**EXHIBIT 10.41****EXPORT-IMPORT BANK LOAN AND SECURITY AGREEMENT**     **THIS EXPORT-IMPORT BANK LOAN AND SECURITY AGREEMENT**(this “**Agreement**”) dated as of theEffective Date between **SILICON VALLEY BANK**, a California corporation with its principal place ofbusiness at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production officelocated at 380 Interlocken Crescent, Suite 600, Broomfield, CO 80021 (“**Bank**”), and **QUALMARKCORPORATION**, a Colorado corporation, with its chief executive office at 4580 Florence Street,Denver, CO 80238 (“**QualMark**”) and each of the other Persons executing this Agreement as a Borrower(together with QualMark, each a “**Borrower**” and collectively and jointly and severally, the“**Borrowers**”), provides the terms on which Bank shall lend to Borrowers and Borrowers shall repayBank.     The parties hereto agree as follows:     RECITALS; ACCOUNTING AND OTHER TERMS          Borrowers and Bank are party to that certain Amended and Restated Loan and SecurityAgreement dated as of even date herewith (as may be amended, modified, supplemented or replacedhereafter, the “**Domestic Agreement**”), together with the related documents executed in conjunctiontherewith (the “**Domestic Loan Documents**”).          Borrowers and Bank desire in this Agreement to set forth their agreement with respect to aworking capital facility to be guaranteed by the Exim Bank.          Accounting terms not defined in this Agreement shall be construed following GAAP.Calculations and determinations must be made following GAAP. Capitalized terms not otherwisedefined in this Agreement shall have the meanings set forth in Section 13. All other termscontained in this Agreement, unless otherwise indicated, shall have the meaning provided by theCode to the extent such terms are defined therein.     LOAN AND TERMS OF PAYMENT     Promise to Pay**. Borrowers hereby jointly and severally unconditionally promise to pay Bankthe outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereonas and when due in accordance with this Agreement.**     ***Revolving Advances****.*          Availability. Subject to the terms and conditions of this Agreement and to deduction ofReserves, after the occurrence of the initial Credit Extension under the Domestic Agreement, Bankwill make Advances to each Borrower up to the Availability Amount. Amounts borrowed under theRevolving Line may be repaid, and prior to the Revolving Line Maturity Date, reborrowed, subject tothe applicable terms and conditions precedent herein.          Termination; Repayment. The Revolving Line terminates on the Revolving Line MaturityDate, when the principal amount of all Advances, the unpaid interest thereon, and all otherObligations relating to the Revolving Line shall be immediately due and payable.     ***Note****. To evidence the Advances, Borrowers shall execute and deliver to Bank on the datehereof a promissory note (the “****Exim Note****”) in substantially the form attached hereto as**ExhibitB**.*     Overadvances**. If at any time or for any reason the total of all outstanding Advances and allother monetary Obligations exceeds the Availability Amount (an “**Overadvance**”), Borrowers shallimmediately pay the amount of the excess to Bank, without notice or demand. Without limitingBorrowers’ obligation to repay to Bank the amount of any Overadvance, each Borrower agrees to payBank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.**     Payment of Interest on the Credit Extensions**.**
 

 
          Interest Rate. Subject to Section 2.3(b), the principal amount outstanding under theRevolving Line shall accrue interest at a floating per annum rate equal to the greater of (x) theaggregate of the Prime Rate plus the Applicable Margin or (y) 8.75%, which interest in allinstances shall be payable monthly.          Default Rate. Immediately upon the occurrence and during the continuance of an Event ofDefault, Obligations shall bear interest at a rate per annum which is three percentage points abovethe rate effective immediately before the Event of Default (the “**Default Rate**”). Payment oracceptance of the increased interest rate provided in this Section 2.3(b) is not a permittedalternative to timely payment and shall not constitute a waiver of any Event of Default orotherwise prejudice or limit any rights or remedies of Bank.          Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension basedon changes to the Prime Rate shall be effective on the effective date of any change to the PrimeRate and to the extent of any such change.           360-Day Year. Interest shall be computed on the basis of a 360-day year for the actualnumber of days elapsed.          Debit of Accounts. Bank may debit any of Borrowers’ deposit accounts, including theDesignated Deposit Account, for principal and interest payments or any other amounts Borrowers oweBank when due. These debits shall not constitute a set-off.          Payment; Interest Computation; Float Charge. Interest is payable monthly on the lastcalendar day of each month. In computing interest on the Obligations, all Payments received after12:00 p.m. Pacific time on any day shall be deemed received on the next Business Day. In addition,Bank shall be entitled to charge Borrowers a “float” charge in an amount equal to two (2) BusinessDays interest, at the interest rate applicable to the Advances, on all Payments received by Bank.The float charge for each month shall be payable on the last day of the month. Bank shall not,however, be required to credit any Borrower’s account for the amount of any item of payment whichis unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrowers’Designated Deposit Account for the amount of any item of payment which is returned to Bankunpaid.     Fees**. Borrowers shall pay to Bank (without duplication of fees that may be due and payableunder the Domestic Agreement):**          (a) Commitment Fee. A fully earned, non-refundable commitment fee of $27,500,on the Effective Date;          (b) Termination Fee. Subject to the terms of Section 4.1, a terminationfee;          (c) Unused Revolving Line Facility Fee. A fee (the “**Unused Revolving LineFacility Fee**”), which fee shall be paid monthly, in arrears, on the last day of each month, in anamount equal to 0.25% per annum of the average unused portion of the Revolving Line, asdetermined by Bank. Borrowers shall not be entitled to any credit, rebate or repayment of anyUnused Revolving Line Facility Fee previously earned by Bank pursuant to this Sectionnotwithstanding any termination of the within Agreement, or suspension or termination of Bank’sobligation to make loans and advances hereunder;          (d) Collateral Monitoring Fee. A monthly collateral monitoring fee of (i) $1,250 atany such time when Credit Extensions are outstanding under the Revolving Line, and (ii) $750 at anysuch time when there are no Credit Extensions outstanding under the Revolving Line for the entiremonth, in either case payable in arrears on the last day of each month (prorated for any partialmonth) at the beginning and upon termination of this Agreement; and          (e) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees andexpenses for documentation and negotiation of this Agreement) incurred through and after theEffective Date, when due.     Exim Guaranty**. To facilitate the financing of Eligible EXIM Accounts, the Exim Bank hasagreed to guarantee the Exim Loans made under this Agreement, pursuant to a Master GuaranteeAgreement, Loan Authorization Agreement and (to the extent applicable) Delegated Authority LetterAgreement (collectively, the “**Exim Guaranty**”). If, at any time after the Exim Guaranty has beenentered into by Bank, for any reason other than due to any action or inaction of Borrower under theExim Guaranty, (a) the Exim Guaranty shall cease to be in full force and effect, or (b) if the EximBank declares the Exim Guaranty void or revokes any obligations thereunder or denies liabilitythereunder, Borrowers shall immediately repay all outstanding Advances hereunder, and Borrowersshall cash collateralize all issued and undrawn letters of credit issued by Bank, if any. If, atany time after the Exim Guaranty has been entered into by Bank, for any reason other than asdescribed in the foregoing sentence, (x) the Exim Guaranty shall cease to be in full force andeffect, or**
 

 
**(y) the Exim Bank declares the Exim Guaranty void or revokes any obligations thereunder ordenies liability thereunder, any such event shall constitute an Event of Default under thisAgreement. Nothing in any confidentiality agreement, in this Agreement or in any other agreement,shall restrict Bank’s right to make disclosures and provide information to the Exim Bank inconnection with the Exim Guaranty.**     Exim Borrower Agreement**. Borrowers shall execute and deliver a Borrower Agreement, in theform specified by the Exim Bank (attached hereto as****Exhibit D****), in favor of Bank and theExim Bank, together with an amendment thereto approved by the Exim Bank to conform certain terms ofsuch Borrower Agreement to the terms of this Agreement (as amended, the “**Borrower Agreement**”).When the Borrower Agreement is entered into by Borrowers and the Exim Bank and delivered to Bank,this Agreement shall be subject to all of the terms and conditions of the Borrower Agreement, allof which are hereby incorporated herein by this reference. If the Borrower Agreement is enteredinto by Borrowers and the Exim Bank and delivered to Bank, each Borrower agrees to be bound by theterms of the Loan Authorization Agreement, including, without limitation, by any additions orrevisions made prior to its execution on behalf of Exim Bank. Upon the execution of the LoanAuthorization Agreement by Exim Bank and Bank, it shall be deemed to be, and shall become, anattachment to the Borrower Agreement, and shall be incorporated herein by reference. Borrowersshall reimburse Bank for all fees and all out of pocket costs and expenses incurred by Bank withrespect to the Exim Guaranty and the Borrower Agreement, including without limitation all facilityfees and usage fees, and Bank is authorized to debit any Borrower’s deposit accounts with Bank forsuch fees, costs and expenses when paid by Bank.**     CONDITIONS OF LOANS     Conditions Precedent to Initial Credit Extension**. Bank’s obligation to make the initialCredit Extension is subject to the condition precedent that Bank shall have received, in form andsubstance satisfactory to Bank, such documents, and completion of such other matters, as Bank mayreasonably deem necessary or appropriate, including, without limitation:**          Each Borrower shall have delivered duly executed original signatures to the Loan Documentsto which it is a party; and          Borrowers shall have paid the fees and Bank Expenses then due as specified in Section 2.4hereof.     Conditions Precedent to all Credit Extensions**. Bank’s obligations to make each CreditExtension, including the initial Credit Extension, is subject to the following:**          timely receipt of an executed Transaction Report;           the representations and warranties in Section 5 shall be true in all material respects onthe date of the Transaction Report and on the Funding Date of each Credit Extension; provided,however, that such materiality qualifier shall not be applicable to any representations andwarranties that already are qualified or modified by materiality in the text thereof; and provided,further that those representations and warranties expressly referring to a specific date shall betrue, accurate and complete in all material respects as of such date, and no Default or Event ofDefault shall have occurred and be continuing or result from the Credit Extension. Each CreditExtension is each Borrower’s representation and warranty on that date that the representations andwarranties in Section 5 remain true in all material respects; provided, however, that suchmateriality qualifier shall not be applicable to any representations and warranties that alreadyare qualified or modified by materiality in the text thereof; and provided, further that thoserepresentations and warranties expressly referring to a specific date shall be true, accurate andcomplete in all material respects as of such date;          in Bank’s good faith business judgment, there has not been a Material Adverse Change;and          (d) the Exim Guaranty shall be in full force and effect.     Covenant to Deliver**.**     Borrowers agree to deliver to Bank each item required to be delivered to Bank under thisAgreement as a condition to any Credit Extension. Borrowers expressly agree that the extension ofa Credit Extension prior to the
 

 
receipt by Bank of any such item shall not constitute a waiver byBank of any Borrower’s obligation to deliver such item, and any such extension in the absence of arequired item shall be in Bank’s sole discretion.     Procedures for Borrowing**. Subject to the prior satisfaction of all other applicableconditions to the making of an Advance set forth in this Agreement, to obtain an Advance, QualMark,on behalf of the relevant Borrower, shall notify Bank (which notice shall be irrevocable) byelectronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of theAdvance. Together with such notification, QualMark, on behalf of the relevant Borrower, mustpromptly deliver to Bank by electronic mail or facsimile a completed Transaction Report executed bya Responsible Officer or his or her designee. Bank shall credit Advances to the Designated DepositAccount. Bank may make Advances under this Agreement based on instructions from a ResponsibleOfficer or his or her designee or without instructions if the Advances are necessary to meetObligations which have become due. Bank may rely on any telephone notice given by a person whomBank believes is a Responsible Officer or designee.**     CREATION OF SECURITY INTEREST     Grant of Security Interest**.**          Each Borrower hereby grants Bank, to secure the payment and performance in full of all ofthe Obligations, a continuing security interest in, and pledges to Bank, the Collateral of suchBorrower, wherever located, whether now owned or hereafter acquired or arising, and all proceedsand products thereof. Each Borrower represents, warrants, and covenants that the security interestgranted herein is and shall at all times continue to be a first priority perfected securityinterest in the Collateral of such Borrower (subject only to Permitted Liens that may have superiorpriority to Bank’s Lien under this Agreement and the security interest granted in the DomesticAgreement as set forth in subsection (b) below). If any Borrower shall acquire a commercial tortclaim, such Borrower shall promptly notify Bank in a writing signed by such Borrower of the generaldetails thereof and grant to Bank in such writing a security interest therein and in the proceedsthereof, all upon the terms of this Agreement, with such writing to be in form and substancereasonably satisfactory to Bank.          Notwithstanding the foregoing, it is expressly acknowledged and agreed that the securityinterest created in this Agreement in all of the Collateral (with the exception of Export-RelatedAccounts Receivable, Export-Related Inventory, and Export-Related General Intangibles), is subjectand subordinate to the security interest granted to Bank in the Domestic Agreement with respect tothe Collateral and the security interest created in the Domestic Agreement with respect toExport-Related Accounts Receivable, Export-Related Inventory and Export-Related General Intangiblesis subject to and subordinate to the security interest granted to Bank in this Agreement withrespect to such Export-Related Accounts Receivable, Export-Related Inventory and Export-RelatedGeneral Intangibles.          This Agreement may be terminated prior to the Revolving Line Maturity Date by Borrowers,effective three (3) Business Days after written notice of termination is given to Bank or if Bank’sobligation to fund Credit Extensions terminates pursuant to the terms of Section 2.1.1(c).Notwithstanding any such termination, Bank’s lien and security interest in the Collateral shallcontinue until Borrowers fully satisfies the Obligations. If such termination is at Borrowers’election or at Bank’s election due to the occurrence and continuance of an Event of Default,Borrowers shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, atermination fee in an amount equal to one percent (1.00%) of the Revolving Line provided that notermination fee shall be charged if the credit facility hereunder is replaced with a new facilityfrom another division of Silicon Valley Bank. Upon payment in full of the Obligations and at suchtime as Bank’s obligation to make Credit Extensions has terminated, Bank shall release its liensand security interests in the Collateral and all rights therein shall revert to Borrowers.     Authorization to File Financing Statements**. Each Borrower hereby authorizes Bank to filefinancing statements, without notice to Borrowers, with all appropriate jurisdictions to perfect orprotect Bank’s interest or rights hereunder, including a notice that any disposition of theCollateral, by either such Borrower or any other Person, shall be deemed to violate the rights ofBank under the Code. Without limiting the foregoing, each Borrower hereby authorizes Bank to filefinancing statements which describe the collateral as “all assets” and/or “all personal property”of such Borrower or words of similar import.**
 

 
     REPRESENTATIONS AND WARRANTIES          Each Borrower represents and warrants as follows:     Domestic Loan Documents**. The representations and warranties contained in the Domestic LoanDocuments, which are incorporated into this Agreement by reference, are true and correct, and shallsurvive the termination of Domestic Agreement.**     Borrower Agreement**. The representations and warranties contained in the Borrower Agreement,which are incorporated by reference into this Agreement, are true and correct.**     Accounts Receivable**. For any Eligible EXIM Account in any Borrowing Base Certificate, allstatements made and all unpaid balances appearing in all invoices, instruments and other documentsevidencing the Accounts are and shall be true and correct and all such invoices, instruments andother documents, and all of each Borrower’s Books are genuine and in all respects what they purportto be. All sales and other transactions underlying or giving rise to each Account shall comply inall material respects with all applicable laws and governmental rules and regulations. No Borrowerhas any knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whoseaccounts are an Eligible EXIM Accounts in any Borrowing Base Certificate. To the best of eachBorrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreementsrelating to all Accounts are genuine, and all such documents, instruments and agreements arelegally enforceable in accordance with their terms.**     AFFIRMATIVE COVENANTS     Each Borrower shall do all of the following as long as this Agreement has not been terminated:     Domestic Loan Documents**. Each Borrower shall comply in all respects with the terms andprovisions of the Domestic Loan Documents, which terms and provisions are incorporated into thisAgreement and shall survive the termination of Domestic Agreement, which shall include, withoutlimitation, compliance with the financial reporting requirements set forth in the DomesticAgreement and the financial covenants set forth in the Domestic Agreement.**     Borrower Agreement**. Each Borrower shall comply with all of the terms of the BorrowerAgreement, including without limitation, the delivery of any and all notices required pursuant tothe Borrower Agreement. In the event of any conflict or inconsistency between any provisioncontained in the Borrower Agreement with any provision contained in this Agreement, the more strictprovision, with respect to Borrower, shall control.**     Accounts Receivable and Inventory**.**          (a) Schedules and Documents Relating to Accounts*.*Each Borrower shall deliver to Banktransaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standardforms; provided, however, that such Borrower’s failure to execute and deliver the same shall notaffect or limit Bank’s Lien and other rights in all of such Borrower’s Accounts, nor shall Bank’sfailure to advance or lend against a specific Account affect or limit Bank’s Lien and other rightstherein. If requested by Bank, each Borrower shall furnish Bank with copies (or, at Bank’srequest, originals) of all contracts, orders, invoices, and other similar documents, and allshipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for anygoods the sale or disposition of which gave rise to such Accounts. In addition, each Borrowershall deliver to Bank, on its request, the originals of all instruments, chattel paper, securityagreements, guarantees and other documents and property evidencing or securing any Accounts, in thesame form as received, with all necessary indorsements, and copies of all credit memos.          (b) Disputes. Each Borrower shall promptly notify Bank of all disputes or claimsrelating to Accounts. Each Borrower may forgive (completely or partially), compromise, or settleany Account for less than payment in full, or agree to do any of the foregoing so long as (i) suchBorrower does so in good faith, in a commercially reasonable manner, in the ordinary course ofbusiness, in arm’s-length transactions, and reports the same to Bank in the regular reportsprovided to Bank; (ii) no Default or Event of Default has occurred and is continuing; and (iii)after taking into account all such discounts, settlements and forgiveness, the total outstandingAdvances will not exceed the Availability Amount.
 

 
          (c) Collection of Accounts. Borrowers shall have the right to collect all Accounts,unless and until a Default or an Event of Default has occurred and is continuing. Whether or notan Event of Default has occurred and is continuing, each Borrower shall hold all Payments on, andproceeds of, Accounts in trust for Bank, and such Borrower shall immediately deliver all suchpayments and proceeds to Bank in their original form, duly endorsed, to be applied to theObligations pursuant to the terms of Section 9.4 hereof. Accounts shall be deposited by eachBorrower into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to ablocked account agreement in such form as Bank may specify in its good faith business judgment.          (d) Inventory; Returns*.*Each Borrower shall keep all Inventory in good and marketablecondition, free from material defects. Provided no Event of Default has occurred and iscontinuing, if any Account Debtor returns any Inventory to any Borrower, such Borrower shallpromptly (i) determine the reason for such return, (ii) issue a credit memorandum to the AccountDebtor in the appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, uponrequest from Bank. In the event any attempted return occurs after the occurrence and during thecontinuance of any Event of Default, such Borrower shall hold the returned Inventory in trust forBank, and immediately notify Bank of the return of the Inventory.          (e) Verification*.*Bank may, from time to time, verify directly with the respectiveAccount Debtors the validity, amount and other matters relating to the Accounts, either in the nameof a Borrower or Bank or such other name as Bank may choose.          **(f)****No Liability*****.*****Bank shall not be responsible or liable for any shortage ordiscrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition ofwhich gives rise to an Account, or for any error, act, omission, or delay of any kind occurring inthe settlement, failure to settle, collection or failure to collect any Account, or for settlingany Account in good faith for less than the full amount thereof, nor shall Bank be deemed to beresponsible for any of any Borrower’s obligations under any contract or agreement giving rise to anAccount. Nothing herein shall, however, relieve Bank from liability for its own gross negligenceor willful misconduct.**     Exim Insurance**. If required by Bank, Borrowers will obtain, and pay when due all premiumswith respect to, and maintain uninterrupted foreign credit insurance. In addition, Borrowers willexecute in favor of Bank an assignment of proceeds of any insurance policy obtained by Borrowersand issued by Exim Bank insuring against comprehensive commercial and political risk (the “**EximBank Policy**”). The insurance proceeds from the Exim Bank Policy assigned or paid to Bank will beapplied to the balance outstanding under this Agreement. Borrowers will immediately notify Bank andExim Bank in writing upon submission of any claim under the Exim Bank Policy.**     Further Assurances**. Each Borrower shall execute any further instruments and take furtheraction as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or toeffect the purposes of this Agreement.**     NEGATIVE COVENANTS     No Borrower shall do any of the following without Bank’s prior written consent (which shall bea matter of its good faith business judgment, unless otherwise stated) as long as this Agreementhas not been terminated:     Domestic Loan Documents**. Violate or otherwise fail to comply with any provisions of theDomestic Loan Documents, which provisions are incorporated into this Agreement by reference, andshall survive the termination of Domestic Agreement.**     Borrower Agreement**. Violate or otherwise fail to comply with any provision of the BorrowerAgreement, including, without limitation, the negative covenants set forth therein.**     Exim Guarantee**. Take any action, or permit any action to be taken, that causes or, with thepassage of time, could reasonably be expected to cause, the Exim Guarantee to cease to be in fullforce and effect.**     EVENTS OF DEFAULT     Any one of the following shall constitute an event of default (an “**Event of Default**”) underthis Agreement:
 

 
     Payment Default**. Any Borrower fails to (a) make any payment of principal or interest on anyCredit Extension on its due date, or (b) pay any other Obligations within three (3) Business Daysafter such Obligations are due and payable. During the cure period, the failure to cure thepayment default is not an Event of Default (but no Credit Extension will be made during the cureperiod);**     Covenant Default**.**          (a) Any Borrower fails or neglects to perform any obligation in Section 6 or violates anycovenant in Section 7; or          **(b) Any Borrower fails or neglects to perform, keep, or observe any other term, provision,condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to anydefault (other than those specified in Sections 8.1 or 8.2(a) above) under such other term,provision, condition, covenant or agreement that can be cured, has failed to cure the defaultwithin ten (10) days after the occurrence thereof; provided, however, that if the default cannot byits nature be cured within the ten (10) day period or cannot after diligent attempts by suchBorrower be cured within such ten (10) day period, and such default is likely to be cured within areasonable time, then Borrowers shall have an additional period (which shall not in any case exceedthirty (30) days) to attempt to cure such default, and within such reasonable time period thefailure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shallbe made during such cure period). Grace periods provided under this section shall not apply, amongother things, to financial covenants or any other covenants set forth in subsection (a) above;**     Insolvency**. Any Borrower is unable to pay its debts (including trade debts) as they becomedue or otherwise becomes insolvent; (b) any Borrower begins an Insolvency Proceeding; or (c) anInsolvency Proceeding is begun against any Borrower and not dismissed or stayed within thirty (30)days (but no Credit Extensions shall be made while of any of the conditions described in clause (a)exist and/or until any Insolvency Proceeding is dismissed);**     Exim Guarantee**. If the Exim Guarantee ceases for any reason to be in full force and effect,or if the Exim Bank declares the Exim Guarantee void or revokes any obligations under the EximGuarantee; and**     Domestic Default**. After the effective date of the Domestic Agreement, the occurrence of anEvent of Default under the Domestic Agreement or the Domestic Loan Documents.**     BANK’S RIGHTS AND REMEDIES     Rights and Remedies**. While an Event of Default occurs and continues Bank may, without noticeor demand, do any or all of the following:**          declare all Obligations immediately due and payable (but if an Event of Default describedin Section 8.3 occurs all Obligations are immediately due and payable without any action byBank);          stop advancing money or extending credit for Borrowers’ benefit under this Agreement orunder any other agreement between any Borrower and Bank;          settle or adjust disputes and claims directly with Account Debtors for amounts on termsand in any order that Bank considers advisable in its good faith business judgment, notify anyPerson owing any Borrower money of Bank’s security interest in such funds, and verify the amount ofsuch account;           make any payments and do any acts it considers necessary or reasonable to protect theCollateral and/or its security interest in the Collateral. Each Borrower shall assemble theCollateral if Bank requests and make it available as Bank designates. Bank may enter premiseswhere the Collateral is located, take and maintain possession of any part of the Collateral, andpay, purchase, contest, or compromise any Lien which appears to be prior or superior to itssecurity interest and pay all expenses incurred. Each Borrower grants Bank a license to enter andoccupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;          apply to the Obligations any (i) balances and deposits of any Borrower it holds, or (ii)any amount held by Bank owing to or for the credit or the account of any Borrower;          ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise forsale, and sell the Collateral. Without limiting its rights as a holder of a Lien on IntellectualProperty, Bank is hereby granted a non-
 

 
exclusive, royalty-free license or other right to use,without charge, each Borrower’s labels, patents, copyrights, mask works, rights of use of any name,trade secrets, trade names, trademarks, service marks, and advertising matter, or any similarproperty as it pertains to the Collateral, in completing production of, advertising for sale, andselling any Collateral and, in connection with Bank’s exercise of its rights under this Section,each Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;          place a “hold” on any account maintained with Bank and/or deliver a notice of exclusivecontrol, any entitlement order, or other directions or instructions pursuant to any ControlAgreement or similar agreements providing control of any Collateral;          demand and receive possession of each Borrower’s Books; and          exercise all rights and remedies available to Bank under the Loan Documents or at law orequity, including all remedies provided under the Code (including disposal of the Collateralpursuant to the terms thereof).     Power of Attorney**. Each Borrower hereby irrevocably appoints Bank as its lawfulattorney-in-fact, exercisable upon the occurrence and during the continuance of an Event ofDefault, to: (a) endorse such Borrower’s name on any checks or other forms of payment or security;(b) sign such Borrower’s name on any invoice or bill of lading for any Account or drafts againstAccount Debtors; (c) settle and adjust disputes and claims about the Accounts directly with AccountDebtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust allclaims under such Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment basedthereon, or otherwise take any action to terminate or discharge the same; and (f) transfer theCollateral into the name of Bank or a third party as the Code permits. Each Borrower herebyappoints Bank as its lawful attorney-in-fact to sign such Borrower’s name on any documentsnecessary to perfect or continue the perfection of any security interest created hereunderregardless of whether an Event of Default has occurred until all Obligations have been satisfied infull and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoingappointment as each Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled withan interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’sobligation to provide Credit Extensions terminates.**     Protective Payments**. If any Borrower fails to obtain the insurance called for by Section 6.7or fails to pay any premium thereon or fails to pay any other amount which such Borrower isobligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance ormake such payment, and all amounts so paid by Bank are Bank Expenses and immediately due andpayable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bankwill make reasonable efforts to provide such Borrower with notice of Bank obtaining such insuranceat the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemedan agreement to make similar payments in the future or Bank’s waiver of any Event of Default.**     Application of Payments and Proceeds**. Unless an Event of Default has occurred and iscontinuing, Bank shall apply any funds in its possession, whether from Borrower account balances,payments, or proceeds realized as the result of any collection of Accounts or other disposition ofthe Collateral, first, to Bank Expenses, including without limitation, the reasonable costs,expenses, liabilities, obligations and attorneys’ fees incurred by Bank in the exercise of itsrights under this Agreement; second, to the interest due upon any of the Obligations; third, to theprincipal of the Obligations (other than the Non-Formula Borrowings) and any applicable fees andother charges, in such order as Bank shall determine in its sole discretion; and fourth, to theprincipal of the Non-Formula Borrowings and any applicable fees and other charges, in such order asBank shall determine in its sole discretion. Any surplus shall be paid to the relevant Borrower orother Persons legally entitled thereto; Borrowers shall remain liable to Bank for any deficiency.If an Event of Default has occurred and is continuing, Bank may apply any funds in its possession,whether from Borrower account balances, payments, proceeds realized as the result of any collectionof Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such orderas Bank shall determine in its sole discretion. Any surplus shall be paid to the relevant Borroweror to other Persons legally entitled thereto; Borrowers shall remain liable to Bank for anydeficiency. If Bank, in its good faith business judgment, directly or indirectly enters into adeferred payment or other credit transaction with any purchaser at any sale of Collateral, Bankshall have the option, exercisable at any time, of either reducing the Obligations by the principalamount of the purchase price or deferring the reduction of the Obligations until the actual receiptby Bank of cash therefor.**
 

 
     Bank’s Liability for Collateral**. So long as Bank complies with reasonable banking practicesregarding the safekeeping of the Collateral in the possession or under the control of Bank, Bankshall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss ordamage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act ordefault of any carrier, warehouseman, bailee, or other Person. Borrowers bear all risk of loss,damage or destruction of the Collateral.**     No Waiver; Remedies Cumulative**. Bank’s failure, at any time or times, to require strictperformance by any Borrower of any provision of this Agreement or any other Loan Document shall notwaive, affect, or diminish any right of Bank thereafter to demand strict performance and complianceherewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then isonly effective for the specific instance and purpose for which it is given. Bank’s rights andremedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights andremedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of anyEvent of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not awaiver, election, or acquiescence.**     Demand Waiver**. Each Borrower waives demand, notice of default or dishonor, notice of paymentand nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement,extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held byBank on which any Borrower is liable.**     NOTICES     All notices, consents, requests, approvals, demands, or other communication (collectively,“**Communication**”), other than Advance requests made pursuant to Section 3.4, by any party to thisAgreement or any other Loan Document must be in writing and be delivered or sent by facsimile atthe addresses or facsimile numbers listed below. Bank or any Borrower may change its noticeaddress by giving the other party written notice thereof. Each such Communication shall be deemedto have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three(3) Business Days after deposit in the U.S. mail, registered or certified mail, return receiptrequested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission(with such facsimile promptly confirmed by delivery of a copy by personal delivery or United Statesmail as otherwise provided in this Section 10); (c) one (1) Business Day after deposit with areputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered bymessenger, all of which shall be addressed to the party to be notified and sent to the address orfacsimile number indicated below. Advance requests made pursuant to Section 3.4 must be in writingand may be in the form of electronic mail, delivered to Bank by Borrowers at the e-mail address ofBank provided below and shall be deemed to have been validly served, given, or delivered when sent(with such electronic mail promptly confirmed by delivery of a copy by personal delivery or UnitedStates mail as otherwise provided in this Section 10). Bank or any Borrower may change itsaddress, facsimile number, or electronic mail address by giving the other party written noticethereof in accordance with the terms of this Section 10.
 

 
         If to any Borrower: QUALMARK CORPORATION      4580 Florence Street      Denver, CO 80238      Attn: Anthony Scalese      Fax: 303-254-8343      Email: ascalese@qualmark.com           If to Bank: Silicon Valley Bank      380 Interlocken Crescent, Suite 600      Broomfield, CO 80021      Attn: Ryan C. Lee      Fax: 303-469-9088      Email: rlee3@svb.com           with a copy to: Riemer & Braunstein LLP      Three Center Plaza      Boston, Massachusetts 02108      Attn: Charles W. Stavros, Esquire      Fax: (617) 880-3456      Email: CStavros@riemerlaw.com       CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE     Colorado law governs the Loan Documents without regard to principles of conflicts of law.Each Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts inCity and County of Denver, State of Colorado; provided, however, that nothing in this Agreementshall be deemed to operate to preclude Bank from bringing suit or taking other legal action in anyother jurisdiction to realize on the Collateral or any other security for the Obligations, or toenforce a judgment or other court order in favor of Bank. Each Borrower expressly submits andconsents in advance to such jurisdiction in any action or suit commenced in any such court, andeach Borrower hereby waives any objection that it may have based upon lack of personaljurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of suchlegal or equitable relief as is deemed appropriate by such court. Each Borrower hereby waivespersonal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, andother process may be made by registered or certified mail addressed to such Borrower at the addressset forth in Section 10 of this Agreement and that service so made shall be deemed completed uponthe earlier to occur of such Borrower’s actual receipt thereof or three (3) days after deposit inthe U.S. mails, proper postage prepaid. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTHHEREINABOVE, BANK SHALL SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANYBORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY ORAPPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINSTBORROWER OR ITS PROPERTY.     **TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURYTRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOANDOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHERCLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACHPARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL**.     GENERAL PROVISIONS     Successors and Assigns**. This Agreement binds and is for the benefit of the successors andpermitted assigns of each party. No Borrower may assign this Agreement or any rights orobligations under it without Bank’s prior written consent (which may be granted or withheld inBank’s discretion). Bank has the right, without the consent of or notice to Borrowers, to sell,transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’sobligations, rights, and benefits under this Agreement and the other Loan Documents.**
 

 
     Indemnification**. Each Borrower agrees to indemnify, defend and hold Bank and its directors,officers, employees, agents, attorneys, or any other Person affiliated with or representing Bankharmless against: (a) all obligations, demands, claims, and liabilities (collectively, “**Claims**”)asserted by any other party in connection with the transactions contemplated by the Loan Documents;and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising fromtransactions between Bank and Borrowers (including reasonable attorneys’ fees and expenses), exceptfor Claims and/or losses directly caused by Bank’s gross negligence or willful misconduct.**     Limitation of Actions**. Any claim or cause of action by any Borrower against Bank, itsdirectors, officers, employees, agents, accountants, attorneys, or any other Person affiliated withor representing Bank based upon, arising from, or relating to this Loan Agreement or any other LoanDocument, or any other transaction contemplated hereby or thereby or relating hereto or thereto, orany other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done byBank, its directors, officers, employees, agents, accountants or attorneys, shall be barred unlessasserted by such Borrower by the commencement of an action or proceeding in a court of competentjurisdiction by (a) the filing of a complaint within one year from the date any Borrower’s officersor directors had knowledge of the first act, the occurrence or omission upon which such claim orcause of action, or any part thereof, is based, and (b) the service of a summons and complaint onan officer of Bank, or on any other person authorized to accept service on behalf of Bank, withinthirty (30) days thereafter. Each Borrower agrees that such one-year period is a reasonable andsufficient time for such Borrower to investigate and act upon any such claim or cause of action.The one-year period provided herein shall not be waived, tolled, or extended except by the writtenconsent of Bank in its sole discretion. This provision shall survive any termination of this LoanAgreement or any other Loan Document.**     Time of Essence**. Time is of the essence for the performance of all Obligations in thisAgreement.**     Severability of Provisions**. Each provision of this Agreement is severable from every otherprovision in determining the enforceability of any provision.**     Amendments in Writing; Integration**. All amendments to this Agreement must be in writingsigned by both Bank and Borrowers. This Agreement and the Loan Documents represent the entireagreement about this subject matter and supersede prior negotiations or agreements. All prioragreements, understandings, representations, warranties, and negotiations between the parties aboutthe subject matter of this Agreement and the Loan Documents merge into this Agreement and the LoanDocuments.**     Counterparts**. This Agreement may be executed in any number of counterparts and by differentparties on separate counterparts, each of which, when executed and delivered, are an original, andall taken together, constitute one Agreement.**     Survival**. All covenants, representations and warranties made in this Agreement continue infull force until this Agreement has terminated pursuant to its terms and all Obligations (otherthan inchoate indemnity obligations and any other obligations which, by their terms, are to survivethe termination of this Agreement) have been satisfied. The obligation of Borrowers in Section12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim orcause of action shall have run.**     Confidentiality**. In handling any confidential information, Bank shall exercise the samedegree of care that it exercises for its own proprietary information, but disclosure of informationmay be made: (a) to Bank’s Subsidiaries or Affiliates in connection with their business withBorrowers; (b) to prospective transferees or purchasers of any interest in the Credit Extensions(provided, however, Bank shall use commercially reasonable efforts to obtain such prospectivetransferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law,regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required inconnection with Bank’s examination or audit; and (e) as Bank considers appropriate in exercisingremedies under this Agreement. Confidential information does not include information that either:(i) is in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of thepublic domain after disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank doesnot know that the third party is prohibited from disclosing the information.**     Attorneys’ Fees, Costs and Expenses**. In any action or proceeding between any Borrower andBank arising out of or relating to the Loan Documents, Bank shall be entitled to recover itsreasonable attorneys’ fees and other costs and expenses incurred, in addition to any other reliefto which it may be entitled.**
 

 
     Borrower Liability. **Each Borrower hereby appoints QualMark as agent for the Borrowers for allpurposes hereunder, including with respect to requesting Credit Extensions hereunder. Each Borrowerhereunder shall be obligated to repay all Credit Extensions made hereunder, regardless of whichBorrower actually receives said Credit Extension, as if each Borrower hereunder directly received****all****Credit Extensions. Each Borrower waives any suretyship defenses available to it underthe Code or any other applicable law. Each Borrower waives any right to require Bank to: (i)proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or(iii) pursue any other remedy. Bank may exercise or not exercise any right or remedy it hasagainst any Borrower or any security it holds (including the right to foreclose by judicial ornon-judicial sale) without affecting any Borrower’s liability. Notwithstanding any other provisionof this Agreement or other related document, each Borrower irrevocably waives all rights that itmay have at law or in equity (including, without limitation, any law subrogating Borrower to therights of Bank under this Agreement) to seek contribution, indemnification or any other form ofreimbursement from any other Borrower, or any other Person now or hereafter primarily orsecondarily liable for any of the Obligations, for any payment made by Borrower with respect to theObligations in connection with this Agreement or otherwise and all rights that it might have tobenefit from, or to participate in, any security for the Obligations as a result of any paymentmade by Borrower with respect to the Obligations in connection with this Agreement or otherwise.Any agreement providing for indemnification, reimbursement or any other arrangement prohibitedunder this Section shall be null and void. If any payment is made to a Borrower in contraventionof this Section, such Borrower shall hold such payment in trust for Bank and such payment shall bepromptly delivered to Bank for application to the Obligations, whether matured or unmatured.Notwithstanding anything to the contrary contained in this Agreement, all of Borrowers’representations and warranties, indebtedness, liabilities and other Obligations of any kinddescribed in this Agreement and any other Loan Document shall be joint and several in nature andaffect their jointly and/or severally owned property.**     Right of Set Off**. Each Borrower hereby grants to Bank, a lien, security interest and rightof set off as security for all Obligations to Bank, whether now existing or hereafter arising uponand against all deposits, credits, collateral and property, now or hereafter in the possession,custody, safekeeping or control of Bank or any entity under the control of Bank (including a Banksubsidiary) or in transit to any of them. At any time after the occurrence and during thecontinuance of an Event of Default, without demand or notice, Bank may set off the same or any partthereof and apply the same to any liability or obligation of such Borrower even though unmaturedand regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALLRIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERALWHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCHDEPOSITS, CREDITS OR OTHER PROPERTY OF ANY BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY ANDIRREVOCABLY WAIVED.**     Borrower Agreement; Cross-Collateralization; Cross-Default; Conflicts**. Both this Agreementand the Borrower Agreement shall continue in full force and effect, and all rights and remediesunder this Agreement and the Borrower Agreement are cumulative. The term “Obligations” as used inthis Agreement and in the Borrower Agreement shall include without limitation the obligation to paywhen due all loans made pursuant to the Borrower Agreement (the “**Exim Loans**”) and all interestthereon and the obligation to pay when due all Advances made pursuant to the terms of thisAgreement and all interest thereon. Without limiting the generality of the foregoing, the securityinterest granted herein covering all “Collateral” as defined in this Agreement and as defined inthe Borrower Agreement shall secure all Exim Loans and all Advances and all interest thereon, andall other Obligations. Any Event of Default under this Agreement shall also constitute a defaultunder the Borrower Agreement, and any default under the Borrower Agreement shall also constitute anEvent of Default under this Agreement. In the event Bank assigns its rights under this Agreementand/or under any note evidencing Exim Loans and/or its rights under the Borrower Agreement and/orunder any note evidencing Advances, to any third party, including, without limitation, the EximBank, whether before or after the occurrence of any Event of Default, Bank shall have the right(but not any obligation), in its sole discretion, to allocate and apportion Collateral to theBorrower Agreement and/or note assigned and to specify the priorities of the respective securityinterests in such Collateral between itself and the assignee, all without notice to or consent ofthe Borrowers. Should any term of the Agreement conflict with any term of the Borrower Agreement,the more restrictive term in either agreement shall govern Borrowers.**     DEFINITIONS
 

 
     Definitions**. Except as otherwise defined, terms that are capitalized in this Agreement shallhave the meanings assigned in the Domestic Agreement. As used in this Agreement, the followingterms have the following meanings:**     “**Account**” is any “account” as defined in the Code with such additions to such term as mayhereafter be made, and includes, without limitation, all accounts receivable and other sums owingto such Borrower.     “**Account Debtor**” is any “account debtor” as defined in the Code with such additions to suchterm as may hereafter be made.     “**Adjustment Date**” is the first Business Day following the date Bank receives the monthlyfinancial statements required by Section 6.2 commencing with the financial statements for the monthending November 30, 2007.     “**Advance**” or “**Advances**” means an advance (or advances) under the Revolving Line.     “**Affiliate**” of any Person is a Person that owns or controls directly or indirectly the Person,any Person that controls or is controlled by or is under common control with the Person, and eachof that Person’s senior executive officers, directors, partners and, for any Person that is alimited liability company, that Person’s managers and members.     “**Agreement**” is defined in the preamble hereof.     “**Applicable Margin**” is:          (a) From and after the Effective Date until the first Adjustment Date, the percentages setforth in Tier III of the pricing grid below; and          (b) From and after the first Adjustment Date, the Applicable Margin shall be determined fromthe following pricing grid based upon the Quick Ratio as of the month ended immediately precedingsuch Adjustment Date; provided, however, that notwithstanding anything to the contrary setforth herein, upon the occurrence of an Event of Default, Bank may immediately increase theApplicable Margin to that set forth in Tier III (even if the Quick Ratio requirements for adifferent Tier have been met) and interest shall accrue at the Default Rate; providedfurther if the foregoing financial statements are at any time restated or otherwise revised(including as a result of an audit) or if the information set forth in such financial statementsotherwise proves to be false or incorrect such that the Applicable Margin would have been higherthan was otherwise in effect during any period, without constituting a waiver of any Default orEvent of Default arising as a result thereof, interest due under this Agreement shall beimmediately recalculated at such higher rate for any applicable periods and shall be due andpayable on demand.       **Tier** **Quick Ratio** **Prime Rate Margin**         III Less than 1.25 2.00%           Equal to or greater than 1.25 but less than or    II equal to 1.50 1.50%         I Greater than 1.50 1.00%       “**Availability Amount**” is (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Baseminus (b) the outstanding principal balance of any Advances Notwithstanding the foregoing, theaggregate amount of all Credit Extensions under this Agreement outstanding at any time togetherwith all Credit Extensions (as defined in the Domestic Agreement) under the Domestic Agreementshall not exceed $2,500,000.     “**Bank**” is defined in the preamble hereof.
 

 
     “**Bank Expenses**” are all reasonable audit fees and expenses, and reasonable costs, and expenses(including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering,defending and enforcing the Loan Documents (including, without limitation, those incurred inconnection with appeals or Insolvency Proceedings) or otherwise incurred with respect to anyBorrower.     “**Borrower(s)**” is defined in the preamble hereof.     “**Borrower Agreement**” is defined in Section 2.6.     “**Borrowers’ Books**” are all Borrowers’ books and records including ledgers, federal and statetax returns, records regarding Borrowers’ assets or liabilities, the Collateral, businessoperations or financial condition, and all computer programs or storage or any equipment containingsuch information.     “**Borrowing Base**” is 90% of Eligible EXIM Accounts, as determined by Bank from Borrowers’ mostrecent Borrowing Base, provided, however, that Bank may decrease the foregoing percentage in itsgood faith business judgment after performing any audit of Borrowers’ Collateral or based onevents, conditions, contingencies, or risks which, as determined by Bank, may adversely affectCollateral.     “**Borrowing Base Certificate**” is defined in the Domestic Agreement.     “**Business Day**” is any day that is not a Saturday, Sunday or a day on which Bank is closed.     “**Code**” is the Uniform Commercial Code, as the same may, from time to time, be enacted and ineffect in the State of Colorado; provided, that, to the extent that the Code is used to define anyterm herein or in any Loan Document and such term is defined differently in different Articles orDivisions of the Code, the definition of such term contained in Article or Division 9 shall govern;provided further, that in the event that, by reason of mandatory provisions of law, any or all ofthe attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on anyCollateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than theState of Colorado, the term “**Code**” shall mean the Uniform Commercial Code as enacted and in effectin such other jurisdiction solely for purposes on the provisions thereof relating to suchattachment, perfection, priority, or remedies and for purposes of definitions relating to suchprovisions.     “**Collateral**” is any and all properties, rights and assets of the relevant Borrower describedon Exhibit A.     “**Communication**” is defined in Section 10.     “**Contingent Obligation**” is, for any Person, any direct or indirect liability, contingent ornot, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligationof another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discountedor sold with recourse by that Person, or for which that Person is directly or indirectly liable;(b) any obligations for undrawn letters of credit for the account of that Person; and (c) allobligations from any interest rate, currency or commodity swap agreement, interest rate cap orcollar agreement, or other agreement or arrangement designated to protect a Person againstfluctuation in interest rates, currency exchange rates or commodity prices; but “ContingentObligation” does not include endorsements in the ordinary course of business. The amount of aContingent Obligation is the stated or determined amount of the primary obligation for which theContingent Obligation is made or, if not determinable, the maximum reasonably anticipated liabilityfor it determined by the Person in good faith; but the amount may not exceed the maximum of theobligations under any guarantee or other support arrangement.     “**Control Agreement**” is defined in the Domestic Agreement.     “**Country Limitation Schedule**” is attached hereto as Exhibit E.     “**Credit Extension**” is any Advance or any other extension of credit by Bank for a Borrower’sbenefit.     **“Current Liabilities”**are all obligations and liabilities of Borrowers to Bank, plus, withoutduplication, the aggregate amount of Borrowers’ Total Liabilities that mature within one (1) year.     “**Default**” means any event which with notice or passage of time or both, would constitute anEvent of Default.
 

 
     “**Default Rate**” is defined in Section 2.3(b).     “**Designated Deposit Account**” is QualMark’s deposit account, account number 360027070,maintained with Bank.     “**Dollars***,*” “**dollars**” and “**$**” each mean lawful money of the United States.     “**Domestic Agreement**” is defined in Section 1(a).     “**Domestic Loan Documents**” is defined in Section 1(a).     “**Effective Date**” is the date Bank executes this Agreement and as indicated on the signaturepage hereof.     “**Eligible EXIM Accounts**” are Accounts which arise in the ordinary course of the relevantBorrower’s business from non-U.S. Account Debtors and that meet all such Borrower’s representationsand warranties in Section 5.3, conform in all respects to the Borrower Agreement, and which Bank,in its good faith business judgment, shall deem eligible for borrowing.. Bank reserves the rightat any time and from time to time after the Effective Date, to adjust any of the criteria set forthbelow and to establish new criteria in its good faith business judgment by giving such Borrowernotice. Unless Bank agrees otherwise in writing, Eligible EXIM Accounts shall not include:     (a) Accounts which do not arise from the sale of Inventory in the ordinary course of theBorrowers’ business;     (b) Accounts which are not subject to a valid, perfected and enforceable first prioritysecurity interest in favor of Bank;     (c) Accounts as to which any covenant, representation or warranty contained in the LoanDocuments or the Domestic Loan Documents relating to such Account has been breached;     (d) Accounts which are not owned by a Borrower or are subject to any right, claim or interestof another party other than the Lien in favor of Bank;     (e) Accounts generated by the sale or provision of defense articles or services, unlessapproved in writing by the EXIM Bank;     (f) Accounts which are due and payable from a foreign Buyer located or to be located in acountry in which the EXIM Bank is legally prohibited from doing business as set forth in thecurrent Country Limitation Schedule or which do not otherwise comply with the requirements of theCountry Limitation Schedule;     (g) Accounts which by their terms are due and payable more than 180 days from their date ofinvoice;     (h) Accounts which are outstanding for more than 60 days past their due date as set forth inthe applicable invoice (the “**EXIM Eligibility Period**”) unless insured through insurance provided bythe EXIM Bank, in which case a period of 90 days past their due date shall apply;     (i) Accounts for which the Account Debtor is Borrower’s Affiliate (including any otherBorrower), officer, employee, or agent;     (j) Accounts backed by letters of credit but where the goods covered have not yet been shippedor where the services covered have not yet been provided;     (k) Accounts denominated in Foreign Currency, unless approved in writing by EXIM Bank;     (l) Accounts which do not comply with the terms of sale as set forth by EXIM Bank;     (m) Accounts in which the Account Debtor disputes liability or makes any claim and Bank orEXIM Bank believes, in its good faith business judgment, there may be a basis for dispute (but onlyup to the disputed or
 

 
claimed amount), or if the Account Debtor is subject to an InsolvencyProceeding, or becomes insolvent, or goes out of business;     (n) Accounts for which the goods giving rise to such Accounts have not been shipped orservices have not been rendered, or for which an export order specifies a timing for invoicing suchgoods and such goods have not been invoiced in accordance with such export order, or such Accountsdo not otherwise represent a final sale;     (o) Accounts which are subject to any offset, deduction, defense, dispute or counterclaim, orAccounts owing from an Account Debtor which is also a creditor or supplier of any Borrower;     (p) Accounts for which a Borrower has made an agreement with the Account Debtor for anydeduction therefrom, except for discounts or allowances made in the ordinary course of business forprompt payment;     (q) Accounts for which any of the goods giving rise to such Accounts have been returned,rejected or repossessed;     (r) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts havenot been paid within ninety (90) days of invoice date;     (s) Accounts which are subject to any contingencies (including Accounts arising from abill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, or any otherrepurchase or return basis or is evidenced by chattel paper); and     (t) Accounts which Bank or EXIM Bank, in either’s reasonable business judgment, deemsuncollectible or unacceptable for inclusion as Eligible EXIM Accounts, including, but not limitedto, Accounts for which finance charges or late charges have been imposed on the Account Debtor by aBorrower as a result of such Account Debtor’s past due status.     “**Equipment**” is all “equipment” as defined in the Code with such additions to such term as mayhereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles(including motor vehicles and trailers), and any interest in any of the foregoing.     “**Event of Default**” is defined in Section 8.     “**Exim Bank**” means Export-Import Bank of the United States.     “**Exim Bank Policy**” is defined in Section 6.4.     “**EXIM Eligibility Period**” is defined in the defined term “Eligible EXIM Account.”     “**Exim Guaranty**” is defined in Section 2.5.     “**Exim Loans**” is defined in Section 12.13.     “**Exim Note**” is defined in Section 2.1.2.     “**Export-Related Accounts Receivable**” is defined in the Borrower Agreement.     “**Export-Related Inventory**” is defined in the Borrower Agreement.     “**Export-Related General Intangibles**” is defined in the Borrower Agreement.     **“Foreign Currency”**means lawful money of a country other than the United States.     “**Funding Date**” is any date on which a Credit Extension is made to or on account of anyBorrower which shall be a Business Day.
 

 
     “**GAAP**” is generally accepted accounting principles set forth in the opinions andpronouncements of the Accounting Principles Board of the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial Accounting Standards Board or insuch other statements by such other Person as may be approved by a significant segment of theaccounting profession, which are applicable to the circumstances as of the date of determination.     “**General Intangibles**” is all “general intangibles” as defined in the Code in effect on thedate hereof with such additions to such term as may hereafter be made, and includes withoutlimitation, all copyright rights, copyright applications, copyright registrations and likeprotections in each work of authorship and derivative work, whether published or unpublished, anypatents, trademarks, service marks and, to the extent permitted under applicable law, anyapplications therefor, whether registered or not, any trade secret rights, including any rights tounpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchiseagreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,income and other tax refunds, security and other deposits, options to purchase or sell real orpersonal property, rights in all litigation presently or hereafter pending (whether in contract,tort or otherwise), insurance policies (including without limitation key man, property damage, andbusiness interruption insurance), payments of insurance and rights to payment of any kind.     “**Guarantor**” is any present or future guarantor of the Obligations.     “**Indebtedness**” is (a) indebtedness for borrowed money or the deferred price of property orservices, such as reimbursement and other obligations for surety bonds and letters of credit, (b)obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital leaseobligations, and (d) Contingent Obligations.     “**Insolvency Proceeding**” is any proceeding by or against any Person under the United StatesBankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefitof creditors, compositions, extensions generally with its creditors, or proceedings seekingreorganization, arrangement, or other relief.     “**Inventory**” is all “inventory” as defined in the Code in effect on the date hereof with suchadditions to such term as may hereafter be made, and includes without limitation all merchandise,raw materials, parts, supplies, packing and shipping materials, work in process and finishedproducts, including without limitation such inventory as is temporarily out of Borrower’s custodyor possession or in transit and including any returned goods and any documents of titlerepresenting any of the above.     “**Investment**” is any beneficial ownership interest in any Person (including stock, partnershipinterest or other securities), and any loan, advance or capital contribution to any Person.     “**Lien**” is a mortgage, lien, deed of trust, charge, pledge, security interest or otherencumbrance.     “**Loan Documents**” are, collectively, this Agreement, the Domestic Agreement, the Domestic LoanDocuments, the Borrower Agreement, the EXIM Guaranty, the Exim Note, any note, or notes orguaranties executed by any Borrower or any Guarantor, and any other present or future agreementbetween any Borrower, any Guarantor and/or for the benefit of Bank in connection with thisAgreement, all as amended, restated, or otherwise modified.     “**Obligations**” are Borrowers’ obligation to pay when due any debts, principal, interest, BankExpenses and other amounts Borrowers owe Bank now or later, whether under this Agreement, the EXIMLoan Agreement, the Loan Documents, or otherwise, including, without limitation, all obligationsrelating to letters of credit, cash management services, and foreign exchange contracts, if any,and including interest accruing after Insolvency Proceedings begin and debts, liabilities, orobligations of any Borrower assigned to Bank, and the performance of each Borrower’s duties underthe Loan Documents.     “**Overadvance**” is defined in Section 2.2.     **“Payment”**means all checks, wire transfers and other items of payment received by Bank(including proceeds of Accounts and payment of all the Obligations in full) for credit toBorrowers’ outstanding Credit Extensions or, if the balance of the Credit Extensions has beenreduced to zero, for credit to its Deposit Accounts.     “**Permitted Liens**” are defined in the Domestic Agreement.
 

 
     “**Person**” is any individual, sole proprietorship, partnership, limited liability company, jointventure, company, trust, unincorporated organization, association, corporation, institution, publicbenefit corporation, firm, joint stock company, estate, entity or government agency.     “**Prime Rate**” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowestrate.     “**Quick Assets”**is, on any date, Borrowers’ consolidated, unrestricted cash, Cash Equivalents,net billed accounts receivable and investments with maturities of fewer than 12 months determinedaccording to GAAP.     **“Quick Ratio”**is the ratio of Quick Assets to Current Liabilities.     **“Reserves”**means, as of any date of determination, such amounts as Bank may from time to timeestablish and revise in good faith reducing the amount of Advances, Letters of Credit and otherfinancial accommodations which would otherwise be available to Borrowers under the lendingformulas: (a) to reflect events, conditions, contingencies or risks which, as determined by Bankin good faith, do or may affect (i) the Collateral or any other property which is security for theObligations or its value (including without limitation any increase in delinquencies of Accounts),(ii) the assets or business of Borrowers or any guarantor, or (iii) the security interests andother rights of Bank in the Collateral (including the enforceability, perfection and prioritythereof); or (b) to reflect Bank’s good faith belief that any collateral report or financialinformation furnished by or on behalf of any Borrower or any guarantor to Bank is or may have beenincomplete, inaccurate or misleading in any material respect; or (c) in respect of any state offacts which Bank determines in good faith constitutes an Event of Default or may, with notice orpassage of time or both, constitute an Event of Default.     “**Responsible Officer**” is any of the Chief Executive Officer, President, Chief FinancialOfficer and Controller of QualMark.     “**Revolving Line**” is an Advance or Advances in an aggregate amount of up to $1,750,000outstanding under this Agreement at any time.     **“Revolving Line Maturity Date”**is the earlier of (a) December ___, 2008 or (b) thetermination of the Domestic Agreement.     “**Subsidiary**” means, with respect to any Person, any Person of which more than 50% of thevoting stock or other equity interests is owned or controlled, directly or indirectly, by suchPerson or one or more Affiliates of such Person.     “**Total Liabilities**” is on any day, obligations that should, under GAAP, be classified asliabilities on Borrowers’ consolidated balance sheet, including all Indebtedness, and currentportion of Subordinated Debt permitted by Bank to be paid by Borrowers, but excluding all otherSubordinated Debt.     **“Transaction Report”**is that certain form attached hereto as Exhibit C.     **“Unused Revolving Line Facility Fee”**is defined in Section 2.4(c).**[**Signature page follows.**]**
 

 
     **IN WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed as of theEffective Date.     BORROWERS: