**Exhibit 10.1**

 

**FIRSTAMENDMENT TO LOAN AND SECURITY AGREEMENT**

 

**FIRST AMENDMENT TO LOAN ANDSECURITY AGREEMENT** dated as of November 19, 2008 (this “Amendment”),among InfoLogix, Inc., a Delaware corporation (“Parent Borrower”),InfoLogix Systems Corporation, a Delaware corporation (“ISC”), EmbeddedTechnologies, LLC, a Delaware limited liability company (“Embedded”),Opt Acquisition LLC, a Pennsylvania limited liability company (“Opt”) andInfoLogix–DDMS, Inc., a Delaware corporation (“DDMS”) (ParentBorrower, ISC, Embedded, Opt and DDMS are each referred to herein as a “Borrower”and collectively as the “Borrowers”) and Hercules Technology Growth Capital, Inc.,a Maryland corporation (“Lender”). Reference is made to that certain Loan and Security Agreement dated asof May 1, 2008 by and among the Borrowers and the Lender (as amended andin effect from time to time, the “Loan Agreement”).  Capitalized terms used herein and which arenot otherwise defined herein have the same meanings herein as specified in theLoan Agreement.

 

**RECITALS**

 

**WHEREAS**, theBorrowers and the Lender desire to amend the Loan Agreement as provided herein;

 

**NOW, THEREFORE**,in consideration of the mutual agreements contained herein and for other goodand valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto hereby agree as follows:

 

**AGREEMENTS**

 

**§1.****                               Amendmentsto Loan Agreement**.  The LoanAgreement is hereby amended in the following respects:

 

(a)                                  Section 1.1of the Loan Agreement is hereby amended by deleting the definition of “ConsolidatedTotal Leverage Ratio” in its entirety.

 

(b)                                 Section 1.1of the Loan Agreement is hereby amended by adding the following definitions inthe appropriate alphabetical order:

 

“Amendment Effective Date” means November 19, 2008.”

 

“Cash Equivalents” means those items and accounts described in clause (ii) ofthe definition of Permitted Investments.

 

“Fundamental Event Agreement” has the meaning given to it in thedefinition of “Revolving Interest Rate”.

 

(c)                                  Allreferences to “cash equivalents” in each of the definitions of Cash, PermittedIndebtedness and Permitted Liens, shall be deleted and replaced with thedefined term “Cash Equivalents”.

 

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(d)                                 Thedefinition of “Permitted Acquisition” in Section 1.1 of the Loan Agreementis hereby amending by inserting “of clause (i) and (ii)” immediatelyfollowing “in each case” within the second parenthetical of the first paragraphof such definition.

 

(e)                                  Section 1.1of the Loan Agreement is hereby amended by amending and restating the followingdefinitions in their entirety as follows:

 

“Average Total Enterprise Value Differential” shall mean the amount, ifany, by which (i) the average of the Parent Borrower’s market capitalizationfor the 30-day period preceding any payments described in Section 2.7(b) exceeds(ii) $50,000,000.  In the event suchmarket capitalization does not exceed $50,000,000, then the Average TotalEnterprise Value Differential shall be deemed to be zero (0).

 

“Consolidated Adjusted EBITDA” means, at any date of determination, anamount equal to consolidated net income of Parent Borrower and its Subsidiarieson a consolidated basis for the most recently completed applicable MeasurementPeriod, plus (a) the following to the extent deducted in calculatingsuch consolidated net income:  (i) ConsolidatedInterest Expenses paid or accrued in such applicable Measurement Period, (ii) theprovision for Federal, state, local and foreign income taxes payable, (iii) depreciationand amortization expense, (iv) other non-recurring expenses reducing suchconsolidated net income which do not represent a cash item in such period orany future period, in each case of or by Parent Borrower and its Subsidiariesfor such applicable Measurement Period, (v) non-cash charges for stockbased compensation, (vi) non-recurring cash fees, costs, charges andexpenses paid during such period incurred in connection with a PermittedAcquisition or the transactions contemplated by this Agreement, (vii) non-recurringnon-cash write-offs or write-downs of demo Equipment not to exceed $750,000 inthe aggregate (in each case of or by the Parent Borrower and its Subsidiariesfor such applicable Measurement Period), (viii) cash severance expenses insuch amounts as are consistent with Parent Borrower’s severance plan asapproved by Parent Borrower’s board of directors and otherwise mutually agreedupon by Parent Borrower and Lender, in the Lender’s reasonable discretion, (ix) cashexpenses described on Schedule 1.1 hereto for the fiscal quarter ending December 31,2008, (x) fees, legal fees and expenses incurred and paid in connectionwith the preparation and negotiation of the Amendment, but only to the extentnot paid or financed from proceeds of the Loans, (xi) fees and expenses ofprofessional advisers relating to structuring, negotiating and documenting aproposed Fundamental Event Agreement and the transactions contemplated thereby,and minus (b) the following, to the extent included in calculatingsuch consolidated net income:  (i) Federal,state, local and foreign income tax credits and (ii) all non-cash itemsincreasing consolidated net income (in each case of or by Parent Borrower andits Subsidiaries for such applicable Measurement Period).  For purposes of this calculation and withoutduplication, with respect to any period of determination, the consolidatedadjusted EBITDA of a wholly-owned acquired Subsidiary acquired as a result of aPermitted Acquisition, which shall be calculated in a manner consistent withthe methodology set forth for Consolidated Adjusted EBITDA herein, may beincluded in the calculation of Consolidated Adjusted EBITDA as though suchPermitted Acquisition was consummated on the first day of the applicableMeasurement Period (the “Acquired Entity EBITDA”).  The Acquired Entity EBITDA shall becalculated by reference to the 

 

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audited financial results of the acquired entity, if available for suchapplicable Measurement Period, or if such audited financial results are notavailable for such Measurement Period, any unaudited financial results ormanagement-prepared results as are approved by Lender in respect of suchacquired entity.  Further for thepurposes of this calculation and without duplication, with respect to any MeasurementPeriod during which the fee contemplated by Section 2.7(b) is paid toLender, in respect of such payment, the Consolidated Adjusted EBITDA for suchperiod(s) shall be reduced by the amount by which such payment exceeds theaggregate of all accruals for non-cash items that reduced Consolidated AdjustedEBITDA in prior Measurement Periods.

 

“Consolidated Total Leverage Ratio” means, as of the date ofdetermination, the ratio of (a) Consolidated Funded Indebtedness as ofsuch date to (b) Consolidated EBITDA on a consolidated basis for the mostrecently completed Twelve Month Measurement Period.

 

“Maximum Revolving Loan Amount” means Nine Million and no/100 Dollars($9,000,000.00).

 

“Maximum Term Loan Amount” means Twelve Million and No/100 Dollars($12,000,000.00).

 

“Refinancing Event” means the closing of a loan with a lender otherthan the Lender, the proceeds of which are applied to payoff the SecuredObligations in full.

 

“Revolving Interest Rate” means

 

(a) for the period commencing on the AmendmentEffective Date to and including February 14, 2009, the greater of (i) elevenand one-quarter percent (11.25%), and (ii) the prime rate as reported inThe Wall Street Journal plus 6.75%;

 

(b) for the period commencing on February 15,2009 to and including May 15, 2009, the greater of (i) twelve andone-quarter percent (12.25%), and (ii) the prime rate as reported in TheWall Street Journal plus 7.75%, and

 

(c) for the period commencing on May 16,2009 and at all times thereafter, the greater of (i) thirteen andone-quarter percent (13.25%), and (ii) the prime rate as reported in TheWall Street Journal plus 8.75%;

 

provided, however, that therate increases set forth in clauses (b) and (c) of this definitionwill not be implemented in the event that Parent Borrower enters into abinding, definitive agreement prior to February 15, 2009 for (i) thesale, transfer or conveyance or other disposition of all or substantially allof the assets of the Parent Borrower or its direct and indirect Subsidiaries, (ii) thesale of all or substantially all of the Capital Stock of the Parent Borrower orits direct or indirect Subsidiaries, (iii) a cash infusion in an amount ofat least $5,000,000, or (iv) the incurrence of Subordinated Indebtednessin an amount of at least $5,000,000, each on terms and in form and substancesatisfactory to Lender in its discretion (a “Fundamental Event Agreement”); andfurther provided, that the rate increase set forth in clause (c) of thisdefinition will not be implemented in the event that Parent Borrower entersinto a Fundamental Event Agreement during the period commencing February 15,2009 and ending May 15, 2009.  Ifany such Fundamental Event Agreement described herein is not consummated priorto the earlier of (x) May 16, 2009, or (y) the occurrence of anEvent of Default, then such rate increases will be implemented retrospectively(and in the case of an Event of Default of the type described 

 

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in Section 9.6, such rate increases shall automatically beimplemented retrospectively) as if such Fundamental Event Agreement was neverexecuted, and shall be in effect thereafter.

 

“Secured Obligations” means each Borrower’s obligations under thisAgreement and any Loan Document, including any obligation, of any kind ornature, to pay any amount now owing or later arising to the Lender (whether ornot such performance is then required or contingent, or such amounts areliquidated or determinable), whether or not evidenced by any note, agreement orother instrument.  This term includes allprincipal, interest (including all interest that accrues after the commencementof any case or proceeding by or against any Borrower, in bankruptcy, whether ornot allowed in such case or proceeding), fees, attorneys’ fees and any othersum chargeable to any Borrower under this Agreement or any of the other LoanDocuments.

 

“Term Loan Interest Rate” means

 

(a) for the period commencing on the AmendmentEffective Date to and including February 14, 2009, the sum of (i) thegreater of thirteen and one-quarter percent (13.25%), and the prime rate as reportedin The Wall Street Journal plus 8.75%; plus (ii) 1.75% per annum, withrespect to this clause (ii), payable in kind on the first business day of eachmonth, commencing December 1, 2008, by capitalizing the amount of suchinterest accrued prior to such monthly payment date, and adding such amount tothe principal amount of the Term Loan;

 

(b) for the period commencing on February 15,2009 to and including May 15, 2009, the sum of (i) the greater offourteen and one-quarter percent (14.25%), and the prime rate as reported inThe Wall Street Journal plus 9.75%, plus (ii) 1.75% per annum, withrespect to this clause (ii), payable in kind on the first business day of eachmonth by capitalizing the amount of such interest accrued prior to such monthlypayment date, and adding such amount to the principal amount of the Term Loan;and

 

(c) for the period commencing on May 16,2009 and at all times thereafter, the sum of (i) greater of fifteen andone-quarter percent (15.25%), and the prime rate as reported in The Wall StreetJournal plus 10.75%; plus (ii) 1.75% per annum, with respect to thisclause (ii), payable in kind on the first business day of each month bycapitalizing the amount of such interest accrued prior to such monthly paymentdate, and adding such amount to the principal amount of the Term Loan;

 

provided, however, that therate increases set forth in clauses (b) and (c) of this definitionwill not be implemented in the event that Parent Borrower enters into aFundamental Event Agreement prior to February 15, 2009; and furtherprovided, that the rate increase set forth in clause (c) of thisdefinition will not be implemented in the event that Parent Borrower entersinto a Fundamental Event Agreement during the period commencing February 15,2009 and ending May 15, 2009.  Ifany such Fundamental Event Agreement described herein is not consummated priorto the earlier of (x) May 16, 2009, or (y) the occurrence of anEvent of Default, then such rate increases will be implemented retrospectively(and in the case of an Event of Default of the type described in Section 9.6,such rate increases shall automatically be implemented retrospectively) as ifsuch Fundamental Event Agreement was never executed, and shall be in effectthereafter.

 

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(f)                                    Section 2.1(b) ofthe Loan Agreement is hereby amended and restated as follows:

 

“(b)                           AdvanceRequest.  To obtain a Revolving LoanAdvance, Parent Borrower, on its own behalf and on behalf of each Borrower,shall complete, sign and deliver an Advance Request and Borrowing BaseCertificate (with such Borrowing Base Certificate reflecting any adjustments ineligibility criteria requested by Lender whether or not any notice period inrespect of such adjustment shall have then elapsed), provided, however that ifBorrowers have submitted a Borrowing Base Certificate dated as of a date notmore than 3 Business Days prior to the submission of the Advance Request, thenthe Parent Borrower shall not be required to submit a new Borrowing BaseCertificate in connection with such Advance Request unless adjustments arerequired pursuant to the parenthetical in the foregoing clause.  Lender shall fund the Revolving Advance inthe manner requested by the Advance Request, providedthat each of the conditions precedent to such Revolving Advance is satisfied asof the requested Advance Date.”

 

(g)                                 Section 2.2(a) ofthe Loan Agreement is hereby amended and restated as follows:

 

“(b)                           Advances.  Subject to the terms and conditions of thisAgreement, Lender will make, and Borrowers agree to draw, on a joint andseveral basis, a Term Loan Advance of $9,000,000.00 on the Closing Date.  Beginning on the Closing Date, and continuinguntil January 1, 2009, Borrowers may request additional Term Loan Advancesin an aggregate amount up to $3,000,000.00 in minimum increments of$100,000.00, provided, however, that the making of such additional Term LoanAdvance(s) shall be subject to Borrowers delivering a ComplianceCertificate demonstrating Borrowers’ pro forma compliance with the financialcovenants set forth in Section 7.20 after giving effect to the making ofsuch proposed additional Term Loan Advance. The aggregate outstanding Term Loan Advances may be up to the MaximumTerm Loan Amount.”

 

(h)                                 Section 2.6of the Loan Agreement is hereby amended by adding the words “or acceleration”immediately after the word “prepayment “ in the first line thereof.

 

(i)                                     Section 2.7(b) ofthe Loan Agreement is hereby amended and restated as follows:

 

“Upon the earliest to occur of (i) demand from the Lender at any timebetween June 30, 2009 and April 30, 2012, (ii) the accelerationof the Secured Obligations, (iii) the Term Loan Maturity Date, and (iv) aprepayment in full of Secured Obligations, Borrowers shall pay to Lender anamount equal to the greater, as of such date of determination, of (x) $900,000,and (y) an amount equal to three percent (3.0%) of the Average TotalEnterprise Value Differential of Parent Borrower.  Notwithstanding anything herein to thecontrary, with respect to any demand for such payment pursuant to clause (i) ofthis Section 2.7(b), so long as no other Event of Default has occurred andis continuing, the failure of Borrowers to pay the fee required by clause (i) ofthis Section 2.7(b) upon demand thereunder, shall not be deemed anEvent of Default under this Agreement, if and only if, the payment of such feesat the time of demand could reasonably be expected to result in the occurrenceof an event that, with the passage of time or giving of notice, or both, wouldconstitute an Event of Default under Section 7.20 (a “Liquidity Event”); provided,however, that the Borrowers shall pay such fee immediately after thepassage of such Liquidity Event and that the foregoing grace period shall in noway be deemed a 

 

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waiver of the payment of such fee, and in any event such requiredpayments under this Section 2.7 shall continue to be deemed a component ofSecured Obligations hereunder.”

 

(j)                                     Section 7.1of the Loan Agreement is hereby amended by deleting the heading and leadsentence thereof and replacing it with the following:

 

“Financial Reports and Compliance Certificate. Borrowers shallfurnish to Lender the financial reports listed hereinafter (the “FinancialStatements”), with delivery of the Financial Statements described insubsections (a), (b) and (c), in each case to be accompanied by theCompliance Certificate in the form attached as Exhibit F:”

 

(k)                                  Section 7.19of the Loan Agreement is hereby amended and restated as follows:

 

“7.19  Notice of Defaults.  The Borrowers shall notify Lender promptlyupon the occurrence of an Event of Default, or upon the occurrence of any eventthat, with the passage of time or the giving of notice, or both, wouldconstitute an Event of Default.”

 

(l)                                     Section 7.20of the Loan Agreement is hereby amended and restated as follows:

 

“7.20 Financial Covenants.

 

(a)                                  ConsolidatedAdjusted EBITDA.

 

(i)                                     TheBorrowers shall not permit the Consolidated Adjusted EBITDA for any Three MonthMeasurement Period ending during any fiscal month, commencing with the monthending October 31, 2008 and ending with the month ending December 31,2010, to be less than the amount set forth below opposite such Three MonthMeasurement Period ending date:

 
| **Measurement Period Ending**                                                                                                                                                   | ** ** | **Consolidated  Adjusted EBITDA** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| October 31, 2008                                                                                                                                                                     |       | $                                      | (600,000   | ) |
| November 30, 2008                                                                                                                                                                    |       | $                                      | 100,000    |   |
| December 31, 2008                                                                                                                                                                    |       | $                                      | 100,000    |   |
| January 31, 2009                                                                                                                                                                     |       | $                                      | 100,000    |   |
| February 28, 2009                                                                                                                                                                    |       | $                                      | 100,000    |   |
| March 31, 2009                                                                                                                                                                       |       | $                                      | 100,000    |   |
| April 30, 2009                                                                                                                                                                       |       | $                                      | 100,000    |   |
| May 31, 2009                                                                                                                                                                         |       | $                                      | 250,000    |   |
| June 30, 2009                                                                                                                                                                        |       | $                                      | 250,000    |   |
| July 31, 2009                                                                                                                                                                        |       | $                                      | 250,000    |   |
| August 31, 2009                                                                                                                                                                      |       | $                                      | 500,000    |   |
| September 30, 2009                                                                                                                                                                   |       | $                                      | 1,000,000  |   |
| October 31, 2009                                                                                                                                                                     |       | $                                      | 2,500,000  |   |
| November 30, 2009                                                                                                                                                                    |       | $                                      | 2,500,000  |   |
| For each Three Month Measurement Period ending  during any fiscal month commencing with the month ending on December 31,  2009 to and including the month ending April 30, 2012 |       | $                                      | 3,000,000  |   |

 

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(b)                                 ConsolidatedTotal Adjusted Leverage Ratio.

 

(i)                                     TheBorrowers shall not permit the Consolidated Total Adjusted Leverage Ratio forany Twelve Month Measurement Period ending during any fiscal month commencingwith the month ending December 31, 2009, to be greater than the amount setforth below opposite such Measurement Period ending date:

 
| **Measurement Period Ending**                                                                                                                                                     | ** ** | **Consolidated Total  Adjusted Leverage  Ratio** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------|------------|
| December 31, 2009                                                                                                                                                                      |       | 3.0 to 1                                                   |       |
| January 30, 2010                                                                                                                                                                       |       | 3.0 to 1                                                   |       |
| February 28, 2010                                                                                                                                                                      |       | 3.0 to 1                                                   |       |
| March 31, 2010                                                                                                                                                                         |       | 2.75 to 1                                                  |       |
| April 30, 2010                                                                                                                                                                         |       | 2.75 to 1                                                  |       |
| May 31, 2010                                                                                                                                                                           |       | 2.75 to 1                                                  |       |
| June 30, 2010                                                                                                                                                                          |       | 2.5 to 1                                                   |       |
| July 31, 2010                                                                                                                                                                          |       | 2.5 to 1                                                   |       |
| August 31, 2010                                                                                                                                                                        |       | 2.5 to 1                                                   |       |
| September 30, 2010                                                                                                                                                                     |       | 2.25 to 1                                                  |       |
| October 31, 2010                                                                                                                                                                       |       | 2.25 to 1                                                  |       |
| November 30, 2010                                                                                                                                                                      |       | 2.25 to 1                                                  |       |
| For each Twelve Month Measurement Period ending on  during any fiscal month commencing with the month ending December 31,  2010, to and including the month ending April 30, 2012 |       | 2.0 to 1                                                   |       |

 

(c)                                  MinimumCash On Hand.  The Borrowers shallnot permit at any time its unrestricted Cash on hand to be less than$2,500,000.

 

(m)                               Section 7.22(a) ishereby amended and restated in its entirety as follows:

 

“(a)  Intellectual Property.  On or before the thirtieth (30th) day afterthe Amendment Effective Date, Borrowers shall take all actions reasonablynecessary to provide Lender with a first priority security interest in theIntellectual Property, free and clear of all liens 

 

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and defects, and Borrowers shall provide to Lender a lien reportobtained by Borrowers and Borrowers’ expense, of the Intellectual Propertyregistered at the United States Patent and Trademark Office, United StatesCopyright Office and Library of Congress, as applicable, which lien reportshall reflect the Lender’s first priority security interest in such Collateral,free and clear of all liens and defects.”

 

(n)                                 Section 7.22(d) ofthe Loan Agreement is hereby amended and restated in its entirety as follows:

 

“(d)  Securities Account Control Agreements.  On or before the thirtieth (30th) day afterthe Amendment Effective Date, Borrowers shall deliver to Lender Account ControlAgreements with respect to each account holding Investment Property, in form andsubstance reasonably satisfactory to the Lender.”

 

(o)                                 Section 7.22of the Loan Agreement is hereby amended by adding the following subsection (h) immediatelyfollowing subsection (g) therein:

 

“(h) Commercial Finance Examination.  On or before December 30, 2008, Lendershall have performed a completed commercial finance exam, the results of whichshall be satisfactory to the Lender in its sole discretion.  The performance of such an examination shallnot be counted as the collateral audit permitted for this calendar yearpursuant to Section 7.3(b).

 

(p)                                 Section 9.2of the Loan Agreement is hereby amended and restated in its entirety asfollows:

 

“9.2  Covenants.  Any Borrower breaches or defaults in theperformance of any covenant or Secured Obligation under this Agreement, theNotes, or any of the other Loan Documents, and (a) with respect to adefault under any covenant under this Agreement (other than under Sections 6,7.5, 7.6, 7.7, 7.8, 7.9, 7.20, 7.21 or 7.22) such default continues for morethan fifteen (15) days after the earlier of the date on which (i) Lenderhas given notice of such default to Parent Borrower and (ii) ParentBorrower has actual knowledge of such default or (b) with respect to adefault under any of Sections 6, 7.5, 7.6, 7.7, 7.8, 7.9, 7.20, 7.21 or 7.22,the occurrence of such default; or”

 

(q)                                 Exhibit B-2of the Loan Agreement is hereby amended and restated in its entirety in theform attached hereto as Exhibit B-2.

 

**§2.****                               Ratificationof Loan Documents, Etc**.  EachBorrower hereby adopts again, ratifies and confirms in all respects, as its ownact and deed: (i) each of the Loan Agreement and the other Loan Documentsto which such Borrower is a party; (ii) the grant of a security interestunder the Loan Agreement and the other Loan Document in the Collateral,together with any and all UCC financing statements, United States Patent andTrademark Office recordings, United States Copyright Office recordings, andother instruments or documents previously executed in connection therewith tocreate, evidence, perfect or preserve the priority of such security interest infavor of the Lender; (iii) each of the other instruments or documentsdelivered in connection with the Loan Agreement or any of the Loan Documentsand purported to be executed by it and acknowledges that all of the foregoingLoan Documents and other instruments, documents, filings and recordings shallcontinue in full force and effect.  Eachpledgor under a Pledge 

 

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Agreement hereby adoptsagain, ratifies and confirms in all respects, as its own act and deed, eachpledge granted by such pledgor thereunder. By its signature below, each Borrower hereby consents to this Amendment,and after taking into account this Amendment, acknowledges that this Amendmentshall not alter, release, discharge or otherwise affect any of its obligationsunder any Loan Document under which such Borrower acts as a secondary obligor,if any.

 

**§3.****                               Representationsand Warranties**.  Each Borrower hereby represents and warrantsto the Lender as follows:

 

(a)                                  Eachof the representations and warranties of such Borrower contained in the LoanAgreement as modified hereby or in any document or instrument deliveredpursuant to or in connection with the Loan Agreement as modified hereby aretrue as of the date hereof and, after taking into account this Amendment, noEvent of Default has occurred and is continuing, and no event has occurred andis continuing that, with the passage of time or giving of notice, or both,would constitute an Event of Default; and

 

(b)                                 Theexecution, delivery and performance of this Amendment and the transactionscontemplated hereby (i) are within the corporate or company authority ofeach Borrower, as applicable, (ii) have been duly authorized by allnecessary corporate and company proceedings, as applicable, (iii) do notconflict with or result in any material breach or contravention of anyprovision of law, statute, rule or regulation to which any Borrower issubject or any judgment, order, writ, injunction, license or permit applicableto any Borrower so as to materially adversely affect the assets, business orany activity of the Borrowers, and (iv) do not conflict with any provisionof the corporate charter, bylaws, certificate of organization or operatingagreement of any Borrower or any agreement or other instrument binding uponthem.  The execution, delivery andperformance of this Amendment will result in valid and legally bindingobligations of each Borrower enforceable against each in accordance with therespective terms and provisions hereof.

 

**§4.****                               Conditionsto Effectiveness**.  This Amendmentshall become effective upon the receipt by the Lender of each of the following:

 

(a)                                  executedoriginals of this Amendment, the Revolving Note, as amended hereby, in the formattached hereto as Exhibit B-2, and all other documents and instrumentsreasonably required by Lender to effectuate the transactions contemplatedhereby, in all cases in form and substance reasonably acceptable to Lender;

 

(b)                                 paymentof an Amendment Fee in an amount equal to $315,000.00;

 

(c)                                  certifiedcopy of resolutions of each Borrower’s board of directors or members ormanagers as applicable evidencing approval of the Amendment and othertransactions evidenced by the Loan Documents, as amended;

 

(d)                                 resultsof UCC and, except as set forth in Section 7.22(i), intellectual propertysearches and with respect to the Collateral indicating no Liens other thanPermitted Liens and otherwise in form and substance satisfactory to the Lender;

 

(e)                                  suchother documents as Lender may reasonably request.

 

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**§5.****                               Effectof Amendment**.  Except asexpressly set forth herein, this Amendment does not constitute an amendment orwaiver of any term or condition of the Loan Agreement or any other LoanDocument, and all such terms and conditions shall remain in full force andeffect and are hereby ratified and confirmed in all respects.  Nothing contained in this Amendment shall beconstrued to imply a willingness on the part of the Lender to grant any similaror other future waivers or amendments of any of the terms and conditions of theLoan Agreement or the other Loan Documents. Nothing contained herein shall in any way prejudice, impair or otherwiseadversely affect any rights or remedies of the Lender under the Loan Agreement,as amended, or any other Loan Document. This Amendment shall constitute a Loan Document.

 

**§6.****                               Waiverof Existing Event of Default**.  Subject to the terms and conditions set forthherein and in reliance upon the representations and warranties of the Borrowersin the Loan Agreement and in this Amendment, the Lender hereby waive the Eventof Default resulting from Borrowers’ violation of the financial covenantcontained in Section 7.20(a)(i) of the Loan Agreement for the TwelveMonth Measurement Period ending September 30, 2008 (the “Specified Eventof Default”).  The waiver shall notextend to or affect any other obligations of the Borrowers contained in theLoan Agreement or any other Loan Documents and shall not impair or prejudiceany rights consequent thereon.  Except tothe extent of the aforementioned waiver, the Lender hereby expressly reservesall of its rights and remedies under the Loan Agreement, as amended hereby, theother related Loan Documents and applicable law in respect of any and allEvents of Default, or events that, with the passage of time or giving ofnotice, or both, would constitute Events of Default, under the Loan Agreementand the related Loan Documents now existing or hereafter arising.  Failure of the Lender to exercise any rightor remedy shall not constitute a waiver of that or any other right or remedy.

 

**§7.****                               GoverningLaw**.  This Amendment shall begoverned by and construed in accordance with the laws of the State ofCalifornia.

 

**§8.****                               Counterparts**.  This Amendment may be signed in any number ofcounterparts, each of which shall be an original, with the same effect as ifthe signatures thereto and hereto were upon the same instrument.  Delivery of an executed counterpart of asignature page of this Amendment by telecopy shall be effective as deliveryof a manually executed counterpart of this Amendment.

 

**[REMAINDEROF PAGE INTENTIONALLY LEFT BLANK]**

 

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IN WITNESS WHEREOF, Borrowers and Lender have duly executed anddelivered this First Amendment to Loan and Security Agreement as of the day andyear first above written.

 
|   | BORROWERS:                                |
|--------|-------------------------------------------|
|   |                                      |   |
|   | INFOLOGIX, INC.                           |
|   |                                      |
|   |                                      |   |
|   | By:                                  | /s/ John A  Roberts |
|   |                                      | John A. Roberts, Chief Financial Officer |
|   |                                      |   |
|   |                                      |
|   | INFOLOGIX  SYSTEMS CORPORATION            |
|   |                                      |   |
|   |                                      |   |
|   | By:                                       | /s/ John A  Roberts |
|   |                                      | John A. Roberts,  Chief Financial Officer |
|   |                                      |   |
|   |                                      |   |
|   | OPT ACQUISITION  LLC                      |
|   |                                      |
|   |                                      |   |
|   | By:                                       | /s/ John A  Roberts |
|   | John A. Roberts, Chief  Financial Officer |
|   |                                      |   |
|   |                                      |   |
|   | EMBEDDED  TECHNOLOGIES, LLC               |
|   | By: INFO LOGIX  INC., its sole Member     |
|   |                                      |
|   |                                      |   |
|   | By:                                       | /s/ John A  Roberts |
|   |                                      | John A. Roberts,  Chief Financial Officer |
|   |                                      |   |
|   |                                      |   |
|   | INFOLOGIX –  DDMS, INC.              |
|   | By:                                       | /s/ John A  Roberts |
|   |                                      | John A. Roberts,  Chief Financial Officer |

 

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|   | Accepted in Palo Alto, California:         |
|--------|--------------------------------------------|
|   | LENDER:                                    |
|   |                                       |   |
|   | HERCULES TECHNOLOGY  GROWTH  CAPITAL, INC. |
|   |                                       |
|   |                                       |   |
|   | Signature:                                 | /s/ K. Nicholas  Martitsch |
|   |                                       |   |
|   | Print Name:                                | K. Nicholas Martitsch |
|   |                                       |   |
|   | Title:                                     | Associate General  Counsel |
|        |                                            |  |  |

 

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**EXHIBITB-2**

 

**SECUREDREVOLVING PROMISSORY NOTE**

 
| $9,000,000 |   | Maturity Date:  November 19, 2009 |
|------------|--------|----------------------------------------|

 

FOR VALUE RECEIVED, each of InfoLogix, Inc., a Delawarecorporation, InfoLogix System Corporation, a Delaware Corporation, EmbeddedTechnologies, LLC a Delaware Limited Liability Company, Opt Acquisition LLC aPennsylvania Limited Liability Company, and InfoLogix-DDMS, Inc, a DelawareCorporation, jointly and severally (each a “Borrower” and collectively, the “Borrowers”)hereby promises to pay to the order of Hercules Technology Growth Capital, Inc.,a Maryland corporation or the holder of this Note (the “Lender”) at 400Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or such other place ofpayment as the holder of this Secured Revolving Promissory Note (this “PromissoryNote”) may specify from time to time in writing, in lawful money of the UnitedStates of America, the principal amount of Nine Million and No/100 Dollars($9,000,000) or such other principal amount as Lender has advanced toBorrowers, together with interest thereon, all as provided in the LoanAgreement referred to below.

 

This Promissory Note is a Revolving Note referred to in, and isexecuted and delivered in connection with, that certain Loan and SecurityAgreement, by and among Borrowers and Lender, dated May 1, 2008, asamended by First Amendment to Loan and Security Agreement dated November 19,2008 (as the same may from time to time be amended, modified or supplemented inaccordance with its terms, the “Loan Agreement”), and is entitled to thebenefit and security of the Loan Agreement and the other Loan Documents (asdefined in the Loan Agreement), to which reference is made for a statement ofall of the terms and conditions thereof. All payments shall be made in accordance with the Loan Agreement.  All terms defined in the Loan Agreement shallhave the same definitions when used herein, unless otherwise definedherein.  An Event of Default under theLoan Agreement shall constitute a default under this Promissory Note.

 

Each Borrower waives presentment and demand for payment, notice ofdishonor, protest and notice of protest under the UCC or any applicablelaw.  Each Borrower agrees to make allpayments under this Promissory Note without setoff, recoupment or deduction andregardless of any counterclaim or defense. This Promissory Note has been negotiated and delivered to Lender and ispayable in the State of California.  ThisPromissory Note shall be governed by and construed and enforced in accordancewith, the laws of the State of California, excluding any conflicts of law rules orprinciples that would cause the application of the laws of any otherjurisdiction.

 
|   | INFOLOGIX, INC. |
|--------|-----------------|
|   |            |   |
|   |            |   |
|   | By:             | /s/ John A  Roberts |
|   |            | John A. Roberts, Chief Financial Officer |

 

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|   | INFOLOGIX  SYSTEMS CORPORATION            |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |   |
|   | By:                                       | /s/ John A  Roberts |
|   |                                      | John A. Roberts, Chief Financial Officer |
|   | OPT ACQUISITION  LLC

 

       |
|   | By:                                       | /s/ John A  Roberts |
|   | John A. Roberts, Chief  Financial Officer |

 

 
|   | EMBEDDED  TECHNOLOGIES, LLC           |
|--------|---------------------------------------|
|   | By: INFO LOGIX  INC., its sole Member |
|   |                                  |
|   |                                  |   |
|   | By:                              | /s/ John A  Roberts |
|   |                                  | John A. Roberts, Chief Financial Officer |
|   | INFOLOGIX –  DDMS, INC.          |
|   |                                  |   |
|   |                                  |   |
|   | By:                                   | /s/ John A  Roberts |
|   |                                  | John A. Roberts,  Chief Financial Officer |

 

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Schedule 1.1

 

Expenses AddedBack to Definition of Consolidated Adjusted EBITDA

 

Discontinued S-1(secondary offering) in an aggregate amount not to exceed $200,000 Pre-paidfees associated with acquisitions in an aggregate amount not to exceed $170,578Severance expenses incurred prior to the Amendment Effective Date in the approximateaggregate amount of $60,000.

 

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