Exhibit 10.2


 


RADVIEW SOFTWARE, INC.


LOAN AND SECURITY AGREEMENT


 


This
LOAN AND SECURITY AGREEMENT is entered into as of May 25, 2005, by and between
Comerica Bank (“Bank”) and RADVIEW SOFTWARE, INC. (“Borrower”).


 


RECITALS


 


Borrower
wishes to obtain credit from time to time from Bank, and Bank desires to extend
credit to Borrower.  This Agreement sets
forth the terms on which Bank will advance credit to Borrower, and Borrower
will repay the amounts owing to Bank.


 


AGREEMENT


 


The
parties agree as follows:


 


1.             DEFINITIONS
AND CONSTRUCTION.


 


1.1   Definitions.  As used in this Agreement, all capitalized
terms shall have the definitions set forth on Exhibit A.  Any term used in the Code and not defined
herein shall have the meaning given to the term in the Code.


 


1.2   Accounting Terms.  Any accounting term not specifically defined
on Exhibit A shall be construed in accordance with GAAP and all calculations
shall be made in accordance with GAAP. 
The term “financial statements” shall include the accompanying notes and
schedules.


 


2.             LOAN
AND TERMS OF PAYMENT.


 


2.1   Credit Extensions.


 


(a)   Promise to Pay.  Borrower promises to pay to Bank, in lawful
money of the United States of America, the aggregate unpaid principal amount of
all Credit Extensions made by Bank to Borrower, together with interest on the
unpaid principal amount of such Credit Extensions at rates in accordance with
the terms hereof.


 


(b)   Advances Under Revolving
Line.


 


(i)            Amount.  Subject to and upon the terms and conditions
of this Agreement, (1) Borrower may request Advances in an aggregate
outstanding amount not to exceed the lesser of (A) the Revolving Line or
(B) the Borrowing Base, and (2) amounts borrowed pursuant to this
Section 2.1(b) may be repaid and reborrowed at any time prior to the
Revolving Maturity Date, at which time all Advances under this Section 2.1(b)
shall be immediately due and payable. 
Borrower may prepay any Advances without penalty or premium.


 


(ii)           Form
of Request.  Whenever Borrower
desires an Advance, Borrower will notify Bank by facsimile transmission or
telephone no later than 3:00 p.m. Pacific time (1:00 p.m. Pacific time for wire
transfers), on the Business Day that the Advance is to be made.  Each such notification shall be promptly
confirmed by a Payment/Advance Form in substantially the form of Exhibit C.  Bank is authorized to make Advances under
this Agreement, based upon instructions received


 





















 


from a Responsible
Officer or a designee of a Responsible Officer, or without instructions if in
Bank’s discretion such Advances are necessary to meet Obligations which have
become due and remain unpaid.  Bank shall
be entitled to rely on any telephonic notice given by a person who Bank
reasonably believes to be a Responsible Officer or a designee thereof, and
Borrower shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. 
Bank will credit the amount of Advances made under this
Section 2.1(b) to Borrower’s deposit account.


 


2.2   Overadvances.  If the aggregate amount of the outstanding
Advances exceeds the lesser of the Revolving Line or the Borrowing Base at any
time, Borrower shall immediately pay to Bank, in cash, the amount of such
excess.


 


2.3   Interest Rates, Payments,
and Calculations.


 


(a)   Interest Rates.


 


(i)            Advances.  Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding daily balance thereof, at a
variable rate equal to 1.25% above the Prime Rate.


 


(b)   Late Fee; Default Rate.  If any payment is not made within 10 days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum
amount permitted to be charged under applicable law.  All Obligations shall bear interest, from and
after the occurrence and during the continuance of an Event of Default, at a
rate equal to 5 percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.


 


(c)   Payments.  Interest hereunder shall be due and payable
on the first calendar day of each month during the term hereof.  Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts or against the Revolving Line, in which case those amounts
shall thereafter accrue interest at the rate then applicable hereunder.  Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.  All payments shall be free and clear of any
taxes, withholdings, duties, impositions or other charges, to the end that Bank
will receive the entire amount of any Obligations payable hereunder, regardless
of source of payment.


 


(d)   Computation.  In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.  All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.


 


2.4   Crediting Payments.  Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies, except
that to the extent Borrower uses the Advances to purchase Collateral, Borrower’s
repayment of the Advances shall apply on a “first-in-first-out” basis so that
the portion of the Advances used to purchase a particular item of Collateral
shall be paid in the chronological order the Borrower purchased the
Collateral.  After the occurrence of an
Event of Default, Bank shall have the right, in its sole discretion, to
immediately apply any wire transfer of funds, check, or other item of payment
Bank may receive to conditionally reduce Obligations, but such applications of
funds shall not be considered a payment on account unless such payment is of
immediately available federal funds or unless and until such check or other
item of payment is honored when presented for payment.


 





















 


Notwithstanding
anything to the contrary contained herein, any wire transfer or payment
received by Bank after 12:00 noon Pacific time shall be deemed to have been
received by Bank as of the opening of business on the immediately following
Business Day.  Whenever any payment to
Bank under the Loan Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment shall instead
be due on the next Business Day, and additional fees or interest, as the case
may be, shall accrue and be payable for the period of such extension.


 


2.5   Fees.  Borrower shall pay to Bank the following:


 


(a)   Facility Fee.  On the Closing Date, a fee equal to $12,500
(including $5,000 of which Bank received before the Closing Date), which shall
be nonrefundable;


 


(b)   Bank Expenses.  On the Closing Date, all Bank Expenses
incurred through the Closing Date, and, after the Closing Date, all Bank
Expenses, as and when they become due.


 


2.6   Term.  This Agreement shall become effective on the
Closing Date and, subject to Section 13.7, shall continue in full force and
effect for so long as any Obligations remain outstanding or Bank has any obligation
to make Credit Extensions under this Agreement. 
Notwithstanding the foregoing, Bank shall have the right to terminate
its obligation to make Credit Extensions under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default.


 


2.7   Lockbox.  As of the date which is 90 days after the
Closing Date, Borrower shall open and shall thereafter maintain a lockbox at
Bank (the “Lockbox”).  Once opened,
Borrower shall at all times thereafter, unless otherwise directed by Bank in
writing, cause all remittances made by any account debtor for any Accounts to
be made to the Lockbox.  Unless otherwise
directed by Bank in writing, all invoices and other instructions submitted by
Borrower to an account debtor relating to Account payments shall designate the
Lockbox as the place to which such payments shall be made.


 


3.             CONDITIONS
OF LOANS.


 


3.1   Conditions Precedent to
Initial Credit Extension.  The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:


 


(a)   this Agreement;


 


(b)   an officer’s certificate of
Borrower with respect to incumbency and resolutions authorizing the execution
and delivery of this Agreement;


 


(c)   a financing statement;


 


(d)   an intellectual property
security agreement;


 


(e)   Unconditional Guaranties and
incumbency certificates, with resolutions to guarantee, and in the case of
Parent, grant a security interest in collateral, from Parent, RadView Software
(UK) Ltd., and RadView Software GmbH;


 


(f)    a third party security
agreement, intellectual property security agreement, share pledge agreement and
stock powers (with respect to shares of stock of Borrower), and subordination
agreement from Parent;


 





















 


(g)   evidence of termination of Parent’s debenture in favor of Bank
Hapoalim, evidence of cancellation and termination of any registered pledge
against Parent in favor of Bank Hapoalim, and requisite consents from the Investment Center of the Israeli Ministry of
Industry and Trade;


 


(h)   Share certificates evidencing
100% of outstanding stock of Borrower;


 


(i)    agreement to provide
insurance;


 


(j)    payment of the fees and Bank
Expenses then due specified in Section 2.5;


 


(k)   current SOS Reports indicating
that except for Permitted Liens, there are no other security interests or Liens
of record in the Collateral;


 


(l)    an audit of the Collateral,
the results of which shall be satisfactory to Bank;


 


(m)  current financial statements, including
audited statements for Parent’s most recently ended fiscal year, together with
an unqualified opinion, company prepared consolidated and consolidating balance
sheets and income statements for the most recently ended month in accordance
with Section 6.2, and such other updated financial information as Bank may
reasonably request;


 


(n)   current Compliance Certificate
in accordance with Section 6.2;


 


(o)   a Warrant to purchase Parent’s
ordinary shares in form and substance satisfactory to Bank; and


 


(p)   such other documents or
certificates, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.


 


3.2   Conditions Precedent to all
Credit Extensions.  The obligation of
Bank to make each Credit Extension, including the initial Credit Extension, is
further subject to the following conditions:


 


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


 


(b)   the representations and
warranties contained in Section 5 shall be true and correct in all material
respects on and as of the date of such Payment/Advance Form and on the
effective date of each Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing, or would
exist after giving effect to such Credit Extension (provided, however, that
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of such date).  The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2.


 


4.             CREATION
OF SECURITY INTEREST.


 


4.1   Grant of Security Interest.  Borrower grants and pledges to Bank a
continuing security interest in the Collateral to secure prompt repayment of
any and all Obligations and to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents.  Except as set forth in the Schedule, such security
interest constitutes a valid, first priority security interest in the presently
existing Collateral, and will constitute a valid, first priority security
interest in later-acquired


 





















 


Collateral.  Notwithstanding any termination, Bank’s Lien
on the Collateral shall remain in effect for so long as any Obligations are
outstanding.


 


4.2   Perfection of Security
Interest.  Borrower authorizes Bank
to file at any time financing statements, continuation statements, and
amendments thereto that (i) either specifically describe the Collateral or
describe the Collateral as all assets of Borrower of the kind pledged
hereunder, and (ii) contain any other information required by the Code for the
sufficiency of filing office acceptance of any financing statement, continuation
statement, or amendment, including whether Borrower is an organization, the
type of organization and any organizational identification number issued to
Borrower, if applicable.  Any such
financing statements may be signed by Bank on behalf of Borrower, as provided
in the Code, and may be filed at any time in any jurisdiction whether or not
Revised Article 9 of the Code is then in effect in that jurisdiction.  Borrower shall from time to time endorse and
deliver to Bank, at the request of Bank, all Negotiable Collateral and other
documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and continue perfected Bank’s security interests in the Collateral and
in order to fully consummate all of the transactions contemplated under the
Loan Documents.  Borrower shall have
possession of the Collateral, except where expressly otherwise provided in this
Agreement or where Bank chooses to perfect its security interest by possession
in addition to the filing of a financing statement.  Where Collateral is in possession of a third
party bailee, Borrower shall take such steps as Bank reasonably requests for
Bank to (i) obtain an acknowledgment, in form and substance satisfactory to
Bank, of the bailee that the bailee holds such Collateral for the benefit of
Bank, (ii) obtain “control” of any Collateral consisting of investment
property, deposit accounts, letter-of-credit rights or electronic chattel paper
(as such items and the term “control” are defined in Revised Article 9 of the
Code) by causing the securities intermediary or depositary institution or
issuing bank to execute a control agreement in form and substance satisfactory
to Bank.  Borrower will not create any
chattel paper without placing a legend on the chattel paper acceptable to Bank
indicating that Bank has a security interest in the chattel paper.  Borrower from time to time may deposit with
Bank specific cash collateral to secure specific Obligations; Borrower
authorizes Bank to hold such specific balances in pledge and to decline to
honor any drafts thereon or any request by Borrower or any other Person to pay
or otherwise transfer any part of such balances for so long as the specific
Obligations are outstanding.


 


4.3   Right to Inspect.  Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to
time during Borrower’s usual business hours but no more than twice a year
(unless an Event of Default has occurred and is continuing), to inspect
Borrower’s Books and to make copies thereof and to check, test, and appraise
the Collateral in order to verify Borrower’s financial condition or the amount,
condition of, or any other matter relating to, the Collateral.


 


5.             REPRESENTATIONS
AND WARRANTIES.


 


Borrower
represents and warrants as follows:


 


5.1   Due Organization and
Qualification.  Borrower and each
Subsidiary is a corporation duly existing under the laws of the state in which
it is incorporated and qualified and licensed to do business in any state in
which the conduct of its business or its ownership of property requires that it
be so qualified, except where the failure to do so would not reasonably be
expected to cause a Material Adverse Effect.


 


5.2   Due Authorization; No
Conflict.  The execution, delivery,
and performance of the Loan Documents are within Borrower’s powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower’s Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement by which
Borrower is bound.


 





















 


Borrower is not in
default under any agreement by which it is bound, except to the extent such
default would not reasonably be expected to cause a Material Adverse Effect.


 


5.3   Collateral.  Borrower has rights in or the power to
transfer the Collateral, and its title to the Collateral is free and clear of
Liens, adverse claims, and restrictions on transfer or pledge except for
Permitted Liens.  All Collateral is
located solely in the Collateral States. 
The Eligible Accounts are bona fide existing obligations.  Other than maintenance related contracts that
are billed in advance, the property or services giving rise to such Eligible
Accounts has been delivered or rendered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor.  Borrower has not received notice of actual or
imminent Insolvency Proceeding of any account debtor whose accounts are included
in any Borrowing Base Certificate as an Eligible Account.  All Inventory is in all material respects of
good and merchantable quality, free from all material defects, except for
Inventory for which adequate reserves have been made.  Except as set forth in the Schedule, none of
the Collateral is maintained or invested with a Person other than Bank or Bank’s
Affiliates.


 


5.4   Intellectual Property
Collateral.  Borrower is the sole
owner of the Intellectual Property Collateral, except for licenses granted by
Borrower to its customers in the ordinary course of business.  To the best of Borrower’s knowledge, each of
the Copyrights, Trademarks and Patents is valid and enforceable, and no part of
the Intellectual Property Collateral has been judged invalid or unenforceable,
in whole or in part, and no claim has been made to Borrower that any part of
the Intellectual Property Collateral violates the rights of any third party
except to the extent such claim would not reasonably be expected to cause a
Material Adverse Effect.  Except as set
forth in the Schedule, Borrower’s rights as a licensee of intellectual property
do not give rise to more than 5% of its gross revenue in any given month,
including without limitation revenue derived from the sale, licensing,
rendering or disposition of any product or service.


 


5.5   Name; Location of Chief
Executive Office.  Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof, and its exact legal name is
as set forth in the first paragraph of this Agreement.  The chief executive office of Borrower is
located in the Chief Executive Office State at the address indicated in Section
10 hereof.


 


5.6   Litigation.  Except as set forth in the Schedule, there
are no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision would
reasonably be expected to have a Material Adverse Effect.


 


5.7   No Material Adverse Change
in Financial Statements.  All
consolidated and consolidating financial statements related to any of the
Borrower Parties that are delivered by or on behalf of any Borrower Party to
Bank fairly present in all material respects Borrower’s and Parent’s
consolidated and consolidating financial condition as of the date thereof and
Borrower’s and Parent’s consolidated and consolidating results of operations
for the period then ended.  There has not
been a material adverse change in the consolidated or in the consolidating
financial condition of Borrower since the date of the most recent of such
financial statements submitted to Bank.


 


5.8   Solvency, Payment of Debts.  Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities (excluding intercompany liabilities to Parent); and Borrower is not
left with unreasonably small capital after the transactions contemplated by
this Agreement.


 


5.9   Compliance with Laws and
Regulations.  Borrower and each
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. 
No event has occurred resulting from Borrower’s failure to comply with
ERISA that is reasonably likely


 





















 


to result in
Borrower’s incurring any liability that could have a Material Adverse
Effect.  Borrower is not an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940. 
Borrower is not engaged principally, or as one of the important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations T and U of the
Board of Governors of the Federal Reserve System).  Borrower has complied in all material
respects with all the provisions of the Federal Fair Labor Standards Act.  Borrower is in compliance with all
environmental laws, regulations and ordinances except where the failure to
comply is not reasonably likely to have a Material Adverse Effect.  Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, the violation of which would reasonably
be expected to have a Material Adverse Effect. 
Borrower and each Subsidiary have filed or caused to be filed all tax
returns required to be filed, and have paid, or have made adequate provision
for the payment of, all taxes reflected therein except those being contested in
good faith with adequate reserves under GAAP or where the failure to file such returns
or pay such taxes would not reasonably be expected to have a Material Adverse
Effect.


 


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


 


5.11 Government Consents.  Borrower and each Subsidiary have obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower’s business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.


 


5.12 Inbound Licenses.  Except as disclosed on the Schedule, or after
the date of this Agreement, as disclosed in writing to Bank, Borrower is not a
party to, nor is bound by: (a) any agreement that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest any
of its property; or (b) any Material License.


 


5.13 Full Disclosure.  No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank taken together with all such certificates and written statements furnished
to Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading, it being recognized by Bank that the
projections and forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not to be viewed as facts and that actual results during the
period or periods covered by any such projections and forecasts may materially
differ from the projected or forecasted results.


 


6.             AFFIRMATIVE
COVENANTS.


 


Borrower covenants
that, until payment in full of all outstanding Obligations, and for so long as
Bank may have any commitment to make a Credit Extension hereunder, Borrower
shall do all of the following:


 


6.1   Good Standing and Government
Compliance.  Borrower shall maintain
its and each of its Subsidiaries’ corporate existence and good standing in the
Borrower State, shall maintain qualification and good standing in each other
jurisdiction in which the failure to so qualify would reasonably be expected to
have a Material Adverse Effect, and shall furnish to Bank the organizational
identification number issued to Borrower by the authorities of the state in
which Borrower is organized, if applicable. 
Borrower shall meet, and shall cause each Subsidiary to meet, the
minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA.  Borrower shall


 





















 


comply in all
material respects with all applicable Environmental Laws, and maintain all
material permits, licenses and approvals required thereunder where the failure
to do so would reasonably be expected to have a Material Adverse Effect.  Borrower shall comply, and shall cause each
Subsidiary to comply, with all statutes, laws, ordinances and government rules
and regulations to which it is subject, and shall maintain, and shall cause
each of its Subsidiaries to maintain, in force all licenses, approvals and
agreements, the loss of which or failure to comply with which would reasonably
be expected to have a Material Adverse Effect.


 


6.2   Financial Statements,
Reports, Certificates.  Borrower
shall deliver to Bank at both the El Segundo and the Boston offices referenced
in Section 10:  (i) as soon as available,
but in any event within 45 days after the end of each quarter, Parent’s report
on Form 10-Q filed with the Securities and Exchange Commission, and within 30
days after the end of each quarter a company prepared consolidated and
consolidating balance sheet and income statement covering Borrower’s and Parent’s
operations during such period, in a form reasonably acceptable to Bank and
certified by a Responsible Officer; (ii) as soon as available, but in any event
within 120 days after the end of Parent’s fiscal year, a report on Form 10-K
filed with the Securities and Exchange Commission, including audited
consolidated financial statements of Parent prepared in accordance with GAAP,
consistently applied, together with an opinion which is unqualified or
otherwise consented to in writing by Bank on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) copies of all statements, reports and notices sent or made available
generally by Borrower or Parent to its security holders or to any holders of
Subordinated Debt; (iv) promptly upon receipt of notice thereof, a report of
any legal actions pending or threatened against any Borrower Party that could
result in damages or costs to such Person of $250,000 or more; (v) promptly
upon receipt, each management letter prepared by Parent’s independent certified
public accounting firm regarding Borrower’s or Parent’s management control
systems; (vi) as soon as available, but in any event by December 31 of each
year, an annual budget and forecast for the following year; (vii) such budgets,
sales projections, operating plans or other financial information generally
prepared by Borrower in the ordinary course of business as Bank may reasonably
request from time to time; and (viii) within 30 days of the last day of each
fiscal quarter, a report signed by Borrower, in form reasonably acceptable to
Bank, listing any applications or registrations that Borrower or any other
Borrower Party has made or filed in respect of any Patents, Copyrights or
Trademarks and the status of any outstanding applications or registrations, as
well as any material change in Borrower’s Intellectual Property Collateral,
including but not limited to any subsequent ownership right of Borrower in or
to any Trademark, Patent or Copyright not specified in Exhibits A, B,
and C of any Intellectual Property Security Agreement delivered to Bank
by Borrower in connection with this Agreement.


 


(a)   Within 30 days after the last
day of each month, Borrower shall deliver to Bank at both the El Segundo and
the Boston offices referenced in Section 10, (i) a Borrowing Base Certificate
signed by a Responsible Officer in substantially the form of Exhibit D
hereto, together with aged listings by invoice date of accounts receivable and
accounts payable and (ii) a Compliance Certificate certified as of the last day
of the applicable month and signed by a Responsible Officer in substantially
the form of Exhibit E hereto.


 


(b)   As soon as possible and in any
event within 3 Business Days after becoming aware of the occurrence or
existence of an Event of Default hereunder, a written statement of a
Responsible Officer setting forth details of the Event of Default, and the
action which Borrower has taken or proposes to take to remedy such Event of
Default.


 


(c)   Bank shall have a right from
time to time hereafter to audit Borrower’s Accounts and appraise Collateral at
Borrower’s reasonable expense, provided that such audits will be conducted no
more often than every 6 months unless an Event of Default has occurred and is
continuing.


 





















 


Borrower or Parent
may deliver to Bank on an electronic basis any certificates, reports or
information required pursuant to this Section 6.2, and Bank shall be entitled
to rely on the information contained in the electronic files, provided that
Bank in good faith believes that the files were delivered by a Responsible
Officer.  If Borrower or Parent delivers
this information electronically, it shall also deliver to Bank by U.S. Mail,
reputable overnight courier service, hand delivery, facsimile or .pdf file
within 5 Business Days of submission of the unsigned electronic copy the
certification of monthly financial statements, the intellectual property
report, the Borrowing Base Certificate and the Compliance Certificate, each
bearing the physical signature of the Responsible Officer.


 


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


 


6.4   Taxes.  Borrower shall make, and cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
including, but not limited to, those laws concerning income taxes, F.I.C.A.,
F.U.T.A. and state disability, and will execute and deliver to Bank, on demand,
proof satisfactory to Bank indicating that Borrower or a Subsidiary has made
such payments or deposits and any appropriate certificates attesting to the
payment or deposit thereof; provided that Borrower or a Subsidiary need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings and is reserved against (to the extent
required by GAAP) by Borrower.


 


6.5   Insurance.


 


(a)   Borrower, at its expense, shall
keep the Collateral insured, or shall cause Parent to keep the Collateral
insured under a global policy for all Borrower Parties, against loss or damage
by fire, theft, explosion, sprinklers, and all other hazards and risks, and in
such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof.  Borrower shall also
maintain, or shall cause Parent to maintain, liability and other insurance in
amounts and of a type that are customary to businesses similar to Borrower’s.


 


(b)   All such policies of insurance
shall be in such form, with such companies, and in such amounts as reasonably
satisfactory to Bank.  All policies of
property insurance shall contain a lender’s loss payable endorsement, in a form
satisfactory to Bank, showing Bank as an additional loss payee, and all
liability insurance policies shall show Bank as an additional insured and
specify that the insurer must give at least 20 days notice to Bank before
canceling its policy for any reason. 
Upon Bank’s request, Borrower shall deliver to Bank certified copies of
the policies of insurance and evidence of all premium payments.  If no Event of Default has occurred and is
continuing, proceeds payable under any casualty policy will, at Borrower’s
option, be payable to Borrower to replace the property subject to the claim,
provided that any such replacement property shall be deemed Collateral in which
Bank has been granted a first priority security interest.  If an Event of Default has occurred and is
continuing, all proceeds payable under any such policy shall, at Bank’s option,
be payable to Bank to be applied on account of the Obligations.


 


6.6   Primary Depository.  Borrower shall maintain all its depository,
operating, and investment accounts with Bank or Bank’s Affiliates, provided
that Borrower may maintain up to: (a)


 





















 


$250,000 in the
aggregate at Bank of America for up to 90 days after the Closing Date; and (b)
$136,000 in the aggregate held at JP Morgan Bank until August 15, 2005.


 


6.7   Financial Covenants.  Borrower shall at all times maintain the
following financial ratios and covenants:


 


(a)   Minimum Cash.  A balance of Cash of Borrower: (a) on the
Closing Date, prior to the initial Credit Extension, of Three Hundred Thousand
Dollars ($300,000), and (b) at all times from and after the Closing Date, of
not less than One Million Two Hundred Thousand Dollars ($1,200,000) (the
“Required Balance”) in money market account #1892864073 at Bank; provided,
however, upon delivery by Parent to Bank of executed account control and
subordination agreements in favor of Bank, in form and content satisfactory to
Bank in its sole discretion, with respect to Parent’s deposit and investment
accounts, the Required Balance shall be reduced to One Million Dollars
($1,000,000).  Such money market account
and all amounts held therein, together with all proceeds thereof, interest paid
thereon, and substitutions therefor, and all accounts, securities, instruments,
securities entitlements and financial assets arising out of any of the
foregoing, are the “Cash Collateral”. 
Borrower grants and pledges to Bank a continuing security interest in
all presently existing and hereafter acquired or arising Cash Collateral, in
order to secure prompt repayment of any and all Obligations.  Bank shall retain control over the Cash
Collateral up to the Required Balance to secure the Obligations until the
Obligations have been satisfied in full. 
Borrower hereby authorizes Bank to place restrictions on Borrower’s
ability to withdraw amounts from accounts holding the Cash Collateral in order
to ensure that such Required Balance is maintained.  Borrower authorizes Bank to execute and/or
file such documents, and take such actions, as Bank determines reasonable to
perfect its security interest in the Cash Collateral.  Such security interest constitutes a valid,
first priority security interest in the Cash Collateral, and will constitute a
valid, first priority security interest in Cash Collateral acquired after the
date hereof.  Notwithstanding termination
of this Agreement, Bank’s Lien on the Cash Collateral shall remain in effect
for so long as any Obligations are outstanding.


 


(b)   Net Loss.  Net Loss (as defined below) shall not be
greater than (i) ($996,000) for the quarter ended March 31, 2005, (ii)
($642,000) for the quarter ending June 30, 2005, (iii) ($787,000) for the
quarter ending September 30, 2005, and (iv) ($299,000) for the quarter ending
December 31, 2005.  This covenant will be
reset by Bank for periods thereafter based on updated projections approved by
Borrower’s and Parent’s Board of Directors for the next fiscal year, which
shall be acceptable to Bank and delivered to Bank by December 31 of each
year.  As used herein, “Net Loss” means
net loss of Parent measured on a consolidated basis in accordance with GAAP.


 


6.8   Registration of Intellectual
Property Rights.


 


(a)   Borrower shall register or
cause to be registered on an expedited basis (to the extent not already
registered) with the United States Patent and Trademark Office or the United
States Copyright Office, as the case may be, those registrable intellectual
property rights now owned or hereafter developed or acquired by Borrower, to
the extent that Borrower, in its reasonable business judgment, deems it
appropriate to so protect such intellectual property rights.


 


(b)   Borrower shall promptly give
Bank written notice of any applications or registrations of intellectual
property rights filed with the United States Patent and Trademark Office,
including the date of such filing and the registration or application numbers,
if any.


 


(c)   Borrower shall (i) give Bank
not less than 30 days prior written notice of the filing of any applications or
registrations with the United States Copyright Office, including the title of
such intellectual property rights to be registered, as such title will appear
on such applications or


 





















 


registrations, and
the date such applications or registrations will be filed; (ii) prior to the
filing of any such applications or registrations, execute such documents as
Bank may reasonably request for Bank to maintain its perfection in such
intellectual property rights to be registered by Borrower; (iii) upon the
request of Bank, either deliver to Bank or file such documents simultaneously
with the filing of any such applications or registrations; (iv) upon filing any
such applications or registrations, promptly provide Bank with a copy of such
applications or registrations together with any exhibits, evidence of the
filing of any documents requested by Bank to be filed for Bank to maintain the
perfection and priority of its security interest in such intellectual property
rights, and the date of such filing.


 


(d)   Borrower shall execute and
deliver such additional instruments and documents from time to time as Bank
shall reasonably request to perfect and maintain the perfection and priority of
Bank’s security interest in the Intellectual Property Collateral.


 


(e)   Borrower shall (i) protect,
defend and maintain the validity and enforceability of the trade secrets,
Trademarks, Patents and Copyrights, (ii) use commercially reasonable efforts to
detect infringements of the Trademarks, Patents and Copyrights and promptly advise
Bank in writing of material infringements detected and (iii) not allow any
material Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Bank, which shall not be
unreasonably withheld.


 


(f)    Bank may audit Borrower’s
Intellectual Property Collateral to confirm compliance with this Section 6.8,
provided such audit may not occur more often than twice per year, unless an
Event of Default has occurred and is continuing.  Bank shall have the right, but not the
obligation, to take, at Borrower’s sole expense, any actions that Borrower is
required under this Section 6.8 to take but which Borrower fails to take, after
15 days’ notice to Borrower.  Borrower
shall reimburse and indemnify Bank for all reasonable costs and reasonable
expenses incurred in the reasonable exercise of its rights under this Section
6.8.


 


6.9   Consent of Inbound Licensors.  Prior to entering into or becoming bound by
any Material License, Borrower shall: 
(i) provide written notice to Bank of the material terms of such license
or agreement with a description of its likely impact on Borrower’s business or
financial condition; and (ii) in good faith use commercially reasonable efforts
to obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for Borrower’s interest in such licenses or contract rights to be
deemed Collateral and for Bank to have a security interest in it that might
otherwise be restricted by the terms of the applicable license or agreement,
whether now existing or entered into in the future, including obtaining an
executed Consent to Security Interest and Assignment of License Agreement on
Bank’s standard form, provided, however, that the failure to obtain any such
consent or waiver shall not constitute a default under this Agreement.


 


6.10  
Additional Guaranties and Collateral Security.  Borrower shall cause:


 


(a)           each
Subsidiary and each Parent Subsidiary not in existence on the Closing Date or
acquired by Borrower or Parent after the Closing Date (a “New Subsidiary”), to
execute and deliver to Bank as soon as reasonably practicable and in any event
within ten (10) days after the formation, acquisition or change in status
thereof, an unconditional guaranty of the Obligations and any other agreements,
deliverables, or actions requested by Bank in connection therewith, each of
which documents shall be in form and substance satisfactory to Bank, along with
any documents requested by Bank to; and


 


(b)           each
owner of the capital stock of any such New Subsidiary to execute and deliver
promptly and in any event within three (3) days after the formation or
acquisition of such New


 





















 


Subsidiary
such documents and share certificates as may be requested by Bank in order for
Bank to take and perfect a security interest in the capital stock of the New
Subsidiary (but only 65% of the voting stock of any foreign Subsidiary) provided
that Borrower need not provide a guaranty of any Inactive Subsidiary for so
long as such Inactive Subsidiary is not carrying on business and has assets of
less than $10,000.


 


6.11 Further Assurances.  At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this
Agreement.


 


7.             NEGATIVE
COVENANTS.


 


Borrower covenants
and agrees that, so long as any credit hereunder shall be available and until
the outstanding Obligations are paid in full or for so long as Bank may have
any commitment to make any Credit Extensions, Borrower will not do any of the
following without Bank’s prior written consent:


 


7.1   Dispositions.  Convey, sell, lease, license, transfer or
otherwise dispose of (collectively, to “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, or move
cash balances on deposit with Bank to accounts opened at another financial
institution, other than Permitted Transfers.


 


7.2   Change in Name, Location,
Executive Office, or Executive Management; Change in Business; Change in Fiscal
Year; Change in Control.  Change its
name or the Borrower State or relocate its chief executive office without 30
days prior written notification to Bank; replace its chief executive officer or
chief financial officer without 30 days prior written notification to Bank if
the furnishing of such prior notification is reasonably practicable; engage in
any business, or permit any of its Subsidiaries to engage in any business,
other than or reasonably related or incidental to the businesses currently
engaged in by Borrower; change its fiscal year end; have a Change in Control.


 


7.3   Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another
Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person except where (i) such transactions do not in the aggregate exceed
$250,000 during any fiscal year, (ii) no Event of Default has occurred, is
continuing or would exist after giving effect to such transactions, (iii)such
transactions do not result in a Change in Control, and (iv) Borrower is the
surviving entity.


 


7.4   Indebtedness.  Create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on Borrower an obligation to prepay any Indebtedness,
except Indebtedness to Bank.


 


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


 


7.6   Distributions.  Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, except that Borrower may (i) repurchase the stock of
former employees pursuant to stock repurchase agreements as long as an Event of
Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase,


 





















 


and (ii)
repurchase the stock of former employees pursuant to stock repurchase agreements
by the cancellation of indebtedness owed by such former employees to Borrower
regardless of whether an Event of Default exists.


 


7.7   Investments.  Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments, or maintain or invest any of its
property with a Person other than Bank or Bank’s Affiliates or permit any
Subsidiary to do so unless such Person has entered into a control agreement
with Bank, in form and substance satisfactory to Bank, or suffer or permit any
Subsidiary to be a party to, or be bound by, an agreement that restricts such
Subsidiary from paying dividends or otherwise distributing property to
Borrower.


 


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


 


7.9   Subordinated Debt.  Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt (including terms
prohibiting such payments in the applicable subordination agreement in favor of
Bank), or amend any provision affecting Bank’s rights contained in any
documentation relating to the Subordinated Debt without Bank’s prior written
consent.


 


7.10 Inventory and Equipment.  Store the Inventory or the Equipment with a
bailee, warehouseman, or similar third party unless the third party has been
notified of Bank’s security interest and Bank (a) has received an acknowledgment
from the third party that it is holding or will hold the Inventory or Equipment
for Bank’s benefit or (b) is in possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment.  Except for Inventory sold in the ordinary
course of business and except for such other locations as Bank may approve in
writing, Borrower shall keep the Inventory and Equipment only at the location
set forth in Section 10 and such other locations of which Borrower gives Bank
prior written notice and as to which Bank files a financing statement where
needed to perfect its security interest.


 


7.11 No Investment Company; Margin
Regulation.  Become or be controlled
by an “investment company,” within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose.


 


8.             EVENTS
OF DEFAULT.


 


Any one or more of
the following events shall constitute an Event of Default by Borrower under
this Agreement:


 


8.1   Payment Default.  If Borrower fails to pay any of the
Obligations when due;


 


8.2   Covenant Default.


 


(a)   If Borrower fails to perform
any obligation under Article 6 or violates any of the covenants contained in
Article 7 of this Agreement; or


 





















 


(b)   If Borrower fails or neglects
to perform or observe any other material term, provision, condition, covenant
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition or covenant that can be cured, has
failed to cure such default within 10 days after Borrower receives notice
thereof or any officer of Borrower becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the 10 day period or
cannot after diligent attempts by Borrower be cured within such 10 day period,
and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional reasonable period (which shall not in any case exceed
30 days) to attempt to cure such default, and within such reasonable time
period the failure to have cured such default shall not be deemed an Event of
Default but no Credit Extensions will be made;


 


8.3   Material Adverse Change.  If there occurs a material adverse change in
Borrower’s prospects, business or financial condition, or if there is a
material impairment in the prospect of repayment of any portion of the
Obligations or a material impairment in the perfection, value or priority of
Bank’s security interests in the Collateral;


 


8.4   Attachment.  If any material portion of Borrower’s assets
is attached, seized, subjected to a writ or distress warrant, or is levied
upon, or comes into the possession of any trustee, receiver or person acting in
a similar capacity and such attachment, seizure, writ or distress warrant or
levy has not been removed, discharged or rescinded within 10 days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within ten days after Borrower receives notice thereof, provided that none of
the foregoing shall constitute an Event of Default where such action or event
is stayed or an adequate bond has been posted pending a good faith contest by
Borrower (provided that no Credit Extensions will be made during such cure
period);


 


8.5   Insolvency.  If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within 30 days
(provided that no Credit Extensions will be made prior to the dismissal of such
Insolvency Proceeding);


 


8.6   Other Agreements.  If there is a default or other failure to
perform in any agreement to which Borrower is a party with a third party or
parties resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount in
excess of $100,000 or that would reasonably be expected to have a Material
Adverse Effect;


 


8.7   Subordinated Debt.  If Borrower makes any payment on account of
Subordinated Debt, except to the extent the payment is allowed under any
subordination agreement entered into with Bank;


 


8.8   Judgments.  If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least $100,000
shall be rendered against Borrower and shall remain unsatisfied and unstayed
for a period of 10 days (provided that no Credit Extensions will be made prior
to the satisfaction or stay of the judgment);


 


8.9   Misrepresentations.  If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Bank


 





















 


by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document;


 


8.10  
Guaranty. If any guaranty of or pledge of security in support of
all or a portion of the Obligations (collectively, a “Guaranty”) ceases for any
reason to be in full force and effect, or any guarantor or pledgor fails to
perform any obligation under any Guaranty or a security or pledge agreement
(collectively, the “Guaranty Documents”), or any event of default occurs under
any Guaranty Document or any guarantor revokes or purports to revoke a
Guaranty, or any material misrepresentation or material misstatement exists now
or hereafter in any warranty or representation set forth in any Guaranty
Document or in any certificate delivered to Bank in connection with any
Guaranty Document, or if any of the circumstances described in Sections 8.3
through 8.9 occur with respect to any guarantor or pledgor.


 


9.             BANK’S
RIGHTS AND REMEDIES.


 


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


 


(a)   Declare all Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.5 (insolvency), all Obligations shall become
immediately due and payable without any action by Bank);


 


(b)   To the extent any letters of
credit have been issued by or through Bank, demand that Borrower  (i) deposit cash with Bank in an amount equal
to the amount of such letters of credit remaining undrawn, as collateral
security for the repayment of any future drawings under such letters of credit,
and (ii) pay in advance all letter of credit fees scheduled to be paid or
payable over the remaining term of the letters of credit, and Borrower shall
promptly deposit and pay such amounts;


 


(c)   Cease advancing money or
extending credit to or for the benefit of Borrower under this Agreement or
under any other agreement between Borrower and Bank;


 


(d)   Settle or adjust disputes and
claims directly with account debtors for amounts, upon terms and in whatever
order that Bank reasonably considers advisable;


 


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


 


(f)    Set off and apply to the
Obligations any and all (i) balances and deposits of Borrower or any Guarantor
held by Bank, including the Required Balance and any other cash, certificates
of deposit, money market accounts, or deposit accounts held by Bank as
Collateral, and (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by Bank;


 





















 


(g)   Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell (in
the manner provided for herein) the Collateral. 
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;


 


(h)   Sell the Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrower’s premises) as Bank determines is commercially reasonable,
and apply any proceeds to the Obligations in whatever manner or order Bank
deems appropriate.  Bank may sell the
Collateral without giving any warranties as to the Collateral.  Bank may specifically disclaim any warranties
of title or the like.  This procedure
will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral.  If Bank sells
any of the Collateral upon credit, Borrower will be credited only with payments
actually made by the purchaser, received by Bank, and applied to the
indebtedness of the purchaser.  If the
purchaser fails to pay for the Collateral, Bank may resell the Collateral and
Borrower shall be credited with the proceeds of the sale;


 


(i)    Bank may credit bid and
purchase at any public sale;


 


(j)    Apply for the appointment of a
receiver, trustee, liquidator or conservator of the Collateral, without notice
and without regard to the adequacy of the security for the Obligations and
without regard to the solvency of Borrower, any guarantor or any other Person
liable for any of the Obligations; and


 


(k)   Any deficiency that exists
after disposition of the Collateral as provided above will be paid immediately
by Borrower.


 


Bank may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.


 


9.2   Power of Attorney.  Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank’s designated officers, or employees) as Borrower’s true
and lawful attorney to:  (a) send
requests for verification of Accounts or notify account debtors of Bank’s
security interest in the Accounts; (b) endorse Borrower’s name on any checks or
other forms of payment or security that may come into Bank’s possession; (c)
sign Borrower’s name on any invoice or bill of lading relating to any Account,
drafts against account debtors, schedules and assignments of Accounts,
verifications of Accounts, and notices to account debtors; (d) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with
respect to Borrower’s policies of insurance; (f) settle and adjust disputes and
claims respecting the accounts directly with account debtors, for amounts and
upon terms which Bank determines to be reasonable; (g) enter into a
short-form  intellectual property
security agreement consistent with the terms of this Agreement for recording
purposes only or modify, in its sole discretion, any intellectual property
security agreement entered into between Borrower and Bank without first
obtaining Borrower’s approval of or signature to such modification by amending Exhibits
A, B, and C, thereof, as appropriate, to include reference to
any right, title or interest in any Copyrights, Patents or Trademarks acquired
by Borrower after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents or Trademarks in which Borrower no
longer has or claims to have any right, title or interest; and (h) file, in its
sole


 





















 


discretion, one or
more financing or continuation statements and amendments thereto, relative to
any of the Collateral without the signature of Borrower where permitted by law;
provided Bank may exercise such power of attorney to sign the name of Borrower
on any of the documents described in clauses (g) and (h) above, regardless of
whether an Event of Default has occurred. 
The appointment of Bank as Borrower’s attorney in fact, and each and
every one of Bank’s rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank’s obligation to provide advances hereunder is terminated.


 


9.3   Accounts Collection.  At any time after the occurrence and during
the continuation of an Event of Default, Bank may notify any Person owing funds
to Borrower of Bank’s security interest in such funds and verify the amount of
such Account.  Borrower shall collect all
amounts owing to Borrower for Bank, receive in trust all payments as Bank’s
trustee, and immediately deliver such payments to Bank in their original form
as received from the account debtor, with proper endorsements for deposit.


 


9.4   Bank Expenses.  If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following after reasonable notice to Borrower: 
(a) make payment of the same or any part thereof; (b) set up such
reserves under the Revolving Line as Bank deems necessary to protect Bank from
the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.5 of this Agreement, and take any
action with respect to such policies as Bank deems prudent.  Any amounts so paid or deposited by Bank
shall constitute Bank Expenses, shall be immediately due and payable, and shall
bear interest at the then applicable rate hereinabove provided, and shall be
secured by the Collateral.  Any payments
made by Bank shall not constitute an agreement by Bank to make similar payments
in the future or a waiver by Bank of any Event of Default under this Agreement.


 


9.5   Bank’s Liability for
Collateral.  Bank has no obligation
to clean up or otherwise prepare the Collateral for sale. So long as Bank
complies with reasonable banking practices, shall not liable for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person.  Except as specifically set forth in the
preceding sentence, all risk of loss, damage or destruction of the Collateral
shall be borne by Borrower.


 


9.6   No Obligation to Pursue
Others.  Bank has no obligation to
attempt to satisfy the Obligations by collecting them from any other person
liable for them and Bank may release, modify or waive any collateral provided
by any other Person to secure any of the Obligations, all without affecting
Bank’s rights against Borrower.  Borrower
waives any right it may have to require Bank to pursue any other Person for any
of the Obligations.


 


9.7   Remedies Cumulative.  Bank’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be
cumulative.  Bank shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity.  No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of
any Event of Default on Borrower’s part shall be deemed a continuing
waiver.  No delay by Bank shall
constitute a waiver, election, or acquiescence by it.  No waiver by Bank shall be effective unless
made in a written document signed on behalf of Bank and then shall be effective
only in the specific instance and for the specific purpose for which it was
given.  Borrower expressly agrees that
this Section 9.7 may not be waived or modified by Bank by course of
performance, conduct, estoppel or otherwise.


 





















 


9.8   Demand; Protest.  Except as otherwise provided in this
Agreement, Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment and any other notices
relating to the Obligations.


 


10.           NOTICES.


 


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


 


	
  If to Borrower:

  	
   

  	
  RADVIEW SOFTWARE, INC.

  
	
   

  	
   

  	
  7 New England Executive
  Park

  
	
   

  	
   

  	
  Burlington, MA 01803

  
	
   

  	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
   

  	
  FAX: (781) 238-8875

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  FULBRIGHT &
  JAWORSKI L.L.P.

  
	
   

  	
   

  	
  666 Fifth Avenue

  
	
   

  	
   

  	
  New York, NY

  
	
   

  	
   

  	
  Attn: Neil Gold

  
	
   

  	
   

  	
  FAX: (212) 318-3400

  
	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Comerica Bank

  
	
   

  	
   

  	
  2321 Rosecrans Ave.,
  Suite 5000

  
	
   

  	
   

  	
  El Segundo, CA 90245

  
	
   

  	
   

  	
  Attn: Manager

  
	
   

  	
   

  	
  FAX: (310) 297-2290

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Comerica Bank

  
	
   

  	
   

  	
  100 Federal Street,
  28th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
  Attn: Chris Lloyd

  
	
   

  	
   

  	
  FAX: (617) 757-6310

  



 


The parties hereto
may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other.


 


11.           CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.


 


This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of California, without regard to principles of conflicts of law.  Jurisdiction shall lie in the State of
California.  BANK AND BORROWER EACH ACKNOWLEDGE
THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED.  EACH OF THEM, AFTER CONSULTING
OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR


 





















 


ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.


 


12.           REFERENCE
PROVISION.


 


The parties prefer that any dispute between them be
resolved in litigation subject to a Jury Trial Waiver as set forth in Section
11 of this Agreement, but the availability of that process is in doubt because
of the opinion of the California Court of Appeal in Grafton Partners LP v.
Superior Court, 9 Cal.Rptr.3d 511.   This
Reference Provision will be applicable until the California Supreme Court
completes its review of that case, and will continue to be applicable if either
that court or a California Court of Appeal publishes a decision holding that a
pre-dispute Jury Trial Waiver provision similar to that contained in the Loan
Documents is invalid or unenforceable. 
Delay in requesting appointment of a referee pending review of any such
decision, or participation in litigation pending review, will not be deemed a
waiver of this Reference Provision.


 


12.1 Mechanics.


 


(a)   Other than (i) nonjudicial
foreclosure of security interests in real or personal property,  (ii) the appointment of a receiver or (iii)
the exercise of other provisional remedies (any of which may be initiated
pursuant to applicable law), any controversy, dispute or claim (each, a
“Claim”) between the parties arising out of or relating to this Agreement or
any other document, instrument or agreement between the Bank and the
undersigned (collectively in this Section, the “Loan Documents”), will be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the
California Code of Civil Procedure (“CCP”), or their successor sections, which
shall constitute the exclusive remedy for the resolution of any Claim,
including whether the Claim is subject to the reference proceeding.  Except as otherwise provided in the Loan
Documents, venue for the reference proceeding will be in the Superior Court or
Federal District Court in the County or District where venue is otherwise
appropriate under applicable law (the “Court”).


 


(b)   The referee shall be a retired
Judge or Justice selected by mutual written agreement of the parties.  If the parties do not agree, the referee
shall be selected by the Presiding Judge of the Court (or his or her
representative).  A request for
appointment of a referee may be heard on an ex parte or
expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted.  The referee shall be appointed to sit with
all the powers provided by law.  Each
party shall have one peremptory challenge pursuant to CCP §170.6.  Pending appointment of the referee, the Court
has power to issue temporary or provisional remedies.


 


(c)   The parties agree that time is
of the essence in conducting the reference proceedings.  Accordingly, the referee shall be requested
to (a) set the matter for a status and trial-setting conference within fifteen
(15) days after the date of selection of the referee, (b) if practicable, try
all issues of law or fact within ninety (90) days after the date of the
conference and (c) report a statement of decision within twenty (20) days after
the matter has been submitted for decision. 
Any decision rendered by the referee will be final, binding and
conclusive, and judgment shall be entered pursuant to CCP §644.


 


(d)   The referee will have power to
expand or limit the amount and duration of discovery.   The referee may set or extend discovery
deadlines or cutoffs for good cause, including a party’s failure to provide
requested discovery for any reason whatsoever. 
Unless otherwise ordered, no


 





















 


party shall be
entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service.  All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding.


 


12.2         Procedures.  Except as expressly set forth in this
Agreement, the referee shall determine the manner in which the reference
proceeding is conducted including the time and place of hearings, the order of
presentation of evidence, and all other questions that arise with respect to
the course of the reference proceeding. 
All proceedings and hearings conducted before the referee, except for
trial, shall be conducted without a court reporter, except that when any party
so requests, a court reporter will be used at any hearing conducted before the
referee, and the referee will be provided a courtesy copy of the
transcript.  The party making such a
request shall have the obligation to arrange for and pay the court reporter.  Subject to the referee’s power to award costs
to the prevailing party, the parties will equally share the cost of the referee
and the court reporter at trial.


 


12.3         Application
of Law. The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California.  The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the
reference proceeding.  The referee shall
be empowered to enter equitable as well as legal relief, provide all temporary
or provisional remedies, enter equitable orders that will be binding on the
parties and rule on any motion which would be authorized in a trial, including
without limitation motions for summary judgment or summary adjudication .  The referee shall issue a decision at the
close of the reference proceeding which disposes of all claims of the parties
that are the subject of the reference. 
The referee’s decision shall be entered by the Court as a judgment or an
order in the same manner as if the action had been tried by the Court.  The parties reserve the right to appeal from
the final judgment or order or from any appealable decision or order entered by
the referee.  The parties reserve the right
to findings of fact, conclusions of laws, a written statement of decision, and
the right to move for a new trial or a different judgment, which new trial, if
granted, is also to be a reference proceeding under this provision.


 


12.4         Repeal.
If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration.  The
arbitration will be conducted by a retired judge or Justice, in accordance with
the California Arbitration Act §1280 through §1294.2 of the CCP as amended from
time to time.  The limitations with
respect to discovery set forth above shall apply to any such arbitration
proceeding.


 


12.5         THE
PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY, AND THAT THEY ARE IN
EFFECT WAIVING THEIR RIGHT TO TRIAL BY JURY IN AGREEING TO THIS REFERENCE
PROVISION.  AFTER CONSULTING (OR HAVING
HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS
REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF
OR IS RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.


 


13.           GENERAL
PROVISIONS.


 


13.1 Successors and Assigns.  This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties and shall bind all persons who become bound as a debtor to this
Agreement; provided, however, that neither this Agreement nor any rights


 





















 


hereunder may be
assigned by Borrower without Bank’s prior written consent, which consent may be
granted or withheld in Bank’s sole discretion. 
Bank shall have the right without the consent of or notice to Borrower
to sell, transfer, negotiate, or grant participation in all or any part of, or
any interest in, Bank’s obligations, rights and benefits hereunder.


 


13.2 Indemnification.  Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and
liabilities claimed or asserted by any other party in connection with the
transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank, its officers,
employees and agents as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this
Agreement, or otherwise (including without limitation reasonable attorneys fees
and expenses), except for losses caused by Bank’s gross negligence or willful
misconduct.


 


13.3 Time of Essence.  Time is of the essence for the performance of
all obligations set forth in this Agreement.


 


13.4 Severability of Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.


 


13.5 Amendments in Writing,
Integration. All amendments to or terminations of this Agreement or the
other Loan Documents must be in writing. 
All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.


 


13.6 Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.


 


13.7 Survival.  All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make any Credit
Extension to Borrower.  The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses,
costs and liabilities described in Section 13.2 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Bank have run.


 


13.8 Confidentiality.  In handling any confidential information,
Bank and all employees and agents of Bank shall exercise the same degree of
care that Bank exercises with respect to its own proprietary information of the
same types to maintain the confidentiality of any non-public information
thereby received or received pursuant to this Agreement except that disclosure
of such information may be made (i) to the subsidiaries or Affiliates of Bank
in connection with their present or prospective business relations with
Borrower, (ii) to prospective transferees or purchasers of any interest in the
Loans, provided that they have entered into a comparable confidentiality
agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or
similar order, (iv) as may be required in connection with the examination,
audit or similar investigation of Bank and (v) as Bank may determine in
connection with the enforcement of any remedies hereunder.  Confidential information hereunder shall not
include information that either:  (a) is
in the public domain or in the knowledge or possession of Bank when disclosed
to Bank, or becomes part of the public domain after disclosure to Bank through
no fault of Bank; or (b) is disclosed  to
Bank by a third 


 





















 


party, provided
Bank does not have actual knowledge that such third party is prohibited from
disclosing such information.


 


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


 


	
   

  	
   

  	
  RADVIEW SOFTWARE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ CHRISTOPHER DINEEN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ PAULA HOWELL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  SVP

  
						



 





















 


EXHIBIT A


 


DEFINITIONS


 


“Accounts”
means all presently existing and hereafter arising accounts, contract rights,
payment intangibles and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower and any and all credit insurance, guaranties, and other security therefor,
as well as all merchandise returned to or reclaimed by Borrower and Borrower’s
Books relating to any of the foregoing.


 


“Advance”
or “Advances” means a cash advance or cash advances under the Revolving Line.


 


“Affiliate”
means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is
under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners (if such Person is a partnership or
similar entity).


 


“Bank
Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses, whether generated in-house or by outside counsel)
incurred in connection with the preparation, negotiation, administration, and
enforcement of the Loan Documents; 
reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees
and expenses (whether generated in-house or by outside counsel) incurred in
amending, enforcing or defending the Loan Documents (including fees and
expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought.


 


“Borrower
State” means New Jersey, the state under whose laws Borrower is organized.


 


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


 


“Borrowing
Base” means an amount equal to $1,000,000 plus 75% of Eligible Accounts,
as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower.


 


“Borrower
Party” or “Borrower Parties” means, individually or collectively, as
applicable, Parent and the Parent Subsidiaries, including Borrower and its
Subsidiaries.


 


“Business
Day” means any day that is not a Saturday, Sunday, or other day on which banks
in the State of California or the Commonwealth of Massachusetts are authorized
or required to close.


 


“Cash”
means unrestricted cash and cash equivalents.


 


“Change
in Control” shall mean a transaction in which any “person” or “group” (within
the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient
number of shares of all classes of stock then outstanding of Borrower
ordinarily entitled to vote in the election of directors, empowering such
“person” or “group” to elect a majority of the Board of Directors of Borrower,
who did not have such power before such transaction.


 


“Chief
Executive Office State” means Massachusetts, where Borrower’s chief executive
office is located.


 


“Closing
Date” means the date of this Agreement.


 





















 


“Code”
means the California Uniform Commercial Code as amended or supplemented from
time to time.


 


“Collateral”
means the property described on Exhibit B attached hereto and all
Negotiable Collateral and Intellectual Property Collateral to the extent not
described on Exhibit B, except to the extent any such property (i) is
nonassignable by its terms without the consent of the licensor thereof or
another party (but only to the extent such prohibition on transfer is
enforceable under applicable law, including, without limitation, Sections 9406
and 9408 of the Code), (ii) the granting of a security interest therein is
contrary to applicable law, provided that upon the cessation of any such restriction
or prohibition, such property shall automatically become part of the
Collateral, or (iii) constitutes the capital stock of a controlled foreign
corporation (as defined in the IRC), in excess of 65% of the voting power of
all classes of capital stock of such controlled foreign corporations entitled
to vote.


 


“Collateral
State” means the state or states where the Collateral is located, which are
California, Massachusetts, New Jersey, and Texas.


 


“Contingent
Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness,
lease, dividend, letter of credit or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable; (ii)
any obligations with respect to undrawn letters of credit, corporate credit
cards or merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term “Contingent Obligation” shall not include
endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determined amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith; provided, however,
that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.


 


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


 


“Credit
Extension” means each Advance, or any other extension of credit by Bank to or
for the benefit of Borrower hereunder.


 


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


 


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


 


(b)                                 Credit
balances over 90 days;


 


(c)                                  Accounts
with respect to an account debtor, 25% of whose Accounts the account debtor has
failed to pay within 90 days of invoice date;


 





















 


(d)                                 Accounts
with respect to an account debtor, including Subsidiaries and Affiliates, whose
total obligations to Borrower exceed 25% of all Accounts, to the extent such
obligations exceed the aforementioned percentage, except as approved in writing
by Bank;


 


(e)                                  Accounts
with respect to which the account debtor does not have its principal place of
business in the United States, except for Eligible Foreign Accounts;


 


(f)                                    Accounts
with respect to which the account debtor is the United States or any
department, agency, or instrumentality of the United States;


 


(g)                                 Accounts
with respect to which Borrower is liable to the account debtor for goods sold
or services rendered by the account debtor to Borrower, but only to the extent
of any amounts owing to the account debtor against amounts owed to Borrower;


 


(h)                                 Accounts
with respect to which goods are placed on consignment, guaranteed sale, sale or
return, sale on approval, bill and hold, demo or promotional, or other terms by
reason of which the payment by the account debtor may be conditional;


 


(i)                                     Accounts
with respect to which the account debtor is an officer, employee, agent or
Affiliate of Borrower;


 


(j)                                     Accounts
that have not yet been billed to the account debtor  or that relate to deposits (such as good
faith deposits) or other property of the account debtor held by Borrower for
the performance of services or delivery of goods which Borrower has not yet
performed or delivered;


 


(k)                                  Pre-billed
Accounts, other than contracts for software maintenance, which shall be
included;


 


(l)                                     Accounts
with respect to which the account debtor disputes liability or makes any claim
with respect thereto as to which Bank believes, in its sole discretion, that
there may be a basis for dispute (but only to the extent of the amount subject
to such dispute or claim), or is subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business;


 


(m)                               Accounts
the collection of which Bank reasonably determines after inquiry and
consultation with Borrower to be doubtful; and


 


(n)                                 Retentions
and hold-backs.


 


“Eligible
Foreign Accounts” means Accounts with respect to which the account debtor does
not have its principal place of business in the United States and that are (i)
supported by one or more letters of credit in an amount and of a tenor, and
issued by a financial institution, acceptable to Bank, (ii) insured by the
Export Import Bank of the United States, (iii) generated by an account debtor
with its principal place of business in Canada, provided that the Bank has
perfected its security interest in the appropriate Canadian province, or (iv)
approved by Bank on a case-by-case basis. 
All Eligible Foreign Accounts must be calculated in U.S. Dollars.


 


“Environmental
Laws” means all laws, rules, regulations, orders and the like issued by any
federal state, local foreign or other governmental or quasi-governmental
authority or any agency pertaining to the environment or to any hazardous
materials or wastes, toxic substances, flammable, explosive or radioactive
materials, asbestos or other similar materials.


 





















 


“Equipment”
means all present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which Borrower
has any interest.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.


 


“Event
of Default” has the meaning assigned in Article 8.


 


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


 


“Inactive
Subsidiary” means any Subsidiary that is not actively carrying on business and
that has assets of less than $10,000.


 


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


 


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


 


“Intellectual
Property Collateral” means all of Borrower’s right, title, and interest in and
to the following:


 


(a)                                  Copyrights,
Trademarks and Patents;


 


(b)                                 Any
and all trade secrets, and any and all intellectual property rights in computer
software and computer software products now or hereafter existing, created,
acquired or held;


 


(c)                                  Any
and all design rights which may be available to Borrower now or hereafter
existing, created, acquired or held;


 


(d)                                 Any
and all claims for damages by way of past, present and future infringement of
any of the rights included above, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
intellectual property rights identified above;


 


(e)                                  All
licenses or other rights to use any of the Copyrights, Patents or Trademarks,
and all license fees and royalties arising from such use to the extent
permitted by such license or rights;


 


(f)                                    All
amendments, renewals and extensions of any of the Copyrights, Trademarks or
Patents; and


 


(g)                                 All
proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.


 


“Inventory”
means all present and future inventory in which Borrower has any interest.


 


“Investment”
means any beneficial ownership of (including stock, partnership or limited
liability company interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.


 





















 


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


 


 “Lien” means any mortgage, lien, deed of
trust, charge, pledge, security interest or other encumbrance.


 


 “Loan Documents” means, collectively, this
Agreement, any note or notes executed by Borrower, and any other document,
instrument or agreement entered into in connection with this Agreement, all as
amended or extended from time to time.


 


“Material
Adverse Effect” means a material adverse effect on (i) the business operations,
condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents,
(iii) Borrower’s interest in, or the value, perfection or priority of Bank’s
security interest in the Collateral.


 


“Material
License” means any license or other agreement of Borrower (other than licenses
for off-the-shelf software in the ordinary course of Borrower’s Business): (a)
with Parent, any Subsidiary, Parent Subsidiary or any other Affiliate of
Borrower; and (b) with any non-Affiliate, that is material to Borrower’s
business or that gives rise to, or the absence of which would result in a loss
of, more than five percent (5%) of Borrower’s gross revenues in any given
month, including revenue derived from the sale, licensing, rendering or
disposition of any product or service.


 


“Negotiable
Collateral” means all of Borrower’s present and future letters of credit of
which it is a beneficiary, drafts, instruments (including promissory notes),
securities, documents of title, and chattel paper, and Borrower’s Books
relating to any of the foregoing.


 


“Obligations”
means all debt, principal, interest, Bank Expenses and other amounts owed to
Bank by Borrower pursuant to this Agreement or any other agreement, whether
absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an
Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.


 


“Parent”
means RadView Software Ltd., a company formed under the laws of Israel.


 


“Parent
Subsidiary” means any corporation, partnership or limited liability company,
joint venture or other Person in which (i) any general partnership interest or
(ii) more than 50% of the stock, limited liability company interest or joint
venture of which by the terms thereof ordinary voting power to elect the Board
of Directors, managers or trustees of the entity (or similar governing body),
at the time as of which any determination is being made, is owned by Parent,
either directly or through an Affiliate.


 


“Patents”
means all patents, patent applications and like protections including without
limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.


 


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


 


“Permitted
Indebtedness” means:


 


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


 





















 


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


 


(c)                                  Indebtedness
not to exceed $250,000 in the aggregate in any fiscal year of Borrower secured
by a lien described in clause (c) of the defined term “Permitted Liens,”
provided such Indebtedness does not exceed the lesser of the cost or fair
market value of the equipment financed with such Indebtedness;


 


(d)                                 Subordinated
Debt;


 


(e)                                  Indebtedness
to trade creditors incurred in the ordinary course of business;


 


(f)                                    Indebtedness
to Parent consisting of intercompany journal entries made in connection with
transfer pricing transactions, provided that all such transactions are
cashless; and


 


(g)                                 Extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be.


 


“Permitted
Investment” means:


 


(a)                                  Investments
existing on the Closing Date disclosed in the Schedule;


 


(b)                                 (i)
Marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency or any State thereof maturing within one
year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having
rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no
more than one year from the date of investment therein, and (iv) Bank’s money
market accounts;


 


(c)                                  Repurchases
of stock from former employees or directors of Borrower under the terms of
applicable repurchase agreements (i) in an aggregate amount not to exceed
$100,000 in any fiscal year, provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases, or (ii) in
any amount where the consideration for the repurchase is the cancellation of
indebtedness owed by such former employees to Borrower regardless of whether an
Event of Default exists;


 


(d)                                 Investments
accepted in connection with Permitted Transfers;


 


(e)                                  Loans
to Parent made after the Closing Date to the extent necessary to fund Parent’s
operating expenses incurred in the ordinary course of business (the “Parent
Advances”), provided that no Parent Advance shall be deemed a Permitted
Investment (and such Parent Advance shall be prohibited hereunder) if, as of
the date such advance is to be funded and after giving effect to such advance,
the aggregate amount of all funded Parent Advances would exceed the sum
of:  (i) the aggregate amount of cash
transfers from Parent to Borrower occurring after the Closing Date and prior to
the funding of such Parent Advance (to the extent the obligation resulting from
such transfer is Subordinated Debt), plus (ii) either (A) Two Hundred Thousand
Dollars ($200,000) if such Parent Advance is to be funded prior to December 31,
2005; or (B) Nine Hundred Eighty Thousand Dollars ($980,000) if such Parent
Advance is to be funded after December 31, 2005 but prior to the first
anniversary of the Closing Date.


 





















(f)                                    Investments
in Affiliates and Subsidiaries not to exceed $10,000 in the aggregate in any
fiscal year;


 


(g)                                 Investments
not to exceed $50,000 in the aggregate in any fiscal year consisting of (i)
travel advances and employee relocation loans and other employee loans and
advances in the ordinary course of business, and (ii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries pursuant to employee stock purchase plan agreements
approved by Borrower’s Board of Directors;


 


(h)                                 Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the
ordinary course of Borrower’s business;


 


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


 


(j)                                     Joint
ventures or strategic alliances in the ordinary course of Borrower’s business
consisting of the non-exclusive licensing of technology, the development of
technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed $50,000 in the aggregate in any fiscal
year.


 


“Permitted
Liens” means the following:


 


(a)                                  Any
Liens existing on the Closing Date and disclosed in the Schedule (excluding
Liens to be satisfied with the proceeds of the Advances) or arising under this
Agreement or the other Loan Documents;


 


(b)                                 Liens
for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or being contested in good faith by appropriate proceedings and
for which Borrower maintains adequate reserves, provided the same have no
priority over any of Bank’s security interests;


 


(c)                                  Liens
not to exceed $250,000 in the aggregate (i) upon or in any Equipment (other
than Equipment financed by an Equipment Advance) acquired or held by Borrower
or any of its Subsidiaries to secure the purchase price of such Equipment or
indebtedness incurred solely for the purpose of financing the acquisition or
lease of such Equipment, or (ii) existing on such Equipment at the time of its
acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such Equipment;


 


(d)                                 Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through (e)
above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase; and


 


(e)                                  Liens
arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.4 (attachment) or 8.8
(judgments).


 


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


 





















 


(a)                                  Inventory
in the ordinary course of business;


 


(b)                                 licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business;


 


(c)                                  worn-out
or obsolete Equipment not financed with the proceeds of Equipment Advances; or


 


(d)                                 other
assets of Borrower or its Subsidiaries that do not in the aggregate exceed
$50,000 during any fiscal year.


 


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


 


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


 


 “Responsible Officer” means each of the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer and
the Controller of Borrower.


 


“Revolving
Line” means a Credit Extension of up to $2,000,000.


 


“Revolving
Maturity Date” means May 24, 2006.


 


“Schedule”
means the schedule of exceptions attached hereto and approved by Bank, if any.


 


“SOS
Reports” means the official reports from the Secretaries of State of each
Collateral State, Chief Executive Office State and the Borrower State and other
applicable federal, state or local government offices identifying all current
security interests filed in the Collateral and Liens of record as of the date
of such report.


 


“Subordinated
Debt” means any debt incurred by Borrower that is subordinated in writing to
the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and
identified as being such by Borrower and Bank).


 


“Subsidiary”
means any corporation, partnership or limited liability company, joint venture
or other Person in which (i) any general partnership interest or (ii) more than
50% of the stock, limited liability company interest or joint venture of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity (or similar governing body), at the time as
of which any determination is being made, is owned by Borrower, either directly
or through an Affiliate.


 


 “Trademarks” means any trademark and servicemark
rights, whether registered or not, applications to register and registrations
of the same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by such trademarks.


 





















 


	
  DEBTOR

  	
   

  	
  RADVIEW SOFTWARE, INC.

  
	
   

  	
   

  	
   

  
	
  SECURED PARTY:

  	
   

  	
  COMERICA BANK

  



 


EXHIBIT B


 


COLLATERAL
DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT


 


All
personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:


 


(a)          all accounts (including
health-care-insurance receivables), chattel paper (including tangible and
electronic chattel paper), deposit accounts, documents (including negotiable
documents), equipment (including all accessions and additions thereto), general
intangibles (including payment intangibles and software), goods (including
fixtures), instruments (including promissory notes), inventory (including all
goods held for sale or lease or to be furnished under a contract of service,
and including returns and repossessions), investment property (including
securities and securities entitlements), letter of credit rights, money, and
all of Debtor’s books and records with respect to any of the foregoing, and the
computers and equipment containing said books and records;


 


(b)         all common law and
statutory copyrights and copyright registrations, applications for
registration, now existing or hereafter arising, in the United States of
America or in any foreign jurisdiction, obtained or to be obtained on or in
connection with any of the foregoing, or any parts thereof or any underlying or
component elements of any of the foregoing, together with the right to
copyright and all rights to renew or extend such copyrights and the right (but
not the obligation) of Secured Party to sue in its own name and/or in the name
of the Debtor for past, present and future infringements of copyright;


 


(c)          all trademarks, service
marks, trade names and service names and the goodwill associated therewith,
together with the right to trademark and all rights to renew or extend such
trademarks and the right (but not the obligation) of Secured Party to sue in
its own name and/or in the name of the Debtor for past, present and future infringements
of trademark;


 


(d)         all (i) patents and
patent applications filed in the United States Patent and Trademark Office or
any similar office of any foreign jurisdiction, and interests under patent
license agreements, including, without limitation, the inventions and
improvements described and claimed therein, (ii) licenses pertaining to any
patent whether Debtor is licensor or 
licensee, (iii) income, royalties, damages, payments, accounts and
accounts receivable now or hereafter due and/or payable under and with respect
thereto, including, without limitation, damages and payments for past, present
or future infringements thereof, (iv) right (but not the obligation) to sue in
the name of Debtor and/or in the name of Secured Party for past, present and
future infringements thereof, (v) rights corresponding thereto throughout the
world in all jurisdictions in which such patents have been issued or applied
for, and (vi) reissues, divisions, continuations, renewals, extensions and
continuations-in-part with respect to any of the foregoing; and


 


(e)          any and all cash
proceeds and/or noncash proceeds of any of the foregoing, including, without
limitation, insurance proceeds, and all supporting obligations and the security
therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2001.


 





















 


EXHIBIT B


 


TECHNOLOGY
& LIFE SCIENCES DIVISION

LOAN ANALYSIS

LOAN ADVANCE/PAYDOWN REQUEST FORM


DEADLINE FOR NEXT DAY
PROCESSING IS 3:30 P.M. Eastern Time

DEADLINE FOR WIRE TRANSFERS IS 3:30 P.M. Eastern Time


 


	
  TO: Loan Analysis

  	
   

  	
  DATE:

  	
   

  	
  TIME:

  	
   

  
	
  FAX #: (650) 846-6840

  	
   

  	
   

  	
   

  	
   

  



 


	
  FROM:

  	
  RADVIEW SOFTWARE, INC.

  	
   

  	
  TELEPHONE REQUEST (For Bank Use Only):

  
	
   

  	
  Borrower’s Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The following person is
  authorized to request the loan payment transfer/loan advance on the
  designated account and is known to me.

  
	
  FROM:

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Signer’s
  Name

  	
   

  
	
  FROM:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature
  (Borrower)

  	
   

  	
  Authorized Request
  & Phone #

  
	
  PHONE #:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Received by (Bank)
  & Phone #

  
	
  FROM 

  	
   

  	
   

  	
   

  
	
  ACCOUNT#:

  	
   

  	
   

  	
   

  
	
  (please include Note
  number, if applicable)

  	
   

  	
   

  
	
  TO ACCOUNT #:

  	
   

  	
   

  	
  Authorized Signature
  (Bank)

  
	
  (please include Note
  number, if applicable)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  REQUESTED TRANSACTION TYPE

  	
  REQUESTED DOLLAR AMOUNT

  	
  For Bank Use Only

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL INCREASE* (ADVANCE)

  	
  $

  	
   

  	
   

  	
  Date Rec’d:

  
	
  PRINCIPAL PAYMENT (ONLY)

  	
  $

  	
   

  	
   

  	
  Time:

  
	
   

  	
   

  	
  Comp. Status:

  	
  YES

  	
  NO

  
	
  OTHER INSTRUCTIONS:

  	
  Status Date:

  
	
   

  	
  Time:

  
	
   

  	
  Approval:

  
	
   

  	
   

  	
   

  	
   

  
	
  All representations and warranties of Borrower
  stated in the Loan Agreement are true, correct and complete in all material
  respects as of the date of the telephone request for and advance confirmed by
  this Borrowing Certificate, including without limitation the representation
  that Borrower has paid for and owns the equipment financed by the Bank;
  provided, however, that those representations and warranties the date expressly
  referring to another date shall be true, correct and complete in all material
  respects as of such date. 

  
	
   

  
	
  
  

  

  

  
	
  *IS THERE A WIRE REQUEST TIED TO
  THIS LOAN ADVANCE?  (PLEASE CIRCLE ONE)
  

  	
  YES

  	
  NO

  	
   

  
	
  If YES, the Outgoing
  Wire Transfer Instructions must be completed below.

  
	
   

  	
   

  	
   

  	
   

  
	
  OUTGOING WIRE TRANSFER INSTRUCTIONS

  	
  Fed Reference Number

  	
  Bank Transfer Number

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  items marked with an asterisk (*) are required to be completed.

  
	
   

  	
   

  
	
  *Beneficiary Name

  	
   

  
	
  *Beneficiary Account Number

  	
   

  
																



 





















 


	
  *Beneficiary Address

  	
   

  
	
  Currency Type

  	
  US DOLLARS ONLY

  
	
  *ABA Routing Number (9 Digits)

  	
   

  
	
  *Receiving Institution Name

  	
   

  
	
  *Receiving Institution Address

  	
   

  
	
  *Wire Account

  	
  $

  



 





















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  Borrower:
  RADVIEW SOFTWARE, INC.

  	
   

  	
  Lender: Comerica Bank

  
	
   

  	
   

  	
   

  
	
  Commitment Amount: $2,000,000

  	
   

  	
   

  



 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  
	
  1.             Accounts
  Receivable Book Value as of      

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  2.             Additions
  (please explain on reverse)

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  3.             TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  
	
  4.             Amounts
  over 90 days due

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  5.             Balance
  of 25% over 90 day accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  6.             Concentration
  Limits

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  7.             Foreign
  Accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  8.             Governmental
  Accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  9.             Contra
  Accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  10.           Demo
  Accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  11.           Intercompany/Employee
  Accounts

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  12.           Other
  (please explain on reverse)

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  13.           TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  14.           Eligible
  Accounts (#3 minus #13)

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  15.           LOAN
  VALUE OF ACCOUNTS ($1,000,000 plus 75% of #14)

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  
	
  16.           Maximum
  Loan Amount

  	
   

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  17.           Total
  Funds Available [Lesser of #16 or #15]

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  18.           Present
  balance owing on Line of Credit

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  19.           RESERVE
  POSITION (#17 minus #18)

  	
   

  	
   

  	
  $

  	
   

  	
   

  



 


The
undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.


 


	
  RADVIEW SOFTWARE, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  	
   

  



 





















 


EXHIBIT D

COMPLIANCE CERTIFICATE


TO:                                                                            COMERICA
BANK


 


FROM:                                                         RADVIEW
SOFTWARE, INC.


 


The undersigned
authorized officer of RADVIEW SOFTWARE, INC. hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please indicate compliance status by circling
Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly financial statements (10Q)

  	
   

  	
  Quarterly within 45 days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited) (10K)

  	
   

  	
  FYE within 120 days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly within 30 days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s Cash

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s Cash at Bank &
  affiliates

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Parent’s Cash

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Parent’s Cash at Bank &
  affiliates

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of RadView (UK) Cash

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of RadView (UK) Cash at Bank &
  affiliates

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of RadView GmbH Cash

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of RadView GmbH Cash at Bank &
  affiliates

  	
   

  	
  Amount: 

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Projections

  	
   

  	
  Dec. 31

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
   

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Cash at Bank

  	
   

  	
  $300,000 (Closing Date)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
  $1,200,000 (thereafter)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Net Loss

  	
   

  	
  See Section 6.7(b)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comments Regarding Exceptions:
  See Attached.

  	
   

  	
  BANK USE ONLY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																		



 





















 


SCHEDULE OF
EXCEPTIONS


 





















 


Corporation Resolutions and Incumbency
Certification


Authority to Procure Loans


 


I certify that I am the duly elected and qualified Secretary of RadView
Software, Inc., a New Jersey corporation; that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


1.               Any one (1) of the
following                                
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:


 


(a)          Negotiate and procure
loans, letters of credit and other credit or financial accommodations from
Comerica Bank (“Bank”), a Michigan banking corporation, including, without
limitation, that certain Loan and Security Agreement dated as of May 25, 2005,
as may subsequently be amended from time to time.


 


(b)         Discount with the Bank,
commercial or other business paper belonging to the Corporation made or drawn
by or upon third parties, without limit as to amount;


 


(c)          Purchase, sell,
exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;


 


(d)         Give security for any
liabilities of the Corporation to the Bank by grant, security interest,
assignment, lien, deed of trust or mortgage upon any real or personal property,
tangible or intangible of the Corporation; and


 


(e)          Execute and deliver in
form and content as may be required by the Bank any and all notes, evidences of
Indebtedness, applications for letters of credit, guaranties, subordination
agreements, loan and security agreements, financing statements, assignments,
liens, deeds of trust, mortgages, trust receipts and other agreements, instruments
or documents to carry out the purposes of these Resolutions, any or all of
which may relate to all or to substantially all of the Corporation’s property
and assets.


 


2.               Said Bank be and it
is authorized and directed to pay the proceeds of any such loans or discounts
as directed by the persons so authorized to sign, whether so payable to the
order of any of said persons in their individual capacities or not, and whether
such proceeds are deposited to the individual credit of any of said persons or not;


 


3.               Any and all
agreements, instruments and documents previously executed and acts and things
previously done to carry out the purposes of these Resolutions are ratified,
confirmed and approved as the act or acts of the Corporation.


 


4.               These Resolutions
shall continue in force, and the Bank may consider the holders of said offices
and their signatures to be and continue to be as set forth in a certified copy
of these Resolutions delivered to the Bank, until notice to the contrary in
writing is duly served on the Bank (such notice to have no effect on any action
previously taken by the Bank in reliance on these Resolutions).


 


5.               Any person,
corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation.


 


6.               The Bank may
consider the holders of the offices of the Corporation and their signatures,
respectively, to be and continue to be as set forth in the Certificate of the
Secretary of the Corporation until notice to the contrary in writing is duly
served on the Bank.


 


I further certify
that the above Resolutions are in full force and effect as of the date of this
Certificate; that these Resolutions and any borrowings or financial
accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which


 





















 


the Corporation is
a party or by which it is bound; and that neither the articles of incorporation
nor bylaws of the Corporation nor any agreement, indenture or other instrument
to which the Corporation is a party or by which it is bound require the vote or
consent of shareholders of the Corporation to authorize any act, matter or
thing described in the foregoing Resolutions.


 


I further certify
that the following named persons have been duly elected to the offices set
opposite their respective names, that they continue to hold these offices at
the present time, and that the signatures which appear below are the genuine,
original signatures of each respectively:


 


(PLEASE
SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)


 


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


In Witness
Whereof, I have affixed my name as Secretary and have caused the corporate seal
(where available) of said Corporation to be affixed on May 25, 2005.


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ***

  	
   

  



 


	
  The Above Statements are Correct.

  	
   

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE. A SHAREHOLDER OTHER
  THAN SECRETARY WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

  
				



 


Failure to
complete the above when the Secretary is authorized to sign alone shall
constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.


 





















 


COMERICA BANK


Member FDIC


 


ITEMIZATION OF AMOUNT FINANCED


DISBURSEMENT INSTRUCTIONS


(Revolver)


 


	
  Name(s):  RADVIEW
  SOFTWARE, INC.                                                                        Date:
  May 25, 2005

  
	
   

  	
   

  
	
  $

  	
  credited to deposit
  account No.                      when
  Advances are requested or disbursed to Borrower by cashiers check or wire
  transfer

  
	
   

  
	
  Amounts paid to others
  on your behalf:

  
	
  $

  	
  to Comerica Bank for
  Facility Fee

  
	
  $ 

  	
  to Comerica Bank for
  accounts receivable audit (estimate)

  
	
  $ 

  	
  to Bank counsel fees
  and expenses

  
	
  $

  	
  to                    

  
	
  $

  	
  to                    

  
	
  $2,000,000

  	
  TOTAL (AMOUNT FINANCED)

  



 


Upon consummation
of this transaction, this document will also serve as the authorization for
Comerica Bank to disburse the loan proceeds as stated above.


 


 


	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  



 





















 


AGREEMENT
TO PROVIDE INSURANCE


 


TO:         COMERICA
BANK                                                                             Date:  May 25, 2005


Attn:  Deni M. Snider, 
MC 4770


75 E. Trimble Road


San
Jose, CA  95131                                                                            Borrower:  RADVIEW SOFTWARE, INC.


 


In consideration of a
loan in the amount of $2,000,000, secured by all tangible personal property
including inventory and equipment.


 


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


 


I/We also agree to advise
the below named agent to add Comerica Bank as lender’s loss payable on the new
or existing insurance policy, and to furnish Bank at above address with a copy
of said policy/endorsements and any subsequent renewal policies.


 


I/We understand
that the policy must contain:


 


1.             Fire
and extended coverage in an amount sufficient to cover:


 


(a)           The
amount of the loan, OR


 


(b)           All
existing encumbrances, whichever is greater,


 


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


 


2.                                       Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica Bank, or any other
form acceptable to Bank.


 


INSURANCE INFORMATION


 


Insurance Co./Agent                                                           Telephone
No.:


 


Agent’s Address:


 


	
  Signature of
  Obligor:

  	
   

  
	
   

  	
   

  
	
  Signature of
  Obligor:

  	
   

  



 




	
  FOR BANK USE ONLY

  
	
   

  
	
  INSURANCE VERIFICATION:
  Date: 

  	
   

  
	
   

  	
   

  
	
  Person Spoken to:

  	
   

  
	
   

  
	
  Policy Number:

  	
   

  
	
   

  
	
  Effective From:

  	
   

  	
  To:

  	
   

  
	
   

  
	
  Verified by:

  	
   

  
								






 





















 


	
  COMERICA BANK

  	
   

  
	
   

  	
  AUTOMATIC DEBIT AUTHORIZATION

  
	
  Member FDIC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  To:  Comerica Bank

  
	
   

  
	
  Re:  Loan #                             

  
	
   

  
	
  You are hereby
  authorized and instructed to charge account No.                         
  in the name of RADVIEW SOFTWARE, INC.

  
	
  for principal, interest
  and other payments due on above referenced loan as set forth below and credit
  the loan referenced above.

  
	
   

  
	
  ý            Debit
  each interest payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  
	
  ý            Debit
  each principal payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  
	
  ý            Debit
  each payment for Bank Expenses as it becomes due according to the terms of
  the Loan and Security Agreement and any renewals or amendments thereof.

  
	
   

  
	
  This Authorization is
  to remain in full force and effect until revoked in writing.

  
	
   

  
	
   

  
	
  Borrower Signature

  	
  Date

  
	
   

  	
   

  
	
   

  	
  May 25, 2005

  
			



 





















 


	
  Phone:

  	
  COMERICA BANK

  
	
  Fax

  	
  CLIENT AUTHORIZATION

  



 


General Authorization


 


I hereby authorize
Comerica Bank to use my company name, logo, and information relating to our
banking relationship in its marketing and advertising campaigns which is
intended for Comerica Bank’s customers, prospects and shareholders.


 


Comerica Bank will
forward any advertising or article including client for prior review and
approval.


 


	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Printed Name

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mailing Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  City, State, Zip Code

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Phone Number

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Fax Number

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  E-Mail

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  
			



 





















 


Secured
Party:  Comerica Bank


 


Debtor:  RADVIEW SOFTWARE, INC.


 


EXHIBIT A to UCC Financing Statement


 


COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT


 


All
personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:


 


(a)          all accounts (including
health-care-insurance receivables), chattel paper (including tangible and
electronic chattel paper), deposit accounts, documents (including negotiable
documents), equipment (including all accessions and additions thereto), general
intangibles (including payment intangibles and software), goods (including
fixtures), instruments (including promissory notes), inventory (including all
goods held for sale or lease or to be furnished under a contract of service,
and including returns and repossessions), investment property (including
securities and securities entitlements), letter of credit rights, money, and
all of Debtor’s books and records with respect to any of the foregoing, and the
computers and equipment containing said books and records;


 


(b)         all common law and
statutory copyrights and copyright registrations, applications for
registration, now existing or hereafter arising, in the United States of
America or in any foreign jurisdiction, obtained or to be obtained on or in
connection with any of the foregoing, or any parts thereof or any underlying or
component elements of any of the foregoing, together with the right to
copyright and all rights to renew or extend such copyrights and the right (but
not the obligation) of Secured Party to sue in its own name and/or in the name
of the Debtor for past, present and future infringements of copyright;


 


(c)          all trademarks, service
marks, trade names and service names and the goodwill associated therewith,
together with the right to trademark and all rights to renew or extend such
trademarks and the right (but not the obligation) of Secured Party to sue in
its own name and/or in the name of the Debtor for past, present and future
infringements of trademark;


 


(d)         all (i) patents and
patent applications filed in the United States Patent and Trademark Office or
any similar office of any foreign jurisdiction, and interests under patent
license agreements, including, without limitation, the inventions and
improvements described and claimed therein, (ii) licenses pertaining to any
patent whether Debtor is licensor or 
licensee, (iii) income, royalties, damages, payments, accounts and accounts
receivable now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past, present or future
infringements thereof, (iv) right (but not the obligation) to sue in the name
of Debtor and/or in the name of Secured Party for past, present and future
infringements thereof, (v) rights corresponding thereto throughout the world in
all jurisdictions in which such patents have been issued or applied for, and
(vi) reissues, divisions, continuations, renewals, extensions and
continuations-in-part with respect to any of the foregoing; and


 


(e)          any and all cash
proceeds and/or noncash proceeds of any of the foregoing, including, without
limitation, insurance proceeds, and all supporting obligations and the security
therefor or for any right to payment. 
All terms above have the meanings given to them in the California
Uniform Commercial Code, as amended or supplemented from time to time,
including revised Division 9 of the Uniform Commercial Code-Secured
Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July
1, 2001.