicable Subsidiary).  All such collateral value reports shall be
conducted and made at the Borrowers’ expense.


 


7.4.                              Further Assurances. 
Each Borrower shall from time to time execute, deliver and file, alone
or with Lender, any financing statements, security agreements, collateral
assignments, notices, control agreements, or other documents to perfect or give
a first priority Lien to Lender on the Collateral, subject to Permitted Liens
which were as of the Closing Date unavoidable and senior under applicable law
to Lender’s liens and security interest (other than Liens under clause (vii) of
the definition of Permitted Liens which may be permitted to remain senior to
Lender’s Liens).  Each Borrower shall
from time to time procure any instruments or documents as may be requested by
Lender, and take all further action that may be necessary or desirable, or that
Lender may reasonably request, to perfect and protect the Liens granted hereby
and thereby.  In addition, and for such
purposes only, each Borrower hereby authorizes Lender to execute and deliver on
behalf of such Borrower and to file such financing statements, collateral
assignments, notices, control agreements, security agreements and other
documents without the signature of such Borrower either in Lender’s name or in
the name of Lender as agent and attorney-in-fact for such Borrower.  Borrowers shall protect and defend each
Borrower’s title to the Collateral and Lender’s Lien thereon against all
Persons claiming any interest adverse to each Borrower or Lender other than
Permitted Liens.


 


7.5.                              Compromise of Agreements. 
With respect to Accounts with a combined value in excess of ten percent
(10%) of all of Borrowers’ Accounts then outstanding, no Borrower shall (a) grant
any material extension of the time of payment thereof, (b) to any material
extent, compromise, compound or settle the same for less than the full amount
thereof, (c) release, wholly or partly, any Person liable for the payment
thereof, or (d) allow any credit or discount whatsoever thereon other than
trade discounts granted by such Borrower in the ordinary course of business of
such Borrower.


 


7.6.                              Indebtedness. 
Parent Borrower shall not create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on any Borrower an obligation to prepay any Indebtedness,
except for (a) the conversion of Indebtedness into equity securities and
the payment of cash in lieu of fractional shares in connection with such
conversion and (b) the Permitted Subordinated Debt Payments under the HIA
Indebtedness in accordance with the HIA Subordination Agreement, so long as no
Event of Default shall have occurred or would result therefrom, or any event
that, with the passage of time or giving of notice, or both, would constitute
an Event of Default or would result therefrom.


 


7.7.                              Collateral; Prohibition of Liens. Each Borrower shall at all times keep
the Collateral and all other property and assets used in such Borrower’s
business or in which such Borrower now or hereafter holds any interest free and
clear from any legal process or Liens whatsoever (except for Permitted Liens),
and shall give Lender prompt written notice of any legal process affecting the
Collateral or any Liens thereon.  Parent
Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s
title to its assets from and against all Persons claiming any interest adverse
to such Subsidiary, and Parent Borrower shall cause its


 


46
















 


Subsidiaries at all times
to keep such Subsidiary’s property and assets free and clear from any legal
process or Liens whatsoever (except for Permitted Liens), and shall give Lender
prompt written notice of any legal process affecting such Subsidiary’s assets.
Parent Borrower shall not, nor shall it permit any of its Subsidiaries to enter
into or permit to exist any arrangement or agreement (excluding this Agreement
and the other Loan Documents) which directly or indirectly prohibits Parent
Borrower or any of its Subsidiaries from creating, assuming or incurring any
Lien upon its properties, revenues or assets or those of any of its
Subsidiaries whether now owned or hereafter acquired or to make transfers or
distributions of all of any part of its assets to Parent Borrower; in each case
other than (i) restrictions on specific assets which assets are the
subject of purchase money security interests to the extent included as a
Permitted Lien, and (ii) customary anti-assignment provisions contained in
leases and licensing agreements entered into by the Parent Borrower or such
Subsidiary in the ordinary course of business.


 


7.8.                              Investments. 
Parent Borrower shall not directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.


 


7.9.                              Distributions. 
Parent Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase
or redeem any class of stock or other equity interest other than pursuant to
employee, director or consultant repurchase plans or other similar agreements, provided, however,
in each case the repurchase or redemption price does not exceed the original
consideration paid for such stock or equity interest, or (b) declare or
pay any cash dividend or make a cash distribution on any class of stock or
other equity interest, except that a Subsidiary may pay dividends or make
distributions to Parent Borrower, or (c) lend money to any employees,
officers or directors or guarantee the payment of any such loans granted by a
third party in excess of $100,000 in the aggregate or (d) waive, release
or forgive any indebtedness owed by any employees, officers or directors in
excess of $100,000 in the aggregate.


 


7.10.                        Transfers.  Except for
Permitted Transfers, no Borrower shall voluntarily or involuntarily transfer,
sell, lease, license, lend or in any other manner convey any equitable,
beneficial or legal interest in any material portion of their assets, and,
except for Permitted Transfers, no Borrower shall voluntarily or involuntarily
transfer, sell, lease, license, or lend in any manner, or convey any equitable
or legal interest in any Account.


 


7.11.                        Mergers or Acquisitions.  Except with respect to Permitted
Acquisitions, Parent Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other
business organization (other than mergers or consolidations of a Subsidiary
into another Subsidiary or into Parent
Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the Capital Stock or property of another Person.


 


7.12.                        Taxes.  Any Borrower
and its Subsidiaries shall pay when due all taxes, fees or other charges of any
nature whatsoever (together with any related interest or penalties) now or
hereafter imposed or assessed against any Borrower or the Collateral or upon
any Borrower’s ownership, possession, use, operation or disposition thereof or
upon any Borrower’s rents, receipts or earnings arising therefrom.  Parent Borrower shall file on or before the
due date therefor all personal property tax returns in respect of the
Collateral.  Notwithstanding the 


 


47

















 


foregoing, any Borrower
may contest, in good faith and by appropriate proceedings, taxes for which such
Borrower maintains adequate reserves therefor in accordance with GAAP.


 


7.13.                        Corporate Changes. 
Neither Parent Borrower nor any Subsidiary shall change its corporate
name, legal form or jurisdiction of formation without twenty (20) days’ prior
written notice to Lender.  Neither Parent
Borrower nor any Subsidiary shall suffer a Change in Control.  Neither Parent Borrower nor any Subsidiary
shall relocate its chief executive office or its principal place of business
unless: (i) it has provided written notice to Lender; and (ii) such
relocation shall be within the continental United States.  Neither Parent Borrower nor any Subsidiary
shall relocate any item of Collateral (other than (x) sales of Inventory
in the ordinary course of business, (y) relocations of equipment having an
aggregate value of up to $150,000 in any fiscal year, and (z) relocations
of Collateral from a location described on Exhibit  C to another
location described on Exhibit  C) unless (i) it has provided
prompt written notice to Lender, (ii) such relocation is within the
continental United States and, (iii) if such relocation is to a third
party bailee, it has delivered a bailee agreement in form and substance
reasonably acceptable to Lender.  Except
as may be required for Parent Borrower and the Subsidiaries to comply with the
provisions of GAAP, neither Parent Borrower nor any Subsidiary shall change its
fiscal year end from December 31st of each year and its fiscal quarter
ends from March 31st, June 30th, September 30th and December 31st
of each year; provided that if such change is required by GAAP, Parent Borrower
will notify Lender of the same and Borrowers agree to modify the provisions of
this Agreement to reflect such changes, as may be reasonably requested by
Lender.


 


7.14.                        Deposit Accounts; Accumulation of Cash.


 


(a)                                  Except for the deposit accounts and
securities accounts identified on Schedule 7.14 or on which Lender has
an Account Control Agreement, neither Parent Borrower nor any Subsidiary shall
maintain any deposit accounts or securities accounts.


 


(b)                                 Borrowers shall not accumulate or
maintain cash in any disbursement accounts (which such accounts include, but
are not limited to, any accounts payable accounts or payroll accounts), as of
any date of determination, in amounts in excess of checks outstanding against
such deposit accounts as of that date and amounts necessary to meet any minimum
balance requirements for such deposit accounts. 
Further, Borrowers shall not hold or maintain, directly or through a
securities or commodities intermediary, investment property (including without
limitation any securities) in any of its deposit or securities accounts, or
enter into repurchase agreements with respect to or through such accounts, without
the prior written consent of Lender, and, at the request and option of Lender,
pursuant to a control or other agreement in form and substance satisfactory to
Lender in its sole discretion.


 


7.15.                        New Subsidiaries. Parent Borrower shall notify Lender of
each Subsidiary formed subsequent to the Closing Date and, within fifteen (15)
days of formation, shall cause any such Subsidiary organized under the laws of
any State within the United States to execute and deliver to Lender a Joinder
Agreement.


 


48

















 


7.16.                        Modification of Material Agreements. 
Parent Borrower will not, and will not permit any of its respective
Subsidiaries to, 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.


 


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.


 


49

















 


7.20.                        Financial Covenants.


 


(a)                                  Consolidated Adjusted EBITDA. 
The Borrowers shall not permit the Consolidated Adjusted EBITDA for any
Three Month Measurement Period ending during any fiscal month, commencing with
the month ending November 30, 2009, to be less than the amount set forth
below opposite such Three Month Measurement Period ending date:


 


	
  Measurement Period Ending

  	
   

  	
  Consolidated

  Adjusted EBITDA

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  0

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  April 30, 2010

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  May 31, 2010

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  July 31, 2010

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  August 31, 2010

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  October 31, 2010

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  November 30, 2010

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  January 31, 2011

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  February 28, 2011

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  April 30, 2011

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  May 31, 2011

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  July 31, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  August 31, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  October 31, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  November 30, 2011

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  December 30, 2011 and thereafter

  	
   

  	
  $

  	
  3,000,000

  	
   

  



 


50

















 


(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 Loans 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.


 


7.22.                        Reservation of Capital Stock. 
Parent Borrower shall, 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, at all times, have a sufficient 


 


51

















 


number of
authorized shares so as to permit the issuance of the shares of common Capital
Stock as provided under Section 2.5(a)(iii) and Section 2.9.


 


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.


 


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
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
or 7.23) 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
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 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 or 7.23, 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


 


52
















 


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) shall file any petition, answer, or document seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation pertinent to such circumstances; or (v) shall seek or consent
to or acquiesce in the appointment of any trustee, receiver, or liquidator of
such Borrower or of all or any substantial part of the assets or property of
such Borrower; or (vi) cease operations of its business, or shall
terminate substantially all of its employees; or (vii) any Borrower or its
directors or majority shareholders (or equivalent position) shall or majority
members or equivalent position, take any action initiating any of the foregoing
actions described in clauses (A)(i) through (A)(vi); or (B) either
(i) sixty (60) days shall have expired after the commencement of an
involuntary action against such Borrower seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, without such action being
dismissed or all orders or proceedings thereunder affecting the operations or
the business of such Borrower being stayed; or (ii) a stay of any such
order or proceedings shall thereafter be set aside and the action setting it
aside shall not be timely appealed; or (iii) any Borrower shall file any
answer admitting or not contesting the material allegations of a petition filed
against such Borrower in any such proceedings; or (iv) the court in which
such proceedings are pending shall enter a decree or order granting the relief
sought in any such proceedings; or (v) thirty (30) days shall have expired
after the appointment, without the consent or acquiescence of Borrower, of any
trustee, receiver or liquidator of Borrower or of all or any substantial part
of the properties of Borrower without such appointment being vacated; or (C) shall
take any action in furtherance or preparation of any of the foregoing.


 


9.7.                            Attachments; Judgments. 
Any portion of any Borrower’s assets is attached or seized, or a levy is
filed against any such assets, or a judgment or judgments is/are entered for
the payment of money, individually or in the aggregate, of at least $100,000
which judgment is not covered by insurance and such judgment is not bonded,
appealed or otherwise stayed for 30 consecutive days, or any Borrower is
enjoined or in any way prevented by court order from conducting any material
part of its business; provided, however, that any such attachment, seizure,
levy or judgment in excess of $750,000, individually or in the aggregate, shall
constitute an Event of Default hereunder not withstanding such insurance
coverage, bonding, appeals or stay; or


 


9.8.                            Other Obligations. 
The occurrence of any default under any agreement or obligation of any
Borrower involving any Indebtedness in excess of $100,000; or


 


9.9.                            Change in Control. A Change in Control shall occur.


 


SECTION 10.                REMEDIES


 


10.1.                     General.  Upon and
during the continuance of any one or more Events of Default, (i) Lender
may, at its option, terminate any of the commitments evidenced hereunder,
accelerate and demand payment of all or any part of the Secured Obligations
together with a Term Loan Prepayment Charge and the amounts referenced pursuant
to Section 2.7 herein, and declare the 


 


53

















 


Secured Obligations to be
immediately due and payable (provided, that upon the occurrence of an
Event of Default of the type described in Section 9.6 and Section 9.9,
the Loans and all of the Secured Obligations shall automatically be accelerated
and made due and payable and the commitments terminated, in each case without
any further notice or act), and (ii) Lender may, at its option, notify any
of Borrower’s account debtors or any Borrower to make payment directly to
Lender, compromise the amount of any such account on such Borrower’s behalf and
endorse Lender’s name without recourse on any such payment for deposit directly
to Lender’s account.  Lender may, at its
option, exercise all rights and remedies with respect to the Collateral under
the Loan Documents or otherwise available to it under the UCC and other
applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the
Collateral and the right to occupy, utilize, process and commingle the
Collateral.  All Lender’s rights and
remedies shall be cumulative and not exclusive.


 


10.2.                     Collection; Foreclosure. 
Upon the occurrence and during the continuance of any Event of Default,
Lender may, at any time or from time to time, apply, collect, liquidate, sell
in one or more sales, lease or otherwise dispose of, any or all of the
Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect.  Any such sale may be made either at public or
private sale at its place of business or elsewhere.  Each Borrower agrees that any such public or
private sale may occur upon ten (10) calendar days’ prior written notice
to such Borrower.  Lender may require any
Borrower or Borrowers to assemble the Collateral and make it available to
Lender at a place designated by Lender that is reasonably convenient to Lender
and such Borrower.  The proceeds of any
sale, disposition or other realization upon all or any part of the Collateral
shall be applied by Lender in the following order of priorities:


 


First, to Lender in
an amount sufficient to pay in full Lender’s costs and professionals’ and
advisors’ fees and expenses as described in Section 11.11;


 


Second, to Lender in
an amount equal to the then unpaid amount of the Secured Obligations (including
principal, interest, and the Default Rate interest), in such order and priority
as Lender may choose in its sole discretion; and


 


Finally, after the
full and final payment in cash of all of the Secured Obligations, to any
creditor holding a junior Lien on the Collateral, or to Borrowers or their
representatives or as a court of competent jurisdiction may direct.


 


Lender shall be deemed to
have acted reasonably in the custody, preservation and disposition of any of
the Collateral if it complies with the obligations of a secured party under the
UCC.


 


10.3.                     No Waiver.  Lender shall
be under no obligation to marshal any of the Collateral for the benefit of any
Borrower or any other Person, and each Borrower expressly waives all rights, if
any, to require Lender to marshal any Collateral.


 


10.4.                     Cumulative Remedies. 
The rights, powers and remedies of Lender hereunder shall be in addition
to all rights, powers and remedies given by statute or rule of law and are
cumulative.  The exercise of any one or
more of the rights, powers and remedies provided herein 


 


54

















 


shall not be construed as
a waiver of or election of remedies with respect to any other rights, powers
and remedies of Lender.


 


SECTION 11.                MISCELLANEOUS


 


11.1.                     Severability. 
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective only to the extent and duration of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.


 


11.2.                     Notice.  Except as
otherwise provided herein, any notice, demand, request, consent, approval,
declaration, service of process or other communication (including the delivery
of Financial Statements) that is required, contemplated, or permitted under the
Loan Documents or with respect to the subject matter hereof shall be in
writing, and shall be deemed to have been validly served, given, delivered, and
received upon the earlier of: (i) the day of transmission by facsimile or
hand delivery or delivery by an overnight express service or overnight mail
delivery service; or (ii) the third calendar day after deposit in the United
States mails, with proper first class postage prepaid, in each case addressed
to the party to be notified as follows:


 


(a)                                 If to Lender:


 


	
  HERCULES
  TECHNOLOGY GROWTH CAPITAL, INC.

  Legal
  Department

  Attention:
  Chief Legal Officer and Roy Liu, Managing Director

  400
  Hamilton Avenue, Suite 310 

  Palo
  Alto, CA 94301

  Facsimile: 650-473-9194

  Telephone:
  650-289-3068

  



 


(b)                                 If to any Borrower:


 


	
  INFOLOGIX,
  INC.

  Attention:
  John A. Roberts, Chief Financial Officer

  101
  East County Line Road

  Suite 210

  Hatboro,
  PA 19040

  Facsimile:
  267-681-0682

  Telephone:
  215-604-0691

  



 


or to such other address as
each party may designate for itself by like notice.


 


11.3.                     Entire Agreement; Amendments. 
This Agreement, the Notes, and the other Loan Documents constitute the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof (including, without limitation, any fee
letters executed prior to the amendment and restatement of the Existing
Agreement), and, subject to Section 11.19 hereof, supersede and
replace in their entirety any prior proposals, term sheets, letters (including
such fee letters), negotiations or other documents or agreements, whether
written or oral, with 


 


55

















 


respect to the subject
matter hereof or thereof, provided that (and for the avoidance of doubt)
nothing herein shall abrogate, limit or otherwise supersede the Waiver and
Release Agreement.  None of the terms of
this Agreement, the Notes or any of the other Loan Documents may be amended
except by an instrument executed by each of the parties thereto.


 


11.4.                     No Strict Construction. 
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement.  In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.


 


11.5.                     No Waiver.  The powers
conferred upon Lender by this Agreement are solely to protect its rights
hereunder and under the other Loan Documents and its interest in the Collateral
and shall not impose any duty upon Lender to exercise any such powers.  No omission or delay by Lender at any time to
enforce any right or remedy reserved to it, or to require performance of any of
the terms, covenants or provisions hereof by any Borrower at any time
designated, shall be a waiver of any such right or remedy to which Lender is
entitled, nor shall it in any way affect the right of Lender to enforce such
provisions thereafter.


 


11.6.                     Survival.  All
agreements, representations and warranties contained in this Agreement, the
Notes and the other Loan Documents or in any document delivered pursuant hereto
or thereto shall be for the benefit of Lender and shall survive the execution
and delivery of this Agreement and the expiration or other termination of this
Agreement.


 


11.7.                     Successors and Assigns. 
The provisions of this Agreement and the other Loan Documents shall
inure to the benefit of and be binding on any Borrower and its permitted
assigns (if any).  No Borrower shall
assign its obligations under this Agreement, the Notes or any of the other Loan
Documents without Lender’s express prior written consent, and any such
attempted assignment shall be void and of no effect.  Lender may assign, transfer, or endorse its
rights hereunder and under the other Loan Documents without prior notice to
Borrowers, and all of such rights shall inure to the benefit of Lender’s
successors and assigns.


 


11.8.                     Governing Law. 
This Agreement, the Notes and the other Loan Documents have been
negotiated and delivered to Lender in the State of California, and shall have
been accepted by Lender in the State of California.  Payment to Lender by Borrowers of the Secured
Obligations is due in the State of California. 
This Agreement, the Notes and the other Loan Documents 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.


 


11.9.                     Consent to Jurisdiction and Venue. 
All judicial proceedings (to the extent that the reference requirement
of Section 11.10 is not applicable) arising in or under or related
to this Agreement, the Notes or any of the other Loan Documents may be brought
in any state or federal court located in the State of California.  By execution and delivery of this Agreement,
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 


 


56

















 


jurisdiction or venue in
the aforesaid courts; and (d) irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement, the Notes or the
other Loan Documents.  Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received
as set forth in Section 11.2. 
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.


 


11.10.              Mutual Waiver of Jury Trial / Judicial Reference.


 


(a)                                 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, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS
ASSIGNEE OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Claims,
including Claims that involve Persons other than Borrowers and Lender; Claims
that arise out of or are in any way connected to the relationship between any
Borrower and Lender; and any Claims for damages, breach of contract, tort,
specific performance, or any equitable or legal relief of any kind, arising out
of this Agreement or any other Loan Document.


 


(b)                                 If the waiver of jury trial set forth in Section 11.10(a) is
ineffective or unenforceable, the parties agree that all 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.


 


(c)                                  In the event Claims are to be resolved by
judicial reference, either party may seek from a court identified in Section 11.9,
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 Claims are otherwise subject to resolution by judicial
reference.


 


11.11.              Professional Fees.  Each
Borrower promises to pay Lender’s fees and expenses necessary to finalize the
Loan Documentation, including but not limited to reasonable attorneys fees, UCC
searches, filing costs, Lender Expenses and other miscellaneous expenses.  In addition, each Borrower promises to pay
any and all reasonable attorneys’ and other professionals’ fees and expenses
(including without limitation, accountants’ fees and financial advisors’ fees)
and all Lender Expenses in connection with fees and services described in clauses
(b), (c), (d), (e), (f) and (g) hereinafter
listed) incurred by Lender after the Closing Date in connection with or related
to:  (a) the Loan; (b) the
administration, collection, or enforcement of 


 


57

















 


the Loan; (c) the
amendment or modification of the Loan Documents; (d) any waiver, consent,
release, or termination under the Loan Documents; (e) the protection,
preservation, sale, lease, liquidation, or disposition of Collateral or the
exercise of remedies with respect to the Collateral; (f) any legal,
litigation, administrative, arbitration, or out of court proceeding in
connection with or related to any Borrower or the Collateral, and any appeal or
review thereof; and (g) any bankruptcy, restructuring, reorganization,
assignment for the benefit of creditors, workout, foreclosure, or other action
related to any Borrower, the Collateral, the Loan Documents, including
representing Lender in any adversary proceeding or contested matter commenced
or continued by or on behalf of any Borrower’s estate, and any appeal or review
thereof.  Absent an Event of Default,
such fees and expenses shall be due thirty (30) calendar days after written
demand therefor.  This Section 11.11
shall survive the termination of this Agreement.


 


11.12.              Confidentiality. 
Lender acknowledges that certain items of Collateral and information
provided to Lender by Borrowers are confidential and proprietary information of
such Borrowers, if and to the extent such information either (x) is marked
as confidential by Borrowers at the time of disclosure, or (y) should
reasonably be understood to be confidential (the “Confidential Information”).  Accordingly, Lender agrees that any
Confidential Information it may obtain in the course of acquiring,
administering, or perfecting Lender’s security interest in the Collateral shall
not be disclosed to any other person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of such Borrower, except
that Lender may disclose any such information: 
(a) to its own directors, officers, employees, accountants, counsel
and other professional advisors and to its affiliates if Lender in its sole
discretion determines that any such party should have access to such
information in connection with such party’s responsibilities in connection with
the Loan or this Agreement and, provided
that such recipient of such Confidential Information either (i) agrees to
be bound by the confidentiality provisions of this paragraph or (ii) is
otherwise subject to confidentiality restrictions that reasonably protect
against the disclosure of Confidential Information; (b) if such
information is generally available to the public; (c) if required in any
report, statement or testimony submitted to any governmental authority having
or claiming to have jurisdiction over Lender; (d) if required in response
to any summons or subpoena or in connection with any litigation, to the extent
permitted or deemed advisable by Lender’s counsel; (e) to comply with any
legal requirement or law applicable to Lender; (f) to the extent
reasonably necessary in connection with the exercise of any right or remedy
under any Loan Document, including Lender’s sale, lease, or other disposition
of Collateral after default; (g) to any participant or assignee of Lender
or any prospective participant or assignee; provided,
that such participant or assignee or prospective participant or assignee agrees
in writing to be bound by this Section prior to disclosure; or (h) otherwise
with the prior consent of the applicable Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of Borrowers or any of their affiliates or any
guarantor under this Agreement or the other Loan Documents.


 


11.13.              Assignment of Rights. 
Each Borrower acknowledges and understands that Lender may sell and
assign all or part of its interest hereunder and under the Note(s) and
Loan Documents to any Person or entity (an “Assignee”) provided that
prior to an Event of Default, Lender shall not make such an assignment unless
it has obtained the prior consent of the Parent Borrower, which consent shall
not be unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing, in connection
with assignments by a Lender due to a forced divestiture at the request of any
regulatory agency or a sale by Lender of a material amount of its 


 


58

















 


assets,
the restrictions set forth herein shall not apply and Assignee shall mean any
Person or party.  After such assignment the
term “Lender” as used in the Loan Documents shall mean and 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.


 


11.15.              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. 
Lender represents and warrants the following, each as of the date
hereof:


 


59

















 


(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 501(a) under
the Securities Act.  Lender is not a
registered broker-dealer or agent thereof under Section 15 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:


 


THESE SECURITIES HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY



 


60

















 


STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION TO THE COMPANY FROM
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO PARENT BORROWER.


 


(g)                                  Advice.  Lender
understands that nothing in this Agreement, or any other materials presented to
Lender by Parent Borrower in connection with the transactions contemplated
hereby constitutes legal, tax, accounting or investment advice.  Lender has consulted such legal, tax,
accounting and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of Securities.


 


(h)                                 Consent to Reliance. 
Lender understands and acknowledges that (i) the Securities are
being offered and sold to it without registration under the Securities Act in a
private placement that is exempt from the registration provisions of the
Securities Act, and (ii) the availability of such exemption depends in
part on, and Parent Borrower will rely upon the accuracy and truthfulness of,
the representations, warranties and covenants of Lender set forth in this Section 11.18,
and Lender hereby consents to such reliance.


 


11.19.              Transitional Arrangements. 
Upon the effectiveness of this Agreement, this Agreement shall supersede
the Existing Agreement in its entirety, except as otherwise in this Section 11.19.  This Agreement constitutes an amendment and
restatement of the Existing Agreement effective from and after the Closing
Date.  The execution and delivery of this
Agreement shall not constitute a novation of any indebtedness or other
obligations owing to Lender under the Existing Agreement or evidence the
repayment of any indebtedness or other obligations thereunder.  It is the intent of the parties hereto that
this Agreement amend and restate in its entirety the Existing Agreement and
re-evidences the obligations of Borrowers outstanding thereunder, secured by
the Security Documents.  As of the
Closing Date, the rights and obligations of the parties under the Existing
Agreement and the “Notes” (as defined in the Existing Agreement) shall be
subsumed within and be governed by this Agreement and the Notes.  Each of the “Loans” (as defined in the
Existing Agreement) advanced by Lender under the Existing Agreement and
outstanding under the Existing Agreement immediately prior to the effectiveness
of this Agreement shall continue to be Loans hereunder, provided that all
interest, fees and expenses owing or accruing under or in respect of the
Existing Agreement through the Closing Date shall be calculated as of the
Closing Date (pro rated in the case of any fractional periods), and shall be
paid on the Closing Date.


 


(SIGNATURES TO FOLLOW)


 


61

















 


IN WITNESS WHEREOF,
Borrowers and Lender have duly executed and delivered this 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 T. 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

  



 

















 


Accepted in Palo Alto, California:


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HERCULES
  TECHNOLOGY GROWTH CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
  /s/
  K. Nichola Martitsch

  
	
   

  	
  Print
  Name:

  	
  K.
  Nicholas Martitsch

  
	
   

  	
  Title:

  	
  Associate
  General Counsel

  



 


63
















 


Table of Exhibits and Schedules


 


	
  Exhibit A:

  	
   

  	
  Advance
  Request

  
	
   

  	
   

  	
  Attachment
  to Advance Request

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1:

  	
   

  	
  Term
  A Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2:

  	
   

  	
  Term
  B Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B-3:

  	
   

  	
  Revolving
  Note

  
	
   

  	
   

  	
   

  
	
  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

  



 

















 


EXHIBIT A


 


ADVANCE REQUEST


 


	
  To:

  	
  Lender:

  	
   

  	
  Date:
                      ,
  20    

  



 


Hercules
Technology Growth Capital, Inc.


400
Hamilton Avenue, Suite 310


Palo Alto, CA 94301


Facsimile:  650-473-9194


Attn:


 


Infologix, Inc., on
behalf of itself and InfoLogix Systems Corporation, Embedded Technologies, LLC,
Opt Acquisition LLC and InfoLogix-DDMS, Inc. (collectively, the “Borrowers”)
hereby request from Hercules Technology Growth Capital, Inc. (“Lender”) a
[Revolving Loan Advance] in the amount of
                                          
Dollars
($                                )
on
                            ,
20     (the “Advance Date”) pursuant to the Loan and
Security Agreement among Borrowers and Lender (the “Agreement”). Capitalized
words and other terms used but not otherwise defined herein are used with the
same meanings as defined in the Agreement.


 


Please:


 


(a)                                  Issue a check
payable to Parent Borrower


 


or


 


(b)                                 Wire Funds to
Parent Borrower’s account


 


Bank:


Address:


 


ABA Number:


Account Number:


Account Name:


 


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.


 


Executed as of
[                                                        ],
20[    ].


 


	
  BORROWERS:

  	
  INFOLOGIX,
  INC., ON BEHALF OF ITSELF AND

  
	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  INFOLOGIX — DDMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


66

















 


ATTACHMENT TO ADVANCE REQUEST


 


Dated:                                    


 


Each Borrower hereby
represents and warrants to Lender that such Borrower’s current name and
organizational status is as follows:


 


	
  Name:

  	
  [                                                                            ]

  
	
   

  	
   

  
	
  Type
  of organization:

  	
  [                                                                            ]

  
	
   

  	
   

  
	
  State
  of organization:

  	
  [                                                                            ]

  
	
   

  	
   

  
	
  Organization
  file number:

  	
  [                                                                            ]

  



 


Each Borrower hereby
represents and warrants to Lender that the street addresses, cities, states and
postal codes of its current locations are as follows:


 


67

















 


EXHIBIT B-1


 


FORM OF TERM NOTE A


 


	
  $5,500,000

  	
   

  	
  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 A (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 A (this “Note”) may specify
from time to time in writing, in lawful money of the United States of America,
the principal amount of Five Million Five Hundred Thousand Dollars ($5,500,000)
or such other principal amount as Lender has advanced to Borrowers, together
with interest thereon, all as provided in the Loan Agreement referred to below.


 


This Note is a Term Note A
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.


 


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

  



 


69

















 


EXHIBIT B-2


 


FORM OF TERM NOTE B


 


THIS TERM NOTE B 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.


 


	
  $5,000,000

  	
   

  	
  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 (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 (this “Note”) may specify
from time to time in writing, in lawful money of the United States of America,
the principal amount of Five Million Dollars ($5,000,000) 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 B
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]


 


71

















 


	
   

  	
  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

  



 


72
















 


EXHIBIT B-3


 


FORM OF REVOLVING NOTE


 


$12,000,000


 


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 Revolving Note (the “Lender”) at 400 Hamilton Avenue, Suite 310,
Palo Alto, CA 94301 or such other place of payment as the holder of this
Revolving Note (this “Note”) may specify from time to time in writing,
in lawful money of the United States of America, the principal amount of Twelve
Million Dollars ($12,000,000) or such other principal amount as Lender has
advanced to Borrowers, together with interest thereon, all as provided in the
Loan Agreement referred to below.


 


This Note is a Revolving
Note referred to in, and is executed and delivered in connection with, that
certain Amended and Restated Loan and Security Agreement, by and among
Borrowers and Lender, dated November 20, 2009 (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.


 


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.


 


This Note constitutes the
amendment and restatement in its entirety of the Revolving Note dated as of
[                
      , 2009] issued by Borrowers to Lender in
the original principal amount of [$          ]
(the “Prior Note”), and is in substitution therefor and an amendment and
replacement thereof.  Nothing herein
shall be construed to constitute payment of the Prior Note or to release or
terminate any guaranty or lien, mortgage, pledge or other security entered in
favor of Lender under the Loan Agreement.


 


[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

  



 


74

















 


EXHIBIT C


 


NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER


 


1.             Borrowers
represent and warrant to Lender that the current name and organizational status
of each Borrower as of  the Closing Date
is as follows:


 


	
  (a)

  	
  Name:

  	
  InfoLogix, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  4256230

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  Name:

  	
  InfoLogix
  Systems Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  3424027

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  Name:

  	
  Embedded
  Technologies, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Limited
  Liability Company

  
	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  3758331

  
	
   

  	
   

  	
   

  
	
  (d)

  	
  Name:

  	
  Opt
  Acquisition LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Limited
  Liability Company

  
	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Pennsylvania

  
	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  3065065

  
	
   

  	
   

  	
   

  
	
  (e)

  	
  Name:

  	
  InfoLogix-DDMS, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
   

  	
  Organization file number:

  	
  4329544

  



 

















 


2.             Borrowers
represent and warrant to Lender that for five (5) years prior to the
Closing Date, no Borrower did business under any other name or organization or
form except the following:


 


	
  (a)

  	
  InfoLogix, Inc.

  	
  (1)

  	
  New
  Age Translation, Inc. (DE)

  
	
   

  	
   

  	
  (2)

  	
  New
  Age Translation, Inc. (NV)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Used
  during dates of:

  	
  November 22,
  2004 to November 29, 2006

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  (1)

  	
  Corporation

  
	
   

  	
   

  	
  (2)

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  (1)

  	
  Delaware

  
	
   

  	
   

  	
  (2)

  	
  Nevada

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  (2)

  	
  C31464-2004

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  fiscal year ends on December 31.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  federal employer tax identification number is:20-1983837

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  InfoLogix
  Systems Corporation

  	
  Info
  Logix Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Used
  during dates of:

  	
  Prior
  to Nov. 29, 2006

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  3424027

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  fiscal year ends on December 31.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  federal employer tax identification number is:23-3090097

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  InfoLogix-DDMS, Inc.

  	
  DDMS
  Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Used
  during dates of:

  	
  Prior to April 9, 2007

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Type
  of organization:

  	
  Limited
  Liability Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  State
  of organization:

  	
  Florida

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Organization
  file number:

  	
  L00000013871

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  fiscal year ends on December 31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  federal employer tax identification number is: N/A

  



 

















 


	
  3.

  	
  Borrowers
  represent and warrant to Lender that the chief executive office of each
  Borrower is located at:

  
	
   

  	
   

  
	
  (a)

  	
  InfoLogix, Inc.
  - 101 East County Line Road, Suite 210, Hatboro, PA 19040.

  
	
   

  	
   

  
	
  (b)

  	
  InfoLogix
  Systems Corporation - same

  
	
   

  	
   

  
	
  (c)

  	
  Embedded
  Technologies, LLC - same

  
	
   

  	
   

  
	
  (d)

  	
  Opt
  Acquisition LLC - same

  
	
   

  	
   

  
	
  (e)

  	
  InfoLogix-DDMS, Inc.
  - same

  
	
   

  	
   

  
	
  4.

  	
  Borrowers
  represent and warrant to Lender that other locations of the Borrowers
  include:

  
	
   

  	
   

  
	
  4360
  Northlake Boulevard, Palm Beach Gardens, Florida 33410

  



 
















 


EXHIBIT D


 


BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES


 


United States Trademarks


 


	
  Registration
  No.

  	
   

  	
  Record Owner

  	
   

  	
  Mark

  	
   

  	
  Type

  
	
  2702443

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
   INFOLOGIX

  	
   

  	
  Wordmark

  IC 42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2923756 

  	
   

  	
  InfoLogix, LLC

  	
   

  	
  INFOLOGIX

  	
   

  	
  Wordmark

  IC 35, 38, 42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3006179

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  CARE STATION

  	
   

  	
  Wordmark

  IC 20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3006180

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  MOBILE CARE STATION

  	
   

  	
  Wordmark

  IC 20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2483149

  	
   

  	
  InfoLogix, Inc.  

  	
   

  	
  OPTASIA

  	
   

  	
  Wordmark

  IC 41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3536132

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  InfoTablet

  	
   

  	
  Special Form

  IC 09

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3645004

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  HEALTHTRAX

  	
   

  	
  Wordmark

  IC 09

  



 


Pending United States Trademark Application


 


	
  Application

  Serial No.

  	
   

  	
  Record Owner

  	
   

  	
  Mark

  	
   

  	
  Type

  
	
  78/923,846

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  HealthTrax

  	
   

  	
  Special Form, ITU, IC 09

  



 


United States Patents


 


	
  Patent No.

  	
   

  	
  Record

  Owner

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Expiration

  Date

  
	
  5,285,398

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  08-Feb-94

  	
   

  	
  Flexible Wearable Computer

  	
   

  	
  05/15/2012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,491,651

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  13-Feb-96

  	
   

  	
  Flexible Wearable Computer

  	
   

  	
  05/15/2012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,555,490

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  10-Sep-96

  	
   

  	
  Wearable Personal Computer
  System

  	
   

  	
  12/13/2013

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,572,401

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  05-Nov-96

  	
   

  	
  Wearable Personal Computer
  System Having Flexible Battery Forming 

  	
   

  	
  10/25/2014

  



 

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Casing of the System

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,581,492

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  03-Dec-96

  	
   

  	
  Flexible Wearable Computer

  	
   

  	
  05/15/2012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,798,907

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  25-Aug-98

  	
   

  	
  Wearable Computing Device
  With Module Protrusion Passing Into Flexible Circuitry

  	
   

  	
  05/15/2012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,991,086

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  23-Nov-99

  	
   

  	
  Inflatable Optical Housing

  	
   

  	
  06/25/2018

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,057,966

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  02-May-00

  	
   

  	
  Body-Carryable Display
  Devices and Systems Using e.g. Coherent Fiber Optic Conduit

  	
   

  	
  05/09/2017

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,097,607

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  01-Aug-00

  	
   

  	
  Flexible Computer System

  	
   

  	
  11/01/2017

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,108,197

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  22-Aug-00

  	
   

  	
  Flexible Wearable Computer

  	
   

  	
  05/15/2012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,121,960

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  19-Sep-00

  	
   

  	
  Touch Screen Systems and
  Methods

  	
   

  	
  08/28/2017

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,249,427

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  19-Jun-01

  	
   

  	
  Wearable Computer
  Packaging Configurations

  	
   

  	
  03/26/2018

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,271,477

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  07-Aug-01

  	
   

  	
  Long-Lasting Flexible
  Circuitry

  	
   

  	
  06/19/2018

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,285,757

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  04-Sep-01

  	
   

  	
  Interactive Devices and
  Methods

  	
   

  	
  11/06/2018

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,288,753

  	
   

  	
  Opt Acquisition LLC

  	
   

  	
  11-Sep-01

  	
   

  	
  System and Method for Live
  Interactive Distance Learning

  	
   

  	
  07/07/2019

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Des. 414,928

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  12-Oct-99

  	
   

  	
  Wearable Computer

  	
   

  	
  10/12/2013

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,574,166

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  3-June-03

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,411,567

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  25-June-02

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,839,304

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  4-Jan-05

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  



 

















 


	
  7,035,168 

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  25-Apr-06

  	
   

  	
  Power control for
  instrumented medication package

  	
   

  	
  07/07/2020

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,961,285

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  1-Nov-05

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7,304,913

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  4-Dec-07

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7,612,662

  	
   

  	
  InfoLogix-DDMS, Inc.

  	
   

  	
  3-Nov-09

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  07/07/2020

  



 


Foreign Patents and Applications


 


	
  Intl. Appl. Nos.

  	
   

  	
  Record 

  Owner

  	
   

  	
  Intl. Pub.

  Date

  	
   

  	
  Title

  	
   

  	
  Country

  	
   

  	
  National

  Appl/Pat

  Status

  
	
  WO 93/23801 PCT/US93/04636

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  25-Nov-93

  	
   

  	
  Flexible Wearable Computer

  	
   

  	
  JP

  	
   

  	
  2744134

  patented

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 95/16948 PCT/US94/14353

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  22-Jun-95

  	
   

  	
  Wearable Personal Computer
  System

  	
   

  	
  CA

  	
   

  	
  2178916

  patented

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  KR

   

   

  KR

  	
   

  	
  10-411842

  patented

   

  10-445122

  patented

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 98/20403 PCT/US97/19770

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  14-May-98

  	
   

  	
  Flexible Computer System

  	
   

  	
  CA

   

   

  CA

  	
   

  	
  2270415

  patented 

   

  2640697

  pending

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  KR

  	
   

  	
  10-0613523

  patented

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 98/09270 PCT/US97/14176

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  4-Mar-98

  	
   

  	
  Touch Screen Systems and
  Methods

  	
   

  	
  KR

  	
   

  	
  10-0627378

  patented

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 98/59286 PCT/US98/12835

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  30-Dec-98

  	
   

  	
  Long-Lasting Flexible
  Circuitry

  	
   

  	
  KR

  	
   

  	
  99-7011977

  pending

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JP

  	
   

  	
  3888696

  patented

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 04/23245 PCT/US03/27350

  	
   

  	
  Info-Logix -
  DDMS, Inc.

  	
   

  	
  18-Mar-04

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  CA

  	
   

  	
  2497766 

  pending

  



 

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CN

  	
   

  	
  ZL03823547.1

  patented

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EPO

  	
   

  	
  03794554.0 

  pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 02/05039 PCT/US01/21779

  	
   

  	
  Info-Logix -
  DDMS, Inc.

  	
   

  	
  17-Jan-02

  	
   

  	
  Drug Delivery Management
  System

  	
   

  	
  AU

  	
   

  	
  2001273336

  patented

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CA

  	
   

  	
  2415891

  patented

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EPO

  	
   

  	
  01952603.7 

  pending

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JP

  	
   

  	
  2002-509837 pending

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WO 00/25193 PCT/US99/25443

  	
   

  	
  Embedded Technologies LLC

  	
   

  	
  4-May-00

  	
   

  	
  Flex-to-Fix User Interface
  Devices and Methods

  	
   

  	
  KR

   

   

   

  KR

  	
   

  	
  10-2001-7005268 pat.
  697729

  patented 

   

  10-2006-7016497 pat.
  835757

  patented

  



 


Pending US Patent Applications


 


	
  Serial
  No.

  	
   

  	
  Record Owner

  	
   

  	
  Filing

  Date

  	
   

  	
  Title

  
	
  11/948,478

  	
   

  	
  Info-Logix - DDMS,Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  Drug Delivery Management
  System

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11/948,523

  	
   

  	
  Info-Logix - DDMS,Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  Drug Delivery Management
  System

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11/948,572

  	
   

  	
  Info-Logix - DDMS,Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  Drug Delivery Management
  System

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11/948,646

  	
   

  	
  Info-Logix - DDMS,Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  Drug Delivery Management
  System

  



 

















 


	
  11/937,932

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  9-Nov-07

  	
   

  	
  Method System and
  Apparatus for Dwell Monitoring in a Retail Establishment

  



 


	
  Copyright 

  Registration No.

  	
   

  	
  Record Owner

  	
   

  	
  Registration Date

  	
   

  	
  Title

  
	
  TXu-1-280-597

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  23-Dec-2005

  	
   

  	
  Wireless healthcare
  technology and patient care

  



 
















 


EXHIBIT E


 


BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS


 


Omitted


 

















 


EXHIBIT F


 


COMPLIANCE CERTIFICATE


 


Hercules
Technology Growth Capital, Inc.


400
Hamilton Avenue, Suite 310


Palo Alto, CA 94301


 


Reference is made to that
certain Amended and Restated Loan and Security Agreement dated November 20,
2009 and all ancillary documents entered into in connection with such Loan and
Security Agreement all as may be amended from time to time, (hereinafter
referred to collectively as the “Loan Agreement”) between Hercules
Technology Growth Capital, Inc. (“Hercules”) as Lender and Parent
Borrower, Inc. (the “Parent Borrower”), Infologix, Inc.,
Infologix Systems Corporation, Opt Acquisition LLC, Embedded Technologies, LLC,
Infologix-DDMS, Inc. as Borrowers. All capitalized terms not defined
herein shall have the same meaning as defined in the Loan Agreement.


 


The undersigned is an
Officer of the Parent Borrower, knowledgeable of financial matters regarding
Parent Borrower and each Borrower, and is authorized to provide certification
of information regarding the Borrower; hereby certifies that in accordance with
the terms and conditions of the Loan Agreement, to my knowledge, the Borrowers
are in compliance for the period ending                         
of all covenants, conditions and terms and hereby reaffirms that all
representations and warranties contained therein are true and correct on and as
of the date of this Compliance Certificate 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, after giving effect in all
cases to any standard(s) of materiality contained in the Loan Agreement as
to such representations and warranties. 
Attached are the required documents supporting the above
certification.  The undersigned further
certifies that these are prepared in accordance with GAAP without giving effect
to FASB 159 (except for the absence of footnotes with respect to unaudited
financial statement and subject to normal year end adjustments) and are
consistent from one period to the next except as explained below.


 


	
  REPORTING REQUIREMENT

  	
  REQUIRED

  	
  CHECK IF ATTACHED

  
	
   

  	
   

  	
   

  
	
  Interim
  Financial Statements

  	
  Monthly
  within 30 days

  	
   

  
	
   

  	
   

  	
   

  
	
  Interim
  Financial Statements

  	
  Quarterly
  within 45 days

  	
   

  
	
   

  	
   

  	
   

  
	
  Audited
  Financial Statements

  	
  FYE
  within 90 days

  	
   

  



 


	
   

  	
  Very
  Truly Yours,

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
					



 

















 


EXHIBIT G


 


FORM OF JOINDER AGREEMENT


 


This Joinder Agreement (the “Joinder
Agreement”) is made and dated as of
[                                                        ],
20[    ], and is entered into by and between
                                    ,
a
                      
corporation (“Subsidiary”), and HERCULES TECHNOLOGY GROWTH CAPITAL,
INC., a Maryland corporation, as Lender.


 


RECITALS


 


A.            Subsidiary’s Affiliates, InfoLogix, Inc.
(“Parent Borrower”), InfoLogix, Inc., InfoLogix Systems
Corporation, Opt Acquisition LLC, Embedded Technologies, LLC, InfoLogix-DDMS, Inc.
(each a “Borrower” and collectively the “Borrowers”) have entered
into that certain Amended and Restated Loan and Security Agreement dated as of November 20,
2009, with Lender (as such agreement may be amended, amended and restated,
supplement or otherwise modified and in effect from time to time, the “Loan
Agreement”), together with the other agreements executed and delivered in
connection therewith;


 


B.            Subsidiary acknowledges and agrees
that it will benefit both directly and indirectly from each Borrower’s
execution of the Loan Agreement and the other agreements executed and delivered
in connection therewith;


 


AGREEMENT


 


NOW THEREFORE, Subsidiary
and Lender agree as follows:


 


1.             The recitals set forth above are
incorporated into and made part of this Joinder Agreement.  Capitalized terms not defined herein shall
have the meaning provided in the Loan Agreement.


 


2.             By signing this Joinder Agreement,
Subsidiary shall be bound by the terms and conditions of the Loan Agreement the
same as if it were a Borrower (as defined in the Loan Agreement) under the Loan
Agreement, mutatis mutandis, provided, however, that Lender shall have no duties,
responsibilities or obligations to Subsidiary arising under or related to the
Loan Agreement or the other agreements executed and delivered in connection
therewith.  Rather, to the extent that
Lender has any duties, responsibilities or obligations arising under or related
to the Loan Agreement or the other agreements executed and delivered in
connection therewith, those duties, responsibilities or obligations shall flow
only to the Borrowers and not to Subsidiary or any other person or entity.  By way of example (and not an exclusive
list): (a) Lender’s providing notice to any Borrower in accordance with
the Loan Agreement or as otherwise agreed between Borrowers and Lender shall be
deemed provided to Subsidiary; (b) a Lender’s providing an Advance to any
Borrower shall be deemed an Advance to Subsidiary; and (c) Subsidiary
shall have no right to request an Advance or make any other demand on Lender.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 

















 


[SIGNATURE PAGE TO JOINDER AGREEMENT]


 


	
   

  	
  SUBSIDIARY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone:

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
  HERCULES
  TECHNOLOGY GROWTH CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  400
  Hamilton Avenue, Suite 310

  
	
   

  	
  Palo Alto, CA 94301

  
	
   

  	
  Facsimile: 650-473-9194

  
	
   

  	
  Telephone: 650-289-3060

  
						



 

















 


EXHIBIT H


 


BORROWING BASE CERTIFICATE


 


Borrower: InfoLogix, Inc.
et al


Revolving Loan Commitment
Amount:  $12,000,000.00


	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  
	
   

  	
  1.

  	
  Accounts
  Receivable Book Value as of

  	
   

  	
  $                      

  
	
   

  	
  2.

  	
  Additions
  (please explain on reverse)

  	
   

  	
  $                      

  
	
   

  	
  3.

  	
  TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
  $                      

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  
	
   

  	
  4.

  	
  Amounts
  over 90 days due

  	
  $                    

  	
   

  
	
   

  	
  5.

  	
  Balance
  of 35% over 90 day accounts

  	
  $                    

  	
   

  
	
   

  	
  6.

  	
  Concentration
  Limits

  	
  $                    

  	
   

  
	
   

  	
  7.

  	
  Foreign
  Accounts

  	
  $                    

  	
   

  
	
   

  	
  8.

  	
  Deferred
  Revenue

  	
  $                    

  	
   

  
	
   

  	
  9.

  	
  Contra
  Accounts

  	
  $                    

  	
   

  
	
   

  	
  10.

  	
  Affiliate
  Accounts

  	
  $                    

  	
   

  
	
   

  	
  11.

  	
  Governmental
  Accounts

  	
  $                    

  	
   

  
	
   

  	
  12.

  	
  Conditional
  Payment

  	
  $                    

  	
   

  
	
   

  	
  13.

  	
  Disputed
  Accounts

  	
  $                    

  	
   

  
	
   

  	
  14.

  	
  Other
  (please explain on reverse)

  	
  $                    

  	
   

  
	
   

  	
  15.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $                      

  
	
   

  	
  16.

  	
  Eligible
  Accounts (#3 minus #15)

  	
   

  	
  $                      

  
	
   

  	
  17.

  	
  LOAN
  VALUE OF ACCOUNTS (85% of #16)

  	
   

  	
  $                      

  
	
  BALANCES

  	
   

  	
   

  
	
   

  	
  18.

  	
  Maximum
  Revolving Loan Amount ($12,000,000)

  	
   

  	
  $                      

  
	
   

  	
  19.

  	
  Total
  Funds Available (Lesser of #18 or #17)

  	
   

  	
  $                      

  
	
   

  	
  20.

  	
  Present
  balance of Revolving Loans

  	
   

  	
  $                      

  
	
   

  	
  21.

  	
  RESERVE POSITION (#19 minus #20)

  	
   

  	
  $                      

  



 


The undersigned represents
and warrants that the foregoing is true, complete and correct, and that the
information reflected in this Borrowing Base Certificate complies with the
representations and warranties set forth in the Amended and Restated Loan and
Security Agreement between the undersigned and Hercules Technology Growth
Capital, Inc.


 


INFOLOGIX,
INC.


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  



 

















 


EXHIBIT I


 


ACH DEBIT AUTHORIZATION AGREEMENT


 


Hercules
Technology Growth Capital, Inc. 

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301


 


Re:                               Amended and Restated Loan
and Security Agreement dated November 20, 2009 among InfoLogix, Inc.,
InfoLogix Systems Corporation, Opt Acquisition LLC, Embedded Technologies, LLC,
InfoLogix-DDMS, Inc. (each a “Borrower” and collectively the “Borrowers”)
and Hercules Technology Growth Capital, Inc. (“Company”) (as amended,
amended and restated and otherwise modified or supplemented from time to time,
the “Agreement”)


 


In connection with the above
referenced Agreement,
[                    ]
hereby authorizes the Company to initiate debit entries for the periodic
payments due under the Agreement to such Borrower’s account indicated
below. 
[                    ]
authorizes the depository institution named below to debit to such account.


 


	
  DEPOSITORY NAME

  	
  BRANCH

  
	
   

  	
   

  
	
  CITY

  	
  STATE AND ZIP CODE

  
	
   

  	
   

  
	
  TRANSIT/ABA NUMBER

  	
  ACCOUNT NUMBER

  



 


This authority will remain
in full force and effect so long as any amounts are due under the Agreement.


 


	
   

  	
   

  
	
  (Borrower)
  (Please Print)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  



 
















 


EXHIBIT J


 


FORM OF COLLATERAL ASSIGNMENT OF ACQUISITION DOCUMENTS


 

















 


EXHIBIT K


 


FORM OF REGISTRATION RIGHTS AGREEMENT


 

















 


SCHEDULE 1 – SUBSIDIARIES


 


InfoLogix, Inc.


InfoLogix Systems Corporation, a
Delaware corporation


InfoLogix — DDMS, Inc., a
Delaware corporation


 


InfoLogix Systems Corporation


Embedded Technologies, LLC, a
Delaware limited liability company


OPT Acquisition LLC, a
Pennsylvania limited liability company


 

















 


SCHEDULE 1A - EXISTING PERMITTED INDEBTEDNESS


 


	
  PAYEE

  	
   

  	
  AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cal First Leasing (Lease)

  	
   

  	
  $

  	
  52,161

  	
   

  
	
  Cisco Systems Capital Corporation (Lease)

  	
   

  	
  $

  	
  153,048

  	
   

  
	
  De Lage Landen (Lease)

  	
   

  	
  $

  	
  10,050

  	
   

  
	
  AMT Systems, Inc. - Notes Payable

  	
   

  	
  $

  	
  334,302

  	
   

  
	
  Healthcare Informatics Associates, Inc. -

  	
   

  	
  $

  	
  4,158,352

  	
   

  
	
  Notes Payable

  	
   

  	
   

  	
   

  



 

















 


SCHEDULE 1B - EXISTING PERMITTED INVESTMENTS


 


NOTES


 


1.             None


 


INVESTMENT
ACCOUNTS


 


1.             None


 


STOCK
AND OTHER EQUITY INTERESTS


 


	
  Company

  	
   

  	
  Owner

  	
   

  	
  Ownership %

  	
   

  	
  Description

  
	
  InfoLogix
  Systems Corporation

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  100%

  	
   

  	
  Common
  Stock

  
	
  InfoLogix
  – DDMS, Inc.

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  100%

  	
   

  	
  Common
  Stock

  
	
  Embedded
  Technologies, LLC

  	
   

  	
  InfoLogix
  Systems Corp.

  	
   

  	
  100%

  	
   

  	
  LLC
  Interests

  
	
  OPT
  Acquisition LLC

  	
   

  	
  InfoLogix
  Systems Corp.

  	
   

  	
  100%

  	
   

  	
  LLC
  Interests

  



 

















 


SCHEDULE 1C - EXISTING PERMITTED LIENS


 


Liens
in favor of Fujitsu Computer Systems as set forth on UCC-1 financing statement No. 4013771
3 and filed with the Secretary of State of the State of Delaware filed against
Info Logix, Inc. (now InfoLogix Systems Corporation)


 


Liens
in favor of California First Leasing Corporation as set forth on UCC-1
financing statement No. 2007 3428314, as amended by UCC Financing
Statement No. 2007 3878765 and filed with the Secretary of State of the
State of Delaware filed against Info Logix, Inc. (now InfoLogix Systems
Corporation)


 


Lien in
favor of Cisco Systems Capital Corporation as set forth on UCC-1 financing
statement No. 2633417 as amended by UCC financing statement No. 2645909
filed against Info Logix, Inc. (now InfoLogix Systems Corporation)


 

















 


SCHEDULE 5.3 - CONSENTS, ETC.


 


Omitted


 

















 


SCHEDULE 5.5 - ACTIONS BEFORE GOVERNMENTAL AUTHORITIES


 


NONE


 

















 


SCHEDULE 5.8 - TAX MATTERS


 


NONE


 

















 


SCHEDULE 5.9 - INTELLECTUAL PROPERTY CLAIMS


 


NONE


 
















 


SCHEDULE 5.10 - INTELLECTUAL PROPERTY


 


NONE


 

















 


SCHEDULE 5.11 - BORROWER PRODUCTS


 


NONE 


 

















 


SCHEDULE
5.14 – CAPITALIZATION


 


	
  Borrower

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Owner

  	
   

  	
  Number of

  Shares

  Authorized

  	
   

  	
  Number of

  Shares Issued

  	
   

  	
  Number of

  Shares

  Outstanding

  	
   

  	
  Number

  of

  Shares

  Owned

  by

  Owner

  	
   

  	
  % of

  Outstanding

  Shares

  Owned

  	
   

  
	
  InfoLogix, Inc.

  	
   

  	
  Delaware

  	
   

  	
  Various

  	
   

  	
  100,000,000 Common, 10,000,000 Preferred

  	
   

  	
  25,759,135*

  	
   

  	
  25,759,135*

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Infologix Systems Corporation

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Embedded Technologies, LLC

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix Systems Corporation

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Opt Acquisition LLC

  	
   

  	
  Pennsylvania

  	
   

  	
  InfoLogix Systems Corporation

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InfoLogix-DDMS, Inc.

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix, Inc

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  100%

  	
   

  



 






*The
number of issued and outstanding shares does not include any share issuable
pursuant to the Debt Conversion Agreement.


 

















 


SCHEDULE 7.14 - DEPOSIT ACCOUNTS


 


Omitted