WORTH COVENANT IN SECTION 5A. OF THE SCHEDULE TO THE LOAN AGREEMENT IN ITS
ENTIRETY AND INSERTING THE FOLLOWING IN LIEU THEREOF:
"a. Minimum Tangible Net Worth:
Borrower shall at all times maintain a Tangible Net Worth, tested quarterly, of
not less than the sum of (i) plus (ii) plus (iii) below:
(i)
(a) as of September 30, 2006, $13,000,000;
(b) as of December 31, 2006 and each quarter end thereafter, $8,000,000;
PLUS
(II)
50% OF BORROWER'S QUARTERLY NET INCOME (IF POSITIVE) IN FISCAL YEAR 2007;
plus
(III) 50% OF ALL CONSIDERATION RECEIVED AFTER THE DATE HEREOF FROM PROCEEDS FROM
THE ISSUANCE OF ANY EQUITY SECURITIES OF THE BORROWER AND/OR SUBORDINATED DEBT
INCURRED BY THE BORROWER.
TANGIBLE NET WORTH SHALL EXCLUDE DEFERRED LICENSING FEES AND CAPITALIZED PRODUCT
DEVELOPMENT FEES.
IN NO EVENT SHALL THE REQUIRED AMOUNT OF THIS MINIMUM
TANGIBLE NET WORTH COVENANT BE DECREASED."
IV.
BY ADDING THE FOLLOWING SECTION 5B. AFTER
SECTION 5A. OF THE SCHEDULE TO LOAN AGREEMENT:
"B.
MINIMUM LIQUIDITY:
AT ALL TIMES, TESTED QUARTERLY, THE SUM OF (I) THE BORROWER'S UNRESTRICTED CASH
MAINTAINED AT BANK PLUS (II) 80% OF THE BORROWER'S ELIGIBLE RECEIVABLES
OUTSTANDING LESS THAN NINETY (90) DAYS FROM INVOICE DATE BASE MINUS (III) ALL
OUTSTANDING LOANS, LETTERS OF CREDIT AND OTHER OBLIGATIONS OUTSTANDING UNDER
THIS AGREEMENT OF NOT LESS THAN $10,000,000."
V.
BY DELETING EXHIBIT B THERETO IN ITS
ENTIRETY AND INSERTING IN LIEU THEREOF EXHIBIT B ATTACHED HERETO.
4.
RATIFICATION OF INTELLECTUAL PROPERTY
SECURITY AGREEMENT.
BORROWER HEREBY RATIFIES, CONFIRMS AND REAFFIRMS, ALL AND
SINGULAR, THE TERMS AND CONDITIONS OF A CERTAIN INTELLECTUAL PROPERTY SECURITY
AGREEMENT DATED AS OF MARCH 19, 2001 BETWEEN BORROWER AND BANK, AND
ACKNOWLEDGES, CONFIRMS AND AGREES THAT, EXCEPT AS PREVIOUSLY DISCLOSED IN
WRITING TO BANK AND EXCEPT AS SET FORTH IN SCHEDULE A ANNEXED HERETO, SAID
INTELLECTUAL PROPERTY SECURITY AGREEMENT CONTAINS AN ACCURATE AND COMPLETE
LISTING OF ALL INTELLECTUAL PROPERTY COLLATERAL (AS DEFINED IN SAID INTELLECTUAL
PROPERTY SECURITY AGREEMENT) AND SHALL REMAIN IN FULL FORCE AND EFFECT.
5.
RATIFICATION OF PERFECTION
CERTIFICATE.
BORROWER HEREBY RATIFIES, CONFIRMS, AND REAFFIRMS, ALL AND
SINGULAR, THE TERMS AND DISCLOSURES CONTAINED IN A CERTAIN
PERFECTION CERTIFICATE DELIVERED TO THE BANK ON OR ABOUT JUNE 7, 2004, AND
ACKNOWLEDGES, CONFIRMS AND AGREES THE DISCLOSURES AND INFORMATION PROVIDED
THEREIN HAS NOT CHANGED, AS OF THE DATE HEREOF.
6.
CONSISTENT CHANGES.
THE EXISTING LOAN
DOCUMENTS ARE HEREBY AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED
ABOVE.
7.
RATIFICATION OF LOAN DOCUMENTS.
BORROWER HEREBY RATIFIES, CONFIRMS, AND REAFFIRMS ALL TERMS AND CONDITIONS OF
THE EXISTING LOAN DOCUMENTS AND ALL SECURITY OR OTHER COLLATERAL GRANTED TO THE
BANK, AND CONFIRMS THAT THE INDEBTEDNESS SECURED THEREBY INCLUDES, WITHOUT
LIMITATION, THE OBLIGATIONS.
8.
NO DEFENSES OF BORROWER.
THE BORROWER
HEREBY ACKNOWLEDGES AND AGREES THAT THE BORROWER HAS NO OFFSETS, DEFENSES,
CLAIMS, OR COUNTERCLAIMS AGAINST THE BANK OR THE BANK'S OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, REPRESENTATIVES, PREDECESSORS, AFFILIATES, SUBSIDIARIES,
PARENTS, SUCCESSORS, AND ASSIGNS WITH RESPECT TO THE OBLIGATIONS, AND/OR THE
EXISTING LOAN DOCUMENTS, AND THAT IF THE BORROWER NOW HAS,