Exhibit
      10.29




**SECOND**  **AMENDMENT**  **AND**  **MODIFICATION**


**TO**  **LOAN**  **AND**  **SECURITY**  **AGREEMENT**  **AND**  **OTHER**  **LOAN**  **DOCUMENTS**




**THIS**  **SECOND**  **AMENDMENT**  **AND**  **MODIFICATION**  **TO**  **LOAN**  **AND**  **SECURITY**  **AGREEMENT**  **AND**  **OTHER**  **LOAN**  **DOCUMENTS** (the **“Amendment”** )
      is made
      effective as of October _____, 2007 by and among **LASALLE**  **BANK**  **NATIONAL**  **ASSOCIATION** (the **“Lender”** )
      and **ZANETT,**  **INC** .,
      a
      Delaware corporation ( **“Zanett”** ), **ZANETT**  **COMMERCIAL**  **SOLUTIONS,**  **INC** .,
      a
      Delaware corporation ( **“ZCS”** )
      and **PARAGON**  **DYNAMICS,**  **INC** .,
      a
      Delaware corporation (“ **Paragon** ”).
      (Zanett, ZCS and Paragon are each individually, a **“Borrower”** and
      collectively, the **“Borrowers”** ).




**BACKGROUND**




**A.**  Borrowers
      and Lender have previously entered into a certain Loan and Security Agreement
      dated December 21, 2006, as amended by that certain First Amendment and
      Modification to Loan and Security Agreement and Other Loan Documents dated
      May
      31, 2007 (as amended, the **“Loan**  **Agreement”** ),
      pursuant to which, inter  alia ,
      Lender
      agreed to extend to Borrowers certain credit facilities subject to the terms
      and
      conditions set forth therein.




**B.**  Bruno
      Guazzoni and Emral Holdings Limited have each previously entered into
      Subordination Agreements with Lender both dated December 21, 2007 (as such
      agreements may have been and may be amended, individually, a “ **Subordination**  **Agreement** ”
and
      collectively, the “ **Subordination**  **Agreements** ”),
      pursuant to which, inter  alia ,
      Bruno
      Guazzoni and Emral Holdings Limited each subordinated their Junior Debt to
      the
      Senior Debt (as both such terms are defined in the applicable Subordination
      Agreement).




**C.**  Borrowers
      and Lender are entering into this Amendment to amend certain terms and
      conditions of the Loan Agreement and the Subordination Agreements.




**D.**  Capitalized
      terms used herein and not otherwise defined herein shall have the meanings
      set
      forth for such terms in the Loan Agreement or the Subordination Agreements,
      as
      applicable.




NOW,
      THEREFORE, in consideration of the foregoing premises and intending to be
      legally bound hereby, the parties hereto agree as follows:




**1.**  **Amendments**  **to**  **Loan**  **Agreement** .




**1.1**  **Definitions** .




**(a)**  The
      following definitions set forth in **Section**  **1(a)** of the
      Loan Agreement shall be amended to read, in each of their entirety, as
      follows:




“ **Contract**  **Term** ”
shall
      mean the earlier to occur of (a) December ___, 2007 or (b) the date of the
      closing of the ___________ Business Line Sale occurs.




“ **Maximum**  **Revolving**  **Loan**  **Limit** ”
shall
      mean $6,000,000 as of the date of this Agreement.







**(b)**  The
      following definition is hereby added to **Section**  **1(a)** of the
      Loan Agreement in its proper alphabetical order and when used in this Amendment,
      such term shall have the following meaning:




“__________ **Business**  **Line**  **Sale** ”
shall
      mean any sale of any material portion of the __________ line of business
      currently operated by __________.




**1.2**  **Interest**  **Rate** . **Section**  **4(a)** of the
      Loan Agreement shall be and is hereby amended to read, in its entirety, as
      follows:




**(a)**  **Interest**  **Rate** .
      Subject
      to the terms and conditions set forth below, all Revolving Loans shall bear
      interest at the per annum rate of interest set forth in **subsections**  **(i)**  **and**  **(ii)** below:




(i)  The
      Prime
      Rate in effect from time to time plus ___________ percent (____%) per annum, payable on the first Business Day of
      each
      month in arrears. Said rate of interest shall increase or decrease by an amount
      equal to each increase or decrease in the Prime Rate effective on the effective
      date of each such change in the Prime Rate.




(ii)  Upon
      the
      occurrence of an Event of Default and during the continuance thereof, the Loans
      shall bear interest at the rate of two percent (2.0%) per annum in excess of
      the
      interest rate otherwise payable thereon (the “ **Default**  **Rate** ”),
      which
      interest shall be payable on demand. All interest shall be calculated on the
      basis of a 360-day year and based on actual principal amounts
      outstanding.




**1.3**  **No**  **LIBOR**  **Rate**  **Loans** .
      Borrowers are no longer entitled to receive any LIBOR Rate Loans and Lender
      shall have no obligation to make or continue any LIBOR Rate Loans.




**1.4**  **Subordinated**  **Debt** .
      Borrowers hereby represent and warrant to Lender that the following sets forth
      the outstanding amount and the regularly scheduled principal and interest
      payments due with respect to all existing Public Subordinated Debt:




**Amount**
            **Mature
                Date**
            **Interest
                Payment Dates**
            **Principal
                Payment Dates**






2


Borrower
      shall not make any prepayment of any amount due with respect to any Public
      Subordinated Debt or make any non-mandatory redemptions or repurchases of any
      Public Subordinated Debt.




Borrowers
      hereby represent and warrant to Lender that the following sets forth the
      outstanding amount and the regularly scheduled principal and interest payments
      due with respect to all existing Private Subordinated Debt:




**Payee**
            **Amount**
            **Maturity
                Date**
            **Interest
                Payments Dates**
            **Principal
                Payment Dates**







Notwithstanding
      anything herein or elsewhere to the contrary, Borrowers shall not make any
      payments whatsoever with respect to any principal, interest or other sums due
      with respect to any Private Subordinated Debt or make any redemptions or
      repurchases of any Private Subordinated Debt.




**Sections**  **4** . **6,**  **4** . **7**  **and**  **4** .8 of the
      First Amendment and Modification to Loan and Security Agreement and other Loan
      Documents dated May 31,2007 are hereby deleted, since Borrower has agreed not
      to
      make any payments on any Private Subordinated Debt.




**2.**  **Waiver**  **Regarding**  **Fixed**  **Charge**  **Coverage**  **Ratio** .
      Borrowers have requested and Lender has agreed to waive as an Event of Default
      the failure of Borrowers to comply with the Fixed Charge Coverage Ratio covenant
      set forth in **Section**  **14(a)** of the
      Loan Agreement for the 12 month period ending on September 30, 2007. Such waiver
      shall be limited to Borrowers’ compliance with **Section**  **14(a)** of the
      Loan Agreement solely for such period and for no other period and such waiver
      shall not be construed to constitute a waiver of Borrowers’ compliance with any
      other terms of the Loan Agreement or an agreement to enter into any future
      waivers with Borrowers.




**3.**  **Waiver**  **Regarding**  **Senior**  **Debt**  **Ratio** .
      Borrowers have requested and Lender has agreed to waive as an Event of Default
      the failure of Borrowers to comply with the Senior Debt Ratio covenant set
      forth
      in **Section**  **14(b)** of the
      Loan Agreement for the following periods: (i) for the 9 month period ending
      on
      June 30, 2007 and (ii) for the 12 month period ending on September 30, 2007.
      Such waiver shall be limited to Borrowers’ compliance with **Section**  **14(b)** of the
      Loan Agreement solely for such periods and for no other period and such waiver
      shall not be construed to constitute a waiver of Borrowers’ compliance with any
      other terms of the Loan Agreement or an agreement to enter into any future
      waivers with Borrowers.




3


**4.**  **Waiver**  **of**  **EBITDA**  **Covenant** .
      Borrowers have requested and Lender has agreed to waive as an Event of Default
      the failure of Borrowers to comply with the “ **EBITDA** ”
      covenant set forth in **Section**  **14(c)** of the
      Loan Agreement: (a) for the following individual calendar months: (i) May,
      2007,
      (ii) June, 2007, (iii) July, 2007, (iv) August, 2007 and (v) September, 2007;
      and (b) for the aggregate calendar months of ____________, 2007. Such waiver
      shall be limited to Borrowers’ compliance with **Section**  **14(c)** of the
      Loan Agreement solely for such calendar months and for no other period and
      such
      waiver shall not be construed to constitute a waiver of Borrowers’ compliance
      with any other terms of the Loan Agreement or an agreement to enter into any
      future waivers with Borrowers.




**5.**  **Cure**  **Period** .
      The
      thirty (30) day cure period set forth in **Section**  **15(b)** of the
      Loan Agreement is hereby deleted in its entirety.




**6.**  **No**  **Payments**  **on**  **Junior**  **Debt** . **Paragraph**  **(C)** of each
      of the Subordination Agreements are hereby amended to read, in each of their
      entirety, as follows:




“(C)  agrees
      to
      instruct Borrower not to pay, and agrees not to accept payment of, or assert,
      demand, sue for or seek to enforce against Borrower or any other person or
      entity, by setoff or otherwise, all or any portion of the Junior Debt unless
      and
      until Lender has, in writing, notified Creditor that the Senior Debt has been
      paid in full, all obligations arising in connection therewith have been
      discharged and Lender has no further obligation to make any advances to
      Borrower.”




**7.**  **Amendment**  **Fee** .
      As
      consideration for Lender to enter into this Amendment, Borrowers have agreed
      to
      pay to Lender an amendment fee equal to $____________ (the “ **Amendment**  **Fee** ”).
      The
      Amendment Fee is due and payable in full upon execution of this Amendment.
      Borrowers agree that the Amendment Fee has been fully earned by Lender and
      is
      non-refundable.




**8.**  **Termination**  **Fee** .
      Borrowers acknowledge and agree that, as a result of the financial covenant
      defaults which are being waived pursuant to this Amendment, Lender could have
      terminated the Loan Agreement and been entitled to receive a Termination Fee
      equal to $160,000. As an inducement for Lender to grant the waivers set forth
      in
      this Agreement, Borrowers agree that such fee in the amount of $160,000 shall
      be
      deemed fully earned upon execution of this Amendment by Lender and that such
      fee
      is non-refundable and is payable upon the earlier to occur of: (a) the
      expiration of the Contract Term, or (b) the occurrence of a Default or Event
      of
      Default, provided  that ,
      in the
      event that Borrowers repay all Loans and Liabilities owed to Lender on or before
      November ___, 2007 and the obligation of Lender to make Advances to Borrowers
      under the Loan Agreement is terminated, then such fee shall be reduced from
      $160,000 to $__________.




4


**9.**  **__________**  **Business**  **Line**  **Sale** .
      Borrowers hereby represent, warrant and covenant to and with Lender as
      follows:




**(a)**  Borrowers
      have engaged Houlihan Lokey to find potential buyers of the __________ business
      line operated by ____________________________.




**(b)**  Borrowers
      authorize Lender to communicate directly with Houlihan Lokey regarding any
      and
      all aspects of the offering for sale and sale of such __________ business line.
      Borrowers shall direct and authorize Houlihan Lokey by a separate letter to
      discuss such sale with Lender and to share information with Lender regarding
      such sale.




**(c)**  Borrowers
      shall provide Lender with weekly written up-dates regarding the progress of
      such
      sale.




**(d)**  Borrowers
      acknowledge and agree that all assets constituting part of or used or useful
      in
      connection with the __________ business line are subject to a perfected, first
      priority lien in favor of Lender and that all proceeds from the __________
      Business Line Sale shall be applied first to repay the Loans and other
      Liabilities owed to Lender.




**10.**  **Confirmation**  **of**  **Collateral** .
      Nothing
      contained herein shall be deemed to be a compromise, satisfaction, accord and
      satisfaction, novation or release of any of the Loan Documents, or any rights
      or
      obligations thereunder, or a waiver by Lender of any of its rights under the
      Loan Documents or at law or in equity. All liens, security interests, rights
      and
      remedies granted to Lender in Loan Documents are hereby ratified, confirmed
      and
      continued. Borrowers acknowledge and agree that the term “Loan Documents” as
      used in the Loan Agreement and any other documents executed in connection
      therewith shall include, without limitation, this Amendment and any and all
      other documents executed in connection herewith.




**11.**  **Challenge**  **to**  **Enforcement** .
      Borrowers acknowledge and agree that they do not have any defense, set-off,
      counterclaim or challenge against the payment of any sums owing under the Loan
      Documents, or the enforcement of any of the terms or conditions
      thereof.




**12.**  **Representation**  **and**  **Warranties** .
      Borrowers hereby, jointly and severally, represent and warrant, which
      representations and warranties shall survive until all Liabilities are paid
      and
      satisfied in full, as follows:




**12.1**  All
      representations and warranties of Borrowers set forth in the Loan Documents
      are
      true and complete in all material respects as of the date hereof.




**12.2**  Upon
      the
      effectiveness of this Amendment, no condition or event exists or has occurred
      which would constitute a Default or an Event of Default under the Loan Agreement
      or any of the other Loan Documents.




**12.3**  Borrowers
      have not received any notice of default or event of default from any other
      lender, trustee or lessor with respect to any other loan, financing or lease
      agreement.




5


**12.4**  The
      execution and delivery of this Amendment by Borrowers and all documents and
      agreements to be executed and delivered pursuant to the terms
      hereof:




**(a)**  has
      been
      duly authorized by all requisite corporate action by each Borrower;




**(b)**  will
      not
      conflict with or result in the breach of or constitute a default (upon the
      passage of time, delivery of notice or both) under any Borrower’s Articles of
      Incorporation, By-Laws or any applicable statute, law, rule, regulation or
      ordinance or any indenture, mortgage, loan or other document or agreement to
      which any Borrower is a party or by which any of them is bound or affected;
      and




**(c)**  will
      not
      result in the creation or imposition of any lien, charge or encumbrance of
      any
      nature whatsoever upon any of the property or assets of Borrower, except liens
      in favor of Lender or as otherwise permitted under the Loan
      Documents.




**13.**  **Conditions** .
      The
      obligation of Lender to enter into this Amendment is subject to the following
      conditions (any of which may be waived by Lender):




**13.1**  **Loan**  **Documents** .
      Borrowers and all other required persons and entities will have executed and
      delivered to Lender this Amendment and such other documents as Lender may
      require.




**13.2**  **Other**  **Documents** .
      Such
      other documents as may be required to be submitted to Lender by the terms hereof
      or any of the Loan Documents shall have been delivered by or on behalf of
      Borrowers.




**14.**  **Additional**  **Documents;**  **Further**  **Assurances** .
      Borrowers covenant and agree to execute and deliver to Lender, or to cause
      to be
      executed and delivered to Lender contemporaneously herewith, at the sole cost
      and expense of Borrowers, any and all other documents, agreements, statements,
      resolutions, certificates, consents and information as Lender may require in
      connection with the matters or actions described herein. Borrowers further
      covenant and agree to execute and deliver to Lender or to cause to be executed
      and delivered at the sole cost and expense of Borrowers, from time to time,
      any
      and all other documents, agreements, statements, certificates and information
      as
      Lender shall reasonably request to evidence or effect the terms hereof, the
      Loan
      Agreement, as amended, or any of the other Loan Documents, or to enforce or
      to
      protect Lender’s interest in the Collateral. All such documents, agreements,
      statements, certificates and information shall be in form and content acceptable
      to Lender in its sole discretion.




**15.**  **Certain**  **Fees,**  **Costs,**  **Expenses**  **and**  **Expenditures** .
      Borrowers will pay all of the Lender’s expenses in connection with the review,
      preparation, negotiation, documentation and closing of this Amendment and the
      consummation of the transactions contemplated hereunder, including without
      limitation, costs and fees and expenses of counsel retained by Lender and all
      fees related to filings, recording of documents and searches, whether or not
      the
      transactions contemplated hereunder are consummated. Nothing contained herein
      shall limit in any manner whatsoever Lender’s right to reimbursement under any
      of the Loan Documents.




6


**16.**  **Communications**  **and**  **Notices** .
      All
      notices, requests and other communications made or given in connection with
      this
      Amendment shall be made in accordance with the provisions of the Loan
      Agreement.




**17.**  **Time**  **of**  **Essence** .
      Time is
      of the essence of this Amendment.




**18.**  **No**  **Waiver** .
      Except
      as otherwise provided herein, nothing contained and no actions taken by Lender
      in connection herewith shall constitute nor shall they be deemed to be a waiver,
      release or amendment of or to any rights, remedies, or privileges afforded
      to
      Lender under the Loan Documents or under the Uniform Commercial Code as adopted
      in the Commonwealth of Pennsylvania. Nothing herein shall constitute a waiver
      by
      Lender of Borrowers’ compliance with the terms of the Loan Documents, nor shall
      anything contained herein constitute an agreement by Lender to enter into any
      further amendments with Borrowers.




**19.**  **Inconsistencies** .
      To the
      extent of any inconsistencies between the terms and conditions of this Amendment
      and the terms and conditions of the Loan Documents, the terms and conditions
      of
      this Amendment shall prevail. All terms and conditions of the Loan Documents
      not
      inconsistent herewith shall remain in full force and effect and are hereby
      ratified and confirmed by Borrowers.




**20.**  **Binding**  **Effect** .
      This
      Amendment and all rights and powers granted hereby will bind and inure to the
      benefit of the parties hereto and their respective permitted successors and
      assigns.




**21.**  **Severability** .
      The
      provisions of this Amendment and all other Loan Documents are deemed to be
      severable, and the invalidity or unenforceability of any provision shall not
      affect or impair the remaining provisions which shall continue in full force
      and
      effect.




**22.**  **No**  **Third**  **Party**  **Beneficiaries** .
      The
      rights and benefits of this Amendment and the Loan Documents shall not inure
      to
      the benefit of any third party.




**23.**  **Modifications** .
      No
      modifications of this Amendment or any of the Loan Documents shall be binding
      or
      enforceable unless in writing and signed by or on behalf of the party against
      whom enforcement is sought.




**24.**  **Holidays** .
      If the
      day provided herein for the payment of any amount or the taking of any action
      falls on a Saturday, Sunday or public holiday at the place for payment or
      action, then the due date for such payment or action will be the next succeeding
      Business Day.




**25.**  **Law**  **Governing** .
      This
      Amendment has been made, executed and delivered in the Commonwealth of
      Pennsylvania and will be construed in accordance with and governed by the laws
      of such Commonwealth, without regard to any rules or principles regarding
      conflicts of law or any rule or canon of construction which interprets
      agreements against the draftsman.




**26.**  **Headings** .
      The
      headings of the Articles, Sections, paragraphs and clauses of this Amendment
      are
      inserted for convenience only and shall not be deemed to constitute a part
      of
      this Amendment.




7


**27.**  **Counterparts;**  **Facsimile**  **Signatures** .
      This
      Amendment may be executed in any number of counterparts, all of which taken
      together constitute one and the same instrument, and any of the parties hereto
      may execute this Amendment by signing any such counterpart. Any signature
      delivered via facsimile shall be deemed an original signature
      hereto.




**28.Waiver
      of Right to Trial by Jury. BORROWERS AND LENDER WAIVE ANY RIGHT TO TRIAL BY
      JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS
      AMENDMENT, (b) ARISING UNDER ANY OF THE OTHER LOAN DOCUMENTS OR (c) IN ANY
      WAY
      CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWERS OR LENDER
      WITH RESPECT TO THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
      TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
      CONTRACT OR TORT OR OTHERWISE. BORROWERS AND LENDER AGREE AND CONSENT THAT
      ANY
      SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
      WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL
      COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
      THE
      CONSENT OF BORROWERS AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
      EACH BORROWER ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH
      COUNSEL REGARDING THIS SECTION, THAT IT FULLY UNDERSTANDS ITS TERMS, CONTENT
      AND
      EFFECT, AND THAT IT VOLUNTARILY AND KNOWINGLY AGREES TO THE TERMS OF THIS
      SECTION.**




**[REMAINDER**  **OF**  **PAGE**  **INTENTIONALLY**  **LEFT**  **BLANK]**




8





**IN**  **WITNESS**  **WHEREOF** ,
        the
        parties hereto have duly executed this Amendment, intending to be legally
        bound
        hereby, effective as of the date first written above.




**BORROWERS****:**
              
              **ZANETT,****INC**.
              
              By:__________________________________
              Name:________________________________
              Title:_________________________________
              
              
              **ZANETT****COMMERCIAL****SOLUTIONS,****INC**.
              
              By:__________________________________
              Name:________________________________
              Title:_________________________________
              
              
              **PARAGON****DYNAMICS,****INC**.
              
              By:__________________________________
              Name:________________________________
              Title:_________________________________**LENDER****:**
              
              **LASALLE****BANK****NATIONAL****ASSOCIATION**
              
              By:__________________________________
              Name:________________________________
              Title:_________________________________





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**CONSENT**  **AND**  **AGREEMENT**





The
      undersigned, as holders of the Private Subordinated Debt, hereby consent and
      agree to the terms of this Amendment, and further consent to, agree to and
      join
      in the provisions of **Section**  **1** . **4** and **Section**  **6** of this
      Amendment as such provisions relate to the Private Subordinated Debt and to
      the
      extent that such provisions amend or modify each of the Subordination Agreements
      dated December 21, 2006 executed by the undersigned in favor of Lender, all
      of
      the terms of which are hereby ratified and confirmed as amended by this
      Amendment.




**IN**  **WITNESS**  **WHEREOF** ,
      the
      undersigned have duly executed this Consent and Agreement, intending to be
      legally bound hereby, effective as of October _____, 2007.







____________________________________


**BRUNO**  **GUAZZONI** ,
      an
      individual











**EMRAL**  **HOLDINGS**  **LIMITED**





By:_________________________________


Name:______________________________




Title:_______________________________







10