EXHIBIT
        10.5

      


       

      AMENDMENT
        NUMBER TEN

      TO
        LOAN AND SECURITY AGREEMENT

      
 

      This
        AMENDMENT NUMBER TEN TO LOAN AND SECURITY AGREEMENT
        (this
“Amendment”)
        is
        entered into as of June 22, 2005, among ACCERIS
        MANAGEMENT AND ACQUISITION, LLC, a
        Minnesota limited liability company (“Lender”),
        and
ACCERIS
        COMMUNICATIONS CORP., a
        Delaware corporation formerly known as WorldxChange Corp. (“ACC”)
        and
ACCERIS
        COMMUNICATIONS INC., a
        Florida
        corporation formerly known as I-Link, Incorporated (“ACI,”
        and,
        together with ACC, each individually a “Borrower”
        and
        together the “Borrowers”),
        with
        reference to the following:

       

      WHEREAS,
        ACC has
        previously entered into, and ACI has previously become a party to, that certain
        Loan and Security Agreement, dated as of December 10, 2001, with Wells
        Fargo Foothill, Inc., a California corporation formerly known as Foothill
        Capital Corporation (the “Original
        Lender”),
        as
        amended by (i) that certain Amendment Number One to Loan and Security Agreement,
        dated as of March 6, 2002, (ii) that certain Amendment Number Two
        to Loan
        and Security Agreement, dated as of June 11, 2002, (iii) that certain
        Amendment Number Three to Loan and Security Agreement, dated as of July 31,
        2003, (iv) that certain Amendment Number Four to Loan and Security Agreement,
        dated as of October 14, 2003, (v) that certain Amendment Number Five to Loan
        and
        Security Agreement, dated as of April 13, 2004, (vi) that certain Amendment
        Number Six to Loan and Security Agreement, dated as of July 15, 2004, (vii)
        that
        certain Amendment Number Seven to Loan and Security Agreement, dated as of
        July
        15, 2004, (viii) that certain Amendment Number Eight to Loan and Security
        Agreement, dated as of October 14, 2004, and (ix) that certain Amendment
        Number
        Nine to Loan and Security Agreement, dated as of February 9, 2005 (as so
        modified and as otherwise heretofore amended, modified or supplemented from
        time
        to time, the “Agreement”),
        pursuant to which the Original Lender made certain loans and financial
        accommodations available to Borrower;

       

      WHEREAS,
        pursuant to that certain Assignment and Acceptance Agreement dated as of
        even
        date herewith by an between the Original Lender and the Lender and acknowledged
        by the Borrowers and by the Guarantors referred to therein (the “Loan
        Assignment Agreement”),
        the
        Original Lender sold to the Lender and the Lender purchased from the Original
        Lender the Agreement, together with the other Loan Documents, interceditor
        agreements and other agreements referred to in the Agreement, and all rights
        related thereto; and 

       

      WHEREAS,
        to
        induce the Lender to enter into the Loan Assignment Agreement, the Borrowers
        have agreed to amend the Agreement as set forth herein, and the Lender has
        agreed to amend the Agreement in certain other respects as set forth
        herein.

       

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

       

      1. Definitions.
        Terms
        used herein without definitions shall have the meanings ascribed to them
        in the
        Agreement.

       

      2. Existing
        Indebtedness.
        Each
        Borrower represents and warrants to the Lender that each of the Agreement,
        the
        other Loan Documents and all other related loan documents entered into with
        the
        Original Lender continue in full force and effect in accordance with its
        original terms, and the obligations of each Borrower thereunder are not subject
        to any defense, counterclaim or right of setoff, or, to the extent that any
        such
        defense, counterclaim or setoff exists, each of the same are hereby absolutely
        and forever waived and released. Each Borrower acknowledges and agrees (i)
        that,
        as of the date hereof, the outstanding principal amount of Advances plus
        interest and all outstanding fees and expenses are $2,689,689.18 and (ii)
        that
        such obligations (the aggregate amount thereof being referred to as the
“Existing
        Indebtedness”),
        together with any other existing obligations of either Borrower acquired
        by the
        Lender from the Original Lender under the Loan Assignment Agreement, are
        now
        evidenced by and repayable in accordance with the Agreement. Each Borrower
        consents to the transactions contemplated by the Loan Assignment Agreement.
        

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3. Amendments
        to the Agreement.

       

      (a)  Section
        1.1
        of the
        Agreement hereby is amended by adding the following defined terms in their
        proper alphabetical order or amending and restating the following definitions
        in
        their entirety, as the case may be: 

       

      “Asset
        Sale Agreement”
        means
        that certain Asset Purchase Agreement by and among each Person comprising
        Borrower, Counsel, Acceris Management and Acquisition LLC, and North Central
        Equity LLC.

       

      “Borrower”
        means,
        collectively and jointly and severally, Acceris Communications Inc., a Florida
        corporation (formerly known as I-Link, Incorporated), also referred to herein
        as
“Parent,” and Acceris Communications Corp. (formerly known as WorldxChange
        Corp.), a Delaware corporation.

       

      “Existing
        Indebtedness”
        means,
        as of June 22, 2005, outstanding Advances under this Agreement in the amount
        of
        principal, interest and related fees and expenses is $2,689,689.18, and any
        other existing obligations of Borrower evidenced by and repayable in accordance
        with this Agreement.

       

      “Loan
        Documents”
        means
        this Agreement, the ACTI Guarantor Security Agreement, the Cash Management
        Agreements, the Control Agreements, the Counsel/ACTI Guaranty, the Counsel
        Stock
        Pledge Agreement, the Counsel 2004 Intercreditor Agreement, the Disbursement
        Letter, the Due Diligence Letter, the Fee Letter, the Guaranty, the
        Intercreditor Agreement, the Laurus Intercreditor Agreement, the Officer’s
        Certificate, the Parent Stock Pledge Agreement, the Stock Pledge Agreement,
        the
        Subsidiary Stock Pledge Agreement, collateral access agreements for Pittsburgh,
        San Diego, and other Borrower locations, any note or notes executed by a
        Borrower in connection with this Agreement and payable to Lender, and any
        other
        agreement, instrument or document entered into, now or in the future, by
        a
        Borrower or Guarantor in connection with this Agreement or otherwise relating
        to, executed in connection with, or arising out of the transactions contemplated
        by this Agreement.

       

      “Obligations”
        means
        all loans, Advances, debts, principal, interest (including any interest that,
        but for the provisions of the Bankruptcy Code, would have accrued), premiums,
        liabilities (including all amounts charged to Borrower’s Loan Account pursuant
        hereto), obligations, fees (including the fees provided for in the Fee Letter),
        charges, costs, Lender Expenses (including any fees or expenses that, but
        for
        the provisions of the Bankruptcy Code, would have accrued), lease payments,
        guaranties, covenants, and duties of any kind and description owing by Borrower
        to Lender pursuant to or evidenced by the Loan Documents and irrespective
        of
        whether for the payment of money, whether direct or indirect, absolute or
        contingent, due or to become due, now existing or hereafter arising, and
        including all interest not paid when due and all Lender Expenses that Borrower
        is required to pay or reimburse by the Loan Documents, by law, or otherwise.
        Any
        reference in this Agreement or in the Loan Documents to the Obligations shall
        include all amendments, changes, extensions, modifications, renewals
        replacements, substitutions, and supplements, thereto and thereof, as
        applicable, both prior and subsequent to any Insolvency Proceeding.

       

      “Maximum
        Revolver Amount”
        means
        $5,000,000, including without limitation the Existing Indebtedness.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      “Tenth
        Amendment”
        means
        that certain Amendment Number Ten to Loan and Security Agreement dated as
        of
        June 22, 2005, between each Person comprising Borrower and Lender. 

       

      (b)  Section
        1.1
        of the
        Agreement hereby is amended by deleting the definitions of “Acceris Accounts,”“Acceris Availability,”“Acceris Base Rate Margin,”“Acceris Borrowing Base,”“Acceris Dilution,”“Acceris Dilution Reserve,”“Acceris Direct Billed
        Accounts,”“Acceris Direct Billed Borrowing Base,”“Acceris Direct Billed
        Dilution,”“Acceris Direct Billed Dilution Reserve,”“Acceris Loan Account,”
        Acceris Revolver Advances,”“Acceris Revolver Usage,”“ACT Transactions,”“Aggregate Availability,”“Applicable Prepayment Premium,”“Availability,”“Bank
        Product Agreements,”“Bank Product Obligations,”“Bank Products,”“Bank Product
        Reserves,”“Base Rate,”“Base Rate Loan,”“Base Rate Margin,”“Billing and
        Collection Charges Reserve,”“Billing Reserve,”“Borrowing Base,”“Borrowing
        Base Certificate,”“Dilution,”“Dilution Reserve,”“Direct Billed Accounts,”“Eligible Accounts,”“Eligible RSL Direct Billed Accounts,”“Eligible Acceris
        Accounts,”“Eligible Acceris Direct Billed Accounts,”“Excess Availability,”“Excess RSL Availability,”“Former RSL Customers,”“Funding Date,”“Funding
        Losses,”“Hedge Agreement,”“ILEC,”“L/C,”“L/C Disbursement,”“L/C
        Undertaking,”“LED Confirmation Statement,”“LEC Reserves,”“Letter of Credit,”“Letter of Credit Usage,”“Net Issuance Proceeds,”“Overadvance,”“Required
        Availability,”“Revolver Block Amount,”“Revolver Usage,”“RSL Availability,”“RSL Borrowing Base,”“RSL Clearinghouse Accounts,”“RSL Dilution,”“RSL
        Dilution Reserve,”“RSL Direct Billed Accounts,”“RSL Note,”“RSL Loan Account,”“RSL Revolver Advances,”“RSL Revolver Usage,”“Telecommunication Taxes,”“Telecommunication Tax Reserve,”“Underlying Issuer,”“Underlying Letter of
        Credit,” and “Wells Fargo.”

       

      (c)  Sections
        2.1, 2.2, 2.3, 2.4, 2.5 and 2.6
        of the
        Agreement are hereby amended and restated in their entirety as set forth
        on
        Schedule 2A hereto.

       

      (d) Section
        2.8
        of the
        Agreement is hereby amended to replace the reference to “Base Rate Loans”
        therein to “Advances.”

       

      (e) Sections
        2.9, 2.10, 2.11, 2.12, 2.13 and 2.14
        of the
        Agreement are hereby amended and restated in their entirety as set forth
        on
        Schedule 2B hereto.

       

      (f) Section
        2.16
        of the
        Agreement is hereby deleted in its entirety. 

       

      (g) The
        introductory clause in Section
        3.3
        is
        hereby amended and restated as follows:

       

      Lender’s
        discretionary consideration of any request for an Advance (or to extend any
        other credit hereunder) shall be subject to the following conditions
        precedent:

       

      (h) Sections
        3.4, 3.5 and 3.6
        of the
        Agreement are hereby amended and restated in their entirety as set forth
        on
        Schedule 3 hereto.

       

      (i) Section
        6.2 of the Agreement is hereby amended to (i) delete, in subsection (a),
        the
        phrase “and a calculation of the Borrowing Base as of such date,” (ii) by
        amending and restating subsection (d) in its entirety to read “intentionally
        omitted,” and (iii) delete, in subsection (e), the phrase “together with a
        reconciliation to the detailed calculation of the Borrowing Base previously
        provided to Lender.”

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (j) The
        second sentence of Section 6.18 is hereby deleted in its entirety.

       

      (k) Section
        7.1
        of the
        Agreement is hereby amended by amending and restating each of subsections
        (e)
        and (f) thereof in their entirety to read “intentionally omitted.”

       

      (l) Section
        7.3(c)
        of the
        Agreement is hereby amended and restated in its entirety as
        follows:

       

      (c) Convey,
        sell, lease, license, assign, transfer, or otherwise dispose of, in one
        transaction or series of transactions, all or any substantial part of its
        assets
        (other than pursuant to a Permitted Disposition or pursuant to the Asset
        Sale
        Agreement).

       

      (m) Section
        7.20
        of the
        Agreement is hereby deleted in its entirety. 

       

      (n) Section
        8.13 of the Agreement is hereby amended and restated in its entirety as
        follows:

       

      If
        the
        obligation of Guarantor under the Guaranty, or of the guarantors under the
        Counsel/ACTI Guaranty, or of any other guarantor under any guaranty of any
        of
        the Obligations is limited, terminated or revoked by operation of law or
        by the
        applicable guarantor thereunder; or

       

      (o) Section
        8.15
        of the
        Agreement is hereby amended to replace the period at its end with “; or”, and
        the Agreement is hereby further amended to add thereafter the following new
        Section
        8.16:

       

      8.16 If
        the
        Asset Sale Agreement is terminated or the transactions contemplated thereby
        are
        not consummated in accordance with the provisions thereof.

       

      (p) Section
        12  of
        the
        Agreement is
        hereby
        amended to amend and restate the notice address for Lender as
        follows:

       

      If
        to
        Lender:  Acceris
        Management and Acquisition, LLC, 60 South Sixth Street

      Suite
        2535, Minneapolis, MN 55402

       

      (q) Section
        16.10
        of the
        Agreement is hereby deleted in its entirety.

       

      (r) Exhibit
        C-1 of the Agreement is hereby amended to (i) address the form of Compliance
        Certificate to Lender, and (ii) restate in its entirety the first sentence
        of
        the Compliance Certificate to read, “Reference is made to that certain Loan and
        Security Agreement, dated as of December 10, 2001, among Acceris
        Communications Inc. (“ACI”), Acceris Communications Corp. (formerly known as
        WorldxChange Corp., “ACC,” and, with ACI, “Borrower”) and Acceris Management and
        Acquisition, LLC (“Lender”), as assignee of Wells Fargo Foothill, Inc. (formerly
        known as Foothill Capital Corporation), as amended.”   

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4. Representations
        and Warranties.
        Each of
        the Borrowers hereby represents and warrants to Lender that (a) the
        execution, delivery, and performance of this Amendment and of the Agreement,
        as
        amended by this Amendment, are within its corporate powers, have been duly
        authorized by all necessary corporate action, and are not in contravention
        of
        any law, rule, or regulation, or any order, judgment, decree, writ, injunction,
        or award of any arbitrator, court, or governmental authority, or of the terms
        of
        its charter or bylaws, or of any contract or undertaking to which it is a
        party
        or by which any of its properties may be bound or affected, (b) this
        Amendment and the Agreement, as amended by this Amendment, constitute the
        legal,
        valid, and binding obligation of such Borrower, enforceable against such
        Borrower in accordance with its terms, (c) this Amendment has been
        duly
        executed and delivered by such Borrower, and (d) no Default or Event of Default
        has occurred and is continuing. Any misrepresentation or breach of warranty
        under this Amendment shall be deemed an Event of Default.

       

      5. Choice
        of Law.
        The
        validity of this Amendment, its construction, interpretation and enforcement,
        and the rights of the parties hereunder, shall be determined under, governed
        by,
        and construed in accordance with the laws of the State of
        California.

       

      6. Counterparts;
        Facsimile Execution.
        This
        Amendment may be executed in any number of counterparts and by different
        parties
        and separate counterparts, each of which when so executed and delivered,
        shall
        be deemed an original, and all of which, when taken together, shall constitute
        one and the same instrument. Delivery of an executed counterpart of a signature
        page to this Amendment by facsimile transmission shall be effective as delivery
        of a manually executed counterpart of this Amendment. Any party delivering
        an
        executed counterpart of this Amendment by facsimile transmission also shall
        deliver a manually executed counterpart of this Amendment but the failure
        to
        deliver a manually executed counterpart shall not affect the validity,
        enforceability, and binding effect of this Amendment.

       

      7. Release.
        As to
        each and every claim released under this Amendment, each Borrower hereby
        represents that it has received the advice of legal counsel with regard to
        the
        releases contained herein, and having been so advised, each of them specifically
        waives the benefit of the provisions of Section 1542 of the Civil Code of
        California which provides as follows:

       

      “A
        GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW
        OR
        SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
        IF
        KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
        DEBTOR.”

       

      As
        to
        each and every claim released hereunder, each Borrower also waives the benefit
        of each other similar provision of applicable federal or state law, if any,
        pertaining to general releases after having been advised by its legal counsel
        with respect thereto. Each Borrower hereby agrees, represents, and warrants
        that
        it has not voluntarily, by operation of law or otherwise, assigned, conveyed,
        transferred or encumbered, either directly or indirectly, in whole or in
        part,
        any right to or interest in any claim released under this Agreement.


       

      8. Effect
        on Loan Documents.

       

      (a) The
        Agreement, as amended hereby, and the other Loan Documents shall be and remain
        in full force and effect in accordance with its respective terms and hereby
        is
        ratified and confirmed in all respects. The execution, delivery, and performance
        of this Amendment shall not, except as expressly set forth herein, operate
        as a
        waiver of or, except as expressly set forth herein, as an amendment of, any
        right, power, or remedy of Lender as in effect prior to the date hereof.
        The
        waivers, consents, and modifications herein are limited to the specifics
        hereof,
        shall not apply with respect to any facts or occurrences other than those
        on
        which the same are based, shall not excuse future non-compliance with the
        Agreement, and shall not operate as a consent to any further or other matter,
        under the Loan Documents.

       

      (b) Upon
        and
        after the effectiveness of this Amendment, each reference in the Agreement
        to
“this Agreement”, “hereunder”, “herein”, “hereof” or words of like import
        referring to the Agreement, and each reference in the other Loan Documents
        to
“the Agreement”, “thereunder”, “therein”, “thereof” or words of like import
        referring to the Agreement, shall mean and be a reference to the Agreement
        as
        modified and amended hereby.

       

      (c) To
        the
        extent that any terms and conditions in any of the Loan Documents shall
        contradict or be in conflict with any terms or conditions of the Agreement,
        after giving effect to this Amendment, such terms and conditions are hereby
        deemed modified or amended accordingly to reflect the terms and conditions
        of
        the Agreement as modified or amended hereby.

       

      [Signature
        page follows]

       

      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

       


      IN
        WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
        as
        of the date first written above.

       

      ACCERIS
        COMMUNICATIONS CORP.,

      a
        Delaware corporation

       

       

      By:______________________________

      Name:

      Title:

       

      ACCERIS
        COMMUNICATIONS INC.,

      a
        Florida
        corporation

       

      By:______________________________

      Name:

      Title:

       

      ACCERIS
        MANAGEMENT AND ACQUISITION, LLC,
        a
        Minnesota limited liability company

       

      By:______________________________

      Name:

      Title:

       


      
        
           

        

        
           

          
            

          

        

        
           

          
          

        

      


      REAFFIRMATION
        AND CONSENT

      


      All
        capitalized terms used herein but not otherwise defined herein shall have
        the
        meanings ascribed to them in that certain Loan and Security Agreement, dated
        as
        of December 10, 2001 (as amended, restated, supplemented or otherwise
        modified, the “Loan Agreement”), by and among Acceris Communications Corp., a
        Delaware corporation formerly known as WorldxChange Corp. (“ACC”)
        and
        Acceris Communications Inc.,
        a
        Florida
        corporation formerly known as I-Link, Incorporated (“ACI,”
        and,
        together with ACC, the “Borrowers”),
        and
        Acceris Management and Acquisition, LLC, a Minnesota limited liability company
        (the “Lender”),
        as
        assignee of Wells Fargo Foothill, Inc., a California corporation, or in
        Amendment Number Ten to Loan and Security Agreement, dated as of June 22,
        2005,
        by and between the Borrowers and Lender (the “Amendment”). Each of the
        undersigned hereby (a) represents and warrants to Lender that the
        execution, delivery, and performance of this Reaffirmation and Consent are
        within its powers, have been duly authorized by all necessary action, and
        are
        not in contravention of any law, rule, or regulation, or any order, judgment,
        decree, writ, injunction, or award of any arbitrator, court, or governmental
        authority, or of the terms of its charter or bylaws, or of any contract or
        undertaking to which it is a party or by which any of its properties may
        be
        bound or affected; (b) consents to the transactions contemplated by
        the
        Amendment; (c) acknowledges and reaffirms its obligations owing to
        Lender
        under any Loan Documents to which it is a party; and (d) agrees that
        each
        of the Loan Documents to which it is a party is and shall remain in full
        force
        and effect. Although the undersigned has been informed of the matters set
        forth
        herein and has acknowledged and agreed to same, it understands that Lender
        has
        no obligations to inform it of such matters in the future or to seek its
        acknowledgment or agreement to future amendments, and nothing herein shall
        create such a duty. Delivery of an executed counterpart of this Reaffirmation
        and Consent by facsimile transmission shall be equally as effective as delivery
        of an original executed counterpart of this Reaffirmation and Consent. Any
        party
        delivering an executed counterpart of this Reaffirmation and Consent by
        facsimile transmission also shall deliver an original executed counterpart
        of
        this Reaffirmation and Consent but the failure to deliver an original executed
        counterpart shall not affect the validity, enforceability, and binding effect
        of
        this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed
        by the laws of the State of California.


      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      


      IN
        WITNESS WHEREOF, the undersigned has caused this Reaffirmation and Consent
        to be
        executed as of the date of the Amendment.

       

      CPT-1
        HOLDINGS, INC.,

      a
        Delaware corporation, as a Guarantor

       

       

      By:_______________________________

      Title:______________________________

       

      ACCERIS
        COMMUNICATIONS TECHNOLOGIES, INC.,

      a
        Delaware corporation, as a Guarantor

       

       

      By:_______________________________

      Title:______________________________

       

      MIBRIDGE,
        INC.,

      a
        Utah
        corporation, as a Guarantor

       

      By:_______________________________

      Title:______________________________

       

      COUNSEL
        CORPORATION,

      an
        Ontario corporation, as a Guarantor

       

       

      By:_______________________________

      Title:______________________________

       

      COUNSEL
        COMMUNICATIONS LLC,

      a
        Delaware limited liability company, as a Guarantor

       

      By:_______________________________

      Title:______________________________

       

      COUNSEL
        CORPORATION (US),

      a
        Delaware corporation, as a Guarantor

       

      By:_______________________________

      Title:______________________________

       

      


      


       

       


      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
        2A

      


      2.1
        Advances.
        

       

      (a)
        With
        respect to advances by Lender to Borrower under this Agreement (“Advances”),
        Borrower acknowledges and agrees that Lender shall not be obligated to make
        any
        further Advances, and that Lender may in its sole discretion refuse to make
        any
        further Advances hereunder for any reason whatsoever or for no reason. The
        aggregate amount of the Existing Indebtedness and all Advances which Lender
        may
        determine in its sole discretion to make under this Agreement will not, in
        any
        event, exceed the Maximum Revolver Amount. 

       

      (b)
        Lender may make further Advances on any basis deemed appropriate by Lender
        from
        time to time. Lender may change from time to time, at its sole discretion
        and
        without notice to Borrower, the standards, criteria or formulae used by Lender
        in determining whether to make any Advance. 

       

      (c)
        Amounts borrowed pursuant to this Section may be repaid at any time during
        the
        term of this Agreement.

      


      (d)
        The
        Obligations shall be fully binding and enforceable without any note or other
        evidence of indebtedness. Nevertheless, if Lender so requests, Borrower will
        duly execute and deliver to Lender a promissory note in negotiable form payable
        on demand to the order of Lender in a principal amount equal to, at Lender’s
        discretion, either the Maximum Revolver Amount or the principal balance of
        Obligations then outstanding to Lender under this Agreement, together with
        interest as set forth in Section
        2.6.

      


      2.2 Intentionally
        omitted.

      


      2.3
        Borrowing
        Procedures and Settlements.

       

      (a) Procedure
        for Borrowing.
        Borrower
        will request Advances from Lender in such manner as Lender may from time
        to time
        prescribe. Borrower acknowledges and agrees that Lender may make Advances
        in any
        amount and in any manner requested orally or in writing by an Authorized
        Person.
        In requesting any Advances under this Agreement, Borrower shall be deemed
        to
        represent and warrant to Lender that, as of the date of the proposed Advance,
        the representations and warranties contained in this Agreement and the other
        Loan Documents will be true and correct in all material respects on and as
        of
        such date, as though made on and as of such date (except to the extent that
        such
        representations and warranties relate solely to an earlier date). 

      


      (b) Making
        of Advances. Lender
        may disburse the proceeds of any Advance by deposit with any bank to or for
        the
        account of either Person comprising Borrower or to or for the account of
        any
        third party designed by any Authorized Person, or by an instrument payable
        to
        either Person comprising Borrower or to any such third party delivered to
        any
        Authorized Person or to any such third party, or in any other manner deemed
        appropriate by Lender.

      


      2.4
        Payments.

      


      (a)  Payments
        by Borrower. Borrower
        hereby promises to pay the Obligations (including principal, interest,
        fees, costs
        and
        expenses) in Dollars in full to Lender as and when due and payable under
        the
        terms of this Agreement and the other Loan Documents. All payments by Borrower
        shall be made at the offices of Lender in Minneapolis, Minnesota, unless
        Lender
        designates a different place of payment by written notice to either Person
        comprising Borrower.

      


      (b) Application
        of Payments.
        All
        payments shall be remitted to Lender and all such payments, and all proceeds
        of
        Accounts or other Collateral received by Lender, may be applied to pay any
        or
        all Advances or other indebtedness of Borrower under this Agreement in any
        manner or order of application as Lender may elect. In the event of a direct
        conflict between this provision and other provisions contained in any other
        Loan
        Document, this provision shall control and govern.

      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.5
        Intentionally
        omitted. 

      


      2.6
        Interest
        Rate, Payments, and Calculations.

      


      (a) Interest
        Rate. All
        Obligations that have been charged to the Loan Account pursuant to the terms
        hereof shall bear interest on the Daily Balance thereof at a per annum rate
        equal to ten percent (10%).

      


      (b) Payment.
        Interest
        and all other fees payable hereunder shall be due and payable, in arrears,
        on
        the first day of each month at any time that Obligations hereunder are
        outstanding, and all Obligations shall be due and payable on the Maturity
        Date.
        Each Person comprising Borrower hereby authorizes Lender, from time to time
        without prior notice to Borrower, to charge such interest and fees, all Lender
        Expenses (as and when incurred), the fees and costs provided for in Section
        2.11
        (as and
        when accrued or incurred), and all other payments as and when due and payable
        under any Loan Document to Borrower’s Loan Account, which amounts thereafter
        shall constitute Advances hereunder and shall accrue interest at the rate
        then
        applicable to Advances hereunder. Any interest not paid when due shall be
        compounded by being charged to Borrower’s Loan Account and shall thereafter
        constitute Advances hereunder and shall accrue interest at the rate then
        applicable to Advances.

      


      (c) Computation.
        All
        interest and fees chargeable under the Loan Documents shall be computed on
        the
        basis of a 360 day year for the actual number of days elapsed.

      


      (d) Intent
        Limit Charges to Maximum Lawful Rate.
        In no
        event shall the interest rate or rates payable under this Agreement, plus
        any
        other amounts paid in connection herewith, exceed the highest rate permissible
        under any law that a court of competent jurisdiction shall, in a final
        determination, deem applicable. Borrower and Lender, in executing and delivering
        this Agreement, intend legally to agree upon the rate or rates of interest
        and
        manner of payment stated within it; provided,
        however,
        that,
        anything contained herein to the contrary notwithstanding, if said rate or
        rates
        of interest or manner of payment exceeds the maximum allowable under applicable
        law, then, ipso
        facto,
        as of
        the date of this Agreement, Borrower is and shall be liable only for the
        payment
        of such maximum as allowed by law, and payment received from Borrower in
        excess
        of such legal maximum, whenever received, shall be applied to reduce the
        principal balance of the Obligations to the extent of such
        excess.


      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
        2B 

      


      2.9
        Designated
        Account.
        Lender
        is
        authorized to make the Advances under this Agreement based upon telephonic
        or
        other instructions received from anyone purporting to be an Authorized Person,
        or without instructions if pursuant to Section 2.6(b). Borrower agrees to
        establish and maintain the Designated Account with the Designated Account
        Bank
        for the purpose of receiving the proceeds of the Advances requested by Borrower
        and made by Lender hereunder. Unless otherwise agreed by Lender and Borrower,
        any Advance requested by Borrower and made by Lender hereunder shall be made
        to
        the Designated Account.

       

      2.10 Maintenance
        of Loan Account; Statements of Obligations.
        Lender
        shall maintain an account on its books in the name of Borrower (the “Loan
        Account”) on which Borrower will be charged with all Advances made by Lender to
        Borrower or for Borrower’s account and with all other payment Obligations
        hereunder or under the other Loan Documents, including, accrued interest,
        fees
        and expenses, and Lender Expenses. In accordance with Section 2.8, the Loan
        Account will be credited with all payments received by Lender from Borrower
        or
        for Borrower’s account, including all amounts received in the Lender’s Account
        from any Cash Management Bank. Lender shall render statements regarding the
        Loan
        Account to Borrower, including principal, interest, fees, and including an
        itemization of all charges and expenses constituting Lender Expenses owing,
        and
        such statements shall be conclusively presumed to be correct and accurate
        and
        constitute an account stated between Borrower and Lender unless, within 30
        days
        after receipt thereof by Borrower, Borrower shall deliver to Lender written
        objection thereto describing the error or errors contained in any such
        statements.

       

      2.11
        Fees.
        Borrower
        shall pay to Lender the following fees and charges, which fees and charges
        shall
        be non-refundable when paid (irrespective of whether this Agreement is
        terminated thereafter):

       

      (a)Fee
        Letter Fees.
        As and
        when due and payable under the terms of the Fee Letter, Borrower shall pay
        to
        Lender the fees set forth in the Fee Letter, and

       

      (b) Audit
        and Valuation Charges.
        Audit
        and valuation fees and charges as follows (i) a fee of $850 per day, per
        auditor, plus out-of-pocket expenses for each financial audit of Borrower
        performed by personnel employed by Lender, (ii) if implemented, a one time
        charge of $5,000 plus out-of-pocket expenses for expenses for the establishment
        of electronic collateral reporting systems, and (iii) after the occurrence
        and
        during the continuance of an Event of Default, the actual charges paid or
        incurred by Lender if it elects to employ the services of one or more third
        Persons to perform financial audits of Borrower or to assess Borrower’s business
        valuation.

       

      2.12 Intentionally
        omitted.

       

      2.13 Intentionally
        omitted.

       

      2.14 Intentionally
        omitted.

       

      


       


      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
        3

       

      


       

      3.4
        Term. This
        Agreement shall become effective upon the execution and delivery hereof by
        Borrower and Lender and shall continue in full force and effect for a term
        ending on _______, 200_ (the “Maturity Date”). The foregoing notwithstanding,
        Lender shall have the right to terminate this Agreement immediately and without
        notice upon the occurrence and during the continuation of an Event of
        Default.

      


      3.5
        Effect
        of Termination.
        On the
        date of termination of this Agreement, all Obligations immediately shall
        become
        due and payable without notice or demand. No termination of this Agreement,
        however, shall relieve or discharge Borrower of its duties, Obligations,
        or
        covenants hereunder and the Lender’s Liens in the Collateral shall remain in
        effect until all Obligations have been fully and finally discharged. When
        this
        Agreement has been terminated and all of the Obligations have been fully
        and
        finally discharged irrevocably, Lender will, at Borrower’s sole expense, execute
        and deliver any UCC termination statements, lien releases, mortgage releases,
        re-assignments of trademarks, discharges of security interests, and other
        similar discharge or release documents (and, if applicable, in recordable
        form)
        as are reasonably necessary to release, as of record, the Lender’s Liens and all
        notices of security interests and liens previously filed by Lender with respect
        to the Obligations.

      


      3.6
        Early
        Termination by Borrower.
        Borrower
        has the option, at any time, to terminate this Agreement by paying to Lender,
        in
        cash, the Obligations in full.