Document:

EXHIBIT
      10.1

     

    REVOLVING
      CREDIT AND TERM LOAN AGREEMENT

     

    AGREEMENT
      (this
“Agreement”)
      is
      made and entered into as of the 21st
      day of
      December, 2007, by and between COMVEST
      CAPITAL, LLC,
      a
      Delaware limited liability company (the “Lender”),
      and
AFTERSOFT
      GROUP, INC.,
      a
      Delaware corporation (the “Borrower”).

     

    W
      I T N E S S E T H :

     

    WHEREAS,
      the
      Borrower is engaged in the business of designing, developing and providing
      software, information and services (including business management systems,
      information products and online services) to the automotive aftermarket in
      the
      United States, the United Kingdom and Canada (collectively, the “Business
      Operations”);
      and

     

    WHEREAS,
      in
      order to provide funds for the Borrower’s working capital and other general
      corporate purposes, the Borrower has requested the Lender to extend to the
      Borrower a revolving credit facility and a term loan on the terms and conditions
      of this Agreement; and

     

    WHEREAS,
      the
      Lender is willing and able to provide such revolving credit facility and make
      such term loan to the Borrower on the terms and conditions of this
      Agreement;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants herein contained, the
      parties hereby agree as follows:

     

    I. DEFINITIONS

     

    Section
      1.01. Defined Terms.
      In
      addition to the other terms defined elsewhere in this Agreement, as used herein,
      the following terms shall have the following meanings:

     

    “Accounts”
shall
      mean “accounts” (as defined in the UCC) of the Borrower and/or its Subsidiaries
      from time to time.

     

    “Account
      Debtor”
shall
      mean any Person who is obligated on an Account.

     

    “Act”
shall
      mean the Securities Act of 1933, as amended, and the rules and regulations
      thereunder.

     

    “Advances”
shall
      mean the principal amounts loaned to the Borrower from time to time pursuant
      to
      Section 2.01 below.

     

    “Affiliate”
shall
      mean, with respect to any Person, any other Person in Control of, Controlled
      by,
      or under common Control with the first Person, and any other Person who has
      a
      substantial interest, direct or indirect, in the first Person or any of its
      Affiliates, including, without limitation, any officer or director of the first
      Person or any of its Affiliates and any family member of any such officer or
      director; provided,
      however,
      that
      neither the Lender nor any of its Affiliates shall be deemed an “Affiliate” of
      the Borrower for any purposes of this Agreement. For the purpose of this
      definition, a “substantial interest” shall mean the direct or indirect legal or
      beneficial ownership of more than ten (10%) percent of any class of stock or
      similar interest.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Agreement”
shall
      mean this Revolving Credit and Term Loan Agreement as it may from time to time
      be amended, modified, supplemented and/or restated.

     

    “Applicable
      Law”
shall
      mean all applicable provisions of all (a) constitutions, statutes, ordinances,
      rules, regulations and orders of all governmental and/or quasi-governmental
      bodies, (b) Government Approvals, and (c) order, judgments and decrees of all
      courts and arbitrators.

     

    “Availability”
shall
      mean the amount (if any) by which, at the time of determination, (a) the
      Revolving Credit Commitment exceeds (b) the outstanding principal amount of
      Advances.

     

    “Borrowing
      Base”
shall
      mean an amount, determined in accordance with the most recent borrowing base
      report theretofore provided to the Lender under Section 5.04(d) below, up to
      (a)
      80% of Eligible Accounts, plus
      (b) in
      the Lender’s sole discretion, 40% of Eligible Inventory, minus
      (c) such
      reserves as the Lender may establish from time to time in its Permitted
      Discretion (including, without limitation, to account for Account concentration
      and other risks of collection, and for obsolete, slow-moving or otherwise
      problematic inventory). In the event that the Borrower has not timely delivered
      a current Borrowing Base report in accordance with Section 5.04(d) below, then
      the applicable Borrowing Base shall be such amount as is established by the
      Lender, until such time as the Borrower has delivered a current Borrowing Base
      report. 

     

    “Borrowing
      Date”
means
      the Business Day on which the Lender makes a Loan hereunder.

     

    “Business
      Day”
shall
      mean a day other than (a) a Saturday, (b) a Sunday, or (c) a day on which
      banking institutions in the State of Florida or the State of New York are
      authorized or required by law or executive order to close.

     

    “Capital
      Expenditures”
shall
      mean with respect to any Person, all expenditures of such Person for tangible
      assets which are capitalized, and the fair value of any tangible assets leased
      by such Person under any lease which would be a Capitalized Lease, determined
      in
      accordance with GAAP, including all amounts paid or accrued by such Person
      in
      connection with the purchase (whether on a cash or deferred payment basis)
      or
      lease (including Capitalized Lease Obligations) of any machinery, equipment,
      real property, improvements to real property (including leasehold improvements),
      or any other tangible asset of such Person which is required, in accordance
      with
      GAAP, to be treated as a fixed asset on the consolidated balance sheet of such
      Person.

     

    “Capitalized
      Lease”
shall
      mean any lease which is or should be capitalized on the balance sheet of the
      lessee thereunder in accordance with GAAP.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Capitalized
      Lease Obligation”
shall
      mean with respect to any Person, the amount of the liability which reflects
      the
      amount of future payments under all Capitalized Leases of such Person as at
      any
      date, determined in accordance with GAAP.

     

    “Cash
      Equivalents”
shall
      mean (a) marketable securities issued, or directly and fully guaranteed or
      insured, by the United States of America or any agency or instrumentality
      thereof (provided that the full faith and credit of the United States of America
      is pledged in support thereof) having maturities of not more than twelve (12)
      months from the date of acquisition; (b) time deposits, demand deposits,
      certificates of deposit, acceptances or prime commercial paper issued by, or
      repurchase obligations for underlying securities of the types described in
      clause (a) entered into with any commercial bank having a short-term deposit
      rating of at least A-2 or the equivalent thereof by Standard & Poor’s
      Corporation or at least P-2 or the equivalent thereof by Moody’s Investors
      Service, Inc.; (c) investment grade commercial paper maturing within twelve
      (12)
      months after the date of acquisition; (d) marketable direct obligations issued
      by any state in the United States or any agency or instrumentality thereof
      maturing within twelve (12) months from the date of acquisition thereof and,
      at
      the time of acquisition, have one of the two highest ratings generally
      obtainable from either Standard & Poor’s Corporation or Moody’s Investors
      Services, Inc.; (e) tax-exempt commercial paper of United States municipal,
      state or local governments rated at least A-2 or the equivalent thereof by
      Standard & Poor’s Corporation or at least P-2 or the equivalent thereof by
      Moody’s Investors Services, Inc. and maturing within twelve (12) months after
      the date of acquisition thereof; (f) any other items selected by the Borrower
      and approved by the Lender (which approval shall not be unreasonably withheld
      or
      delayed); or (g) any mutual fund or other pooled investment vehicle which
      invests principally in the foregoing obligations.

     

    “Closing
      Date”
shall
      mean the date on which the Term Loan is funded. 

     

    “Closing
      Fees”
shall
      mean the sum of $100,000 with respect to the Term Loan and $15,000 in respect
      of
      the Revolving Credit Commitment, which shall be payable in accordance with
      Section 2.04(a) below.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, and the rules and regulations
      promulgated thereunder, as in effect from time to time.

     

    “Collateral”
shall
      mean all collateral pledged by the Borrower and/or any of the Subsidiaries
      as
      security for the payment and performance of the Obligations, whether pursuant
      to
      the Collateral Agreement or any other Security Document.

     

    “Collateral
      Agreement”
shall
      mean the Collateral Agreement, dated as of the Closing Date, by and among the
      Borrower, its Subsidiaries and the Lender, as same may be amended, modified,
      supplemented and/or restated from time to time; provided,
      however,
      that
      the members of the EXP Group shall not be required to execute and deliver or
      become a party to the Collateral Agreement except in accordance with Section
      5.11 below.

     

    “Commitment
      Fees”
shall
      mean the annual fees payable to the Lender pursuant to Section 2.04(b)(ii)
      below. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Common
      Stock”
shall
      mean the authorized common stock of the Company, $.0001 par value per
      share.

     

    “Confidential
      Information”
shall
      mean information that the Borrower furnishes to the Lender which is not
      generally available to the public or available to the Lender from a source
      other
      than the Borrower which is not, to the Lender’s knowledge, bound by any
      confidentiality agreement in respect thereof. 

     

    “Contract”
shall
      mean any indenture, agreement (other than this Agreement), other contractual
      restriction, lease in which the Borrower or any Subsidiary is a lessor or
      lessee, license or instrument.

     

    “Control”
shall
      mean the possession, directly or indirectly, of the power to direct or cause
      the
      direction of the management or policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise, and the terms
“Controlling”
and
      “Controlled”
shall
      have meanings correlative thereto.

     

    “Control
      Agreement”
shall
      mean, with respect to each bank account and/or securities account maintained
      by
      or in the name of the Borrower or any Subsidiary from time to time, an agreement
      executed and delivered by the Borrower (or the subject Subsidiary, as
      applicable) and the account intermediary, whereby the account intermediary
      acknowledges the Lender’s Lien on such account and all funds or property
      therein, and “control” (within the meaning of the UCC) over such account is
      established in favor of the Lender.

     

    “Debt
      Service”
shall
      mean, for the period in question, the sum of all principal payments scheduled
      or
      required to be made during or with respect to such period in respect of
      Indebtedness of the Borrower and its Subsidiaries, and all Interest Expense
      of
      the Borrower and its Subsidiaries for such period.

     

    “Default”
shall
      mean any of the events specified in Article VII hereof, whether or not any
      requirement for the giving of notice, the lapse of time, or both, has been
      satisfied.

     

    “Disclosure
      Schedule”
shall
      mean the disclosure schedule, dated as of the Closing Date, executed and
      delivered by the Borrower to the Lender, the section numbers of which correspond
      to the Section numbers of this Agreement.

     

    “Dollars”
or
      “$”
shall
      mean United States Dollars, lawful currency for the payment of public and
      private debts.

     

    “Domestic
      Subsidiary”
shall
      mean any Subsidiary which is incorporated or formed under the laws of the United
      States, any State or Commonwealth in the United States, or the District of
      Columbia.

     

    “EBIDA”
shall
      mean, for the subject period, for the Borrower and its Subsidiaries on a
      consolidated basis, the sum of (a) Net Income, plus
      (b)
      Interest Expense deducted in the calculation of such Net Income, plus
      (c)
      depreciation and amortization expense deducted in the calculation of such Net
      Income, plus
      (d)
      other non-cash charges and expenses deducted in the calculation of such Net
      Income, excluding accruals for cash expenses made in the ordinary course of
      business. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Eligible
      Account”
shall
      mean the face amount of each trade Account of the Borrower or a Subsidiary
      (if
      same has become a party to the Guaranty Agreement and the Collateral Agreement)
      for services rendered or goods and products sold in the ordinary course of
      the
      Business Operations which the Lender, in its Permitted Discretion, deems to
      be
      an Eligible Account; provided,
      however,
      that an
      Account shall not be deemed an Eligible Account unless it meets all of the
      following conditions:

     

    (a) the
      subject services or products and goods have been rendered, shipped or delivered
      on an absolute sale basis to an Account Debtor which is not an Affiliate, vendor
      or supplier of the Borrower or a Subsidiary, with an invoice date
      contemporaneous with or within thirty (30) calendar days after the date of
      shipment or service, and which does not constitute a consignment sale,
      bill-and-hold sale, sale-and-return or other such arrangement and is not subject
      to any other repurchase, return or offset agreement binding upon the Borrower
      or
      a Subsidiary; the subject services or products and goods have been rendered,
      shipped and delivered (or shipped f.o.b.) to such Account Debtor on an open
      account basis (or with payment guaranteed by a letter of credit, drawn on or
      by
      a domestic financial institution, acceptable to the Lender in all respects),
      and
      no part of the subject services, products or goods has been returned, rejected,
      lost or damaged; the Account is not evidenced by chattel paper or an instrument
      of any kind; and such Account Debtor, unless pre-approved in writing by the
      Lender, is not insolvent or the subject of any bankruptcy or insolvency
      proceeding of any kind in any jurisdiction;

     

    (b) if
      the
      Account Debtor is located outside the continental United States, Canada or
      the
      United Kingdom, either (i) payment for the subject services or goods shall
      be
      secured by an irrevocable letter of credit, which letter of credit shall have
      been confirmed by a financial institutional reasonably acceptable to the Lender
      payable in the full amount of the face value of the Account in Dollars or other
      currency reasonably acceptable to the Lender, (ii) such Account shall be covered
      by credit insurance reasonably acceptable to the Lender, or (iii) such Account
      and Account Debtor are reasonably satisfactory to the Lender in its Permitted
      Discretion;

     

    (c) it
      is a
      valid, legally enforceable obligation of the Account Debtor thereunder payable
      in Dollars or other currency reasonably satisfactory to the Lender, and is
      not
      subject to any recoupment, offset or other defense or any discount or chargeback
      on the part of such Account Debtor (provided that prompt payment discounts
      granted in the ordinary course of business shall not cause an Account to be
      disqualified hereunder, so long as only the discounted amount of such Account,
      if not otherwise disqualified, is included in the calculation of the Borrowing
      Base) or to any claim on the part of such Account Debtor denying liability
      thereunder (provided that the undisputed portion may be considered to be an
      Eligible Account);

     

    (d) it
      is
      subject to no Lien whatsoever, except for the Lien of the Lender;

     

    (e) it
      has
      not remained unpaid in whole or in part for a period exceeding ninety (90)
      days
      after the original invoice date;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (f) it
      does
      not arise out of a transaction (whether direct or indirect) with an employee,
      officer, agent, director or Affiliate of the Borrower or any Subsidiary or
      with
      any entity controlled by any employee, officer, agent or director of the
      Borrower or any Subsidiary;

     

    (g) it
      is not
      subject to any contract retainage or other withholding of any portion of
      payments on amounts invoiced, whether to secure the Borrower’s or any
      Subsidiary’s performance or otherwise; 

     

    (h) it
      does
      not represent the unpaid portion of an Account any portion of which was
      previously paid or agreed to be paid through the issuance or delivery of equity
      securities or other non-cash consideration; 

     

    (i) if
      the
      Account Debtor is the United States, any State or Commonwealth therein, or
      any
      department, agency or instrumentality thereof, or any foreign government
      (federal, national, provincial or local) or agency of a foreign government,
      the
      Borrower or the applicable Domestic Subsidiary has duly assigned its rights
      to
      payment of such Account to the Lender pursuant to the federal Assignment of
      Claims Act, any comparable state statutes or any comparable foreign statutes
      (as
      applicable);

     

    (j) the
      Lender has a perfected first priority Lien in such Account;

     

    (k) such
      Account is not payable by any person other than the Account Debtor (such as
      a
      beneficiary, recipient or subscriber individually), provided that the portion
      thereof which is payable by the Account Debtor may be considered to be an
      Eligible Account;

     

    (l) at
      least
      sixty (60%) percent in dollar amount of the total Accounts owed by such Account
      Debtor and/or its Affiliates constitute Eligible Accounts;

     

    (m) the
      total
      Accounts owed by the subject Account Debtor and/or its Affiliates constitute
      less than ten (10%) percent of the net collectible dollar value of all Eligible
      Accounts (provided that only the excess over ten (10%) percent shall be
      disqualified under this clause (m), unless the Lender has otherwise consented
      in
      writing to the inclusion of all or any portion of such excess);

     

    (n) such
      Account is payable solely to the Borrower or a Subsidiary, and the Borrower
      or
      such Subsidiary is not aware of any dispute by the Account Debtor with respect
      to such Account; and

     

    (o) it
      is not
      otherwise determined by the Lender, in the Lender’s Permitted Discretion, to be
      difficult to collect, uncollectible or otherwise unacceptable for any
      reason.

     

    “Eligible
      Inventory”
shall
      mean the lower of the cost (on a [first in-first out] basis) or fair market
      value of that inventory consisting of raw materials or finished goods (but
      excluding work in process and product models or samples) of Borrower or any
      Subsidiary which is party to the Guaranty Agreement and the Collateral
      Agreement, which (a) is in good and merchantable condition, (b) was manufactured
      in accordance with and meets all standards imposed by any governmental agency
      having regulatory authority over such goods and/or their use, manufacture and/or
      sale, (c) is in the physical possession of the Borrower or the subject
      Subsidiary, or has been shipped to the Borrower or the subject Subsidiary with
      title thereto having passed to the Borrower or such Subsidiary, (d) is currently
      usable or currently saleable in the normal course of the Business Operations,
      (e) is not on consignment to or from any Person, (f) is not subject to any
      Lien
      whatsoever, except for the Lien of the Lender, which shall be perfected with
      respect to such inventory, (g) has not been sold to any Person, and (h) is
      otherwise satisfactory to the Lender in its Permitted Discretion; provided,
      however,
      that
      any inventory which is held or stored at any location which is not subject
      to an
      effective Landlord Waiver shall not constitute Eligible Inventory unless
      expressly agreed to in writing by the Lender.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as in effect from
      time
      to time.

     

    “ERISA
      Affiliate”
shall
      mean, with respect to any Person, any other Person which is under common control
      with the first Person within the meaning of Section 414(b) or 414(c) of the
      Code; provided,
      however,
      that
      with respect to the Borrower, no Person which is an Affiliate of the Lender
      (other than the Borrower and its Subsidiaries) shall be deemed an ERISA
      Affiliate for purposes of this Agreement

     

    “Event
      of Default”
has
      the
      meaning set forth in Article VII below.

     

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

     

    “Factor”
shall
      mean Eurofactor UK Limited.

     

    “Factoring
      Facility”
shall
      mean the invoice discounting and factoring credit facility heretofore provided
      to MMI Automotive Ltd. by the Factor.

     

    “Financial
      Statements”
has
      the
      meaning set forth in Section 3.01(a) below.

     

    “Fiscal
      Year”
shall
      mean the fiscal year of the Borrower which ends on June 30 of each
      year.

     

    “Foreign
      Investment Limitation”
has
      the
      meaning set forth in Section 6.01(g) below.

     

    “Foreign
      Subsidiary”
shall
      mean any Subsidiary which is not a Domestic Subsidiary.

     

    “GAAP”
shall
      mean generally accepted accounting principles in the United States of America,
      consistently applied, unless the context otherwise requires, with respect to
      any
      financial terms contained herein, as then in effect with respect to the
      preparation of financial statements.

     

    “Government
      Approval”
shall
      mean an authorization, consent, non-action, approval, license or exemption
      of,
      registration or filing with, or report to, any governmental or
      quasi-governmental department, agency, body or other unit.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Guaranty”,
      “Guaranteed”
or
      to
“Guarantee”,
      as
      applied to any Indebtedness, liability or other obligation, shall mean (a)
      a
      guaranty, directly or indirectly, in any manner, including by way of endorsement
      (other than endorsements of negotiable instruments for collection in the
      ordinary course of business), of any part or all of such obligation, and (b)
      an
      agreement, contingent or otherwise, and whether or not constituting a guaranty,
      assuring, or intended to assure, the payment or performance (or payment of
      damages in the event of non-performance) of any part or all of such obligation
      by any means (including, without limitation, the purchase of securities or
      obligations, the purchase or sale of property or services, or the supplying
      of
      funds). 

     

    “Guaranty
      Agreement”
shall
      mean a guaranty agreement, in form and substance satisfactory to the Lender,
      to
      be executed by each Subsidiary in favor of the Lender, pursuant to which such
      Subsidiary will guaranty the full and timely payment and performance of all
      of
      the Obligations; provided,
      however,
      that
      the members of the EXP Group shall not be required to execute and deliver or
      become a party to the Guaranty Agreement except in accordance with Section
      5.11
      below.

     

    “Indebtedness”
shall
      mean (without
      duplication), with respect to any Person, (a) all obligations or liabilities,
      contingent or otherwise, for borrowed money, (b) any and all obligations
      represented by promissory notes, bonds, debentures or the like, or on which
      interest charges are customarily paid, (c) any liability secured by any
      mortgage, pledge, lien or security interest on property owned or acquired,
      whether or not such liability shall have been assumed, (d) obligations of such
      Person under conditional sale or other title retention agreements relating
      to
      property or assets purchased by such Person, (e) all obligations of such Person
      issued or assumed as the deferred purchase price of property or services
      (excluding trade payables and accrued obligations incurred in the ordinary
      course of business), (f) any obligations (contingent or otherwise) of such
      Person as an account party or applicant in respect of letters of credit and/or
      bankers’ acceptances, or in respect of interest rate swaps, interest rate caps,
      hedging agreements or other financial or hedging obligations, and (g)
      Guarantees, endorsements (other than for collection in the ordinary course
      of
      business) and other contingent obligations in respect of the obligations of
      others.

     

    “Intellectual
      Property”
shall
      have the meaning ascribed thereto in the Collateral Agreement.

     

    “Interest
      Expense”
shall
      mean, for the relevant period, total interest expense (including interest
      attributable to Capitalized Leases in accordance with GAAP) and fees with
      respect to outstanding Indebtedness.

     

    “Investment”,
      as
      applied to the Borrower or any Subsidiary, shall mean: (a) any shares of capital
      stock, evidence of Indebtedness or other security issued by any other Person
      to
      the Borrower or any Subsidiary, (b) any loan, advance or extension of credit
      to,
      or contribution to the capital of, any other Person, other than credit terms
      extended to customers in the ordinary course of business, (c) any other
      investment by the Borrower or any Subsidiary in any assets or securities of
      any
      other Person, and (d) any commitment to make any Investment.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    “Knowledge”
      or “Known”
or
      words of similar import shall mean, with respect to the Borrower and/or any
      Subsidiary, the actual knowledge of Ian Warwick, Simon Chadwick and/or Charles
      Trapp (and/or their respective successors as officers of the Borrower) after
      reasonable inquiry of the appropriate employees of the Borrower and the
      Subsidiaries.

     

    “Landlord
      Waiver”
shall
      mean a landlord waiver, subordination and/or access agreement, in form and
      substance reasonably satisfactory to the Lender, executed in favor of the Lender
      by the landlord of a Leased Real Property. 

     

    “Leased
      Real Property”
shall
      mean any and all Real Properties (other than Owned Real Properties) leased
      or
      occupied by the Borrower or any Subsidiary from time to time.

     

    “Liabilities
      and Contingencies”
has
      the
      meaning set forth in Section 3.01(c) below.

     

    “Lien”,
      as
      applied to the property or assets (or the income or profits therefrom) of the
      Borrower or any Subsidiary, shall mean (in each case, whether the same is
      consensual or non-consensual or arises by contract, operation of law, legal
      process or otherwise): (a) any mortgage, lien, pledge, hypothecation,
      attachment, assignment, deposit arrangement, encumbrance, charge, lease
      constituting a Capitalized Lease Obligation, conditional sale or other title
      retention agreement, or other security interest or encumbrance of any kind
      in
      respect of any property (including, without limitation, stock of any Subsidiary)
      of the Borrower or any Subsidiary, or upon the income or profits therefrom;
      (b)
      any arrangement under which any property of the Borrower or any Subsidiary
      is
      transferred, sequestered or otherwise identified for the purpose of subjecting
      or making available the same for the payment of Indebtedness or the performance
      of any other liability in priority to the payment of the general, unsecured
      creditors of the Borrower or any Subsidiary; (c) any Indebtedness or liability
      which remains unpaid after the same shall become due and payable and which,
      if
      unpaid, by law or otherwise is given any priority whatsoever over the general
      unsecured creditors of the Borrower or any Subsidiary; and (d) any agreement
      (other than this Agreement) or other arrangement which, directly or indirectly,
      prohibits the Borrower or any Subsidiary from creating or incurring any lien
      on
      any of its properties or assets or which conditions the ability to do so on
      the
      security, on a pro rata
      or other
      basis, of Indebtedness other than Indebtedness outstanding under this
      Agreement.

     

    “Loan
      Documents”
shall
      mean the collective reference to this Agreement, the Notes, the Security
      Documents, the Warrants, the Registration Rights Agreement, and any and all
      other agreements, instruments, certificates and other documents as may be
      executed and delivered by the Borrower and/or any of the Subsidiaries pursuant
      hereto or thereto.

     

    “Loans”
shall
      mean, collectively, the Advances and the Term Loan.

     

    “Material
      Adverse Effect”
shall
      mean any event, act, omission, condition or circumstance which has or would
      reasonably be expected to have a material adverse effect on (a) the business,
      operations, properties, assets or condition, financial or otherwise, of the
      Borrower and the Subsidiaries, taken as a whole, (b) the ability of the Borrower
      or any Subsidiary to perform any of its obligations under any of the Loan
      Documents, or (c) the validity or enforceability of, or the Lender’s rights and
      remedies under, any of the Loan Documents, other than due to the acts or
      omissions of the Lender or any of its Affiliates.

     

    
      
        
        

      

      
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    “Maturity
      Date”
shall
      mean Revolving Credit Maturity Date and/or the Term Loan Maturity Date, as
      the
      case may be. 

     

    “Maximum
      Revolver Amount”
shall
      mean $1,000,000.

     

    “Monitoring
      Fee”
shall
      mean the fees payable to the Lender pursuant to Section 2.04(b)(i)
      below.

     

    “Net
      Income”
shall
      mean the consolidated net income (or loss) of the Borrower and its Subsidiaries
      for the period in question, after giving effect to deduction of or provision
      for
      all operating expenses, all taxes and reserves (including reserves for deferred
      taxes) and all other proper deductions, all determined in accordance with GAAP
      and (for so long as the Borrower is subject thereto) Regulation S-X promulgated
      under the Act; provided,
      however,
      that
      for purposes of calculating Net Income, there shall be excluded and no effect
      shall be given to (a) any restoration of any contingency reserve, except to
      the
      extent that provision for such reserve was made out of income for the subject
      period, and (b) any Net Income attributable to any Subsidiary to the extent
      that
      the Borrower is prohibited (by law, by Contract or otherwise) from receiving
      a
      distribution of such Net Income from such Subsidiary.

     

    “Non-UK
      Subsidiary”
shall
      mean any Foreign Subsidiary which is not incorporated under the laws of England
      and Wales. 

     

    “Notes”
shall
      mean, collectively, the Revolving Credit Note and the Term Note.

     

    “Obligations”
shall
      mean the collective reference to all Indebtedness and other liabilities and
      obligations of every kind and description owed by the Borrower to the Lender
      from time to time under or pursuant to this Agreement, the Notes, the Security
      Documents and the other Loan Documents (excluding the Warrant and Registration
      Rights Agreement, other than amounts payable from time to time pursuant to
      Section 2(c) of the Registration Rights Agreement), and/or otherwise in respect
      of the Loans, however evidenced, created or incurred, fixed or contingent,
      now
      or hereafter existing, due or to become due.

     

    “Organic
      Documents”
shall
      mean, with respect to any Person, the certificate of incorporation, articles
      of
      incorporation, certificate of formation, certificate of limited partnership,
      by-laws, operating agreement, limited partnership agreement or other such
      document of such Person.

     

    “Owned
      Real Property”
shall
      mean each Real Property in which the Borrower or any Subsidiary holds an
      ownership or fee interest from time to time.

     

    “Permitted
      Discretion”
shall
      mean a determination or judgment made by the Lender in good faith in the
      exercise of reasonable business judgment from the perspective of a secured
      lender.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Indebtedness”
shall
      mean any and all Indebtedness expressly permitted pursuant to Section 6.01
      below.

     

    “Permitted
      Liens”
shall
      mean those Liens expressly permitted pursuant to Section 6.02
      below.

     

    “Person”
shall
      mean any individual, partnership, corporation, limited liability company,
      banking association, business trust, joint stock company, trust, unincorporated
      association, joint venture, governmental authority or other entity of whatever
      nature.

     

    “Qualified
      Proceeds”
shall
      mean any and all net proceeds received by the Borrower from time to time after
      the date of this Agreement from the issuance and/or sale of any capital stock
      of
      the Borrower or any security (including any Indebtedness incurred subsequent
      to
      the Closing Date) convertible into or exchangeable for capital stock of the
      Borrower, except to the extent that such proceeds are, within sixty (60) days
      after the receipt thereof, applied to pay the purchase price and/or directly
      associated expenses of the Borrower’s acquisition (directly or through a
      Wholly-Owned Subsidiary) of another business (whether through merger,
      consolidation, share exchange, stock purchase, or purchase of all or
      substantially all of the assets of the target company or an operating division
      or unit thereof), in each case effected subject to and in accordance with the
      requirements of this Agreement and the Collateral Agreement (including, without
      limitation the pledge to the Lender of the capital stock and/or assets (as
      applicable) of the acquired business). In determining the amount of net proceeds
      for purposes of this definition, there shall be deducted from gross proceeds
      only those reasonable expenses incurred by the Borrower directly related to
      the
      subject issuance or sale, exclusive of any fees or commissions paid to any
      officer, director or other Affiliate of the Borrower or any Affiliate of any
      of
      the foregoing.

     

    “Real
      Properties”
shall
      mean, collectively, any real properties (land, buildings and/or improvements)
      now owned or leased or occupied by the Borrower or any of the Subsidiaries,
      and,
      during the period of the Borrower’s and/or Subsidiary’s occupancy thereof, any
      other real properties heretofore owned or leased by the Borrower or any
      Subsidiary (provided that, with respect to leased properties, the “Real
      Property” shall refer only to the portion of the subject property (excluding
      common areas) leased by the Borrower or a Subsidiary). 

     

    “Registration
      Rights Agreement”
shall
      mean the Registration Rights Agreement, to be dated as of the Closing Date,
      made
      by the Borrower for the benefit of the Lender and any subsequent Holders (as
      such term is defined in the Registration Rights Agreement), as same may be
      amended, modified, supplemented and/or restated from time to time.

     

    “Revolving
      Credit Commitment”
shall
      mean the Lender’s agreement to make Advances to the Borrower within the
      limitations set forth in Section 2.01 below.

     

    “Revolving
      Credit Maturity Date”
shall
      mean the earlier of (a) November 30, 2009, subject to extension accordance
      with
      Section 2.01(h) below, or (b) the date of prepayment in full of the Term Loan
      (or the date on which such prepayment is required to be made).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “Revolving
      Credit Note”
shall
      mean the promissory note of the Borrower issued to the Lender to represent
      the
      Advances and interest thereon, as described in Section 2.01(f)
      below.

     

    “Sale”
shall
      mean any transaction or series of related transactions (a) whereby Control
      of
      the Borrower is held by a Person (or group of Persons acting in concert),
      provided that a “Sale” shall not be deemed to have occurred solely by reason of
      normal market trading in the Common Stock which does not result in the
      acquisition by a single Person or “group” (within the meaning of Section
      13(d)(3) of the Exchange Act) of a majority of the outstanding voting stock
      of
      the Borrower, (b) in which the Borrower is a constituent party to any merger,
      consolidation or share exchange and as a result thereof (i) the holders of
      the
      outstanding capital stock of the Borrower which ordinarily has voting power
      for
      the election of directors (including preferred stock counted on an “as
      converted” basis into common stock) immediately prior to such merger or
      consolidation cease to own a majority of the outstanding capital stock of the
      Borrower which ordinarily has voting power for the election of directors
      (including preferred stock counted on an “as converted” basis into common
      stock), or (ii) the Borrower is not the surviving corporation, or (c) whereby
      all or any material portion of the assets of the Borrower or any Subsidiary
      are
      sold, assigned or transferred; provided,
      however,
      that
      the term “Sale” shall not include (i) the distribution by Data Network, Inc. of
      the Common Stock currently held by such entity.

     

    “SEC”
shall
      mean the United States Securities and Exchange Commission, and any successor
      agency performing the functions thereof.

     

    “SEC
      Reports”
shall
      mean the periodic and current reports, registration statements, proxy statements
      and other reports filed or required to be filed by the Borrower with the SEC
      from and after December 2005 pursuant to the Act and/or the Exchange Act, and
      any amendments or supplements thereto filed with the SEC.

     

    “Security
      Documents”
shall
      mean the Guaranty Agreement, the Collateral Agreement, the U.K. Security
      Agreement, the Validity Guaranties, any collateral assignments, Landlord
      Waivers, Control Agreements, financing statements, Lien recordings or other
      such
      agreements or documents pursuant thereto, and any other agreements or
      instruments securing or creating or evidencing Liens securing the
      Obligations.

     

    “Subordinated
      Debt”
shall
      mean all Indebtedness for money borrowed and other liabilities of the Borrower
      or any Subsidiary, whether or not evidenced by promissory notes, which is
      contractually subordinated in right of payment, in a manner satisfactory to
      the
      Lender (as evidenced by the Lender’s prior written approval thereof), to all
      Obligations of the Borrower and/or the subject Subsidiary to the
      Lender.

     

    “Subsidiary”
or
      “Subsidiaries”
shall
      mean the individual or collective reference to any corporation, limited
      liability company or other entity of which 50% or more of the outstanding shares
      of stock or other equity interests of each class having ordinary voting power
      and/or rights to profits (other than stock having such power only by reason
      of
      the happening of a contingency) is at the time owned by the Borrower, directly
      or indirectly through one or more Subsidiaries of the Borrower.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “Term
      Loan”
shall
      mean the term loan in the principal amount of $5,000,000 to be made pursuant
      to
      Section 2.02(a) below.

     

    “Term
      Loan Maturity Date”
shall
      mean November 30, 2010.

     

    “Term
      Note”
shall
      mean the convertible promissory note of the Borrower issued to the Lender as
      described in Section 2.02(d) below.

     

    “UCC”
means
      the Uniform Commercial Code as in effect in the State of New York on the date
      hereof and hereafter from time to time.

     

    “U.K.
      Security Agreement”
shall
      mean the collective reference to (a) a Guarantee and Debenture, to be dated
      the
      Closing Date, by and among the Foreign Subsidiaries and the Lender, and (b)
      a
      Charge Over Shares, to be dated the Closing Date, by and between the Borrower
      and the Lender, each as may be amended, modified, supplemented and/or restated
      from time to time.

     

    “Validity
      Guaranties”
shall
      mean the Validity Guaranties to be executed and delivered to the Lender by
      the
      Company and Ian Warwick, by the Company and Simon Chadwick, and by the Company
      and Charles Trapp, each as of the Closing Date.

     

    “Warrants”
shall
      mean the warrants to purchase shares of Common Stock (such warrants covering
      an
      aggregate of 5,083,333 shares of Common Stock, subject to adjustment) to be
      issued by the Borrower to the Lender on the Closing Date.

     

    “Wholly-Owned
      Subsidiary”
shall
      mean each Subsidiary of which all of the outstanding equity securities (other
      than directors’ qualifying shares) are owned by the Borrower or another such
      Wholly-Owned Subsidiary.

     

    “Wholly-Owned
      Domestic Subsidiary”
shall
      mean each Wholly-Owned Subsidiary which is a Domestic Subsidiary. 

     

    Section
      1.02. Use of Defined Terms.
      All
      terms defined in this Agreement shall have their defined meanings when used
      in
      the Notes, the Security Documents, the other Loan Documents, and all
      certificates, reports or other documents made or delivered pursuant to this
      Agreement, unless otherwise defined therein or unless the specific context
      shall
      otherwise require.

     

    Section
      1.03. Accounting Terms.
      All
      accounting terms not specifically defined herein shall be construed in
      accordance with GAAP.

     

    Section
      1.04. Other Definitional Provisions.
      The
      words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import
      when used in this Agreement shall refer to this Agreement as a whole and not
      to
      any particular provision of this Agreement, and Section references are to this
      Agreement unless otherwise specified. The meanings given to terms defined herein
      shall be equally applicable to both the singular and plural forms of such terms.
      The word “including” and words of similar import when used in this Agreement
      shall mean “including, without limitation,” unless otherwise
      specified.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    II. GENERAL
      TERMS

     

    Section
      2.01. Revolving
      Credit Loans.

     

    (a) Subject
      at all times to all of the terms and conditions of this Agreement, the Lender
      hereby agrees to extend to the Borrower a secured revolving credit facility,
      from the Closing Date to the Revolving Credit Maturity Date, in an aggregate
      principal amount not to exceed, at any time outstanding, the lesser of (i)
      the
      Borrowing Base at the subject time, or (ii) the Maximum Revolver Amount (the
      “Revolving
      Credit Commitment”).

     

    (b) Such
      revolving credit loans are herein sometimes referred to individually as an
      “Advance”
and
      collectively as the “Advances.”
      Subject at all times to all of the terms and conditions of this Agreement,
      from
      the Closing Date to the Revolving Credit Maturity Date and within the limits
      of
      the Revolving Credit Commitment, the Lender shall lend, and the Borrower may
      borrow, prepay (without premium or penalty) and reborrow under this Section
      2.01. Each request for an Advance (i) shall be irrevocable, (ii) shall be deemed
      to constitute an express affirmation that all conditions precedent set forth
      in
      part B of Article IV hereof are satisfied on the date of such request and will
      be satisfied on the requested Borrowing Date, and (iii) shall be made to the
      Lender in writing, not later than three (3) Business Days prior to the requested
      Borrowing Date, by an authorized officer of the Borrower or by telephonic
      communication by such authorized officer to the Lender, which shall be confirmed
      by written notice to the Lender to be delivered to the Lender by the Business
      Day next following the subject request. In no event shall the Borrower request,
      or shall the Lender be required to honor, (A) any request for an Advance in
      an
      amount greater than the Availability at such time, (B) any request for an
      Advance in an amount less than $100,000, or (C) more than one request for the
      borrowing of an Advance in any seven (7) calendar day period.

     

    (c) The
      Borrower shall pay the Lender interest on all Advances at the rate(s) per annum
      as in effect from time to time in accordance with the Revolving Credit Note.
      Such interest shall be payable monthly in arrears on the first day of each
      calendar month commencing January 1, 2008 and on the Revolving Credit Maturity
      Date, and shall be computed on the daily unpaid balance of all Advances made
      under the Borrower’s revolving credit loan accounts with the Lender, based on a
      three hundred sixty (360) day year, counting the actual number of days elapsed.
      The Borrower hereby authorizes the Lender to charge the Borrower’s revolving
      credit loan accounts for all such interest; provided,
      however,
      that
      the Lender shall be under no obligation to make any such charge to the
      Borrower’s revolving credit loan accounts (including, without limitation, if
      there is insufficient Availability at the time such interest is due and
      payable).

     

    (d) In
      the
      event and to the extent that, at any time, the outstanding principal amount
      of
      Advances exceeds the Revolving Credit Commitment then in effect, then the
      Borrower shall immediately, without notice or demand, make a payment to the
      Lender in respect of the Advances in an amount sufficient to cause the
      outstanding principal amount of Advances to be equal to or less than the
      Revolving Credit Commitment then in effect.

     

    
      
        
        

      

      
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    (e) Unless
      sooner due and payable by reason of an Event of Default or Sale having occurred,
      the Borrower shall pay in full all of the Obligations to the Lender in respect
      of all Advances on the Revolving Credit Maturity Date.

     

    (f) All
      Advances shall be evidenced by a secured Revolving Credit Note of the Borrower
      payable to the Lender or registered assigns.

     

    (g) The
      Borrower may, at its option, terminate the Revolving Credit Commitment at any
      time upon five (5) Business Days’ prior written notice, and paying to the
      Lender, on the date fixed for termination, an amount equal to the sum of (i)
      all
      outstanding principal and accrued interest of the Advances, and (ii) prorated
      accrued Commitment Fees. 

     

    (h) Provided
      that the Revolving Credit Maturity Date has not theretofore occurred by reason
      of clause (b) of the definition thereof, the Borrower may, at its option, by
      written notice to the Lender given not earlier than September 1, 2009 and not
      later than November 1, 2009, elect to extend the Revolving Credit Maturity
      Date
      to November 30, 2010, provided that, at the time of such notice and on the
      scheduled Revolving Credit Maturity Date, no Default or Event of Default shall
      have occurred and be continuing. The Borrower’s extension notice shall expressly
      certify to the satisfaction of such conditions, and once given, any such notice
      shall be irrevocable.

     

    Section
      2.02. Term Loan.

     

    (a) Subject
      at all times to all of the terms and conditions of this Agreement, the Lender
      hereby agrees to extend to the Borrower a Term Loan in the principal amount
      of
      $5,000,000. The Term Loan shall be borrowed in a single borrowing on the Closing
      Date, and any principal amounts repaid in respect of the Term Loan may not
      be
      reborrowed.

     

    (b) The
      Term
      Loan shall be repayable in installments, in accordance with the schedule of
      payments set forth in the Term Note. The Borrower shall be required to prepay
      the Term Loan (i) in full simultaneously with the consummation of any Sale,
      and
      (ii) in whole or in part from time to time in the event and to the extent of
      50%
      of any Qualified Proceeds received by the Borrower from time to time. Any
      prepayment required under the foregoing clause (ii) shall be due and payable
      as
      and when the amount of Qualified Proceeds is determined (i.e., upon receipt
      of
      such Qualified Proceeds in the event that no acquisition transaction is then
      pending, or sixty (60) days after receipt of such Qualified Proceeds to the
      extent that such Qualified Proceeds have not been applied to the purchase price
      and/or related expenses of a consummated business acquisition). 

     

    (c) The
      Borrower shall pay the Lender interest on the principal balance of the Term
      Loan
      at the rate(s) per annum as in effect from time to time in accordance with
      the
      Term Note. Such interest shall be payable monthly in arrears commencing January
      1, 2008, on the first day of each calendar month thereafter, and on the Term
      Loan Maturity Date, and shall be computed on the daily unpaid balance of the
      Term Loan, based on a three hundred sixty (360) day year, counting the actual
      number of days elapsed. The Borrower hereby authorizes the Lender to charge
      the
      Borrower’s revolving credit loan accounts for all such interest and/or for any
      or all principal amounts due and payable in respect of the Term Loan;
provided,
      however,
      that
      the Lender shall be under no obligation to make any such charge to the
      Borrower’s revolving credit loan accounts (including, without limitation, if
      there is insufficient Availability at the time such interest and/or principal
      is
      due and payable). 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (d) The
      Term
      Loan shall be evidenced by a secured Convertible Term Note of the Borrower
      payable to the Lender or registered assigns.

     

    Section
      2.03. [Reserved].

     

    Section
      2.04. Fees and Premiums.

     

    (a) The
      Borrower shall pay the Closing Fees to the Lender on the Closing Date. The
      Closing Fees shall be deemed fully earned on the Closing Date and shall not
      be
      refundable in whole or in part and shall not be subject to reduction or set-off
      under any circumstances.

     

    (b) The
      Borrower shall further pay to the Lender, in respect of the Revolving Credit
      Commitment:

     

    (i) in
      advance on the Closing Date and on the first (1st)
      Business Day of each calendar month prior to (A) the Revolving Credit Maturity
      Date, or (B) the earlier termination of the Revolving Credit Commitment and
      payment of the Obligations thereon in accordance with this Agreement, a
      collateral monitoring and administrative fee in the amount of $1,500 per month
      or portion thereof; and

     

    (ii) on
      December 1 of each year commencing December 1, 2008, and upon any termination
      of
      the Revolving Credit Commitment (appropriately prorated in such latter case),
      an
      annual Commitment Fee in the amount of $15,000.

     

    (c) In
      the
      event of any prepayment of all or any portion of the Term Loan other than
      pursuant to Section 2.02(b)(ii) above, in addition to the payment of the subject
      principal amount and all unpaid accrued interest thereon, the Borrower shall
      be
      required to pay to the Lender a prepayment premium in an amount equal to (i)
      three (3%) percent of the principal amount being prepaid if such prepayment
      is
      made or is required to be made on or prior to the second (2nd)
      anniversary of the Closing Date, and (ii) one (1%) percent of the principal
      amount being prepaid if such prepayment is made or is required to be made
      subsequent to the second (2nd)
      anniversary of the Closing Date.

     

    (d) Payments
      received in respect of the Obligations after 12:00 Noon (Eastern Time) on any
      day shall be deemed to be received on the next succeeding Business Day, and
      if
      any payment is received other than by wire transfer of immediately available
      funds, such payment shall be subject to three (3) Business Days’ clearance prior
      to being credited to the Obligations for interest calculation
      purposes.

     

    (e) In
      the
      event that the Lender notifies the Borrower that the Lender is ready, willing
      and able to fund the Loans on substantially the terms of this Agreement and
      the
      other Loan Documents presented to the Borrower and its Subsidiaries, and the
      Closing Date has not occurred within ten (10) days thereafter other than due
      to
      the fault of the Lender, then the Lender may, at any time thereafter until
      the
      Closing Date, terminate this Agreement by written notice to the Borrower, in
      which event the Borrower shall immediately pay to the Lender (i) an amount
      equal
      to all out-of-pocket costs, charges and expenses incurred by the Lender in
      respect of the transactions contemplated by this Agreement, and (ii) an
      additional fee in the amount of $150,000. This Section 2.04(e) shall survive
      any
      termination of this Agreement. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Section
      2.05. Use of Proceeds.
      The
      Borrower shall utilize the proceeds of the Loans solely for working capital
      and
      other general corporate purposes of the Borrower.

     

    Section
      2.06. Further Obligations.
      With
      respect to all Obligations for which the interest rate is not otherwise
      specified herein (whether such Obligations arise hereunder, pursuant to the
      Notes or Security Documents, or otherwise), such Obligations shall bear interest
      at the rate(s) in effect from time to time pursuant to the Revolving Credit
      Note.

     

    Section
      2.07. Application of Payments.
      Except
      as otherwise provided in Section 2.02(b), all amounts paid to or received by
      the
      Lender in respect of the Loans from whatever source (whether from the Borrower,
      any Subsidiary pursuant to the Guaranty Agreement, any realization upon any
      Collateral, or otherwise) shall, unless otherwise directed by the Borrower
      with
      respect to any particular payment (unless an Event of Default shall then be
      continuing, in which event the Lender may disregard the Borrower’s direction),
      be applied (a) first, to reimburse the Lender for all out-of-pocket costs and
      expenses incurred by the Lender which are reimbursable to the Lender in
      accordance with this Agreement, the Notes and/or any of the other Loan
      Documents, (b) next, to any accrued but unpaid fees or prepayment premiums,
      and
      amounts payable under Section 2.2(c) of the Registration Rights Agreement,
      (c)
      next, to unpaid accrued interest on the Term Loan, (d) next, to unpaid accrued
      interest on the Advances, (e) next, to the outstanding principal of the Term
      Loan, to the extent then due and payable, (f) next, to the outstanding principal
      of the Advances, and (g) finally, to the payment of any other outstanding
      Obligations; and after payment in full of the Obligations, any further amounts
      paid to or received by the Lender in respect of the Loans shall be paid over
      to
      the Borrower or such other Person(s) as may be legally entitled
      thereto.

     

    Section
      2.08. Sale.
      Anything elsewhere contained in this Agreement and/or the Notes to the contrary
      notwithstanding, the Revolving Credit Commitment shall terminate and all
      Obligations shall become immediately due and payable, without requirement of
      any
      notice or demand, upon the consummation of any Sale.

     

    Section
      2.09. Obligations Unconditional.
      

     

    (a) The
      payment and performance of all Obligations shall constitute the absolute and
      unconditional obligations of the Borrower, and shall be independent of any
      defense or rights of set-off, recoupment or counterclaim which the Borrower
      might otherwise have against the Lender. All payments required by this Agreement
      and/or the Notes shall be paid free of any deductions or withholdings for any
      taxes (but only for the original Lender and any investment funds under common
      management with such Lender) or other amounts and without abatement, diminution
      or set-off. If the Borrower is required by law to make such a deduction or
      withholding from a payment hereunder, the Borrower shall pay to the Lender
      such
      additional amount as is necessary to ensure that, after the making of such
      deduction or withholding, the Lender receives (free from any liability in
      respect of any such deduction or withholding) a net sum equal to the sum which
      it would have received and so retained had no such deduction or withholding
      been
      made or required to be made. The Borrower shall (i) pay the full amount of
      any
      deduction or withholding, which it is required to make by-law, to the relevant
      authority within the payment period set by the relevant law, and (ii) promptly
      after any such payment, deliver to the Lender an original (or certified copy)
      official receipt issued by the relevant authority in respect of the amount
      withheld or deducted or, if the relevant authority does not issue such official
      receipts, such other evidence of payment of the amount withheld or deducted
      as
      is reasonably acceptable to the Lender.

     

    
      
        
        

      

      
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    (b) If,
      at
      any time and from time to time after the Closing Date, (i) any change in any
      existing law, regulation, treaty or directive or in the interpretation or
      application thereof, (ii) any new law, regulation, treaty or directive enacted
      or application thereof, or (iii) compliance by the Lender with any request
      or
      directive (whether or not having the force of law) from any governmental
      authority (A) subjects the Lender to any tax, levy, impost, deduction,
      assessment, charge or withholding of any kind whatsoever with respect to any
      Loan Document, or changes the basis of taxation of payments to the Lender of
      any
      amount payable thereunder (except for net income taxes, or franchise taxes
      imposed in lieu of net income taxes, imposed generally by federal, state, local
      or foreign taxing authorities with respect to interest or commitment fees or
      other fees payable hereunder or changes in the rate of tax on the overall net
      income of the Lender or its members), or (B) imposes on the Lender any other
      condition or increased cost in connection with the transactions contemplated
      thereby or participations therein, and the result of any of the foregoing is
      to
      increase the cost to the Lender of making or continuing any Loan or to reduce
      any amount receivable hereunder, then, in any such case, the Borrower shall
      promptly pay to the Lender any additional amounts necessary to compensate the
      Lender, on an after-tax basis, for such additional cost or reduced amount as
      determined by the Lender. If the Lender becomes entitled to claim any additional
      amounts pursuant to this Section 2.09(b), the Lender shall promptly notify
      the
      Borrower of the event by reason of which the Lender has become so entitled
      and
      the basis therefor (to the extent known to the Lender) in reasonable detail,
      and
      each such notice of additional amounts payable pursuant to this Section 2.09(b)
      submitted by the Lender to the Borrower shall, absent manifest error, be final,
      conclusive and binding for all purposes.

     

    Section
      2.10. Reversal of Payments.
      To the
      extent that any payment or payments made to or received by the Lender pursuant
      to this Agreement or any other Loan Document are subsequently invalidated,
      declared to be fraudulent or preferential, set aside, or required to be repaid
      to any trustee, receiver or other person under any state or federal bankruptcy
      or other such law, then, to the extent thereof, such amounts shall be revived
      as
      Obligations and continue in full force and effect hereunder as if such payment
      or payments had not been received by the Lender.

     

    III. REPRESENTATIONS
      AND WARRANTIES

     

    As
      of the
      Closing Date and on each Borrowing Date (unless the representation and warranty
      refers to a specific date), the Borrower hereby makes the following
      representations and warranties to the Lender, all of which representations
      and
      warranties shall survive the Closing Date, the delivery of the Notes and the
      making of the Loans, shall be continuing in nature so long as any Obligations
      are outstanding or the Revolving Credit Commitment remains in effect, and are
      as
      follows:

     

    
      
        
        

      

      
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    Section
      3.01. Financial Matters.

     

    (a) The
      Borrower has heretofore furnished to the Lender the audited consolidated
      financial statements (including balance sheets, statements of income and
      statements of cash flows) of the Borrower and its Subsidiaries as at June 30,
      2005, 2006 and 2007, and for the Fiscal Years then ended (collectively, the
      “Financial
      Statements”).

     

    (b) The
      Financial Statements (i) have been prepared in accordance with GAAP and
      Regulation S-X promulgated under the Act on a consistent basis for all periods
      (subject, in the case of unaudited statements, to the absence of full footnote
      disclosures, and to normal non-material audit adjustments), (ii) are complete
      and correct in all material respects, (iii) fairly present the consolidated
      financial condition of the Borrower and its Subsidiaries as of said dates,
      and
      the results of their operations for the periods stated, (iv) contain and reflect
      all necessary adjustments and accruals, as applicable, for a fair presentation
      of the Borrower’s and its Subsidiaries’ consolidated financial condition and
      results of operations as of the dates of and for the periods covered by such
      Financial Statements, and (v) make full and adequate provision, subject to
      and
      in accordance with GAAP, for the various assets and liabilities (including,
      without limitation, deferred revenues) of the Borrower, fixed or contingent,
      and
      the results of their operations and transactions in their accounts, as of the
      dates and for the periods referred to therein.

     

    (c) Except
      as
      set forth in Schedule
      3.01
      of the
      Disclosure Schedule, neither the Borrower nor any of its Subsidiaries have
      any
      liabilities, obligations or commitments of any kind or nature whatsoever,
      whether absolute, accrued, contingent or otherwise (collectively “Liabilities
      and Contingencies”),
      including, without limitation, Liabilities and Contingencies under employment
      agreements and with respect to any “earn-outs”, stock appreciation rights, or
      related compensation obligations, except: (i) Liabilities and Contingencies
      disclosed in the Financial Statements or footnotes thereto, (ii) Liabilities
      and
      Contingencies incurred in the ordinary course of business and consistent with
      past practice since the date of the most recent Financial Statements, or (iii)
      those Liabilities and Contingencies which are not required to be disclosed
      under
      GAAP. The reserves, if any, reflected on the balance sheet included in the
      most
      recent Financial Statements are appropriate and reasonable. Neither the Borrower
      nor any of its Subsidiaries have any Indebtedness for money borrowed,
      outstanding obligations for the purchase price of property, contingent
      obligations or liabilities for taxes, or any material or unusual forward or
      long-term commitments, except as specifically set forth in Schedule
      3.01
      of the
      Disclosure Schedule.

     

    (d) Since
      the
      date of the most recent Financial Statements, except as set forth in
Schedule
      3.01
      of the
      Disclosure Schedule, there has been no material adverse change in the working
      capital, condition (financial or otherwise), assets, liabilities, reserves,
      business, management, operations or prospects of the Borrower or any of its
      Subsidiaries, including, without limitation, the following:

     

    
      
        
        

      

      
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    (i) there
      has
      been no material change in any assumptions underlying, or in any methods of
      calculating, any bad debt, contingency or other reserve relating to the Borrower
      or any Subsidiary;

     

    (ii) there
      have been (A) no material write-downs in the value of any inventory of, and
      there have been no write-offs as uncollectible of any notes, accounts receivable
      or other receivables of, the Borrower or any Subsidiary other than write-offs
      of
      accounts receivable reserved in full as of the date of the most recent financial
      statements delivered to the Lender, and (B) no reserves established for the
      uncollectibility of any notes, Accounts or other receivables of the Borrower
      or
      any Subsidiary except to the extent that same have been disclosed to the Lender
      in writing and would not, individually or in the aggregate, cause the
      outstanding Advances to exceed the Revolving Credit Commitment;

     

    (iii) no
      debts
      which, individually or in the aggregate, are material to the Borrower and its
      Subsidiaries (taken as a whole) have been cancelled, no claims or rights of
      substantial value have been waived and no properties or assets (real, personal
      or mixed, tangible or intangible) have been sold, transferred, or otherwise
      disposed of by the Borrower or any Subsidiary except in the ordinary course
      of
      business and consistent with past practice;

     

    (iv) there
      has
      been no change in any method of accounting or accounting practice utilized
      by
      the Borrower or any Subsidiary;

     

    (v) no
      material casualty, loss or damage has been suffered by the Borrower or any
      Subsidiary, regardless of whether such casualty, loss or damage is or was
      covered by insurance; 

     

    (vi) Any
      announced changes in the policies or practices of any customer, supplier or
      referral source of the Borrower or any Subsidiary which the Borrower or such
      Subsidiary has received written notice of and which would reasonably be expected
      to have a Material Adverse Effect;

     

    (vii) Any
      incurrence of (A) any liability or obligation outside of the ordinary course
      of
      business which, individually or in the aggregate, is or will be material to
      the
      consolidated financial condition of the Borrower and its Subsidiaries, or (B)
      any Indebtedness other than Permitted Indebtedness;

     

    (viii) Any
      declaration, setting aside or payment of any dividend or distribution or any
      other payment of any kind by the Borrower to or in respect of any equity
      securities of the Borrower; and

     

    (ix) No
      action
      described in this Section 3.01(d) has been agreed to be taken by the Borrower
      or
      any Subsidiary.

     

    (e) The
      Borrower and its Subsidiaries have in place adequate systems of internal
      controls and disclosure controls and procedures sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with management’s
      general or specific authorizations, (ii) transactions are recorded as necessary
      to permit preparation of financial statements in accordance with GAAP and to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization, (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences, and (v) the Borrower and its management are able to obtain timely
      and accurate information regarding the Business Operations and all material
      transactions relating to the Borrower and the Subsidiaries; and no material
      deficiency exists with respect to the Borrower’s or any Subsidiary’s systems of
      internal controls.

     

    
      
        
        

      

      
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    (f) All
      of
      the SEC Reports (as amended), as of the respective dates thereof, complied
      in
      all material respects, as applicable, with the Act and the Exchange
      Act.

     

    (g) The
      representations and warranties made in this Section 3.01 are subject to the
      matters disclosed in the Borrower’s Current Report on Form 8-K dated October 18,
      2007, filed with the SEC.

     

    Section
      3.02. Organization; Corporate Existence.

     

    (a) The
      Borrower (i) is a corporation duly organized, validly existing and in good
      standing under the laws of the State of Delaware, (ii) has all requisite
      corporate power and authority to own its properties and to carry on its business
      as now conducted and as proposed hereafter to be conducted, (iii) is qualified
      to do business as a foreign corporation in each jurisdiction in which the
      failure of the Borrower to be so qualified would have a Material Adverse Effect,
      and (iv) has all requisite corporate power and authority to execute and deliver,
      and perform all of its obligations under, the Loan Documents. True and complete
      copies of the Organic Documents of the Borrower, together with all amendments
      thereto to the date hereof, have been furnished to the Lender.

     

    (b) On
      the
      date of this Agreement, the outstanding capital stock of the Borrower, the
      number and amount of all outstanding options, warrants, convertible securities,
      subscriptions and other rights to acquire capital stock of the Borrower, and
      the
      number of shares reserved or to be reserved under outstanding, authorized or
      proposed option plans or the like, are as set forth in Schedule
      3.02
      of the
      Disclosure Schedule. All of such outstanding capital stock is validly issued,
      fully paid and nonassessable. Except as set forth in such Schedule
      3.02,
      no
      holders of any such securities have any registration rights in respect thereof.
      

     

    (c) Schedule
      3.02
      of the
      Disclosure Schedule further sets forth, with respect to each Subsidiary on
      the
      date of this Agreement, (i) its proper legal name, (ii) its jurisdiction of
      incorporation or formation, (iii) the jurisdictions in which it is qualified
      to
      do business as a foreign entity, (iv) the number of shares of capital stock,
      equity securities or ownership interests outstanding (all of which are validly
      issued, fully paid and nonassessable), and (v) the owner(s) of such outstanding
      capital stock, equity securities or other ownership interests. Each of the
      Subsidiaries (A) is an entity duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or formation,
      (B) has all requisite power and authority to own its properties and to carry
      on
      its business as now conducted and as proposed hereafter to be conducted, and
      to
      execute and deliver, and perform all of its obligations under, the Loan
      Documents to which it is a party, and (C) is not required to be qualified to
      do
      business as a foreign entity in any jurisdiction in which it is not so qualified
      and the failure to be so qualified would reasonably be expected to have a
      Material Adverse Effect. True and complete copies of the Organic Documents
      of
      each Subsidiary, together with all amendments thereto to the date hereof, have
      been furnished to the Lender.

     

    
      
        
        

      

      
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    Section
      3.03. Authorization.
      

     

    (a) The
      execution, delivery and performance by the Borrower and the Subsidiaries of
      their respective obligations under the Loan Documents have been duly authorized
      by all requisite corporate and other action and will not, either prior to or
      as
      a result of the consummation of the transactions contemplated by this Agreement:
      (i) violate any provision of Applicable Law, any order of any court or other
      agency of government, any provision of the Organic Documents of the Borrower
      or
      any Subsidiary, or any Contract, indenture, agreement or other instrument to
      which the Borrower or any of the Subsidiaries is a party, or by which the
      Borrower or any of the Subsidiaries or any of its assets or properties are
      bound, or (ii) be in conflict with, result in a breach of, or constitute (after
      the giving of notice or lapse of time or both) a default under, or, except
      as
      may be provided in the Loan Documents, result in the creation or imposition
      of
      any Lien of any nature whatsoever upon any of the property or assets of the
      Borrower or any of the Subsidiaries pursuant to, any such Contract, indenture,
      agreement or other instrument. 

     

    (b) This
      Agreement and the other Loan Documents have been duly executed and delivered
      by
      the Borrower and its Subsidiaries party thereto, and constitute the valid and
      binding obligations of the Borrower and its Subsidiaries party thereto,
      enforceable against the Borrower and such Subsidiaries in accordance with their
      respective terms, except to the extent that enforceability may be limited by
      bankruptcy, insolvency, reorganization, moretorium, fraudulent transfer or
      other
      similar laws now or hereafter in effect relating to creditors’ rights generally,
      and by general principles of equity. 

     

    (c) Except
      for compliance with applicable federal or state securities laws, as applicable,
      neither the Borrower nor any of the Subsidiaries is required to obtain any
      Government Approval, consent or authorization from, or to file any declaration
      or statement with, any governmental instrumentality or agency in connection
      with
      or as a condition to the execution, delivery or performance of any of the Loan
      Documents.

     

    (d) Without
      limitation of Sections 3.03(a) through 3.03(c) above, the issuance of the Term
      Note and the Warrants has been authorized by all requisite corporate action
      of
      the Borrower, and such issuance does not conflict with any shareholders’
agreement, preemptive rights, limitation under or requirement of Organic
      Documents, or other agreement or commitment of the Borrower. Upon conversion
      of
      the Term Note (in whole or in part) from time to time in accordance therewith,
      the shares of Common Stock issuable upon such conversion will be validly issued,
      fully paid and nonassessable; and upon exercise of the Warrants in accordance
      with the terms thereof, the Warrant Shares (as such term is defined in the
      Warrants) will be validly issued, fully paid and nonassessable.

     

    Section
      3.04. Litigation.
      Except
      as disclosed on Schedule
      3.04
      of the
      Disclosure Schedule, there is no action, suit or proceeding at law or in equity
      or by or before any governmental instrumentality or other agency now pending
      or,
      to the knowledge of the Borrower, threatened against or affecting the Borrower
      or any of the Subsidiaries or any of their respective assets, which, if
      adversely determined, would have a Material Adverse Effect. The Borrower has
      no
      Knowledge of any state of facts, events, conditions or circumstances which
      are
      reasonably likely to give rise to, or would properly constitute grounds for
      or
      the basis of, any suit, action, arbitration, proceeding or investigation
      (including, without limitation, any unfair labor practice charges, interference
      with union organizing activities, or other labor or employment claims) against
      or with respect to the Borrower or any Subsidiary.

     

    
      
        
        

      

      
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    Section
      3.05. Material Contracts.
      Except
      as disclosed on Schedule
      3.05
      of the
      Disclosure Schedule, neither the Borrower nor any of the Subsidiaries is (a)
      a
      party to any Contract, agreement or instrument or subject to any charter or
      other corporate or organizational restriction which has had or could reasonably
      be expected to have a Material Adverse Effect, (b) subject to any liability
      or
      obligation under or relating to any collective bargaining agreement, or (c)
      in
      default in the performance, observance or fulfillment of any of the obligations,
      covenants or conditions contained in any Contract, agreement or instrument
      to
      which it is a party or by which any of its assets or properties is bound, which
      default, individually or in the aggregate, would have or could reasonably be
      expected to have a Material Adverse Effect.

     

    Section
      3.06. Title to Properties.
      Except
      as set forth in Schedule
      3.06
      fo the
      Disclosure Schedule, the Borrower and each of the Subsidiaries has good title
      to
      all of its properties and assets, free and clear of all mortgages, security
      interests, restrictions, encumbrances or other Liens of any kind, except for
      restrictions on the nature of use thereof imposed by Applicable Law, and except
      for Permitted Liens, none of which materially interfere with the use and
      enjoyment of such properties and assets in the normal course of the Business
      Operations as presently conducted, or materially impair the value of such
      properties and assets for the purpose of such business. 

     

    Section
      3.07. Real Property.
      Neither
      the Borrower nor any Subsidiary owns any Owned Real Property.  Schedule
      3.07
      of the
      Disclosure Schedule sets forth a correct and complete lists of all Leased Real
      Properties. The Borrower has a valid lessee’s interest in each Leased Real
      Property currently leased or occupied by the Borrower and neither the Borrower
      nor, to the Borrower’s Knowledge, any other party thereto, is in material breach
      or violation of any requirements of any such lease. All Real Properties
      currently owned or occupied by the Borrower or any Subsidiary are in good
      condition (reasonable wear and tear excepted) and are adequate for the current
      and proposed businesses of the Borrower and its Subsidiaries. To the Borrower’s
      Knowledge, its use of the Real Properties in the normal conduct of the Business
      Operations does not violate any applicable building, zoning or other law,
      ordinance or regulation affecting such Real Properties, and no covenants,
      easements, rights-of-way or other such conditions of record materially impair
      the Borrower’s use of the Real Properties in the normal conduct of the Business
      Operations.

     

    Section
      3.08. Machinery and Equipment.
      The
      machinery and equipment owned and/or used by the Borrower and the Subsidiaries
      is, as to each individual material item of machinery and equipment, and in
      the
      aggregate as to all such equipment, in good and usable condition and in a state
      of good maintenance and repair (reasonable wear and tear excepted), and adequate
      for its use in the Business Operations.

     

    
      
        
        

      

      
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    Section
      3.09. Capitalization.
      Except
      as set forth in Schedule
      3.02
      of the
      Disclosure Schedule and for new Subsidiaries which may hereafter be formed
      or
      acquired in compliance with this Agreement, the Borrower does not, directly
      or
      indirectly, own any capital stock of or any form of equity interest in any
      other
      Person.

     

    Section
      3.10. Solvency.
      After
      giving effect to the Loans and the other transactions contemplated hereby,
      the
      borrowings made and/or to be made by the Borrower under this Agreement do not
      and will not render the Borrower insolvent or with unreasonably small capital
      for its business; the fair saleable value of all of the assets and properties
      of
      the Borrower does now, and will, upon the funding of the Loans contemplated
      hereby, exceed the aggregate liabilities and Indebtedness of the Borrower
      (including contingent liabilities); the Borrower is not contemplating either
      the
      filing of a petition under any state or federal bankruptcy or insolvency law,
      or
      the liquidation of all or any substantial portion of its assets or property;
      the
      Borrower has no Knowledge of any Person contemplating the filing of any such
      petition against the Borrower; and the Borrower reasonably anticipates that
      it
      will be able to pay its debts as they mature.

     

    Section
      3.11. No Investment Company.
      The
      Borrower is not an “investment company” or a company “controlled” by an
“investment company” as such terms are defined in the Investment Company Act of
      1940, as amended.

     

    Section
      3.12. Margin Securities.
      The
      Borrower does not own or have any present intention of acquiring any “margin
      security” or any “margin stock” within the meaning of Regulations T, U or X of
      the Board of Governors of the Federal Reserve System (herein called “margin
      security” and “margin stock”). None of the proceeds of the Loans will be used,
      directly or indirectly, for the purpose of purchasing or carrying, or for the
      purpose of reducing or retiring any Indebtedness which was originally incurred
      to purchase or carry, any margin security or margin stock or for any other
      purpose which might constitute the transactions contemplated hereby a “purpose
      credit” within the meaning of said Regulations T, U or X, or cause this
      Agreement to violate any other regulation of the Board of Governors of the
      Federal Reserve System or the Exchange Act, or any rules or regulations
      promulgated under such statutes.

     

    Section
      3.13. Taxes.
      

     

    (a) Except
      as
      set forth in Schedule
      3.13
      of the
      Disclosure Schedule, all material federal, state, local and foreign tax returns
      and tax reports required to be filed by the Borrower and/or any Subsidiary
      have
      been timely filed with the appropriate governmental agencies in all
      jurisdictions in which such returns and reports are required to be filed, and
      all of such tax returns, tax reports and other filings are correct and complete
      in all material respects. All federal, state, local and foreign income,
      franchise, sales, use, property, excise, ad valorem, value-added, payroll and
      other taxes (including interest, penalties and additions to tax and including
      estimated tax installments where required to be filed and paid) due from or
      with
      respect to the Borrower and the Subsidiaries have been fully paid, and
      appropriate accruals have been made on the Borrower’s books for taxes not yet
      due and payable. All taxes and other assessments and levies which the Borrower
      and/or any Subsidiary is required by law to withhold or to collect have been
      duly withheld and collected, and have been paid over to the proper governmental
      authorities to the extent due and payable. Except as set forth in Schedule
      3.13
      of the
      Disclosure Schedule, there are no outstanding or pending claims, deficiencies
      or
      assessments for taxes, interest or penalties with respect to any taxable period
      of the Borrower or any Subsidiary, and no outstanding tax Liens.

     

    
      
        
        

      

      
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    (b) Except
      as
      disclosed in Schedule
      3.13
      of the
      Disclosure Schedule, the Borrower has no Knowledge and has not received notice
      of any pending audit with respect to any federal, state, local or foreign tax
      returns of the Borrower or any Subsidiary, and no waivers of statutes of
      limitations have been given or requested with respect to any tax years or tax
      filings of the Borrower or any Subsidiary.

     

    Section
      3.14. ERISA.
      Except
      as set forth in Schedule
      3.14
      of the
      Disclosure Schedule, neither the Borrower nor any ERISA Affiliate of the
      Borrower maintains or has any obligation to make any contributions to any
      pension, profit sharing or other similar plan providing for deferred
      compensation to any employee. With respect to any such plan(s) as may now exist
      or may hereafter be established by the Borrower or any ERISA Affiliate of the
      Borrower, and which constitutes an “employee pension benefit plan” within the
      meaning of Section 3(2) of ERISA, except as set forth on Schedule
      3.14
      of the
      Disclosure Schedule: (a) the Borrower or the subject ERISA Affiliate has paid
      and shall cause to be paid when due all amounts necessary to fund such plan(s)
      in accordance with its terms, (b) except for normal premiums payable by the
      Borrower to the Pension Benefit Guaranty Corporation (“PBGC”),
      the
      Borrower or the subject ERISA Affiliate has not taken and shall not take any
      action which could result in any liability to the PBGC, or any of its successors
      or assigns, (c) the present value of all accrued benefits thereunder shall
      not
      at any time exceed the value of the assets of such plan(s) allocable to such
      accrued benefits, (d) there have not been and there shall not be any
      transactions such as would cause the imposition of any tax or penalty under
      Section 4975 of the Code or under Section 502 of ERISA, which would adversely
      affect the funded benefits attributable to the Borrower or the subject ERISA
      Affiliate, (e) there has not been and there shall not be any termination or
      partial termination thereof (other than a partial termination resulting solely
      from a reduction in the number of employees of the Borrower or an ERISA
      Affiliate of the Borrower, which reduction is not anticipated by the Borrower),
      and there has not been and there shall not be any “reportable event” (as such
      term is defined in Section 4043(b) of ERISA) on or after the effective date
      of
      Section 4043(b) of ERISA with respect to any such plan(s) subject to Title
      IV of
      ERISA, (f) no “accumulated funding deficiency” (as defined in Section 412 of the
      Code) has been or shall be incurred on or after the effective date of Section
      412 of the Code, (g) such plan(s) have been and shall be determined to be
“qualified” within the meaning of Section 401(a) of the Code, and have been and
      shall be duly administered in compliance with ERISA and the Code, and (h) the
      Borrower is not aware of any fact, event, condition or cause which might
      adversely affect the qualified status thereof. As respects any “multi-employer
      plan” (as such term is defined in Section 3(37) of ERISA) to which the Borrower
      or any ERISA Affiliate thereof has heretofore been, is now, or may hereafter
      be
      required to make contributions, the Borrower or such ERISA Affiliate has made
      and shall make all required contributions thereto, and there has not been and
      shall not be any “complete withdrawal” or “partial withdrawal” (as such terms
      are respectively defined in Sections 4203 and 4205 of ERISA) therefrom on the
      part of the Borrower or such ERISA Affiliate. Neither the Borrower nor any
      of
      its Subsidiaries is or has at any time been an employer (for purposes of
      Sections 38 to 51 of the Pensions Act 2004 under English law) of an occupational
      pension scheme which is not a money purchase scheme (both terms as defined
      in
      the Pensions Schemes Act 1993 under English law), or “connected” with an
“associate” of such an employer (as those terms are used in Sections 39 and 43
      of the Pensions Act 2004 under English law).

     

    
      
        
        

      

      
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    Section
      3.15. Intellectual Property.
      

     

    (a) To
      the
      Knowledge of the Borrower, the Borrower and the Subsidiaries own or have the
      valid right to use all material patents, trademarks, copyrights, software,
      computer programs, equipment designs, network designs, equipment configurations,
      technology and other intellectual property used, marketed and/or sold in the
      Business Operations, and the Borrower and the Subsidiaries are in compliance
      in
      all material respects with all licenses, user agreements and other such
      agreements regarding the use of intellectual property used in the Business
      Operations; and the Borrower has no Knowledge of or received written notice
      claiming that any such intellectual property infringes upon or violates the
      rights of any other Person.

     

    (b) Schedule
      3.15(b)
      of the
      Disclosure Schedule sets forth all material Intellectual Property owned by
      the
      Borrower and its Subsidiaries (“Owned
      Intellectual Property”),
      including the name, if any, and a brief description thereof. Except as set
      forth
      in such Schedule
      3.15(b),
      to the
      Knowledge fo the Borrower, either the Borrower or one of its Subsidiaries holds,
      good, valid and indefeasible title to all Owned Intellectual Property, free
      and
      clear of any liens or encumbrances of any kind, except for: (i) any lien for
      current taxes not yet due and payable, and (ii) liens that have arisen in the
      ordinary course of business and that do not (individually or in the aggregate)
      materially detract from the value of the assets subject thereto or materially
      impair the operations of the Borrower and its Subsidiaries.

     

    (c) Schedule
      3.15(c)
      of the
      Disclosure Schedule sets forth: (i) all material Intellectual Property licensed
      by the Borrower or any of its Subsidiaries from third parties and used in the
      conduct of the business of the Borrower and its Subsidiaries (“Licensed
      Intellectual Property”),
      including a brief description thereof; (ii) with respect to any Owned
      Intellectual Property that is the subject of any registration or pending
      application in any jurisdiction, the names of the jurisdictions, any
      registration and/or application serial numbers, and the current status thereof;
      (iii) a brief description of all material licenses, sublicenses, and other
      agreements pursuant to which the Borrower (or any of its Subsidiaries) or any
      sublicensee of the Borrower (or any of its Subsidiaries) has granted to any
      third party the right to use any of the Owned Intellectual Property; (iv) all
      other material consents, indemnifications, forbearances to sue, settlement
      agreements and licensing or cross-licensing arrangements to which the Borrower
      or any of its Subsidiaries is a party relating to the Owned Intellectual
      Property; and (v) any ongoing royalty or payment obligations with respect to
      the
      Licensed Intellectual Property.

     

    (d) To
      the
      Knowledge of the Borrower, the Borrower and its Subsidiaries have a valid right
      to use, license, and otherwise exploit all Licensed Intellectual Property,
      and
      any rights thereunder will not be affected by the Borrower and its Subsidiaries
      entering into this Agreement, the other Loan Documents and the agreements and
      transactions contemplated hereby and thereby. Except as set forth in
Schedule
      3.15(d)
      of the
      Disclosure Schedule, neither the Borrower nor any of its Subsidiaries is under
      any obligation to pay royalties or other payments in connection with any
      license, sublicense, or other agreement, nor restricted from assigning its
      right
      under any sublicense or agreement respecting the Licensed Intellectual Property,
      nor will the Borrower or any of its Subsidiaries otherwise be, as a result
      of
      the execution and delivery of this Agreement, the other Loan Documents or the
      performance of their obligations hereunder and thereunder, in breach of any
      license, sublicense or other agreement relating to the Licensed Intellectual
      Property.

     

    
      
        
        

      

      
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    (e) To
      the
      Knowledge of the Borrower, the Borrower’s and each Subsidiary’s rights in all of
      the Owned Intellectual Property are valid, subsisting, and enforceable. None
      of
      the Owned Intellectual Property or any registrations therefor have been
      cancelled or adjudicated invalid or unenforceable, or are subject to any
      outstanding order, judgment, or decree restricting its use or adversely
      affecting or reflecting the Borrower’s or any of its Subsidiaries’ rights
      thereto. To the Knowledge of the Borrower, all Owned Intellectual Property
      that
      is the subject of a registration or pending application is valid, subsisting,
      unexpired, and in proper form, and all renewal fees and other maintenance fees
      that have fallen due on or prior to the Closing Date have been paid. Either
      the
      Borrower or its applicable Subsidiary has timely made all filings and payments
      with the appropriate intellectual property offices required to maintain in
      subsistence all Owned Intellectual Property. All documentation necessary to
      confirm and effect the Borrower’s and its Subsidiaries’ ownership of and rights
      in any Owned Intellectual Property that is the subject of a registration or
      pending application acquired by the Borrower or any of its Subsidiaries from
      third parties has been filed in the United States Patent and Trademark Office
      and the United States Copyright Office, and any and all other relevant
      intellectual property offices and agencies in other jurisdictions. Except for
      any pending application by the Borrower or a Subsidiary, no Owned Intellectual
      Property is the subject of any legal or governmental proceeding before any
      governmental, registration or other authority in any jurisdiction, including
      any
      office action or other form of preliminary or final refusal of
      registration.

     

    (f) The
      consummation of the transactions contemplated hereby will not materially alter
      or impair any Owned Intellectual Property. To the Knowledge of the Borrower,
      no
      Owned Intellectual Property has been used, divulged, disclosed or appropriated
      to the detriment of the Borrower or any of its Subsidiaries for the benefit
      of
      any third party; and, to the Knowledge of the Borrower, no employee or agent
      of
      the Company or any of its Subsidiaries has misappropriated any material trade
      secrets or other material confidential information of any third party in the
      course of the performance of his or her duties as an employee of the Borrower
      or
      any of its Subsidiaries. To the Knowledge of the Borrower, (i) none of the
      Owned
      Intellectual Property infringes on any Intellectual Property owned or used
      by
      any other Person; (ii) none of the products that are or have been designed,
      created, developed, assembled, manufactured or sold by the Borrower or any
      of
      its Subsidiaries is infringing, misappropriating, or making any unlawful use
      of
      any Intellectual Property owned by any other Person, and the Borrower and its
      Subsidiaries have all rights and licenses reasonably necessary in order to
      make,
      have made, use or sell such products, (iii) no other Person is infringing,
      misappropriating or making any unlawful use of, and no Intellectual Property
      owned or used by any other Person infringes on any Owned Intellectual Property,
      and (iv) there is no claim, suit, action or proceeding pending or threatened
      or
      asserted against the Borrower or any of its Subsidiaries: (A) alleging any
      conflict or infringement by the Borrower or any of its Subsidiaries of any
      other
      Person’s intellectual property or proprietary rights; or (B) challenging the
      Borrower’s or any of its Subsidiaries’ ownership or use of, or the validity or
      enforceability of, any of the Owned Intellectual Property or the Licensed
      Intellectual Property.

     

    
      
        
        

      

      
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    Section
      3.16. Compliance with Laws.
      The
      Borrower and the Subsidiaries are in compliance with all occupational safety,
      health, wage and hour, employment discrimination, environmental, flammability,
      labeling and other Applicable Law which are material to the Business Operations,
      except where such non-compliance would not, individually or in the aggregate,
      have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has
      any
      Knowledge of any state or facts, events, conditions or occurrences which may
      now
      or hereafter constitute or result in a violation of any Applicable Law, or
      which
      may give rise to the assertion of any such violation, which in either case
      could
      have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has
      received written notice of default or violation, nor is the Borrower or any
      Subsidiary in default or violation, with respect to any Applicable Law. Neither
      the Borrower nor any Subsidiary has received written notice of or been charged
      with, or is, to the Borrower’s Knowledge, under investigation with respect to,
      any violation of any provision of any Applicable Law, which violation would
      have
      a Material Adverse Effect.

     

    Section
      3.17. Licenses and Permits.
      The
      Borrower and each Subsidiary has all federal, state and local licenses and
      permits required to be maintained in connection with and material to the
      Business Operations, and all such licenses and permits are valid and in full
      force and effect. The Borrower and each Subsidiary has complied with the
      requirements of such licenses and permits in all material respects, and has
      received no notice of any pending or threatened proceedings for the suspension,
      termination, revocation or limitation thereof. There is no circumstance or
      condition Known to the Borrower that would cause or permit any of such licenses
      or permits to be voided, revoked or withdrawn.

     

    Section
      3.18. Insurance.
      Schedule
      3.18
      of the
      Disclosure Schedule lists all insurance coverages maintained by the Borrower
      on
      the date of this Agreement, including the names of insurers, policy limits
      and
      deductibles. The Borrower has not received written notice of cancellation or
      intent not to renew any of such policies, and there has not occurred, and there
      does not exist, any condition (other than general industry-wide conditions)
      such
      as would cause any of such insurers to cancel any of such insurance coverages,
      or would be reasonably likely to materially increase the premiums charged to
      the
      Borrower for coverages consistent with the scope and amounts of coverages as
      in
      effect on the date hereof.

     

    Section
      3.19. Environmental Laws.

     

    (a) The
      Borrower and each Subsidiary has complied in all material respects with all
      Environmental Laws relating to its business and properties, and to the Knowledge
      of the Borrower there exist no Hazardous Substances in amounts in violation
      of
      applicable Environmental Laws or underground storage tanks on any of the Real
      Properties the existence of which would have a Material Adverse Effect, except
      those that are stored and used in compliance with Applicable Laws. 

     

    (b) Neither
      the Borrower nor any Subsidiary has received written notice of any pending
      or
      threatened litigation or administrative proceeding which in any instance (i)
      asserts or alleges any violation of applicable Environmental Laws on the part
      of
      the Borrower or any Subsidiary, (ii) asserts or alleges that the Borrower or
      any
      Subsidiary is required to clean up, remove or otherwise take remedial or other
      response action due to the disposal, depositing, discharge, leaking or other
      release of any Hazardous Substances or materials, or (iii) asserts or alleges
      that the Borrower or any Subsidiary is required to pay all or any portion of
      the
      costs of any past, present or future cleanup, removal or remedial or other
      response action which arises out of or is related to the disposal, depositing,
      discharge, leaking or other release of any hazardous substances or materials
      by
      the Borrower or any Subsidiary. To the Borrower’s Knowledge, neither the
      Borrower nor any Subsidiary is subject to any judgment, decree, order or
      citation related to or arising out of any Environmental Laws. To the Borrower’s
      Knowledge, neither the Borrower nor any Subsidiary has been named or listed
      as a
      potentially responsible party by any governmental body or agency in any matter
      arising under any Environmental Laws. Neither the Borrower nor any Subsidiary
      is
      a participant in, nor does the Borrower have Knowledge of, any governmental
      investigation involving any of the Real Properties.

     

    
      
        
        

      

      
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    (c) To
      the
      Borrower’s Knowledge, neither the Borrower, any Subsidiary nor any other Person
      has caused or permitted any Hazardous Substances or other materials to be
      stored, deposited, treated, recycled or disposed of on, under or at any of
      the
      Real Properties in violation of applicable Environmental Laws, which materials,
      if known to be present, would reasonably be expected to require or authorize
      cleanup, removal or other remedial action under any applicable Environmental
      Laws.

     

    (d) As
      used
      in this Section 3.19 and in Section 5.08 below, the following terms have the
      following meanings:

     

    “Environmental
      Laws”
include
      all federal, state, local and foreign laws, rules, regulations, ordinances,
      permits, orders, and consent decrees agreed to by the Borrower or any
      Subsidiary, relating to health, safety, and environmental matters applicable
      to
      the business and property of the Borrower or any Subsidiary. Such laws and
      regulations include but are not limited to the Resource Conservation and
      Recovery Act (“RCRA”),
      42
      U.S.C. §6901 et seq., as amended; the Comprehensive Environmental Response,
      Compensation and Liability Act (“CERCLA”),
      42
      U.S.C. §9601 et seq., as amended; the Toxic Substances Control Act
      (“TSCA”),
      15
      U.S.C. §2601 et seq., as amended; and the Clean Water Act, 33 U.S.C. §1331 et
      seq., as amended. 

     

    “Hazardous
      Substances”,
      “Release”,
      “Respond”
and
      “Response”
shall
      have the meanings assigned to them in CERCLA, 42 U.S.C. §9601, as amended.

     

    “Notice”
means
      any actual summons, citation, directive, information request, notice of
      potential responsibility, notice of violation or deficiency, order, claim,
      complaint, investigation, proceeding, judgment, letter, or other communication,
      written or oral, from the United States Environmental Protection Agency or
      other
      federal, state, local or foreign agency or authority, or any other entity or
      individual, public or private, concerning any intentional or unintentional
      act
      or omission which involves management of Hazardous Substances in amounts in
      violation of Environmental Laws on or off any Real Properties; the imposition
      of
      any lien on any Real Properties, including but not limited to liens asserted
      by
      government entities in connection with any Borrower’s or Subsidiary’s response
      to the presence or Release of Hazardous Substances in amounts in violation
      of
      Environmental Laws; and any alleged violation of or responsibility under any
      Environmental Laws.

     

    
      
        
        

      

      
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    Section
      3.20. Sensitive Payments.
      Neither
      the Borrower nor any Subsidiary has (a) made any contributions, payments or
      gifts to or for the private use of any governmental official, employee or agent
      where either the payment or the purpose of such contribution, payment or gift
      is
      illegal under the laws of the United States or the jurisdiction in which made,
      (b) established or maintained any unrecorded fund or asset for any purpose
      or
      made any false or artificial entries on its books, (c) made any payments to
      any
      person with the intention that any part of such payment was to be used for
      any
      purpose other than that described in the documents supporting the payment,
      or
      (d) engaged in any “trading with the enemy” or other transactions violating any
      rules or regulations of the Office of Foreign Assets Control or any similar
      laws, rules or regulations. 

     

    Section
      3.21. Full Disclosure.
      No
      statement of fact made by the Borrower in this Agreement or any other Loan
      Document, in any SEC Report (as amended), or in any information memorandum,
      business summary, agreement, certificate, schedule or other written statement
      furnished by the Borrower or any Subsidiary to the Lender pursuant hereto,
      contains or will contain any untrue statement of a material fact, or omits
      or
      will omit to state any material fact necessary to make any statements contained
      herein or therein not misleading. Except for matters of a general economic
      or
      political nature which do not affect the Borrower or any Subsidiary uniquely,
      there is no fact presently known to the Borrower which has not been disclosed
      to
      the Lender, which has had or would reasonably be expected to have a Material
      Adverse Effect.

     

    Section
      3.22. Reaffirmation.
      Each
      and every request by the Borrower for an Advance shall constitute a
      reaffirmation of the truth and accuracy of the Borrowers’ and each Subsidiary’s
      representations and warranties made in this Agreement and the Security Documents
      on and as of the date of such request.

     

    IV. CONDITIONS
      OF MAKING THE LOANS

     

    A. The
      obligation of the Lender to make the initial Loan hereunder and to consummate
      the other transactions contemplated hereby are subject to the following
      conditions precedent:

     

    Section
      4.01. Representations and Warranties.
      The
      representations and warranties set forth in Article III hereof and in the other
      Loan Documents shall be true and correct on and as of the Closing
      Date.

     

    Section
      4.02. Loan Documents.
      The
      Borrower and its Subsidiaries (as applicable) shall have duly executed and/or
      delivered to the Lender all of the following:

     

    (a) The
      Notes;

     

    (b) The
      Guaranty Agreement, the Collateral Agreement, the U.K. Security Agreement,
      the
      Validity Guaranties (which shall also be executed by Ian Warwick, Simon Chadwick
      and Charles Trapp, respectively) and any and all other Security Documents
      required by the Lender at the Closing Date (including, without limitation,
      Control Agreements in respect of the Borrower’s and its Subsidiaries’ deposit
      accounts, and any Landlord Waivers, warehousemen’s waivers, bailee letters or
      consents required by the Lender);

     

    (c) The
      Warrants;

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (d) The
      Registration Rights Agreement; 

     

    (e) A
      certificate or certificates of insurance, with loss payable endorsements,
      evidencing the insurance required by Section 5.01(d) below; 

     

    (f) A
      current
      Borrowing Base report in conformity with Section 5.04(d) below, and a written
      request for the borrowing of the Term Loan and the initial Advance;

     

    (g) A
      certificate of the Secretary or an Assistant Secretary of the Borrower and
      each
      Subsidiary, certifying the vote of the Boards of Directors or other governing
      body of the Borrower and each Subsidiary, authorizing and directing the
      execution and delivery of the Loan Documents and all further agreements,
      instruments, certificates and other documents pursuant hereto and
      thereto;

     

    (h) A
      certificate of the Secretary or an Assistant Secretary of the Borrower and
      each
      Subsidiary, certifying the names of the officers of the Borrower and each
      Subsidiary who are authorized to execute and deliver the Loan Documents and
      all
      other agreements, instruments, certificates and other documents to be delivered
      pursuant hereto and thereto, together with the true signatures of such officers.
      The Lender may conclusively rely on such certificate until the Lender shall
      receive any further such certificate canceling or amending the prior certificate
      and submitting the signatures of the officers named in such further
      certificate;

     

    (i) Certified
      copies of the Organic Documents of the Borrower and each Subsidiary, and a
      certificate of the Secretary of State or other appropriate official of the
      jurisdiction of incorporation of the Borrower and each Subsidiary and of each
      jurisdiction in which the Borrower and each Subsidiary is qualified to do
      business as a foreign corporation, dated reasonably prior to the Closing Date,
      stating that the Borrower and each Subsidiary is duly formed or qualified and
      in
      good standing in such jurisdiction; provided,
      however,
      that
      with respect to any Foreign Subsidiary, (i) the delivery of uncertified copies
      of its Organic Documents shall be satisfactory, and (ii) no certificate of
      good
      standing need be delivered if the subject jurisdiction does not issue such
      certificates or comparable documents;

     

    (j) Such
      other agreements, instruments, documents and certificates (including, without
      limitation, satisfactory lien and judgment searches respecting the Borrower
      and
      its Subsidiaries) as the Lender or its counsel may reasonably request.

     

    Section
      4.03. Payoff and Release Letter.
      The
      Borrower shall have received, and shall have delivered to the Lender, a payoff
      and release letter signed by the Factor, in form and substance satisfactory
      to
      the Lender, (a) confirming the amount required to be paid to the Factor in
      order
      to pay all of the Borrower’s and its Subsidiaries’ obligations to the Factor
      under or in respect of the Factoring Facility, (b) affirming that, upon receipt
      of such amount on or prior to the Closing Date, all claims, Liens, encumbrances
      and security interests held by the Factor under, pursuant to or in respect
      of
      the Factoring Facility shall be terminated and released, and all collateral
      therefor and receivables purchased thereunder shall be released, reassigned
      and
      returned to the transferor(s) thereof, and (c) authorizing the filing, upon
      receipt of such amount on the Closing Date, of termination statements in respect
      of any and all Lien filings against the Borrower and/or its Subsidiaries in
      respect of such Liens, encumbrances and security interests of the
      Factor.

     

    
      
        
        

      

      
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    Section
      4.04. Equity Matters.
      The
      Borrower shall have provided to the Lender written evidence of, and all material
      agreements relating to, (a) the receipt by the Borrower of gross proceeds of
      not
      less than $2,500,000 from the issuance and sale of Common Stock subsequent
      to
      July 1, 2007, and (b) the resolution to the Lender’s satisfaction the “toxic”
provision of the Rho preferred stock. 

     

    Section
      4.05. Legal Opinions.
      The
      Lender shall have received written opinions of Gersten Savage LLP and McFaddens,
      United States and United Kingdom (respectively) counsel for the Borrower and
      the
      Subsidiaries, dated the Closing Date, satisfactory to the Lender and its counsel
      in scope and substance.

     

    Section
      4.06. Fees and Reimbursements.
      The
      Borrower shall have paid to the Lender the Closing Fee and the initial
      Monitoring Fee, and shall have paid or reimbursed the Lender for its reasonable
      out-of-pocket costs, charges and expenses incurred to the Closing Date; and
      in
      connection herewith, the Borrower hereby irrevocably authorizes the Lender
      to
      charge such amounts as Advances to the Borrower’s revolving credit loan
      accounts. Failure of the Lender to effect any such charge shall not excuse
      the
      Borrower from its obligation to pay such amounts.

     

    Section
      4.07. Further Matters.
      All
      legal matters, and the form and substance of all documents, incident to the
      transactions contemplated hereby shall be satisfactory to the Lender and its
      counsel.

     

    Section
      4.08. No Default.
      No
      Default or Event of Default shall have occurred and be continuing.

     

    B. The
      obligation of the Lender to make any Advances subsequent to the Closing Date
      is
      subject to (a) the representations and warranties set forth in Article III
      and
      in the other Loan Documents being true and correct in all material respects
      (except that, to the extent that any representation or warranty is already
      qualified by concepts of materiality and/or Material Adverse Effect, then such
      representations and warranties shall be true and correct in all respects) on
      and
      as of the subject Borrowing Date, (b) the Lender’s receipt of a current
      Borrowing Base report in conformity with Section 5.04(d) below, (c) the
      execution and delivery of such further Security Documents as the Lender may
      have
      reasonably requested pursuant to the Security Documents theretofore executed
      and
      delivered, and (d) there being no continuing Default or Event of
      Default.

     

    V. AFFIRMATIVE
      COVENANTS

     

    The
      Borrower hereby covenants and agrees that, from the date hereof and until all
      Obligations (whether now existing or hereafter arising) have been paid in full
      and the Revolving Credit Commitment has been terminated, unless the Lender
      shall
      otherwise consent in writing, the Borrower shall, and shall cause each of its
      Subsidiaries to:

     

    Section
      5.01. Corporate and Insurance.
      Do or
      cause to be done all things necessary to at all times (a) preserve, renew and
      keep in full force and effect its corporate or other legal existence, rights,
      licenses, permits and franchises, (b) comply with the Loan Documents and any
      other agreements and instruments executed and delivered hereunder and thereunder
      (to the extent a party thereto), (c) maintain, preserve and protect all of
      its
      franchises and material trade names, and preserve all of its material property
      used or useful in the conduct of its business and keep the same in good repair,
      working order and condition (reasonable wear and tear excepted), and from time
      to time make, or cause to be made, all needed and proper repairs, renewals,
      replacements, betterments and improvements thereto, so that the Business
      Operations carried on in connection therewith may be properly and advantageously
      conducted at all times, consistent with past practice, (d) maintain
      insurance in amounts, on such terms and against such risks (including fire
      and
      other hazards insured against by extended coverage, and public liability
      insurance covering claims for personal injury, death or property damage) as are
      customary for companies of similar size in the same or similar businesses and
      operating in the same or similar locations, as well as all such other insurance
      as is required by the Collateral Agreement, each of which policies (other than
      workers compensation or any similar statutorily-required employee coverage)
      shall be issued by a financially sound and reputable insurer reasonably
      satisfactory to the Lender and shall name the Lender as loss payee and
      additional insured as its interest appears and provide for the Lender to receive
      written notice thereof at least thirty (30) days prior to any cancellation
      of
      the subject policy, and (e) comply in all material respects with all material
      Contracts and material obligations to which it is a party or by which it is
      bound, all benefit plans which it maintains or is required to contribute to,
      and
      all Applicable Law (including, without limitation, Environmental Laws) material
      to its Business Operations, and all requirements of its insurers, whether now
      in
      effect or hereafter enacted, promulgated or issued; provided,
      however,
      that
      the Borrower shall be permitted to contest any of the foregoing matters in
      good
      faith by appropriate proceedings, and subject to the maintenance of appropriate
      reserves therefor on its books in accordance with GAAP. The Borrower will
      provide to the Lender a certificate of the foregoing insurance, promptly upon
      request. 

    
       

      
        
          
          

        

        
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    Section
      5.02. Payment of Taxes.
      File,
      pay and discharge, or cause to be paid and discharged, all material taxes,
      assessments and governmental charges or levies imposed upon the Borrower and/or
      any Subsidiary or upon its income and profits or upon any of its property (real,
      personal or mixed) or upon any part thereof, before the same shall become in
      default, as well as all lawful claims for labor, materials, supplies and
      otherwise, which, if unpaid when due, might become a Lien or charge upon such
      property or any part thereof; provided,
      however,
      that
      neither the Borrower nor any Subsidiary shall be required to pay and discharge
      or cause to be paid and discharged any such tax, assessment, charge, levy or
      claim so long as (a) the validity thereof shall be contested in good faith
      by
      appropriate proceedings and the Borrower or such Subsidiary shall have set
      aside
      on its books adequate reserves (to the extent required by GAAP) with respect
      to
      any such tax, assessment, charge, levy or claim so contested, and (b) payment
      with respect to any such tax, assessment, charge, levy or claim shall be made
      before any of the Borrower’s or such Subsidiary’s property shall be seized or
      sold in satisfaction thereof.

     

    Section
      5.03. Notices.
      Give
      prompt written notice to the Lender of (a) the filing by the Borrower of any
      SEC
      Reports, (b) any proceedings instituted against the Borrower or any Subsidiary
      in any federal, state, local or foreign court or before any commission or other
      regulatory body, whether federal, state, local or foreign, which, if adversely
      determined, could reasonably be expected to have a Material Adverse Effect
      (c)
      occupancy of any new or additional Real Property, and (d) the occurrence of
      any
      material casualty to any Collateral, any Material Adverse Effect, or any Default
      or Event of Default, and the action that the Borrower has taken, is taking,
      or
      proposes to take with respect thereto.

     

    
      
        
        

      

      
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    Section
      5.04. Periodic Reports.
      Furnish
      to the Lender:

     

    (a) Within
      ninety (90) calendar days after the end of each Fiscal Year, consolidated
      balance sheets, and consolidated and consolidating statements of income,
      statements of stockholders’ equity, and statements of cash flows of the Borrower
      and its Subsidiaries, together with footnotes and supporting schedules thereto,
      certified (as to the consolidated statements) by independent certified public
      accountants selected by the Borrower and reasonably satisfactory to the Lender,
      showing the financial condition of the Borrower and its Subsidiaries at the
      close of such Fiscal Year and the results of operations of the Borrower and
      its
      Subsidiaries during such Fiscal Year;

     

    (b) Within
      thirty (30) calendar days after the end of each calendar month (forty-five
      (45)
      calendar days in the case of the end of a fiscal quarter), consolidated and
      consolidating unaudited balance sheets, statements of income and statements
      of
      cash flows of the Borrower and its Subsidiaries, in each case with supporting
      schedules thereto, prepared by the Borrower and certified by the Borrower’s
      Chairman, President, Chief Executive Officer, Chief Financial Officer or Chief
      Accounting Officer, such balance sheets to be as of the close of such calendar
      month and such statements of income and statements of cash flows to be for
      the
      period from the beginning of the then-current Fiscal Year to the end of such
      calendar month, together with comparative statements of income and cash flows
      for the corresponding period in the immediately preceding Fiscal Year, in each
      case subject to normal audit and year-end adjustments;

     

    (c) Concurrently
      with the delivery of each of the financial statements required by Sections
      5.04(a) and 5.04(b) above, a certificate on behalf of the Borrower (signed
      by
      the Chairman, President, Chief Executive Officer, Chief Financial Officer or
      Chief Accounting Officer of the Borrower), certifying that he has examined
      the
      provisions of this Agreement and that, to the best of his knowledge, no Default
      or Event of Default (including, without limitation, under Sections 6.16 and
      6.17
      below, as demonstrated by detailed calculations included in such certificate)
      has occurred and/or is continuing;

     

    (d) On
      or
      prior to the fifth (5th)
      Business Day of each calendar month, a detailed calculation of the Borrowing
      Base as of the end of the immediately preceding calendar month, in form and
      substance, and with supporting documentation (including, without limitation,
      receivables and payables agings as of the close of the immediately preceding
      calendar month) as may reasonably be required by the Lender; and, on or prior
      to
      the twentieth (20th)
      calendar day of each calendar month, a detailed calculation of the Borrowing
      Base as of a date not earlier than the fifteenth (15th)
      calendar day of such calendar month, with supporting documentation as
      aforesaid;

     

    (e) As
      soon
      as approved by the Borrower’s Board of Directors (but in any event not later
      than thirty (30) days after the beginning of each Fiscal Year), a budget and
      operating plan (on a quarter-by-quarter basis) for such Fiscal Year, in such
      detail as may reasonably be required by the Lender;

     

    
      
        
        

      

      
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    (f) As
      and
      when distributed to the Borrower’s shareholders, copies of all proxy materials,
      reports and other information which the Borrower provides to its shareholders;
      and as and when distributed to any other holders of Indebtedness of the Borrower
      or the Subsidiaries, copies of all reports, statements and other information
      provided to such lenders; and

     

    (g) Promptly,
      from time to time, such other information (including, without limitation,
      receivables and payables agings, and sales reports) regarding the Borrower’s or
      any Subsidiary’s operations, assets, business, affairs and financial condition,
      as the Lender may reasonably request.

     

    To
      the
      extent that the financial statements required by Sections 5.04(a) and 5.04(b)
      are contained in any SEC Reports filed by the Borrower within the required
      time
      period hereunder for the delivery of such financial statements, then the
      Borrower shall be deemed to have complied with the subject financial statement
      delivery by notifying the Lender of the filing of the subject SEC
      Report.

     

    To
      the
      extent that any report or other delivery required under this Section 5.04 or
      elsewhere in this Agreement will, at the time of anticipated delivery to the
      Lender, contain any material non-public information, the Borrower will notify
      the Lender thereof as promptly as practicable prior to the delivery of such
      report (but without disclosing the specific items of material non-public
      information or the nature thereof), and if so requested by the Lender prior
      to
      the required date of the information delivery hereunder, the Borrower shall
      (x)
      if reasonably practicable, redact such material non-public information from
      the
      subject report prior to the delivery thereof to the Lender, or (y) defer
      delivery of such report until such time as the Borrower has made public
      disclosure of the subject material information or the Lender has affirmatively
      requested delivery of such report. Absent timely request by the Lender as
      aforesaid, the Borrower shall make the required delivery to the Lender on a
      timely basis; provided,
      that
      the Lender shall keep such material non-public information confidential in
      accordance with Section 9.13 below, and shall refrain from trading in the Common
      Stock until the earlier of such time as such information ceases to be material
      or 48 hours after such information has become generally available to the
      public.

     

    Section
      5.05. Books and Records; Inspection.
      Maintain centralized books and records regarding all of the Business Operations
      at the Borrower’s principal place of business, and permit agents or
      representatives of the Lender to inspect, at any time during normal business
      hours, upon reasonable notice, and without material disruption of the Business
      Operations, all of the Borrower’s and its Subsidiaries’ various books and
      records, to make copies, abstracts and/or reproductions thereof, and to discuss
      the business and affairs of the Borrower and the Subsidiaries with the
      management of the Borrower; provided,
      that to
      the extent of any material non-public information disclosed to the Lender (after
      fair warning to the Lender of the material non-public nature of such
      information) or otherwise obtained by the Lender in connection with any such
      inspection, the Lender shall keep such information confidential in accordance
      with Section 9.13 below, and shall refrain from trading in the Common Stock
      until the earlier of such time as such information ceases to be material or
      48
      hours after such information has become generally available to the
      public.

     

    
      
        
        

      

      
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    Section
      5.06. Accounting.
      Maintain a standard system of accounting in order to permit the preparation
      of
      financial statements in accordance with GAAP and Regulation S-X promulgated
      under the Act.

     

    Section
      5.07. Reimbursements.
      Pay or
      reimburse the Lender or other appropriate Persons on demand for all reasonable
      costs, expenses and other charges incurred or payable from time to time in
      connection with the transactions contemplated by this Agreement, any waivers
      or
      amendments in respect of any Loan Documents (whether or not completed or
      executed), and any “workout” or enforcement action (whether or not consummated
      or completed, and regardless of the outcome thereof), including but not limited
      to any and all search fees, recording fees, costs of inspections, reasonable
      legal and accounting fees, and costs related to routine Exchange Act filings
      in
      respect of the Lender’s and its Affiliates’ position in securities of the
      Borrower.

     

    Section
      5.08. Environmental Response.
      In the
      event of any material discharge, spill, injection, escape, emission, disposal,
      leak or other Release of Hazardous Substances in amounts in violation of
      applicable Environmental Laws by the Borrower or any Subsidiary on any Real
      Property owned or leased by the Borrower or any Subsidiary, which is not
      authorized by a permit or other approval issued by the appropriate governmental
      agencies and which requires notification to or the filing of any report with
      any
      federal or state governmental agency, the Borrower shall promptly: (a) notify
      the Lender; and (b) comply with the notice requirements of the Environmental
      Protection Agency and applicable state agencies, and take all steps necessary
      to
      promptly clean up such discharge, spill, injection, escape, emission, disposal,
      leak or other Release in accordance with all applicable Environmental Laws
      and
      the Federal National Contingency Plan, and, if required, receive a certification
      from all applicable state agencies or the Environmental Protection Agency,
      that
      such Real Property has been cleaned up to the satisfaction of such
      agency(ies).

     

    Section
      5.09. Management.
      Cause
      Ian Warwick to continue to be employed or to function as the Chief Executive
      Officer of the Borrower, and Charles Trapp and Simon Chadwick to continue to
      be
      employed or to function as executive officers of the Borrower, unless a
      successor is appointed within sixty (60) days after the termination of any
      such
      individual’s employment and such successor is reasonably satisfactory to the
      Lender.

     

    Section
      5.10. Use of Proceeds.
      Cause
      all proceeds of the Loans to be utilized solely in the manner and for the
      purposes set forth in Section 2.05 above.

     

    Section
      5.11. Future Subsidiaries.
      At any
      time and from time to time when the Borrower or any of its Subsidiaries proposes
      to form or acquire any Subsidiary subsequent to the Closing Date, the Borrower
      shall give written notice thereof to the Lender reasonably in advance of (and
      in
      no event less than fifteen (15) days prior to) the formation or acquisition
      of
      such Subsidiary, accompanied by true and complete copies of the Organic
      Documents of such Subsidiary and stating, with respect to such Subsidiary,
      (a)
      its proper legal name, (b) its jurisdiction of incorporation or formation,
      (c)
      the jurisdictions (if any) in which it is qualified or is required to be
      qualified to do business as a foreign entity, (d) the number of shares of
      capital stock, equity securities or ownership interests outstanding, and (e)
      the
      record owners of such outstanding capital stock, equity securities or other
      ownership interests; and contemporaneously with the formation or acquisition
      of
      such new Subsidiary, such new Subsidiary shall be deemed to have made and joined
      in all of the representations and warranties made by the Borrower in this
      Agreement and the other Loan Documents (all of which shall be applicable to
      such
      new Subsidiary as if named therein), and the Borrower shall cause such new
      Subsidiary to execute and deliver to the Lender (i) a Guaranty Agreement in
      substantially the form of the Guaranty Agreement as then in effect (or a joinder
      agreement with respect to the existing Guaranty Agreement in form and substance
      reasonably satisfactory to the Lender), and (ii) a Collateral Agreement (with
      completed perfection certificate and other appropriate Security Documents)
      in
      substantially the form of the Collateral Agreement as then in effect (or a
      joinder agreement with respect to the existing Collateral Agreement and/or
      U.K.
      Security Agreement (as applicable) in form and substance reasonably satisfactory
      to the Lender) and other Security Documents as reasonably requested by the
      Lender.

     

    
      
        
        

      

      
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    Section
      5.12. Landlord Waivers.
      Unless
      in effect at the Closing Date, obtain, within thirty (30 days after the Closing
      Date, a Landlord Waiver in form and substance reasonably satisfactory to the
      Lender, in respect of the Borrower’s Leased Real Property located in Allentown,
      Pennsylvania; and to the extent requested by the Lender from time to time
      subsequent to the Closing Date, use their commercially reasonable efforts to
      obtain, within thirty (30) days after the Lender’s request therefor, in form and
      substance reasonably satisfactory to the Lender, any and all bailee waivers,
      warehousemen’s waivers, Landlord Waivers and/or access agreements requested by
      the Lender in respect of locations where there is stored or held Collateral
      having an aggregate fair market value in excess of $25,000.

     

    Section
      5.13. Deposit Accounts.
      Notify
      the Lender upon opening any new bank account or securities account, and cause
      the subject bank or securities intermediary promptly to execute and deliver
      to
      the Lender a Control Agreement in respect of such bank account or securities
      account; and this Section 5.13 shall also be applicable to any and all bank
      accounts for which Control Agreements have not been entered into on the Closing
      Date if (a) the funds in such bank account exceed $25,000 (or the Dollar
      equivalent), or (ii) the funds held in the Bank Accounts for which Control
      Agreements are not in place exceed $100,000 (or the Dollar equivalent) in the
      aggregate; and to the extent that a required Control Agreement is not entered
      into within sixty (60) days after the Closing Date, then the subject bank
      account(s) shall be promptly closed and the funds held therein shall be
      transferred to one or more accounts at another banking institution which has
      executed and delivered a Control Agreement in respect of such account(s) in
      form
      and substance satisfactory to the Lender.

     

    VI. NEGATIVE
      COVENANTS

     

    The
      Borrower hereby covenants and agrees that, until all Obligations (whether now
      existing or hereafter arising) have been paid in full and the Revolving Credit
      Commitment has been terminated, unless the Lender shall otherwise consent in
      writing, the Borrower shall not, and shall not permit any Subsidiary to,
      directly or indirectly:

     

    Section
      6.01. Indebtedness.
      Incur,
      create, assume, become or be liable in any manner with respect to, or permit
      to
      exist, any Indebtedness, other than:

     

    (a) Indebtedness
      to the Lender pursuant to the Loan Documents;

     

    
      
        
        

      

      
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    (b) liabilities
      with respect to trade obligations, accounts payable, advances, royalty or other
      similar payments, operating leases and other normal accruals incurred in the
      ordinary course of business, or with respect to which the Borrower or the
      subject Subsidiary is contesting in good faith the amount or validity thereof
      by
      appropriate proceedings, and then only to the extent that the Borrower or the
      subject Subsidiary has set aside on its books adequate reserves
      therefor;

     

    (c) Indebtedness
      existing on the date of this Agreement owed to those Persons, in those amounts
      and having those maturities as set forth in Schedule
      3.01
      of the
      Disclosure Schedule, and any Indebtedness that refinances any of such
      Indebtedness (provided that such refinancing shall not cause an increase in
      the
      principal amount of the refinanced Indebtedness immediately prior to such
      refinancing);

     

    (d) Capitalized
      Leases reflected in the Financial Statements, and Capitalized Leases hereafter
      entered into by the Borrower or its Subsidiaries, subject to the limitations
      of
      Section 6.16 below;

     

    (e) purchase
      money Indebtedness incurred in connection with the Borrower’s or its
      Subsidiaries’ acquisition of assets, including capital assets, subject to the
      limitations of Section 6.16 below;

     

    (f) Subordinated
      Debt;

     

    (g) intercompany
      Indebtedness between the Borrower and any Subsidiary or between Subsidiaries,
      provided that all such Subsidiaries are, at the time of incurring such
      intercompany Indebtedness, parties to the Guaranty Agreement and the Collateral
      Agreement (and, to the extent applicable, the U.K. Security Agreement) and
      in
      compliance with their respective obligations thereunder; provided,
      however,
      that
      except for the intercompany Indebtedness disclosed in Schedule
      6.01
      of the
      Disclosure Schedule, the aggregate intercompany Indebtedness owed to the
      Borrower or any Domestic Subsidiary by any and all Non-UK Subsidiaries, when
      aggregated with the amount of all other Investments in Non-UK Subsidiaries
      and
      the face amount of all Guarantees made by the Borrower or its Domestic
      Subsidiaries in respect of obligations of Non-UK Subsidiaries, shall not at
      any
      time exceed $100,000 (the “Foreign
      Investment Limitation”);
      and.

     

    (h) Guarantees
      to the extent permitted pursuant to Section 6.03 below.

     

    Section
      6.02. Liens.
      Create,
      incur, assume or suffer to exist any Lien or other encumbrance of any nature
      whatsoever on any of its assets, now or hereafter owned, other
      than:

     

    (a) subject
      to Section 5.02 above, Liens securing the payment of taxes which are either
      not
      yet due or the validity of which is being contested in good faith by appropriate
      proceedings, and as to which the Borrower or the subject Subsidiary shall have
      set aside on its books adequate reserves;

     

    (b) deposits
      under workers’ compensation, unemployment insurance and social security laws, or
      to secure the performance of bids, tenders, contracts (other than for the
      repayment of money borrowed) or leases, or to secure statutory obligations
      or
      surety or appeal bonds, or to secure indemnity, performance or other similar
      bonds in the ordinary course of business;

     

    
      
        
        

      

      
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    (c) statutory
      Liens of landlords and Liens imposed by law, such as, carriers’, warehousemen’s,
      materialmen’s or mechanics’ liens, incurred by the Borrower or any Subsidiary in
      good faith in the ordinary course of business and discharged promptly after
      same
      are incurred; fully bonded Liens arising out of a judgment or award against
      the
      Borrower or any Subsidiary with respect to which the Borrower or such Subsidiary
      shall currently be prosecuting an appeal, a stay of execution pending such
      appeal having been secured; and Liens arising out of a judgment or award against
      the Borrower or any Subsidiary which are fully covered by insurance (subject
      to
      applicable deductibles) and for which the relevant insurer has not denied or
      disclaimed coverage;

     

    (d) other
      Liens incurred in connection with Indebtedness expressly permitted pursuant
      to
      Section 6.01(d) and/or Section 6.01(e) above, provided that such Liens do not
      extend to any assets or property other than the specific assets or properties
      acquired pursuant to such permitted Indebtedness;

     

    (e) encumbrances
      consisting of easements, rights-of-way, survey exceptions and other similar
      restrictions on the use of Real Property, or irregularities in title thereto
      which do not materially impair the use of such property in the operation of
      the
      business of the Borrower and its Subsidiaries;

     

    (f) Liens
      in
      existence on the date of this Agreement, as set forth on Schedule
      6.02
      of the
      Disclosure Schedule;

     

    (g) Liens
      arising out of judgments or awards (i) which are fully covered by insurance
      (subject to applicable deductibles) and for which the relevant insurer has
      not
      denied or disclaimed coverage, or (ii) with respect to which the Borrower or
      the
      subject Subsidiary shall be prosecuting an appeal in good faith and in respect
      of which a stay of execution shall have been issued;

     

    (h) Liens
      created by standard account agreements in favor of the depository institution
      in
      respect of funds in the Borrower’s and its Subsidiaries’ bank
      accounts;

     

    (i) Liens
      in
      favor of the Lender;

     

    (j) any
      other
      Liens specifically consented to by the Lender in writing; and

     

    (k) extensions,
      renewals or replacements of any Lien referred to in clauses (a) through (f)
      above, provided that same shall not extend such Lien to any additional assets
      or
      effect any increase in any principal amount secured thereby. 

     

    Section
      6.03. Guarantees.
      Guarantee, endorse or otherwise in any manner become or be responsible for
      obligations of any other Person, except (a) endorsements of negotiable
      instruments for collection in the ordinary course of business, (b) subject
      to
      the Foreign Investment Limitation, Guarantees by the Borrower of obligations
      of
      Wholly-Owned Subsidiaries in the ordinary course of business. 

     

    
      
        
        

      

      
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    Section
      6.04. Sales of Assets and Management.
      Except
      as disclosed in Schedule
      6.04
      of the
      Disclosure Schedule, (a) sell, lease, transfer, encumber or otherwise dispose
      of
      any of the Borrower’s or any Subsidiary’s properties, assets, rights, licenses
      or franchises other than (i) sales of inventory in the ordinary course of
      business, (ii) licenses, joint ventures and related transactions entered into,
      modified or terminated in the ordinary course of business, (iii) the disposition
      of surplus, obsolete or worn-out personal properties in the ordinary course
      of
      business, or the abandonment or disposition of Intellectual Property as and
      to
      the extent permitted by the Collateral Agreement, or (b) permit any Affiliate
      of
      the Borrower (other than a Subsidiary which is a party to the Guaranty Agreement
      and the Collateral Agreement) to own or obtain any patent, patent application,
      copyright, copyright application, trademark, trademark application, license,
      or
      other intangible asset relating to the Business Operations except in the normal
      course of business on terms and conditions no less favorable to the Borrower
      or
      any Subsidiary than those which could be obtained in an arms’ length transaction
      with an unaffiliated third party.

     

    Section
      6.05. Sale-Leaseback.
      Enter
      into any arrangement, directly or indirectly, with any Person whereby the
      Borrower or any Subsidiary shall sell or transfer any property (real, personal
      or mixed) used or useful in the Business Operations, whether now owned or
      hereafter acquired, and thereafter rent or lease such property.

     

    Section
      6.06. Investments; Acquisitions.
      Make
      any Investment in, or otherwise acquire or hold securities (including, without
      limitation, capital stock and evidences of Indebtedness) of, or make loans
      or
      advances to, or enter into any arrangement for the purpose of providing funds
      or
      credit to, any other Person (including any Affiliate), except:

     

    (a) The
      outstanding intercompany loans described in the proviso
      to
      Section 6.01(g) above, and Investments in Wholly-Owned Subsidiaries which have
      complied with the requirements of Section 5.11 hereof (subject, in the case
      of
      Foreign Subsidiaries, to the Foreign Investment Limitation); 

     

    (b) advances
      (to the extent permitted by Applicable Law, including federal securities laws)
      to employees of the Borrower or any Wholly-Owned Subsidiaries for normal
      business expenses not to exceed at any time $10,000 in the aggregate;

     

    (c) Investments
      of excess cash generated in the Business Operations in Cash Equivalents;
      and

     

    (d) Investments
      of cash in overnight deposits or other customary cash management Investments
      with commercial banks or in commercial paper satisfying the criteria for such
      banks or commercial paper as set forth in the definition of Cash
      Equivalents.

     

    Section
      6.07. Corporate Form; Acquisitions.
      Purchase or acquire any Real Property or any ownership interest in any Real
      Property; cause or permit any reduction in the Borrower’s ultimate percentage
      ownership interest in any Subsidiary; or dissolve or liquidate, or consolidate
      or merge with or into, sell all or substantially all of the assets of the
      Borrower or any Subsidiary to, or acquire all or substantially all of the
      securities, assets or properties of, any other Person, except for (a)
      consolidations of a Subsidiary with a Wholly-Owned Subsidiary (provided that
      no
      Domestic Subsidiary shall be consolidated with a Foreign Subsidiary); (b)
      mergers of a Wholly-Owned Subsidiary into the Borrower or into a Wholly-Owned
      Subsidiary (provided that no Domestic Subsidiary shall be merged into any
      Foreign Subsidiary); or (c) sales to the Borrower or another Subsidiary for
      fair
      value.

     

    
      
        
        

      

      
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    Section
      6.08. Dividends and Redemptions.
      Directly or indirectly declare or pay any dividends, or make any distribution
      of
      cash or property, or both, to any Person in respect of any of the shares of
      the
      capital stock or other equity securities of the Borrower or any other Person,
      or
      directly or indirectly redeem, purchase or otherwise acquire for consideration
      any securities or shares of the capital stock or other equity securities of
      the
      Borrower or any other Person; provided,
      that
      this Section 6.08 shall not be deemed to prohibit the payment of dividends
      or
      distributions by any Subsidiary to the Borrower or to any direct or indirect
      Wholly-Owned Domestic Subsidiary.

     

    Section
      6.09. Compensation.
      Directly or indirectly pay any cash compensation to any executive officers
      of
      the Borrower except in accordance with the compensation levels disclosed in
      Schedule
      6.09
      of the
      Disclosure Schedule or as otherwise approved by the independent members of
      the
      Board of Directors of the Borrower but in no case in any amount or amounts
      which
      would cause or reasonably be expected to cause a Material Adverse
      Effect.

     

    Section
      6.10. Change of Business.
      Directly or indirectly: (a) engage in a business materially different from
      the
      general nature of the Business Operations (i) as now being conducted, or (ii)
      as
      the same may hereafter be reasonably expanded from time to time in like areas
      of
      business; (b) wind up the Business Operations or cease substantially all of
      its
      normal Business Operations for a period in excess of thirty (30) consecutive
      days; or (c) suffer any material disruption, interruption or discontinuance
      of a
      material portion of its normal Business Operations for a period in excess of
      thirty (30) consecutive days.

     

    Section
      6.11. Receivables.
      Sell or
      assign in any way any accounts receivable, promissory notes or trade acceptances
      held by the Borrower or any Subsidiary with or without recourse, except for
      collections (including endorsements) in the ordinary course of
      business.

     

    Section
      6.12. Certain Amendments.
      Agree,
      consent, permit or otherwise undertake to amend any of the terms or provisions
      of the Borrower’s or any Subsidiary’s Organic Documents in a manner which may
      impair in any respect any of the Lender’s rights under any of the Loan
      Documents.

     

    Section
      6.13. Affiliate Transactions.
      Enter
      into any Contract, agreement or transaction with any Affiliate of the Borrower
      except (a) as disclosed in Schedule
      6.13
      of the
      Disclosure Schedule, (b) for intercompany Indebtedness between the Borrower
      and
      any Wholly-Owned Subsidiary or between any Wholly-Owned Subsidiaries (subject
      to
      the limitations provided in Section 6.06(a) above), or (c) in the normal course
      of business on terms and conditions no less favorable to the Borrower or any
      Subsidiary than those which could be obtained in an arms’ length transaction
      with an unaffiliated third party.

     

    Section
      6.14. Fiscal Year.
      Amend
      its Fiscal Year.

     

    
      
        
        

      

      
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    Section
      6.15. Subordinated Debt.
      Prepay
      any of the Indebtedness listed in Schedule
      3.01
      of the
      Disclosure Schedule; or prepay, redeem or purchase any Subordinated Debt, or
      make any payment on any Subordinated Debt, in each case in violation of the
      applicable subordination agreement.

     

    Section
      6.16. Capital Expenditures.
      Make
      aggregate Capital Expenditures in excess of $600,000 in any Fiscal Year;
provided,
      however,
      that
      there shall not be counted against such limitation any Capital Expenditures
      included in the purchase price of any business acquired after the Closing Date
      (provided that any required consent with respect thereto under this Agreement
      has been obtained). 

     

    Section
      6.17. Coverage Test.
      Permit,
      as of the end of any quarter of any Fiscal Year, the ratio of (a) EBIDA minus
      Capital Expenditures incurred to maintain or replace capital assets, to (b)
      Debt
      Service, for the four (4) consecutive quarters then ended to be less than 1.25
      to 1.00.

     

    VII. DEFAULTS

     

    Section
      7.01. Events of Default.
      Each of
      the following events is herein, and in the Notes, sometimes referred to as
      an
      Event of Default: 

     

    (a) if
      any
      representation or warranty made herein or in any other Loan Document, or in
      any
      certificate, financial statement, Borrowing Base report, instrument or other
      written statement furnished by the Borrower or any Subsidiary in connection
      with
      this Agreement, any other Loan Document or any of the borrowings hereunder
      shall
      be false, inaccurate or misleading in any material respect when made or when
      deemed made hereunder;

     

    (b) any
      default in the payment of any principal or interest under any of the Notes
      or
      any other Obligations when the same shall be due and payable, whether at the
      due
      date thereof or at a date required for prepayment or by acceleration or
      otherwise, and the continuance of any such non-payment (in whole or in part)
      for
      a period of five (5) Business Days;

     

    (c) any
      default in the due observance or performance of any covenant, condition or
      agreement contained in any Section of Article VI hereof, which, if capable
      of
      being cured, is not fully cured within thirty (30) days after the occurrence
      thereof;

     

    (d) any
      default in the due observance or performance of any covenant, condition or
      agreement to be observed or performed under Article V hereof, or otherwise
      pursuant to the terms hereof or any other Loan Document and not addressed in
      Sections 7.01(a), (b) or (c), and the continuance of such default unremedied
      for
      a period of thirty (30) days (ten (10) Business Days in the case of Section
      5.01(d) hereof) after written notice thereof to the Borrower, or such other
      cure
      period as may be provided in the applicable Loan Document;

     

    (e) any
      uncured default or event of default with respect to any Indebtedness of the
      Borrower or any of the Subsidiaries (other than to the Lender) in an amount
      in
      excess of $100,000, if the effect of such default or event of default is to
      permit the holder, with or without notice or lapse of time or both, to
      accelerate the maturity of any such Indebtedness for money borrowed or to cause
      such Indebtedness for money borrowed to become due prior to the stated maturity
      thereof;

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    (f) if
      the
      Borrower or any Subsidiary shall: (i) apply for or consent to the appointment
      of
      a receiver, trustee, custodian or liquidator of it or any of its properties,
      (ii) admit in writing its inability to pay its debts as they mature, (iii)
      make
      a general assignment for the benefit of creditors, (iv) be adjudicated a
      bankrupt or insolvent or be the subject of an order for relief under Title
      11 of
      the United States Code or any bankruptcy, reorganization, insolvency,
      readjustment of debt, dissolution or liquidation law or statute of any other
      jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy,
      or a petition or an answer seeking reorganization or an arrangement with
      creditors or to take advantage or any bankruptcy, reorganization, insolvency,
      readjustment of debt, dissolution or liquidation law or statute, or an answer
      admitting the material allegations of a petition filed against it in any
      proceeding under any such law, or (vi) take or permit to be taken any action
      in
      furtherance of or for the purpose of effecting any of the
      foregoing;

     

    (g) if
      any
      order, judgment or decree shall be entered, without the application, approval
      or
      consent of the Borrower or any Subsidiary, by any court of competent
      jurisdiction, approving a petition seeking liquidation or reorganization of
      the
      Borrower or any Subsidiary, or appointing a receiver, trustee, custodian or
      liquidator of the Borrower or any Subsidiary, or of all or any substantial
      part
      of its assets, and such order, judgment or decree shall continue unstayed and
      in
      effect for any period of sixty (60) days;

     

    (h) if
      final
      judgment(s) or administrative order for the payment of money in an uninsured
      amount in excess of $100,000, individually or in the aggregate shall be rendered
      against the Borrower and/or any Subsidiary, and the same shall remain
      undischarged or unbonded for a period of thirty (30) consecutive days, during
      which execution shall not be effectively stayed; 

     

    (i) the
      occurrence of any levy upon or seizure or attachment of, or any uninsured loss
      of or damage to, any property of the Borrower or any Subsidiary having an
      aggregate fair value or repair cost (as the case may be) in excess of $100,000
      individually or in the aggregate, and any such levy, seizure or attachment
      shall
      not be set aside, bonded or discharged within thirty (30) days after the date
      thereof; 

     

    (j) if
      any
      Lien purported to be created by any Security Document shall cease to be a valid
      perfected first priority Lien (subject only to any priority accorded by law
      to
      Permitted Liens) on the assets or properties covered thereby, or the Borrower
      or
      any Subsidiary shall assert in writing that any Lien purported to be created
      by
      any Security Document is not a valid perfected first priority lien (subject
      only
      to any priority accorded by law to Permitted Liens) on the assets or properties
      purported to be covered thereby; or if any Subsidiary which is a Wholly-Owned
      Subsidiary shall cease to be a Wholly-Owned Subsidiary;

     

    (k) if
      any of
      the Loan Documents shall cease to be in full force and effect (other than as
      a
      result of the discharge thereof in accordance with the terms thereof or by
      written agreement of all parties thereto);

     

    (l) if
      the
      Common Stock shall not be listed or traded on any national securities exchange
      or any NASDAQ market, or shall cease to be listed or quoted on the OTC Bulletin
      Board, for any period in excess of thirty (30) consecutive days;

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (m) if
      the
      Borrower or any Subsidiary shall be indicted for, convicted of or plead
nolo contendere
      to any
      criminal offense; or 

     

    (n) the
      occurrence of a Material Adverse Effect.

     

    Section
      7.02. Remedies.
      Upon
      the occurrence of any Event of Default, and at all times thereafter during
      the
      continuance thereof: (a) the Notes, and any and all other Obligations, shall,
      at
      the Lender’s option (except in the case of Sections 7.01(f) and 7.01(g) hereof,
      the occurrence of which shall automatically effect acceleration, regardless
      of
      any action or forbearance in respect of any prior or ongoing Default or Event
      of
      Default which may be inconsistent with such automatic acceleration), become
      immediately due and payable, both as to principal, interest and other charges,
      without presentment, demand, protest or notice of any kind, all of which are
      hereby expressly waived, anything contained herein or in the Notes or other
      evidence of such Obligations to the contrary notwithstanding, (b) all
      outstanding Obligations under the Notes, and all other outstanding Obligations,
      shall bear interest at the default rates of interest provided in the Notes,
      (c)
      the Lender may file suit against the Borrower on the Notes and against the
      Borrower and the Subsidiaries under the other Loan Documents and/or seek
      specific performance or injunctive relief thereunder (whether or not a remedy
      exists at law or is adequate), (d) the Lender shall have the right, in
      accordance with the Security Documents, to exercise any and all remedies in
      respect of such or all of the Collateral as the Lender may determine in its
      discretion (without any requirement of marshalling of assets or other such
      requirement, all of which are hereby waived by the Borrower), and (e) the
      Revolving Credit Commitment shall, at the Lender’s option (except in the case of
      Sections 7.01(f) and 7/01(g) hereof, the occurrence of which shall automatically
      effect termination, regardless of any action or forbearance in respect of any
      prior or ongoing Default or Event of Default which may be inconsistent with
      such
      automatic termination), be immediately terminated or reduced, and the Lender
      shall be under no further obligation to consider making any further
      Advances.

     

    VIII. PARTICIPATING
      LENDERS; ASSIGNMENT.

     

    Section
      8.01. Participations.
      Anything in this Agreement to the contrary notwithstanding, the Lender may,
      at
      any time and from time to time, without in any manner affecting or impairing
      the
      validity of any Obligations, transfer, assign or grant participating interests
      in the Loans as the Lender shall in its sole discretion determine, to such
      other
      Persons (the “Participants”)
      as the
      Lender may determine. Notwithstanding the granting of any such participating
      interests: (a) the Borrower shall look solely to the Lender for all purposes
      of
      this Agreement and the transactions contemplated hereby, (b) the Borrower shall
      at all times have the right to rely upon any waivers or consents signed by
      the
      Lender as being binding upon all of the Participants, and (c) all communications
      in respect of this Agreement and such transactions shall remain solely between
      the Borrower and the Lender (exclusive of Participants) hereunder.

     

    Section
      8.02. Transfer and Assignment.
      Anything in this Agreement to the contrary notwithstanding, the Lender may,
      at
      any time and from time to time, subject to Section 8.03 below, without in any
      manner affecting or impairing the validity of any Obligations, transfer and
      assign all or any portion of its interest in this Agreement, the Notes and
      the
      other Loan Documents to any Person (an “Assignee
      Lender”)
      as the
      Lender may determine; provided,
      however,
      that
      unless an Event of Default shall have occurred and be continuing, the Lender
      shall not, without the Borrower’s prior written consent, make any such
      assignment to any Person which, to the Lender’s knowledge, derives any material
      amount of revenues from the operation (directly or through any Affiliate) of
      any
      business competitive with the Business Operations. Upon any such transfer or
      assignment, the Assignee Lender shall be deemed to succeed (to the extent of
      the
      interest assigned) to the rights and obligations of the Lender for all purposes
      of this Agreement. In the event of any transfer and assignment of the Lender’s
      entire interest in this Agreement, the Notes and the Security Documents, the
      Lender shall be replaced by the Assignee Lender as “Secured Party” under the
      Collateral Agreement and all other Security Documents.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    Section
      8.03. Recordation of Assignment.
      In
      respect of any negotiation, transfer or assignment of all or any portion of
      any
      Lender’s interest in this Agreement, any Note and/or any other Loan Documents at
      any time and from time to time, the following provisions shall be
      applicable:

     

    (a) The
      Borrower, or any agent appointed by the Borrower, shall maintain a register
      (the
“Register”)
      in
      which there shall be recorded the name and address of each Person holding any
      Note(s) hereunder or any commitment to lend hereunder, and the principal amount
      payable to such Person under such Person’s Note(s) or committed by such Person
      under such Person’s lending commitment. The Borrower hereby irrevocably appoints
      the Lender (and/or any subsequent Lender appointed by the Lender then
      maintaining the Register) as the Borrower’s agent for the purpose of maintaining
      the Register.

     

    (b) In
      connection with any negotiation, transfer or assignment as aforesaid, the
      transferor/assignor shall deliver to the Lender then maintaining the Register
      an
      assignment and assumption agreement executed by the transferor/assignor and
      the
      transferee/assignee, setting forth the specifics of the subject transaction,
      including but not limited to the amount and nature of Obligations and/or lending
      commitments being transferred or assigned (and being assumed, as applicable),
      and the proposed effective date of such transfer or assignment and the related
      assumption (if applicable).

     

    (c) Subject
      to receipt of completed tax forms (indicating withholding status, or exemption
      from withholding, as applicable, of the transferee/assignee) reasonably required
      by the Person then maintaining the Register, and (if required by such Person)
      surrender of the negotiated, transferred or assigned Note(s) for reissuance
      by
      the Borrower, such Person shall record the subject transfer, assignment and
      assumption in the Register. Anything contained in any Note or other Loan
      Document to the contrary notwithstanding, no negotiation, transfer or assignment
      shall be effective until it is recorded in the Register pursuant to this Section
      8.03(c). The entries in the Register shall be conclusive and binding for all
      purposes, absent manifest error; and the Borrower and each Lender shall treat
      each Person whose name is recorded in the Register as a Lender hereunder for
      all
      purposes of this Agreement. The Register shall be available for inspection
      by
      the Borrower and each Lender at any reasonable time and from time to time upon
      reasonable prior notice.

     

    IX. MISCELLANEOUS

     

    Section
      9.01. Survival.
      This
      Agreement and all covenants, agreements, representations and warranties made
      herein and in the certificates delivered pursuant hereto, shall survive the
      making by the Lender of the Loans and the execution and delivery to the Lender
      of the Notes, and shall continue in full force and effect for so long as the
      Notes or any other Obligations are outstanding and unpaid or the Revolving
      Credit Commitment remains outstanding. Whenever in this Agreement any of the
      parties hereto is referred to, such reference shall be deemed to include the
      successors and permitted assigns of such party; and all covenants, promises
      and
      agreements in this Agreement contained, by or on behalf of the Borrower shall
      inure to the benefit of the successors and assigns of the Lender.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    Section
      9.02. Indemnification.
      The
      Borrower shall indemnify the Lender and its directors, officers, employees,
      attorneys and agents against, and shall hold the Lender and such Persons
      harmless from, any and all losses, claims, damages and liabilities and related
      expenses, including reasonable counsel fees and expenses, incurred by the Lender
      or any such Person arising out of, in any way connected with, or as a result
      of:
      (a) any breach by the Borrower or any Subsidiary of any of the Loan Documents;
      (b) the use of any of the proceeds of the Loans made by the Lender to the
      Borrower; (c) this Agreement, the ownership and operation of the Borrower’s and
      any Subsidiary’s assets, including all Real Properties and improvements or any
      Contract, the performance by the Borrower or any other Person of their
      respective obligations thereunder, and the consummation of the transactions
      contemplated by this Agreement; (d) any finder’s fee, brokerage commission of
      other such obligation payable or alleged to be payable in respect of the
      transactions contemplated by this Agreement which arises or is alleged to arise
      from any agreement, action or conduct of the Borrower or any of its Affiliates,
      and/or (e) any claim, litigation, investigation or proceeding relating to any
      of
      the foregoing, whether or not the Lender or its directors, officers, managers,
      employees, attorneys or agents are a party thereto; provided
      that
      such indemnity shall not apply to any such losses, claims, damages, liabilities
      or related expenses arising from (i) any unexcused breach by the Lender of
      any
      of its obligations under this Agreement, (ii) the willful misconduct or gross
      negligence of the Lender as determined by a final, non-appealable judgment
      of a
      court of competent jurisdiction, or (iii) the breach of any commitment or legal
      obligation of the Lender to any Person other than the Borrower or its
      Affiliates, provided
      that
      such breach is determined pursuant to a final and nonappealable decision of
      a
      court of competent jurisdiction. The foregoing indemnity shall remain operative
      and in full force and effect regardless of the expiration or any termination
      of
      this Agreement, the consummation of the transactions contemplated by this
      Agreement, the repayment of the Loans, the invalidity or unenforceability of
      any
      term or provision of any Loan Document, any investigation made by or on behalf
      of the Lender, and the content or accuracy of any representation or warranty
      made by the Borrower or any Subsidiary in any Loan Document. All amounts due
      under this Section 9.02 shall be payable on written demand
      therefor.

     

    Section
      9.03. Governing Law.
      This
      Agreement and the other Loan Documents shall (irrespective of where same are
      executed and delivered) be governed by and construed in accordance with the
      laws
      of the State of New York (without giving effect to principles of conflicts
      of
      laws).

     

    Section
      9.04. Waiver and Amendment.
      Neither
      any modification or waiver of any provision of this Agreement, the Notes, or
      any
      other Loan Document, nor any consent to any departure by the Borrower or any
      Subsidiary therefrom, shall in any event be effective unless the same shall
      be
      set forth in writing duly signed or acknowledged by the Lender (or, in the
      event
      that there are multiple Lenders at any time, Lenders holding a majority of
      the
      outstanding principal balance of the Term Loan and the maximum Revolving Credit
      Commitment) and all parties to such Loan Document, and then such waiver or
      consent shall be effective only in the specific instance, and for the specific
      purpose, for which given. No notice to or demand on the Borrower in any instance
      shall entitle the Borrower to any other or future notice or demand in the same,
      similar or other circumstances.

      
      

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    Section
      9.05. Reservation of Remedies.
      Neither
      any failure nor any delay on the part of the Lender in exercising any right,
      power or privilege hereunder or under the Notes or any other Loan Document
      shall
      operate as a waiver thereof, nor shall a single or partial exercise thereof
      preclude any other or future exercise, or the exercise of any other right,
      power
      or privilege.

     

    Section
      9.06. Notices.
      All
      notices, requests, demands and other communications under or in respect of
      this
      Agreement or any transactions hereunder shall be in writing and shall be
      personally delivered, sent by prepaid recognized overnight courier service,
      or
      telecopied by facsimile transmission to the applicable party at its address
      or
      telecopier number indicated below.

    

      
        	
                If
                  to the Lender:

              
	 	 
	 	
                ComVest
                  Capital, LLC

              
	 	
                One
                  North Clematis, Suite 300

              
	 	
                West
                  Palm Beach, FL 33401

              
	 	
                Attention:
                  Chief Financial Officer

              
	 	
                Telecopier:
                  (212) 829-5986

              
	 	 
	
                with
                  a copy to:

              
	 	 
	 	
                Greenberg
                  Traurig, LLP

              
	 	
                200
                  Park Avenue

              
	 	
                New
                  York, New York 10166

              
	 	
                Attention:
                  Shahe Sinanian, Esq.

              
	 	
                Telecopier:
                  (212) 801-6400

              
	 	 
	
                If
                  to the Borrower:

              
	 	 
	 	
                Aftersoft
                  Group, Inc. 

              
	 	
                Regus
                  House

              
	 	
                Heronsway
                  Chester Business Park

              
	 	
                Chester,
                  CH4 9QR United Kingdom

              
	 	
                Attention:
                  Simon Chadwick

              
	 	
                Telecopier:
                  011-44-870-134-2941

              
	 	 
	
                with
                  a copy to:

              
	 	 
	 	
                Gersten
                  Savage LLP

              
	 	
                600
                  Lexington Avenue, 9th
                  Floor

              
	 	
                New
                  York, New York 10022-6018

              
	 	
                Attention:
                  John H. Riley, Esq.

              
	 	
                Telecopier:
                  (212) 980-5192

              

      

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

    

     

    or,
      as to
      each party, at such other address or telecopier number as shall be designated
      by
      such party in a written notice to the other party delivered as aforesaid. All
      such notices, requests, demands and other communications shall be deemed given
      (a) when personally delivered, (b) three (3) Business Days after being delivered
      to the telegraph company or overnight courier service, if prepaid and sent
      overnight delivery, addressed as aforesaid and with all charges prepaid or
      billed to the account of the sender, or (c) when sent by facsimile transmission
      to a telecopier number designated by such addressee (provided that, if such
      facsimile is sent other than during normal business hours at the point of
      receipt, such facsimile shall be deemed to have been sent on the next succeeding
      Business Day).

     

    Section
      9.07. Binding Effect.
      This
      Agreement shall be binding upon and inure to the benefit of the Borrower and
      the
      Lender and their respective successors and assigns, except that the Borrower
      shall not assign any of its rights or obligations hereunder without the prior
      written consent of the Lender.

     

    Section
      9.08. Consent to Jurisdiction; Waiver of Jury Trial.
      Each of
      the Lender and the Borrower hereby consents to the non-exclusive jurisdiction
      of
      all courts of the State of New York and the United States District Court for
      the
      Southern District of New York, as well as to the jurisdiction of all courts
      from
      which an appeal may be taken from such courts, for the purpose of any suit,
      action or other proceeding arising out of or with respect to this Agreement,
      any
      other Loan Document, any other agreements, instruments, certificates or other
      documents executed in connection herewith or therewith, or any of the
      transactions contemplated hereby or thereby, or any of the Lender’s, the
      Borrower’s or any Subsidiary’s obligations hereunder or thereunder. The Borrower
      hereby waives the right to interpose any counterclaims (other than compulsory
      counterclaims) in any action brought by the Lender hereunder or in respect
      of
      any other Loan Document, provided that this waiver shall not preclude the
      Borrower from pursuing any such claims by means of separate proceedings. EACH
      OF
      THE LENDER AND THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS
      WHICH
      IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO WAIVES TRIAL BY JURY
      IN
      ANY SUCH SUIT, ACTION OR PROCEEDING. Each party may file a copy of this
      Agreement as evidence of the foregoing waiver of right to jury
      trial.

     

    Section
      9.09. Certain Waivers.
      The
      Borrower and the Lender each hereby waives any claims for special, consequential
      or punitive damages in any way arising out of or relating to this Agreement,
      any
      of the other Loan Documents, or any breach hereof or thereof.

     

    Section
      9.10. Severability.
      If any
      provision of this Agreement is held invalid or unenforceable, either in its
      entirety or by virtue of its scope or application to given circumstances, such
      provision shall thereupon be deemed modified only to the extent necessary to
      render same valid, or not applicable to given circumstances, or excised from
      this Agreement, as the situation may require, and this Agreement shall be
      construed and enforced as if such provision had been included herein as so
      modified in scope or application, or had not been included herein, as the case
      may be.

     

    Section
      9.11. Captions.
      The
      Article and Section headings in this Agreement are included herein for
      convenience of reference only, and shall not affect the construction or
      interpretation of any provision of this Agreement.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    Section
      9.12. Sole and Entire Agreement.
      This
      Agreement, the Notes, the other Loan Documents, and the other agreements,
      instruments, certificates and documents referred to or described herein and
      therein constitute the sole and entire agreement and understanding between
      the
      parties hereto as to the subject matter hereof, and supersede all prior
      discussions, agreements and understandings of every kind and nature between
      the
      parties as to such subject matter.

     

    Section
      9.13. Confidentiality.
      The
      Lender shall not disclose any Confidential Information to any Person, or use
      Confidential Information except in connection with the administration of this
      Agreement and the other Loan Documents, without the prior written consent of
      the
      Borrower; provided,
      however,
      that
      nothing herein contained shall limit any disclosure of the tax structure of
      the
      transactions contemplated hereby, or the disclosure of any information (a)
      to
      the extent required by statute, rule, regulation or judicial process, (b) to
      counsel for the Lender, (c) to bank examiners, auditors, accountants or, if
      required by law, any regulatory authority, (d) to the officers, partners,
      managers, directors, employees, agents and advisors (including independent
      auditors and counsel) of the Lender, subject to the requirements of this Section
      9.13, (e) in connection with any litigation which relates to this Agreement
      to
      which the Lender is a party, (f) to a subsidiary or Affiliate of the Lender,
      subject to the requirements of this Section 9.13, or (g) to any assignee or
      participant (or prospective assignee or participant) which agrees to be bound
      by
      this Section 9.13, and further provided,
      that in
      no event shall the Lender be obligated or required to return any materials
      furnished by the Borrower. The obligations of the Lender under this Section
      9.13
      shall supersede and replace the obligations of the Lender under any
      confidentiality letter in respect of this financing previously signed and
      delivered by the Lender to the Borrower. In no event shall the Lender trade
      in
      any securities of the Borrower using non-public information of the
      Borrower.

     

    Section
      9.14. Counterparts; Fax Signatures.
      This
      Agreement may be executed in any number of counterparts, all of which shall
      constitute one and the same agreement. This Agreement may be executed by fax
      or
      e-mailed signatures, each of which shall be fully binding on the signing
      party.

     

    [The
      remainder of this page is intentionally blank]

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Agreement to be duly executed by their duly
      authorized officer as of the day and year first written above.

    

      
        	
                COMVEST
                  CAPITAL, LLC

              
	 
	
                By: 

              	
                /s/
                  Gary E. Jaggard

              
	 	
                Name:
                  Gary E. Jaggard

              
	 	
                Title:
                  Managing Director

                 

              
	 
	
                AFTERSOFT
                  GROUP, INC. 

              
	 
	
                By: 

              	
                /s/
                  Simon Chadwick

              
	 	
                Name:
                  Simon Chadwick

              
	 	
                Title:
                  Chief Operating Officer

              

      

    

     

    
      
        
        

      

      
        50EXHIBIT
      10.2

     

    REVOLVING
      CREDIT NOTE

     

    
      
        	
                $1,000,000

              	
                December
                  21, 2007

              

      

    

     

    FOR
      VALUE RECEIVED,
      the
      undersigned, AFTERSOFT
      GROUP, INC.,
      a
      Delaware corporation (the “Maker”), hereby promises to pay to COMVEST
      CAPITAL, LLC, a
      Delaware limited liability company (“ComVest”), or registered assigns
      (hereinafter, collectively with ComVest, referred to as the “Payee”), on
      November 30, 2009 (subject to extension pursuant to Section 2.01(h) of the
      Loan
      Agreement hereinafter described, or sooner by reason of an Event of Default
      or
      required prepayment in accordance with the Loan Agreement hereinafter
      described), the principal sum of One Million ($1,000,000) Dollars or, if less,
      the aggregate unpaid principal amount of all Revolving Credit Advances made
      by
      the Payee to the Maker pursuant to that certain Revolving Credit and Term Loan
      Agreement of even date herewith by and between ComVest and the Maker (as same
      may be amended, modified, supplemented and/or restated from time to time, the
      “Loan Agreement”), together with interest (computed as hereinafter provided) on
      any and all principal amounts outstanding hereunder from time to time from
      the
      date hereof until payment in full hereof, at a rate per annum equal to the
      greater of (a) the Prime Rate (as such term is hereinafter defined) as in effect
      from time to time plus two (2%) percent, or (b) nine and one-half (9.5%)
      percent; provided,
      however,
      that
      during the continuance of any Event of Default under the Loan Agreement, the
      interest rate otherwise applicable hereunder shall be increased by four hundred
      (400) basis points. All interest shall be computed on the daily unpaid principal
      balance hereof based on a three hundred sixty (360) day year, and shall be
      payable monthly in arrears on the first day of each calendar month commencing
      January 1, 2008, and upon maturity or acceleration
      hereof.

     

    As
      used
      herein, the term “Prime Rate” shall mean the “prime rate” or “base rate” of
      interest publicly announced by Citibank, N.A. (or any successor thereto, or
      in
      the event that such bank shall cease to exist and shall have no successor,
      any
      other domestic commercial bank selected by the Payee in good faith) from time
      to
      time, which is merely a reference rate for determining the interest rate to
      be
      charged on loans or other financial transactions, and may or may not be the
      best
      rate offered by such bank for commercial loans; and upon each announced change
      of the Prime Rate by such bank, the interest rate hereunder shall be
      correspondingly adjusted.

     

    The
      Maker
      shall have the right, at any time and from time to time, to prepay all or any
      portion of the principal balance of this Note upon written notice to the Payee,
      stating the amount of the prepayment. In addition, the Maker shall be required
      to make principal payments hereunder, without requirement of notice or demand,
      as and to the extent provided in Sections 2.01(d) and 2.08 of the Loan
      Agreement, and upon any payment, prepayment or requirement for the prepayment
      in
      full of the Term Loans (as such term is defined in the Loan
      Agreement).

     

    Unless
      the Maker shall be otherwise notified in writing by ComVest, all principal
      and
      interest hereunder are payable in lawful money of the United States of America
      at the office of ComVest set forth in the Loan Agreement in immediately
      available funds. Payments of principal and/or interest hereunder shall be made,
      at the Payee’s option, by debiting any demand deposit account(s) in the name of
      the Maker at the Payee (or any agent of the Payee) or in such other reasonable
      manner as may be designated by the Payee in writing to the Maker and in any
      event shall be made in immediately available funds. The Maker hereby irrevocably
      authorizes the Payee to so debit any and all such demand deposit
      accounts.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Except
      for notice specifically provided herein, the Maker hereby waives presentment,
      demand, dishonor, protest, notice of protest, diligence and any other notice
      or
      action otherwise required to be given or taken under the law in connection
      with
      the delivery, acceptance, performance, default, enforcement or collection of
      this Note, and expressly agrees that this Note, or any payment hereunder, may
      be
      extended, modified or subordinated (by forbearance or otherwise) from time
      to
      time, without in any way affecting the liability of the Maker. The Maker hereby
      further waives the benefit of any exemption under the homestead exemption laws,
      if any, or any other exemption, appraisal or insolvency laws, and consents
      that
      the Payee may release or surrender, exchange or substitute any personal property
      or other collateral security now held or which may hereafter be held as security
      for the payment of this Note.

     

    This
      Note
      is the Revolving Credit Note issued pursuant to the terms of the Loan Agreement
      and is secured pursuant to the provisions of certain “Security Documents”
referred to in the Loan Agreement. This Note is entitled to all of the benefits
      of the Loan Agreement and said Security Documents, including provisions
      governing the payment and the acceleration of maturity hereof, which agreements
      and instruments are hereby incorporated by reference herein and made a part
      hereof. The occurrence and continuance of an Event of Default thereunder shall
      constitute a default under this Note and shall entitle the Payee to accelerate
      the entire indebtedness hereunder and take such other action as may be provided
      for in the Loan Agreement and/or any and all other instruments evidencing and/or
      securing the indebtedness under this Note, or as may be provided under the
      law.

     

    In
      the
      event that any holder of this Note shall, during the continuance of any Event
      of
      Default, exercise or endeavor to exercise any of its remedies hereunder or
      under
      the Loan Agreement or any of the Security Documents, the Maker shall pay all
      reasonable costs and expenses incurred in connection therewith, including,
      without limitation, reasonable attorneys’ fees, all of which costs and expenses
      shall be obligations under and part of this Note; and the holder hereof may
      take
      judgment for all such amounts in addition to all other sums due
      hereunder.

     

    No
      consent or waiver by the holder hereof with respect to any action or failure
      to
      act which, without such consent or waiver, would constitute a breach of any
      provision of this Note shall be valid and binding unless in writing and signed
      by the Maker and by the holder hereof.

     

    All
      agreements between the Maker and the Payee are hereby expressly limited to
      provide that in no contingency or event whatsoever, whether by reason of
      acceleration of maturity of the indebtedness evidenced hereby or otherwise,
      shall the amount paid or agreed to be paid to the Payee for the use, forbearance
      or detention of the indebtedness evidenced hereby exceed the maximum amount
      which the Payee is permitted to receive under applicable law. If, from any
      circumstances whatsoever, fulfillment of any provision hereof or of any of
      the
      Security Documents or the Loan Agreement, at the time performance of such
      provision shall be due, shall involve transcending the limit of validity
      prescribed by law, then, ipso facto,
      the
      obligation to be fulfilled shall automatically be reduced to the limit of such
      validity, and if from any circumstance the Payee shall ever receive as interest
      an amount which would exceed the highest lawful rate, such amount which would
      be
      excessive interest shall be applied to the reduction of the principal balance
      of
      any of the Maker’s Obligations (as such term is defined in the Loan Agreement)
      to the Payee, and not to the payment of interest hereunder. To the extent
      permitted by applicable law, all sums paid or agreed to be paid for the use,
      forbearance or detention of the indebtedness evidenced by this Note shall be
      amortized, prorated, allocated and spread throughout the full term of such
      indebtedness until payment in full, to the end that the rate or amount of
      interest on account of such indebtedness does not exceed any applicable usury
      ceiling. As used herein, the term “applicable law” shall mean the law in effect
      as of the date hereof, provided,
      however,
      that in
      the event there is a change in the law which results in a higher permissible
      rate of interest, then this Note shall be governed by such new law as of its
      effective date. This provision shall control every other provision of all
      agreements between the Maker and the Payee.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      New York, except to the extent that such laws are superseded by Federal
      enactments. 

     

    IN
      WITNESS WHEREOF,
      the
      Maker has caused this Note to be executed by its duly authorized officer as
      of
      the date first set forth above.

    

      
        	
                AFTERSOFT
                  GROUP, INC. 

              	 
	 	 
	
                By:

              	
                /s/
                  Simon Chadwick

              	 
	
                Name:

              	
                Simon
                  Chadwick

              
	
                Title:

              	
                Chief
                  Operating Officer

              

      

    

    
       

      
        
        

      

      
        3

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