LOAN AND
SECURITY AGREEMENT


 


THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of March 28, 2012 (the “Effective Date”) by and
among SILICON VALLEY BANK, a California corporation (“Bank”), SAJAN, INC., a Delaware corporation and
SAJAN, LLC, a Delaware limited liability company (collectively, “Borrower”), provides the terms on which Bank
shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:


 


1ACCOUNTING
AND OTHER TERMS


 


Accounting terms not
defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.


 


2LOAN
AND TERMS OF PAYMENT


 


2.1Promise
to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and
accrued and unpaid interest thereon as and when due in accordance with this Agreement.


 


2.1.1Revolving
Advances.


 


(a)Availability.
Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Availability Amount. Amounts
borrowed hereunder may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and
conditions precedent herein. 


 


(b)Termination;
Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.


 


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


 


2.3Payment
of Interest on the Credit Extensions. 


 


(a)Interest
Rate.


 


(i)Advances.
Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum
rate equal to the greater of (A) one half of one percent (0.50%) above the Prime Rate and (B) 4.0%, which interest shall be payable
monthly in accordance with Section 2.3(f) below.


 


(b)Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at
a rate per annum which is five percentage points (5.00%) above the rate that is otherwise applicable thereto (the “Default
Rate”) unless Bank otherwise elects from time to time in its sole discretion to impose a smaller increase. Fees and
expenses 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 a rate equal to the highest rate applicable to the Obligations. Payment
or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 


 


(c)Adjustment
to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective
on the effective date of any change to the Prime Rate and to the extent of any such change.


 



    	 



    	 



    

(d)Computation;
360-Day Year. In computing interest, the date of the making of any Credit 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, such
day shall be included in computing interest on such Credit Extension. Interest shall be computed on 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, including the Designated Deposit Account, for principal
and interest payments or any other amounts Borrower owes Bank when due; provided that Bank first debit the Designated Deposit
Account to the extent funds are available prior to debiting any of Borrower’s other deposit accounts at Bank. These debits
shall not constitute a set-off.


 


(f)Interest
Payment Date. Unless otherwise provided, interest is payable monthly on the first (1st) calendar day of each month.


 


2.4Fees.
Borrower shall pay to Bank:


 


(a)Commitment
Fee. A fully earned, non-refundable commitment fee of $7,500, on the Effective Date; and


 


(b)Bank
Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of
this Agreement) incurred through and after the Effective Date, when due.


 


2.5Payments;
Application of Payments.


 


(a)All payments
(including prepayments) to be made by Borrower under any Loan Document shall be made in immediately available funds in U.S. Dollars,
without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received
after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due
on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable,
shall continue to accrue until paid.


 


(b)If
any Event of Default has occurred and is continuing, Bank shall apply the whole or any part of collected funds against the Revolving
Line or credit such collected funds to a depository account of Borrower with Bank (or an account maintained by an Affiliate of
Bank), the order and method of such application to be in the sole discretion of Bank. In such case, Borrower shall have no right
to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank
or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this
Agreement. 


 


3CONDITIONS
OF CREDIT EXTENSIONS


 


3.1Conditions
Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:


 


(a)duly executed
signatures to the Loan Documents;


 


(b)Borrower’s
Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of such Borrower’s jurisdiction
of organization as of a date no earlier than thirty (30) days prior to the Effective Date;


 


(c)duly executed
signatures to the completed Borrowing Resolutions for Borrower;


 


(d)certified
copies, dated as of a recent date, of financing statement searches, as Bank shall request, accompanied by written evidence (including
any UCC termination statements) that the Liens 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;


 



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(e)the completed
Perfection Certificate of Borrower, together with the duly executed signatures thereto;


 


(f)Unconditional
Guaranty (SAJAN SOFTWARE LIMITED, SAJAN SPAIN, S.L., SAJAN SINGAPORE PTE. LTD.);


 


(g)Resolutions
to guaranty (SAJAN SOFTWARE LIMITED, SAJAN SPAIN, S.L., SAJAN SINGAPORE PTE. LTD.);


 


(h)Subordination
Agreement (Shannon and Angel Zimmerman);


 


(i)a landlord’s
consent in favor of Bank for each location at which Borrower leases any real property by the respective landlord thereof, together
with the duly executed signatures thereto;


 


(j)evidence
satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and effect, together with appropriate
evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and


 


(k)payment
of the fees and Bank Expenses then due as specified in Section 2.4 hereof.


 


3.2Conditions
Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension,
is subject to the following conditions precedent:


 


(a)except
as otherwise provided in Section 3.4(a), timely receipt of an executed Payment/Advance Form;


 


(b)the representations
and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Payment/Advance
Form and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided,
further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete
in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties
in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date; and


 


(c)in Bank’s
sole discretion, there has not been a Material Adverse Change.


 


3.3Covenant
to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition
precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any
such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.


 


3.4Procedures
for Borrowing.


 


(a)Advances.
Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement,
to obtain an Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone
by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with any such electronic or facsimile notification, Borrower
shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible Officer or his
or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee.
Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions
from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations that
have become due.


 



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3.5Post-Closing
Conditions.


 


(a)The completion
of the Initial Audit shall take place within 60 days of the Effective Date with results satisfactory to Bank in its sole and absolute
discretion.


 


(b)Within
60 days of the Effective Date, Borrower shall deliver (i) certified formation documents for each of the Guarantors, (ii) good
standing certificates for each of the Guarantors, if applicable, and (iii) such other organizing documents for each of the Guarantors
as are reasonably requested by Bank certified by a Responsible Officer as being true and correct.


 


4CREATION
OF SECURITY INTEREST 


 


4.1Grant
of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired
or arising, and all proceeds and products thereof.


 


Borrower acknowledges
that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms
of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations
hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected
security interest in the Collateral granted herein (subject only to Permitted Liens that may have superior priority to Bank’s
Lien in this Agreement).


 


If this Agreement
is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations)
are satisfied in full, and at such time, Bank shall, at Borrower’s sole cost and expense, terminate its security interest
in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity
obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the
security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment
for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to
Bank cash collateral in an amount equal to 105% of the Dollar Equivalent of the face amount of all such Letters 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 Obligations relating to such Letters of Credit.


 


4.2Priority
of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that
may have superior priority to Bank’s Lien under this Agreement or by applicable law). If Borrower shall acquire a commercial
tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank
in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance reasonably satisfactory to Bank.


 


4.3Authorization
to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition
of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.


 


5REPRESENTATIONS
AND WARRANTIES


 


Borrower represents
and warrants as follows:


 


5.1Due
Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization
in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which
the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could
not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement,
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 legal name is that indicated on the Perfection Certificate
and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth
in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification
number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place
of business, or, if more than one, its chief executive office 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 its jurisdiction
of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information
set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being
understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective
Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization
but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.


 



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The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any
material Requirement 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 any of its Subsidiaries or any of their property or
assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental
Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full
force and effect or such filing as required to perfect security interests granted in the Collateral, or (v) constitute an
event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which
it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s
business.


 


5.2Collateral.
Borrower has good title to, has rights in, and the power to transfer each item of the Collateral upon which it purports to grant
a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the
deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security
interest therein. The Accounts are bona fide, existing obligations of the Account Debtors.


 


The Collateral
is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.
None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate
or as permitted pursuant to Section 7.2.


 


Borrower is
the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to
its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public,
and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. To the best of Borrower’s
knowledge, each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable,
and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business
has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made
that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably
be expected to have a material adverse effect on Borrower’s business. Except as noted on the Perfection Certificate, Borrower
is not a party to, nor is it bound by, any Restricted License.


 


5.3Accounts
Receivable. For any Eligible Account in any Borrowing Base Certificate, all statements made and all unpaid balances appearing
in all invoices, instruments and other documents evidencing such Eligible Accounts are and shall be true and correct and all such
invoices, instruments and other documents, and all of Borrower's Books are genuine and in all respects what they purport to be.
During the continuance of an Event of Default, Bank may notify any Account Debtor owing Borrower money of Bank’s security
interest in such funds and verify the amount of such Eligible Account. All sales and other transactions underlying or giving rise
to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations.
Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts
in any Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements
are legally enforceable in accordance with their terms.


 



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5.4Litigation.
There are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, $100,000.


 


5.5Financial
Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered
to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.


 


5.6Solvency.
The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its
debts (including trade debts) as they mature.


 


5.7Regulatory
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 not engaged as one of its important activities
in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower has complied
in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is 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 of 2005. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably be expected to have a material adverse effect on its business.
None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or,
to the 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 Subsidiaries have 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
their respective businesses as currently conducted.


 


5.8Subsidiaries;
Investments. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.


 


5.9Tax
Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower
has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower
may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing of the commencement of,
and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes 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 years which could result
in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension,
profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation
in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.


 


5.10Use
of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital, and to fund its general business
requirements and not for personal, family, household or agricultural purposes.


 


5.11Full
Disclosure. No written representation, warranty or other statement of Borrower in any 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 written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections
and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).


 



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5.12Definition
of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s
knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of the Responsible Officers.


 


6AFFIRMATIVE
COVENANTS


 


Borrower shall do
all of the following:


 


6.1Government
Compliance.


 


(a)Maintain
its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse
effect on Borrower’s business or operations; provided that a Borrower may merge with and into another Borrower or any Subsidiary
may merge with and into any Borrower. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations
to which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business.


 


(b)Obtain
all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which
it is a party and the grant of a security interest to Bank in all of the Collateral. Borrower shall promptly provide copies of
any such obtained Governmental Approvals to Bank.


 


6.2Financial
Statements, Reports, Certificates. Deliver to Bank:


 


(a)Borrowing
Base Reports. Within 30 days after the last day of each month, (i) aged listings of accounts receivable and accounts payable
(by invoice date) (the “Borrowing Base Reports”);


 


(b)Borrowing
Base Certificate. Within 30 days after the last day of each month and together with the Borrowing Base Reports, a duly completed
Borrowing Base Certificate signed by a Responsible Officer;


 


(c)Monthly
Financial Statements. As soon as available, but no later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated operations for such month certified by
a Responsible Officer and in a form acceptable to Bank (the “Monthly Financial Statements”);


 


(d)Monthly
Compliance Certificate. Within 30 days after the last day of each month and together with the Monthly Financial Statements,
a duly completed Compliance Certificate signed by a Responsible Officer in the form attached hereto as Exhibit D;


 


(e)Financial
Projections. As soon as available, but no later than 30 days after fiscal year end, financial projections on a monthly basis
for the upcoming fiscal year commensurate with those provided to Borrower’s Board of Directors and investors, along with
periodic updates;


 


(f)Other
Statements. Within 5 days of delivery, copies of all statements, reports and notices made available to Borrower’s security
holders or to any holders of Subordinated Debt. Documents required to be delivered pursuant to the terms hereof (to the extent
any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered,
shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s
website on the Internet at Borrower’s website address;


 


(g) SEC
Filings. Within 5 days of filing, copies of all periodic and other reports, proxy statements and other materials filed by
Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities
exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof
(to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and
if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link
thereto, on Borrower’s website on the Internet at Borrower’s website address;


 



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(h)Legal
Action Notice. A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries
that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, $100,000 or
more;


 


(i)Intellectual
Property Notice.  Prompt written notice of (i) any material change in the composition of the Intellectual Property, (ii)
the registration of any copyright, including any subsequent ownership right of Borrower in or to any copyright, patent or trademark
not previously disclosed in writing to Bank, and (iii) Borrower’s knowledge of an event that could reasonably be expected
to materially and adversely affect the value of the Intellectual Property; and


 


(j)Other
Financial Information. Budgets, sales projections, operating plans and other financial information reasonably requested by
Bank.


 


6.3Inventory;
Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower
and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly
notify Bank of all returns, recoveries, disputes and claims that involve more than $100,000.


 


6.4Taxes;
Pensions; Withholding. Timely file all required tax returns and reports and timely pay, and require each of its Subsidiaries
to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each
of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall
deliver to Bank, on demand, appropriate certificates 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.


 


In the event any payments
are received by Bank from Borrower pursuant to this Agreement, such payments will be made subject to applicable withholding for
any taxes, levies, fees, deductions, withholding, restrictions or conditions of any nature whatsoever. Notwithstanding the foregoing,
if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any
such deduction or withholding from any such payment or other sum payment hereunder to Bank, the amount due from Borrower with
respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making
of such required deduction or withholding, Bank receives a net sum equal to the sum which it would have received had no deductions
or withholding been required, and Borrower shall pay the full amount deducted or withheld to the relevant Governmental Authority.
Borrower will, upon request, furnish Bank with proof satisfactory to Bank indicating that Borrower has made such withholding payment;
provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is
contested in good faith by appropriate proceedings and as to which payment in full is bonded or reserved against by Borrower.
The agreements and obligations of Borrower contained in this provision shall survive the termination of this Agreement.


 


6.5Insurance.
Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and
location and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are reasonably
satisfactory to Bank. All property policies of Borrower shall have a lender’s loss payable endorsement showing Bank as lender
loss payee and waive subrogation against Bank. All liability policies of Borrower shall show, or have endorsements showing, Bank
as an additional insured. All policies (or the loss payable and additional insured endorsements) of Borrower shall provide that
the insurer shall endeavor to give Bank at least twenty (20) days notice before canceling, amending, or declining to renew its
policy. At Bank’s request, Borrower shall deliver certified copies 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 option of applying the proceeds
of any casualty policy up to $50,000 with respect to any loss, but not exceeding $100,000 in the aggregate for all losses under
all casualty policies in any one year, toward the replacement or repair 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 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 under such casualty policy shall, at the option of Bank, be payable
to Bank on account of the Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay
any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain
such insurance policies required in this Section 6.5, and take any action under the policies Bank deems prudent.


 



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6.6Operating
Accounts.


 


(a)Within
60 days of the Effective Date, maintain all of its U.S. operating accounts, excess cash and investment accounts with Bank. Borrower
shall be permitted to maintain the foreign accounts listed on the Schedule.


 


(b)Provide
Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution
in the United States other than Bank or Bank’s Affiliates. For each such Collateral Account that Borrower at any time maintains,
Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account
to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not
be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Bank by Borrower as such.


 


6.7Financial
Covenants. Maintain at all times, to be tested as of the last day of each month unless otherwise noted:


(a)Minimum
Liquidity. Maintain at all times, measured monthly, a ratio of (i) Borrower’s unrestricted cash and Cash Equivalents
held at Bank plus Eligible Accounts to (ii) all outstanding Indebtedness owing to Bank of at least 1.25:1.00; and


(b)Minimum
EBITDA. Maintain on a consolidated basis, measured as of the end of each fiscal month during the following periods, (i) for
each of the months ending March 31, 2012 and April 30, 2012, EBITDA of at least $25,000, and (ii) thereafter beginning for the
period ending May 31, 2012, trailing three (3) month EBITDA of at least $150,000.


6.8Protection
of Intellectual Property Rights.


 


(a)(i) Protect,
defend and maintain the validity and enforceability of its material Intellectual Property; (ii) promptly advise Bank in writing
of material infringements of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.


 


(b)Provide
written notice to Bank within 10 days of entering or becoming bound by any Restricted License (other than over-the-counter software
that is commercially available to the public).


 


6.9Litigation
Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Bank may
deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect
to any Collateral or relating to Borrower.


 


6.10Access
to Collateral; Books and Records. Allow Bank, or its agents, to inspect the Collateral and audit and copy Borrower’s
Books. After the Initial Audit, unless an Event of Default has occurred and is continuing, such inspections or audits shall be
conducted no more often than once every twelve (12) months. The foregoing inspections and audits shall be at Borrower’s
expense, and the charge therefor shall be $850 per person per day (or such higher amount as shall represent Bank’s then-current
standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than
ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10) days written notice to
Bank, then (without limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket
expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.


 



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6.11Formation
or Acquisition of Subsidiaries. At the time that Borrower forms any direct or indirect domestic Subsidiary or acquires any
direct or indirect domestic Subsidiary after the Effective Date, Borrower shall (a) cause, within thirty (30) days of such acquisition,
such new Subsidiary to provide to Bank a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower hereunder,
together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank
(including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired domestic Subsidiary, other than Intellectual Property and only to the extent of 65% of the equity interest
in any foreign Subsidiary), (b) provide to Bank appropriate certificates and powers and financing statements, pledging all of
the direct or beneficial ownership interest in such new domestic Subsidiary, in form and substance satisfactory to Bank, and (c) provide
to Bank all other documentation in form and substance satisfactory to Bank which in its opinion is appropriate with respect to
the execution and delivery of the applicable documentation referred to above. At the time that Borrower forms any direct or indirect
foreign Subsidiary or acquires any direct or indirect foreign Subsidiary after the Effective Date, Borrower shall (a) cause, within
thirty (30) days of such acquisition, such new Subsidiary to provide to Bank a guaranty of Borrower’s Obligations under
the Loan Agreement to cause such Subsidiary to become a Guarantor hereunder, (b) provide to Bank appropriate certificates and
powers and financing statements, pledging sixty-five percent (65%) of the voting power of all capital stock of such new foreign
Subsidiary, in form and substance satisfactory to Bank, and (c) provide to Bank all other documentation in form and substance
satisfactory to Bank which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation
referred to above. Borrower represents, to the best of its knowledge, that the ownership interests of SAJAN SOFTWARE LIMITED,
SAJAN SPAIN, S.L. and SAJAN SINGAPORE PTE. LTD. (“Shares”) are not certificated and, thus, the Bank shall not require
the delivery of such ownership interests; provided, however, promptly upon certification, Borrower shall deliver the Shares representing
sixty-five percent (65%) of the voting power of each such Foreign Subsidiary (the “Pledged Shares”) to the Bank, accompanied
by an instrument of assignment duly executed in blank by Borrower, and Borrower shall cause the books of each entity whose shares
are part of the Pledged Shares and any transfer agent to reflect the pledge of the Pledged Shares. Upon the occurrence and during
the continuance of an Event of Default, Bank may effect the transfer of the Pledged Shares into the name of Bank and cause new
certificates representing such securities to be issued in the name of Bank or its transferee. Any document, agreement, or instrument
executed or issued pursuant to this Section shall be a Loan Document.


 


6.12Further
Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s
Lien in the Collateral or to effect the purposes of this Agreement.


 


7NEGATIVE
COVENANTS


 


Borrower shall not
do any of the following without Bank’s prior written consent:


 


7.1Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of
its Subsidiaries to Transfer, all or any part of its business 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 Permitted Investments; (d) of
non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; and (e)
payment of expenses and salaries arising in the ordinary course of business consistent with past practices.


 


7.2Changes
in Business, Ownership, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in
any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related
thereto; (b) liquidate or dissolve (other than Borrower may liquidate or dissolve into any other Borrower or any Subsidiary and
any Subsidiary may liquidate or dissolve into any other Subsidiary or into any Borrower; (c) replace its chief executive officer
without ten (10) days prior written notification to Bank; or (d) permit or suffer any Change in Control. Borrower shall not,
without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than $10,000) in Borrower’s assets or property) or deliver any
portion of the Collateral valued, individually or in the aggregate, in excess of $10,000 to a bailee at a location other than
to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3)
change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned
by its jurisdiction of organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of $10,000 to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing
both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the
written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank
in its sole discretion.


 



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7.3Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or 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.
A Subsidiary may merge or consolidate into Borrower and any Borrower may merge or consolidate into any other Borrower.


 


7.4Indebtedness.
Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.


 


7.5Encumbrance.
Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the
sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be
subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement
(except with or in favor of Bank) with any Person which directly or indirectly prohibits 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
Intellectual Property or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Liens” herein.


 


7.6Maintenance
of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6(b) hereof.


 


7.7Distributions;
Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock
provided that (i) Borrower may convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely
in common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements
so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase,
provided such repurchase does not exceed in the aggregate of $50,000 per fiscal year; or (b) directly or indirectly make
any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so.


 


7.8Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person and transactions
permitted pursuant to the terms of Section 7.2 hereof.


 


7.9Subordinated
Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating
to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations
owed to Bank.


 


7.10Compliance.
Become an “investment company” or a company controlled by an “investment company”, under the Investment
Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit
Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction,
as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation,
if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination
of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


 



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8EVENTS
OF DEFAULT


 


Any one of the following
shall constitute an event of default (an “Event of Default”) under this Agreement:


 


8.1Payment
Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or
(b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3)
Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure
to make or pay any payment specified under clause (a) or (b) hereunder is not an Event of Default (but no Credit Extension will
be made during the cure period);


 


8.2Covenant
Default.


 


(a) Borrower fails or
neglects to perform any obligation under Section 6.1, 6.2, 6.6, 6.5 or 6.7, 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 any default (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 ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts
by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within
such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions
shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial
covenants or any other covenants set forth in clause (a) above;


 


8.3Material
Adverse Change. A Material Adverse Change occurs;


 


8.4Attachment;
Levy; Restraint on Business.


 


(a) (i) Any funds
of Borrower or of any entity under the control of Borrower (including a Subsidiary) on deposit or otherwise maintained with Bank
or any Bank Affiliate are attached by trustee or similar process, or (ii) a notice of lien or levy is filed against any of Borrower’s
material assets by any government agency, and the same under subclauses (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, no Credit
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 comes into possession of a trustee or receiver, or (ii) any
court order enjoins, restrains, or prevents Borrower from conducting any material part of its business;


 


8.5Insolvency
(a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within
sixty (60) 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);


 


8.6Other
Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties, (a)
any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness
in an amount individually or in the aggregate in excess of $50,000; or (b) any default by Borrower, the result of which could
have a material adverse effect on Borrower’s business;


 



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8.7Judgments.
One or more final judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at
least $50,000 (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier)
shall be rendered against Borrower and the same are not, within ten (10) days after the entry thereof, discharged or execution
thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided
that no Credit Extensions will be made prior to the discharge, stay, or bonding of such judgment, order, or decree);


 


8.8Misrepresentations.
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 writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made;


 


8.9Guaranty.
(a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does
not perform any obligation or covenant under any guaranty of the Obligations, subject to any cure period contained therein; (c)
any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8 occurs with respect to any Guarantor, or (d) the liquidation,
winding up, or termination of existence of any Guarantor other than as permitted in this Agreement; or


 


8.10Subordinated
Debt. Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated
or otherwise cease to be in full force and effect, any Borrower shall be in breach thereof or contest in any manner the validity
or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any
reason be subordinated or shall not have the priority contemplated by this Agreement.


 


9BANK’S
RIGHTS AND REMEDIES


 


9.1Rights
and Remedies. While an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:


 


(a)declare
all Obligations immediately due and payable (but if an Event of Default described in 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 or under any other agreement between Borrower and
Bank;


 


(c)for any
Letters of Credit, require that Borrower (i) deposit cash with Bank in an amount equal to 105% of the Dollar Equivalent of the
aggregate face amount of all Letters of Credit remaining undrawn (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 Obligations relating to such Letters
of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining
term of any Letters of Credit;


 


(d)terminate
any FX Contracts;


 


(e)settle
or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable,
notify any Person owing Borrower money of Bank’s security 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 the Collateral and/or its security interest in the Collateral.
Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Subject to the terms of any
landlord waiver or collateral access agreement then in place, Bank may enter premises where the Collateral 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 security interest and pay all expenses incurred. Subject to the terms of any landlord waiver or collateral
access agreement then in place, Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise
any of Bank’s rights or remedies;


 



    	-13-



    	 



    

(g)apply
to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount 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 for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights,
mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property
as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection
with Bank’s exercise of its rights under this Section, 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 exclusive control, any entitlement order,
or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;


 


(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 or equity, including all remedies provided under
the Code (including disposal of the Collateral pursuant to the terms thereof).


 


9.2Power
of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and
during the continuance of an Event of Default, 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 Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines
reasonable; (d) make, settle, and adjust all claims 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 based thereon, or otherwise
take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as
the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event
of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit
Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights
and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s
obligation to provide Credit Extensions terminates.


 


9.3Protective
Payments. If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails
to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such
insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest
at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide
Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments
by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.


 


9.4Application
of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Bank may apply any funds in
its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts
or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any
deficiency. If Bank, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing
the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt
by Bank of cash therefor.


 


9.5Bank’s
Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.


 



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9.6No
Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand
strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting
the 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. Bank has all rights and remedies provided under the Code, by
law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising
any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default
is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.


 


9.7Borrower
Liability. Either Borrower may, acting singly, request Advances hereunder.  Each Borrower hereby appoints the other as
agent for the other for all purposes hereunder, including with respect to requesting Advances hereunder. Each Borrower hereunder
shall be jointly and severally obligated to repay all Advances made hereunder, regardless of which Borrower actually receives
said Advance, as if each Borrower hereunder directly received all Advances.  Each Borrower waives (a) any suretyship
defenses available to it under the Code or any other applicable law, including, without limitation, the benefit of California
Civil Code Section 2815 permitting revocation as to future transactions and the benefit of California Civil Code Sections 1432,
2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850, and 2899 and 3433, 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 has against any Borrower or any security it holds (including the right
to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability.  Notwithstanding any other
provision of this Agreement or other related document, 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) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or
secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise
until all obligations have been paid in full.  Any agreement providing for indemnification, reimbursement or any other arrangement
prohibited under this Section shall be null and void.  If any payment is made to a Borrower in contravention of this Section,
such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to
the Obligations, whether matured or unmatured.


 


9.8Demand
Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees
held by Bank on which Borrower is liable.


 


10NOTICES


 


All notices, consents,
requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing
and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid;
(b) upon receipt of confirmation of delivery, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day
after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated
below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written
notice thereof in accordance with the terms of this Section 10.


 



    	-15-



    	 



    




	 	If to Borrower: 	SAJAN,
                                                                                                                                 INC.
                                                                                                                                 (DE) 
			SAJAN,
                                                                                                                                LLC
                                                                                                                                (DE)



			625
                                                                                                                                Whitetail
                                                                                                                                Blvd.



			River
                                                                                                                                Falls,
                                                                                                                                WI
                                                                                                                                54022



			Attn:
                                                                                                                                Tim
                                                                                                                                Clayton



			Fax:
                                                                                                                                715-426-0105



			Email:  tclayton@sajan.com



 





	 	If to Bank: 	Silicon
                                                                                                                             Valley
                                                                                                                             Bank 
			230
                                                                                                                                West
                                                                                                                                Monroe
                                                                                                                                Street



			Chicago,
                                                                                                                                IL
                                                                                                                                60606



			Attn:
                                                                                                                                Dennis
                                                                                                                                P.
                                                                                                                                Grunt
                                                                                                                                



			Fax:
                                                                                                                                312-704-1532



			Email:
                                                                                                                                dgrunt@svb.com



 


 


11CHOICE
OF LAW, VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE


 


California 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 Santa Clara County, California; provided, however, that nothing in this Agreement shall be
deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower
expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower
hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens
and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby
waives personal service of the summons, complaints, and other 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 address set
forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall
be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the
U.S. mail, first class, registered or certified mail, return receipt requested, with proper postage prepaid.


 


TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY
AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED
THIS WAIVER WITH ITS COUNSEL.


 


WITHOUT INTENDING
IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the
right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature
between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California
Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive
jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit
to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions
of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among
others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary
and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all
records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional
relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply
to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted
in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall
be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable
to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge
shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement
of decision thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right
of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private
judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.


 



    	-16-



    	 



    

12GENERAL
PROVISIONS


 


12.1Successors
and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may
not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted
or withheld in Bank’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.


 


12.2Indemnification.
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, and liabilities (collectively, “Claims”) claimed or asserted by any other party against Bank
in connection with the transactions contemplated by the Loan Documents; and (b) all losses or expenses (including Bank 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 (including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.


 


12.3Time
of Essence. Time is of the essence for the performance of all Obligations in this Agreement.


 


12.4Severability
of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability
of any provision.


 


12.5Correction
of Loan Documents. Bank may fill in any blanks in the Loan Documents consistent with the agreement of the parties.


 


12.6Amendments
in Writing; Waiver; Integration. No purported amendment or modification of any 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 writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing,
no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate
as, or evidence, 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, and shall not apply to any subsequent or other circumstance, whether
similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents
represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents
merge into the Loan Documents.


 


12.7Counterparts.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute one Agreement.


 


12.8Survival.
All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement) have been paid in full and satisfied. Without limiting the foregoing,
except as otherwise provided in Section 4.1, the grant of security interest by Borrower in Section 4.1 shall survive until the
termination of all Bank Services Agreements. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until
the statute of limitations with respect to such claim or cause of action shall have run.


 



    	-17-



    	 



    

12.9Confidentiality.
In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective
transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain
any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s
examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party
service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no
less restrictive than those contained herein. Confidential information does not include information that is either: (i) in
the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (ii) disclosed to Bank by a third party if Bank 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 to distribution unless otherwise expressly permitted
by Borrower.  The provisions of the immediately preceding sentence shall survive the termination of this Agreement.


 


12.10Attorneys’
Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank arising out of or relating to the Loan Documents,
the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred,
in addition to any other relief to which it may be entitled.


 


12.11Electronic
Execution of Documents. The words “execution,” “signed,” “signature” and words of like
import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based
recordkeeping systems, 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.


 


12.12Captions.
The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.


 


12.13Construction
of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation
of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the
uncertainty to exist.


 


12.14Relationship.
The relationship of the parties to this Agreement is determined solely by the 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 those of parties to an arm’s-length contract.


 


12.15Third
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 persons other 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 this Agreement; or (c)
give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.


 


13DEFINITIONS


 


13.1Definitions.
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 not limiting, the singular includes the plural,
and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms
have the following meanings:


 


“Account”
is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to Borrower.


 



    	-18-



    	 



    

“Account
Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter
be made.


 


“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 directly or indirectly the Person, any Person that controls
or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors,
partners and, for any 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 available under the Borrowing Base minus (b)
the outstanding principal balance of any Advances.


 


“Bank”
is defined in the preamble hereof.


 


“Bank Expenses”
are all audit fees and expenses (subject to the limitations contained in Section 6.10 herein), costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the
Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise
incurred with respect to Borrower.


 


“Bank Services”
are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of
its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services
(including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services),
interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s
various agreements related thereto (each, a “Bank Services Agreement”).


 


“Borrower”
is defined in the preamble hereof.


 


“Borrower’s
Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs
or storage or any equipment containing such information.


 


“Borrowing
Base” is 80% of Eligible Accounts, as determined by Bank from Borrower’s most recent Borrowing Base Certificate;
provided, however, that Bank may increase or decrease the foregoing percentage in its good faith business judgment based on events,
conditions, contingencies, or risks which, as determined by Bank, may positively or adversely affect Collateral.


 


“Borrowing
Base Certificate” is that certain certificate in the form attached hereto as Exhibit C.


 


“Borrowing
Base Report” is defined in Section 6.2(a)


 


.


“Borrowing
Resolutions” are, with respect to any Person, resolutions substantially in the form attached hereto.


 


“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 unconditionally guaranteed by the United States or any agency or any
State thereof having maturities of not more than 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 Group
or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year
after issue.


 


“Change in
Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term
is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a trustee or other fiduciary holding securities under
an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of Borrower, representing 40% or more of the combined voting power of Borrower’s
then outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning
of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the Board of
Directors of Borrower was approved by a vote of not less than sixty percent (60%) of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease
for any reason other than death, disability, or termination for cause to constitute a majority of the directors then in office.


 



    	-19-



    	 



    

“Code”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided,
that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently
in different Articles or Divisions 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 of the attachment, perfection, or priority
of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a
jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such provisions.


 


“Collateral”
is any and all properties, rights and assets of Borrower described on Exhibit A.


 


“Collateral
Account” is any Deposit Account, Securities Account, or Commodity Account.


 


“Commodity
Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Compliance
Certificate” is that certain certificate in the form attached hereto as Exhibit D.


 


“Contingent
Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness,
lease, dividend, letter of credit or other obligation of 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 or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; 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
a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any
guarantee or other support arrangement.


 


“Control
Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a domestic
Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a domestic Securities Account
or a domestic Commodity Account, Borrower, and Bank pursuant 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 registrations and like protections in each work or authorship
and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.


 


“Credit Extension”
is any Advance or any other extension of credit by Bank for Borrower’s benefit.


 


“Default
Rate” is defined in Section 2.3(b).


 


“Deposit
Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Designated
Deposit Account” is Borrower’s deposit account, account number _____________, maintained with Bank.


 



    	-20-



    	 



    

“Dollars,”
“dollars” or use of the sign “$” means only lawful money of the United States and not any
other currency, regardless of whether that currency uses the “$” sign to denote its currency 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 equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing
rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign
Currency.


 


“EBITDA”
shall mean (a) Net Income, plus (b) cash Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense, plus (d) cash income tax expense, plus (e) stock based compensation, plus (f) Non-Recurring
Expenses as agreed to by Bank from time to time.


 


“Effective
Date” is defined in the preamble hereof.


 


“Eligible
Accounts” means Accounts in which Bank has been granted a valid first priority security interest and which are billed
on terms reasonably satisfactory to Bank and which arise in the ordinary course of Borrower’s business and that meet all
Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to
adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise
agrees in writing, Eligible Accounts shall not include:


 


(a)Accounts that
the Account Debtor has not paid within one hundred twenty (120) days of invoice date regardless of invoice payment period terms;


 


(b)Accounts owing
from an Account Debtor, twenty-five percent (25%) or more of whose Accounts have not been paid within one hundred twenty (120)
days of invoice date;


 


(c)Accounts owing
from an Account Debtor which does not have its principal place of business in the United States;


 


(d)Accounts billed
and/or payable outside of the United States;


 


(e)Accounts owing
from an Account Debtor to the extent that Borrower is indebted or obligated in 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 of customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;


 


(f)Accounts for
which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent;


 


(g)Accounts with
credit balances over one hundred twenty (120) days from invoice date;


 


(h)Accounts owing
from an Account Debtor, including Affiliates, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts,
for the amounts that exceed that percentage, unless Bank approves in writing;


 


(i)Accounts owing
from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims
Act of 1940, as amended;


 


(j)Accounts for
demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale
or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;


 


(k)Accounts owing
from an Account Debtor that has not been invoiced or where goods or services have not yet been rendered to the Account Debtor
(sometimes called memo billings or pre-billings);


 



    	-21-



    	 



    

(l)Accounts subject
to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion
or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s
failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone
billings, or fulfillment contracts);


 


(m)Accounts owing
from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s
complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);


 


(n)Accounts subject
to trust provisions, subrogation rights of a bonding company, or a statutory trust;


 


(o)Accounts owing
from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower,
and the Account Debtor have entered into an agreement acceptable to Bank in its sole discretion wherein the Account Debtor acknowledges
that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and
(iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);


 


(p)Accounts for
which the Account Debtor has not been invoiced;


 


(q)Accounts that
represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;


 


(r)Accounts subject
to chargebacks or others payment deductions taken by an Account Debtor (but only to the extent the chargeback is determined invalid
and subsequently collected by Borrower);


 


(s)Accounts in
which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business; and


 


(t)Accounts for
which Bank in its good faith business judgment determines collection to be doubtful.


 


“Equipment”
is all “equipment” as defined in the Code with such additions to such term as may hereafter 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, as amended, and its regulations.


 


“Event of
Default” is defined in Section 8.


 


“Exchange
Act” is the Securities Exchange Act of 1934, as amended.


 


“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 of Borrower which shall be a Business Day.


 


“FX Contract”
is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency on a specified date.


 


“GAAP”
is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination.


 


“General
Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and
other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal
property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies
(including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.


 



    	-22-



    	 



    

“Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.


 


“Governmental
Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory organization.


 


“Guarantor”
is any present or future guarantor of the Obligations, including SAJAN SOFTWARE LIMITED, SAJAN SPAIN, S.L., SAJAN SINGAPORE
PTE. LTD.


 


“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property or services, 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
lease obligations, and (d) Contingent Obligations.


 


“Indemnified
Person” is defined in Section 12.2.


 


“Initial
Audit” is Bank’s inspection of the Collateral, and Borrower’s Books with results satisfactory to Bank in
its sole and absolute discretion.


 


“Insolvency
Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors,
or proceedings seeking reorganization, arrangement, or other relief.


 


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


 


(a)its Copyrights,
Trademarks and Patents;


 


(b)any and all
trade secrets and trade secret rights, including, without limitation, any rights 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 of the foregoing, with the right, but not the obligation,
to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; 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 any event, interest expense with respect to any Credit Extension and
other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts,
or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and
the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion 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 such additions 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 finished products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title representing any of the above.


 



    	-23-



    	 



    

“Investment”
is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person.


 


“Letter of
Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application,
guarantee, indemnity, or similar agreement.


 


“Lien”
is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily
incurred or arising by operation of law or otherwise against any property.


 


“Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, any Bank Services Agreement, any subordination agreement, any note,
or notes or guaranties executed by Borrower or any guarantor, and any other present or future agreement between Borrower and any
guarantor and/or for the benefit of Bank, all as amended, restated, or otherwise modified.


 


“Material
Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or
in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise)
of Borrower; (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines,
based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall
fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period.


 


“Monthly
Financial Statements” is defined in Section 6.2(c)


 


.


“Net Income”
means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of determination,
the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting
period.


 


“Non-Recurring
Expenses” means expenses that are one time in nature resulting from acquisitions, the closing of a specific business
unit, severance costs paid to terminated employees, payroll expenses related to terminated employees, or similar expenses.


 


“Obligations”
are Borrower’s obligations to pay when due any debts, principal, interest, Bank Expenses, and other amounts Borrower owes
Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, any interest
accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance
of Borrower’s duties under the Loan Documents.


 


“Operating
Documents” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of
such Person’s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such
Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability
company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement),
each of the foregoing with all current amendments or modifications thereto.


 


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


 


“Payment/Advance
Form” is that certain form attached hereto as Exhibit B.


 


“Perfection
Certificate” is defined in Section 5.1.


 


“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;


 



    	-24-



    	 



    

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


 


(e)Indebtedness
incurred as a result of endorsing negotiable instruments received in the ordinary course of business;


 


(f)Indebtedness
secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;


 


(g)other
Indebtedness not otherwise permitted by Section 7.4 not exceeding $50,000 in the aggregate outstanding at any time; and


 


(h)extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (g) above, provided
that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon
Borrower or its Subsidiary, as the case may be.


 


“Permitted
Investments” are:


 


(a)Investments
(including, without limitation, in Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;


 


(b)Investments
consisting of Cash Equivalents;


 


(c)Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of Borrower;


 


(d)Investments
consisting of deposit accounts in which Bank has a perfected security interest;


 


(e)Investments
accepted in connection with Transfers permitted by Section 7.1;


 


(f)Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors;


 


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


 


(h)Investments
by Borrower in any other Borrower, by a Subsidiary in any Borrower;


 


(i)Investments
by Borrower in any Subsidiary in the ordinary course of business consistent with past practices; and


 


(j)other Investments
not otherwise permitted by Section 7.7 not exceeding $50,000 in the aggregate outstanding at any time.


 


“Permitted
Liens” are:


 


(a)Liens existing
on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;


 


(b)Liens for taxes,
fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith
and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed
or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;


 



    	-25-



    	 



    

(c)purchase money
Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than
$100,000 in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;


 


(d)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 (other than Liens imposed by ERISA);


 


(e)Liens incurred
in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness
may not increase;


 


(f)leases or subleases
of real property granted in the ordinary course of Borrower’s business;


 


(g)non-exclusive
license of Intellectual Property granted to third parties in the ordinary course of business;


 


(h)Liens arising
from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections 8.4 and
8.7; and


 


(i)Liens in favor
of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions,
provided that Bank has a perfected security interest in the amounts held in such deposit and/or securities accounts.


 


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


 


“Prime Rate”
means, for any date of determination, the U.S. Prime Rate published from time to time in the Western Edition of The Wall Street
Journal.


 


“Registered
Organization” is any “registered organization” as defined in the Code with such additions to such term as
may hereafter be made.


 


“Requirement
of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its property is subject.


 


“Responsible
Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.


 


“Restricted
License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or
any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell
any Collateral.


 


“Revolving
Line” is an Advance or Advances in an amount equal to $1,500,000.


 


“Revolving
Line Maturity Date” is March 28, 2013.


 


“SEC”
shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.


 


“Securities
Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter
be made.


 



    	-26-



    	 



    

“Subordinated
Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to
Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered
into between Bank and the other creditor), on terms acceptable to Bank.


 


“Subsidiary”
is, as to any Person, a corporation, partnership, limited liability company or other 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 the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary
herein shall be a reference to a Subsidiary of Borrower.


 


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


 


“Transfer”
is defined in Section 7.1.


 


[Signature page follows.] 


 


 



    	-27-



    	 



    

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the Effective Date.


 


BORROWER:


 


SAJAN, INC., a Delaware corporation


 


By /s/ Shannon Zimmerman                                           


 


Name: Shannon Zimmerman                                          
 


 


Title: President and CEO                                                 


 


SAJAN, LLC, a Delaware limited liability company


 


By /s/ Shannon Zimmerman                                           


 


Name: Shannon Zimmerman                                          
 


 


Title: President and CEO                                                 


 


 


 


BANK:


 


SILICON VALLEY BANK


 


By /s/ Dennis P. Grunt                                                   


 


Name: Dennis P. Grunt                                                  


 


Title: Relationship
Manager                                         


 





 



    	



    	 



    

SCHEDULE OF EXCEPTIONS


 


Permitted
Indebtedness


	Capital
    Equipment Lease with American Capital	$75,000/$60,000


 


Permitted
Liens


	River
                                                                                              Valley Business Center, LLC. –
                                                                                              Lessors of the building in River
                                                                                              Falls to Company

         

        Owned
        by Shannon and Angel Zimmerman

         
	Security
    interest in assets of Sajan.
	U.S.
    Bancorp Equipment Finance, Inc.	Certain
    equipment financed by the secured party.
	Webbank	Certain
    equipment financed by the secured party.
	Wells
    Fargo Equipment Finance, Inc.	Certain
    equipment financed by the secured party.
	 	 


 


Permitted
Investments


	Intercompany
    debts	       
     
	Intercompany
    balance payable by Sajan Software Limited to Sajan, LLC	$99,899/$99,899
	Intercompany
    balance payable by Sajan Spain S.L. to Sajan, LLC	$429,234/$429,234
	Intercompany
    balance payable by Sajan Singapore Pte. Ltd. to Sajan, LLC	$172,875/$172,875
	Intercompany
    balance payable by Sajan Software Limited to Sajan Spain S.L.	$699,576/$699,576
	Intercompany
    balance payable by Sajan Software Limited to Sajan Singapore Pte. Ltd.	$134,561/$134,561
	Intercompany
    balance payable by New-Global Corporation Canada Inc. to Sajan, LLC	$90,586/$90,586
	Intercompany
    balance payable by New-Global Europe, S.L. to Sajan, LLC	$72,365/$72,365



    	1



    	 



    

Section 6.6 – Foreign Operating Accounts


 


	Depositary Institution

         
	Sajan
    Entity	Account
    Number
	AIB Bank	Sajan
    Software Limited	[redacted]
	AIB Bank	Sajan
    Software Limited	[redacted]
	AIB Bank	Sajan
    Software Limited	[redacted]
	AIB
    Bank	Sajan
    Software Limited	[redacted]
	LaCaixa Bank	Sajan
    Spain S.L.	[redacted]
	DBS
    Bank	Sajan
    Singapore PTE. Ltd.	[redacted]
	DBS Bank	Sajan
    Singapore PTE. Ltd.	[redacted]


 


 



    	2



    	 



    

EXHIBIT A – COLLATERAL DESCRIPTION


 


The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal property:


 


All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including
any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights
(whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations,
and financial assets, whether now owned or hereafter acquired, wherever located; and


 


all Borrower’s
Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or
all of the foregoing.


 


Notwithstanding the
foregoing, the Collateral does not include any Intellectual Property; provided, however, the Collateral shall include all Accounts
and all proceeds of Intellectual Property. If a judicial authority (including a U.S.
Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security
interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically,
and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s
security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property.


 


Notwithstanding the
foregoing, the Collateral does not include any such property that constitutes the capital stock of a controlled foreign corporation
(as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations
entitled to vote.


 


Pursuant to the terms
of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without
Bank’s prior written consent.


 


 



    	 



    	 



    

EXHIBIT B – LOAN PAYMENT/ADVANCE
REQUEST FORM


 


Deadline
for same day processing is Noon Pacific Time


 


 


 


 


 



    	 



    	 



    

EXHIBIT C - BORROWING BASE CERTIFICATE


 


Borrower:
SAJAN, INC. and SAJAN, LLC

Lender:Silicon Valley Bank

Amount: $1,500,000



	 	 
	ACCOUNTS RECEIVABLE	 
	1.	Accounts Receivable (invoiced) Book Value as of ____________________	$_______________
	2.	Additions (please explain on reverse)	$_______________
	3.	TOTAL ACCOUNTS RECEIVABLE	$_______________
	 	 	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 
	4.	120 Days Past Invoice Date	$_______________
	5.	Balance of 25% over 120 Day Accounts	$_______________
	6.	Foreign Account Debtor Accounts	$_______________
	7.	Foreign Invoiced Accounts	$_______________
	8.	Contra/Customer Deposit Accounts	$_______________
	9.	Intercompany/Employee Accounts	$_______________
	10.	Credit Balances over 120 Days	$_______________
	11.	Concentration Limits (25%)	$_______________
	12.	U.S. Governmental Accounts	$_______________
	13.	Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts	$_______________
	14.	Accounts with Progress/Milestone/Pre-billings; Contract Accounts	$_______________
	15.	Accounts for Retainage Billings	$_______________
	16.	Trust Accounts	$_______________
	17.	Bill and Hold Accounts	$_______________
	18.	Unbilled Accounts	$_______________
	19.	Non-Trade Accounts	$_______________
	20.	(Reserved)	$_______________
	21.	Accounts Subject to Chargebacks	$_______________
	22.	Disputed Accounts	$_______________
	23.	Other (please explain on reverse)	$_______________
	24.	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	$_______________
	25.	Eligible Accounts (#3 minus #24)	$_______________
	26.	ELIGIBLE AMOUNT OF ACCOUNTS ( 80% of #25)	$_______________
	 	 	 
	BALANCES	 
	27.	Maximum Loan Amount	$1,500,000
	28.	Total Funds Available [Lesser of #26 or #27]	$_______________
	29.	Present balance owing on Line of Credit	$_______________
	30.	Outstanding under Sublimits (if any)	$_______________
	31.	RESERVE POSITION (#28 minus #29 and #30)	$_______________


 


[Continued on following page.]



    	 



    	 



    

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


 


	COMMENTS:

        SAJAN, INC.

         

        By: ___________________________

        Authorized Signer

         

        Date: ___________________________

         
	BANK USE ONLY

        Received by: _____________________

        authorized
        signer

        Date: __________________________

        Verified: ________________________

        authorized
        signer

        Date: ___________________________

        Compliance Status:        Yes       No

         



SAJAN,
LLC


 


By:
___________________________


Authorized
Signer


 


Date:
___________________________


 



    	 



    	 



    

EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


	TO:	SILICON VALLEY BANK	Date:  ___________________________
	FROM:	SAJAN, INC. and SAJAN, LLC	 


 


The undersigned authorized
officer of SAJAN, INC. and SAJAN, LLC (collectively, “Borrower”) certifies that under the terms and conditions of
the Loan and Security Agreement between Borrower and Bank (the “Agreement”):


 


(1) Borrower
is in complete compliance for the period ending _______________ with all required covenants except as noted below; (2) there
are no continuing Events of Default; (3) all representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided,
further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete
in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns
and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions
owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have
been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank.


 


Attached are the required
documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently
applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that
no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of
the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but
not otherwise defined herein shall have the meanings given them in the Agreement.


 


	Please indicate compliance status by circling
    Yes/No under “Complies” column.
	 
	Reporting
    Covenant	Required	Complies
	 	 	 
	Monthly financial statements with 
 Compliance
    Certificate	Monthly
    within 30 days	Yes  
    No
	10-Q, 10-K and 8-K	Within
    5 days after filing with SEC	Yes  
    No
	Borrowing Base Certificate, A/R & A/P Agings	Monthly
    within 30 days	Yes  
    No
	Initial Audit	Within
    60 days of the Effective Date and no more than annually thereafter	Yes  
    No
	Annual financial projections	Within
    30 days of FYE	 
    Yes   No
	 


 


	Financial
    Covenant	Required	Actual	Complies
	Maintain at all times (measured monthly):	 	 	 
	Minimum Liquidity	1.25:1.00	____:1.00	Yes  
    No
	Minimum EBITDA	See
    Section 6.7(b)	$____	Yes 
    No


 


 


The following financial covenant analys[is][es]
and information set forth in Schedule 1, if any, attached hereto are true and accurate as of the date of this Certificate.


 



    	 



    	 



    

The following are the exceptions with respect
to the certification above: (If no exceptions exist, state “No exceptions to note.”)


 
























 


	SAJAN, INC., a Delaware corporation

         

         

        By: __________________________________

        Name: ________________________________

        Title: _________________________________

         

        SAJAN, LLC, a Delaware limited liability company

         

         

        By: ___________________________________

        Name: _________________________________

        Title: __________________________________

         
	BANK USE ONLY

         

        Received by: _____________________

        authorized
        signer

        Date: _________________________

         

        Verified: ________________________

        authorized
        signer

        Date: _________________________

         

        Compliance Status:       Yes       No



 


 


 



    	 



    	 



    

Schedule 1 to Compliance Certificate


 


Financial Covenants of Borrower


 


In the event of a conflict between this Schedule and the Loan
Agreement, the terms of the Loan Agreement shall govern.


 


		Dated:	____________________



 


		I.	Liquidity
                                                                                                                                Ratio
                                                                                                                                (Section
                                                                                                                                6.7(a))



 


Required:1.25:1.00


 


Actual:


 


	A.	Unrestricted cash and cash equivalents of Borrower at Bank	$_______

         

	B.	Eligible Accounts	$_______

         

	C.	Liquidity (line A plus line B)	$_______

         

	D.	Aggregate value of Obligations to Bank	$_______

         

	E.	Liquidity Ratio (line C divided by line D)	_______


 


Is line E equal to or greater than 1.25:1:00?


 


	 	_______  No, not in compliance	______  Yes, in compliance


 


II.EBITDA (Section 6.7(b))


 


Required:See chart below


 


	Period	EBITDA
	 	 
	Monthly EBITDA for periods ending 3/31/2012
    and 4/30/2012	$25,000
	 	 
	Trailing three (3) month EBITDA for the
    periods ending 5/31/2012 and thereafter	$150,000
	 	 


 



    	 



    	 



    

Actual:


 


	A.	Net Income	$________
	 	 	 
	B.	To the extent included in the determination of Net Income	 
	 	 	 
	 	1.      Cash taxes	$________
	 	 	 
	 	2.      Depreciation expense	$________
	 	 	 
	 	3.      Amortization expense	$________
	 	 	 
	 	4.      Cash Interest Expense	$________
	 	 	 
	 	5.      Stock-based compensation	$________
	 	 	 
	 	6.      All other expenses which are both non-cash
    and non-recurring	$________
	 	 	 
	 	7.      The sum of lines 1 through 6	$________
	 	 	 
	C.	EBITDA (line A plus line B.7)	$________


 


Is line C equal to or greater than the amount in the chart?


 


	 	_______  No, not in compliance	______  Yes, in compliance