**Exhibit10.2**

 

**VASTERA, INC.**

 

**LOAN AND SECURITY AGREEMENT**

** **

 

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**TABLE OFCONTENTS**

 
| 1.     | DEFINITIONS AND  CONSTRUCTION   |
|--------|---------------------------------|
|   |                            |
|   | 1.1                             | Definitions |
|   |                            |   |
|   | 1.2                             | Accounting  Terms |
|   |                            |   |
| 2.     | LOAN AND TERMS OF PAYMENT       |
|   |                            |
|   | 2.1                             | Credit  Extensions |
|   |                            |   |
|   | 2.4                             | Crediting  Payments |
|   |                            |   |
|   | 2.5                             | Fees |
|   |                            |   |
|   | 2.6                             | Term |
|   |                            |   |
| 3.     | CONDITIONS  OF LOANS            |
|   |                            |
|   | 3.1                             | Conditions  Precedent to Initial Credit Extension |
|   |                            |   |
|   | 3.2                             | Conditions  Precedent to All Credit Extensions |
|   |                            |   |
| 4.     | CREATION OF SECURITY  INTEREST  |
|   |                            |
|   | 4.1                             | Grant of Security Interest |
|   |                            |   |
|   | 4.2                             | Delivery  of Additional Documentation Required |
|   |                            |   |
|   | 4.3                             | Right to  Inspect |
|   |                            |   |
| 5.     | REPRESENTATIONS AND  WARRANTIES |
|   |                            |
|   | 5.1                             | Due Organization and  Qualification |
|   |                            |   |
|   | 5.2                             | Due Authorization; No  Conflict |
|   |                            |   |
|   | 5.3                             | Collateral |
|   |                            |   |
|   | 5.4                             | Intentionally  Omitted |
|   |                            |   |
|   | 5.5                             | Name; Location  of Chief Executive Office |
|   |                            |   |
|   | 5.6                             | Litigation |
|   |                            |   |
|   | 5.7                             | No  Material Adverse Change in Financial Statements |
|   |                            |   |
|   | 5.8                             | Solvency, Payment of Debts |
|   |                            |   |
|   | 5.9                             | Compliance with  Laws and Regulations |
|   |                            |   |
|   | 5.10                            | Subsidiaries |
|   |                            |   |
|   | 5.11                            | Government  Consents |
|   |                            |   |
|   | 5.12                            | Inbound  Licenses |
|   |                            |   |
|   | 5.13                            | Full Disclosure |
|   |                            |   |
| 6.     | AFFIRMATIVE  COVENANTS          |

 

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|   | 6.1                 | Good Standing  and Government Compliance                             |
|--------|---------------------|----------------------------------------------------------------------|
|   |                |                                                                 |
|   | 6.2                 | Financial  Statements, Reports, Certificates                         |
|   |                |                                                                 |
|   | 6.3                 | Inventory;  Returns                                                  |
|   |                |                                                                 |
|   | 6.4                 | Taxes                                                                |
|   |                |                                                                 |
|   | 6.5                 | Insurance                                                            |
|   |                |                                                                 |
|   | 6.6                 | Primary  Depository                                                  |
|   |                |                                                                 |
|   | 6.7                 | Financial  Covenants                                                 |
|   |                |                                                                 |
|   | 6.8                 | Intentionally omitted                                                |
|   |                |                                                                 |
|   | 6.9                 | Further  Assurances                                                  |
|   |                |                                                                 |
| 7.     | NEGATIVE  COVENANTS |
|   |                |
|   | 7.1                 | Dispositions                                                         |
|   |                |                                                                 |
|   | 7.2                 | Change in Business, Control, Name or  Jurisdiction of Incorporation. |
|   |                |                                                                 |
|   | 7.3                 | Mergers  or Acquisitions                                             |
|   |                |                                                                 |
|   | 7.4                 | Indebtedness                                                         |
|   |                |                                                                 |
|   | 7.5                 | Encumbrances                                                         |
|   |                |                                                                 |
|   | 7.6                 | Distributions                                                        |
|   |                |                                                                 |
|   | 7.7                 | Investments                                                          |
|   |                |                                                                 |
|   | 7.8                 | Transactions with  Affiliates                                        |
|   |                |                                                                 |
|   | 7.9                 | Subordinated  Debt                                                   |
|   |                |                                                                 |
|   | 7.10                | Inventory  and Equipment                                             |
|   |                |                                                                 |
|   | 7.11                | Compliance                                                           |
|   |                |                                                                 |
|   | 7.12                | Negative Pledge Agreements                                           |
|   |                |                                                                 |
| 8.     | EVENTS OF  DEFAULT  |
|   |                |
|   | 8.1                 | Payment Default                                                      |
|   |                |                                                                 |
|   | 8.2                 | Covenant  Default                                                    |
|   |                |                                                                 |
|   | 8.3                 | Material  Adverse Change                                             |
|   |                |                                                                 |
|   | 8.4                 | Attachment                                                           |
|   |                |                                                                 |
|   | 8.5                 | Insolvency                                                           |
|   |                |                                                                 |
|   | 8.6                 | Other  Agreements                                                    |
|   |                |                                                                 |
|   | 8.7                 | Subordinated  Debt                                                   |

 

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|   | 8.8                                         | Judgments                             |
|--------|---------------------------------------------|---------------------------------------|
|   |                                        |                                  |
|   | 8.9                                         | Misrepresentations                    |
|   |                                        |                                  |
|   | 8.10                                        | Guaranty                              |
|   |                                        |                                  |
| 9.     | BANK’S  RIGHTS AND REMEDIES            |
|   |                                        |
|   | 9.1                                         | Rights  and Remedies                  |
|   |                                        |                                  |
|   | 9.2                                         | Power of  Attorney                    |
|   |                                        |                                  |
|   | 9.3                                         | Accounts  Collection                  |
|   |                                        |                                  |
|   | 9.4                                         | Bank Expenses                         |
|   |                                        |                                  |
|   | 9.5                                         | Bank’s Liability for  Collateral |
|   |                                        |                                  |
|   | 9.6                                         | Remedies  Cumulative                  |
|   |                                        |                                  |
|   | 9.7                                         | Demand; Protest                       |
|   |                                        |                                  |
| 10.    | NOTICES                                     |
|   |                                        |
| 11.    | CHOICE OF  LAW AND VENUE; JURY TRIAL WAIVER |
|   |                                        |
| 12.    | GENERAL  PROVISIONS                         |
|   |                                        |
|   | 12.1                                        | Successors  and Assigns               |
|   |                                        |                                  |
|   | 12.2                                        | Indemnification                       |
|   |                                        |                                  |
|   | 12.3                                        | Time of Essence                       |
|   |                                        |                                  |
|   | 12.4                                        | Severability of Provisions            |
|   |                                        |                                  |
|   | 12.5                                        | Amendments in Writing, Integration    |
|   |                                        |                                  |
|   | 12.6                                        | Counterparts                          |
|   |                                        |                                  |
|   | 12.7                                        | Survival                              |
|   |                                        |                                  |
|   | 12.8                                        | Confidentiality                       |

 

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**This Loan And Security Agreement**(this“***Agreement***”)is entered into as of July 30, 2002, by and between **Comerica Bank-California**(“***Bank***”) and **Vastera, Inc.,** a Delaware corporation (“***Borrower***”).

 

**RECITALS**

 

Borrower wishes toobtain credit from time to time from Bank, and Bank desires to extend credit toBorrower.  This Agreement sets forth theterms on which Bank will advance credit to Borrower, and Borrower will repaythe amounts owing to Bank.

 

**AGREEMENT**

 

The parties agreeas follows:

 

**1.****                                      DefinitionsAnd Construction.**

 

**1.1         ****Definitions****. **As used in this Agreement, thefollowing terms shall have the definitions set forth on Exhibit A.

 

**1.2         ****AccountingTerms****. **Allaccounting terms not specifically defined on Exhibit A shall be construed inaccordance with GAAP and all calculations shall be made in accordance withGAAP.  The term “***financial statements***”shall include the accompanying notes and schedules.

 

**2.****                                      Loan AndTerms Of Payment.**

 

**2.1         ****Credit Extensions.**

 

**(a)          **Borrower promisesto pay to Bank, in lawful money of the United States of America, the aggregateunpaid principal amount of all Credit Extensions made by Bank to Borrower,together with interest on the unpaid principal amount of such Credit Extensionsat rates in accordance with the terms hereof.

 

**(b)          **Revolving Advances.

 

**(i)           **Subject to andupon the terms and conditions of this Agreement (1) Borrower may requestAdvances from time to time in an aggregate outstanding principal amount not toexceed on any date the lesser of (A) the maximum principal amount of theCommitted Revolving Line or (B) the Borrowing Base as of such date, and (2)amounts borrowed pursuant to this Section 2.1(b) may be repaid and reborrowedat any time prior to the Revolving Maturity Date, at which time all Advancesunder this Section 2.1(b) shall be immediately due and payable.  Borrower may prepay at any time, in whole orin part, any Advances without penalty or premium.

 

**(ii)          **Whenever Borrowerdesires an Advance, Borrower will notify Bank by facsimile transmission ortelephone no later than 3:00 p.m. Eastern Standard Time, on the Business Daythat the Advance is to be made.  Eachsuch notification shall be promptly confirmed by a Payment/Advance Form insubstantially the form of Exhibit C. Bank is

 

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authorized to make Advances under this Agreement,based upon instructions received from a Responsible Officer or a designee of aResponsible Officer, or without instructions if in Bank’s discretion suchAdvances are necessary to meet Obligations which have become due and remainunpaid.  Bank shall be entitled to relyon any telephonic notice given by a person who Bank reasonably believes to be aResponsible Officer or a designee thereof, and Borrower shall indemnify andhold Bank harmless for any damages or loss suffered by Bank as a result of suchreliance.  Bank will credit the amountof Advances made under this Section 2.1(b) to Borrower’s deposit account.

 

**(iii)        **As a conditionprecedent to the initial Advance, Bank shall, upon prior notice to Borrower,conduct an audit of Borrower’s Accounts, at Borrower’s expense, the results ofwhich must be satisfactory to Bank.

 

**(c)           EquipmentAdvances.**

 

**(i)           **Subject to andupon the terms and conditions of this Agreement, at any time from the datehereof through the Tranche A Availability End Date and the Tranche BAvailability End Date, as applicable, Bank agrees to make Advances to Borrowerin two tranches, Tranche A and Tranche B (each an “***Equipment Advance***”and collectively, the “***EquipmentAdvances***”).  Borrower mayrequest Equipment Advances under Tranche A at any time from the date hereofthrough the earlier to occur of (a) the Tranche A Availability End Date and (b)the termination of Bank’s obligation to advance money pursuant to Section9.1(b).  Borrower may request EquipmentAdvances under Tranche B at any time from the day following the Tranche A AvailabilityEnd Date through the earlier to occur of (a) the Tranche B Availability EndDate and (b) the termination of Bank’s obligation to advance money pursuant toSection 9.1(b).  The aggregateoutstanding principal amount of Tranche A Equipment Advances and Tranche BEquipment Advances, shall not at any time exceed the maximum principal amountof the Committed Equipment Line.  EachEquipment Advance shall not exceed 100% of the invoiced amount of new Equipmentand software approved by Bank from time to time, excluding taxes, shipping,warranty charges, freight discounts and installation expense (“***Permitted Equipment***”),which Permitted Equipment Borrower shall have purchased within 90 days prior tothe date of the corresponding Equipment Advance.  The aggregate amount of all Equipment Advances allocated to thefinancing of software, taxes, shipping, warranty charges, freight discounts andinstallation expenses (“***SoftwareAdvances***”) shall be limited to $500,000.

 

**(ii)          **Interest shallaccrue from the date of each Equipment Advance at the rate specified in Section2.3(a), and shall be payable monthly in arrears commencing on the 30th(1) dayof the month immediately following such Equipment Advance and continuing on thelike day of each month thereafter.

 

**(1)           Tranche A Equipment Advances**. In addition to monthlyinterest payments, the principal amount with respect to any Equipment Advancesthat are outstanding under Tranche A on the Tranche A Availability End Dateshall be repaid in 30 equal monthly installments of principal, beginning on the30th day of the month following the Tranche A Availability End Date, andcontinuing on the like day of each month thereafter

 

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(1) The day of the monthon which this Agreement is dated.

 

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through theEquipment Maturity Date, at which time all amounts due in connection withTranche A Equipment Advances made under this Section 2.1(c) shall beimmediately due and payable.

 

**(2)           Tranche B Equipment Advances**. Any EquipmentAdvances that are outstanding under Tranche B on the Tranche B Availability EndDate shall be due and payable in 24 equal monthly installments of principal,beginning on the 30th day of the month following the Tranche BAvailability End Date, and continuing on the like day of each month thereafterthrough the Equipment Maturity Date, at which time all amounts due inconnection with Tranche B Equipment Advances made under this Section 2.1(c)shall be immediately due and payable.

 

**(iii)        **Equipment Advances,once repaid, may not be reborrowed. Borrower may prepay any Equipment Advances at any time, in whole or inpart, without penalty or premium.

 

**(iv)         **When Borrowerdesires to obtain an Equipment Advance, Borrower shall notify Bank (whichnotice shall be irrevocable) by facsimile transmission to be received no laterthan 3:00 p.m. Eastern Standard Time three (3) Business Days before the day onwhich the Equipment Advance is to be made. Such notice shall be substantially in the form of Exhibit C.  The notice shall be signed by a ResponsibleOfficer or its designee and include a copy of the invoice for any Equipment tobe financed.

 

**(d)           TermLoan.**

 

**(i)           **Subjectto and upon the terms and conditions of this Agreement, on the date hereof Bankshall make a single Credit Extension to Borrower in an amount not to exceed $4,100,000(the “***Term Loan***”)to pay off all Indebtedness owed by Borrower under the PNC Bank Loan Documents.

 

**(ii)          **Intereston the Term Loan shall accrue from the date hereof at the rate specified inSection 2.3(a), and shall be payable in arrears monthly commencing on August30th(2), 2002 and continuing on the like day of each month through the TermLoan Maturity Date.

 

**(iii)        **Inaddition to monthly payments of interest as provided in (ii) above, theprincipal balance of the Term Loan shall be repaid in 23 equal monthlyinstallments of principal, beginning on August 30, 2002, and continuing on thelike day of each month thereafter through the Term Loan Maturity Date, at whichtime all amounts due in connection with the Term Loan shall be immediately dueand payable.

** **

**(iv)         **No further Advancesor drawdowns under the Term Loan shall be permitted.

 

**(e)           Letter of Credit Usage**.  Subject to the availability under theCommitted Revolving Line and in reliance on the representations and warrantiesof Borrower set forth herein, at any time and from time to time from the datehereof through the Business Day

 

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(2) The day of the month on which this Agreement isdated.

 

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immediately prior to the Revolving Maturity Date, Bankshall issue for the account of Borrower such standby letters of credit (each, a“***Letter of Credit***”and collectively, “***Lettersof Credit***”) as Borrower may request, not to exceed the aggregateamount of $2,500,000, which request shall be made by delivering to Bank a dulyexecuted letter of credit application on Bank’s standard form substantiallysimilar to Exhibit F attached hereto; provided, however, that the outstandingand undrawn amounts under all such Letters of Credit which are not cashcollateralized shall be deemed to constitute Advances for the purpose ofcalculating availability under the Revolving Facility.  Unless Borrower shall have deposited withBank cash collateral in an amount sufficient to cover all undrawn amounts undereach such Letter of Credit and Bank shall have agreed in writing, no Letter ofCredit shall have an expiration date that is later than the earlier of(i) one year after the date of its issuance or (ii) the fifthBusiness Day prior to the Revolving Maturity Date.  All Letters of Credit shall be in form and substance acceptableto Bank in its sole discretion and shall be subject to the terms and conditionsof Bank’s form application and letter of credit agreement.  Borrower will pay any standard issuance andother fees that Bank notifies Borrower will be charged for issuing andprocessing Letters of Credit for Borrower, including, without limitation, aletter of credit fee in an amount equal to 1.5% on a per annum basis multipliedby the face amount of each Letter of Credit, payable quarterly in arrears.

 

**(f)            Voluntary Reductions of Commitment.**

 

**(i)            Voluntary Reductions. **Upontwo Business Days’ written notice to Bank, Borrower may from time to timevoluntarily permanently reduce the Committed Revolving Line.  Each voluntary reduction shall be in aminimum amount of $2,000,000 or, if greater than $2,000,000, in integralmultiples of $1,000,000.

 

**(ii)           Effect of Reductions.**  Simultaneously with each voluntary permanent reduction of theCommitted Revolving Line, Borrower shall make a payment of the outstandingAdvances equal to the excess, if any, of (A) the aggregate principalamount of the outstanding Advances and the face amount of any outstanding andundrawn Letters of Credit which are not cash collateralized over (B) themaximum principal amount of the Committed Revolving Line, as so reduced.  Notice of a reduction, once given, shall beirrevocable.  All such reductions shallbe without penalty or premium.

 

**2.2          Overadvances. **Ifthe aggregate amount of the outstanding Advances exceeds the lesser of themaximum principal amount of the Committed Revolving Line or the Borrowing Baseat any time, Borrower shall immediately pay to Bank, in cash, the amount ofsuch excess.

 

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**2.3          InterestRates, Payments, and Calculations.**

 

**(a)           InterestRates.**

 

**(i)            Advances. **Exceptas set forth in Section 2.3(b), the Advances shall bear interest, on theoutstanding daily balance thereof, at a rate per annum equal to the Prime Rate.

 

**(ii)           Equipment Advances. **Exceptas set forth in Section 2.3(b), the Equipment Advances shall bear interest, onthe outstanding daily balance thereof, at a rate per annum equal to 0.50% abovethe Prime Rate.

 

**(iii)         TermLoan.**  Exceptas set forth in Section 2.3(b), the Term Loan shall bear interest, on theoutstanding daily balance thereof, at a rate per annum equal to 0.50% above thePrime Rate.

 

**(b)           Late Fee; Default Rate. **Ifany payment due hereunder is not made within ten days after the date suchpayment is due, Borrower shall pay Bank a late fee equal to the lesser of(i) 5% of the amount of such unpaid amount or (ii) the maximum amountpermitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence andduring the continuance of an Event of Default, at a rate equal to fivepercentage points above the interest rate applicable immediately prior to theoccurrence of the Event of Default.

 

**(c)           Payments.** Bank shall, at its option and with prior notice to Borrower, charge suchinterest, all Bank Expenses, and all Periodic Payments that Borrower fails topay when due against any of Borrower’s deposit accounts or against theCommitted Revolving Line, in which case those amounts shall thereafter accrueinterest at the rate then applicable hereunder.  Any interest not paid when due shall be compounded by becoming apart of the Obligations, and such interest shall thereafter accrue interest atthe rate then applicable hereunder.

 

**(d)           Computation. **Inthe event the Prime Rate is changed from time to time hereafter, the applicablerate of interest hereunder shall be increased or decreased, effective as of theday the Prime Rate is changed, by an amount equal to such change in the PrimeRate.  All interest chargeable under theLoan Documents shall be computed on the basis of a 360 day year for the actualnumber of days elapsed.

 

**2.4         ****CreditingPayments****. **Prior to the occurrence of anEvent of Default, Bank shall credit a wire transfer of funds, check or otheritem of payment to such deposit account or Obligation as Borrowerspecifies.  After the occurrence of anEvent of Default, the receipt by Bank of any wire transfer of funds, check, orother item of payment shall be immediately applied to conditionally reduceObligations, but shall not be considered a payment on account unless suchpayment is of immediately available federal funds or unless and until suchcheck or other item of payment is honored when presented for payment.  Notwithstanding anything to the contrarycontained herein, any wire transfer or payment received by Bank after 12:00noon Pacific time shall be deemed to have been received by Bank as of theopening of business on the immediately following Business Day.  Whenever any payment to Bank under the Loan

 

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Documents would otherwise be due (except by reason ofacceleration) on a date that is not a Business Day, such payment shall insteadbe due on the next Business Day, and additional fees or interest, as the casemay be, shall accrue and be payable for the period of such extension.

 

**2.5         ****Fees****. **Borrower shall pay to Bank thefollowing:

 

**(a)           Facility Fee. **Onthe Closing Date, a Facility Fee equal to $32,500, which shall benonrefundable;

 

**(b)           Unused Fee**. Beginning on September 30, 2002, and continuing on the last day of eachcalendar quarter thereafter until the Revolving Maturity Date and on theRevolving Maturity Date, the Borrower shall pay an unused fee (the “***Unused Fee***”) to Bank,in arrears, at an annual rate of thirty-seven and one-half basis points(0.375%) on the average daily unused portion of the Committed Revolving Lineduring the calendar quarter or period then ended.  The Unused Fee shall be computed on the basis of the year of 365or 366 days, as the case may be, and paid on the actual number of dayselapsed.  The Unused Fee shall becalculated from the Closing Date.

 

**(c)           Letter of Credit Fees.**  Letter of Credit Fees in accordance with Section 2.1(e).

 

**(d)           Bank Expenses. **Onthe Closing Date, all reasonable costs and expenses incurred by the Bank inconnection with the Closing of the facilities evidenced by this Agreement,including reasonable attorneys’ fees and expenses and, after the Closing Date,all Bank Expenses incurred after the Closing Date, including reasonableattorneys’ fees and expenses, as and when they become due.

 

**2.6         ****Term****. **This Agreement shall becomeeffective on the Closing Date and, subject to Section 12.7, shall continue infull force and effect so long as any Credit Extension shall be available andfor so long as any Letters of Credit are outstanding or available to berequested hereunder, and until payment in full of the Obligations.

 

**3.****                                      Conditions OfLoans.**

 

**3.1         ****ConditionsPrecedent to Initial Credit Extension****. **The obligation of Bank to makethe initial Credit Extension is subject to the condition precedent that Bankshall have received, in form and substance satisfactory to Bank, the following:

 

**(a)          **this Agreement;

 

**(b)          **an officer’scertificate of Borrower with respect to incumbency and resolutions authorizingthe execution and delivery of this Agreement;

 

**(c)          **financingstatements (Form UCC-1) with respect to the security interests granted to Bankby Borrower and Guarantors;

 

**(d)          **negative pledgeagreements executed by Borrower and Guarantors;

 

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**(e)          **pledge agreementsexecuted by Borrower and Vastera International, together with delivery of stockcertificates and stock powers in blank, or arrangements satisfactory to Bankfor the transfer of such stock certificates from PNC Bank to Bank;

 

**(f)           **agreement toprovide insurance;

 

**(g)          **evidence ofinsurance, satisfactory to Bank, showing Bank as loss payee;

 

**(h)          **the GuarantyAgreement and Guarantor Security Agreement executed by Vastera SolutionServices and Vastera International;

 

**(i)           **payment of thefees and Bank Expenses then due specified in Section 2.5;

 

**(j)           **current financialstatements in accordance with Section 6.2;

 

**(k)          **a payoff letter inform and substance acceptable to Bank with respect to the obligations owedunder the PNC Loan Facility;

 

**(l)           **such otherdocuments, and completion of such other matters, as Bank may reasonably deemnecessary or appropriate.

 

**3.2         ****ConditionsPrecedent to All Credit Extensions****. **The obligation of Bank to makeeach Credit Extension, including the initial Credit Extension, is furthersubject to the following conditions:

 

**(a)          **timely receipt byBank of the Payment/Advance Form as provided in Section 2.1; and

 

**(b)          **the representationsand warranties contained in Section 5 shall be true and correct in all materialrespects on and as of the date of such Payment/Advance Form and on theeffective date of each Credit Extension as though made at and as of each suchdate (except to the extent of changes resulting from transactions contemplatedby or permitted by this Agreement or the other Loan Documents and changesoccurring in the ordinary course of business that singly or in the aggregateare not materially adverse and to the extent that such representations and warrantiesrelate expressly to an earlier date), and no Default or Event of Default shallhave occurred and be continuing, or would exist after giving effect to suchCredit Extension (provided, however, that those representations and warrantiesexpressly referring to another date shall be true, correct and complete in allmaterial respects as of such date).  Themaking of each Credit Extension shall be deemed to be a representation andwarranty by Borrower on the date of such Credit Extension as to the accuracy ofthe facts referred to in this Section 3.2.

 

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**4.****                                      CreationOf Security Interest.**

 

**4.1         ****Grant ofSecurity Interest****. **Borrower grants and pledges toBank a continuing security interest in all presently existing and hereafteracquired or arising Collateral to secure prompt repayment of any and allObligations and to secure prompt performance by Borrower of each of itscovenants and duties under the Loan Documents. Except as set forth in the Schedule, such security interest constitutesa valid, first priority security interest in the presently existing Collateral,and will constitute a valid, first priority security interest in later-acquiredCollateral; *provided, however,*thatsuch priority shall be subject only to Liens described in clause (l) of thedefinition of Permitted Liens. Notwithstanding any termination, Bank’s Lien on the Collateral shallremain in effect for so long as any Obligations are outstanding.

 

**4.2         ****Delivery ofAdditional Documentation Required****. **Borrower shall from time to timeexecute and deliver to Bank, at the request of Bank, all Negotiable Collateral,all financing statements and other documents that Bank may reasonably request,in form satisfactory to Bank, to perfect and continue perfected Bank’s securityinterests in the Collateral and in order to fully consummate all of thetransactions contemplated under the Loan Documents.

 

**4.3         ****Right toInspect****. **Bank (through any of itsofficers, employees, or agents) shall have the right, upon reasonable priornotice, from time to time during Borrower’s usual business hours but no morethan twice a year (unless an Event of Default has occurred and is continuing),to inspect Borrower’s Books and to make copies thereof in order to verifyBorrower’s financial condition.

 

**5.****                                      RepresentationsAnd Warranties****.**

 

Borrowerrepresents and warrants as follows:

 

**5.1         ****DueOrganization and Qualification****. **Borrower and each Subsidiary is acorporation duly existing under the laws of its state of incorporation andqualified and licensed to do business in any state in which the conduct of itsbusiness or its ownership of property requires that it be so qualified, exceptwhere the failure to do so could not reasonably be expected to cause a MaterialAdverse Effect.

 

**5.2         ****DueAuthorization; No Conflict****. **The execution, delivery, andperformance of the Loan Documents are within Borrower’s powers, have been dulyauthorized, and are not in conflict with nor constitute a breach of anyprovision contained in Borrower’s Articles of Incorporation or Bylaws, nor willthey constitute an event of default under any material agreement by whichBorrower is bound.  Borrower is not indefault under any agreement by which it is bound, which default could have aMaterial Adverse Effect.

 

**5.3         ****Collateral****. **Borrower has good title to theCollateral, free and clear of Liens, except for Permitted Liens.  The Eligible Accounts are bona fide existingobligations.  The property giving riseto such Eligible Accounts has been delivered to the account debtor or its agentfor immediate shipment to and unconditional acceptance by the accountdebtor.  Borrower has not receivednotice of actual or imminent Insolvency Proceeding of any account debtor whose accountsare included in any Borrowing Base Certificate as an Eligible Account.  All Inventory is in all material respects ofgood and marketable quality, free from all material defects, except forInventory for which adequate reserves have been made.

 

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**5.4         ****IntentionallyOmitted****.**

 

**5.5         ****Name;Location of Chief Executive Office****. **Except as disclosed in theSchedule, Borrower has not done business under any name other than thatspecified on the signature page hereof. The chief executive office of Borrower is located at the addressindicated in Section 10 hereof.

 

**5.6         ****Litigation****. **Except as set forth in theSchedule, there are no actions or proceedings pending by or against Borrower orany Subsidiary before any court or administrative agency in which a likelyadverse decision could reasonably be expected to have a Material AdverseEffect, or a material adverse effect on Borrower’s interest, or Bank’s securityinterest, in the Collateral.

 

**5.7         ****No MaterialAdverse Change in Financial Statements****. **All consolidated financialstatements related to Borrower and any Subsidiary that are delivered byBorrower to Bank fairly present in all material respects Borrower’sconsolidated financial condition as of the date thereof and Borrower’sconsolidated results of operations for the period then ended.  There has not been a material adverse changein the consolidated financial condition of Borrower since the date of the mostrecent financial statements submitted to Bank.

 

**5.8         ****Solvency****, Paymentof Debts****. **Borrower is generally able to payits debts (including trade debts) as and when they mature; the fair saleablevalue of Borrower’s assets (including goodwill minus disposition costs) exceedsthe fair value of its liabilities; and Borrower is not left with unreasonablysmall capital after the transactions contemplated by this Agreement.

 

**5.9         ****Compliancewith Laws and Regulations****. **To the best of the Borrower’sknowledge, Borrower and each of its Subsidiaries have met the minimum fundingrequirements of ERISA with respect to any employee benefit plans subject toERISA.  To the best knowledge ofBorrower, no event has occurred resulting from Borrower’s failure to complywith ERISA that is reasonably likely to result in Borrower’s incurring anyliability that could have a Material Adverse Effect.  Borrower is not an “***investment company***” or a company “***controlled***” by an “***investment company***”within the meaning of the Investment Company Act of 1940.  Borrower is not engaged principally, or asone of the important activities, in the business of extending credit for thepurpose of purchasing or carrying margin stock (within the meaning ofRegulations T and U of the Board of Governors of the Federal Reserve System).  Borrower has complied in all materialrespects with all the provisions of the Federal Fair Labor Standards Act.  Borrower is in compliance with allapplicable environmental laws, regulations and ordinances except where thefailure to comply is not reasonably likely to have a Material AdverseEffect.  Borrower has not violated anystatutes, laws, ordinances or rules applicable to it, violation of which couldhave a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed, exceptfor any extensions properly filed, all tax returns required to be filed, andhave paid, or have made adequate provision for the payment of, all taxesreflected therein except those being contested in good faith with adequatereserves under GAAP.

 

**5.10       ****Subsidiaries****. **Borrower does not own any stock,partnership interest or other equity securities of any Person, except forPermitted Investments.

 

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**5.11       ****GovernmentConsents****. **Borrower and each Subsidiary haveobtained all consents, approvals and authorizations of, made all declarationsor filings with, and given all notices to, all governmental authorities thatare necessary for the continued operation of Borrower’s business as currently conducted,except where the failure to do so could not reasonably be expected to cause aMaterial Adverse Effect.

 

**5.12       ****InboundLicenses****. **Except as disclosed on theSchedule, Borrower is not a party to, nor is bound by, any license or otheragreement that prohibits or otherwise restricts Borrower from granting asecurity interest in Borrower’s interest in such license or agreement or anyother property and which accounts for 20% or more of Borrower’s revenue or isotherwise material to Borrower’s business.

 

**5.13       ****FullDisclosure****. **No representation, warranty orother statement made by Borrower in any certificate or written statementfurnished to Bank taken together with all such certificates and writtenstatements furnished to Bank contains any untrue statement of a material factor omits to state a material fact necessary in order to make the statementscontained in such certificates or statements not misleading, it beingrecognized by Bank that the projections and forecasts provided by Borrower ingood faith and based upon reasonable assumptions are not to be viewed as factsand that actual results during the period or periods covered by any suchprojections and forecasts may differ from the projected or forecasted results.

 

**6.****                                      AffirmativeCovenants****.**

 

Borrower covenantsthat, until payment in full of all outstanding Obligations, and for so long asBank may have any commitment to make a Credit Extension hereunder, Borrowershall do all of the following:

 

**6.1         ****GoodStanding and Government Compliance****. **Borrower shall maintain its andeach of its Subsidiaries’ corporate existence in its jurisdiction ofincorporation and maintain qualification in each jurisdiction in which thefailure to so qualify could have a Material Adverse Effect.  Borrower shall meet, and shall cause eachSubsidiary to meet, the minimum funding requirements of ERISA with respect toany employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, withall statutes, laws, ordinances and government rules and regulations to which itis subject, and shall maintain, and shall cause each of its Subsidiaries tomaintain, in force all licenses, approvals and agreements, the loss of which orfailure to comply with which could have a Material Adverse Effect, or amaterial adverse effect on the Collateral or the priority of Bank’s Lien on theCollateral.

 

**6.2         ****FinancialStatements****, Reports, Certificates****. **Borrower shall deliver toBank:  (a) as soon as available, but nolater than the earlier to occur of 45 days after the end of each fiscal quarteror 5 days after filing of a Form 10-Q for such quarter with the Securities andExchange Commission, a company prepared consolidated balance sheet and incomestatement covering Borrower’s consolidated operations during such period, in aform acceptable to Bank and certified by a Responsible Officer; (b) as soon asavailable, but no later than the earlier to occur of 90 days after the end ofeach fiscal year of Borrower or 5 days after filing of a Form 10-K for suchfiscal year with the Securities and Exchange Commission, audited consolidatedfinancial statements of Borrower prepared in accordance with GAAP, consistentlyapplied,

 

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together with an opinion which is unqualified orotherwise consented to in writing by Bank on such financial statements of anindependent certified public accounting firm reasonably acceptable to Bank; (c)if applicable, copies of all statements, reports and notices sent or madeavailable generally by Borrower to its security holders or to any holders ofSubordinated Debt and all reports on Forms 10-K and 10-Q filed with theSecurities and Exchange Commission; (d) promptly upon receipt of noticethereof, a report of any legal actions pending or threatened against Borroweror any Subsidiary that could result in damages or costs to Borrower or anySubsidiary of $500,000 or more; (e) such budgets, sales projections, operatingplans or other financial information generally prepared by Borrower in theordinary course of business as Bank may reasonably request from time to time;and (f) upon request by Bank, a report signed by Borrower, in formreasonably acceptable to Bank, listing any applications or registrations thatBorrower has made or filed in respect of any Patents, Copyrights or Trademarksand the status of any outstanding applications or registrations, as well as anymaterial change in Borrower’s Patents, Copyrights, or Trademarks.

 

**(a)          **If there areAdvances or Letters of Credit outstanding, within 30 days after the last day ofeach month, Borrower shall deliver to Bank a Borrowing Base Certificate signedby a Responsible Officer in substantially the form of Exhibit D hereto,together with aged listings of accounts receivable and accounts payable.

 

**(b)          **No later than theearlier to occur of 45 days after the last day of each fiscal quarter or 5 daysafter filing of a Form 10-Q for such quarter with the Securities and ExchangeCommission, Borrower shall deliver to Bank with its quarterly financialstatements a Compliance Certificate signed by a Responsible Officer insubstantially the form of Exhibit E hereto.

 

**(c)          **Bank shall have aright from time to time hereafter to audit Borrower’s Accounts and appraiseCollateral at Borrower’s expense, provided that such audits will be conductedno more often than once every 12 months unless an Event of Default has occurredand is continuing.

 

**6.3         ****Inventory;Returns****. **Borrower shall keep all Inventoryin good and marketable condition, free from all material defects except forInventory for which adequate reserves have been made.  Returns and allowances, if any, as between Borrower and itsaccount debtors shall be on the same basis and in accordance with the usualcustomary practices of Borrower, as they exist on the Closing Date.  Borrower shall promptly notify Bank of allreturns and recoveries and of all disputes and claims involving more than$100,000.

 

**6.4         ****Taxes****. **Borrower shall make, and causeeach Subsidiary to make, due and timely payment or deposit of all materialfederal, state, and local taxes, assessments, or contributions required of itby law, including, but not limited to, those laws concerning income taxes,F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank,on demand, proof satisfactory to Bank indicating that Borrower or a Subsidiaryhas made such payments or deposits and any appropriate certificates attestingto the payment or deposit thereof; provided that Borrower or a Subsidiary neednot make any payment if the amount or validity of such payment is contested ingood faith by appropriate proceedings and is reserved against (to the extentrequired by GAAP) by Borrower.

 

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**6.5         ****Insurance****.**

 

**(a)          **Borrower, at itsexpense, shall keep the Collateral insured against loss or damage by fire,theft, explosion, sprinklers, and all other hazards and risks, and in suchamounts, as ordinarily insured against by other owners in similar businessesconducted in the locations where Borrower’s business is conducted on the datehereof.  Borrower shall also maintainliability and other insurance in amounts and of a type that are customary tobusinesses similar to Borrower’s.

 

**(b)          **All such policiesof insurance shall be in such form, with such companies, and in such amounts asreasonably satisfactory to Bank.  Allpolicies of property insurance shall contain a lender’s loss payableendorsement, in a form satisfactory to Bank, showing Bank as an additional losspayee, and all liability insurance policies shall show Bank as an additionalinsured and specify that the insurer must give at least 30 days notice to Bankbefore canceling its policy for any reason. Upon Bank’s request, Borrower shall deliver to Bank certified copies ofthe policies of insurance and evidence of all premium payments.  If no Event of Default has occurred and iscontinuing, proceeds payable under any casualty policy will, at Borrower’soption, be payable to Borrower to replace the property subject to the claim,provided that any such replacement property shall be deemed Collateral in whichBank has been granted a first priority security interest.  If an Event of Default has occurred and iscontinuing, all proceeds payable under any such policy shall, at Bank’s option,be payable to Bank to be applied on account of the Obligations.

 

**6.6         ****PrimaryDepository****. **Borrower shall open an operatingaccount with Bank on or before the Closing and maintain such an account withBank thereafter.  From and after thedate 30 days after the Closing, Borrower shall maintain its primary depositoryand operating accounts with Bank.

 

**6.7         ****FinancialCovenants****. **Borrower shall at all timesmaintain:

 

**(a)           Modified Quick Ratio. **Aratio of Quick Assets to Current Liabilities less Deferred Revenue of at least2.00 to 1.00 tested for compliance at the end of each calendar****quarter.

 

**(b)           Total Liabilities/Tangible Net Worth Ratio. **A ratio of Total Liabilities to TangibleNet Worth of not more than 1.50 to 1.00.

 

**(c)           Quarter Pro-Forma Income/(Loss). **APro-Forma Income/(Loss) in an amount of not more than ($1,500,000) for thethree months ending September 30, 2002; and $0.00 for the three months endingDecember 31, 2002 and thereafter, measured quarterly.

 

**6.8         ****Intentionally****omitted****.**

 

**6.9         ****FurtherAssurances****. **At any time and from time to timeBorrower shall execute and deliver such further instruments and take suchfurther action as may reasonably be requested by Bank to effect the purposes ofthis Agreement.

 

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**7.****                                      NegativeCovenants****.**

 

Borrower covenantsand agrees that, so long as any credit hereunder shall be available and untilpayment in full of the outstanding Obligations or for so long as Bank may haveany commitment to make any Credit Extensions, Borrower will not do any of thefollowing without Bank’s prior written consent, which shall not be unreasonablywithheld, conditioned or delayed:

 

**7.1         ****Dispositions****. **Convey, sell, lease, transfer orotherwise dispose of (collectively, to “***Transfer***”), or permit any of its Subsidiariesto Transfer, all or any part of its business or property, other than PermittedTransfers.

 

**7.2         ****Change****inBusiness, Control, Name or Jurisdiction of Incorporation.****  **Engage in any business, or permitany of its Subsidiaries to engage in any business, other than or reasonablyrelated or incidental to the businesses currently engaged in by Borrower.  Borrower will not have a Change in Controland will not, without 30 days’ prior written notification to Bank, relocate itschief executive office, its principal place of business, any office in which itmaintains books or records relating to Collateral owned by it or any office orfacility at which Collateral owned by it is located, or change its jurisdictionof incorporation, its corporate name or any trade name used to identify it inthe conduct of its business or the ownership of its properties, or its federaltaxpayer identification number.

 

**7.3         ****Mergers orAcquisitions****. **Merge or consolidate, or permitany of its Subsidiaries to merge or consolidate, with or into any other Person(other than mergers or consolidations of a Subsidiary into another Subsidiaryor into Borrower), or acquire, or permit any of its Subsidiaries to acquire,all or substantially all of the capital stock or property of another Personexcept Permitted Acquisitions.

 

**7.4         ****Indebtedness****. **Create, incur, assume or be orremain liable with respect to any Indebtedness, or permit any Subsidiary so todo, other than Permitted Indebtedness.

 

**7.5         ****Encumbrances****. **Create, incur, assume or allowany Lien with respect to any of its property, or assign or otherwise convey anyright to receive income, including the sale of any Accounts, or permit any ofits Subsidiaries so to do, except for Permitted Liens, or covenant to any otherPerson that Borrower in the future will refrain from creating, incurring,assuming or allowing any Lien with respect to any of Borrower’s property.

 

**7.6         ****Distribution****s****. **Pay any dividends or make anyother distribution or payment on account of or in redemption, retirement orpurchase of any capital stock, except that Borrower may repurchase the stock offormer employees pursuant to stock repurchase agreements as long as an Event ofDefault does not exist prior to such repurchase or would not exist after givingeffect to such repurchase.

 

**7.7         ****Investments****. **Directly or indirectly acquire orown, or make any Investment in or to any Person, or permit any of its Subsidiariesso to do, other than Permitted Investments.

 

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**7.8         ****Transactionswith Affiliates****. **Directly or indirectly enter intoor permit to exist any material transaction with any Affiliate of Borrowerexcept for transactions that are in the ordinary course of Borrower’s business,upon fair and reasonable terms that are no less favorable to Borrower thanwould be obtained in an arm’s length transaction with a non-affiliated Person.

 

**7.9         ****SubordinatedDeb****t****. **Make any payment in respect ofany Subordinated Debt, or permit any of its Subsidiaries to make any suchpayment, except in compliance with the terms of such Subordinated Debt, oramend any provision contained in any documentation relating to the SubordinatedDebt without Bank’s prior written consent, other than (a) refinancingswith respect to which the Indebtedness owed by Borrower or any of itSubsidiaries is not changed and (b) payment of accrued and unpaid interestof Permitted Indebtedness, provided that such payment is not prohibited underthe terms of a subordination agreement or other intercreditor agreement withthe Bank.

 

**7.10       ****Inventoryand Equipment****. **Store the Inventory or theEquipment with a bailee, warehouseman, or similar party unless Bank hasreceived a pledge of the warehouse receipt covering such Inventory.  Except for Inventory sold in the ordinarycourse of business and except for such other locations as Bank may approve inwriting, Borrower shall keep the Inventory and Equipment only at the locationsset forth in Section 10 and the Schedule, and at such other locations of whichBorrower gives Bank prior written notice and as to which Borrower signs andfiles a financing statement where needed to perfect Bank’s security interest.

 

**7.11       ****Compliance****. **Become or be controlled by an “***investment company,***”within the meaning of the Investment Company Act of 1940, or become principallyengaged in, or undertake as one of its important activities, the business ofextending credit for the purpose of purchasing or carrying margin stock, or usethe proceeds of any Credit Extension for such purpose.  Fail to meet the minimum fundingrequirements of ERISA, permit a Reportable Event or Prohibited Transaction, asdefined in ERISA, to occur, fail to comply with the Federal Fair LaborStandards Act or violate any law or regulation, which violation couldreasonably be expected to have a Material Adverse Effect, or a material adverseeffect on the Collateral or the priority of Bank’s Lien on the Collateral, orpermit any of its Subsidiaries to do any of the foregoing.

 

**7.12       ****NegativePledge Agreements****.**  Make or enter into any agreement (other thanwith the Bank) for the benefit of any Person not to grant Liens, except forsuch agreements existing on the date hereof and set forth on the Schedule, orpermit the inclusion in any contract to which it becomes a party of anyprovisions that could restrict or invalidate the creation of a securityinterest in Borrower’s rights and interests in any Collateral.

 

**8.****                                      Events Of Default****.**

 

Any one or more ofthe following events shall constitute an Event of Default by Borrower underthis Agreement:

 

**8.1         ****PaymentDefaul****t****. **If Borrower fails to pay any ofthe Obligations and such failure continues for 5 calendar days or more afterthe due date, provided that within such 5-day

 

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cure period, the failure to pay shall not be deemed anEvent of Default, but no Credit Extensions will be made;

 

**8.2         ****CovenantDefault****. **If Borrower fails to perform anyobligation under Article 6 or violates any of the covenants contained inArticle 7 of this Agreement, or fails or neglects to perform or observe anyother material term, provision, condition, covenant contained in thisAgreement, in any of the Loan Documents, or in any other present or futureagreement between Borrower and Bank and as to any default under such otherterm, provision, condition or covenant that can be cured, has failed to curesuch default within ten days after Borrower receives notice thereof or anyofficer of Borrower becomes aware thereof; provided, however, that if thedefault cannot by its nature be cured within the ten day period or cannot afterdiligent attempts by Borrower be cured within such ten day period, and suchdefault is likely to be cured within a reasonable time, then Borrower shallhave an additional reasonable period (which shall not in any case exceed 30days) to attempt to cure such default, and within such reasonable time periodthe failure to have cured such default shall not be deemed an Event of Defaultbut no Credit Extensions will be made;

 

**8.3         ****MaterialAdverse Change****. **If there occurs a MaterialAdverse Effect;

 

**8.4         ****Attachment****. **If any material portion ofBorrower’s assets is attached, seized, subjected to a writ or distress warrant,or is levied upon, or comes into the possession of any trustee, receiver orperson acting in a similar capacity and such attachment, seizure, writ ordistress warrant or levy has not been removed, discharged or rescinded withinten days, or if Borrower is enjoined, restrained, or in any way prevented bycourt order from continuing to conduct all or any material part of its businessaffairs, or if a judgment or other claim becomes a lien or encumbrance upon anymaterial portion of Borrower’s assets, or if a notice of lien, levy, orassessment is filed of record with respect to any of Borrower’s assets by theUnited States Government, or any department, agency, or instrumentalitythereof, or by any state, county, municipal, or governmental agency, and thesame is not paid within ten days after Borrower receives notice thereof,provided that none of the foregoing shall constitute an Event of Default wheresuch action or event is stayed or an adequate bond has been posted pending agood faith contest by Borrower (provided that no Credit Extensions will berequired to be made during such cure period);

 

**8.5         ****Insolvenc****y****. **If Borrower becomes insolvent, orif an Insolvency Proceeding is commenced by Borrower, or if an InsolvencyProceeding is commenced against Borrower and is not dismissed or stayed within60 days (provided that no Credit Extensions will be made prior to the dismissalof such Insolvency Proceeding);

 

**8.6         ****OtherAgreements****. **If there is a default in anyagreement to which Borrower is a party with a third party or parties resultingin a right by such third party or parties, whether or not exercised, toaccelerate the maturity of any Indebtedness in an amount in excess of $500,000or that could have a Material Adverse Effect;

 

**8.7         ****SubordinatedDebt****. **If Borrower makes any payment onaccount of Subordinated Debt, except to the extent the payment is allowed underany subordination agreement entered into with Bank;

 

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**8.8         ****Judgments****. **If a judgment or judgmentsexcluding any judgments which are fully covered by insurance for the payment ofmoney in an amount, individually or in the aggregate, of at least $1,000,000shall be rendered against Borrower and shall remain unsatisfied and unstayedfor a period of 30 days (provided that no Credit Extensions will be made priorto the satisfaction or stay of the judgment); or

 

**8.9         ****Misrepresentations****. **If any material misrepresentationor material misstatement exists now or hereafter in any warranty orrepresentation set forth herein or in any certificate delivered to Bank by anyResponsible Officer pursuant to this Agreement or to induce Bank to enter into thisAgreement or any other Loan Document.

 

**8.10       ****Guaranty****.** If any guaranty of all or a portion of the Obligations ceases for anyreason to be in full force and effect, or, subject to any applicable cure,notice or grace period, any guarantor fails to perform any obligation under anyguaranty of all or a portion of the Obligations, or any guarantor revokes orpurports to revoke any guaranty of the Obligations, or any materialmisrepresentation or material misstatement exists now or hereafter in any warrantyor representation set forth in any guaranty of all or a portion of theObligations or in any certificate delivered to Bank in connection with suchguaranty.

 

**9.****                                      Bank’s RightsAnd Remedies****.**

 

**9.1         ****Rights andRemedies****. **Upon the occurrence and duringthe continuance of an Event of Default, Bank may, at its election, withoutnotice of its election and without demand, do any one or more of the following,all of which are authorized by Borrower:

 

**(a)          **Declare allObligations, whether evidenced by this Agreement, by any of the other LoanDocuments, or otherwise, immediately due and payable (provided that upon theoccurrence of an Event of Default described in Section 8.5, all Obligationsshall become immediately due and payable without any action by Bank);

 

**(b)          **Cease advancingmoney or extending credit to or for the benefit of Borrower under thisAgreement or under any other agreement between Borrower and Bank;

 

**(c)          **Settle or adjustdisputes and claims directly with account debtors for amounts, upon terms andin whatever order that Bank reasonably considers advisable;

 

**(d)          **Make such paymentsand do such acts as Bank considers necessary or reasonable to protect itssecurity interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and tomake the Collateral available to Bank as Bank may designate.  Borrower authorizes Bank to enter thepremises where the Collateral is located, to take and maintain possession ofthe Collateral, or any part of it, and to pay, purchase, contest, or compromiseany encumbrance, charge, or lien which in Bank’s determination appears to beprior or superior to its security interest and to pay all expenses incurred inconnection therewith.  With respect toany of Borrower’s owned premises, Borrower hereby grants Bank a license toenter into possession of such premises and to occupy the same, without charge,in order to exercise any of Bank’s rights or remedies provided herein, at law,in equity, or otherwise;

 

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**(e)          **Set off and applyto the Obligations any and all (i) balances and deposits of Borrower heldby Bank, or (ii) indebtedness at any time owing to or for the credit orthe account of Borrower held by Bank;

 

**(f)           **Ship, reclaim,recover, store, finish, maintain, repair, prepare for sale, advertise for sale,and sell (in the manner provided for herein) the Collateral.  Bank is hereby granted a license or otherright, solely pursuant to the provisions of this Section 9.1, to use, withoutcharge, Borrower’s labels, patents, copyrights, rights of use of any name,trade secrets, trade names, trademarks, service marks, and advertising matter,or any property of a similar nature, as it pertains to the Collateral, incompleting production of, advertising for sale, and selling any Collateral and,in connection with Bank’s exercise of its rights under this Section 9.1,Borrower’s rights under all licenses and all franchise agreements shall inureto Bank’s benefit;

 

**(g)          **Sell the Collateralat either a public or private sale, or both, by way of one or more contracts ortransactions, for cash or on terms, in such manner and at such places(including Borrower’s premises) as Bank determines is commercially reasonable,and apply any proceeds to the Obligations in whatever manner or order Bankdeems appropriate;

 

**(h)          **Bank may credit bidand purchase at any public sale; and

 

**(i)           **Any deficiencythat exists after disposition of the Collateral as provided above will be paidimmediately by Borrower.

 

**9.2         ****Power ofAttorney****. **Effective only upon theoccurrence and during the continuance of an Event of Default, Borrower herebyirrevocably appoints Bank (and any of Bank’s designated officers, or employees)as Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtorsof Bank’s security interest in the Accounts; (b) endorse Borrower’s name on anychecks or other forms of payment or security that may come into Bank’spossession; (c) sign Borrower’s name on any invoice or bill of lading relatingto any Account, drafts against account debtors, schedules and assignments ofAccounts, verifications of Accounts, and notices to account debtors; (d)dispose of any Collateral; (e) make, settle, and adjust all claims under anddecisions with respect to Borrower’s policies of insurance; (f) settle andadjust disputes and claims respecting the accounts directly with accountdebtors, for amounts and upon terms which Bank determines to be reasonable; (g)to modify, in its sole discretion, any intellectual property security agreemententered into between Borrower and Bank without first obtaining Borrower’sapproval of or signature to such modification by amending Exhibits A, B, and C,thereof, as appropriate, to include reference to any right, title or interestin any Copyrights, Patents or Trademarks acquired by Borrower after theexecution hereof or to delete any reference to any right, title or interest inany Copyrights, Patents or Trademarks in which Borrower no longer has or claimsto have any right, title or interest; and (h) to file, in its sole discretion,one or more financing or continuation statements and amendments thereto,relative to any of the Collateral; provided Bank may exercise such power ofattorney to sign the name of Borrower on any of the documents described inSection 4.2 regardless of whether an Event of Default has occurred.  The appointment of Bank as Borrower’sattorney in fact, and each and every one of Bank’s rights and powers, beingcoupled with an interest, is irrevocable

 

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until all of the Obligations have been fully repaidand performed and Bank’s obligation to provide advances hereunder isterminated.

 

**9.3         ****AccountsCollection****. **Upon the occurrence and duringthe continuance of an Event of Default, Bank may notify any Person owing fundsto Borrower of Bank’s security interest in such funds and verify the amount ofsuch Account.  Upon the occurrence andduring the continuance of an Event of Default, Borrower shall collect allamounts owing to Borrower for Bank, receive in trust all payments as Bank’strustee, and immediately deliver such payments to Bank in their original formas received from the account debtor, with proper endorsements for deposit.

 

**9.4         ****BankExpense****s****. **If Borrower fails to pay anyamounts or furnish any required proof of payment due to third persons orentities, as required under the terms of this Agreement, then Bank may do anyor all of the following after reasonable notice to Borrower:  (a) make payment of the same or any partthereof; (b) set up such reserves under the Revolving Facility as Bank deemsnecessary to protect Bank from the exposure created by such failure; or (c)obtain and maintain insurance policies of the type discussed in Section 6.5 ofthis Agreement, and take any action with respect to such policies as Bank deemsprudent.  Any amounts so paid ordeposited by Bank shall constitute Bank Expenses, shall be immediately due andpayable, and shall bear interest at the then applicable rate hereinaboveprovided, and shall be secured by the Collateral.  Any payments made by Bank shall not constitute an agreement byBank to make similar payments in the future or a waiver by Bank of any Event ofDefault under this Agreement.

 

**9.5         ****Bank’sLiability for Collateral****. **So long as Bank complies withreasonable banking practices and Section 9-207 of the UCC, Bank shall not inany way or manner be liable or responsible for:  (a) the safekeeping of the Collateral; (b) any loss or damagethereto occurring or arising in any manner or fashion from any cause; (c) anydiminution in the value thereof; or (d) any act or default of any carrier,warehouseman, bailee, forwarding agency, or other person whomsoever.  All risk of loss, damage or destruction ofthe Collateral shall be borne by Borrower.

 

**9.6         ****RemediesCumulative****. **Bank’s rights and remedies underthis Agreement, the Loan Documents, and all other agreements shall becumulative.  Bank shall have all otherrights and remedies not inconsistent herewith as provided under the UCC, bylaw, or in equity.  No exercise by Bankof one right or remedy shall be deemed an election, and no waiver by Bank ofany Event of Default on Borrower’s part shall be deemed a continuing waiver.  No delay by Bank shall constitute a waiver,election, or acquiescence by it.  Nowaiver by Bank shall be effective unless made in a written document signed onbehalf of Bank and then shall be effective only in the specific instance andfor the specific purpose for which it was given.

 

**9.7         ****Demand;Protest****. **Borrower waives demand, protest,notice of protest, notice of default or dishonor, notice of payment andnonpayment, notice of any default, nonpayment at maturity, release, compromise,settlement, extension, or renewal of accounts, documents, Instruments, ChattelPaper, and guarantees at any time held by Bank on which Borrower may in any waybe liable.

 

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**10.****                               Notices****.**

 

Unless otherwiseprovided in this Agreement, all notices or demands by any party relating tothis Agreement or any other agreement entered into in connection herewith shallbe in writing and (except for financial statements and other informationaldocuments which may be sent by first-class mail, postage prepaid) shall bepersonally delivered or sent by a recognized overnight delivery service,certified mail, postage prepaid, return receipt requested, or by telefacsimileto Borrower or to Bank, as the case may be, at its addresses set forth below:

 
| If to Borrower: |   | **Vastera, Inc.**                                   |
|-----------------|--------|-----------------------------------------------------|
|            |   |                                                |
|            |   | 45025 Aviation Drive,  Suite 300                    |
|            |   | Dulles, Virginia 20166                              |
|            |   | Attn:  Philip Balsamo, Chief Financial Officer |
|            |   | Telephone:  (703) 661-9006                     |
|            |   | Facsimile:  (703) 661-8497                     |
|            |   |                                                |
| With a copy to: |   | **Vastera,  Inc.**                                  |
|            |   |                                                |
|            |   | 45025 Aviation Drive, Suite 300                     |
|            |   | Dulles, Virginia 20166                              |
|            |   | Attn:  Brian  D. Henderson, Vice President     |
|            |   | Corporate and Legal Affairs                         |
|            |   | Telephone:   (703) 661-9006                    |
|            |   | Facsimile:   (703) 661-8497                    |
|            |   |                                                |
| If to Bank:     |   | **Comerica Bank-California**                        |
|            |   |                                                |
|            |   | 9920 South La Cienega  Boulevard, Suite 1401        |
|            |   | Inglewood, CA 90301                                 |
|            |   | Attn:  Manager                                 |
|            |   | Facsimile:  (310) 338-6110                     |
|            |   |                                                |
| With a copy to: |   | **Comerica Bank-California**                        |
|            |   |                                                |
|            |   | 11921 Freedom Drive, Suite 920                      |
|            |   | Reston, VA 20190                                    |
|            |   | Attn:  Peter  Gibson                           |
|            |   | Telephone:   (703) 464-7228                    |
|            |   | Facsimile:   (703) 467-9308                    |

 

The parties heretomay change the address at which they are to receive notices hereunder, bynotice in writing in the foregoing manner given to the other.

 

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**11.****                               ChoiceOf Law And Venue; Jury Trial Waiver****.**

 

This Agreementshall be governed by, and construed in accordance with, the internal laws ofthe State of California, without regard to principles of conflicts of law.  Each of Borrower and Bank hereby submits tothe exclusive jurisdiction of the state and Federal courts located in theCounty of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURYTRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THELOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDINGCONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAWOR STATUTORY CLAIMS.  EACH PARTY RECOGNIZESAND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR ITTO ENTER INTO THIS AGREEMENT.  EACHPARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGALCOUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTSFOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

**12.****                               GeneralProvisions****.**

 

**12.1       ****Successorsand Assigns****. **This Agreement shall bind andinure to the benefit of the respective successors and permitted assigns of eachof the parties; provided, however, that neither this Agreement nor any rightshereunder may be assigned by Borrower without Bank’s prior written consent,which consent may be granted or withheld in Bank’s sole discretion.  Bank shall have the right without theconsent of or notice to Borrower to sell, transfer, negotiate, or grantparticipation in all or any part of, or any interest in, Bank’s obligations,rights and benefits hereunder.

 

**12.2       ****Indemnification****. **Borrower shall defend, indemnifyand hold harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, andliabilities claimed or asserted by any other party in connection with thetransactions contemplated by this Agreement; and (b) all losses or BankExpenses in any way suffered, incurred, or paid by Bank as a result of or inany way arising out of, following, or consequential to transactions betweenBank and Borrower whether under this Agreement, or otherwise (including withoutlimitation reasonable attorneys fees and expenses), except for losses caused byBank’s gross negligence or willful misconduct.

 

**12.3       ****Time ofEssence****. **Time is of the essence for theperformance of all obligations set forth in this Agreement.

 

**12.4       ****Severabilityof Provisions****. **Each provision of this Agreementshall be severable from every other provision of this Agreement for the purposeof determining the legal enforceability of any specific provision.

 

**12.5       ****Amendments****in Writing,Integration****.** All amendments to or terminations of thisAgreement must be in writing.  All prioragreements, understandings, representations, warranties, and negotiationsbetween the parties hereto with respect to the subject matter of thisAgreement, if any, are merged into this Agreement and the Loan Documents.

 

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**12.6       ****Counterpart****s****. **This Agreement may be executed inany number of counterparts and by different parties on separate counterparts,each of which, when executed and delivered, shall be deemed to be an original,and all of which, when taken together, shall constitute but one and the sameAgreement.

 

**12.7       ****Survival****. **All covenants, representationsand warranties made in this Agreement shall continue in full force and effectso long as any Obligations remain outstanding. The obligations of Borrower to indemnify Bank with respect to theexpenses, damages, losses, costs and liabilities described in Section 12.2shall survive until all applicable statute of limitations periods with respectto actions that may be brought against Bank have run.

 

**12.8       ****Confidentialit****y****. **In handling any confidentialinformation Bank and all employees and agents of Bank shall exercise the samedegree of care that Bank exercises with respect to its own proprietaryinformation of the same types to maintain the confidentiality of any non-publicinformation thereby received or received pursuant to this Agreement except thatdisclosure of such information may be made (i) to the subsidiaries oraffiliates of Bank in connection with their present or prospective businessrelations with Borrower, (ii) to prospective transferees or purchasers ofany interest in the Loans, provided that they have entered into a comparableconfidentiality agreement in favor of Borrower and have delivered a copy toBorrower, (iii) as required by law, regulations, rule or order, subpoena,judicial order or similar order, (iv) as may be required in connection with theexamination, audit or similar investigation of Bank and (v) as Bank maydetermine in connection with the enforcement of any remedies hereunder.  Confidential information hereunder shall notinclude information that either:  (a) isin the public domain or in the knowledge or possession of Bank when disclosedto Bank, or becomes part of the public domain after disclosure to Bank throughno fault of Bank; or (b) is disclosed to Bank by a third party, provided Bankdoes not have actual knowledge that such third party is prohibited fromdisclosing such information.

 

**In Witness Whereof**, the partieshereto have caused this Agreement to be executed as of the date first abovewritten.

 
|   | **Vastera,  Inc.**            |
|--------|-------------------------------|
|   |                          |
|   | By:                           |   |   |
|   |                          |   |
|   | Title:                        |   |   |
|   |                          |
|   |                          |
|   | **Comerica  Bank-California** |
|   |                          |
|   | By:                           |   |   |
|   |                          |   |
|   | Title:                        |   |   |
|        |                               |  |  |  |

 

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**Exhibit A**

 

**DEFINITIONS**

 

“***Accounts***” means all presentlyexisting and hereafter arising accounts, contract rights, and all other formsof obligations owing to Borrower arising out of the sale or lease of goods(including, without limitation, the licensing of software and other technology)or the rendering of services by Borrower, whether or not earned by performance,and any and all credit insurance, guaranties, and other security therefor, aswell as all merchandise returned to or reclaimed by Borrower and Borrower’sBooks relating to any of the foregoing.

 

“***Advance***” or “***Advances***” means acash advance or cash advances under the Revolving Facility.

 

“***Affiliate***” means,with respect to any Person, any Person that owns or controls directly orindirectly such Person, any Person that controls or is controlled by or isunder common control with such Person, and each of such Person’s seniorexecutive officers, directors, and partners.

 

“***Bank Expenses***” meansall:  reasonable costs or expenses(including reasonable attorneys’ fees and expenses) incurred in connection withthe administration and enforcement of the Loan Documents;  reasonable Collateral audit fees; and Bank’sreasonable attorneys’ fees and expenses incurred in amending, enforcing ordefending the Loan Documents (including fees and expenses of appeal), incurredbefore, during and after an Insolvency Proceeding, whether or not suit isbrought.

 

“***Borrower’s Books***”means all of Borrower’s books and records including:  ledgers; records concerning Borrower’s assets or liabilities, theCollateral, business operations or financial condition; and all computerprograms, or tape files, and the equipment, containing such information.

 

“***Borrowing Base***”means, at any date, an amount equal to 80% of Eligible Accounts, as determinedby Bank as of such date with reference to the most recent Borrowing BaseCertificate delivered by Borrower.

 

“***Business Day***” meansany day that is not a Saturday, Sunday, or other day on which banks in theState of California are authorized or required to close.

 

**“*Capitalized Lease***” meansany lease of property by Borrower or a Subsidiary of Borrower, as lessee, whichwould be capitalized in accordance with GAAP.

 

**“*Capitalized Lease Obligations”***means the amount of the obligations of Borrower and its Subsidiaries underCapitalized Leases which would be shown as a liability of Borrower or suchSubsidiary in accordance with GAAP.

 

“***Cash Equivalents***”means (a) securities issued or fully guaranteed or insured by the United Statesgovernment or any agency thereof maturing not more than six (6) months from thedate of acquisition; (b) certificates of deposit, time deposits, repurchaseagreements, reverse

 

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repurchase agreements, orbankers’ acceptances, having in each case a tenor of not more than six (6)months, issued by the Lenders, any affiliate of the Lenders or any U.S.commercial bank or any branch or agency of any non-U.S. bank licensed toconduct business in the United States having combined capital and surplus ofnot less than $250,000,000; (c) commercial paper of any issuer rated at leasta-1 by Standard & Poor’s Rating Group, a division of McGraw-Hill Companies,or P-1 by Moody’s Investors Service Inc. and in either case having a tenor ofnot more than three (3) months; *provided,however,*that only those Cash Equivalents with maturities not toexceed 90 days shall be included in the definition of “***Quick Assets***”.

 

“***Change of Control***”means within a period of twelve (12) consecutive calendar months (i) (a)together with individuals who were directors of Borrower on the first day ofsuch period (b) individuals whose election by Borrower’s Board of Directors orwhose nomination by shareholders of Borrower was approved by a majority ofBorrower’s Board of Directors then still in office who were either directors atthe beginning of such period or whose election or nomination for election waspreviously so approved, collectively shall cease to constitute a majority ofthe board of directors of Borrower, or (ii) a Person or group of Persons actingin concert and who is not (a) an Existing Shareholder or (b) an Affiliate ofshareholders of Borrower on the first day of such period or (c) a Person who iseligible to report their ownership of capital stock of Borrower on Form 13Gfiled with the Securities and Exchange Commission shall acquire thirty percent(30%) or more of the issued and outstanding capital stock of Borrower on afully diluted basis, taking into account all issued and outstanding stockoptions and warrants to purchase capital stock.

 

***“Chattel Paper”***means any “chattelpaper,” as such term is defined in Section 9105(1)(b) of the UCC, now owned orhereafter acquired by Borrower or in which Borrower now holds or hereafteracquires an interest.

 

“***Closing Date***” meansthe date of this Agreement.

 

“***Collateral***” means theproperty described on Exhibit B attached hereto and all Negotiable Collateralto the extent not described on Exhibit B, except to the extent any suchproperty or rights (i) are nonassignable by their terms without theconsent of the licensor thereof or another party (but only to the extent suchprohibition on transfer is enforceable under applicable law, including, withoutlimitation, Section 9318(4) of the UCC), or (ii) the granting of asecurity interest therein is contrary to applicable law or the terms of theagreement pursuant to which the rights or property is acquired, provided thatupon the cessation of any such restriction or prohibition, such property shallautomatically become part of the Collateral.

 

“***Committed Equipment Line***”means credit extensions of up to $5,000,000.

 

“***Committed Revolving Line***”means a credit extension of up to $10,000,000.

 

“***Contingent Obligation***”means, as applied to any Person, any direct or indirect liability, contingentor otherwise, of that Person with respect to (i) any indebtedness, lease,dividend, letter of credit or other obligation of another, including, withoutlimitation, any such obligation directly or indirectly guaranteed, endorsed,co-made or discounted or sold with recourse by that Person, or in respect ofwhich that Person is otherwise directly or indirectly liable; (ii) anyobligations

 

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with respect to undrawnletters of credit issued for the account of that Person; and (iii) allobligations arising under any interest rate, currency or commodity swapagreement, interest rate cap agreement, interest rate collar agreement, orother agreement or arrangement designated to protect a Person againstfluctuation in interest rates, currency exchange rates or commodity prices;provided, however, that the term “***Contingent Obligation***” shall not includeendorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligationshall be deemed to be an amount equal to the stated or determined amount of theprimary obligation in respect of which such Contingent Obligation is made or,if not stated or determinable, the maximum reasonably anticipated liability inrespect thereof as determined by such Person in good faith; provided, however,that such amount shall not in any event exceed the maximum amount of theobligations under the guarantee or other support arrangement.

 

“***Copyrights***” means anyand all copyright rights, copyright applications, copyright registrations andlike protections in each work or authorship and derivative work thereof,whether published or unpublished and whether or not the same also constitutes atrade secret, now or hereafter existing, created, acquired or held.

 

“***Credit Extension***”means each Advance, Equipment Advance, or any other extension of credit by Bankfor the benefit of Borrower hereunder.

 

“***Current Liabilities***”means, as of any applicable date, all amounts that should, in accordance withGAAP, be included as current liabilities on the consolidated balance sheet ofBorrower and its Subsidiaries, as at such date, plus, to the extent not alreadyincluded therein, that portion of outstanding Credit Extensions made under thisAgreement that constitutes a current liability under GAAP.

 

“***Daily Balance***” meansthe amount of the Obligations owed at the end of a given day.

 

“***Default***” means anevent where with the passage of time or the giving of notice would be an Eventof Default.

 

“***Deferred Revenue***”means all amounts received in advance of performance under maintenancecontracts and not yet recognized as revenue.

 

***“Deposit Accounts”*** means any “depositaccount” as such term is defined in Section 9105(e) of the UCC, and shouldinclude, without limitation, any demand, time, savings passbook or likeaccount, now or hereafter maintained by or for the benefit of Borrower, or inwhich Borrower now holds or hereafter acquires any interest, with a bank,savings and loan association, credit union or like organization (includingBank) and all funds and amounts therein, whether or not restricted ordesignated for a particular purpose.

 

“***Eligible Accounts***”means those Accounts that arise in the ordinary course of Borrower’s businessthat comply with all of Borrower’s representations and warranties to Bank setforth in Section 5.3; provided, that Bank may change the standards ofeligibility by giving Borrower 30 days prior written notice.  Unless otherwise agreed to by Bank, EligibleAccounts shall not include the following:

 

(a) Accounts thatthe account debtor has failed to pay within 90 days of invoice date;

 

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(b) Accounts withrespect to an account debtor, 25% of whose Accounts the account debtor hasfailed to pay within 90 days of invoice date;

 

(c) Accounts withrespect to which the account debtor is an officer, employee, or agent ofBorrower;

 

(d) Accounts withrespect to which goods are placed on consignment, guaranteed sale, sale orreturn, sale on approval, bill and hold, or other terms by reason of which thepayment by the account debtor may be conditional;

 

(e) Accounts(other than Accounts of Ford Motor Company) with respect to which the accountdebtor is an Affiliate of Borrower;

 

(f) Accounts withrespect to which the account debtor does not have its principal place ofbusiness in the United States, except for Eligible Foreign Accounts;

 

(g) Accounts withrespect to which the account debtor is the United States or any department,agency, or instrumentality of the United States;

 

(h) Accounts withrespect to which Borrower is liable to the account debtor for goods sold orservices rendered by the account debtor to Borrower, but only to the extent ofany amounts owing to the account debtor against amounts owed to Borrower;

 

(i) Accountswith respect to an account debtor, including Subsidiaries and Affiliates, whosetotal obligations to Borrower exceed 20% of all Accounts, to the extent suchobligations exceed the aforementioned percentage, except as approved in writingby Bank;

 

(j) Accounts withrespect to which the account debtor disputes liability or makes any claim withrespect thereto as to which Bank believes, in its sole discretion, that theremay be a basis for dispute (but only to the extent of the amount subject tosuch dispute or claim), or is subject to any Insolvency Proceeding, or becomesinsolvent, or goes out of business; and

 

(k) Accounts thecollection of which Bank reasonably determines after inquiry and consultationwith Borrower to be doubtful.

 

“***Eligible Foreign Accounts***”means Accounts with respect to which the account debtor does not have itsprincipal place of business in the United States and that (i) aresupported by one or more letters of credit in an amount and of a tenor, andissued by a financial institution, acceptable to Bank, or (ii) that Bankapproves on a case-by-case basis.

 

“***Equipment***” means allpresent and future machinery, equipment, tenant improvements, furniture,fixtures, vehicles, tools, parts and attachments in which Borrower has anyinterest.

 

“***Equipment Advance***” or“***Equipment Advances***”has the meaning set forth in Section 2.1(c).

 

“***Equipment Line***” meansa Credit Extension of up to $5,000,000.

 

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“***Equipment Maturity Date***”means July 30, 2005.

 

“***ERISA***” means theEmployee Retirement Income Security Act of 1974, as amended, and theregulations thereunder.

 

“***Event of Default***” hasthe meaning assigned in Article 8.

 

“***Existing Shareholder***”means a holder of the Borrower’s capital stock as of the date hereof.

 

“***GAAP***” means generallyaccepted accounting principles as in effect from time to time in the UnitedStates.

 

“***Guarantor***”  means each Subsidiary of Borrower inexistence on the Closing Date and each Person which becomes a Subsidiary ofBorrower on and after the Closing Date.

 

“***Guarantor Security Agreement***”means a Guarantor Security Agreement in the form of **Exhibit F** hereto, togetherwith all extensions, renewals, amendments, supplements, substitutions andreplacements thereof and thereto.

 

“***Guaranty Agreement***”means a Guaranty Agreement in the form of **Exhibit G** hereto, together with allextensions, renewals, amendments, supplements, substitutions and replacementsthereof and thereto.

 

“***Indebtedness***” means(a) all indebtedness for borrowed money or the deferred purchase price ofproperty or services, including without limitation reimbursement and otherobligations with respect to surety bonds and letters of credit, (b) allobligations evidenced by notes, bonds, debentures or similar Instruments, (c)all capital lease obligations and (d) all Contingent Obligations.

 

“***Insolvency Proceeding***”means any proceeding commenced by or against any person or entity under anyprovision of the United States Bankruptcy Code, as amended, or under any otherbankruptcy or insolvency law, including assignments for the benefit of creditors,formal or informal moratoria, compositions, extension generally with itscreditors, or proceedings seeking reorganization, arrangement, or other relief.

 

***“Instruments”*** means any “instrument,”as such term is defined in Section 9105(1)(i) of the UCC now owned or hereafteracquired by Borrower or in which Borrower now holds or hereafter acquires anyinterest, including, without limitation, all notes, certificated securities,and other evidences of indebtedness, other than instruments that constitute, orare a part of a group of writings that constitute, Chattel Paper.

 

“***Inventory***” means allpresent and future inventory in which Borrower has any interest, includingmerchandise, raw materials, parts, supplies, packing and shipping materials,work in process and finished products intended for sale or lease or to befurnished under a contract of service, of every kind and description now or atany time hereafter owned by or in the custody or possession, actual orconstructive, of Borrower, including such inventory as is temporarily out ofits custody or possession or in transit and including any returns upon anyaccounts or other

 

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proceeds, includinginsurance proceeds, resulting from the sale or disposition of any of theforegoing and any documents of title representing any of the above, andBorrower’s Books relating to any of the foregoing.

 

“***Investment***” means anybeneficial ownership of (including stock, partnership interest or othersecurities) any Person, or any loan, advance or capital contribution to anyPerson.

 

“***IRC***” means theInternal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“***Lien***” means anymortgage, lien, deed of trust, charge, pledge, security interest or otherencumbrance.

 

“***Loan Documents***”means, collectively, this Agreement, any note or notes executed by Borrower,and any other agreement entered into between Borrower and Bank in connectionwith this Agreement, all as amended or extended from time to time.

 

“***Loan Party***” meansBorrower and each Guarantor.

 

“***Material Adverse Effect***”means a material adverse effect on (i) the business operations orcondition (financial or otherwise) of Borrower and its Subsidiaries taken as awhole or (ii) the ability of Borrower to repay the Obligations orotherwise perform its obligations under the Loan Documents as and whenrequired.

 

“***Negotiable Collateral***”means all of Borrower’s present and future letters of credit of which it is abeneficiary, notes, drafts, Instruments, securities, documents of title, andChattel Paper, and Borrower’s Books relating to any of the foregoing.

 

“***Net Income***” means, for any applicable period, the aggregate of allamounts which, in accordance with GAAP, would be included as net income (or netloss (including any extraordinary losses)) on a consolidated statement ofincome of Borrower and its Subsidiaries for such period.

 

“***Obligations***” meansall debt, principal, interest, Bank Expenses and other amounts owed to Bank byBorrower pursuant to this Agreement or any other Loan Document, whetherabsolute or contingent, due or to become due, now existing or hereafterarising, including any interest that accrues after the commencement of anInsolvency Proceeding and including any debt, liability, or obligation owing fromBorrower to others that Bank may have obtained by assignment or otherwise.

 

“***Patents***” means allpatents, patent applications and like protections including without limitationimprovements, divisions, continuations, renewals, reissues, extensions and continuations-in-partof the same.

 

“***Periodic Payments***”means all installments or similar recurring payments that Borrower may now orhereafter become obligated to pay to Bank pursuant to the terms and provisionsof any instrument, or agreement now or hereafter in existence between Borrowerand Bank.

 

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“***Permitted Acquisitions***”means acquisitions of all or substantially all of the stock or assets of otherentities for aggregate cash consideration (including assumed liabilities) notexceeding $10,000,000 for all acquisitions that take place after the datehereof through the Revolving Maturity Date, provided that (a) Borrower hasprovided to Bank copies of Borrower’s due diligence in connection with such acquisitions,including historical financial statements for the acquisition target and proforma consolidating projections (the “***Pro Forma Projections***”), (b) the ProForma Projections confirm that Borrower will be in compliance, on a pro formabasis, with Section 6.7 prior to the applicable acquisitions and for at leastthe two reporting periods immediately following the applicable acquisitions,and (c) each target company must be in the same line of business as Borrower.

 

“***Permitted Indebtedness***”means:

 

(a) Indebtednessof Borrower or any Subsidiary in favor of Bank arising under this Agreement orany other Loan Document;

 

(b) Indebtednessexisting on the Closing Date and disclosed in the Schedule;

 

(c) trade payablesincurred in the ordinary course of business;

 

(d) Indebtednesssecured by a lien described in clause (l) of the defined term “***Permitted Liens***;”

 

(e) SubordinatedDebt,

 

(f) Indebtednessof Borrower or any Subsidiary in favor of the Borrower or any wholly-ownedSubsidiary of the Borrower (and provided such wholly-owned Subsidiary, if it isa domestic Subsidiary, has entered into a Guaranty Agreement and a GuarantorSecurity Agreement with the Administrative Agent); provided, however, thatloans in favor of foreign Subsidiaries (excluding the loans in favor of foreignSubsidiaries as of the date hereof and set forth in the Schedule, and extensions and refinancings thereof which do notincrease the principal amount of such indebtedness as of the date of suchextension or refinancing) shall not exceed $5,000,000 in the aggregate at anytime outstanding; and

 

(g) additionalunsecured indebtedness of the Borrower and its Subsidiaries not to exceed inthe aggregate $1,000,000 at any time outstanding.

 

“***Permitted Investment***”means:

 

(a) Investmentsexisting on the Closing Date disclosed in the Schedule;

 

(b) (i) Marketabledirect obligations issued or unconditionally guaranteed by the United States ofAmerica or any agency or any State thereof maturing within one year from thedate of acquisition thereof, (ii) commercial paper maturing no more thanone year from the date of creation thereof and currently having rating of atleast A-2 or P-2 from either Standard & Poor’s Corporation or Moody’sInvestors Service, (iii) Bank’s certificates of deposit maturing no morethan one year from the date of investment therein, and (iv) Bank’s money marketaccounts;

 

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(c) Repurchases ofstock from former employees or directors of Borrower under the terms ofapplicable repurchase agreements in an aggregate amount not to exceed $100,000in the aggregate in any fiscal year, provided that no Event of Default hasoccurred, is continuing or would exist after giving effect to the repurchases;

 

(d) Investmentsaccepted in connection with Permitted Transfers;

 

(e) loanspermitted under clause (f) of the definition of “Permitted Indebtedness”;

 

(f) Investmentsconsisting of (i) travel advances and employee relocation loans and otheremployee loans and advances in the ordinary course of business, and (ii) loansto employees, officers or directors relating to the purchase of equitysecurities of Borrower or its Subsidiaries pursuant to employee stock purchaseplan agreements approved by Borrower’s Board of Directors;

 

(g) Investments(including debt obligations) received in connection with the bankruptcy orreorganization of customers or suppliers and in settlement of delinquentobligations of, and other disputes with, customers or suppliers arising in theordinary course of Borrower’s business;

 

(h) PermittedAcquisitions;

 

(i) Interest rateprotection or hedge instruments;

 

(j) Loanspermitted under clause (f) of the definition of Permitted Indebtedness;

 

(k) Investments consisting of notes receivable of, or prepaid royaltiesand other credit extensions, to customers and suppliers who are not Affiliates,in the ordinary course of business, provided that this subparagraph (j) shallnot apply to Investments of Borrower in any Subsidiary;

 

(l) Joint venturesor strategic alliances in the ordinary course of Borrower’s business consistingof the non-exclusive licensing of technology, the development of technology orthe providing of technical support, provided that any cash Investments byBorrower do not exceed $100,000 in the aggregate in any fiscal year; and

 

(m) Investments inSubsidiaries for the purpose of financing Permitted Acquisitions.

 

“***Permitted Liens***”means Liens (a) for current taxes and assessments not yet due and payable, (b),if any, reflected on or in the notes to the most recent balance sheet ofBorrower delivered to the Bank on or prior to the Closing Date, (c) if any,specified on the Schedule, (d) securing the payment of taxes or charges ofGovernmental Authorities not yet delinquent or being contested in good faith byappropriate proceeding, for which adequate reserves are maintained inaccordance with GAAP provided the same have no priority over any of the Bank’ssecurity interests; (e) securing claims or demands of materialmen, mechanics,carriers, warehousemen, landlords and other like Persons, imposed withoutaction of such parties, provided that the payment thereof is not yet past dueor for which adequate reserves are maintained in accordance with GAAP; (f)incurred or deposits made in the ordinary course of Borrower’s business inconnection with worker’s compensation, unemployment insurance, social securityand other like laws; (g) in the nature of non-exclusive licenses andsublicenses of

 

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intellectual propertygranted to Persons in the ordinary course of business; (h) arising fromjudgments, decrees or attachments to the extent and only so long as suchjudgment, decree or attachment has not caused or resulted in an Event ofDefault; (i) in favor of customs and revenue authorities arising as a matter oflaw to secure payment of customs duties in connection with the importation ofgoods; (j) which constitute rights of set-off of a customary nature or bankers’liens with respect to amounts on deposit, whether arising by operation of lawor by contract, in connection with arrangements entered into with banks in theordinary course of business; (k) in favor of lessors of tangible personalproperty arising under operating leases, provided that such Liens are limitedto the leased property, any improvements made thereto and the proceeds thereof;(l) to secure (x) purchase money security interests, as the that term isdefined in the UCC, in property that secures the indebtedness that was incurredto acquire the property or (y) Capitalized Lease Obligations; (m) securinginterest hedge agreements; (n) deposits or other temporary cashinvestments to secure trade contracts and operating leases; (o) on real estateconsisting of easements, rights of way, zoning restrictions and restrictions onthe use of real property; or (p) in favor of or approved by the Bank.

 

“***Permitted Transfer***”means the conveyance, sale, lease, transfer or disposition by Borrower or anySubsidiary of:

 

(a) Inventory inthe ordinary course of business;

 

(b) licenses andsimilar arrangements for the use of the property of Borrower or itsSubsidiaries in the ordinary course of business;

 

(c) surplus,worn-out or obsolete Equipment;

 

(d) Investmentspermitted under Section 7.7; and

 

(e) other assetsof Borrower or its Subsidiaries which do not in the aggregate exceed $100,000.

 

“***Person***” means anyindividual, sole proprietorship, partnership, limited liability company, jointventure, trust, unincorporated organization, association, corporation,institution, public benefit corporation, firm, joint stock company, estate,entity or governmental agency.

 

“***PNC Bank Loan Documents***”means that certain Amended and Restated Loan Agreement dated as of May 15, 2001among the Borrower, PNC Bank, National Association and the Bank (the “***PNC Loan Agreement***”)and the Loan Documents (as such term is defined in the PNC Loan Agreement)referenced therein.

 

“***PNC Loan Facility***”means that certain equipment loan facility provided by PNC Bank, NationalAssociation and the Bank to Borrower evidenced by the PNC Bank Loan Documents.

 

“***Prime Rate***” means thevariable rate of interest, per annum, most recently announced by Bank, as its “***prime rate,***” whetheror not such announced rate is the lowest rate available from Bank.

 

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“***Pro-Forma Income/(Loss)***”means Net Income, plus interest expense, plus taxes, plus non-cash charges(including depreciation, amortization, stock-based compensation, research anddevelopment related charges and one-time restructuring charges), plus cashrestructuring charges (not to exceed $5,000,000 in the aggregate from the datehereof through the Revolving Maturity Date), less interest income, lessone-time or non-recurring revenue.

 

“***Quick Assets***” means,at any date as of which the amount thereof shall be determined, theunrestricted cash and Cash Equivalents, net billed trade accounts receivableand investments with maturities not to exceed 90 days, of Borrower determinedin accordance with GAAP.

 

 “***Responsible Officer***” means each of the ChiefExecutive Officer, the Chief Operating Officer, the Chief Financial Officer andthe Controller of Borrower.

 

“***Revolving Facility***”means the facility under which Borrower may request Bank to issue Advances, asspecified in Section 2.1(b) hereof.

 

“***Revolving Maturity Date***”means July 30, 2004.

 

“***Schedule***” means theschedule of exceptions attached hereto, if any.

 

“***Subordinated Debt***”means any debt incurred by Borrower that is subordinated to the debt owing byBorrower to Bank on terms reasonably acceptable to Bank (and identified asbeing such by Borrower and Bank).

 

“***Subsidiary***” means anycorporation or partnership in which (i) any general partnership interestor (ii) more than 50% of the stock of which by the terms thereof ordinaryvoting power to elect the Board of Directors, managers or trustees of theentity, at the time as of which any determination is being made, is owned byBorrower, either directly or through an Affiliate.

 

“***Tangible Net Worth***”means at any date as of which the amount thereof shall be determined, the sumof the capital stock and additional paid-in capital plus retained earnings (orminus accumulated deficit) of Borrower and its Subsidiaries minus intangibleassets, net of amortization, on a consolidated basis determined in accordancewith GAAP.

 

“***Term Loan***” has themeaning assigned in Section 2.1(d)(i).

 

“***Term Loan Maturity Date***”means June 30, 2004.

 

“***Total Liabilities***”means at any date as of which the amount thereof shall be determined, allobligations that should, in accordance with GAAP be classified as liabilitieson the consolidated balance sheet of Borrower, including in any eventcontingent liabilities and all Indebtedness.

 

“***Trademarks***” means anytrademark and servicemark rights, whether registered or not, applications toregister and registrations of the same and like protections, and the entiregoodwill of the business of Borrower connected with and symbolized by suchtrademarks.

 

“***Tranche A***” has themeaning set forth in Section 2.1(c)(i).

 

10

----

 

“***Tranche B***” has themeaning set forth in Section 2.1(c)(i).

 

“***Tranche A******Availability End Date***”means January 30, 2003.

 

“***Tranche B Availability End Date***”means July 30, 2003.

 

“***Tranche A Equipment Advance***”means any Equipment Advance(s) made under Tranche A.

 

“***Tranche B Equipment Advance***”means any Equipment Advance(s) made under Tranche B.

 

“***UCC***” means theUniform Commercial Code as the same may from time to time be in effect in theState of California; provided, however, in the event that, by reason ofmandatory provisions of law, any or all of the attachment, perfection orpriority of the Secured Party’s security interest in any collateral is governedby the Uniform Commercial Code as in effect in a jurisdiction other than the Stateof California, the term “UCC” shall mean the Uniform Commercial Code (includingthe Articles thereof) as in effect at such time in such other jurisdiction forpurposes of the provisions hereof relating to such attachment, perfection orpriority and for purposes of definitions related to such provisions.  Notwithstanding anything contained herein tothe contrary, the parties intend that the terms used herein which are definedin the UCC have, at all times, the broadest and most inclusive meanings possible.  Accordingly, if the UCC shall in the futurebe amended or held by a court to define any term used herein more broadly orinclusively than the UCC in effect on the date of this Agreement, then suchterm, as used herein, shall be given such broadened meaning.  If the UCC shall in the future be amended orheld by a court to define any term used herein more narrowly, or lessinclusively, than the UCC in effect on the date of this Agreement, suchamendment or holding shall be disregarded in defining terms used in thisAgreement.

 

11

----

 

**DEBTOR                                               VASTERA,INC.**

 

**SECUREDPARTY:                             COMERICABANK-CALIFORNIA**

 

**Exhibit B**

 

**COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT**

 

All personalproperty of Debtor of every kind, whether presently existing or hereaftercreated, written, produced or acquired, including, but not limited to:  (a) all accounts (includinghealth-care-insurance receivables), chattel paper (including tangible andelectronic chattel paper), deposit accounts, documents (including negotiabledocuments), equipment (including all accessions and additions thereto), generalintangibles (including payment intangibles and software), goods (includingfixtures), instruments (including promissory notes), inventory (including allgoods held for sale or lease or to be furnished under a contract of service,and including returns and repossessions), investment property (includingsecurities and securities entitlements), letter of credit rights, money, andall of Debtor’s books and records with respect to any of the foregoing, and thecomputers and equipment containing said books and records; and (b) any and allcash proceeds and/or noncash proceeds of any of the foregoing, including,without limitation, insurance proceeds, and all supporting obligations and thesecurity therefor or for any right to payment. Notwithstanding the foregoing, the Collateral shall not include anycopyrights, patents, trademarks, servicemarks, and applications therefore andlicenses thereto, now owned or hereafter acquired or created, or any claims fordamages by way of any past, present and future infringement of any of theforegoing (collectively, the “Intellectual Property”); provided, however, thatthe Collateral shall include all accounts and general intangibles that consistof rights to payment from the sale, licensing or disposition of all or any partof, or rights in, the Intellectual Property (the “Rights to Payment”).  Notwithstanding the foregoing, if a judicialauthority (including a U.S. Bankruptcy Court) holds that a security interest inthe underlying Intellectual Property is necessary to have a security interestin the Rights to Payment, then the Collateral shall automatically, andeffective July 30, 2002, include the Intellectual Property only to the extentnecessary to permit perfection of Secured Party’s security interest in theRights to Payment.  All terms above have the meaningsgiven to them in the California Uniform Commercial Code, as amended orsupplemented from time to time, including revised Division 9 of the UniformCommercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45),Section 35, operative July 1, 2001.

 

 

----

 

**Exhibit C**

 

**LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM**

 

LOANPAYMENT/ADVANCE TELEPHONE REQUEST FORM

DEADLINE FOR SAMEDAY PROCESSING IS 3:00 P.M., E.S.T., 3 BUSINESS DAYS PRIOR TO ADVANCE

TO:         [               ]                                                                                                                                              DATE:

FAX #:  [               ]                                                                                                                                               TIME:

 
| FROM:   VASTERA, INC.                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CLIENT  NAME (BORROWER)                                                                                                                                                                                                                                                                                                                                                                                                                     |
| REQUESTED  BY:                                                                                                                                                                                                                                                                                                                                                                                                                              |
| AUTHORIZED  SIGNER’S NAME                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| AUTHORIZED  SIGNATURE:                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| PHONE  NUMBER:                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| FROM  ACCOUNT #                                                                                                                                                                                                                                                                                                                                                                                                    | TO  ACCOUNT # |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| REQUESTED  TRANSACTION TYPE                                                                                                                                                                                                                                                                                                                                                                                                                 | REQUEST  DOLLAR AMOUNT |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        | $ |
| PRINCIPAL  INCREASE (ADVANCE)                                                                                                                                                                                                                                                                                                                                                                                                               | $ |
| PRINCIPAL  PAYMENT (ONLY)                                                                                                                                                                                                                                                                                                                                                                                                                   | $ |
| INTEREST  PAYMENT (ONLY)                                                                                                                                                                                                                                                                                                                                                                                                                    | $ |
| PRINCIPAL  AND INTEREST (PAYMENT)                                                                                                                                                                                                                                                                                                                                                                                                           | $ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| OTHER  INSTRUCTIONS:                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| All  representations and warranties of Borrower stated in the Loan and Security  Agreement are true, correct and complete in all material respects as of the  date of the telephone request for an Advance confirmed by this Borrowing  Certificate; provided, however, that those representations and warranties  expressly referring to another date shall be true, correct and complete in  all material respects as of such date.  |

 
| BANK  USE ONLY                                                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------|
| TELEPHONE  REQUEST:                                                                                                                          |
|                                                                                                                                         |
| The  following person is authorized to request the loan payment transfer/loan  advance on the advance designated account and is known to me. |
|                                                                                                                                         |   |
|                                                                                                                                         |   |   |   |
| Authorized  Requester                                                                                                                        | Phone  # |
|                                                                                                                                         |   |
|                                                                                                                                         |   |
|                                                                                                                                         |   |   |   |
| Received  By (Bank)                                                                                                                          | Phone  # |
|                                                                                                                                         |   |
|                                                                                                                                         |   |
| Authorized  Signature (Bank)                                                                                                                 |
|                                                                                                                                              |  |  |  |  |  |

 

1

----

 

**Exhibit D**

 

**BORROWING BASE CERTIFICATE**

 

Borrower:  Vastera, Inc.                                                                                                                       Lender:  Comerica Bank-California

 

Commitment Amount:  $10,000,000

 
| 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 25% over 90  day accounts             | $      |
|                                                  | 6.     | Concentration Limits                             | $      |
|                                                  | 7.     | Foreign Accounts                                 | $      |
|                                                  | 8.     | Governmental Accounts                            | $      |
|                                                  | 9.     | Contra Accounts                                  | $      |
|                                                  | 10.    | Demo Accounts                                    | $      |
|                                                  | 11.    | Intercompany/Employee  Accounts                  | $      |
|                                                  | 12.    | Other (please explain  on reverse)               | $      |
|                                                  | 13.    | TOTAL ACCOUNTS  RECEIVABLE DEDUCTIONS            | $      |
|                                                  | 14.    | Eligible Accounts (#3  minus #13)                | $      |
|                                                  | 15.    | LOAN VALUE OF ACCOUNTS  (80% of #14)             | $      |
|                                                  |   |                                             |   |   |
| BALANCES                                              |   |                                             |   |
|                                                  | 16.    | Maximum Loan Amount                              |   | $      |
|                                                  | 17.    | Total Funds Available  [Lesser of #16 or #15]    |   | $      |
|                                                  | 18.    | Present balance owing  on Line of Credit         |   | $      |
|                                                  | 19.    | Outstanding under  Sublimits (Letters of Credit) |   | $      |
|                                                  | 20.    | RESERVE POSITION (#17  minus #18 and #19)        |   | $      |
|                                                       |        |                                                  |        |        |  |  |  |

 

*Theundersigned represents and warrants that the foregoing is true, complete andcorrect, and that the information reflected in this Borrowing Base Certificatecomplies with the representations and warranties set forth in the Loan and SecurityAgreement between the undersigned and Comerica Bank-California.*

 
| **Vastera, Inc.** |
|-------------------|
|              |
| By:               |   |   |
|              | Authorized Signer |
|                   |  |  |  |

 

1

----

 

**Exhibit E**

 

**COMPLIANCE CERTIFICATE**

 

TO:         COMERICA BANK-CALIFORNIA

 

FROM:   VASTERA, INC.

 

The undersignedauthorized officer of [BORROWER] hereby certifies that in accordance with theterms and conditions of the Loan and Security Agreement between Borrower andBank (the “***Agreement***”),(i) Borrower is in complete compliance for the period ending                 with all required covenants,including without limitation Section 6.7, except as noted below and(ii) all representations and warranties of Borrower stated in theAgreement are true and correct in all material respects as of the date hereof.  Attached herewith are the required documentssupporting the above certification.  TheOfficer further certifies that these are prepared in accordance with GenerallyAccepted Accounting Principles (GAAP) and are consistently applied from oneperiod to the next except as explained in an accompanying letter or footnotes.

 

**Pleaseindicate compliance status by circling Yes/No under “***Complies***”column.**

** **
| **Reporting  Covenant**                    |   | **Required**                                                            |   | **Complies** |   |
|--------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------------|--------|
|                                       |   |                                                                    |   |         |   |   |   |
| Quarterly financial statements             |   | Quarterly no later than  earlier of 45 days or 5 days after filing 10-Q |   | Yes          |   | No |   |
| Annual (CPA Audited)                       |   | FYE no later than  earlier of 90 days or 5 days after filing 10-K       |   | Yes          |   | No |   |
| 10K and 10Q                                |   | (as applicable)                                                         |   | Yes          |   | No |   |
| A/R & A/P Agings, Borrowing Base Cert. |   | Monthly within 30 days                                                  |   | Yes          |   | No |   |
| A/R Audit                                  |   | Initial and Annual                                                      |   | Yes          |   | No |   |
| IP Report                                  |   | Upon request                                                            |   | Yes          |   | No |   |

 
| **Financial  Covenant**                                   |   | **Required**                                                                                         |   | **Actual** |                                           | **Complies** |   |
|-----------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|------------|------------------------------------------------|--------------|--------|
|                                                      |   |                                                                                                 |   |       |                                           |         |   |   |   |
| Maintain on a Monthly  Basis:                        |   |                                                                                                 |   | :1.00      |                                           | Yes          |   | No |   |
| Minimum Modified Quick Ratio                              |   | 2.00:1.00                                                                                            |   | $          | **       ** |         | Yes    |   | No |   |
| Minimum Ratio of Total Liabilities to Tangible Net  Worth |   | 1.50:1.00                                                                                            |   | $          | **       ** |         | Yes    |   | No |   |
| Minimum/Maximum Quarterly Pro-Forma Income/(Loss)         |   | ($1,500,000) [for the  quarter ended 9/30]  $0.00 [beginning quarter ending 12/31/02 and thereafter] |   | $          |                                           |         | Yes    |   | No |   |

 

 
| **Comments  Regarding Exceptions:**   See Attached. |   | **BANK  USE ONLY** |   |   |
|----------------------------------------------------------|--------|--------------------|--------|--------|
|                                                     |   |               |   |   |
|                                                     |   | Received by:       |   |
| Sincerely,                                               |   | AUTHORIZED  SIGNER |   |   |
|                                                     |   |               |   |   |
|                                                     |   | Date:              |   |
|                                                     |   |               |   |   |
|                                                     |   | Verified:          |   |
| SIGNATURE                                                |   | AUTHORIZED  SIGNER |   |   |
|                                                     |   |               |   |   |
|                                                     |   |               |   |   |
|                                                     |   | Date:              |   |
| TITLE                                                    |   |               |   |   |
|                                                     |   | Compliance Status  | Yes    | No     |
|                                                     |   |               |   |   |
| DATE                                                     |   |               |
|                                                          |        |                    |        |        |  |  |  |  |

 

1

----

 

**SCHEDULEOF EXCEPTIONS**

 

PermittedIndebtedness  (Exhibit A)

 

PermittedInvestments  (Exhibit A)

 

Permitted Liens  (Exhibit A)

 

Prior Names  (Section 5.5)

 

Litigation  (Section 5.6)

 

1

----

 

**CORPORATERESOLUTIONS TO BORROW**

 

Borrower:               **Vastera, Inc.**

 

I, the undersignedofficer of **Vastera,Inc.** (the “***Corporation***”),**Hereby Certify**thatthe Corporation is organized and existing under and by virtue of the laws ofthe State of Delaware.

 

**I Further Certify**that attachedhereto as Attachments 1 and 2 are true and complete copies of the Articles ofIncorporation, as amended, and the Restated Bylaws of the Corporation, each ofwhich is in full force and effect on the date hereof.

 

**I Further Certify**that at ameeting of the Directors of the Corporation, duly called and held, at which aquorum was present and voting (or by other duly authorized corporate action inlieu of a meeting), the following resolutions were adopted.

 

**Be It Resolved,**that any one (1)of the following named officers, employees, or agents of this Corporation,whose actual signatures are shown below:

 
| **NAMES** |   | **POSITION** |       | **ACTUAL SIGNATURES** |       |
|-----------|--------|--------------|------------|-----------------------|------------|
|      |   |         | ** ** |                  | ** ** |
|      |   |         | ** ** |                  | ** ** |
|      |   |         | ** ** |                  | ** ** |

 

acting for and on behalfof this Corporation and as its act and deed be, and they hereby are, authorizedand empowered:

 

**BorrowMoney. **To borrow fromtime to time from Comerica Bank-California (“***Bank***”), on such terms as may be agreedupon between the officers, employees, or agents of the Corporation and Bank,such sum or sums of money as in their judgment should be borrowed, withoutlimitation, including such sums as are specified in that certain Loan andSecurity Agreement dated as of July 30, 2002, (the “***Loan Agreement***”).

 

**ExecuteDocuments. **To executeand deliver to Bank the Loan Agreement and any other agreement entered intobetween Corporation and Bank in connection with the Loan Agreement, all asamended or extended from time to time (collectively, with the Loan Agreement,the “***Loan Documents***”),and also to execute and deliver to Bank one or more renewals, extensions,modifications, refinancings, consolidations, or substitutions for the LoanDocuments, or any portion thereof.

 

1

----

 

**GrantSecurity. **To grant asecurity interest to Bank in the Collateral described in the Loan Documents,including a pledge of the stock of all subsidiaries of the Corporation, whichsecurity interest shall secure all of the Corporation’s Obligations, asdescribed in the Loan Documents.

 

**Negative Pledge on IntellectualProperty. **To executea negative pledge agreement with Bank with respect to the Corporation’sintellectual property.

 

**NegotiateItems.**  To draw,endorse, and discount with Bank all drafts, trade acceptances, promissorynotes, or other evidences of indebtedness payable to or belonging to theCorporation or in which the Corporation may have an interest, and either toreceive cash for the same or to cause such proceeds to be credited to theaccount of the Corporation with Bank, or to cause such other disposition of theproceeds derived therefrom as they may deem advisable.

 

**Lettersof Credit; Foreign Exchange. **Toexecute letters of credit applications, foreign exchange agreements and otherrelated documents pertaining to Bank’s issuance of letters of credit andforeign exchange contracts.

 

**FurtherActs. **In the case oflines of credit, to designate additional or alternate individuals as beingauthorized to request advances thereunder, and in all cases, to do and performsuch other acts and things, to pay any and all fees and costs, and to executeand deliver such other documents and agreements as they may in their discretiondeem reasonably necessary or proper in order to carry into effect theprovisions of these Resolutions.

 

**Be It Further Resolved**, that anyand all acts authorized pursuant to these resolutions and performed prior tothe passage of these resolutions are hereby ratified and approved, that theseResolutions shall remain in full force and effect and Bank may rely on theseResolutions until written notice of their revocation shall have been deliveredto and received by Bank.  Any suchnotice shall not affect any of the Corporation’s agreements or commitments ineffect at the time notice is given.

 

**I Further Certify**that theofficers, employees, and agents named above are duly elected, appointed, oremployed by or for the Corporation, as the case may be, and occupy thepositions set forth opposite their respective names; that the foregoingResolutions now stand of record on the books of the Corporation; and that theResolutions are in full force and effect and have not been modified or revokedin any manner whatsoever.

 

**In Witness Whereof**, I havehereunto set my hand on               ,       and attest that thesignatures set opposite the names listed above are their genuine signatures.

 
|   | CERTIFIED AND ATTESTED  BY: |
|--------|-----------------------------|
|   |                        |
|   | X                           |   |

 

2

----

 

**COMERICA BANK-CALIFORNIA**

**MemberFDIC**

 

**ITEMIZATIONOF AMOUNT FINANCED**

**DISBURSEMENTINSTRUCTIONS**

**(Revolver)**

 

**Name(s): Vastera, Inc.                                                                                Date:   July 30, 2002**

 

$10,000,000                                                                                    creditedto deposit account No. 1891929323 when Advances are requested or disbursed toBorrower by cashiers check or wire transfer

 

Amounts paid toothers on your behalf:

 

$                                                                                                                                          toComerica Bank-California for Loan Fee

 

$                                                                                                                                          toComerica Bank-California for Closing Fee

 

$                                                                                                                                          toComerica Bank-California for accounts receivable audit (estimate)

 

$                                                                                                                                          toBank counsel fees and expenses

 

$                                                                                                                                          to                  

 

$                                                                                                                                          to                  

 

$10,000,000                                                                                    TOTAL(AMOUNT FINANCED)

 

Upon consummation of thistransaction, this document will also serve as the authorization for ComericaBank-California to disburse the loan proceeds as stated above.

 
|      |   |      |   |
|-----------|--------|-----------|--------|
| Signature |   | Signature |   |

 

1

----

 

**COMERICABANK-CALIFORNIA**

**MemberFDIC**

 

**ITEMIZATIONOF AMOUNT FINANCED**

**DISBURSEMENTINSTRUCTIONS**

**(EquipmentLoan)**

 

**Name(s):  Vastera,Inc.                                                                                                                Date:   July 30, 2002**

 

$5,000,000                                                                                          creditedto deposit account No. 1891929323 when Advances are requested or disbursed toBorrower by cashiers check or wire transfer

 

Amounts paid toothers on your behalf:

 

$                                                                                                                                          toComerica Bank-California for Loan Fee

 

$                                                                                                                                          toComerica Bank-California for Closing Fee

 

$                                                                                                                                          toComerica Bank-California for accounts receivable audit (estimate)

 

$                                                                                                                                          toBank counsel fees and expenses

 

$                                                                                                                                          to                 

 

$                                                                                                                                          to                 

 

$5,000,000                                                                                          TOTAL(AMOUNT FINANCED)

 

Upon consummation of thistransaction, this document will also serve as the authorization for ComericaBank-California to disburse the loan proceeds as stated above.

 
|      |   |   |
|-----------|--------|--------|
| Signature |   |   |   | Signature |
|           |        |        |  |  |

 

1

----

 

**COMERICABANK-CALIFORNIA**

**MemberFDIC**

 

**ITEMIZATIONOF AMOUNT FINANCED**

**DISBURSEMENTINSTRUCTIONS**

**(TermLoan)**

 

**Name(s):  Vastera,Inc.**                                                                                                                **Date:   July30, 2002**

 

$                                                                                                                                                                                          creditedto deposit account No. 1891929323 when Advances are requested or disbursed toBorrower by cashiers check or wire transfer

 

Amounts paid toothers on your behalf:

 

$                                                                                                                                                                                          toComerica Bank-California for Loan Fee

 

$                                                                                                                                                                                          toComerica Bank-California for Closing Fee

 

$                                                                                                                                                                                          toComerica Bank-California for accounts receivable audit (estimate)

 

$                                                                                                                                                                                          toBank counsel fees and expenses

 

$4,100,000                                                                                                                                          toPNC Bank, NA

 

$                                                                                                                                                                                          to                   

 

$4,100,000                                                                                                                                          TOTAL(AMOUNT FINANCED)

 

Upon consummation of thistransaction, this document will also serve as the authorization for ComericaBank-California to disburse the loan proceeds as stated above.

 
|   |      |   |
|--------|-----------|--------|
|   | Signature |   | Signature |
|        |           |        |  |

 

1

----

 

**AGREEMENT TO PROVIDE INSURANCE**

 
| TO:    | COMERICA  BANK-CALIFORNIA                | Date:  July 30, 2002     |
|--------|------------------------------------------|-------------------------------|
|   | 920 South La Cienega  Boulevard, MC 4604 |                          |
|   | Inglewood, CA 90301                      | Borrower:  VASTERA, INC. |

 

In considerationof a loan in the amount of $19,100,000 secured by all tangible personalproperty including inventory and equipment.

 

I/We agree toobtain adequate insurance coverage to remain in force during the term of theloan.

 

I/We also agree toadvise the below named agent to add Comerica Bank-California as lender’s losspayable on the new or existing insurance policy, and to furnish Bank at aboveaddress with a copy of said policy/endorsements and any subsequent renewalpolicies.

 

I/We understandthat the policy must contain:

 

1.             Fire and extended coverage in anamount sufficient to cover:

 

(a)           The amount of theloan, OR

 

(b)           All existing encumbrances, whicheveris greater,

 

But not in excessof the replacement value of the improvements on the real property.

 

2.             Lender’s “***Loss Payable***” EndorsementForm 438 BFU in favor of Comerica Bank-California, or any other form acceptableto Bank.

** **

**INSURANCEINFORMATION**

 
|   | Insurance Co./Agent   | Telephone No.: |
|--------|-----------------------|----------------|
|   |                  |
|   | Agent’s Address: |           |
|   |                  |
|   | Signature of Obligor: |           |   |
|   |                  |
|   | Signature of Obligor: |           |   |
|        |                       |                |  |  |  |

 

| FOR BANK USE ONLY              |
|--------------------------------|
|                           |
| INSURANCE VERIFICATION:  Date: |
|                           |
| Person Spoken to:              |
|                           |
| Policy Number:                 |
|                           |
| Effective From:                | To: |
|                           |   |
| Verified by:                   |

 

1

----

 
| **COMERICA BANK-CALIFORNIA** |                               |
|------------------------------|------------------------------------|
|                         | **AUTOMATIC  DEBIT AUTHORIZATION** |

 

 
| To:  **Comerica  Bank-California**                                                                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                |
| Re:  **Loan #**                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                |
| You  are hereby authorized and instructed to charge account No. 1891929323 in the  name of VASTERA, INC. for principal and interest payments due on above  referenced loan as set forth below and credit the loan referenced above. |
|                                                                                                                                                                                                                                |
|                 Debit each  interest payment as it becomes due according to the terms of the note and any  renewals or amendments thereof.                    |
|                                                                                                                                                                                                                                |
|                 Debit each principal payment is at becomes due according  to the terms of the note and any renewals or amendments thereof.                    |
|                                                                                                                                                                                                                                |
| This  Authorization is to remain in full force and effect until revoked in writing.                                                                                                                                                 |

 
| Borrower Signature |   | Date  July 30, 2002 |
|--------------------|--------|---------------------|
|               |   |                |
|               |   |                |
|               |   |                |

 

----

 
| SIGNATURE AUTHORIZATION |                      |     |                                    |
|-------------------------|---------------------------|----------|-----------------------------------------|
| To:                     | Comerica  Bank-California | Address: | 9920 South La Cienega  Blvd., Suite 636 |
|                    | Lending Services          |     | Inglewood, CA 90301                     |
|                         |                           |          |                                         |  |  |  |

 

This Authorizationis in reference to that certain Credit Terms and Conditions, Loan Agreement orCredit Agreement (“***Agreement***”)executed by the undersigned borrower (“***Borrower***”) concerning a loan or loans fromComerica Bank-California (“***Bank***”)to Borrower.  Each individual signingbelow hereby certifies that he/she has been authorized by Borrower to designatecertain individuals who are employees or agents of Borrower to perform suchacts as are contemplated by and in furtherance of the Agreement.

 

The individualsnamed below, any one acting alone, are hereby authorized and appointed for andon behalf of Borrower from time to time to do any of the following:

 

(1)                                  Torequest advances of credit under the Agreement and to effect repayment of anycredit outstanding under the Agreement.

 

(2)                                  Toexecute and deliver assignments, borrowing certificates, instruments,schedules, reports, invoices, bills, shipping documents and such otherdocuments or certificates as may be necessary or appropriate under theAgreement or any other agreement or instrument relating thereto or delivered inconnection therewith;

 

(3)                                  Totransfer and endorse to Bank in payment of Borrower’s obligations to Bank anychecks, drafts, notes or other instruments payable to Borrower; and

 

(4)                                  Todo or perform any and all other acts or matters in any way relating to any orall of the foregoing.

 

The undersignedindividuals each further certifies that the specimen signatures below are thegenuine signatures of the individuals designated herein and that theirsignatures shall be binding on Borrower until Bank receives written notice oftermination if the authority of any such designated individuals.

 

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| Dated:                                                         |   |
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| VASTERA, INC.                                                  |   |
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| (Authorized Individuals and Specimen Signatures on  Next Page) |   |
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AuthorizedIndividuals and Specimen Signatures:

 
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