EVOLVE SOFTWARE, INC.
                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT





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                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of
November  13, 2001 (as amended from time to time, this "LOAN AGREEMENT") between
EVOLVE  SOFTWARE,  INC.,  a Delaware corporation (herein called "BORROWER"), and
COMERICA  BANK-CALIFORNIA,  successor  by merger to Imperial Bank (herein called
"BANK").  This  Loan  Agreement  amends, restates and supercedes in its entirety
that  certain  Loan and Security Agreement dated as of January 31, 2001, entered
into  between  Borrower  and  Imperial  Bank  (the  "ORIGINAL  LOAN AGREEMENT").

                                    RECITALS

     A.     Borrower is in violation of the financial covenant for the reporting
period ended September 30, 2001, set forth in (1) Section 6.7(a) of the Original
Loan  Agreement  that  Borrower maintain a Quick Ratio of at least 1.75:1.00 for
each  of the calendar months July through September, 2001, (2) Section 6.7(b) of
the Original Loan Agreement that Borrower maintain a Liquidity Ratio of at least
1.75:1.00 for each of the calendar months August through September, 2001 and (3)
Section  6.7(c)  of  the  Original Loan Agreement that Borrower maintain minimum
revenues,  for each of the calendar months April through September, 2001, of not
less than 80% of Borrower's projected gross revenue, which violations constitute
an  Event  of  Default  under  Section  8.2  of the Original Loan Agreement (the
"CURRENT  EVENTS  OF  DEFAULT").

     B.     Borrower  has  requested  and  Bank  has  agreed to  (1)  waive  the
Current  Events  of  Default,  and  (2)  amend  and  restate  the  Original Loan
Agreement,  all  in  accordance with the terms set forth in this Loan Agreement.


                                    AGREEMENT

     The  parties  agree  as  follows:

SECTION  1.     DEFINITIONS  AND  CONSTRUCTION.

DEFINITIONS.  Capitalized terms used in this Agreement without definitions shall
have  the  meanings  set  forth  on  Exhibit  A  hereto.

ACCOUNTING  TERMS.  All  accounting  terms not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance  with  GAAP.  The  term  "FINANCIAL  STATEMENTS"  shall  include  the
accompanying  notes  and  schedules.

SECTION  2.     LOAN  AND  TERMS  OF  PAYMENT.

CREDIT  EXTENSIONS.

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


                                       1.
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          (b)     REVOLVING  ADVANCES.

               (i)     INITIAL  REVOLVING  ADVANCES.  Subject  to  and  upon the
terms  and conditions of this Loan Agreement, Borrower may request from Bank, at
any  time  and  from time to time from the date hereof through December 31, 2001
("INITIAL REVOLVING MATURITY DATE"), loans (each an "INITIAL REVOLVING ADVANCE";
collectively,  the "INITIAL REVOLVING ADVANCES"), subject to Section 2.1(b)(iv),
in an aggregate outstanding amount not to exceed the lesser of (A) the Committed
Revolving  Line and (B) the amount of cash collateral deposited by Borrower with
Bank  and  Custodian  to  secure  such  Initial  Revolving  Advances.

               (ii)     FINAL  REVOLVING ADVANCES. Subject to and upon the terms
and  conditions  of this Loan Agreement Borrower may request from Bank, from the
Initial Revolving Maturity Date through the Final Revolving Maturity Date, loans
(each  a  "FINAL  REVOLVING  ADVANCE";  collectively,  with  Initial  Revolving
Advances,  the  "REVOLVING  ADVANCES"),  subject  to  Section  2.1(b)(iv), in an
aggregate  outstanding  amount not to exceed the amount resulting from deducting
the  amount  of  Initial  Revolving  Advances  outstanding on such date from the
lesser  of  (A)  the  Committed  Revolving  Line  and  (B)  the  Borrowing Base.
Notwithstanding anything in this Loan Agreement to the contrary, Borrower agrees
that  no  Final  Revolving  Advance  shall  be made by Bank if: (1) any Event of
Default  has  occurred  and  is continuing at the time Borrower requests a Final
Revolving  Advance,  or  (2) Bank has completed an audit of Borrower's books and
records  relating  to the Eligible Accounts and Collateral on or before December
15, 2001, the results of which are not satisfactory to Bank as determined in its
sole  and  absolute  discretion  ("FINAL  REVOLVING  REQUIREMENTS").

               (iii)     LETTERS  OF  CREDIT.  Subject to the availability under
the  Committed  Revolving  Line,  and  in  reliance  on  the representations and
warranties  of  Borrower  set  forth herein, Bank shall issue for the account of
Borrower commercial and/or standby letters of credit (collectively, the "LETTERS
OF  CREDIT")  as Borrower may request, which request shall be made by delivering
to Bank a duly executed letter of credit application on Bank's standard form (1)
at  any time and from time to time from the date hereof through the Business Day
immediately  prior  to the Initial Revolving Maturity Date, in aggregate amounts
not  to  exceed  the  aggregate  amounts deposited by Borrower with Bank as cash
collateral  for  each  such Letter of Credit (including all fees charged by Bank
thereon),  (2)  at any time from the Initial Revolving Maturity Date through the
Business Day immediately prior to the Final Revolving Maturity Date and upon the
satisfaction  of  the  Final Revolving Requirements, in aggregate amounts not to
exceed  the  Borrowing  Base  less  the  aggregate  of  all  Revolving  Advances
outstanding.  Notwithstanding  anything  to the contrary in this Loan Agreement,
the  outstanding  and  undrawn  amounts  under all Letters of Credit at any time
shall  not  exceed  $3,000,000  less  the  aggregate  of  all Revolving Advances
outstanding  at  such time, and shall be deemed to constitute Revolving Advances
for  the purpose of calculating availability under the Committed Revolving Line.
All  Letters  of Credit shall be in form and substance acceptable to Bank in its
sole  discretion and shall be subject to the terms and conditions of Bank's form
application  and  letter  of  credit  agreement.  Borrower will pay any standard
issuance  and other fees that Bank notifies Borrower will be charged for issuing
and  processing  Letters  of  Credit  for  Borrower.

               (iv)     Subject  to  Sections  2.1(b)  and  2.1(b)(ii),  amounts
borrowed  pursuant  to  this  Section 2.1(b) may be repaid and reborrowed at any
time  prior to the earlier to occur of (a) the Final Revolving Maturity Date and


                                       2.
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(b)  the  termination  of Bank's obligation to advance money pursuant to Section
11.1(b), at which time all Revolving Advances under this Section 2.1(b) shall be
immediately  due and payable.  Borrower may prepay any Revolving Advances at any
time,  in  whole or in part, without penalty or premium.  Revolving Advances may
be  used  for Revolving Advance Permitted Uses only.  If the aggregate amount of
the outstanding Revolving Advances (including outstanding and undrawn Letters of
Credit)  exceeds the amounts that Borrower is allowed to borrow pursuant to this
Section  2.l(b)  at  any time, Borrower shall promptly pay to Bank, in cash, the
amount  of  such  excess.

               (v)     Whenever  Borrower  desires a Revolving Advance, Borrower
will  notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific  Standard  Time, on the Business Day that the Revolving Advance is to be
made.  Each  such  notification shall be promptly confirmed by a Payment/Advance
Form  in  substantially  the  form  of  Exhibit  C.  Bank  is authorized to make
Revolving  Advances  under this Loan Agreement, based upon instructions received
from  a  Responsible  Officer or a designee of a Responsible Officer, or without
instructions  if  in  Bank's discretion such Revolving Advances are necessary to
meet  Obligations  which  have  become  due  and  remain  unpaid.  Bank shall be
entitled  to rely on any telephonic notice given by a person who Bank reasonably
believes  to  be a Responsible Officer or a designee thereof, and Borrower shall
indemnify and hold Bank harmless for any damages or losses suffered by Bank as a
result of such reliance.  Bank will credit the amount of Revolving Advances made
under  this  Section  2.1(b) to Borrower's deposit account maintained with Bank.

               (vi)     Interest  shall  accrue  from the date of each Revolving
Advance at the rate specified in Section 2.2(a), and shall be payable monthly on
the  first  day  of  each  month  through  the  Final  Revolving  Maturity Date.

          (c)     EXISTING  EQUIPMENT ADVANCES.  Borrower acknowledges that Bank
has  provided  equipment  loans  (each  an "EQUIPMENT ADVANCE" and collectively,
"EQUIPMENT  ADVANCES")  to  Borrower  pursuant  to  Borrower's request under the
Original  Loan  Agreement  on the terms and conditions set forth in the Original
Loan  Agreement.  Borrower  hereby  acknowledges  and  agrees  that  the current
outstanding  principal balance of the Equipment Advances made under the Original
Loan  Agreement is $4,356,718.  Borrower promises to pay to Bank the outstanding
unpaid  principal  balance  (and  all  accrued  unpaid  interest thereon) of the
Equipment Advances in equal monthly principal installments of $198,032.66, along
with  all  accrued interest thereon at the interest rate calculated according to
Section  2.2  hereof.  Borrower  agrees  that no new Equipment Advances shall be
made  under  this  Loan  Agreement  after  the date hereof, and acknowledges and
agrees  that  Bank  shall have no obligation to make any new Equipment Advances.
Borrower  shall  have  the right to prepay at any time all outstanding Equipment
Advances,  along  with accrued interest thereon, without any premium or penalty.

INTEREST  RATES,  PAYMENTS,  AND  CALCULATIONS.

          (d)     INTEREST  RATES.

               (i)     REVOLVING  ADVANCES.  Except  as  set  forth  in  Section
2.2(b),  the  Revolving  Advances  shall bear interest, on the outstanding daily
balance  thereof,  at  a  rate  equal  to  .75%  above  the  Prime  Rate.


                                       3.
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               (ii)     EQUIPMENT  ADVANCES.  Except  as  set  forth  in Section
2.2(b),  the  Equipment  Advances  shall bear interest, on the outstanding daily
balance  thereof,  at a rate equal to (1) prior to Borrower's raising additional
equity  after September 26, 2001 from one or more issuances of new securities in
an  aggregate amount equal to or greater than $20,000,000, 1.50% above the Prime
Rate,  (2)  1.00%  above  the  Prime  Rate  thereafter.

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

          (f)     PAYMENTS.  Bank  shall, at its option, charge any interest due
hereunder,  all  Bank  Expenses,  and  all  Periodic  Payments  against  any  of
Borrower's  deposit  accounts  or against the Committed Revolving Line, in which
case  those amounts shall thereafter accrue interest at the rate then applicable
hereunder.  Any  interest  not  paid  when due shall be compounded by becoming a
part  of  the Obligations, and such interest shall thereafter accrue interest at
the  rate  then  applicable  hereunder.

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

CREDITING  PAYMENTS.  Prior to the occurrence of an Event of Default, Bank shall
credit  a wire transfer of funds, check or other item of payment to such deposit
account  or  Obligation as Borrower specifies.  After the occurrence of an Event
of  Default,  the receipt by Bank of any wire transfer of funds, check, or other
item  of  payment  shall  be  immediately  applied  to  conditionally reduce the
Obligations,  but  shall  not  be  considered  a  payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment.  Notwithstanding
anything  to the contrary contained in this Loan Agreement, any wire transfer or
payment  received by Bank after 12:00 noon Pacific Standard Time shall be deemed
to  have  been received by Bank as of the opening of business on the immediately
following  Business  Day.  Whenever any payment to Bank under the Loan Documents
would  otherwise be due (except by reason of acceleration) on a date that is not
a  Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the  period  of  such  extension.


                                       4.
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SECTION  3.     COMERICA  BANK-CALIFORNIA, SUCCESSOR BY MERGER TO IMPERIAL BANK.
Each  Loan  Document  is  hereby  amended so that all references to Bank therein
shall be references to Comerica Bank-California, successor by merger to Imperial
Bank.

SECTION  4.     LIMITED  WAIVER.

     Bank  hereby  waives the Current Events of Default. The waiver set forth in
this  Section 4 shall be limited precisely as written and shall not be deemed to
(i)  be  a  waiver  of  or  an  amendment  to  any term or condition of the Loan
Agreement  or  any other Loan Document, (ii) prejudice any right or remedy which
any party may now have or may have in the future under or in connection with the
Loan  Agreement  or any other Loan Document, or (iii) be a consent to any future
waiver  or  amendment.

SECTION  5.     CONDITIONS  PRECEDENT.

CONDITIONS  PRECEDENT  TO  EFFECTIVENESS  OF  THIS  LOAN  AGREEMENT.  The  legal
effectiveness  of  this  Loan Agreement is subject to the satisfaction of all of
the  following  conditions  precedent:

          (a)     EXECUTED  LOAN  AGREEMENT.  Bank shall have received this Loan
Agreement duly executed and delivered by Borrower and the same shall have become
effective.

          (b)     OFFICER'S  CERTIFICATE.  Bank  shall  have  received  a  duly
executed  officer's  certificate  of  Borrower  with  respect  to incumbency and
resolutions  authorizing  the  execution  and  delivery  of this Loan Agreement.

          (c)     CONTROL  AGREEMENTS.  Bank  shall  have received (1) a Control
Agreement,  duly executed by Borrower and Custodian in favor of Bank in order to
perfect Bank's security interest in securities and cash deposited by Borrower in
the securities account number xxxxxxxxx and any other account set up by Borrower
with  Custodian ("CUSTODIAN ACCOUNT"), and the same shall have become effective,
and (2) a Control Agreement, duly executed by Borrower and Monarch Funds, LLC, a
Delaware  business trust ("MONARCH") in favor of Bank in order to perfect Bank's
security interest in securities and cash deposited by Borrower in the securities
account  number  xxxxxxxxx and any other account set up by Borrower with Monarch
("MONARCH  ACCOUNT";  collectively  with Custodian Account, the "ACCOUNTS"), and
the  same  shall  have  become  effective.

          (d)     CERTIFICATE OF DEPOSIT.  Borrower shall have transferred funds
in  cash  or  immediately available funds in an amount equal to $2,901,127 to be
placed  in  a  certificate  of  deposit  ("CERTIFICATE  OF  DEPOSIT"), under the
exclusive  dominion  and control of Bank, as security for the full, complete and
final  payment  and  performance  when  due  (whether  at  stated  maturity,  by
acceleration  or  otherwise)  of  Borrower's  obligations to repay the Revolving
Advances.

          (e)     LOAN  FEE.  Bank  shall have received from Borrower a loan fee
in  the  amount  of  Seven  Thousand  Five  Hundred  Dollars  ($7,500).

          (f)     TERM SHEET. Bank shall have received copies of definitive term
sheets  for equity investments in the stock of Borrower signed by Warburg Pincus
on  terms  and conditions acceptable to Bank in its sole and absolute condition.


                                       5.
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          (g)     FINANCIAL  CONDITION.  There  shall  have occurred no material
adverse  change  in the financial condition or prospects of Borrower as shown on
the  most  recent  financial  statements submitted to Bank or disclosed to Bank,
respectively,  and  relied  upon  by  Bank in entering into this Loan Agreement.

          (h)     NO  DEFAULT.  No  Event  of  Default has occurred that remains
uncured  and  is  continuing  or  will  result  from  the  consummation  of  the
transactions  contemplated  by  this  Loan  Agreement.

          (i)     BANK  EXPENSES.  Bank  shall  have received reimbursement from
Borrower  of its costs and expenses incurred (including, without limitation, its
reasonable  attorneys' fees and expenses) in connection with this Loan Agreement
and  the  transactions  contemplated  hereby.

          (j)     UCC  STATEMENTS.  Bank  shall  have received from Borrower (1)
duly  executed  financing  statements  (Forms  UCC-1) as Bank deems necessary or
appropriate,  and  (2)  copies  of duly filed UCC termination statements as Bank
deems  necessary  or  appropriate.

          (k)     AUDIT.  Bank,  at Bank's option, shall have performed an audit
of  the  Collateral,  the  results  of which shall be satisfactory to Bank, such
audit  to  be  completed,  if  at  all,  within  ten days after the date hereof.

CONDITIONS  PRECEDENT  TO ALL CREDIT EXTENSIONS.  The obligation of Bank to make
each  Credit  Extension,  including  each  Initial Revolving Advance, is further
subject  to  the  following  conditions:

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

          (m)     the  representations  and  warranties  contained  in Section 7
shall be true and correct in all material respects on and as of the date of such
Payment/Advance  Form  and  on  the  effective  date of each Credit Extension as
though  made  at  and  as  of each such date, and no Event of Default shall have
occurred  and  be  continuing, or would exist after giving effect to such Credit
Extension  (provided,  however,  that  those  representations  and  warranties
expressly  referring  to another date shall be true, correct and complete in all
material  respects  as of such date).  The making of each Credit Extension shall
be  deemed  to  be a representation and warranty by Borrower on the date of such
Credit  Extension  as  to  the accuracy of the facts referred to in this Section
5.2.

SECTION  6.     EFFECTIVENESS  OF  SECURITY  INTEREST.

     Borrower  hereby  covenants  for  the  benefit  of  Bank  that the security
interest granted to Bank pursuant to the Original Loan Agreement continues to be
valid  and  enforceable  and  that Bank has and will continue to have a security
interest  in all presently existing and hereafter acquired or arising Collateral
to  secure  prompt  repayment  of  any  and all Obligations and to secure prompt
performance  by  Borrower  of  each  of  its covenants and duties under the Loan
Documents.  Except  as  set  forth  in  the  Schedule,  such  security  interest
constitutes  a valid, first priority security interest in the presently-existing
Collateral,  and  will  constitute  a valid, first priority security interest in


                                       6.
<PAGE>
later-acquired  Collateral.  Notwithstanding any termination, Bank's Lien on the
Collateral  shall  remain  in  effect  for  so  long  as  any  Obligations  are
outstanding.   Borrower  further  covenants  for  the  benefit of Bank that Bank
shall  continue  to  have  the rights provided Bank pursuant to Section 4 of the
Original  Loan  Agreement,  including,  without  limitation  the  right,  upon
reasonable  prior  notice,  from  time  to time during Borrower's usual business
hours  but no more than once a year (unless an Event of Default has occurred and
is  continuing),  to  inspect Borrower's Books and to make copies thereof and to
check, test, and appraise the Collateral in order to verify Borrower's financial
condition  or  the  amount,  condition  of, or any other matter relating to, the
Collateral.

     Additionally, Borrower hereby grants to Bank a security interest in (a) the
Certificate  of  Deposit,  b)  the  Accounts, and (c) the proceeds, increase and
products  of each of the Certificate of Deposit and the Accounts, all accessions
thereto,  and  all property which Borrower may receive on account of each of the
Certificate  of  Deposit  and  the  Accounts,  as  additional  security.

SECTION  7.     REPRESENTATIONS  AND  WARRANTIES.

     Borrower  represents  and  warrants  as  follows:

DUE  ORGANIZATION  AND  QUALIFICATION.  Borrower  and  each  Subsidiary  is  a
corporation  duly  existing  under  the  laws  of its state of incorporation and
qualified  and  licensed to do business in any state in which the conduct of its
business  or  its ownership of property requires that it be so qualified, except
where  the failure to do so could not reasonably be expected to cause a Material
Adverse  Effect.

DUE AUTHORIZATION; NO CONFLICT.  The execution, delivery, and performance of the
Loan  Documents are within Borrower's powers, have been duly authorized, and are
not  in  conflict  with  nor  constitute  a breach of any provision contained in
Borrower's  Certificate  of Incorporation or Bylaws, nor will they constitute an
event  of  default  under  any  material  agreement  by which Borrower is bound.
Borrower  is  not  in  default  under  any agreement by which it is bound, which
default  could  have  a  Material  Adverse  Effect.

COLLATERAL.  Borrower has good title to the Collateral, free and clear of Liens,
except  for  Permitted  Liens.  The  Eligible  Accounts  are  bona fide existing
obligations.  The  property  giving  rise  to  such  Eligible  Accounts has been
delivered  to  the  account  debtor  or  its agent for immediate shipment to and
unconditional  acceptance  by  the  account  debtor.  Borrower  has not received
notice  of  an  actual  or  imminent Insolvency Proceeding of any account debtor
whose  accounts  are  included  in any Borrowing Base Certificate as an Eligible
Account.  All  Inventory  is  in  all  material  respects of good and marketable
quality, free from all material defects, except for Inventory for which adequate
reserves  have  been  made.

INTELLECTUAL  PROPERTY  COLLATERAL.  Borrower  is  the  sole  owner  of  the
Intellectual Property Collateral, except for Licenses granted by Borrower to its
customers  in  the  ordinary  course  of  business.  Each  of  the  Copyrights,
Trademarks  and  Patents is, to Borrower's knowledge, valid and enforceable, and
no  part  of  the  Intellectual  Property  Collateral has been judged invalid or
unenforceable,  in whole or in part, and no claim has been made that any part of
the  Intellectual  Property  Collateral  violates  the rights of any third party
except  to  the  extent  such  claim could not reasonably be expected to cause a


                                       7.
<PAGE>
Material Adverse Effect.  Except as set forth in the Schedule, Borrower's rights
as  a  licensee  and  reseller of intellectual property do not give rise to more
than  5% of its gross revenue in any given month, including, without limitation,
revenue  derived  from  the  sale,  licensing,  rendering  or disposition of any
product  or  service.

NAME; LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL.  Except as disclosed in
the  Schedule,  Borrower  has  not  done business under any name other than that
specified  on the signature page hereof.  The chief executive office of Borrower
is  located  at  the  address indicated in Section 12 hereof.  The Collateral is
presently  located  at  the  addresses  set  forth  on  the  Schedule.

LITIGATION.  Except  as  set  forth  in  the  Schedule,  there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative  agency  in  which  a likely adverse decision could reasonably be
expected  to  have  a  Material  Adverse Effect, or a material adverse effect on
Borrower's  interest  or  Bank's  security  interest  in  the  Collateral.

NO  MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.  All consolidated financial
statements related to Borrower and any Subsidiary that are delivered by Borrower
to  Bank  fairly  present  in  all  material  respects  Borrower's  consolidated
financial  condition  as of the date thereof and Borrower's consolidated results
of  operations for the period then ended.  There has not been a material adverse
change in the consolidated financial condition of Borrower since the date of the
most  recent  of  such  financial  statements  submitted  to  Bank.

SOLVENCY,  PAYMENT OF DEBTS.  Borrower is able to pay its debts (including trade
debts)  as  they mature; the fair saleable value of Borrower's Assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities less
its  deferred maintenance and royalties and other revenue derived from Licenses;
and  Borrower is not left with unreasonably small capital after the transactions
contemplated  by  this  Loan  Agreement.

COMPLIANCE WITH LAWS AND REGULATIONS.  Borrower and each Subsidiary have met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject  to  ERISA.  No  event has occurred resulting from Borrower's failure to
comply  with  ERISA  that is reasonably likely to result in Borrower's incurring
any  liability  that  could  have a Material Adverse Effect.  Borrower is not an
"INVESTMENT COMPANY" or a company "CONTROLLED" by an "INVESTMENT COMPANY" within
the  meaning  of  the  Investment  Company Act of 1940.  Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit  for  the  purpose  of  purchasing  or  carrying margin stock (within the
meaning  of Regulations T and U of the Board of Governors of the Federal Reserve
System).  Borrower has complied in all material respects with all the provisions
of  the  Federal  Fair  Labor Standards Act.  Borrower is in compliance with all
environmental  laws,  regulations  and  ordinances  except  where the failure to
comply is not reasonably likely to have a Material Adverse Effect.  Borrower has
not violated any statutes, laws, ordinances or rules applicable to it, violation
of  which  could  have  a Material Adverse Effect.  Borrower and each Subsidiary
have  filed or caused to be filed all tax returns required to be filed, and have
paid,  or  have  made adequate provision for the payment of, all taxes reflected
therein  except those being contested in good faith with adequate reserves under
GAAP.


                                       8.
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SUBSIDIARIES.  Borrower  does  not  own any stock, partnership interest or other
equity  securities  of  any  Person,  except  for  Permitted  Investments.

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

INBOUND  LICENSES.  Except as disclosed on the Schedule, Borrower is not a party
to,  nor is bound by, any License or other agreement that prohibits or otherwise
restricts  Borrower  from granting a security interest in Borrower's interest in
such  License  or  agreement  or  any  other  property.

NEW EQUITY.  Borrower closed a sale of preferred stock with investors on October
9,  2001,  and  received  in  excess  of  $10,000,000  in  proceeds  therefrom.

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

SECTION  8.     AFFIRMATIVE  COVENANTS.

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

GOOD  STANDING  AND GOVERNMENT COMPLIANCE.  Borrower shall maintain its and each
of  its  Subsidiaries'  corporate existence in its jurisdiction of incorporation
and  maintain  qualification  in  each  jurisdiction  in which the failure to so
qualify  could  have  a Material Adverse Effect.  Borrower shall meet, and shall
cause  each  Subsidiary  to meet, the minimum funding requirements of ERISA with
respect  to any employee benefit plans subject to ERISA.  Borrower shall comply,
and  shall  cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules and regulations to which it is subject, and shall maintain,
and  shall  cause  each  of its Subsidiaries to maintain, in force all licenses,
approvals  and  agreements,  the  loss  of which or failure to comply with which
could  have  a  Material  Adverse  Effect,  or  a material adverse effect on the
Collateral  or  the  priority  of  Bank's  Lien  on  the  Collateral.

FINANCIAL  STATEMENTS,  REPORTS,  CERTIFICATES.  Borrower shall deliver to Bank:
(a) as soon as available, but in any event within 20 Business Days after the end
of each calendar month, a company-prepared consolidated balance sheet and income
statement  covering  Borrower's consolidated operations during such period, in a
form  acceptable  to Bank and certified by a Responsible Officer; (b) as soon as
available,  but  in  any event within 95 days after the end of Borrower's fiscal


                                       9.
<PAGE>
year,  audited  consolidated  financial  statements  of  Borrower  prepared  in
accordance  with  GAAP,  consistently applied, together with an opinion which is
unqualified  or  otherwise  consented  to  in  writing by Bank on such financial
statements  of  an  independent  certified  public  accounting  firm  reasonably
acceptable to Bank; (c) promptly upon receipt of notice thereof, a report of any
legal  actions  pending  or  threatened  against Borrower or any Subsidiary that
could  result  in  damages or costs to Borrower or any Subsidiary of $250,000 or
more;  (d)  such  budgets, sales projections, operating plans or other financial
information generally prepared by Borrower in the ordinary course of business as
Bank  may  reasonably  request  from time to time; and (e) within 30 days of the
last day of each fiscal quarter, a report signed by Borrower, in form reasonably
acceptable  to Bank, listing any applications or registrations that Borrower has
made or filed in respect of any Patents, Copyrights or Trademarks and the status
of any outstanding applications or registrations, as well as any material change
in  Borrower's  Intellectual Property Collateral, including, but not limited to,
any  subsequent  ownership  right  of Borrower in or to any Trademark, Patent or
Copyright  not  specified  in  Exhibits A, B, and C of the Intellectual Property
Security  Agreement  delivered  to Bank by Borrower in connection with this Loan
Agreement.  Borrower  shall  deliver  to  Bank on or before December 15, 2001, a
copy  of  Borrower's pro forma financial statements for the calendar year ending
December  31,  2002,  in form and substance satisfactory to Bank in its sole and
absolute  discretion.

          (a)     Within  10  Business  Days  after  the last day of each month,
Borrower  shall  deliver  to  Bank  a  Borrowing  Base  Certificate  signed by a
Responsible Officer in substantially the form of Exhibit D hereto, together with
aged  listings  of  accounts  receivable  and  accounts  payable.

          (b)     Within  20  Business  Days  after  the last day of each month,
Borrower  shall  deliver  to  Bank,  with  the  monthly  financial statements, a
Compliance Certificate signed by a Responsible Officer in substantially the form
of  Exhibit  E  hereto.

          (c)     Bank  shall  have a right from time to time hereafter to audit
Borrower's Accounts and appraise Collateral at Borrower's expense, provided that
such  audits  will  be  conducted  no  more often than two times in any 12 month
period  unless  an  Event  of  Default  has  occurred  and  is  continuing.
Notwithstanding anything to the contrary herein, if there is no continuing Event
of Default at the time Bank verifies Accounts, Bank shall not identify itself as
Bank  to  the  Account  debtors.

INVENTORY;  RETURNS.  Borrower  does  not  currently  maintain  Inventory of any
significant magnitude, however, Borrower shall keep the Inventory it has in good
and  marketable  condition,  free from all material defects except for Inventory
for  which adequate reserves have been made.  Returns and allowances, if any, as
between  Borrower  and  its  account  debtors  shall be on the same basis and in
accordance  with the usual customary practices of Borrower, as they exist on the
Closing Date.  Borrower shall promptly notify Bank of all returns and recoveries
of  Inventory  and of all disputes and claims involving Inventory with an amount
of  more  than  $100,000.

TAXES.  Borrower  shall  make, and cause each Subsidiary to make, due and timely
payment or deposit of all material federal, state, and local taxes, assessments,
or  contributions  required  of  it by law, including, but not limited to, those
laws  concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will


                                      10.
<PAGE>
execute  and  deliver  to Bank, on demand, proof satisfactory to Bank indicating
that  Borrower  or  a  Subsidiary  has  made  such  payments or deposits and any
appropriate  certificates  attesting to the payment or deposit thereof; provided
that  Borrower  or  a  Subsidiary  need  not  make  any payment if the amount or
validity  of  such payment is contested in good faith by appropriate proceedings
and  is  reserved  against  (to  the  extent  required  by  GAAP)  by  Borrower.

INSURANCE.

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

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

PRIMARY  DEPOSITORY.  Borrower shall maintain its primary depositary account and
banking  relationship  with  Bank.

FINANCIAL  COVENANTS.  Borrower  shall:

               (f)     BANK  LIQUIDITY  RATIO.  Maintain  at  all  times  a Bank
Liquidity  Ratio  of  1.50:1.00 from the date hereof until December 31, 2002 and
1.25:1.00  thereafter.  As used herein, "BANK LIQUIDITY RATIO" on any given date
shall  be  defined  as  (a) the sum of cash deposited by Borrower with Bank plus
cash deposited by Borrower with Custodian to (b) the sum of the aggregate amount
of  outstanding  Revolving  Advances  and  Equipment  Advances  not  otherwise
cash-collateralized  as  of  such  date.

               (g)     COMPANY LIQUIDITY RATIO.  Beginning from the month ending
December  31,  2001,  and calculated on a monthly basis thereafter, maintain the
greater  of  either (1) a ratio of (a) the sum of (i) cash deposited by Borrower
with Bank plus cash deposited by Borrower with Custodian plus the Certificate of
Deposit (collectively, "UNRESTRICTED CASH") plus (ii) the amount available as of
the  date of determination under the Committed Revolving Line, to (b) the sum of


                                      11.
<PAGE>
(x)  Borrower's  total  Indebtedness  to  Bank  plus  (y)  all  other  secured
Indebtedness  of Borrower, of at least 1.75:1.00, or (2) Unrestricted Cash of at
least  $14,000,000  until December 31, 2001, and at least $8,000,000 thereafter.

               (h)     MAXIMUM  LEVERAGE RATIO.  Beginning from the month ending
December  31,  2001,  and  calculated on a monthly basis thereafter, maintain, a
Leverage Ratio not to exceed 2.25:1.00.   As used herein, "LEVERAGE RATIO" shall
be  defined  as  total  liabilities of Borrower less deferred revenue divided by
Tangible  Net  Worth.  As  used herein, "TANGIBLE NET WORTH" shall be defined as
the  sum  of  all  of  Borrower's  assets,  excluding  any  value  for goodwill,
Trademarks,  Patents,  Copyrights,  organization  expense  and  other  similar
intangible  items,  less  all  Borrower's  liabilities,  plus Subordinated Debt.

     REGISTRATION  OF  INTELLECTUAL  PROPERTY  RIGHTS.

               (i)     Borrower  shall  register or cause to be registered on an
expedited  basis  (to  the extent not already registered) with the United States
Patent  and  Trademark  Office  or  the  United  States  Copyright  Office,  as
applicable:  (i)  those intellectual property rights listed on Exhibits A, B and
C to any intellectual property security agreements delivered to Bank by Borrower
pursuant  to  Section  8.8(b), (ii) all registrable intellectual property rights
Borrower  has  developed  as  of  the date of this Loan Agreement but heretofore
failed to register, within 30 days of the date of this Loan Agreement, and (iii)
those  additional intellectual property rights developed or acquired by Borrower
from time to time in connection with any product, prior to the sale or licensing
of  such product to any third party, and prior to Borrower's use of such product
(including  without  limitation major revisions or additions which significantly
improve  the  functionality  of  the intellectual property rights listed on such
Exhibits  A, B and C).  Borrower shall give Bank notice of all such applications
or  registrations.

               (j)     Borrower  shall  execute  and  deliver  such  additional
instruments  and documents from time to time as Bank shall reasonably request to
perfect  Bank's  security  interest  in  the  Intellectual  Property Collateral.
Additionally,  Borrower  shall  deliver to Bank on a semi-annual basis, executed
originals  of  Bank's  standard form of Intellectual Property Security Agreement
with appropriate insertions, schedules and other information, including, without
limitation,  all  titles, names or marks together with all relevant registration
and/or  application numbers and registration and/or filing dates, sufficient for
Bank  to file a security interest in all the Intellectual Property Collateral of
Borrower  in  which  Bank  does  not already have a perfected security interest.

               (k)     Borrower  shall  (i)  protect,  defend  and  maintain the
validity  and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its  best  efforts  to  detect  infringements  of  the  Trademarks,  Patents and
Copyrights  and  promptly  advise  Bank  in  writing  of  material infringements
detected  and  (iii) not allow any Trademarks, Patents or Copyrights material to
Borrower's  ongoing  operations  to  be abandoned, forfeited or dedicated to the
public  without  the  written  consent  of Bank, which shall not be unreasonably
withheld.

               (l)     Bank  may  audit  Borrower's  Intellectual  Property
Collateral  to confirm compliance with this Section 8.8, provided such audit may
not  occur more often than two times in any twelve-month period, unless an Event
of  Default  has occurred and is continuing.  Bank shall have the right, but not


                                      12.
<PAGE>
the  obligation,  to take, at Borrower's sole expense, any actions that Borrower
is  required  under  this  Section 8.8 to take but which Borrower fails to take,
after  15  days'  written  notice  to  Borrower.  Borrower  shall  reimburse and
indemnify  Bank for all reasonable costs and reasonable expenses incurred in the
reasonable  exercise  of  its  rights  under  this  Section  8.8.

CONSENT  OF  INBOUND LICENSORS.  Prior to entering into or becoming bound by any
License  or  agreement  that  is  reasonably likely to have a material impact on
Borrower's business or financial condition, Borrower shall:  (i) provide written
notice  to  Bank  of  the  material  terms  of  such License or agreement with a
description  of its likely impact on Borrower's business or financial condition;
and  (ii)  take  such steps as Bank requests to obtain the consent of, or waiver
by,  any  person whose consent or waiver is necessary for Borrower's interest in
such  Licenses or contract rights to be deemed Collateral and for Bank to have a
security  interest  in it that might otherwise be restricted by the terms of the
applicable  License  or  agreement,  whether now existing or entered into in the
future.

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

SECTION  9.     NEGATIVE  COVENANTS.

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

DISPOSITIONS.  Convey,  sell,  lease,  transfer  or  otherwise  dispose  of
(collectively,  to  "TRANSFER"),  or permit any of its Subsidiaries to Transfer,
all  or  any  part  of its business or property, other than Permitted Transfers.

CHANGE  IN  BUSINESS;  CHANGE  IN  CONTROL  OR  EXECUTIVE OFFICE.  Engage in any
business,  or  permit  any  of its Subsidiaries to engage in any business, other
than  or reasonably related or incidental to the businesses currently engaged in
by  Borrower.  Borrower  will not have a Change in Control and will not, without
30 days prior written notification to Bank, relocate its chief executive office.

MERGERS  OR  ACQUISITIONS.  Other  than  in  the  normal  and ordinary course of
Borrower's  business, merge or consolidate, or permit any of its Subsidiaries to
merge  or  consolidate,  with  or  into  any other Person (other than mergers or
consolidations  of  a  Subsidiary  into another Subsidiary or into Borrower), or
acquire,  or permit any of its Subsidiaries to acquire, all or substantially all
of  the capital stock or property of another Person except where, upon the prior
written  consent  of  Bank, which consent shall not be unreasonably withheld (i)
the  Borrower  or  Subsidiary, as applicable, is the surviving entity after such
merger  or  acquisition and (ii) no Event of Default has occurred, is continuing
or  would  exist  after  giving  effect  to  the  transactions.

INDEBTEDNESS.  Create,  incur, assume or be or remain liable with respect to any
Indebtedness,  or  permit  any  Subsidiary  so  to  do,  other  than  Permitted
Indebtedness.


                                      13.
<PAGE>
ENCUMBRANCES.  Create,  incur,  assume  or allow any Lien with respect to any of
its  property,  or  assign  or  otherwise  convey  any  right to receive income,
including  the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens, or covenant to any other Person that Borrower in the
future will refrain from creating, incurring, assuming or allowing any Lien with
respect  to  any  of  Borrower's  property.

DISTRIBUTIONS.  Pay  any  dividends or make any other distribution or payment on
account of or in redemption, retirement or purchase of any capital stock, except
that  Borrower  may  repurchase  the  stock of former employees, consultants and
independent  contractors  pursuant to stock repurchase agreements as long as (a)
the  market value of such stock is greater than the repurchase price, and (b) an
Event  of  Default  does  not  exist prior to such repurchase or would not exist
after  giving  effect  to  such  repurchase.

INVESTMENTS.  Other  than  in  the  normal  and  ordinary  course  of Borrower's
business, directly or indirectly acquire or own, or make any Investment in or to
any  Person,  or  permit  any of its Subsidiaries so to do, other than Permitted
Investments.

TRANSACTIONS  WITH  AFFILIATES.  Directly  or indirectly enter into or permit to
exist  any  material  transaction  with  any  Affiliate  of  Borrower except (a)
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 (b) as
set  forth  in  paragraph  (e)  of  the  definition of "Permitted Indebtedness."

SUBORDINATED  DEBT.  Make  any  payment  in respect of any Subordinated Debt, or
permit  any  of  its Subsidiaries to make any such payment, except in compliance
with  the  terms  of such Subordinated Debt, or amend any provision contained in
any documentation relating to the Subordinated Debt without Bank's prior written
consent,  which  consent  shall  not  be  unreasonably  withheld.

INVENTORY  AND  EQUIPMENT.  Store  the Inventory or the Equipment with a bailee,
warehouseman,  or  similar  party  unless  Bank  has  received  a  pledge of the
warehouse  receipt  covering  such  Inventory.  Except for Inventory sold in the
ordinary  course  of  business  and  except for such other locations as Bank may
approve  in writing, Borrower shall keep the Inventory and Equipment only at the
locations  set  forth on the Schedule and such other locations of which Borrower
gives  Bank  prior  written  notice  and  as to which Borrower signs and files a
financing  statement  where  needed  to  perfect  Bank's  security  interest.

COMPLIANCE.  Become  or  be  controlled  by  an "INVESTMENT COMPANY," within the
meaning of the Investment Company Act of 1940, or become principally engaged in,
or  undertake  as  one  of  its  important activities, the business of extending
credit  for  the  purpose  of  purchasing  or  carrying margin stock, or use the
proceeds  of  any  Credit  Extension for such purpose.  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 law or regulation, which violation could
reasonably  be expected to have a Material Adverse Effect, or a material adverse
effect  on  the  Collateral or the priority of Bank's Lien on the Collateral, or
permit  any  of  its  Subsidiaries  to  do  any  of  the  foregoing.


                                      14.
<PAGE>
SECTION  10.     EVENTS  OF  DEFAULT.

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

PAYMENT  DEFAULT.  If  Borrower  fails  to  pay  any of the Obligations and such
failure  continues for 3 Business Days or more after the due date, provided that
within  such  3 Business Day cure period, the failure to pay shall not be deemed
an  Event  of  Default,  but  no  Credit  Extensions  will  be  made;

COVENANT  DEFAULT.  If  Borrower fails to perform any obligation under Article 7
or  violates any of the covenants contained in Article 8 of this Loan Agreement,
or  fails  or neglects to perform or observe any other material term, provision,
condition,  covenant  contained  in  this  Loan  Agreement,  in  any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
and  as  to  any default under such other term, provision, condition or covenant
that  can  be  cured,  has  failed  to  cure  such default within ten days after
Borrower  receives  notice  thereof  or  any  officer  of Borrower becomes aware
thereof;  provided,  however,  that if the default cannot by its nature be cured
within the ten day period or cannot after diligent attempts by Borrower be cured
within  such  ten  day  period,  and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall  not  in  any  case  exceed  30 days) to attempt to cure such default, and
within  such reasonable time period the failure to have cured such default shall
not  be  deemed  an  Event  of  Default  but  no Credit Extensions will be made;

MATERIAL  ADVERSE  CHANGE.  If  there  occurs  a  material  adverse  change  in
Borrower's  business  or  financial condition taken as a whole, or if there is a
material  impairment  of  the  prospect  of  repayment  of  any  portion  of the
Obligations or a material impairment of the value or priority of Bank's security
interests  in  the  Collateral;

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

INSOLVENCY.  If  Borrower  becomes  insolvent, or if an Insolvency Proceeding is
commenced  by  Borrower,  or  if  an  Insolvency Proceeding is commenced against


                                      15.
<PAGE>
Borrower  and is not dismissed or stayed within 30 days (provided that no Credit
Extensions  will  be made prior to the dismissal of such Insolvency Proceeding);

OTHER AGREEMENTS.  If there is a default in any agreement to which Borrower is a
party  with a third party or parties resulting in a right by such third party or
parties,  whether  or  not  exercised,  to  accelerate  the  maturity  of  any
Indebtedness  in  an  amount in excess of $250,000 or that could have a Material
Adverse  Effect; provided, however, that the Event of Default under this Section
10.6  caused by the occurrence of a default under another agreement described in
this  Section  10.6  shall be cured for purposes of this Loan Agreement upon the
receipt  of  proof by Bank of the cure or waiver of the default under such other
agreement;

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

JUDGMENTS.  If  a  judgment  or judgments for the payment of money in an amount,
individually or in the aggregate, of at least $250,000 shall be rendered against
Borrower  and  shall remain unsatisfied and unstayed for a period of 10 Business
Days  (provided that no Credit Extensions will be made prior to the satisfaction
or  stay  of  the  judgment);  or

MISREPRESENTATIONS.  If  any material misrepresentation or material misstatement
exists now or hereafter in any warranty or representation set forth herein or in
any  certificate  delivered  to Bank by any Responsible Officer pursuant to this
Loan  Agreement or to induce Bank to enter into this Loan Agreement or any other
Loan  Document.

SECTION  11.     BANK'S  RIGHTS  AND  REMEDIES.

RIGHTS AND REMEDIES.  Upon the occurrence and during the continuance of an Event
of  Default,  Bank  may,  at  its  election,  without notice of its election and
without  demand  (except  that  Bank  shall  provide  Borrower  a  notice of the
occurrence  of  an  Event  of  Default prior to enforcing its rights against any
deposit,  securities or other account including, but not limited to, the amounts
on  deposit  in the Certificate of Deposit and the amounts deposited by Borrower
with  Monarch  Securities  and Comerica Securities, Inc.), do any one or more of
the  following,  all  of  which  are  authorized  by  Borrower:

          (a)     Declare  all  Obligations,  whether  evidenced  by  this  Loan
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable  (provided  that upon the occurrence of an Event of Default described in
Section  10.5,  all Obligations shall become immediately due and payable without
any  action  by  Bank);

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

          (c)     Demand  that  Borrower (i) deposit cash with Bank in an amount
equal  to  the  amount of any Letters of Credit remaining undrawn, 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  Letters  of  Credit  fees scheduled to be paid or payable over the
remaining  term  of  the  Letters  of  Credit;


                                      16.
<PAGE>
          (d)     Settle  or  adjust  disputes  and claims directly with account
debtors  for  amounts,  upon  terms  and  in whatever order that Bank reasonably
considers  advisable;

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

          (f)     Set  off and apply to the Obligations any and all (i) balances
and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to
or  for  the  credit  or  the  account  of  Borrower  held  by  Bank;

          (g)     Ship,  reclaim,  recover,  store,  finish,  maintain,  repair,
prepare  for  sale,  advertise  for  sale,  and sell (in the manner provided for
herein) the Collateral.  Bank is hereby granted a license or other right, solely
pursuant  to  the  provisions  of  this  Section  11.1,  to use, without charge,
Borrower's  labels,  patents,  copyrights,  rights  of  use  of  any name, trade
secrets,  trade names, trademarks, service marks, and advertising matter, or any
property  of  a  similar nature, as it pertains to the Collateral, in completing
production  of,  advertising  for  sale,  and  selling  any  Collateral  and, in
connection  with  Bank's  exercise  of  its  rights  under  this  Section  11.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Bank's  benefit;

          (h)     Sell  the  Collateral  at  either a public or private sale, or
both,  by way of one or more contracts or transactions, for cash or on terms, in
such  manner  and  at  such  places  (including  Borrower's  premises)  as  Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in  whatever  manner  or  order  Bank  deems  appropriate;

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

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

POWER  OF  ATTORNEY.  Effective  only  upon  the  occurrence  and  during  the
continuance  of  an  Event of Default, Borrower hereby irrevocably appoints Bank
(and  any  of  Bank's  designated officers, or employees) as Borrower's true and
lawful  attorney  to:  (a)  send requests for verification of Accounts or notify
account  debtors  of  Bank's  security  interest  in  the  Accounts; (b) endorse
Borrower's  name  on  any  checks or other forms of payment or security that may
come  into Bank's possession; (c) sign Borrower's name on any invoice or bill of
lading  relating  to  any Account, drafts against account debtors, schedules and
assignments  of  Accounts,  verifications  of  Accounts,  and notices to account
debtors;  (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; (f) settle


                                      17.
<PAGE>
and  adjust  disputes  and  claims respecting the accounts directly with account
debtors,  for amounts and upon terms which Bank determines to be reasonable; (g)
to  modify, in its sole discretion, any intellectual property security agreement
entered  into  between  Borrower  and  Bank  without  first obtaining Borrower's
approval  of or signature to such modification by amending Exhibits A, B, and C,
thereof, as appropriate, to include reference to any right, title or interest in
any  Copyrights,  Patents or Trademarks acquired by Borrower after the execution
hereof  or  to  delete  any  reference  to  any  right, title or interest in any
Copyrights,  Patents  or Trademarks in which Borrower no longer has or claims to
have any right, title or interest; and (h) to transfer the Intellectual Property
Collateral  into the name of Bank or a third party to the extent permitted under
the  UCC;  provided, however, that Bank may file, in its sole discretion, one or
more  financing  or  continuation statements and amendments thereto, relative to
any  of  the Collateral without the signature of Borrower where permitted by law
regardless of whether an Event of Default has occurred.  The appointment of Bank
as  Borrower's  attorney  in  fact,  and each and every one of Bank's rights and
powers,  being coupled with an interest, is irrevocable until the earlier of the
cure  or  waiver  of the Event of Default or such time as all of the Obligations
have  been  fully repaid and performed and Bank's obligation to provide advances
hereunder  is  terminated.

ACCOUNTS  COLLECTION.  At  any time during the term of this Loan Agreement, Bank
may  notify  any  Person  owing funds to Borrower of Bank's security interest in
such  funds  and  verify the amount of such Account.  Borrower shall collect all
amounts  owing  to  Borrower  for  Bank, receive in trust all payments as Bank's
trustee, and immediately deliver such payments to Bank in their original form as
received  from  the  account  debtor,  with  proper  endorsements  for  deposit.

BANK  EXPENSES.  If  Borrower  fails  to pay any amounts or furnish any required
proof  of  payment due to third persons or entities, as required under the terms
of  this  Loan  Agreement,  then  Bank  may do any or all of the following after
reasonable  notice  to  Borrower:  (a)  make  payment  of  the  same or any part
thereof;  (b)  set  up  such reserves under the Revolving Facility as Bank deems
necessary  to  protect  Bank  from  the exposure created by such failure; or (c)
obtain  and  maintain insurance policies of the type discussed in Section 8.5 of
this  Loan  Agreement, and take any action with respect to such policies as Bank
deems  prudent.  Any  amounts so paid or deposited by Bank shall constitute Bank
Expenses,  shall  be immediately due and payable, and shall bear interest at the
then  applicable  rate  hereinabove  provided,  and  shall  be  secured  by  the
Collateral.  Any payments made by Bank shall not constitute an agreement by Bank
to  make  similar  payments  in  the  future or a waiver by Bank of any Event of
Default  under  this  Loan  Agreement.

BANK'S  LIABILITY  FOR  COLLATERAL.  So  long  as  Bank complies with reasonable
banking  practices  and  Section  9-207 of the UCC, Bank shall not in any way or
manner be liable or responsible for:  (a) the safekeeping of the Collateral; (b)
any  loss  or  damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default of
any  carrier,  warehouseman,  bailee,  forwarding  agency,  or  other  person
whomsoever.  All  risk of loss, damage or destruction of the Collateral shall be
borne  by  Borrower,  except where such loss, damage or destruction results from
the  gross  negligence or willful misconduct of Bank or Bank's failure to comply
with  Section  9-207  of  the  UCC.

REMEDIES  CUMULATIVE.  Bank's rights and remedies under this Loan Agreement, the
Loan  Documents,  and all other agreements shall be cumulative.  Bank shall have


                                      18.
<PAGE>
all  other  rights  and remedies not inconsistent herewith as provided under the
UCC,  by law, or in equity.  No exercise by Bank of one right or remedy shall be
deemed  an election, and no waiver by Bank of any Event of Default on Borrower's
part  shall  be deemed a continuing waiver.  No delay by Bank shall constitute a
waiver,  election,  or acquiescence by it.  No waiver by Bank shall be effective
unless  made  in  a  written document signed on behalf of Bank and then shall be
effective  only  in the specific instance and for the specific purpose for which
it  was  given.

DEMAND;  PROTEST.  Borrower waives demand, protest, notice of protest, 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 at any time
held  by  Bank  on  which  Borrower  may  in  any  way  be  liable.

SECTION  12.     NOTICES.

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

     If  to  Borrower:     Evolve  Software,  Inc.
                           1400  65th  Street,  Suite  100
                           Emeryville,  CA  94608
                           Attn:     Kenneth  J.  Bozzini,
                           Chief Financial Officer & Vice President of Finance
                           Fax:     (510)  428-6902

     If  to  Bank:         Comerica  Bank-California
                           Emerging  Growth  Division
                           555  California  Street,  Suite  3160
                           San  Francisco,  CA  94104
                           Attn:     Philip  Koblis
                           Fax:     (415)  705-5818

     with a copy to:       Comerica  Bank-California
                           226  Airport  Parkway
                           San  Jose,  CA  95110
                           Attn:  Corporate  Banking  Center
                           Fax:  (408)  451-8586

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


                                      19.
<PAGE>
SECTION  13.     CHOICE  OF  LAW  AND  VENUE;  JURY  TRIAL  WAIVER.

     This Loan Agreement shall be governed by, and construed in accordance with,
the  internal  laws  of the State of California, without regard to principles of
conflicts  of  law.  Each  of  Borrower and Bank hereby submits to the exclusive
jurisdiction  of  the  state  and  Federal courts located in the County of Santa
Clara,  State  of  California.  BORROWER  AND  BANK  EACH  HEREBY  WAIVE  THEIR
RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN,  INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING  WAIVER  CONSTITUTES  A  MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
LOAN  AGREEMENT.  EACH  PARTY  REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS
WAIVER  WITH  ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY  TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH  LEGAL  COUNSEL.

SECTION  14.     GENERAL  PROVISIONS.

SUCCESSORS AND ASSIGNS.  This Loan Agreement shall bind and inure to the benefit
of  the  respective  successors  and  permitted  assigns of each of the parties;
provided, however, that neither this Loan Agreement nor any rights hereunder may
be  assigned by Borrower without Bank's prior written consent, which consent may
be  granted  or  withheld  in Bank's sole discretion.  Bank shall have the right
without  the  consent  of or notice to Borrower to sell, transfer, negotiate, or
grant  participation  in  all  or  any  part  of,  or  any  interest  in, Bank's
obligations,  rights  and  benefits  hereunder.

INDEMNIFICATION.  Borrower  shall  defend,  indemnify and hold harmless Bank and
its  officers,  employees,  and  agents  against:  (a) all obligations, demands,
claims,  and  liabilities  claimed  or asserted by any other party in connection
with the transactions contemplated by this Loan Agreement; and (b) all losses or
expenses in any way suffered, incurred, or paid by Bank as a result of or in any
way arising out of, following, or consequential to transactions between Bank and
Borrower  whether  under  this  Loan  Agreement, or otherwise (including without
limitation  reasonable attorneys fees and expenses), except for losses caused by
Bank's  gross  negligence  or  willful  misconduct.  Bank may not enter into any
settlement  or  other  compromise  with  respect  to  any  claim  covered by the
indemnity  set  forth  in  this  Section  14.2  without giving notice thereof to
Borrower.  If Bank or any other indemnified party obtains recovery of any of the
amounts  that  Borrower  has paid to them pursuant to the indemnity set forth in
this  Section,  then  Bank or such other indemnified party, as applicable, shall
promptly  pay  to  Borrower  such  amounts  paid  by  Borrower.

TIME  OF ESSENCE.  Time is of the essence for the performance of all obligations
set  forth  in  this  Loan  Agreement.

SEVERABILITY  OF  PROVISIONS.  Each  provision  of  this Loan Agreement shall be
severable  from  every other provision of this Loan Agreement for the purpose of
determining  the  legal  enforceability  of  any  specific  provision.


                                      20.
<PAGE>
AMENDMENTS  IN  WRITING, INTEGRATION.  All amendments to or terminations of this
Loan  Agreement  must  be  in  writing.  All  prior  agreements, understandings,
representations,  warranties,  and  negotiations between the parties hereto with
respect  to  the  subject matter of this Loan Agreement, if any, are merged into
this  Loan  Agreement  and  the  Loan  Documents.

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

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

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


                                      21.
<PAGE>
     IN  WITNESS  WHEREOF, the parties hereto have caused this Loan Agreement to
be  executed  as  of  the  date  first  above  written.

                              EVOLVE  SOFTWARE,  INC.

                              By: ____________________________________________

                              Name: __________________________________________

                              Title: _________________________________________


                              COMERICA  BANK-CALIFORNIA,
                              successor  by  merger  to  Imperial  Bank

                              By: ____________________________________________

                              Name: __________________________________________

                              Title: _________________________________________


                                      22.
<PAGE>