collateral in an amount equal to 110% of the Dollar Equivalent of the face amount of all suchLetters of Credit plus all interest, fees, and costs due or to become due in connection therewith(as estimated by Bank in its good faith business judgment), to secure all of the Obligationsrelating to such Letters of Credit. All Letters of Credit shall be in form and substanceacceptable to Bank in its sole discretion and shall be subject to the terms and conditions ofBank’s standard Application and Letter of Credit Agreement (the “**Letter of Credit Application**”).Borrower agrees to execute any further documentation in connection with the Letters of Credit asBank may reasonably request. Borrower further agrees to be bound by the regulations andinterpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’saccount or by Bank’s interpretations of any Letter of Credit issued by Bank for Borrower’s account,and Borrower understands and agrees that Bank shall not be liable for any error, negligence, ormistake, whether of omission or commission, in following Borrower’s instructions or those containedin the Letters of Credit or any modifications, amendments, or supplements thereto.          (c) The obligation of Borrower to immediately reimburse Bank for drawings made under Lettersof Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly inaccordance with the terms of this Agreement, such Letters of Credit, and the Letter of CreditApplication.          (d) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. Ifa demand for payment is made under any such Letter of Credit, Bank shall treat such demand as anAdvance to Borrower of the Dollar Equivalent of the amount thereof (plus fees and charges inconnection therewith such as wire, cable, SWIFT or similar charges).          (e) To guard against fluctuations in currency exchange rates, upon the issuance of any Letterof Credit payable in a Foreign Currency, Bank shall create a reserve (the “**Letter of CreditReserve**”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount ofsuch Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank fromtime to time to account for fluctuations in the exchange rate. The availability of funds under theRevolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as suchLetter of Credit remains outstanding.     **2.1.3 Foreign Exchange Sublimit**. As part of the Revolving Line, Borrower may enter intoforeign exchange contracts with Bank under which Borrower commits to purchase from or sell to Banka specific amount of Foreign Currency (each, a “**FX Forward Contract**”) on a specified date (the“**Settlement Date**”). FX Forward Contracts shall have a Settlement Date of at least one (1) FXBusiness Day after the contract date and shall be subject to a reserve of ten percent (10%) of eachoutstanding FX Forward Contract (the “**FX Reserve**”). The aggregate amount of FX Forward Contractsat any one time may not exceed ten (10) times the lesser of (A) Ten Million Dollars ($10,000,000),minus (i) the sum of all amounts used for Cash Management Services, and minus (ii) the DollarEquivalent of the face amount of any outstanding Letters of Credit (including drawn butunreimbursed Letters of Credit and any Letter of Credit Reserve), or (B) the lesser of RevolvingLine or the Borrowing Base, minus (i) the sum of all outstanding principal amounts of any Advances(including any amounts used for Cash Management Services), and minus (ii) the Dollar Equivalent ofthe face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters ofCredit and any Letter of Credit Reserve). The amount otherwise available for Credit Extensionsunder the Revolving Line shall be reduced by an amount equal to ten percent (10%) of eachoutstanding FX Forward Contract (the “**FX Reduction Amount**”). Any amounts needed to fully reimburseBank for any amounts not paid by Borrower in connection with FX Forward Contracts will be treatedas Advances under the Revolving Line and will accrue interest at the interest rate applicable toAdvances.     **2.1.4 Cash Management Services Sublimit**. Borrower may use the Revolving Line for Bank’s cashmanagement services, which may include merchant services, direct deposit of payroll, businesscredit card, and check cashing services identified in Bank’s various cash management servicesagreements (collectively, **the**“**Cash Management Services**”), in an aggregate amount not to exceed thelesser of Ten Million Dollars ($10,000,000), minus (i) the sum of all outstanding principalamounts of any Advances, minus (ii) the Dollar Equivalent of the face amount of anyoutstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter ofCredit Reserve), and minus (iii) the FX Reduction Amount. Any amounts Bank pays on behalfof Borrower for any Cash Management Services will be treated as Advances under the Revolving Lineand will accrue interest at the interest rate applicable to Advances.     **2.1.5 Term Loan.**
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          (a) **Availability**. Bank shall make one (1) term loan (the “**Term Loan**”) available to Borrowerin an amount up to the Term Loan Amount on the Effective Date subject to the satisfaction of theterms and conditions of this Agreement.          (b) **Use of Proceeds — Term Loan.**Borrower acknowledges that it is indebted to Bank pursuantto certain term loans made pursuant to a prior loan arrangement with Bank with an original maturitydate of July 1, 2012 and with a current outstanding principal balance of Six Thousand Five HundredDollars ($6,500) (the “**Prior Loan Agreement**”) . Borrower acknowledges and agrees that a portion ofthe proceeds of the Term Loan hereunder shall be used to immediately repay in full all remainingoutstand principal and accrued and unpaid interest on the Prior Term Loan, together with anyadditional fees associated therewith.          (c) **Repayment**. In addition to the monthly payments of interest, as set forth in Section2.3(a)(ii) below, Borrower shall repay the Term Loan in sixty (60) equal installments of principal(the “**Term Loan Payment**”), beginning on July 31, 2009. Each Term Loan Payment shall be payable onthe last Business Day of each month. Borrower’s final Term Loan Payment, due on the Term LoanMaturity Date, shall include all outstanding principal and accrued and unpaid interest under theTerm Loan. Once repaid, the Term Loan may not be reborrowed.          (d) **Prepayment**. Subject to the provisions of Section 12.1 hereof, the Term Loan may beprepaid prior to the Term Loan Maturity Date.     **2.2 Overadvances**. If, at any time, the sum of (a) the outstanding principal amount of anyAdvances (including any amounts used for Cash Management Services); plus (b) the faceamount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit andany Letter of Credit Reserve); plus (c) the FX Reduction Amount exceeds the lesser ofeither the Revolving Line or the Borrowing Base (such excess amount being an “**Overadvance**”),Borrower shall immediately pay to Bank in cash such Overadvance. Without limiting Borrower’sobligation to repay Bank any amount of the Overadvance, Borrower agrees to pay Bank interest on theoutstanding amount of any Overadvance, on demand, at the Default Rate.     **2.3 Payment of Interest on the Credit Extensions**.     (a) Interest Rate.               (i) Advances. Subject to Section 2.3(b), the principal amount outstanding under theRevolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate, whichinterest shall be payable monthly, in arrears, in accordance with Section 2.3(f) below.               (ii) Term Loan. Subject to Section 2.3(b), the principal amount outstanding under theTerm Loan shall accrue interest at a floating per annum rate equal to one-half of one percentagepoint (0.50%) above the Prime Rate, which interest shall be payable monthly.          (b) Default Rate. Immediately upon the occurrence and during the continuance of anEvent of Default, Obligations shall bear interest at a rate per annum which is four percentagepoints (4.00%) above the rate that is otherwise applicable thereto (the “**Default Rate**”) unless Bankotherwise elects from time to time in its sole discretion to impose a smaller increase. Fees andexpenses which are required to be paid by Borrower pursuant to the Loan Documents (including,without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at arate equal to the highest rate applicable to the Obligations. Payment or acceptance of theincreased interest rate provided in this Section 2.3(b) is not a permitted alternative to timelypayment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limitany rights or remedies of Bank.          (c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extensionbased on changes to the Prime Rate shall be effective on the effective date of any change to thePrime Rate and to the extent of any such change.          (d) Computation; 360-Day Year. In computing interest, the date of the making of anyCredit Extension shall be included and the date of payment shall be excluded; provided,however*,*that if any Credit Extension is repaid on the same day on which it is made, suchday shall be included in computing interest on such Credit Extension. Interest shall be computedon the basis of a 360-day year for the actual number of days elapsed.          (e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, includingthe Designated
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Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank whendue. These debits shall not constitute a set-off.          (f) Interest Payment Date. Unless otherwise provided, interest is payable monthly onthe last calendar day of each month.          (g) Payment; Interest Computation; Float Charge. Interest is payable monthly on thelast calendar day of each month. In computing interest on the Obligations, all Payments receivedafter 12:00 p.m. Pacific time on any day shall be deemed received on the next Business Day. Allwire transfers shall be deemed applied on account of the Obligations on the date of receipt thereofby Bank, and Bank shall be entitled to charge Borrower a “float” charge in an amount equal to two(2) Business Days interest, at the interest rate applicable to the Advances, on all Paymentsconsisting of checks and/or other items of Payment other than wire transfers received by Bank.Said float charge is not included in interest for purposes of computing Minimum Monthly Interest(if any) under this Agreement. The float charge for each month shall be payable on the last day ofthe month. Bank shall not, however, be required to credit Borrower’s account for the amount of anyitem of payment which is unsatisfactory to Bank in its good faith business judgment, and Bank maycharge Borrower’s Designated Deposit Account for the amount of any item of payment which isreturned to Bank unpaid.     **2.4 Fees**. Borrower shall pay to Bank:          (a) Commitment Fee. (i) a fully earned, non-refundable Term Loan commitment fee ofOne Hundred Twenty Five Thousand Dollars ($125,000), on the Effective Date and (ii) a fully earned,non-refundable Revolving Line Commitment Fee, payable as follows: (X) One Hundred Fifty ThousandDollars ($150,000) on the Effective Date; (Y) One Hundred Fifty Thousand Dollars ($150,000) thefirst anniversary of the Effective Date; and (Z); One Hundred Fifty Thousand Dollars ($150,000) onthe second anniversary of the Effective Date.          (b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance orrenewal of Letters of Credit, upon the issuance of such Letter of Credit, each anniversary of theissuance during the term of such Letter of Credit, and upon the renewal of such Letter of Credit byBank;          (c) Termination Fee. As provided in Section 12.1, a termination fee;          (d) Unused Revolving Line Facility Fee. A fee (the “**Unused Revolving Line FacilityFee**”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one-quarterpercent (0.25%) per annum of the average unused portion of the Revolving Line, as determined byBank. The unused portion of the Revolving Line, for the purposes of this calculation, shallinclude amounts reserved for products provided in connection with Cash Management Services, FXForward Contracts and Letter of Credit usage. Borrower shall not be entitled to any credit, rebateor repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to thisSection notwithstanding any termination of the Agreement or the suspension or termination of Bank’sobligation to make loans and advances hereunder;          (e) Collateral Monitoring Fee. A monthly collateral monitoring fee of Five HundredDollars ($500), payable in arrears on the last day of each month (prorated for any partial month atthe beginning and upon termination of this Agreement); and          (f) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees andexpenses for documentation and negotiation of this Agreement incurred through and after theEffective Date, when due.     **2.5 Payments; Application of Payments.**          (a) All payments (including prepayments) to be made by Borrower under any Loan Document shallbe made in immediately available funds in U.S. Dollars, without setoff or counterclaim, before12:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after12:00 p.m. Eastern time are considered received at the opening of business on the next BusinessDay. When a payment is due on a day that is not a Business Day, the payment shall be due the nextBusiness Day, and additional fees or interest, as applicable, shall continue to accrue until paid.          (b) Bank shall apply the whole or any part of collected funds against the Revolving Line orcredit such collected funds to a depository account of Borrower with Bank (or an account maintainedby an Affiliate of Bank), the order and method of such application to be in the sole discretion ofBank. Borrower shall have no right to specify the order or the accounts to which Bank shallallocate or apply any payments required to be made by Borrower to Bank or otherwise received byBank under this Agreement when any such allocation or application is not specified elsewhere inthis Agreement.
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     **3****CONDITIONS OF LOANS**     **3.1 Conditions Precedent to Initial Credit Extension**. Bank’s obligation to make the initialCredit Extension is subject to the condition precedent that Bank shall have received, in form andsubstance satisfactory to Bank, such documents, and completion of such other matters, as Bank mayreasonably deem necessary or appropriate, including, without limitation:          (a) duly executed original signatures to the Loan Documents;          (b) [Intentionally Omitted];          (c) Borrower’s Operating Documents and a good standing certificate of Borrower certified bythe Secretary of State of each applicable jurisdiction as of a date no earlier than thirty (30)days prior to the Effective Date;          (d) duly executed original signatures to the Secretary’s Certificate with completed BorrowingResolutions for Borrower;          (e) certified copies, dated as of a recent date, of financing statement searches, as Bankshall request, accompanied by written evidence (including any UCC termination statements) that theLiens indicated in any such financing statements either constitute Permitted Liens or have been or,in connection with the initial Credit Extension, will be terminated or released;          (f) the Perfection Certificate of Borrower together with the duly executed original signaturesthereto;          (g) a landlord’s consent in favor of Bank for the following locations by the respectivelandlord thereof, together with the duly executed original signatures thereto; A. 275 West Street, Annapolis, Maryland 21401  B. 2024 West Street, Annapolis, Maryland 21401  C. 2401 Elliot Avenue, 2nd Floor, Seattle, Washington 98121  D. 206 Kelsey Lane, Tampa, Florida 33619          (h) a bailee’s/warehouseman’s waiver executed by each bailee, if any, of Borrower as requiredby Bank, in favor of Bank;          (i) a legal opinion of Borrower’s counsel, in form and substance acceptable to Bank, in itsreasonable discretion, dated as of the Effective Date together with the duly executed originalsignature thereto;          (j) evidence satisfactory to Bank that the insurance policies required by Section 6.7 hereofare in full force and effect, together with appropriate evidence showing lender loss payable and/oradditional insured clauses or endorsements in favor of Bank;          (k) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof;          (l) evidence that the capital structure of Borrower and its Subsidiaries is acceptable toBank, in its sole discretion; and          (m) such other documents, certificates and agreements in respect of Borrower and itsSubsidiaries as Bank may request, in its sole discretion.     **3.2 Conditions Precedent to all Credit Extensions**. Bank’s obligations to make each CreditExtension, including the initial Credit Extension, is subject to the following conditionsprecedent**:**          (a) except as otherwise provided in Section 3.4(a), timely receipt of an executed TransactionReport;
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          (b) the representations and warranties in this Agreement shall be true, accurate, and completein all material respects on the date of the Transaction Report and on the Funding Date of eachCredit Extension; provided, however, that such materiality qualifier shall not beapplicable to any representations and warranties that already are qualified or modified bymateriality in the text thereof; and provided, further that those representations andwarranties expressly referring to a specific date shall be true, accurate and complete in allmaterial respects as of such date, and no Default or Event of Default shall have occurred and becontinuing or result from the Credit Extension. Each Credit Extension is Borrower’s representationand warranty on that date that the representations and warranties in this Agreement remain true,accurate, and complete in all material respects; provided, however, that suchmateriality qualifier shall not be applicable to any representations and warranties that alreadyare qualified or modified by materiality in the text thereof; and provided, further thatthose representations and warranties expressly referring to a specific date shall be true, accurateand complete in all material respects as of such date; and          (c) in Bank’s reasonable discretion, after consultation with Borrower, there has not been (a)a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in thevalue of such Collateral; (b) a material adverse change in the business, operations, or condition(financial or otherwise) of Borrower; or (c) a material impairment of the prospect of repayment ofany portion of the Obligations.     **3.3 Covenant to Deliver.**Borrower agrees to deliver to Bank each item required to bedelivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrowerexpressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shallnot constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making ofany Credit Extension in the absence of a required item shall be in Bank’s sole discretion.     **3.4 Procedures for Borrowing.**          (a) Advances. Subject to the prior satisfaction of all other applicable conditions tothe making of an Advance set forth in this Agreement, to obtain an Advance other than Advancesunder Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) byelectronic mail, facsimile, or telephone by 12:00 p.m. Eastern time on the Funding Date of theAdvance**.**Together with any such electronic or facsimile notification, Borrower shall deliver toBank by electronic mail or facsimile a completed Transaction Report executed by a ResponsibleOfficer or his or her designee**.**Bank may rely on any telephone notice given by a person whom Bankbelieves is a Responsible Officer or designee. Bank shall credit Advances to the DesignatedDeposit Account. Bank may make Advances under this Agreement based on instructions from aResponsible Officer or his or her designee or without instructions if the Advances are necessary tomeet Obligations which have become due.          (b) Term Loan. Subject to the prior satisfaction of all other applicable conditionsto the making of the Term Loan set forth in this Agreement, if any portion of the proceeds of theTerm Loan shall be used to refinance outstanding Indebtedness of the Borrower, Borrower shalldeliver to Bank by electronic mail or facsimile a copy of the payoff letter stating the payoffamount invoice for the refinancing of such existing Indebtedness and the request for the Term Loan.     **4****CREATION OF SECURITY INTEREST**     **4.1**Grant of Security Interest. Borrower hereby grants Bank, to secure the paymentand performance in full of all of the Obligations, a continuing security interest in, and pledgesto Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, andall proceeds and products thereof.     **4.2**Priority of Security Interest. Borrower represents, warrants, and covenants thatthe security interest granted herein is and shall at all times continue to be a first priorityperfected security interest in the Collateral (subject only to Permitted Liens that may havesuperior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercialtort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the generaldetails thereof and grant to Bank in such writing a security interest therein and in the proceedsthereof, all upon the terms of this Agreement, with such writing to be in form and substancereasonably satisfactory to Bank.     If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until theObligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon paymentin full in cash of the Obligations and at such time as Bank’s obligation to make Credit Extensionshas terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in theCollateral and all rights therein shall revert to Borrower.
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     **4.3**Authorization to File Financing Statements. Borrower hereby authorizes Bank tofile financing statements, without notice to Borrower, with any necessary jurisdictions to perfector protect Bank’s interest or rights hereunder, including an appropriate notice that anydisposition of certain of the Collateral, by either Borrower or any other Person, shall be deemedto violate the rights of Bank under the Code. Such financing statements may indicate theCollateral as “all assets of the Debtor” or words of similar effect, or as being of an equal orlesser scope, or with greater detail, all in Bank’s discretion.     **5****REPRESENTATIONS AND WARRANTIES**     Borrower represents and warrants as follows:     **5.1 Due Organization; Authorization; Power and Authority**. Borrower and each of itsSubsidiaries are duly existing and in good standing as a Registered Organization in itsjurisdiction of formation and each is qualified and licensed to do business and each is in goodstanding in any jurisdiction in which the conduct of each of its business or its ownership ofproperty requires that it be qualified except where the failure to do so could not reasonably beexpected to have a material adverse effect on Borrower’s business. In connection with thisAgreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled“Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legalname is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borroweris an organization of the type and is organized in the jurisdiction set forth in the PerfectionCertificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizationalidentification number or accurately states that Borrower has none; (d) the Perfection Certificateaccurately sets forth Borrower’s place of business, or, if more than one, its chief executiveoffice as well as Borrower’s mailing address (if different than its chief executive office); (e)Borrower (and each of its predecessors) has not, in the past five (5) years, changed itsjurisdiction of formation, organizational structure or type, or any organizational number assignedby its jurisdiction; and (f) all other information set forth on the Perfection Certificatepertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understoodand agreed that Borrower may from time to time update certain information in the PerfectionCertificate after the Effective Date to the extent permitted by one or more specific provisions inthis Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrowershall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizationalidentification number.     The execution, delivery and performance by Borrower of the Loan Documents to which it is aparty have been duly authorized, and do not (i) conflict with any of Borrower’s organizationaldocuments, (ii) contravene, conflict with, constitute a default under or violate any materialRequirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,injunction, decree, determination or award of any Governmental Authority by which Borrower or anyof its Subsidiaries or any of their property or assets may be bound or affected, (iv) require anyaction by, filing, registration, or qualification with, or Governmental Approval from, anyGovernmental Authority (except such Governmental Approvals which have already been obtained and arein full force and effect or (v) constitute an event of default under any material agreement bywhich Borrower is bound. Borrower is not in default under any agreement to which it is a party orby which it is bound in which the default could reasonably be expected to have a material adverseeffect on Borrower’s business.     **5.2 Collateral**. Borrower has good title to, has rights in, and the power to transfer eachitem of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any andall Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accountswith Bank, the deposit accounts, if any described in the Perfection Certificate delivered to Bankin connection herewith, or of which Borrower has given Bank notice and taken such actions as arenecessary to give Bank a perfected security interest therein. The Accounts are bona fide, existingobligations of the Account Debtors.     The Collateral is not in the possession of any third party bailee (such as a warehouse) exceptas otherwise provided in the Perfection Certificate. None of the components of the Collateralshall be maintained at locations other than as provided in the Perfection Certificate or aspermitted pursuant to Section 7.2. In the event that Borrower, after the date hereof, intends tostore or otherwise deliver any portion of the Collateral to a bailee, then Borrower will firstreceive the written consent of Bank and such bailee must execute and deliver a bailee agreement inform and substance satisfactory to Bank in its sole discretion.     All Inventory included in Borrower’s Books and intended for sale to its customers is in allmaterial respects of good and marketable quality, free from material defects.
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     Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by,any Restricted License.     **5.3 Accounts Receivable; Inventory**. For any Eligible Account in any Borrowing BaseCertificate, all statements made and all unpaid balances appearing in all invoices, instruments andother documents evidencing such Eligible Accounts are and shall be true and correct and all suchinvoices, instruments and other documents, and all of Borrower’s Books are genuine and in allrespects what they purport to be. Whether or not an Event of Default has occurred and iscontinuing, Bank may notify any Account Debtor owing Borrower money of Bank’s security interest insuch funds and verify the amount of such Eligible Account. All sales and other transactionsunderlying or giving rise to each Eligible Account shall comply in all material respects with allapplicable laws and governmental rules and regulations. Borrower has no knowledge of any actual orimminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in anyBorrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsementson all documents, instruments, and agreements relating to all Eligible Accounts are genuine, andall such documents, instruments and agreements are legally enforceable in accordance with theirterms.     **5.4 Litigation**. Except as set forth on the Perfection Certificate, there are no actions orproceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by oragainst Borrower or any of its Subsidiaries involving any individual claim in excess of FiftyThousand Dollars ($50,000) or two or more claims involving One Hundred Thousand Dollars ($100,000)in the aggregate.     **5.5 Financial Condition**. All consolidated financial statements for Borrower and any of itsSubsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidatedfinancial condition and Borrower’s consolidated results of operations as of the dates and for theperiods indicated therein. There has not been any material deterioration in Borrower’sconsolidated financial condition since the date of the most recent financial statements submittedto Bank.     **5.6 Solvency**. The fair salable value of Borrower’s assets (including goodwill minusdisposition costs) exceeds the fair value of its liabilities; Borrower is not left withunreasonably small capital after the transactions in this Agreement; and Borrower is able to payits debts (including trade debts) as they mature.     **5.7 Regulatory Compliance**. Borrower is not an “investment company” or a company “controlled”by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is notengaged as one of its important activities in extending credit for margin stock (under RegulationsX, T and U of the Federal Reserve Board of Governors). Borrower has complied in all materialrespects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiariesis a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a“holding company” as each term is defined and used in the Public Utility Holding Company Act of2005. Borrower has not violated any laws, ordinances or rules, the violation of which couldreasonably be expected to have a material adverse effect on its business. None of Borrower’s orany of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, tothe best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating,or transporting any hazardous substance other than legally. Borrower and each of its Subsidiarieshave obtained all consents, approvals and authorizations of, made all declarations or filings with,and given all notices to, all Government Authorities that are necessary to continue theirrespective businesses as currently conducted.     **5.8 Subsidiaries; Investments**. Except as set forth in the Perfection Certificate, Borrowerdoes not own any stock, partnership interest or other equity securities except for PermittedInvestments.     **5.9 Tax Returns and Payments; Pension Contributions**. Borrower has timely filed all requiredtax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,assessments, deposits and contributions owed by Borrower, other than those that are not yetdelinquent, or that are contested in good faith as to which adequate reserves have been provided tothe extent required by law and in accordance with GAAP. Borrower may defer payment of anycontested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxesby appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank inwriting of the commencement of, and any material development in, the proceedings, (c) posts bondsor takes any other steps required to prevent the governmental authority levying such contestedtaxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien”.Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax yearswhich could result in additional taxes becoming due and payable by Borrower. Borrower has paid allamounts necessary to fund all present pension, profit sharing and deferred
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compensation plans in accordance with their terms, and Borrower has not withdrawn fromparticipation in, and has not permitted partial or complete termination of, or permitted theoccurrence of any other event with respect to, any such plan which could reasonably be expected toresult in any liability of Borrower, including any liability to the Pension Benefit GuarantyCorporation or its successors or any other governmental agency.     **5.10 Use of Proceeds**. Borrower shall use the proceeds of the Credit Extensions solely to payoff the outstanding term balance owed under the Prior Loan Agreement, as working capital and tofund its general business requirements and not for personal, family, household or agriculturalpurposes.     **5.11 Full Disclosure**. No written representation, warranty or other statement of Borrower inany certificate or written statement given to Bank, as of the date such representation, warranty,or other statement was made, taken together with all such written certificates and writtenstatements given to Bank, contains any untrue statement of a material fact or omits to state amaterial fact necessary to make the statements contained in the certificates or statements notmisleading (it being recognized by Bank that the projections and forecasts provided by Borrower ingood faith and based upon reasonable assumptions are not viewed as facts and that actual resultsduring the period or periods covered by such projections and forecasts may differ from theprojected or forecasted results).     **5.12 Definition of “Knowledge.”**For purposes of the Loan Documents, whenever a representationor warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, orwith a similar qualification, knowledge or awareness means the actual knowledge, after reasonableinvestigation, of the Responsible Officers.     **6****AFFIRMATIVE COVENANTS**     Borrower shall do all of the following:     **6.1 Government Compliance**. Maintain its and all its Subsidiaries’ legal existence and goodstanding in their respective jurisdictions of formation and maintain qualification in eachjurisdiction in which the failure to so qualify would reasonably be expected to have a materialadverse effect on Borrower’s business or operations. Borrower shall comply, and have eachSubsidiary comply, with all laws, ordinances and regulations to which it is subject, thenoncompliance with which could have a material adverse effect on Borrower’s business.     **6.2 Financial Statements, Reports, Certificates**.          (a) Borrower shall provide Bank with the following:               (i) (A) weekly, and (B) upon each request for a Credit Extension, a Transaction Report;               (ii) within fifteen (15) days after the end of each month, (A) monthly accounts receivableagings, aged by invoice date, (B) monthly accounts payable agings, aged by invoice date, andoutstanding or held check registers, if any, and (C) monthly reconciliations of accountsreceivable agings (aged by invoice date), transaction reports, deferred revenue report and generalledger,               (iii) as soon as available, and in any event within thirty (30) days after the end of eachmonth, monthly management prepared unaudited financial statements;               (iv) within thirty (30) days after the end of each month a monthly Compliance Certificatesigned by a Responsible Officer, certifying that as of the end of such month, Borrower was in fullcompliance with all of the terms and conditions of this Agreement, and setting forth calculationsshowing compliance with the financial covenants set forth in this Agreement and such otherinformation as Bank shall reasonably request, including, without limitation, a statement that atthe end of such month there were no held checks;               (v) as soon as available, and in any event within forty-five (45) days after the endof each fiscal quarter of Borrower, quarterly consolidated and consolidating managementprepared unaudited financial statements;               (vi) within sixty (60) days prior to the end of each fiscal year of Borrower, annualfinancial projections for the following fiscal year (on a quarterly basis), together withany related business forecasts used in the preparation of such annual financialprojections; and within sixty (60) days after the end of each fiscal year of Borrower,annual operating budgets (including income statements, balance sheets
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and cash flow statements, by month) for the current fiscal year of Borrower asapproved by Borrower’s board of directors**;**               (vii) as soon as available, and in any event within one hundred twenty (120) daysfollowing the end of Borrower’s fiscal year, annual consolidated and consolidatingfinancial statements certified by, and with an unqualified opinion of, independentcertified public accountants acceptable to Bank;               (viii) within five (5) days of delivery, copies of all statements, reports andnotices, if any, made available to Borrower’s security holders or to any holders ofSubordinated Debt;               (ix) a prompt report of any legal actions pending or threatened in writing againstBorrower or any of its Subsidiaries that could result in damages or costs to Borrower orany of its Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars($500,000) or more;               Notwithstanding the foregoing, provided no Event of Default has occurred and iscontinuing, Borrower shall be required to provide Bank with the reports and schedulesrequired pursuant to clause (a)(i) (A) above monthly, within thirty (30) days after theend of each month.          (b) Within five (5) days after filing, all reports on Form 10-K, 10-Q and 8-K filed with theSEC or a link thereto on Borrower’s or another website on the Internet.     **6.3 Accounts Receivable**.          (a) Schedules and Documents Relating to Accounts*.*Borrower shall deliver to Banktransaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standardforms; provided, however, that Borrower’s failure to execute and deliver the same shall not affector limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure toadvance or lend against a specific Account affect or limit Bank’s Lien and other rights therein.If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) ofall contracts, orders, invoices, and other similar documents, and all shipping instructions,delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale ordisposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, onits request, the originals of all instruments, chattel paper, security agreements, guarantees andother documents and property evidencing or securing any Accounts, in the same form as received,with all necessary endorsements, and copies of all credit memos.          (b) Disputes. Borrower shall promptly notify Bank of all disputes or claims relatingto Accounts (i) in excess of an aggregate amount for any Account Debtor in excess One HundredThousand Dollars ($100,000) and (ii) in excess of an aggregate amount for all Account Debtors ofFive Hundred Thousand Dollars ($500,000). Borrower may forgive (completely or partially),compromise, or settle any Account for less than payment in full, or agree to do any of theforegoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, inthe ordinary course of business, in arm’s-length transactions, and reports the same to Bank in theregular reports provided to Bank; (ii) no Default or Event of Default has occurred and iscontinuing; and (iii) after taking into account all such discounts, settlements and forgiveness,the total outstanding Advances will not exceed the Availability Amount.          (c) Collection of Accounts. Borrower shall have the right to collect all Accounts,unless and until a Default or an Event of Default has occurred and is continuing. All payments on,and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into alockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked accountagreement in form and substance satisfactory to Bank in its sole discretion. Whether or not anEvent of Default has occurred and is continuing, Borrower shall hold all payments on, and proceedsof, Accounts in trust for Bank, and Borrower shall promptly deliver all such payments and proceedsto Bank in their original form, duly endorsed, to be applied to the Obligations pursuant to theterms of Section 9.4 hereof.          (d) Returns*.*Provided no Event of Default has occurred and is continuing, if anyAccount Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reasonfor such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount,and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the eventany attempted return occurs after the occurrence and during the continuance of any Event ofDefault, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bankof the return of the Inventory.
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          (e) Verification*.*Bank may, from time to time, verify directly with the respectiveAccount Debtors the validity, amount and other matters relating to the Accounts, either in the nameof Borrower or Bank or such other name as Bank may choose.          (f) No Liability*.*Bank shall not be responsible or liable for any shortage ordiscrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition ofwhich gives rise to an Account, or for any error, act, omission, or delay of any kind occurring inthe settlement, failure to settle, collection or failure to collect any Account, or for settlingany Account in good faith for less than the full amount thereof, nor shall Bank be deemed to beresponsible for any of Borrower’s obligations under any contract or agreement giving rise to anAccount. Nothing herein shall, however, relieve Bank from liability for its own gross negligenceor willful misconduct.     **6.4 Remittance of Proceeds**. Except as otherwise provided in Section 6.3(c), deliver, in kind,all proceeds arising from the disposition of any Collateral to Bank in the original form in whichreceived by Borrower not later than the following Business Day after receipt by Borrower, to beapplied to the Obligations pursuant to the terms of Section 9.4 hereof; provided that, if noDefault or Event of Default has occurred and is continuing, Borrower shall not be obligated toremit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower ingood faith in an arm’s length transaction for an aggregate purchase price of $25,000 or less (forall such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds ofCollateral with any of Borrower’s other funds or property, but will hold such proceeds separate andapart from such other funds and property and in an express trust for Bank. Nothing in this Sectionlimits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.     **6.5 Taxes; Pensions; Withholding.**Timely file, and require each of its Subsidiaries to timelyfile, all required tax returns and reports and timely pay, and require each of its Subsidiaries totimely pay, all foreign, federal, state and local taxes**,**assessments, deposits and contributionsowed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contestedpursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriatecertificates attesting to such payments, and pay all amounts necessary to fund all present pension,profit sharing and deferred compensation plans in accordance with their terms.     **6.6 Access to Collateral; Books and Records**. At reasonable times, on one (1) Business Day’snotice (provided no notice is required if an Event of Default has occurred and is continuing),Bank, or its agents, shall have the right, on an annual basis (or more frequently at Bank’s solediscretion after a Default or an Event of Default has occurred), to inspect the Collateral and theright to audit and copy Borrower’s Books. The foregoing inspections and audits shall be atBorrower’s expense, and the charge therefor shall be $850 per person per day (or such higher amountas shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocketexpenses; provided, however, that the cost of such inspections and audits will notexceed Fifteen Thousand Dollars ($15,000) in any twelve (12) month period (excluding the cost ofinspections and audits conducted after the occurrence of an Event of Default). In the eventBorrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels orseeks to reschedules the audit with less than ten (10) days written notice to Bank, then (withoutlimiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus anyout-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expensesof the cancellation or rescheduling.     **6.7 Insurance**. Keep its business and the Collateral insured for risks and in amounts standardfor companies in Borrower’s industry and location and as Bank may reasonably request. Insurancepolicies shall be in a form, with companies, and in amounts that are satisfactory to Bank. Allproperty policies shall have a lender’s loss payable endorsement showing Bank as an additionallenderloss payee and waive subrogation against Bank and shall provide that the insurermust give Bank at least twenty (20) days notice before canceling, amending, or declining to renewits policy. All liability policies shall show, or have endorsements showing, Bank as an additionalinsured, and all such policies (or the loss payable and additional insured endorsements) shallprovide that the insurer shall give Bank at least twenty (20) days notice before canceling,amending, or declining to renew its policy. At Bank’s request, Borrower shall deliver certifiedcopies of policies and evidence of all premium payments. Proceeds payable under any policy shall,at Bank’s option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing,(a) so long as no Event of Default has occurred and is continuing, Borrower shall have the optionof applying the proceeds of any casualty policy up to Fifty Thousand Dollars ($50,000) with respectto any loss, but in any event not exceeding One Hundred Thousand Dollars ($100,000) in theaggregate for all losses under all casualty policies in any one year**,**toward the replacement orrepair of destroyed or damaged property; provided that any such replaced or repaired property (i)shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be
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deemed Collateral in which Bank has been granted a first priority security interest, and (b)after the occurrence and during the continuance of an Event of Default, all proceeds payable undersuch casualty policy shall, at the option of Bank, be payable to Bank on account of theObligations. If Borrower fails to obtain insurance as required under this Section 6.7 or to payany amount or furnish any required proof of payment to third persons and Bank, Bank may make all orpart of such payment or obtain such insurance policies required in this Section 6.7 and take anyaction under the policies Bank deems prudent.     **6.8 Operating Accounts**.          (a) Maintain its and its Subsidiaries’ primary depository, operating accounts and securitiesaccounts with Bank and Bank’s affiliates with all excess funds maintained at or invested throughBank or an affiliate of Bank, which accounts shall represent at least seventy percent (70%) of thedollar value of Borrower’s and such Subsidiaries accounts at all financial institutions, excludingcash collateral held at other financial institutions used to secure letters of credit or cash heldas lease deposits; and          (b) Monthly, within thirty (30) days after the end of each month, provide Bank written noticeof any Collateral Account established at or with any bank or financial institution other than Bankor Bank’s Affiliates. For any Collateral Account that Borrower at any time maintains, Borrowershall, after the occurrence of an Event of Default, upon the written request by Bank, in its solediscretion, either (i) cause the applicable bank or financial institution (other than Bank) at orwith which any Collateral Account is maintained to execute and deliver a Control Agreement or otherappropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in suchCollateral Account in accordance with the terms hereunder, which Control Agreement may not beterminated without the prior written consent of Bank; or (ii) close such Collateral Account andtransfer the proceeds of such Collateral Account to a Collateral Account of Borrower maintained atBank or Bank’s Affiliates**.**The provisions of the previous sentence shall not apply to depositaccounts exclusively used for payroll, payroll taxes and other employee wage and benefit paymentsto or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.     **6.9 Financial Covenants**.          Maintain as of the last day of each month, unless otherwise noted, on a consolidated basiswith respect to Borrower and its Subsidiaries:          (a) Adjusted Quick Ratio. (i) for each monthly period beginning with the monthlyperiod ending April 30, 2009 through and including August 31, 2009, an Adjusted Quick Ratio of notless than 1.65:1.00; and (ii) for each monthly period beginning with the monthly period endingSeptember 30, 2009 and as of the last day of each monthly period thereafter, an Adjusted QuickRatio of not less than 1.75:1.00.          (b) Fixed Charge Coverage Ratio. Maintain, as of the last day of each fiscal quarter,a Fixed Charge Coverage Ratio of not less than 1.50:1.00.     **6.10 Protection of Intellectual Property Rights.**          (a) Protect, defend and maintain the validity and enforceability of its material IntellectualProperty; (ii) promptly advise Bank in writing of material infringements of its materialIntellectual Property; and (iii) not allow any Intellectual Property material to Borrower’sbusiness, to be abandoned, forfeited or dedicated to the public without Bank’s prior writtenconsent, such consent not to be unreasonably withheld.          (b) Provide written notice to Bank within thirty (30) days of entering or becoming bound byany Restricted License (other than over-the-counter software that is commercially available to thepublic). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by,any person whose consent or waiver is necessary for (i) any Restricted License to be deemed“Collateral” and for Bank to have a security interest in it that might otherwise be restricted orprohibited by law or by the terms of any such Restricted License, whether now existing or enteredinto in the future, and (ii) Bank to have the ability in the event of a liquidation of anyCollateral to dispose of such Collateral in accordance with Bank’s rights and remedies under thisAgreement and the other Loan Documents.     **6.11 Litigation Cooperation**. From the date hereof and continuing through the termination ofthis Agreement, make available to Bank, without expense to Bank, Borrower and its officers,employees and agents and
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Borrower’s Books, to the extent that Bank may deem them reasonably necessary to prosecute or defendany third-party suit or proceeding instituted by or against Bank with respect to any Collateral orrelating to Borrower.     **6.12 Creation/Acquisition of Subsidiaries**. Notwithstanding and without limiting the negativecovenant contained in Section 7.3 hereof, in the event Borrower or any Subsidiary creates oracquires any Subsidiary, Borrower and such Subsidiary shall promptly notify Bank of the creation oracquisition of such new Subsidiary and, at Bank’s request, in its sole discretion, take all suchaction as may be reasonably required by Bank to cause each such Subsidiary to, in Bank’s solediscretion, become a co-Borrower or guarantor under the Loan Documents and grant a continuingpledge and security interest in and to the assets of such Subsidiary (substantially as described onExhibit A hereto); and Borrower shall, at Bank’s request, grant and pledge to Bank a perfectedsecurity interest in the stock, units or other evidence of ownership of each Subsidiary.     **6.13 Further Assurances.**Execute any further instruments and take further action as Bankreasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposesof this Agreement, and deliver to Bank, within five (5) days after the same are sent or received,copies of all correspondence, reports, documents and other filings with any Governmental Authorityregarding compliance with or maintenance of Governmental Approvals or Requirements of Law or thatcould reasonably be expected to have a material adverse effect on any of the Governmental Approvalsor otherwise on the operations of Borrower or any of its Subsidiaries.     **7****NEGATIVE COVENANTS**     Borrower shall not do any of the following without Bank’s prior written consent:     **7.1 Dispositions**. Convey, sell, lease, transfer, assign, or otherwise dispose of(collectively, “**Transfer**”), or permit any of its Subsidiaries to Transfer, all or any part of itsbusiness or property, except for Transfers (a) of Inventory in the ordinary course of business; (b)of worn-out or obsolete Equipment; (c) in connection with Permitted Liens and PermittedInvestments; and (d) of non-exclusive licenses for the use of the property of Borrower or itsSubsidiaries in the ordinary course of business and licenses that could not result in a legaltransfer of title of the licensed property but that may be exclusive in respects other thanterritory and that may be exclusive as to territory only as to discreet geographical areas outsideof the United States.     **7.2 Changes in Business, Control, or Business Locations**. (a) Engage in or permit any of itsSubsidiaries to engage in any business other than the businesses currently engaged in by Borrowerand such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or(c) permit or suffer any Change in Control.     Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) addany new offices or business locations, including warehouses (unless such new offices or businesslocations contain less than Fifty Thousand Dollars ($50,000) in Borrower’s assets or property atany one location and not more than Two Hundred Fifty Thousand Dollars ($250,000) in the aggregateat all such locations) or deliver any portion of the Collateral valued, individually or in theaggregate, in excess of Fifty Thousand Dollars ($50,000) to a bailee at a location other than to abailee and at a location already disclosed in the Perfection Certificate, (2) change itsjurisdiction of organization, (3) change its organizational structure or type, (4) change its legalname, or (5) change any organizational number (if any) assigned by its jurisdiction oforganization. If Borrower intends to deliver any portion of the Collateral valued in excess ofFifty Thousand Dollars ($50,000) to a bailee that has not executed and delivered a bailee agreementwith Bank, such bailee shall execute and deliver a bailee agreement in form and substancesatisfactory to Bank in its sole discretion.     **7.3 Mergers or Acquisitions**. Merge or consolidate, or permit any of its Subsidiaries to mergeor consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire,all or substantially all of the capital stock or property of another Person in an acquisition oracquisitions in which the aggregate consideration paid for all such acquisitions exceeds TwoMillion Dollars ($2,000,000) (a “**Permitted Acquisition**”); provided, however, thatno Default or Event of Default shall exist immediately prior to or immediately after giving effectto such Permitted Acquisition. A Subsidiary may merge or consolidate into another Subsidiary orinto Borrower, and a Borrower may merge or consolidate into TCS.     **7.4 Indebtedness**. Create, incur, assume, or be liable for any Indebtedness, or permit anySubsidiary to do so, other than Permitted Indebtedness.
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     **7.5 Encumbrance**. Create, incur, allow, or suffer any Lien on any of its property, or assignor convey any right to receive income, including the sale of any Accounts, or permit any of itsSubsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to thefirst priority security interest granted herein, or enter into any agreement, document, instrumentor other arrangement (except with or in favor of Bank) with any Person which directly or indirectlyprohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging,pledging, granting a security interest in or upon, or encumbering any of Borrower’s or anySubsidiary’s Intellectual Property**,**except as is otherwise permitted in Section 7.1 hereof and thedefinition of “Permitted Liens” herein.     **7.6 Maintenance of Collateral Accounts**. Maintain any Collateral Account except pursuant tothe terms of Section 6.8(b) hereof.     **7.7 Distributions; Investments**. (a) Pay any dividends or make any distribution or payment orredeem, retire or purchase any capital stock; or (b) directly or indirectly make any Investmentother than Permitted Investments, or permit any of its Subsidiaries to do so.     **7.8 Transactions with Affiliates**. Directly or indirectly enter into or permit to exist anymaterial transaction with any Affiliate of Borrower, except for transactions between one Borrowerand another Borrower or with any Subsidiary of a Borrower that is a party to the Loan Documents, orthat are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are noless favorable to Borrower than would be obtained in an arm’s length transaction with anon-affiliated Person and transactions permitted pursuant to the terms of Section 7.2 or Section7.3 hereof.     **7.9 Subordinated Debt**. (a) Make or permit any payment on any Subordinated Debt, except underthe terms of the subordination, intercreditor, or other similar agreement to which suchSubordinated Debt is subject, or (b) amend any provision in any document relating to theSubordinated Debt which would increase the amount thereof or adversely affect the subordinationthereof to Obligations owed to Bank.     **7.10 Compliance**. Become an “investment company” or a company controlled by an “investmentcompany”, under the Investment Company Act of 1940, as amended, or undertake as one of itsimportant activities extending credit to purchase or carry margin stock (as defined in Regulation Uof the Board of Governors of the Federal Reserve System), or use the proceeds of any CreditExtension for that purpose; fail to meet the minimum funding requirements of ERISA, permit aReportable Event or non-exempt Prohibited Transaction, as defined in ERISA, to occur; fail tocomply with the Federal Fair Labor Standards Act or violate any other law or regulation, if theviolation could reasonably be expected to have a material adverse effect on Borrower’s business, orpermit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw fromparticipation in, permit partial or complete termination of, or permit the occurrence of any otherevent with respect to, any present pension, profit sharing and deferred compensation plan whichcould reasonably be expected to result in any liability of Borrower, including any liability to thePension Benefit Guaranty Corporation or its successors or any other governmental agency.     **7.11 Subsidiary Limitations**. Permit any Subsidiary that is not a Borrower to maintain assetsin an aggregate amount for all such Subsidiaries in excess of One Million Dollars ($1,000,000)outstanding at any time.     **8****EVENTS OF DEFAULT**     Any one of the following shall constitute an event of default (an “**Event of Default**”) underthis Agreement:     **8.1 Payment Default**. Borrower fails to (a) make any payment of principal or interest on anyCredit Extension on its due date, or (b) pay any other Obligations within five (5) Business Daysafter such Obligations are due and payable (which five (5) Business Day cure period shall not applyto payments due on the Revolving Line Maturity Date or the Term Loan Maturity Date). During thecure period, the failure to make or pay any payment specified under clause (a) or (b) hereunder isnot an Event of Default (but no Credit Extension will be made during the cure period);     **8.2 Covenant Default**.
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          (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7,6.8, 6.9, 6.10, or 6.11, or violates any covenant in Section 7; or          (b) Borrower fails or neglects to perform, keep, or observe any other term, provision,condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to anydefault (other than those specified in this Section 8) under such other term, provision, condition,covenant or agreement that can be cured, has failed to cure the default within fifteen (15) daysafter the occurrence thereof; provided, however, that if the default cannot by its nature be curedwithin the fifteen (15) day period or cannot after diligent attempts by Borrower be cured withinsuch fifteen (15) day period, and such default is likely to be cured within a reasonable time, thenBorrower shall have an additional period (which shall not in any case exceed thirty (30) days) toattempt to cure such default, and within such reasonable time period the failure to cure thedefault shall not be deemed an Event of Default (but no Credit Extensions shall be made during suchcure period). Cure periods provided under this section shall not apply, among other things, tofinancial covenants or any other covenants set forth in clause (a) above;     **8.3 Material Adverse Change; Change in Control**. A Material Adverse Change or a Change inControl occurs;     **8.4 Attachment; Levy; Restraint on Business**.     (a) (i) The service of process seeking to attach, by trustee or similar process, any funds ofBorrower or of any entity under the control of Borrower (including a Subsidiary) on deposit orotherwise maintained with Bank or any Bank Affiliate, or (ii) a notice of lien or levy is filedagainst any of Borrower’s assets with a fair market value of Five Hundred Thousand Dollars($500,000) or more, individually or in the aggregate by any government agency, and the same undersubclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,discharged or stayed (whether through the posting of a bond or otherwise); provided, however, noCredit Extensions shall be made during any ten (10) day cure period; or          (b) (i) any material portion of Borrower’s assets is attached, seized, levied on, or comesinto possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or preventsBorrower from conducting any material part of its business;     **8.5 Insolvency**. (a) Borrower is unable to pay its debts (including trade debts) as theybecome due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) anInsolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days(but no Credit Extensions shall be made while of any of the conditions described in clause (a)exist and/or until any Insolvency Proceeding is dismissed);     **8.6 Other Agreements**. There is, under any agreement to which Borrower is a party with a thirdparty or parties, (a) any default resulting in a right by such third party or parties, whether ornot exercised, to accelerate the maturity of any Indebtedness in an amount individually or in theaggregate in excess of Five Hundred Thousand Dollars ($500,000); or (b) any default by Borrower,the result of which could have a material adverse effect on Borrower’s business;     **8.7 Judgments**. One or more final judgments**,**orders, or decrees for the payment of money in anamount, individually or in the aggregate, of at least Five Hundred Thousand Dollars ($500,000) (notcovered by independent third-party insurance as to which liability has been accepted by suchinsurance carrier) shall be rendered against Borrower and the same are not, within ten (10) daysafter the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or suchjudgments are not discharged prior to the expiration of any such stay (provided that no CreditExtensions will be made prior to the discharge, stay**,**or bonding of such judgment**,**order, ordecree);     **8.8 Misrepresentations**. Borrower or any Person acting for Borrower makes any representation,warranty, or other statement now or later in this Agreement, any Loan Document or in any writingdelivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and suchrepresentation, warranty, or other statement is incorrect in any material respect when made;     **8.9 Subordinated Debt**. Any document, instrument, or agreement evidencing any SubordinatedDebt shall for any reason be revoked or invalidated or otherwise cease to be in full force andeffect, any Person shall be in breach thereof or contest in any manner the validity orenforceability thereof or deny that it has any further liability
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or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not havethe priority contemplated by this Agreement or the Subordination Agreement; or     **8.10 Governmental Approvals**. Any Governmental Approval shall have been (a) revoked,rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for afull term or (b) subject to any decision by a Governmental Authority that designates a hearing withrespect to any applications for renewal of any of such Governmental Approval or that could resultin the Governmental Authority taking any of the actions described in clause (a) above, and suchdecision or such revocation, rescission, suspension, modification or non-renewal (i) has, or couldreasonably be expected to have, a Material Adverse Change, or (ii) materially adversely affects thelegal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval inany applicable jurisdiction and such revocation, rescission, suspension, modification ornon-renewal could reasonably be expected to have a material adverse effect on the status of orlegal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval inany other jurisdiction.     **9****BANK’S RIGHTS AND REMEDIES**     **9.1 Rights and Remedies**. While an Event of Default occurs and continues Bank may, withoutnotice or demand, do any or all of the following:          (a) declare all Obligations immediately due and payable (but if an Event of Default describedin Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);          (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement orunder any other agreement between Borrower and Bank;          (c) demand that Borrower (i) deposit cash with Bank in an amount equal 110% of the DollarEquivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus allinterest, fees, and costs due or to become due in connection therewith (as estimated by Bank in itsgood faith business judgment)), to secure all of the Obligations relating to such Letters ofCredit**,**as collateral security for the repayment of any future drawings under such Letters ofCredit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance allletter of credit fees scheduled to be paid or payable over the remaining term of any Letters ofCredit;          (d) terminate any FX Forward Contracts;          (e) settle or adjust disputes and claims directly with Account Debtors for amounts on termsand in any order that Bank considers advisable, notify any Person owing Borrower money of Bank’ssecurity interest in such funds, and verify the amount of such account;          (f) make any payments and do any acts it considers necessary or reasonable to protect theCollateral and/or its security interest in the Collateral. Borrower shall assemble the Collateralif Bank requests and make it available as Bank designates. Bank may enter premises where theCollateral is located, take and maintain possession of any part of the Collateral, and pay,purchase, contest, or compromise any Lien which appears to be prior or superior to its securityinterest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any ofits premises, without charge, to exercise any of Bank’s rights or remedies;          (g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) anyamount held by Bank owing to or for the credit or the account of Borrower;          (h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise forsale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license orother right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights ofuse of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similarproperty as it pertains to the Collateral, in completing production of, advertising for sale, andselling any Collateral and, in connection with Bank’s exercise of its rights under this Section,Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;          (i) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusivecontrol, any entitlement order, or other directions or instructions pursuant to any ControlAgreement or similar agreements providing control of any Collateral;
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          (j) demand and receive possession of Borrower’s Books; and          (k) exercise all rights and remedies available to Bank under the Loan Documents or at law orequity, including all remedies provided under the Code (including disposal of the Collateralpursuant to the terms thereof).     **9.2 Power of Attorney**. Borrower hereby irrevocably appoints Bank as its lawfulattorney-in-fact, exercisable upon the occurrence and during the continuance of an Event ofDefault, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)sign Borrower’s name on any invoice or bill of lading for any Account or drafts against AccountDebtors; (c) settle and adjust disputes and claims about the Accounts directly with AccountDebtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust allclaims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment basedthereon, or otherwise take any action to terminate or discharge the same; and (f) transfer theCollateral into the name of Bank or a third party as the Code permits. Borrower hereby appointsBank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfector continue the perfection of Bank’s security interest in the Collateral regardless of whether anEvent of Default has occurred until all Obligations have been satisfied in full and Bank is underno further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment asBorrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, areirrevocable until all Obligations have been fully repaid and performed and Bank’s obligation toprovide Credit Extensions terminates.     **9.3 Protective Payments**. If Borrower fails to obtain the insurance called for by Section 6.7or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated topay under this Agreement or any other Loan Document, Bank may obtain such insurance or make suchpayment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearinginterest at the then highest rateapplicable to the Obligations, and secured by theCollateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtainingsuch insurance at the time it is obtained or within a reasonable time thereafter. No payments byBank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Eventof Default.     **9.4 Application of Payments and Proceeds**. Unless an Event of Default has occurred and iscontinuing, Bank may apply any funds in its possession, whether from Borrower account balances,payments, or proceeds realized as the result of any collection of Accounts or other disposition ofthe Collateral, first, to Bank Expenses, including without limitation, the reasonable costs,expenses, liabilities, obligations and attorneys’ fees incurred by Bank in the exercise of itsrights under this Agreement; second, to the interest due upon any of the Obligations; and third, tothe principal of the Obligations and any applicable fees and other charges, in such order as Bankshall determine in its sole discretion. Any surplus shall be paid to Borrower or other Personslegally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If an Event ofDefault has occurred and is continuing, Bank may apply any funds in its possession, whether fromBorrower account balances, payments, proceeds realized as the result of any collection of Accountsor other disposition of the Collateral, or otherwise, to the Obligations in such order as Bankshall determine in its sole discretion. Any surplus shall be paid to Borrower or to other Personslegally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in itsgood faith business judgment, directly or indirectly enters into a deferred payment or other credittransaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisableat any time, of either reducing the Obligations by the principal amount of the purchase price ordeferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.     **9.5 Bank’s Liability for Collateral**. So long as Bank complies with reasonable bankingpractices regarding the safekeeping of the Collateral in the possession or under the control ofBank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) anyloss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any actor default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,damage or destruction of the Collateral.     **9.6 No Waiver; Remedies Cumulative**. Bank’s failure, at any time or times, to require strictperformance by Borrower of any provision of this Agreement or any other Loan Document shall notwaive, affect, or diminish any right of Bank thereafter to demand strict performance and complianceherewith or therewith. No waiver hereunder shall be effective unless signed by the party grantingthe waiver and then is only effective for the specific instance and purpose for which it is given.Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bankhas all rights and remedies provided under the Code, by law, or in equity.
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Bank’s exercise of oneright or remedy is not an election and shall not preclude Bank from exercising any other remedyunder this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Eventof            Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver,election, or acquiescence.     **9.7 Demand Waiver**. Borrower waives demand, notice of default or dishonor, notice of paymentand nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement,extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held byBank on which Borrower is liable.     **9.8 Borrower Liability**. Any Borrower may, acting singly, request Advances hereunder. EachBorrower hereby appoints the other as agent for the other for all purposes hereunder, includingwith respect to requesting Advances/Credit Extensions hereunder. Each Borrower hereunder shall bejointly and severally obligated to repay all Advances/Credit Extensions made hereunder, regardlessof which Borrower actually receives said Advance/Credit Extension, as if each Borrower hereunderdirectly received all Advances/Credit Extensions. Each Borrower waives (a) any suretyship defensesavailable to it under the Code or any other applicable law, and (b) any right to require Bank to:(i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security;or (iii) pursue any other remedy. Bank may exercise or not exercise any right or remedy it hasagainst any Borrower or any security it holds (including the right to foreclose by judicial ornon-judicial sale) without affecting any Borrower’s liability. Notwithstanding any other provisionof this Agreement or other related document, until the Obligations have been indefeasibly paid infull, each Borrower irrevocably waives all rights that it may have at law or in equity (including,without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) toseek contribution, indemnification or any other form of reimbursement from any other Borrower, orany other Person now or hereafter primarily or secondarily liable for any of the Obligations, forany payment made by Borrower with respect to the Obligations in connection with this Agreement orotherwise and all rights that it might have to benefit from, or to participate in, any security forthe Obligations as a result of any payment made by Borrower with respect to the Obligations inconnection with this Agreement or otherwise. Any agreement providing for indemnification,reimbursement or any other arrangement prohibited under this Section shall be null and void. Ifany payment is made to a Borrower in contravention of this Section, such Borrower shall hold suchpayment in trust for Bank and such payment shall be promptly delivered to Bank for application tothe Obligations, whether matured or unmatured.     **10****NOTICES**     All notices, consents, requests, approvals, demands, or other communication (collectively,“**Communication**”), other than Advance requests made pursuant to Section 3.4, by any party to thisAgreement or any other Loan Document must be in writing and be delivered or sent by facsimile atthe addresses or facsimile numbers listed below. Bank or Borrower may change its notice address bygiving the other party written notice thereof. Each such Communication shall be deemed to havebeen validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3)Business Days after deposit in the U.S. mail, registered or certified mail, return receiptrequested, with proper postage prepaid; (b) upon transmission, when sent by facsimile transmission(with such facsimile promptly confirmed by delivery of a copy by personal delivery or United Statesmail as otherwise provided in this Section 10); (c) one (1) Business Day after deposit with areputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered bymessenger, all of which shall be addressed to the party to be notified and sent to the address orfacsimile number indicated below. Advance requests made pursuant to Section 3.4 must be in writingand may be in the form of electronic mail, delivered to Bank by Borrower at the e-mail address ofBank provided below and shall be deemed to have been validly served, given, or delivered when sent(with such electronic mail promptly confirmed by delivery of a copy by personal delivery or UnitedStates mail as otherwise provided in this Section 10). Bank or Borrower may change its address,facsimile number, or electronic mail address by giving the other party written notice thereof inaccordance with the terms of this Section 10.
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   If to Borrower: TELECOMMUNICATION SYSTEMS, INC.LONGHORN ACQUISITION, LLCc/o TELECOMMUNICATION SYSTEMS, INC.275 West Street, Suite 400Annapolis, Maryland 21401Attn: Thomas M. Brandt, Jr., Chief Financial OfficerFax: (410) 280-1048Email: tbrandt@telecomsys.com   with a copy to: TELECOMMUNICATION SYSTEMS, INC.275 West Street, Suite 400Annapolis, Maryland 21401Attn: Bruce White, Vice President and General CounselFax: (410) 280-1048Email: bwhite@telecomsys.com   If to Bank: Silicon Valley BankOne Newton Executive Park, Suite 2002221 Washington Street, Newton, MA 02462Attn: Mr. Ryan RavenscroftFax: (617) 969-5962Email: rravenscroft@svb.com   with a copy to: Riemer & Braunstein LLPThree Center PlazaBoston, Massachusetts 02108Attn: Charles W. Stavros, EsquireFax: (617) 880-3456 Email: cstavros@riemerlaw.com     **11****CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE**     New York law governs the Loan Documents without regard to principles of conflicts of law.Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in NewYork; provided, however, that nothing in this Agreement shall be deemed to operateto preclude Bank from bringing suit or taking other legal action in any other jurisdiction torealize on the Collateral or any other security for the Obligations, or to enforce a judgment orother court order in favor of Bank. Borrower expressly submits and consents in advance to suchjurisdiction in any action or suit commenced in any such court, and Borrower hereby waives anyobjection that it may have based upon lack of personal jurisdiction, improper venue, or forum nonconveniens and hereby consents to the granting of such legal or equitable relief as is deemedappropriate by such court. Borrower hereby waives personal service of the summons, complaints, andother process issued in such action or suit and agrees that service of such summons, complaints,and other process may be made by registered or certified mail addressed to Borrower at the addressset forth in Section 10 of this Agreement and that service so made shall be deemed completed uponthe earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in theU.S. mails, proper postage prepaid. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE,BANK SHALL SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITSPROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDERTO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITSPROPERTY.**TO THE FULLESTEXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO AJURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOANDOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHERCLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACHPARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL**.     **12****GENERAL PROVISIONS**
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     **12.1 Termination Prior to Maturity Date**. (a) Term Loan. The Term Loan may be prepaidin full or terminated prior to the Term Loan Maturity Date by Borrower, effective three (3)Business Days after written notice of termination is given to Bank. Notwithstanding any suchprepayment or termination, Bank’s lien and security interest in the Collateral shall continue untilBorrower fully satisfies its Obligations. If such prepayment or termination is at Borrower’selection (regardless of the existence of any Event of Default), or at Bank’s election due to theoccurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to thepayment of any other expenses or fees then-owing, a termination fee in an amount equal to (i) ifprepaid or terminated at any time prior to the first anniversary of the Effective Date, an amountequal to two percent (2.00%) of amount of the Term Loan Amount prepaid; (ii) if prepaid orterminated on or at any time after the first anniversary of the Effective Date but prior to thesecond anniversary of the Effective Date, an amount equal to one and one half percent (1.50%) ofthe amount of the Term Loan Amount prepaid; (iii) if prepaid or terminated on or at any time afterthe second anniversary of the Effective Date but prior to the third anniversary of the EffectiveDate, one percent (1.00%) of the amount of the Term Loan Amount prepaid; (iv) if prepaid orterminated on or at any time after the third anniversary of the Effective Date but prior to thefourth anniversary of the Effective Date, one-half of one percent (0.50%) of the amount of the TermLoan Prepaid; and (v) from the fourth anniversary of the Effective Date and thereafter, ZeroDollars ($0.00); providedthat no termination fee shall be charged if the creditfacility hereunder is replaced with a new facility from another division of Silicon Valley Bank.Amounts so prepaid or terminated cannot be reborrowed. Upon payment in full of the Obligations andat such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall release itsliens and security interests in the Collateral and all rights therein shall revert to Borrower.     (b) Revolving Line. Subject in any event to the provisions of Section 12.9 hereof,the Revolving Line commitment may be terminated prior to the Revolving Line Maturity Date byBorrower, effective three (3) Business Days after written notice of termination is given to Bank.Notwithstanding any such termination, Bank’s lien and security interest in the Collateral shallcontinue until Borrower fully satisfies all of its Obligations to Bank. Amounts so terminatedcannot be reborrowed. Upon payment in full of the Obligations and at such time as Bank’sobligation to make Credit Extensions has terminated, Bank shall release its liens and securityinterests in the Collateral and all rights therein shall revert to Borrower.     **12.2 Successors and Assigns**. This Agreement binds and is for the benefit of the successorsand permitted assigns of each party. Borrower may not assign this Agreement or any rights orobligations under it without Bank’s prior written consent (which may be granted or withheld inBank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell,transfer**,**assign, negotiate, or grant participation in all or any part of, or any interest in,Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.     **12.3 Indemnification**. Borrower agrees to indemnify, defend and hold Bank and its directors,officers, employees, agents, attorneys, or any other Person affiliated with or representing **Bank**(each, an “Indemnified Person”) harmless against: (a) all obligations, demands, claims, andliabilities (collectively, “**Claims**”) claimed orasserted by any other party in connectionwith the transactions contemplated by the Loan Documents; and (b) all losses or expenses (includingBank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of,following from, consequential to, or arising from transactions between Bank and Borrower (includingreasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by suchIndemnified Person’s gross negligence or willful misconduct.     **12.4 Time of Essence**. Time is of the essence for the performance of all Obligations in thisAgreement.     **12.5 Correction of Loan Documents.**Bank may correct patent errors and fill in any blanks inthe Loan Documents consistent with the agreement of the parties so long as Bank provides Borrowerwith written notice of such correction and allows Borrower at least ten (10) days to object to suchcorrection. In the event of such objection, such correction shall not be made except by anamendment signed by both Bank and Borrower.     **12.6 Severability of Provisions**. Each provision of this Agreement is severable from everyother provision in determining the enforceability of any provision.     **12.7 Amendments in Writing; Waiver; Integration**. No purported amendment or modification ofany Loan Document, or waiver, discharge or termination of any obligation under any Loan Document,shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writingsigned by the party against
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which enforcement or admission is sought. Without limiting thegenerality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failureto require performance or course of conduct shall operate as, orevidence, an amendment, supplement or waiver or have any other effect on any Loan Document.Any waiver granted shall be limited to the specific circumstance expressly described in it, andshall not apply to any subsequent or other circumstance, whether similar or dissimilar, or giverise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documentsrepresent the entire agreement about this subject matter and supersede prior negotiations oragreements. All prior agreements, understandings, representations, warranties, and negotiationsbetween the parties about the subject matter the Loan Documents merge into the Loan Documents**.**     **12.8 Counterparts**. This Agreement may be executed in any number of counterparts and bydifferent parties on separate counterparts, each of which, when executed and delivered, is anoriginal, and all taken together, constitute one Agreement.     **12.9 Survival**. All covenants, representations and warranties made in this Agreement continuein full force until this Agreement has terminated pursuant to its terms and all Obligations (otherthan inchoate indemnity obligations and any other obligations which, by their terms, are to survivethe termination of this Agreement) have been paid in full and satisfied. The obligation ofBorrower in Section 12.3 to indemnify Bank shall survive until the statute of limitations withrespect to such claim or cause of action shall have run.     **12.10 Confidentiality**. In handling any confidential information, Bank shall exercise the samedegree of care that it exercises for its own proprietary information, but disclosure of informationmay be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasersof any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonableefforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of thisprovision that any prospective transferee or purchaser shall have entered into an agreementcontaining provisions substantially the same as those in this Section); (c) as required by law,regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required inconnection with Bank’s examination or audit; (e) as Bank considers appropriate in exercisingremedies under the Loan Documents; and (f) to third-party service providers of Bank so long as suchservice providers have executed a confidentiality agreement with Bank with terms no lessrestrictive than those contained herein. Confidential information does not include informationthat is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomespart of the public domain after disclosure to Bank; or (ii) disclosed to Bank by a third party ifBank does not know that the third party is prohibited from disclosing the information.     Bank may use confidential information for the development of databases, reporting purposes,and market analysis so long as such confidential information is aggregated and anonymized prior todistribution unless otherwise expressly permitted by Borrower. The provisions of the immediatelypreceding sentence shall survive the termination of this Agreement.     **12.11 Attorneys’ Fees, Costs and Expenses**. In any action or proceeding between Borrower andBank arising out of or relating to the Loan Documents, Bank shall be entitled to recover itsreasonable attorneys’ fees and other costs and expenses incurred, in addition to any other reliefto which it may be entitled.     **12.12 Right of Set Off**. Borrower hereby grants to Bank, a lien, security interest and rightof set off as security for all Obligations to Bank, whether now existing or hereafter arising uponand against all deposits, credits, collateral and property, now or hereafter in the possession,custody, safekeeping or control of Bank or any entity under the control of Bank (including a Banksubsidiary) or in transit to any of them. At any time after the occurrence and during thecontinuance of an Event of Default, without demand or notice, Bank may set off the same or any partthereof and apply the same to any liability or obligation of Borrower even though unmatured andregardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TOREQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURESTHE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OROTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.     **12.13 Electronic Execution of Documents**. The words “execution,” “signed,” “signature” andwords of like import in any Loan Document shall be deemed to include electronic signatures or thekeeping of records in electronic form, each of which shall be of the same legal effect, validityand enforceability as a manually executed signature or the use of a paper-based recordkeepingsystems, as the case may be, to the extent and as provided for in any applicable law, including,without limitation, any state law based on the Uniform Electronic Transactions Act.
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     **12.14 Captions.**The headings used in this Agreement are for convenience only and shall notaffect the interpretation of this Agreement.     **12.15 Construction of Agreement**. The parties mutually acknowledge that they and theirattorneys have participated in the preparation and negotiation of this Agreement. In cases ofuncertainty this Agreement shall be construed without regard to which of the parties caused theuncertainty to exist.     **12.16 Relationship**. The relationship of the parties to this Agreement is determined solely bythe provisions of this Agreement. The parties do not intend to create any agency, partnership,joint venture, trust, fiduciary or other relationship with duties or incidents different from thoseof parties to an arm’s-length contract.     **12.17 Third Parties**. Nothing in this Agreement, whether express or implied, is intended to:(a) confer any benefits, rights or remedies under or by reason of this Agreement on any personsother than the express parties to it and their respective permitted successors and assigns; (b)relieve or discharge the obligation or liability of any person not an express party to thisAgreement; or (c) give any person not an express party to this Agreement any right of subrogationor action against any party to this Agreement.     **12.18 Amended and Restated Loan and Security Agreement**. This Agreement amends and restates inits entirety a certain Second Amended and Restated Loan and Security Agreement by and among TCS andBank dated as of October 14, 2005, as amended by a certain first Amendment to Second Amended andRestated Loan and Security Agreement, dated as of December 30, 2005, as further amended by acertain Second Amendment to Second Amended and Restated Loan and Security Agreement, dated as ofMarch 10, 2006, as further amended by a certain Third Amendment to Second Amended and Restated Loanand Security Agreement, dated as of November 14, 2006, and as further amended by a certain FourthAmendment to Second Amended and Restated Loan and Security Agreement, dated as of June 27, 2007.     **13****DEFINITIONS**     **13.1 Definitions**. As used in the Loan Documents, the word “shall” is mandatory, the word“may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are notlimiting, the singular includes the plural, and numbers denoting amounts that are set off inbrackets are negative. As used in this Agreement, the following capitalized terms have thefollowing meanings:     “**Account**” is any “account” as defined in the Code with such additions to such term as mayhereafter be made, and includes, without limitation, all accounts receivable and other sums owingto Borrower.     “**Account Debtor**” is any “account debtor” as defined in the Code with such additions to suchterm as may hereafter be made.     “**Adjusted Quick Ratio**” shall mean the ratio of (A) Borrower’s domestic unrestricted cash anddomestic unrestricted Cash Equivalents plus the aggregate value of Borrower’s net billed accountsreceivable divided by (B) Borrower’s Current Liabilities (including, without limitation,all Indebtedness owed to Bank and any Reserves established by Bank), less the current portion ofBorrower’s Deferred Revenue.     “**Advance**” or “**Advances**” means an advance (or advances) under the Revolving Line.     “**Affiliate**” is, with respect to any Person, each other Person that owns or controls directlyor indirectly the Person, any Person that controls or is controlled by or is under common controlwith the Person, and each of that Person’s senior executive officers, directors, partners and, forany Person that is a limited liability company, that Person’s managers and members.     “**Agreement**” is defined in the preamble hereof.     “**Availability Amount**” is (a) the lesser of (i) the Revolving Line or (ii) the amount availableunder theBorrowing Base minus (b) the Dollar Equivalent amount of all outstandingLetters of Credit (including drawn but unreimbursed Letters of Credit plus an amount equal to theLetter of Credit Reserve), minus (c) the FX Reduction Amount, minus (d) any amountsused for Cash Management Services, and minus (e) the outstanding principal balance of anyAdvances.
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     “**Bank**” is defined in the preamble hereof.     “**Bank Expenses**” are all audit fees and expenses, costs, and expenses (including reasonableattorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending andenforcing the Loan Documents(including, without limitation, those incurred in connection with appeals or InsolvencyProceedings) or otherwise incurred with respect to Borrower.     “**Borrower**” is defined in the preamble hereof.     “**Borrower’s Books**” are all Borrower’s books and records including ledgers, federal and statetax returns, records regarding Borrower’s assets or liabilities, the Collateral, businessoperations or financial condition, and all computer programs or storage or any equipment containingsuch information.     “**Borrowing Base**” is (a) eighty-five percent (85%) of Eligible Accounts, as determined by Bankfrom Borrower’s most recent Borrowing Base Certificate.     “**Borrowing Base Certificate**” is that certain certificate included within each TransactionReport.     “**Borrowing Resolutions**” are, with respect to any Person, those resolutions adopted by suchPerson’s Board of Directors or other appropriate body and delivered by such Person to Bankapproving the Loan Documents to which such Person is a party and the transactions contemplatedthereby, together with a certificate executed by its secretary on behalf of such Person certifyingthat (a) such Person has the authority to execute, deliver, and perform its obligations under eachof the Loan Documents to which it is a party, (b) that attached as Exhibit A to such certificate isa true, correct, and complete copy of the resolutions then in full force and effect authorizing andratifying the execution, delivery, and performance by such Person of the Loan Documents to which itis a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents on behalf ofsuch Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bankmay conclusively rely on such certificate unless and until such Person shall have delivered to Banka further certificate canceling or amending such prior certificate.     “**Business Day**” is any day that is not a Saturday, Sunday or a day on which Bank is closed.     “**Cash Equivalents**” means (a) marketable direct obligations issued or unconditionallyguaranteed by the United States or any agency or any State thereof having maturities of not morethan one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1)year after its creation and having the highest rating from either Standard & Poor’s Ratings Groupor Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit issued maturing no more thanone (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of theassets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) ofthis definition.     “**Cash Management Services**” is defined in Section 2.1.4.     “**Change in Control**” is a transaction in which any “**person**” or “**group**” (within the meaning ofSection 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the“**beneficial owner**” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, asamended), directly or indirectly, of greater than 35% of the shares of all classes of stock thenoutstanding of TCS ordinarily entitled to vote in the election of directors.     “**Code**” is the Uniform Commercial Code, as the same may, from time to time, be enacted and ineffect in the State of New York; provided, that, to the extent that the Code is used to define anyterm herein or in any Loan Document and such term is defined differently in different Articles orDivisions of the Code, the definition of such term contained in Article or Division 9 shall govern;provided further, that in the event that, by reason of mandatory provisions of law, any or all ofthe attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on anyCollateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than theState of New York, the term “**Code**” shall mean the Uniform Commercial Code as enacted and in effectin such other jurisdiction solely for purposes of the provisions thereof relating to suchattachment, perfection, priority, or remedies and for purposes of definitions relating to suchprovisions.     “**Collateral**” is any and all properties, rights and assets of Borrower described on ExhibitA.     “**Collateral Account**” is any Deposit Account, Securities Account, or Commodity Account.
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     “**Commodity Account**” is any “commodity account” as defined in the Code with such additions tosuch term as may hereafter be made.     “**Communication**” is defined in Section 10.     “**Compliance Certificate**” is that certain certificate in the form attached hereto asExhibit B.     “**Contingent Obligation**” is, for any Person, any direct or indirect liability, contingent ornot, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligationof another such as an obligation, in each case directly or indirectly guaranteed, endorsed,co-made, discounted or sold with recourse by that Person, or for which that Person is directly orindirectly liable; (b) any obligations for undrawn letters of credit for the account of thatPerson; and (c) all obligations from any interest rate, currency or commodity swap agreement,interest rate cap or collar agreement, or other agreement or arrangement designated to protect aPerson against fluctuation in interest rates, currency exchange rates or commodity prices; but“Contingent Obligation” does not include endorsements in the ordinary course of business. Theamount of a Contingent Obligation is the stated or determined amount of the primary obligation forwhich the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipatedliability for it determined by the Person in good faith; but the amount may not exceed the maximumof the obligations under any guarantee or other support arrangement.     “**Control Agreement**” is any control agreement entered into among the depository institution atwhich Borrower maintains a Deposit Account or the securities intermediary or commodity intermediaryat which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bankpursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,Securities Account, or Commodity Account.     “**Copyrights**” are any and all copyright rights, copyright applications, copyright registrationsand like protections in each work or authorship and derivative work thereof, whether published orunpublished and whether or not the same also constitutes a trade secret.     “**Credit Extension**” is any Advance, Letter of Credit, Term Loan, FX Forward Contract, amountutilized for Cash Management Services, or any other extension of credit by Bank for Borrower’sbenefit.     “**Current Liabilities**” are all obligations and liabilities of Borrower to Bank, plus, withoutduplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year.     “**Default**” means any event which with notice or passage of time or both, would constitute anEvent of Default.     “**Default Rate**” is defined in Section 2.3(b).     “**Deferred Revenue**” is all amounts received or invoiced in advance of performance undercontracts and not yet recognized as revenue.     “**Deposit Account**” is any “deposit account” as defined in the Code with such additions to suchterm as may hereafter be made.     “**Designated Deposit Account**” is Borrower’s deposit account, account number 3300363939,maintained with Bank.     “**Dollars***,*” “**dollars**” or use of the sign “$” means only lawful money of the United States andnot any other currency, regardless of whether that currency uses the “$” sign to denote itscurrency or may be readily converted into lawful money of the United States.     “**Dollar Equivalent**” is, at any time, (a) with respect to any amount denominated in Dollars,such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalentamount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailingrate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer tothe country issuing such Foreign Currency**.**     “**EBITDA**” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to theextent deducted in the calculation of Net Income, depreciation expense and amortization expense,plus (d) income tax expense, plus (e)
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reasonable add-backs for non-cash deductionsfrom Net Income, including, without limitation, non-cash stock compensation expense, in each casein this clause (e) in Bank’s sole discretion, minus (e) capitalized software developmentexpense.     “**Effective Date**” is the date Bank executes this Agreement and as indicated on the signaturepage hereof.     “**Eligible Accounts**” are Accounts which arise in the ordinary course of Borrower’s businessthat meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right atany time and from time to time after the Effective Date upon notice to Borrower, to adjust any ofthe criteria set forth below and to establish new criteria in its good faith business judgment.Without limiting the fact that the determination of which Accounts are eligible for borrowing is amatter of Bank’s good faith judgment, the following (“Minimum Eligibility Requirements”) are theminimum requirements for an Account to be an Eligible Account. Unless Bank agrees otherwise inwriting, Eligible Accounts shall not include:     (a) Accounts for which the Account Debtor has not been invoiced or where goods or serviceshave not yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);     (b) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date,regardless of invoice payment period terms;     (c) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts havenot been paid within ninety (90) days of invoice date;     (d) Accounts billed and/or payable outside the United States;     (e) Accounts with credit balances over ninety (90) days from invoice date;     (f) Accounts owing from an Account Debtor, including Affiliates, whose total obligations toBorrower exceed twenty-five percent (25%) of all Accounts, for the amounts that exceed thatpercentage, unless Bank approves in writing;     (g) Accounts subject to contractual arrangements between Borrower and an Account Debtor wherepayments shall be scheduled or due according to completion or fulfillment requirements where theAccount Debtor has a right of offset for damages suffered as a result of Borrower’s failure toperform in accordance with the contract (sometimes called contracts accounts receivable, progressbillings, milestone billings, or fulfillment contracts);     (h) Accounts owing from an Account Debtor the amount of which may be subject to withholdingbased on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to theextent of the amount withheld; sometimes called retainage billings);     (i) Accounts owing from an Account Debtor which does not have its principal place of businessin the United States or Canada except for Eligible Foreign Accounts;     (i) Accounts owing from the United States or any department, agency, or instrumentalitythereof except for Accounts of the United States if Borrower has assigned its payment rights toBank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940,as amended;     (j) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligatedin any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception ofcustomary credits, adjustments and/or discounts given to an Account Debtor by Borrower in theordinary course of its business;     (k) Accounts for demonstration or promotional equipment, or in which goods are consigned, orsold on a “sale guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other termsif Account Debtor’s payment may be conditional;     (l) Accounts that represent non-trade receivables or that are derived by means other than inthe ordinary course of Borrower’s business;
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     (m) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, oragent;     (n) Accounts in which the Account Debtor disputes liability or makes any claim (but only up tothe disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,or becomes insolvent, or goes out of business;     (o) Accounts subject to liens in favor of any other Person, including, without limitation,Tatonka Capital Corporation;     (p) Accounts subject to chargebacks or other payment deductions taken by an Account Debtor;     (q) Accounts for which Bank in its good faith business judgment determines collection to bedoubtful; and     (r) other Accounts Bank deems ineligible in the exercise of its good faith business judgment.     “**Eligible Foreign Accounts**” are Accounts for which the Account Debtor does not have itsprincipal place of business in the United States but are otherwise Eligible Accounts that (a) Bankpre-approves in writing and (b) are supported by letter(s) of credit acceptable to Bank, in itssole discretion.     “**Equipment**” is all “equipment” as defined in the Code with such additions to such term as mayhereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles(including motor vehicles and trailers), and any interest in any of the foregoing.     “**ERISA**” is the Employee Retirement Income Security Act of 1974, and its regulations.     “**Event of Default**” is defined in Section 8.     “**Fixed Charge Coverage Ratio**” means the ratio of (A) (i) Borrower’s EBITDA for the trailingtwelve (12) month period then ending minus (ii) Borrower’s unfinanced Capital Expenditures(made during such period) minus (iii) taxes and dividends paid in cash (during suchperiod), divided by (B) Borrower’s Fixed Charges for the trailing three (3) month periodthen ended (including, for the period ending June 30, 2009, an amount equal to three regularlyscheduled Term Loan Payments) multiplied by four (4).     “**Fixed Charges**” means the sum of Borrower’s Interest Expense plus all required principalpayments on Indebtedness during the trailing three (3) month period then ended.     “**Foreign Currency**” means lawful money of a country other than the United States.     “**Funding Date**” is any date on which a Credit Extension is made to or for the account ofBorrower which shall be a Business Day.     “**FX Business Day**” is any day when (a) Bank’s Foreign Exchange Department is conducting itsnormal business and (b) the Foreign Currency being purchased or sold by Borrower is available toBank from the entity from which Bank shall buy or sell such Foreign Currency.     “**FX Forward Contract**” is defined in Section 2.1.3.     “**FX Reserve**” is defined in Section 2.1.3.     “**FX Reduction Amount**” is defined in Section 2.1.3.     “**GAAP**” is generally accepted accounting principles set forth in the opinions andpronouncements of the Accounting Principles Board of the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial Accounting Standards Board or insuch other statements by such other Person as may be approved by a significant segment of theaccounting profession, which are applicable to the circumstances as of the date of determination.
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     “**General Intangibles**” is all “general intangibles” as defined in the Code in effect on thedate hereof with such additions to such term as may hereafter be made, and includes withoutlimitation, all Intellectual Property, claims, income and other tax refunds, security and otherdeposits, payment intangibles, contract rights, options to purchase or sell real or personalproperty, rights in all litigation presently or hereafter pending (whether in contract, tort orotherwise), insurance policies (including without limitation key man, property damage, and businessinterruption insurance), payments of insurance and rights to payment of any kind.     “**Governmental Approval**” is any consent, authorization, approval, order, license, franchise,permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, orother act by or in respect of, any Governmental Authority.     “**Governmental Authority**” is any nation or government, any state or other political subdivisionthereof, any agency, authority, instrumentality, regulatory body, court, central bank or otherentity exercising executive, legislative, judicial, taxing, regulatory or administrative functionsof or pertaining to government, any securities exchange and any self-regulatory organization.     “**Indebtedness**” is (a) indebtedness for borrowed money or the deferred price of property orservices, such as reimbursement and other obligations for surety bonds and letters of credit, (b)obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital leaseobligations, and (d) Contingent Obligations.     “**Indemnified Person**” is defined in Section 12.2.     “**Insolvency Proceeding**” is any proceeding by or against any Person under the United StatesBankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefitof creditors, compositions, extensions generally with its creditors, or proceedings seekingreorganization, arrangement, or other relief.     “**Intellectual Property**” means all of Borrower’s right, title, and interest in and to thefollowing:     (a) its Copyrights, Trademarks and Patents, and all related applications;     (b) any and all trade secrets and trade secret rights, including, without limitation, anyrights to unpatented inventions, know-how, operating manuals;     (c) any and all source code;     (d) any and all design rights which may be available to a Borrower;     (e) any and all claims for damages by way of past, present and future infringement of any ofthe foregoing, with the right, but not the obligation, to sue for and collect such damages for saiduse or infringement of the Intellectual Property rights identified above; and     (f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.     “**Interest Expense**” means for any fiscal period, interest expense (whether cash or non-cash)determined in accordance with GAAP for the relevant period ending on such date, including, in anyevent, interest expense with respect to any Credit Extension and other Indebtedness of Borrower,including, without limitation or duplication, all commissions, discounts, or related amortizationand other fees and charges with respect to letters of credit and bankers’ acceptance financing andthe net costs associated with interest rate swap, cap, and similar arrangements, and the interestportion of any deferred payment obligation (including leases of all types).     “**Inventory**” is all “inventory” as defined in the Code in effect on the date hereof with suchadditions to such term as may hereafter be made, and includes without limitation all merchandise,raw materials, parts, supplies, packing and shipping materials, work in process and finishedproducts, including without limitation such inventory as is temporarily out of Borrower’s custodyor possession or in transit and including any returned goods and any documents of titlerepresenting any of the above.     “**Investment**” is any beneficial ownership interest in any Person (including stock, partnershipinterest or other securities), and any loan, advance or capital contribution to any Person.
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     “**Letter of Credit**” means a standby letter of credit issued by Bank or another institutionbased upon an application, guarantee, indemnity or similar agreement on the part of Bank as setforth in Section 2.1.2.     “**Letter of Credit Application**” is defined in Section 2.1.2(a).     “**Letter of Credit Reserve**” has the meaning set forth in Section 2.1.2(d).     “**Lien**” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or otherencumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwiseagainst any property**.**     “**Loan Documents**” are, collectively, this Agreement, the Perfection Certificate, theSubordination Agreement, any note, or notes or guaranties executed by Borrower or any guarantor,and any other present or future agreement between Borrower and/or for the benefit of Bank inconnection with this Agreement, all as amended, restated, or otherwise modified.     “**Material Adverse Change**” is (a) a material impairment in the perfection or priority of Bank’sLien in the Collateral or in the value of such Collateral; (b) a material adverse change in thebusiness, operations, or condition (financial or otherwise) of Borrower; or (c) a materialimpairment of the prospect of repayment of any portion of the Obligations.     “**Minimum Eligibility Requirements**” is defined in the defined term “Eligible Accounts”.     “**Net Income**” means, as calculated on a consolidated basis for Borrower and its Subsidiaries,if any, for any period as at any date of determination, the net profit (or loss), after provisionfor taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.     “**Obligations**” are Borrower’s obligation to pay when due any debts, principal, interest, BankExpenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the LoanDocuments, or otherwise, including, without limitation, all obligations relating to letters of**credit**(including reimbursement obligations for drawn and undrawn letters of credit), cashmanagement services, and foreign exchange contracts, if any, and including interest accruing afterInsolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank,and **t**o perform Borrower’s duties under the Loan Documents.     “**Operating Documents**” are, for any Person, such Person’s formation documents, as certifiedwith the Secretary of State of such Person’s state of formation on a date that is no earlier than30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws incurrent form, (b) if such Person is a limited liability company, its limited liability companyagreement (or similar agreement), and (c) if such Person is a partnership, its partnershipagreement (or similar agreement), each of the foregoing with all current amendments ormodifications thereto.     “**Patents**” means all patents, patent applications and like protections including withoutlimitation improvements, divisions, continuations, renewals, reissues, extensions andcontinuations-in-part of the same.     “**Payment**” means all checks, wire transfers and other items of payment received by Bank(including proceeds of Accounts and payment of all the Obligations in full) for credit toBorrower’s outstanding Credit Extensions or, if the balance of the Credit Extensions has beenreduced to zero, for credit to its Deposit Accounts.     “**Perfection Certificate**” is defined in Section 5.1.     “**Permitted Acquisition**” is defined in Section 7.3.     “**Permitted Indebtedness**” is:     (a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;     (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;     (c) Subordinated Debt, including, without limitation, Indebtedness owed to Tatonka Capitalcorporation pursuant to the terms and conditions of a certain promissory note, as amended from timeto time,
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described in that certain Subordination Document, dated December 28, 2006, by and betweenBank and Tatonka Capital Corporation;     (d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;     (e) Indebtedness secured by Permitted Liens;     (f) Indebtedness owed by one Borrower to another Borrower, or, subject to clause (d) of thedefinition of “Permitted Investments hereof, Indebtedness owed by a Subsidiary to a Borrower; and     (g) extensions, refinancings, modifications, amendments and restatements of any items ofPermitted Indebtedness (a) through (f) above, provided that the principal amount thereof is notincreased or the terms thereof are not modified to impose more burdensome terms upon Borrower orits Subsidiary, as the case may be.     “**Permitted Investments**” are:     (a) Investments shown on the Perfection Certificate and existing on the Effective Date;     (b) Cash Equivalents;     (c) Investments consisting of the endorsement of negotiable instruments for deposit orcollection or similar transactions in the ordinary course of Borrower’s business;     (d) Investments by Borrower in Subsidiaries that are not a Borrower in an amount not to exceedOne Million Dollars ($1,000,000) in the aggregate for all such Subsidiaries;     (e) Investments consisting of (i) travel advances and employee relocation loans and otheremployee 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 Subsidiariespursuant to employee stock purchase plans or agreements approved by Borrower’s board of directors;     (f) Investments (including debt obligations) received in connection with the bankruptcy orreorganization of customers or suppliers and in settlement of delinquent obligations of, and otherdisputes with, customers or suppliers arising in the ordinary course of business;     (g) Investments consisting of notes receivable of, or prepaid royalties and other creditextensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;provided that this paragraph (g) shall not apply to Investments of Borrower in anySubsidiary; and     (h) Investments in other assets in an amount not to exceed One Million Dollars ($1,000,000) inthe aggregate.     “**Permitted Liens**” are:     (a) Liens existing on the Effective Date and shown on the Perfection Certificate or arisingunder this Agreement and the other Loan Documents;     (b) Liens for taxes, fees, assessments or other government charges or levies, either **(i)**notdue and payable or (ii) being contested in good faith and for which Borrower maintains adequatereserves on its Books, that no notice of any such Lien has been filed or recorded under theInternal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;     (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financingthe acquisition of the Equipment securing no more than Five Hundred Thousand Dollars ($500,000) inthe aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lienis confined to the property and improvements and the proceeds of the Equipment;     (d) statutory Liens securing claims or demands of materialmen, mechanics, carriers,warehousemen, landlords and other Persons imposed without action of such parties, provided, theyhave no priority over any of
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Bank’s Lien, such Liens attach only to Inventory and the aggregateamount of the Indebtedness secured by such Liens does not at any time exceed One Hundred FiftyThousand Dollars ($150,000) and is not delinquent or is being contested in good faith byappropriate proceedings;     (e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions,social security and other like obligations incurred in the ordinary course of business, provided,they have no priority over any of Bank’s Liens and the aggregate amount of the Indebtedness securedby such Liens does not at any time exceed One Hundred Fifty Thousand Dollars ($150,000);     (f) Liens in favor of customs and revenue authorities securing the payment of customs dutiesin connection with the importation of goods in the ordinary course of Borrower’s business,consistent with past practices;     (g) Liens incurred in the extension, renewal or refinancing of the indebtedness secured byLiens described in (a) through (f), but any extension, renewal or replacement Lien must belimited to the property encumbered by the existing Lien and the principal amount of theindebtedness may not increase;     (h) leases or subleases of real property granted in the ordinary course of business, andleases, subleases, non-exclusive licenses or sublicenses of property (other than real property orIntellectual Property) granted in the ordinary course of Borrower’s business, if theleases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest;     (i) non-exclusive license of Intellectual Property granted to third parties in the ordinarycourse of business; and     (j) Liens arising from judgments, decrees or attachments in circumstances not constituting anEvent of Default under Section 8.4 or 8.7.     “**Person**” is any individual, sole proprietorship, partnership, limited liability company, jointventure, company, trust, unincorporated organization, association, corporation, institution, publicbenefit corporation, firm, joint stock company, estate, entity or government agency.     “**Prime Rate**” is the greater of (i) four percent (4.00%) per annum, or (ii) the Bank’s mostrecently announced “prime rate,” even if it is not Bank’s lowest rate.     “**Prior Loan Agreement**” is defined in the preamble hereof.     “**Prior Term Loan**” is defined in Section 2.1.5(b) hereof.     “**Registered Organization**” is any “registered organization” as defined in the Code with suchadditions to such term as may hereafter be made.     “**Requirement of Law**” is as to any Person, the organizational or governing documents of suchPerson, and any law (statutory or common), treaty, rule or regulation or determination of anarbitrator or a court or other Governmental Authority, in each case applicable to or binding uponsuch Person or any of its property or to which such Person or any of its property is subject.     “**Reserves**” means, as of any date of determination, such amounts as Bank may from time to timeestablish and revise in good faith reducing the amount of Advances, Letters of Credit and otherfinancial accommodations which would otherwise be available to Borrower under the lending formulas:(a) to reflect events, conditions, contingencies or risks which, as determined by Bank in goodfaith, do or may affect (i) the Collateral or any other property which is security for theObligations or its value (including without limitation any increase in delinquencies of Accounts),(ii) the assets or business of Borrower or any guarantor, or (iii) the security interests and otherrights of Bank in the Collateral (including the enforceability, perfection and priority thereof);or (b) to reflect Bank’s good faith belief that any collateral report or financial informationfurnished by or on behalf of Borrower or any guarantor to Bank is or may have been incomplete,inaccurate or misleading in any material respect; or (c) in respect of any state of facts whichBank determines in good faith constitutes an Event of Default or may, with notice or passage oftime or both, constitute an Event of Default.
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     “**Responsible Officer**” is any of the Chief Executive Officer, President, Chief FinancialOfficer and Controller of Borrower.     “**Restricted License**” is any material license or other agreement with respect to which Borroweris the licensee (a) that prohibits or otherwise restricts Borrower from granting a securityinterest in Borrower’s interest in such license or agreement or any other property, or (b) forwhich a default under or termination of could interfere with the Bank’s right to sell anyCollateral.     “**Revolving Line**” is an Advance or Advances in an amount equal to Thirty Million Dollars($30,000,000).     “**Revolving Line Maturity Date**” is June     , 2012.     “**SEC**” shall mean the Securities and Exchange Commission, any successor thereto, and anyanalogous Governmental Authority     “**Securities Account**” is any “securities account” as defined in the Code with such additions tosuch term as may hereafter be made.     “**Subordinated Debt**” is indebtedness incurred by Borrower subordinated to all of Borrower’s nowor hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similaragreement in form and substance satisfactory to Bank entered into between Bank and the othercreditor), on terms acceptable to Bank.     “**Subsidiary**” is, as to any Person, a corporation, partnership, limited liability company orother entity of which shares of stock or other ownership interests having ordinary voting power(other than stock or such other ownership interests having such power only by reason of thehappening of a contingency) to elect a majority of the board of directors or other managers of suchcorporation, partnership or other entity are at the time owned, or the management of which isotherwise controlled, directly or indirectl**y**through one or more intermediaries, or both, by suchPerson. Unless the context otherwise requires, each reference to a Subsidiary herein shall be areference to a Subsidiary of Borrower.     “**Term Loan**” is a loan made by Bank pursuant to the terms of Section 2.1.5 hereof**.**     “**Term Loan Amount**” is an aggregate amount equal to Twenty Million Dollars ($20,000,000).     “**Term Loan Maturity Date**” is the earliest to occur of (a) June 30, 2014 or (b) the occurrenceof an Event of Default.     “**Term Loan Payment**” is defined in Section 2.1.5(c).     “**Trademarks**” means any trademark and servicemark rights, whether registered or not,applications to register and registrations of the same and like protections, and the entiregoodwill of the business of Borrower connected with and symbolized by such trademarks.     “**Transaction Report**” is the Bank’s standard reporting package provided by Bank to Borrower.     “**Transfer**” is defined in Section 7.1.     “**Unused Revolving Line Facility Fee**” is defined in Section 2.4(d).**[**Signature page follows.**]**
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     **IN WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed as of theEffective Date.      BORROWER: