Document:

Unassociated Document

     

    

     

    (Working
      Capital Line of Credit)

     

    LOAN
      AND SECURITY AGREEMENT

     

    This
      LOAN AND SECURITY AGREEMENT
      (this
“Agreement”) dated as of October 9, 2008 (the “Effective Date”) is among (a)
SILICON
      VALLEY BANK,
      a
      California corporation (“Bank”), with its principal place of business at 3003
      Tasman Drive, Santa Clara, California 95054 with a loan production office
      located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
      Massachusetts 02462 (FAX 617-969-5965), and (b) INTERCLICK,
      INC.,
      a
      Delaware corporation (“InterClick”), with its principal place of business
      at 257 Park Avenue South, New York, New York 10010 (FAX 646-304-6875),
      and DESKTOP
      ACQUISITION SUB, INC.,
      a
      Delaware corporation (“Desktop”), with its principal place of business
      at 257 Park Avenue South, New York, New York 10010 (FAX 646-304-6875)
      (InterClick and Desktop are hereinafter jointly and severally, individually
      and
      collectively, referred to as “Borrower”), and provides the terms on which Bank
      shall lend to Borrower, and Borrower shall repay Bank. The parties agree as
      follows:

     

    1
       ACCOUNTING
      AND OTHER TERMS

     

    Accounting
      terms not defined in this Agreement shall be construed following GAAP.
      Calculations and determinations must be made following GAAP. The term “financial
      statements” includes the notes and schedules. The terms “including” and
“includes” always mean “including (or includes) without limitation,” in this or
      any Loan Document. Capitalized terms not otherwise defined in this Agreement
      shall have the meanings set forth in Section 13. All other terms contained
      in
      this Agreement, unless otherwise indicated, shall have the meanings provided
      by
      the Code, to the extent such terms are defined therein.

     

    2
       LOAN
      AND TERMS OF PAYMENT

     

    2.1
       Promise
      to Pay.
      Borrower hereby unconditionally promises to pay Bank the unpaid principal amount
      of all Advances hereunder with all interest, fees and finance charges due
      thereon as and when due in accordance with this Agreement.

     

    2.1.1
       Financing
      of Accounts.

     

    (a)
       Availability.
      Subject
      to the terms of this Agreement, Borrower may request that Bank finance specific
      Eligible Accounts. Bank may, in its good faith business discretion, finance
      such
      Eligible Accounts by extending credit to Borrower in an amount equal to the
      result of the Advance Rate multiplied by the face amount of the Eligible Account
      (the “Advance”). Bank may, in its sole discretion, change the percentage of the
      Advance Rate for a particular Eligible Account on a case by case basis. When
      Bank makes an Advance, the Eligible Account becomes a “Financed Receivable.”

     

    (b)
       Maximum
      Advances.
      The
      aggregate face amount of all Financed Receivables outstanding at any time may
      not exceed the Facility Amount.

     

    (c)
       Borrowing
      Procedure.
      Borrower will deliver an Invoice Transmittal for each Eligible Account it
      offers. Bank may rely on information set forth in or provided with the Invoice
      Transmittal. 

     

    (d)
       Credit
      Quality; Confirmations.
      Bank
      may, at its option, conduct a credit check of the Account Debtor for each
      Account requested by Borrower for financing hereunder in order to approve any
      such Account Debtor’s credit before agreeing to finance such Account. Bank may
      also verify directly with the respective Account Debtors the validity, amount
      and other matters relating to the Accounts (including confirmations of
      Borrower’s representations in Section 5.3) by means of mail, telephone or
      otherwise, either in the name of Borrower or Bank from time to time in its
      sole
      discretion. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (e) Accounts
      Notification/Collection.
      Bank
      may notify any Person owing Borrower money of Bank’s security interest in the
      funds and verify and/or collect the amount of the Account.

     

    (f) Early
      Termination.
      This
      Agreement may be terminated prior to the Maturity Date as follows: (i) by
      Borrower, effective three Business Days after written notice of termination
      is
      given to Bank; or (ii) by Bank at any time after the occurrence of an Event
      of
      Default, without notice, effective immediately. If this Agreement is terminated
      (A) by Bank in accordance with clause (ii) in the foregoing sentence, or (B)
      by
      Borrower for any reason, Borrower shall pay to Bank a termination fee in an
      amount equal to Twenty Thousand Dollars ($20,000.00) (the “Early Termination
      Fee”). The Early Termination Fee shall be due and payable on the effective date
      of such termination and thereafter shall bear interest at a rate equal to the
      highest rate applicable to any of the Obligations. Notwithstanding the
      foregoing, Bank agrees to waive the Early Termination Fee if Bank agrees to
      refinance and redocument this Agreement under another division of Bank (in
      its
      sole and exclusive discretion) prior to the Maturity Date.

     

    (g) Maturity.
      This
      Agreement shall terminate and all Obligations outstanding hereunder shall be
      immediately due and payable on the Maturity Date.

     

    (h) Suspension
      of Advances.
      Borrower’s ability to request that Bank finance Eligible Accounts hereunder will
      terminate if, in Bank’s sole discretion, there has been a material adverse
      change in the general affairs, results of operation, condition (financial or
      otherwise) or the prospect of repayment of the Obligations, or there has been
      any material adverse deviation by Borrower from the most recent business plan
      of
      Borrower presented to and accepted by Bank prior to the execution of this
      Agreement.

     

    2.2 Collections,
      Finance Charges, Remittances and Fees.
      The
      Obligations shall be subject to the following fees and Finance Charges. Unpaid
      fees and Finance Charges may, in Bank’s discretion, accrue interest and fees as
      described in Section 9.2 hereof. 

     

    2.2.1 Collections.
      Collections will be credited to the Financed Receivable Balance for such
      Financed Receivable, but if there is an Event of Default, Bank may apply
      Collections to the Obligations in any order it chooses. If Bank receives a
      payment for both a Financed Receivable and a non-Financed Receivable, the funds
      will first be applied to the Financed Receivable and, if there is no Event
      of
      Default then existing, the excess will be remitted to Borrower, subject to
      Section 2.2.7. 

     

    2.2.2 Facility
      Fee.
      A fully
      earned, non-refundable facility fee of Thirty Thousand Dollars ($30,000.00)
      is
      due upon execution of this Agreement (the “Facility
      Fee”).

     

    2.2.3 Finance
      Charges.
      In
      computing Finance Charges on the Obligations under this Agreement, all
      Collections received by Bank shall be deemed applied by Bank on account of
      the
      Obligations three (3) Business Days after receipt
      of the Collections. Borrower will pay a finance charge (the “Finance Charge”) on
      the Financed Receivable Balance which is equal to the Applicable Rate
divided
      by
      360
multiplied
      by
      the
      number of days each such Financed Receivable is outstanding multiplied
      by
      the
      outstanding Financed Receivable Balance. The Finance Charge is payable when
      the
      Advance made based on such Financed Receivable is payable in accordance with
      Section 2.3 hereof. After an Event of Default, the Applicable Rate will increase
      an additional five percent (5.0%) per annum effective immediately upon the
      occurrence of such Event of Default.  Commencing
      on October 1, 2008, and continuing for each fiscal quarter thereafter, in the
      event that the aggregate amount of Finance Charges and Collateral Handling
      Fees
      earned by Bank in any fiscal quarter is less than the Minimum Finance Charge,
      Borrower shall pay to Bank an additional Finance Charge equal to (i) the Minimum
      Finance Charge minus (ii) the aggregate amount of all Finance Charges and
      Collateral Handling Fees earned by Bank in such fiscal quarter. Such additional
      Finance Charge shall be payable on the first day of the next fiscal
      quarter.

     

    2.2.4 Collateral
      Handling Fee. 
      Borrower will pay to Bank a collateral handling fee equal to one-quarter of
      one
      percent (0.25%) per month of the Financed Receivable Balance for each Financed
      Receivable outstanding based upon a 360 day year (the “Collateral Handling
      Fee”).  This fee is charged on a daily basis which is equal to the
      Collateral Handling Fee divided by 30, multiplied by the number of days each
      such Financed Receivable is outstanding, multiplied by the outstanding Financed
      Receivable Balance.  The Collateral Handling Fee is payable when the
      Advance made based on such Financed Receivable is payable in accordance with
      Section 2.3 hereof.  In computing Collateral Handling Fees under this
      Agreement, all Collections received by Bank shall be deemed applied by Bank
      on
      account of Obligations three (3) Business Days after receipt of the
      Collections.  After an Event of Default, the Collateral Handling Fee will
      increase an additional 0.50% effective immediately upon such Event of
      Default.

    
      
        
        

      

      
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    2.2.5 Accounting.
      After
      each Reconciliation Period, Bank will provide an accounting of the transactions
      for that Reconciliation Period, including the amount of all Financed
      Receivables, all Collections, Adjustments, Finance Charges, Collateral Handling
      Fee, and the Facility Fee. If Borrower does not object to the accounting in
      writing within sixty (60) days it shall be considered accurate. All Finance
      Charges and other interest and fees are calculated on the basis of a 360 day
      year and actual days elapsed.

     

    2.2.6 Deductions.
      Bank
      may deduct fees, Finance Charges, Advances which become due pursuant to Section
      2.3, and other amounts due pursuant to this Agreement from any Advances made
      or
      Collections received by Bank.

     

    2.2.7 Lockbox;
      Account Collection Services.
      

     

    (a) As
      and
      when directed by Bank from time to time, at Bank’s option and at the sole and
      exclusive discretion of Bank (regardless of whether an Event of Default has
      occurred), Borrower shall direct each Account Debtor (and each depository
      institution where proceeds of Accounts are on deposit) to remit payments with
      respect to the Accounts to a lockbox account established with Bank or to wire
      transfer payments to a cash collateral account that Bank controls (collectively,
      the “Lockbox”).
      It
      will be considered an immediate Event of Default if the Lockbox is not set-up
      and operational on the Effective Date. 

     

    (b) For
      any
      time at which such Lockbox is not established, the proceeds of the Accounts
      shall be paid by the Account Debtors to an address consented to by Bank. Upon
      receipt by Borrower of such proceeds, Borrower shall immediately transfer and
      deliver same to Bank, along with a detailed cash receipts journal. Provided
      no
      Event of Default exists or an event that with notice or lapse of time will
      be an
      Event of Default, within three (3) days of receipt of such amounts by Bank,
      Bank
      will turn over to Borrower the proceeds of the Accounts other than Collections
      with respect to Financed Receivables and the amount of Collections in excess
      of
      the amounts for which Bank has made an Advance to Borrower, less any amounts
      due
      to Bank, such as the Finance Charge, the Facility Fee, payments due to Bank,
      other fees and expenses, or otherwise; provided, however, Bank may hold such
      excess amount with respect to Financed Receivables as a reserve until the end
      of
      the applicable Reconciliation Period if Bank, in its discretion, determines
      that
      other Financed Receivable(s) may no longer qualify as an Eligible Account at
      any
      time prior to the end of the subject Reconciliation Period. This Section does
      not impose any affirmative duty on Bank to perform any act other than as
      specifically set forth herein. All Accounts and the proceeds thereof are
      Collateral and if an Event of Default occurs, Bank may apply the proceeds of
      such Accounts to the Obligations.

     

    2.2.8 Bank
      Expenses.
      Borrower shall pay all Bank Expenses (including reasonable attorneys’ fees and
      expenses, plus expenses, for documentation and negotiation of this Agreement)
      incurred through and after the Effective Date, when due.

     

    2.2.9 Good
      Faith Deposit.
      Borrower has paid to Bank a deposit of Ten Thousand Dollars ($10,000.00) (the
      “Good
      Faith Deposit”)
      to
      initiate Bank’s due diligence review process. Any portion of the Good Faith
      Deposit not utilized to pay Bank Expenses will be applied to the Facility
      Fee.

     

    2.3 Repayment
      of Obligations; Adjustments.

     

    2.3.1 Repayment.
      Borrower will repay each Advance on the earliest of: (a) the date on which
      payment is received of the Financed Receivable with respect to which the Advance
      was made, (b) the date on which the Financed Receivable is no longer an Eligible
      Account, (c) the date on which any Adjustment is asserted to the Financed
      Receivable (but only to the extent of the Adjustment if the Financed Receivable
      remains otherwise an Eligible Account), (d) the date on which there is a breach
      of any warranty or representation set forth in Section 5.3, or a breach of
      any
      covenant in this Agreement or (e) the Maturity Date (including any early
      termination). Each payment will also include all accrued Finance Charges and
      Collateral Handling Fees with
      respect to such Advance and all other amounts then due and payable hereunder.
      

     

    
      
        
        

      

      
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    2.3.2 Repayment
      on Event of Default.
      When
      there is an Event of Default, Borrower will, if Bank demands (or, upon the
      occurrence of an Event of Default under Section 8.5, immediately without notice
      or demand from Bank) repay all of the Advances. The demand may, at Bank’s
      option, include the Advance for each Financed Receivable then outstanding and
      all accrued Finance Charges, the
      Early
      Termination Fee, Collateral Handling Fee, attorneys’ and professional fees,
      court costs and expenses, and any other Obligations.

     

    2.3.3 Debit
      of Accounts.
      Bank
      may debit any of Borrower’s deposit accounts for payments or any amounts
      Borrower owes Bank hereunder. Bank shall promptly notify Borrower when it debits
      Borrower’s accounts. These debits shall not constitute a set-off.

     

    2.3.4 Adjustments.
      If, at
      any time during the term of this Agreement, any Account Debtor asserts an
      Adjustment, Borrower issues a credit memorandum, or any of the representations
      and warranties in Section 5.3 or covenants in this Agreement are no longer
      true
      in all material respects, Borrower will promptly advise Bank.

     

    2.4 Power
      of Attorney.
      Borrower irrevocably appoints Bank and its successors and assigns as
      attorney-in-fact and authorizes Bank, to: (a) following the occurrence of an
      Event of Default, (i) sell, assign, transfer, pledge, compromise, or discharge
      all or any part of the Financed Receivables; (ii) demand, collect, sue, and
      give
      releases to any Account Debtor for monies due and compromise, prosecute, or
      defend any action, claim, case or proceeding about the Financed Receivables,
      including filing a claim or voting a claim in any bankruptcy case in Bank’s or
      Borrower’s name, as Bank chooses; and (iii) prepare, file and sign Borrower’s
      name on any notice, claim, assignment, demand, draft, or notice of or
      satisfaction of lien or mechanics’ lien or similar document; and
      (b) regardless of whether there has been an Event of Default, (i) notify
      all Account Debtors to pay Bank directly; (ii) receive, open, and dispose of
      mail addressed to Borrower; (iii) endorse Borrower’s name on checks or other
      instruments (to the extent necessary to pay amounts owed pursuant to this
      Agreement); and (iv) execute on Borrower’s behalf any instruments, documents,
      financing statements to perfect Bank’s interests in the Financed Receivables and
      Collateral and do all acts and things necessary or expedient, as determined
      solely and exclusively by Bank, to protect or preserve, Bank’s rights and
      remedies under this Agreement, as directed by Bank.

     

    3 CONDITIONS
      OF LOANS

     

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

     

    (a) a
      certificate of the Secretary of Borrower with respect to articles, bylaws,
      incumbency and resolutions authorizing the execution and delivery of this
      Agreement;

     

    (b) subordination
      agreements/intercreditor agreements by certain Persons;

     

    (c) Perfection
      Certificates by Borrower;

     

    (d) a
      legal
      opinion of Borrower’s counsel (authority/enforceability), in form and substance
      acceptable to Bank;

     

    (e) a
      landlord’s consent executed by the applicable landlord in favor of Bank for each
      of Borrower’s locations;

     

    (f) Account
      Control Agreements/Investment Account Control Agreements;

     

    (g) evidence
      satisfactory to Bank that the insurance policies required by Section 6.4 hereof
      are in full force and effect, together with appropriate evidence showing lender
      loss payable and/or additional insured clauses or endorsements in favor of
      Bank;

     

    (h) evidence
      of payoff of, and lien release by, Viking Asset Management;

     

    (i) payment
      of the fees and Bank Expenses then due and payable;

     

    
      
        
        

      

      
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    (j) Certificates
      of Foreign Qualification (if applicable); 

     

    (k) Certificates
      of Good Standing/Legal Existence; and

     

    (l) such
      other documents, and completion of such other matters, as Bank may reasonably
      deem necessary or appropriate.

     

    3.2 Conditions
      Precedent to all Advances.
      Bank’s
      agreement to make each Advance, including the initial Advance, is subject to
      the
      following:

     

    (a) receipt
      of the Invoice Transmittal; 

     

    (b) Bank
      shall have (at its option) conducted the confirmations and verifications as
      described in Section 2.1.1 (d); and

     

    (c) each
      of
      the representations and warranties in Section 5 shall be true on the date of
      the
      Invoice Transmittal and on the effective date of each Advance and no Event
      of
      Default shall have occurred and be continuing, or result from the Advance.
      Each
      Advance is Borrower’s representation and warranty on that date that the
      representations and warranties in Section 5 remain true.

     

    4 CREATION
      OF SECURITY INTEREST

     

    4.1 Grant
      of Security Interest.
      Borrower hereby grants Bank, to secure the payment and performance in full
      of
      all of the Obligations and the performance of each of Borrower’s duties under
      the Loan Documents, a continuing security interest in, and pledges to Bank,
      the
      Collateral, wherever located, whether now owned or hereafter acquired or
      arising, and all proceeds and products thereof. Borrower represents, warrants,
      and covenants that the security interest granted herein shall be a first
      priority security interest in the Collateral. If Borrower shall at any time,
      acquire a commercial tort claim, Borrower shall promptly notify Bank in a
      writing signed by Borrower of the general details thereof and grant to Bank
      in
      such writing a security interest therein and in the proceeds thereof, all upon
      the terms of this Agreement, with such writing to be in form and substance
      satisfactory to Bank.

     

    If
      this
      Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
      Obligations (other than inchoate indemnity obligations) are repaid in full
      in
      cash. Upon payment in full in cash of the Obligations and
      at
      such time this Agreement has been terminated, Bank shall, at Borrower’s sole
      cost and expense, release its Liens in the Collateral and all rights therein
      shall revert to Borrower.

     

    4.2 Authorization
      to File Financing Statements.
      Borrower hereby authorizes Bank to file financing statements, without notice
      to
      Borrower, with all appropriate jurisdictions to perfect or protect Bank’s
      interest or rights hereunder, including a notice that any disposition of the
      Collateral, by either Borrower or any other Person, shall be deemed to violate
      the rights of Bank under the Code. Any such financing statements may indicate
      the Collateral as “all assets of the Debtor” or words of similar effect, or as
      being of an equal or lesser scope, or with greater detail, all in Bank’s
      discretion.

     

    5 REPRESENTATIONS
      AND WARRANTIES

     

    Borrower
      represents and warrants as follows: 

     

    5.1 Due
      Organization and Authorization.
      Borrower and each of its Subsidiaries are duly existing and in good standing
      as
      Registered Organizations in their respective jurisdictions of formation and
      are
      qualified and licensed to do business and are in good standing in any
      jurisdiction in which the conduct of their respective business or ownership
      of
      property requires that they be qualified except where the failure to do so
      could
      not reasonably be expected to have a material adverse effect on Borrower’s
      business. In connection with this Agreement, Borrower has delivered to Bank
      completed certificates signed by Borrower (the “Perfection Certificate”).
      Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is
      that indicated on the Perfection Certificate and on the signature page hereof;
      (b) Borrower is an organization of the type and is organized in the
      jurisdiction set forth in the Perfection Certificate; (c) the Perfection
      Certificate accurately sets forth Borrower’s organizational identification
      number or accurately states that Borrower has none; (d) the Perfection
      Certificate accurately sets forth Borrower’s place of business, or, if more than
      one, its chief executive office as well as Borrower’s mailing address (if
      different than its chief executive office); (e) Borrower (and each of its
      predecessors) has not, in the past five (5) years, changed its jurisdiction
      of
      formation, organizational structure or type, or any organizational number
      assigned by its jurisdiction; and (f) all other information set forth on the
      Perfection Certificate pertaining to Borrower and each of its Subsidiaries
      is
      accurate and complete (it being understood and agreed that Borrower may from
      time to time update certain information in the Perfection Certificate after
      the
      Effective Date to the extent permitted by one or more specific provisions in
      this Agreement). If Borrower is not now a Registered Organization but later
      becomes one, Borrower shall promptly notify Bank of such occurrence and provide
      Bank with Borrower’s organizational identification number.

     

    
      
        
        

      

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

     

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

     

    The
      Collateral is not in the possession of any third party bailee (such as a
      warehouse) except as otherwise provided in the Perfection Certificate. None
      of
      the components of the Collateral shall be maintained at locations other than
      as
      provided in the Perfection Certificate or as permitted pursuant to Section
      7.2.
      In the event that Borrower, after the date hereof, intends to store or otherwise
      deliver any portion of the Collateral to a bailee, then Borrower will first
      receive the written consent of Bank and such bailee must execute and deliver
      a
      bailee agreement in form and substance satisfactory to Bank in its sole
      discretion. 

     

    Except
      as
      noted on the Perfection Certificate, Borrower is not a party to, nor is bound
      by, any material license or other agreement with respect to which Borrower
      is
      the licensee (a) that prohibits or otherwise restricts Borrower from
      granting a security interest in Borrower’s interest in such license or agreement
      or any other property, or (b) for which a default under or termination of
      could interfere with Bank’s right to sell any Collateral. Without prior consent
      from Bank, Borrower shall not enter into, or become bound by, any such license
      or agreement which is reasonably likely to have a material impact on Borrower’s
      business or financial condition. Borrower shall take such steps as Bank requests
      to obtain the consent of, or waiver by, any person whose consent or waiver
      is
      necessary for all such licenses or contract rights to be deemed “Collateral” and
      for Bank to have a security interest in it that might otherwise be restricted
      or
      prohibited by law or by the terms of any such license or agreement, whether
      now
      existing or entered into in the future.

     

    5.3 Financed
      Receivables.
      Borrower represents and warrants for each Financed Receivable:

     

    (a) Such
      Financed Receivable is an Eligible Account;

     

    (b) Borrower
      is the owner of and has the legal right to sell, transfer, assign and encumber
      such Financed Receivable;

     

    (c) The
      correct amount is on the Invoice Transmittal and is not disputed;

     

    
      
        
        

      

      
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    (d) Payment
      is not contingent on any obligation or contract and Borrower has fulfilled
      all
      its obligations as of the Invoice Transmittal date;

     

    (e) Such
      Financed Receivable is based on an actual sale and delivery of goods and/or
      services rendered, is due to Borrower, is not past due or in default, has not
      been previously sold, assigned, transferred, or pledged and is free of any
      liens, security interests and encumbrances other than Permitted
      Liens;

     

    (f) There
      are
      no defenses, offsets, counterclaims or agreements for which the Account Debtor
      may claim any deduction or discount;

     

    (g) Borrower
      reasonably believes no Account Debtor is insolvent or subject to any Insolvency
      Proceedings; 

     

    (h) Borrower
      has not filed or had filed against it Insolvency Proceedings and does not
      anticipate any filing;

     

    (i) Bank
      has
      the right to endorse and/ or require Borrower to endorse all payments received
      on Financed Receivables and all proceeds of Collateral; and

     

    (j) No
      representation, warranty or other statement of Borrower in any certificate
      or
      written statement given to Bank contains any untrue statement of a material
      fact
      or omits to state a material fact necessary to make the statement contained
      in
      the certificates or statement not misleading.

     

    5.4 Litigation.
      There
      are no actions or proceedings pending or, to the knowledge of Borrower’s
      Responsible Officers, threatened in writing by or against Borrower or any
      Subsidiary in which an adverse decision could reasonably be expected to cause
      a
      Material Adverse Change.

     

    5.5 No
      Material Deterioration in Financial Statements.
      All
      consolidated financial statements for Borrower and any Subsidiaries delivered
      to
      Bank fairly present in all material respects Borrower’s consolidated financial
      condition and Borrower’s consolidated results of operations. There has not been
      any material deterioration in Borrower’s consolidated financial condition since
      the date of the most recent financial statements submitted to Bank.

     

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

     

    5.7 Regulatory
      Compliance.
      Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act of 1940, as amended.
      Borrower is not engaged as one of its important activities in extending credit
      for margin stock (under Regulations X, T and U of the Federal Reserve Board
      of
      Governors). Neither Borrower nor any of its Subsidiaries is a “holding company”
or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding
      company” as each term is defined and used in the Public Utility Holding Company
      Act of 2005. Borrower has complied in all material respects with the Federal
      Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
      rules, the violation of which could reasonably be expected to cause a Material
      Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has
      been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge,
      by previous Persons, in disposing, producing, storing, treating, or transporting
      any hazardous substance other than legally. Borrower and each of its
      Subsidiaries have obtained all consents, approvals and authorizations of, made
      all declarations or filings with, and given all notices to, all Government
      Authorities that are necessary to continue their respective businesses as
      currently conducted.

     

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

     

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

     

    
      
        
        

      

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

     

    6 AFFIRMATIVE
      COVENANTS

     

    Borrower
      shall do all of the following:

     

    6.1Government
      Compliance.
      

     

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

     

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

     

    6.2 Financial
      Statements, Reports, Certificates.

     

    (a) Deliver
      to Bank: (i) as soon as available, but no later than thirty (30)
      days after
      the
      last day of each month, a company prepared consolidated and consolidating
      balance sheet and income statement covering Borrower’s and each of its
      Subsidiary’s operations during the period certified by a Responsible Officer and
      in a form acceptable to Bank; (ii) as soon as available, but no later than
      one
      hundred fifty (150) days
      after the last day of Borrower’s fiscal year, audited consolidated financial
      statements prepared under GAAP, consistently applied, together with an
      unqualified opinion on the financial statements from an independent certified
      public accounting firm reasonably acceptable to Bank; (iii) in the event that
      Borrower’s stock becomes publicly held, within five (5) days of filing, copies
      of all statements, reports and notices made available to Borrower’s security
      holders or to any holders of Subordinated Debt and all reports on Form 10-K,
      10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt
      report of any legal actions pending or threatened against Borrower or any
      Subsidiary that could result in damages or costs to Borrower or any Subsidiary
      of One Hundred Thousand Dollars ($100,000.00) or more; and (v) budgets,
      sales projections, operating plans or other
      financial information reasonably requested by Bank.

     

    (b) Within
      thirty (30) days
      after the last day of each month, deliver to Bank with the monthly financial
      statements a Compliance Certificate signed by a Responsible Officer in the
      form
      of Exhibit
      B.
      

     

    (c) Allow
      Bank to audit Borrower’s Collateral, including, but not limited to, Borrower’s
      Accounts at Borrower’s expense, upon reasonable notice to Borrower; provided,
      however, prior to the occurrence of an Event of Default, Borrower shall be
      obligated to pay for not more than one (1) audit per year. Borrower hereby
      acknowledges that the first such audit will be conducted within ninety (90)
      days
      after the Effective Date. After
      the
      occurrence of an Event of Default, Bank may audit Borrower’s Collateral,
      including, but not limited to, Borrower’s Accounts at Borrower’s expense and at
      Bank’s sole and exclusive discretion and without notification and authorization
      from Borrower.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

     

    (d) Upon
      Bank’s request, provide a written report respecting any Financed Receivable, if
      payment of any Financed Receivable does not occur by its due date and include
      the reasons for the delay.

     

    (e) Provide
      Bank with, as soon as available, but no later than thirty (30) days following
      each Reconciliation Period, an aged listing of accounts receivable and accounts
      payable by invoice date, in form acceptable to Bank.

     

    (f) Provide
      Bank with, as soon as available, but no later than thirty (30) days following
      each Reconciliation Period, a Deferred Revenue report, in form acceptable to
      Bank.

     

    6.3 Taxes.
      Borrower shall make, and cause each Subsidiary to make, timely payment of all
      federal, state, and local taxes or assessments (other than taxes and assessments
      which Borrower is contesting in good faith, with adequate reserves maintained
      in
      accordance with GAAP) and will deliver to Bank, on demand, appropriate
      certificates attesting to such payments.

     

    6.4 Insurance.
      Keep
      its business and the Collateral insured for risks and in amounts standard for
      companies in Borrower’s industry and location, and as Bank may reasonably
      request. Insurance policies shall be in a form, with companies, and in amounts
      that are satisfactory to Bank. All property policies shall have a lender’s loss
      payable endorsement showing Bank as the sole lender loss payee and waive
      subrogation against Bank, and all liability policies shall show, or have
      endorsements showing, Bank as an additional insured. All policies (or the loss
      payable and additional insured endorsements) shall provide that the insurer
      must
      give Bank at least twenty (20) days notice before canceling, amending, or
      declining to renew its policy. At Bank’s request, Borrower shall deliver
      certified copies of policies and evidence of all premium payments. Proceeds
      payable under any policy shall, at Bank’s option, be payable to Bank on account
      of the Obligations. If Borrower fails to obtain insurance as required under
      this
      Section 6.4 or to pay any amount or furnish any required proof of payment to
      third persons and Bank, Bank may make all or part of such payment or obtain
      such
      insurance policies required in this Section 6.4, and take any action under
      the
      policies Bank deems prudent.

     

    6.5 Accounts.

     

    (a) To
      permit
      Bank to monitor Borrower’s financial performance and condition, Borrower, and
      all Borrower’s Subsidiaries, shall maintain Borrower’s and such Subsidiaries’,
      depository and operating accounts and securities accounts with Bank and Bank’s
      affiliates. Any Guarantor
      shall maintain all
      depository and operating accounts with Bank, and, with respect to securities
      accounts, with an affiliate of Bank.

     

    (b) Borrower
      shall identify to Bank, in writing, any deposit or securities account opened
      by
      Borrower with any institution other than Bank. In addition, for each such
      account that Borrower or Guarantor at any time opens or maintains, Borrower
      shall, at Bank’s request and option, pursuant to an agreement in form and
      substance acceptable to Bank, cause the depository bank or securities
      intermediary to agree that such account is the collateral of Bank pursuant
      to
      the terms hereunder, which control agreement may not be terminated without
      the
      prior written consent of Bank. The provisions of the previous sentence shall
      not
      apply to deposit accounts exclusively used for payroll, payroll taxes and other
      employee wage and benefit payments to or for the benefit of Borrower’s
      employees.

     

    6.6 Inventory;
      Returns.
      Keep
      all Inventory in good and marketable condition, free from material defects.
      Returns and allowances between Borrower and its Account Debtors shall follow
      Borrower’s customary practices as they exist at the Effective Date. Borrower
      must promptly notify Bank of all returns, recoveries, disputes and claims that
      involve more than One Hundred Thousand Dollars ($100,000.00).

     

    6.7 Financial
      Covenants.

     

    Borrower
      shall maintain at all times, to be tested as
      of the
      last day of each month, unless
      otherwise noted:

     

    
      
        
        

      

      
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    (a) Liquidity.
      Unrestricted cash at Bank plus Excess Availability of at least One Million
      Dollars ($1,000,000.00).

     

    (b) EBITDA.
      Commencing on February 1, 2009, and continuing for each month thereafter, EBITDA
      for each month of at least One Dollar ($1.00).

     

    6.8 Protection
      of Intellectual Property Rights.
      Borrower shall: (a) protect, defend and maintain the validity and enforceability
      of its intellectual property; (b) promptly advise Bank in writing of material
      infringements of its intellectual property; and (c) not allow any intellectual
      property material to Borrower’s business to be abandoned, forfeited or dedicated
      to the public without Bank’s written consent. 

     

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

     

    6.10 Further
      Assurances.
      Borrower shall execute any further instruments and take further action as Bank
      reasonably requests to perfect or continue Bank’s security interest in the
      Collateral or to effect the purposes of this Agreement.

     

    7 NEGATIVE
      COVENANTS

     

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

     

    7.1 Dispositions.
      Convey,
      sell, lease, transfer, assign, or otherwise dispose of (collectively a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
      its business or property, except for Transfers (a) of Inventory in the ordinary
      course of business; (b) of worn-out or obsolete Equipment; (c) in connection
      with Permitted Liens and Permitted Investments; and (d) of stock in Options
      Media Group Holdings, Inc. (together with all cash dividends, stock dividends,
      interest, profits, premiums, redemptions, warrants, subscription rights,
      options, substitutions, exchanges and other distributions made after such
      transfer with respect to such stock) for fair consideration. 

     

    7.2 Changes
      in Business, Ownership, Management or Business
      Locations.
      Engage
      in or permit any of its Subsidiaries to engage in any business other than the
      businesses currently engaged in by Borrower or reasonably related thereto,
      enter
      into any transaction or series of related transactions in which the stockholders
      of Borrower
      who were not stockholders immediately prior to the first such transaction own
      more than fifty percent (50%) of the voting stock of Borrower
      immediately after giving effect to such transaction or related series of such
      transactions
      (other
      than by the sale of Borrower’s equity securities in a public offering or to
      venture capital investors so long as Borrower identifies to Bank the venture
      capital investors prior to the closing of the investment), or
      suffer
      the resignation or departure of any Key Person and not hire a replacement
      reasonably acceptable to Bank for such Key Person within ninety (90) days of
      such Key Person’s resignation or departure.
      Borrower shall not, without at least thirty (30) days prior written notice
      to
      Bank: (a) relocate its chief executive office, or add any new offices or
      business locations, including warehouses (unless such new offices or business
      locations contain less than Five Thousand Dollars ($5,000.00) in Borrower’s
      assets or property), or (b) change its jurisdiction of organization, or (c)
      change its organizational structure or type, or (d) change its legal name,
      or
      (e) change any organizational number (if any) assigned by its jurisdiction
      of
      organization.

     

    7.3 Mergers
      or Acquisitions.
      Merge
      or consolidate, or permit any of its Subsidiaries to merge or consolidate,
      with
      any other Person, or acquire, or permit any of its Subsidiaries to acquire,
      all
      or substantially all of the capital stock or property of another Person. A
      Subsidiary may merge or consolidate into another Subsidiary or into
      Borrower.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

     

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

     

    7.6 Distributions;
      Investments.
      (a)
      Directly or indirectly acquire or own any Person, or make any Investment in
      any
      Person, other than Permitted Investments, or permit any of its Subsidiaries
      to
      do so; or (b) pay any dividends or make any distribution or payment or redeem,
      retire or purchase any capital stock.

     

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

     

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

     

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

     

    8 EVENTS
      OF DEFAULT

     

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

     

    8.1 Payment
      Default.
      Borrower fails to pay any of the Obligations when due;

     

    8.2 Covenant
      Default. Borrower
      fails or neglects to perform any obligation in Section 6 or violates any
      covenant in Section 7 or fails or neglects to perform, keep, or observe any
      other material term, provision, condition, covenant or agreement contained
      in
      this Agreement, any Loan Documents and as to any default under such other term,
      provision, condition, covenant or agreement that can be cured, has failed to
      cure the default within ten (10) days after the occurrence thereof; provided,
      however, grace and cure periods provided under this section shall not apply
      to
      financial covenants or any other covenants that are required to be satisfied,
      completed or tested by a date certain;

     

    8.3 Material
      Adverse Change.
      A
      Material Adverse Change occurs;

     

    8.4 Attachment;
      Levy; Restraint on Business.
      (a) (i)
      The service of process seeking to attach, by trustee or similar process, any
      funds of Borrower or of any entity under control of Borrower (including a
      Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice of
      lien, levy, or assessment is filed against any of Borrower’s assets by any
      government agency, and the same under subclauses (i) and (ii) hereof are not,
      within ten (10) days after the occurrence thereof, discharged or stayed (whether
      through the posting of a bond or otherwise); provided, however, no Credit
      Extensions shall be made during any ten (10) day cure period; and (b) (i) any
      material portion of Borrower’s assets is attached, seized, levied on, or comes
      into possession of a trustee or receiver, or (ii) any court order enjoins,
      restrains, or prevents Borrower from conducting any part of its
      business;

     

    
      
        
        

      

      
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    8.5 Insolvency.
      (a)
      Borrower is unable to pay its debts (including trade debts) as they become
      due
      or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding;
      or
      (c) an Insolvency Proceeding is begun against Borrower and not dismissed or
      stayed within thirty (30) days (but no Advances shall be made while of any
      of
      the conditions described in clause (a) exist and/or until any Insolvency
      Proceeding is dismissed);

     

    8.6 Other
      Agreements.
      If
      there is a default in any agreement to which Borrower is a party with a third
      party or parties resulting in a right by such third party or parties, whether
      or
      not exercised, to accelerate the maturity of any Indebtedness in an amount
      in
      excess of One Hundred Thousand Dollars ($100,000.00) or that could result in
      a
      Material Adverse Change;

     

    8.7 Judgments.
      One or
      more judgments, orders, or decrees for the payment of money in an amount,
      individually or in the aggregate, of at least Fifty Thousand Dollars
      ($50,000.00) (not covered by independent third-party insurance as to which
      liability has been accepted by such insurance carrier) shall be rendered against
      Borrower and shall remain unsatisfied, unvacated, or unstayed for a period
      of
      ten (10) days after the entry thereof (provided that no Advances will be made
      prior to the satisfaction, vacation, or stay of such judgment, order, or
      decree);

     

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

     

    8.9 Subordinated
      Debt.
      A
      default or breach occurs under any agreement between Borrower and any creditor
      of Borrower that signed a subordination agreement, intercreditor agreement,
      or
      other similar agreement with Bank, or any creditor that has signed such an
      agreement with Bank breaches any terms of the agreement;

     

    8.10 Guaranty.
      (a)
      Any
      guaranty of any Obligations terminates or ceases for any reason to be in full
      force and effect; (b) any Guarantor does not perform any obligation or covenant
      under any guaranty of the Obligations; (c) any circumstance described in
      Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor;
      (d) the death, liquidation, winding up, or termination of existence of any
      Guarantor; or (e) (i) a material impairment in the perfection or
      priority of Bank’s Lien in the collateral provided by Guarantor or in the value
      of such collateral, or (ii) a material adverse change in the general
      affairs, management, results of operation, condition (financial or otherwise)
      or
      the prospect of repayment of the Obligations occurs with respect to any
      Guarantor; or

     

    8.11 Governmental
      Approvals.
      Any
      Governmental Approval shall have been (a) revoked, rescinded, suspended,
      modified in an adverse manner or not renewed in the ordinary course for a full
      term or (b) subject to any decision by a Governmental Authority that
      designates a hearing with respect to any applications for renewal of any of
      such
      Governmental Approval or that could result in the Governmental Authority taking
      any of the actions described in clause (a) above, and such decision or such
      revocation, rescission, suspension, modification or non-renewal (i) has, or
      could reasonably be expected to have, a Material Adverse Change, or
      (ii) adversely affects the legal qualifications of Borrower or any of its
      Subsidiaries to hold such Governmental Approval in any applicable jurisdiction
      and such revocation, rescission, suspension, modification or non-renewal could
      reasonably be expected to affect the status of or legal qualifications of
      Borrower or any of its Subsidiaries to hold any Governmental Approval in any
      other jurisdiction.

     

    9 BANK’S
      RIGHTS AND REMEDIES

     

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

     

    (a) declare
      all Obligations immediately due and payable (but if an Event of Default
      described in Section 8.5 occurs all Obligations are immediately due and payable
      without any action by Bank);

     

    (b) stop
      advancing money or extending credit for Borrower’s benefit under this Agreement
      or under any other agreement between Borrower and Bank;

     

    
      
        
        

      

      
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    (c) demand
      that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
      amount of any Letters of Credit remaining undrawn, as collateral security for
      the repayment of any future drawings under such Letters of Credit, and Borrower
      shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter
      of Credit fees scheduled to be paid or payable over the remaining term of any
      Letters of Credit;

     

    (d) settle
      or
      adjust disputes and claims directly with Account Debtors for amounts, on terms
      and in any order that Bank considers advisable and notify any Person owing
      Borrower money of Bank’s security interest in such funds and verify the amount
      of such account. Borrower shall collect all payments in trust for Bank and,
      if
      requested by Bank, immediately deliver the payments to Bank in the form received
      from the Account Debtor, with proper endorsements for deposit; 

     

    (e) make
      any
      payments and do any acts it considers necessary or reasonable to protect its
      security interest in the Collateral. Borrower shall assemble the Collateral
      if
      Bank requests and make it available as Bank designates. Bank may enter premises
      where the Collateral is located, take and maintain possession of any part of
      the
      Collateral, and pay, purchase, contest, or compromise any Lien which appears
      to
      be prior or superior to its security interest and pay all expenses incurred.
      Borrower grants Bank a license to enter and occupy any of its premises, without
      charge, to exercise any of Bank’s rights or remedies;

     

    (f) apply
      to
      the Obligations any (i) balances and deposits of Borrower it holds, or (ii)
      any
      amount held by Bank owing to or for the credit or the account of
      Borrower;

     

    (g) ship,
      reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
      for sale, and sell the Collateral. Bank is hereby granted a non-exclusive,
      royalty-free license or other right to use, without charge, Borrower’s labels,
      patents, copyrights, mask works, rights of use of any name, trade secrets,
      trade
      names, trademarks, service marks, and advertising matter, or any similar
      property as it pertains to the Collateral, in completing production of,
      advertising for sale, and selling any Collateral and, in connection with Bank’s
      exercise of its rights under this Section, Borrower’s rights under all licenses
      and all franchise agreements inure to Bank’s benefit; 

     

    (h) place
      a
“hold” on any account maintained with Bank and/or deliver a notice of exclusive
      control, any entitlement order, or other directions or instructions pursuant
      to
      any control agreement or similar agreements providing control of any
      Collateral;

     

    (i) demand
      and receive possession of Borrower’s Books; and

     

    (j) exercise
      all rights and remedies available to Bank under the Loan Documents or at law
      or
      equity, including all remedies provided under the Code (including disposal
      of
      the Collateral pursuant to the terms thereof).

     

    9.2 Protective
      Payments.
      If
      Borrower fails to obtain insurance called for by Section 6.4 or fails to pay
      any
      premium thereon or fails to pay any other amount which Borrower is obligated
      to
      pay under this Agreement or by any other Loan Document, Bank may obtain such
      insurance or make such payment, and all amounts so paid by Bank are Bank
      Expenses and immediately due and payable, bearing interest at the then highest
      applicable rate, and secured by the Collateral. Bank will make reasonable effort
      to provide Borrower with notice of Bank obtaining such insurance at the time
      it
      is obtained or within a reasonable time thereafter. No payments by Bank are
      deemed an agreement to make similar payments in the future or Bank’s waiver of
      any Event of Default.

     

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

     

    9.4 Remedies
      Cumulative.
      Bank’s
      failure, at any time or times, to require strict performance by Borrower of
      any
      provision of this Agreement or any other Loan Document shall not waive, affect,
      or diminish any right of Bank thereafter to demand strict performance and
      compliance herewith or therewith. No waiver hereunder shall be effective unless
      signed by Bank and then is only effective for the specific instance and purpose
      for which it is given. Bank’s rights and remedies under this Agreement and the
      other Loan Documents are cumulative. Bank has all rights and remedies provided
      under the Code, by law, or in equity. Bank’s exercise of one right or remedy is
      not an election, and Bank’s waiver of any Event of Default is not a continuing
      waiver. Bank’s delay in exercising any remedy is not a waiver, election, or
      acquiescence. 

     

    
      
        
        

      

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

     

    10 NOTICES.

     

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

     

    11 CHOICE
      OF LAW, VENUE AND JURY TRIAL WAIVER

     

    New
      York
      law governs the Loan Documents without regard to principles of conflicts of
      law.
      Borrower and Bank each submit to the exclusive jurisdiction of the State and
      Federal courts in New York; provided, however, that if for any reason Bank
      cannot avail itself of such courts in the State of New York, Borrower accepts
      jurisdiction of the courts and venue in Santa Clara County, California.
      Notwithstanding the foregoing, nothing in this Agreement shall be deemed to
      operate to preclude Bank from bringing suit or taking other legal action in
      any
      other jurisdiction to realize on the Collateral or any other security for the
      Obligations, or to enforce a judgment or other court order in favor of Bank.
      Borrower expressly submits and consents in advance to such jurisdiction in
      any
      action or suit commenced in any such court, and Borrower hereby waives any
      objection that it may have based upon lack of personal jurisdiction, improper
      venue, or forum non conveniens and hereby consents to the granting of such
      legal
      or equitable relief as is deemed appropriate by such court. Borrower hereby
      waives personal service of the summons, complaints, and other process issued
      in
      such action or suit and agrees that service of such summons, complaints, and
      other process may be made by registered or certified mail addressed to Borrower
      at the address set forth in Section 10 of this Agreement and that service so
      made shall be deemed completed upon the earlier to occur of Borrower’s actual
      receipt thereof or three (3) days after deposit in the U.S. mails, proper
      postage prepaid.

     

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

     

    12 GENERAL
      PROVISIONS

     

    12.1 Successors
      and Assigns.
      This
      Agreement binds and is for the benefit of the successors and permitted assigns
      of each party. Borrower may not assign this Agreement or any rights or
      obligations under it without Bank’s prior written consent which may be granted
      or withheld in Bank’s discretion. Bank has the right, without the consent of or
      notice to Borrower, to sell, transfer, negotiate, or grant participation in
      all
      or any part of, or any interest in, Bank’s obligations, rights and benefits
      under this Agreement, the Loan Documents or any related agreement.

     

    12.2 Indemnification.
      Borrower agrees to indemnify, defend, and hold Bank and its officers, directors,
      employees, agents, attorneys or any other Person affiliated with or representing
      Bank (each, an “Indemnified Person”) harmless against: (a) all obligations,
      demands, claims, and liabilities (collectively, “Claims”) asserted by any other
      party in connection with the transactions contemplated by the Loan Documents;
      and (b) all losses or Bank Expenses incurred, or paid by such Indemnified Person
      from, following, or arising from transactions between Bank and Borrower
      (including reasonable attorneys’ fees and expenses), except for Claims and/or
      losses directly caused by such Indemnified Person’s gross negligence or willful
      misconduct.

     

    
      
        
        

      

      
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    12.3 Right
      of Set-Off.
      Borrower hereby grants to Bank, a lien, security interest and right of setoff
      as
      security for all Obligations to Bank, whether now existing or hereafter arising
      upon and against all deposits, credits, collateral and property, now or
      hereafter in the possession, custody, safekeeping or control of Bank or any
      entity under the control of Bank (including a Bank subsidiary) or in transit
      to
      any of them. At any time after the occurrence and during the continuance of
      an
      Event of Default, without demand or notice, Bank may set off the same or any
      part thereof and apply the same to any liability or obligation of Borrower
      even
      though unmatured and regardless of the adequacy of any other collateral securing
      the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS
      OR
      REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
      PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
      OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
      WAIVED.

     

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

     

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

     

    12.6 Correction
      of Loan Documents.
      Bank
      may correct patent errors and fill in any blanks in this Agreement and the
      other
      Loan Documents consistent with the agreement of the parties.

     

    12.7 Amendments
      in Writing; Integration.
      All
      amendments to this Agreement must be in writing signed by both Bank and
      Borrower. This Agreement and the Loan Documents represent the entire agreement
      about this subject matter, and supersede prior negotiations or agreements.
      All
      prior agreements, understandings, representations, warranties, and negotiations
      between the parties about the subject matter of this Agreement and the Loan
      Documents merge into this Agreement and the Loan Documents.

     

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

     

    12.8 Borrower
      Liability. Either
      Borrower may, acting singly, request Advances hereunder. Each Borrower hereby
      appoints the other as agent for the other for all purposes hereunder, including
      with respect to requesting Advances hereunder. Each Borrower hereunder shall
      be
      obligated to repay all Advances made hereunder, regardless of which Borrower
      actually receives said Advance, as if each Borrower hereunder directly received
      all
      Advances. Notwithstanding any other provision of this Agreement or other related
      document, each Borrower irrevocably waives all rights that it may have at law
      or
      in equity (including, without limitation, any law subrogating Borrower to the
      rights of Bank under this Agreement) to seek contribution, indemnification
      or
      any other form of reimbursement from any other Borrower, or any other Person
      now
      or hereafter primarily or secondarily liable for any of the Obligations, for
      any
      payment made by Borrower with respect to the Obligations in connection with
      this
      Agreement or otherwise and all rights that it might have to benefit from, or
      to
      participate in, any security for the Obligations as a result of any payment
      made
      by Borrower with respect to the Obligations in connection with this Agreement
      or
      otherwise. Any agreement providing for indemnification, reimbursement or any
      other arrangement prohibited under this Section shall be null and void. If
      any
      payment is made to a Borrower in contravention of this Section, such Borrower
      shall hold such payment in trust for Bank and such payment shall be promptly
      delivered to Bank for application to the Obligations, whether matured or
      unmatured. 

     

    Each
      Borrower waives any suretyship defenses available to it under the Code or any
      other applicable law.  Each Borrower waives any right to require Bank to:
      (a) proceed against any Borrower or any other person; (b) proceed against
      or exhaust any security; or (c) pursue any other remedy.  Bank may exercise
      or not exercise any right or remedy it has against any Borrower or any security
      it holds (including the right to foreclose by judicial or non-judicial sale)
      without affecting any Borrower’s liability.

     

    
      
        
        

      

      
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    12.9 Survival.
      All
      covenants, representations and warranties made in this Agreement continue in
      full force until this Agreement has terminated pursuant to its terms and all
      Obligations (other than inchoate indemnity obligations and any other obligations
      which, by their terms, are to survive the termination of this Agreement) have
      been satisfied. The obligation of Borrower in Section 12.2 to indemnify Bank
      shall survive until the statute of limitations with respect to such claim or
      cause of action shall have run.

     

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

     

    Bank
      may
      use confidential information for any purpose, including, without limitation,
      for
      the development of client databases, reporting purposes, and market analysis,
      so
      long as Bank does not disclose Borrower’s identity or the identity of any person
      associated with Borrower unless otherwise expressly permitted by this Agreement.
      The provisions of the immediately preceding sentence shall survive the
      termination of this Agreement.

    

    13 DEFINITIONS

     

    13.1 Definitions.
      In this
      Agreement:

     

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

     

    “Account
      Debtor”
is
      as
      defined in the Code and shall include, without limitation, any person liable
      on
      any Financed Receivable, such as, a guarantor of the Financed Receivable and
      any
      issuer of a letter of credit or banker’s acceptance.

     

    “Adjustments”
are
      all
      discounts, allowances, returns, disputes, counterclaims, offsets, defenses,
      rights of recoupment, rights of return, warranty claims, or short payments,
      asserted by or on behalf of any Account Debtor for any Financed
      Receivable.

     

    “Advance”
is
      defined in Section 2.1.1.

     

    “Advance
      Rate” is
      eighty
      percent (80.0%), net of any offsets related to each specific Account Debtor,
      including, without limitation, Deferred Revenue, or such other percentage as
      Bank establishes under Section 2.1.1.

     

    “Affiliate”
of
      any
      Person is a Person that owns or controls directly or indirectly the Person,
      any
      Person that controls or is controlled by or is under common control with the
      Person, and each of that Person’s senior executive officers, directors, partners
      and, for any Person that is a limited liability company, that Person’s managers
      and members.

     

    “Applicable
      Rate”
is
      a
      per annum rate equal to the Prime Rate plus one and three-quarters of one
      percent (1.75%). 

     

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

     

    
      
        
        

      

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

     

    “Business
      Day”
is
      any
      day that is not a Saturday, Sunday or a day on which Bank is
      closed.

     

    “Claims”
are
      defined in Section 12.2.

     

    “Code”
is
      the
      Uniform Commercial Code, as the same may, from time to time, be enacted and
      in
      effect in the State
      of
      New York;
      provided, that, to the extent that the Code is used to define any term herein
      or
      in any Loan Document and such term is defined differently in different Articles
      or Divisions of the Code, the definition of such term contained in Article
      or
      Division 9 shall govern; provided further, that in the event that, by reason
      of
      mandatory provisions of law, any or all of the attachment, perfection, or
      priority of, or remedies with respect to, Bank’s Lien on any Collateral is
      governed by the Uniform Commercial Code in effect in a jurisdiction other than
      the State
      of
      New York,
      the
      term “Code”
shall
      mean the Uniform Commercial Code as enacted and in effect in such other
      jurisdiction solely for purposes on the provisions thereof relating to such
      attachment, perfection, priority, or remedies and for purposes of definitions
      relating to such provisions.

     

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

     

    “Collateral
      Handling Fee” is
      defined in Section 2.2.4.

     

    “Collections” are
      all
      funds received by Bank from or on behalf of an Account Debtor for Financed
      Receivables.

     

    “Compliance
      Certificate”
is
      attached as Exhibit
      B.
      

     

    “Contingent
      Obligation”
is,
      for
      any Person, any direct or indirect liability, contingent or not, of that Person
      for (a) any indebtedness, lease, dividend, letter of credit or other obligation
      of another such as an obligation directly or indirectly guaranteed, endorsed,
      co-made, discounted or sold with recourse by that Person, or for which that
      Person is directly or indirectly liable; (b) any obligations for undrawn letters
      of credit for the account of that Person; and (c) all obligations from any
      interest rate, currency or commodity swap agreement, interest rate cap or collar
      agreement, or other agreement or arrangement designated to protect a Person
      against fluctuation in interest rates, currency exchange rates or commodity
      prices; but “Contingent Obligation” does not include endorsements in the
      ordinary course of business. The amount of a Contingent Obligation is the stated
      or determined amount of the primary obligation for which the Contingent
      Obligation is made or, if not determinable, the maximum reasonably anticipated
      liability for it determined by the Person in good faith; but the amount may
      not
      exceed the maximum of the obligations under any guarantee or other support
      arrangement.

     

    “Deferred
      Revenue”
is
      all
      amounts received or invoiced, as appropriate, in advance of performance under
      contracts and not yet recognized as revenue.

     

    “Early
      Termination Fee” is
      defined in Section 2.1.1.

     

    “EBITDA” means
      earnings before interest, taxes, depreciation and amortization in accordance
      with GAAP.

     

    “Effective
      Date”
is
      defined in the preamble of this Agreement.

     

    “Eligible
      Accounts”
are
      billed Accounts in the ordinary course of Borrower’s business that meet all
      Borrower’s representations and warranties in Section 5.3, have been, at the
      option of Bank, confirmed in accordance with Section 2.1.1(d), and are due
      and
      owing from Account Debtors deemed creditworthy by Bank in its sole discretion.
      Without limiting the fact that the determina-tion of which Accounts are eligible
      hereunder is a matter of Bank discretion in each instance, Eligible Accounts
      shall not include the following Accounts (which listing may be amended or
      changed in Bank’s discretion with notice to Borrower):

     

    (a) Accounts
      that the Account Debtor has not paid within ninety (90) days of invoice date
      regardless of invoice payment period terms;

     

    
      
        
        

      

      
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    (b) Accounts
      owing from an Account Debtor which does not have its principal place of business
      in the United States, unless otherwise approved by Bank in writing on a
      case-by-case basis in its sole discretion;

     

    (c) Accounts
      billed and/or payable outside of the United States, unless otherwise approved
      by
      Bank in writing on a case-by-case basis in its sole discretion;

     

    (d) Accounts
      owing from an Account Debtor to the extent that Borrower is indebted or
      obligated in any manner to the Account Debtor (as creditor, lessor, supplier
      or
      otherwise - sometimes called “contra” accounts, accounts payable, customer
      deposits or credit accounts), with the exception of customary credits,
      adjustments and/or discounts given to an Account Debtor by Borrower in the
      ordinary course of its business;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (p) Accounts
      owing from an Account Debtor with respect to which Borrower has received
      Deferred Revenue (but only to the extent of such Deferred Revenue);

     

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

     

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

     

    
      
        
        

      

      
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    “ERISA”
is
      the
      Employee Retirement Income Security Act of 1974, and its
      regulations.

     

    “Events
      of Default”
are
      set
      forth in Article 8.

     

    “Excess
      Availability”
means,
      as the date of determination, an amount equal to (a) eighty percent (80%) of
      Eligible Accounts, minus (b) the outstanding Obligations.

     

    “Facility
      Amount”
is
      Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00).

     

    “Facility
      Fee”
is
      defined in Section 2.2.2.

     

    “Finance
      Charges”
is
      defined in Section 2.2.3.

     

    “Financed
      Receivables”
      are all
      those Eligible Accounts, including their proceeds which Bank finances and makes
      an Advance, as set forth in Section 2.1.1. A Financed Receivable stops being
      a
      Financed Receivable (but remains Collateral) when the Advance made for the
      Financed Receivable has been fully paid.

     

    “Financed
      Receivable Balance” is
      the
      total outstanding gross face amount, at any time, of any Financed
      Receivable.

     

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

     

    “General
      Intangibles”
is
      all
      “general intangibles” as defined in the Code in effect on the date hereof with
      such additions to such term as may hereafter be made, and includes without
      limitation, all copyright
      rights, copyright applications, copyright registrations and like protections
      in
      each work of authorship and derivative work, whether published or unpublished,
      any patents, trademarks, service marks and, to the extent permitted under
      applicable law, any applications therefor, whether registered or not, any trade
      secret rights, including any rights to unpatented inventions,
      payment
      intangibles, royalties, contract rights, goodwill, franchise agreements,
      purchase orders, customer lists, route lists, telephone numbers, domain names,
      claims, income and other tax refunds, security and other deposits, options
      to
      purchase or sell real or personal property, rights in all litigation presently
      or hereafter pending (whether in contract, tort or otherwise), insurance
      policies (including without limitation key man, property damage, and business
      interruption insurance), payments of insurance and rights to payment of any
      kind.

     

    “Good
      Faith Deposit”
is
      defined in Section 2.2.8.

     

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

     

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

     

    “Guarantor” is
      any
      present or future guarantor of the Obligations.

     

    “Indebtedness”
is
      (a)
      indebtedness for borrowed money or the deferred price of property or services,
      such as reimbursement and other obligations for surety bonds and letters of
      credit, (b) obligations evidenced by notes, bonds, debentures or similar
      instruments, (c) capital lease obligations and (d) Contingent
      Obligations.

     

    “Indemnified
      Person”
is
      defined in Section 12.2.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

     

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

     

    “Inventory”
is
      all
      “inventory” as defined in the Code in effect on the date hereof with such
      additions to such term as may hereafter be made, and includes without limitation
      all merchandise, raw materials, parts, supplies, packing and shipping materials,
      work in process and finished products, including without limitation such
      inventory as is temporarily out of Borrower’s custody or possession or in
      transit and including any returned goods and any documents of title representing
      any of the above.

     

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

     

    “Invoice
      Transmittal”
      shows
      Eligible Accounts which Bank may finance and, for each such Account, includes
      the Account Debtor’s, name, address, invoice amount, invoice date and invoice
      number.

     

    “Key
      Person”
is
      either of the Chief Executive Officer or Chief Financial Officer of
      Borrower.

     

    “Letter
      of Credit”
means
      a
      standby letter of credit issued by Bank or another institution based upon an
      application, guarantee, indemnity or similar agreement on the part of
      Bank.

     

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

     

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

     

    “Lockbox” is
      defined in Section 2.2.7.

     

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

     

    “Maturity
      Date”
is
      364
      days from the Effective Date.

     

    “Minimum
      Finance Charge” is
      an
      amount equal to the Finance Charges and Collateral Handling Fees Bank would
      have
      earned during a particular fiscal quarter if the amount of Advances outstanding
      during such fiscal quarter was Seven Hundred Fifty Thousand Dollars
      ($750,000.00) at all times.

     

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

     

    “Perfection
      Certificate”
is
      defined in Section 5.1.

     

    “Permitted
      Indebtedness”
      is:

     

    (a) Borrower’s
      indebtedness to Bank under this Agreement or the Loan Documents;

     

    (b) Subordinated
      Debt;

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

     

    (c) Indebtedness
      to trade creditors incurred in the ordinary course of business; and

     

    (d) Indebtedness
      secured by Permitted Liens.

     

    “Permitted
      Investments”
are:
      (i) marketable direct obligations issued or unconditionally guaranteed by the
      United States or its agency or any state maturing within 1 year from its
      acquisition, (ii) commercial paper maturing no more than 1 year after its
      creation and having the highest rating from either Standard & Poor’s
      Corporation or Moody’s Investors Service, Inc., (iii) Bank’s certificates of
      deposit issued maturing no more than 1 year after issue, and (iv) any other
      investments administered through Bank. 

     

    “Permitted
      Liens”
      are:

     

    (a) Liens
      arising under this Agreement or other Loan Documents;

     

    (b) Liens
      for
      taxes, fees, assessments or other government charges or levies, either not
      delinquent or being contested in good faith and for which Borrower maintains
      adequate reserves on its Books, if they have no priority over any of Bank’s
      security interests;

     

    (c) Purchase
      money Liens securing no more than One Hundred Thousand Dollars ($100,000.00)
      in
      the aggregate amount outstanding (i) on equipment acquired or held by Borrower
      incurred for financing the acquisition of the equipment, or (ii) existing
      on equipment when acquired, if
      the Lien
      is confined to the property and improvements and the proceeds of the
      equipment;

     

    (d) Leases
      or
      subleases and non-exclusive licenses or sublicenses granted in the ordinary
      course of Borrower’s business, if
      the
      leases, subleases, licenses and sublicenses permit granting Bank a security
      interest; and

     

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

     

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

     

    “Prime
      Rate”
is
      Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
      rate.

     

    “Reconciliation
      Period”
is
      each
      calendar month.

     

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

     

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

     

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

     

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

     

    “Subsidiary”
is,
      with respect to any Person, any Person of which more than fifty percent (50.0%)
      of the voting stock or other equity interests (in the case of Persons other
      than
      corporations) is owned or controlled directly or indirectly by such Person
      or
      one or more of Affiliates of such Person.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    [signature
      page follows]

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

     

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

     

    BORROWER:

     

    INTERCLICK,
      INC.

     

    By:
      /s/ David M. Garrity                    

    Name:
      David M. Garrity                    

    Title:
      CFO                            

     

    DESKTOP
      ACQUISITION SUB, INC.

     

    By:
      /s/ Michael Brauser                    

    Name:
      Michael Brauser                    

    Title:
      President                          

     

     

    BANK:

     

    SILICON
      VALLEY BANK

     

    By:
      /s/ Christine Egitto                    

    Name:
      Christine Egitto                    

    Title:
      VP                             
      

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

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

     

    All
      goods, equipment, inventory, contract rights or rights to payment of money,
      leases, license agreements, franchise agreements, general intangibles (including
      payment intangibles) accounts (including health-care receivables), documents,
      instruments (including any promissory notes), chattel paper (whether tangible
      or
      electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
      or not the letter of credit is evidenced by a writing), commercial tort claims,
      securities, and all other investment property, supporting obligations, and
      financial assets, whether now owned or hereafter acquired, wherever located;
      and
      any copyright rights, copyright applications, copyright registrations and like
      protections in each work of authorship and derivative work, whether published
      or
      unpublished, now owned or later acquired; any patents, trademarks, service
      marks
      and applications therefor; trade styles, trade names, any trade secret rights,
      including any rights to unpatented inventions, know-how, operating manuals,
      license rights and agreements and confidential information, now owned or
      hereafter acquired; or any claims for damages by way of any past, present and
      future infringement of any of the foregoing; and 

     

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

     

    Notwithstanding
      the foregoing, the Collateral shall not be deemed to include any copyrights
      (including computer programs, blueprints and drawings), copyright applications,
      copyright registration and like protection in each work of authorship and
      derivative work thereof, whether published or unpublished, now owned or
      hereafter acquired; any design rights; any patents, patent applications and
      like
      protections including without limitation improvements, divisions, continuations,
      renewals, reissues, extensions and continuations-in-part of the same,
      trademarks, servicemarks and applications therefor, whether registered or not,
      except that the Collateral shall include all accounts, license and royalty
      fees
      and other revenues, proceeds, or income arising out of or relating to any of
      the
      foregoing.

     

    Notwithstanding
      anything herein to the contrary, the Collateral shall exclude 7,800,000 shares
      of common stock of Options Media Group Holdings, Inc. currently held by Borrower
      (the “Permitted Pledged Shares”). The Permitted Pledged Shares may be pledged to
      Barry Honig and/or GRQ Consultants, Inc., or any affiliates thereof, in
      connection with any and all loans to Borrower.

     

    

    Borrower
      and Bank are parties to that certain negative pledge arrangement whereby
      Borrower, in connection with Bank’s loan(s) to Borrower, has agreed not to sell,
      transfer, assign, mortgage, pledge, lease, grant a security interest in, or
      encumber any of its intellectual property without Bank’s prior written
      consent.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    

    

    SPECIALTY
      FINANCE DIVISION

    Compliance
      Certificate

    

    I,
      an
      authorized officer of INTERCLICK, INC. and DESKTOP ACQUISITION SUB, INC.
      (jointly and severally, individually and collectively, “Borrower”) certify under
      the Loan and Security Agreement (as amended, the “Agreement”) between Borrower
      and Silicon Valley Bank (“Bank”) as follows (all capitalized terms used herein
      shall have the meaning set forth in the Agreement): 

    

    Borrower
      represents and warrants for each Financed Receivable:

    

    Each
      Financed Receivable is an Eligible Account.

    

    Borrower
      is the owner with legal right to sell, transfer, assign and encumber such
      Financed Receivable;

    

    The
      correct amount is on the Invoice Transmittal and is not disputed;

    

    Payment
      is not contingent on any obligation or contract and Borrower has fulfilled
      all
      its obligations as of the Invoice Transmittal date;

    

    Each
      Financed Receivable is based on an actual sale and delivery of goods and/or
      services rendered, is due to Borrower, is not past due or in default, has not
      been previously sold, assigned, transferred, or pledged and is free of any
      liens, security interests and encumbrances other than Permitted
      Liens;

    

    There
      are
      no defenses, offsets, counterclaims or agreements for which the Account Debtor
      may claim any deduction or discount;

    

    It
      reasonably believes no Account Debtor is insolvent or subject to any Insolvency
      Proceedings; 

    

    It
      has
      not filed or had filed against it Insolvency Proceedings and does not anticipate
      any filing;

    

    Bank
      has
      the right to endorse and/ or require Borrower to endorse all payments received
      on Financed Receivables and all proceeds of Collateral.

    

    No
      representation, warranty or other statement of Borrower in any certificate
      or
      written statement given to Bank contains any untrue statement of a material
      fact
      or omits to state a material fact necessary to make the statement contained
      in
      the certificates or statement not misleading.

    

    Additionally,
      Borrower represents and warrants as follows:

    

    Borrower
      and each Subsidiary is duly existing and in good standing in its state of
      formation and qualified and licensed to do business in, and in good standing
      in,
      any state in which the conduct of its business or its ownership of property
      requires that it be qualified except where the failure to do so could not
      reasonably be expected to cause a Material Adverse Change. The execution,
      delivery and performance of the Loan Documents have been duly authorized, and
      do
      not conflict with Borrower’s organizational documents, nor constitute an event
      of default under any material agreement by which Borrower is bound. Borrower
      is
      not in default under any agreement to which or by which it is bound in which
      the
      default could reasonably be expected to cause a Material Adverse
      Change.

    

    Borrower
      has good title to the Collateral, free of Liens except Permitted Liens. All
      inventory is in all material respects of good and marketable quality, free
      from
      material defects. 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    

    Borrower
      is not an “investment company” or a company “controlled” by an “investment
      company” under the Investment Company Act of 1940, as amended. Neither Borrower
      nor any of its Subsidiaries is a “holding company” or an “affiliate” of a
“holding company” or a “subsidiary company” of a “holding company” as each term
      is defined and used in the Public Utility Holding Company Act of 2005. Borrower
      is not engaged as one of its important activities in extending credit for margin
      stock (under Regulations X, T and U of the Federal Reserve Board of Governors).
      Borrower has complied in all material respects with the Federal Fair Labor
      Standards Act. Borrower has not violated any laws, ordinances or rules, the
      violation of which could reasonably be expected to cause a Material Adverse
      Change. None of Borrower’s or any Subsidiary’s properties or assets has been
      used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by
      previous Persons, in disposing, producing, storing, treating, or transporting
      any hazardous substance other than legally. Borrower and each Subsidiary has
      timely filed all required tax returns and paid, or made adequate provision
      to
      pay, all material taxes, except those being contested in good faith with
      adequate reserves under GAAP. Borrower and each Subsidiary has obtained all
      consents, approvals and authorizations of, made all declarations or filings
      with, and given all notices to, all government authorities that are necessary
      to
      continue its business as currently conducted except where the failure to obtain
      or make such consents, declarations, notices or filings would not reasonably
      be
      expected to cause a Material Adverse Change.

    

    Borrower
      is in compliance with the financial covenants set forth in Section 6.7 of the
      Agreement.

    

    All
      representations and warranties in the Agreement are true and correct in all
      material respects on this date, and Borrower represents that there is no
      existing Event of Default.

    

    

    Financial
      Covenants

    

    
      	  
	
              Required

            	
              Actual

            	
              Compliance

            
	 	 	 	 
	
              Liquidity

            	
                      
                $1,000,000*

            	
              $______

            	
              Yes
                No

            
	
              Monthly
                EBIDTA

            	
              $1.00*

            	
              $______

            	
              Yes
                No

            

    

    

    *As
      set
      forth in Section 6.7 of the Agreement.

    

    

    

    

    Sincerely,
      

    

    _________________

    

    

    

    ________________________

    Signature

    ________________________

    Title

    ________________________
      

    Date

    

    

    
      
        
        

      

      
        2AMENDMENT
      NO. 1 

    

    AMENDMENT
      NO. 1 dated as of August 7, 2008 (this “Amendment”)
      with
      respect to the Credit Agreement, dated as of September 30, 2007 (the
“Credit
      Agreement”)
      by and
      between Lazare Kaplan International Inc. (“Borrower”)
      and
      Bank Leumi USA (the “Bank”).

    

    WITNESSETH:

    

    WHEREAS,
      pursuant to the Credit Agreement, the Bank has made Loans and other financial
      accommodations to the Borrower which remain outstanding; and

    

    WHEREAS,
      the Borrower has requested that the Credit Agreement be modified on the terms
      and conditions set forth herein; 

    

    NOW,
      THEREFORE, in consideration of the premises and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto hereby agree as follows:

    

    ARTICLE
      I

    AMENDMENTS

    

    Section
      1.1 Amendments.
      

    

    (a) Section
      1
      of the Credit Agreement is hereby amended by adding the following
      definitions:

    

    “NamGem
      Belgium” means NamGem Trading BVBA, a company organized and existing under the
      laws of the Kingdom of Belgium and a Subsidiary of the Borrower. 

    

    “NamGem
      BVI” means NamGem Trading BVI Limited, a company limited by shares organized and
      existing under the laws of the British Virgin Islands and a Subsidiary of the
      Borrower.

    

    “OPIC”
      means the Overseas Private Investment Corporation, an agency of the United
      States of America. 

    

    “OPIC
      Financing Agreement” means that certain First Amended and Restated Finance
      Agreement between OPIC and NamGem BVI dated as of June 10, 2008, as the same
      may
      be amended, modified or supplemented from time to time.” 

    

    (b) The
      definition of “Total Funded Debt” in Section 1 of the Credit Agreement is hereby
      deleted in its entirety and replaced as follows:

    

    “Total
      Funded Debt: At any time the same is to be determined, the aggregate of all
      Indebtedness of the Borrower and its Subsidiaries at such time, including all
      Indebtedness of any other Person which is directly or indirectly guaranteed
      by
      the Borrower (other than amounts guaranteed by Borrower in respect of the
      Gulfdiam Obligation, the Nedbank Loan and up to $25,200,000 in Indebtedness
      of
      the Borrower and/or any Subsidiary thereof to OPIC and the obligations of
      Borrower and NamGem Belgium with respect to the transactions contemplated by
      the
      OPIC Financing Agreement evidencing such Indebtedness) or any of its
      Subsidiaries or which the Borrower or any of its Subsidiaries has agreed
      (contingently or otherwise) to purchase or otherwise acquire or in respect
      of
      which the Borrower or any of its Subsidiaries has otherwise assured a creditor
      against loss.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) Section
      8.2(a) of the Credit Agreement is hereby amended by deleting the term “and”
appearing immediately prior to clause (x) and adding a new clause (xi) as
      follows:

    

    “and
      (xi)
      up to $25,200,000 in Indebtedness of the Borrower and/or any Subsidiary thereof
      to OPIC and the obligations of Borrower and NamGem Belgium with respect to
      the
      transactions contemplated by the OPIC Financing Agreement evidencing such
      Indebtedness.”

    

    (d) Section
      8.2(b) of the Credit Agreement is hereby amended by deleting the term “and”
appearing immediately prior to clause (vi) and adding a new clause (vii) as
      follows:

    

    “and
      (vii) Liens granted by Subsidiaries of the Borrower on the property and capital
      stock of such Subsidiaries to secure Indebtedness permitted by Section
      8.2(a)(xi) above.”

    

    (e) Section
      8.2(c) clause (vi) of the Credit Agreement is hereby amended by adding the
      following proviso at the end of such clause as follows:

    

    “;
      provided further that such limitation shall not apply to investments by the
      Borrower and its Subsidiaries in an aggregate amount of up to $10,800,000 in
      NamGem BVI.”

    

    (f) Section
      8.3 of the Credit Agreement is hereby amended by adding the following proviso
      at
      the end of such Section as follows:

    

    “;
      provided, that, for the purpose of calculating compliance with any subsection
      of
      this Section 8.3 for any period, Borrower’s investment in NamGem BVI and NamGem
      Belgium shall be accounted for using the equity method of
      accounting.”

    

    ARTICLE
      II

    EFFECTIVE
      DATE

    

    Section
      2.1 Effective
      Date.
      This
      Amendment shall become effective upon the satisfaction of the following
      conditions precedent:

    

    (a) the
      Borrower and the Bank shall have executed and delivered this Amendment;

    

    (b) Lazare
      Kaplan Europe Inc., Lazare Kaplan Japan Inc. and Lazare Kaplan Africa Inc.
      shall
      have executed and delivered to the Bank their consent to this Amendment in
      the
      form set forth below; and

    

    (c) all
      of
      the representations and warranties set forth in Section 6 of the Credit
      Agreement shall be true and correct in all material respects with the same
      effect as if made on and as of the date hereof (or if any such representation
      or
      warranty is expressly stated to have been made as of a specific date, as of
      such
      date) and the Borrower shall be in compliance with the terms and conditions
      of
      the Credit Agreement and, after giving effect to this Amendment, no Default
      or
      Event of Default has occurred under the Credit Agreement.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    ARTICLE
      III

    INTERPRETATION

    

    Section
      3.1. Continuing
      Effect of the Credit Agreement.
      The
      Borrower and the Bank hereby acknowledge and agree that the Credit Agreement
      shall continue to be and shall remain unchanged and in full force and effect
      in
      accordance with its terms, except as expressly modified hereby.

    

    Section
      3.2. No
      Waiver.
      Nothing
      contained in this Amendment be construed or interpreted or is intended as a
      waiver of any future Default or Event of Default or of any rights, powers,
      privileges or remedies that the Bank have or may have under the Credit
      Agreement, any other related document or applicable law on account of such
      Default or Event of Default.

    

    ARTICLE
      IV

    MISCELLANEOUS

    

    Section
      4.1. Representations
      and Warranties.
      The
      Borrower hereby represents and warrants as of the date hereof that, after giving
      effect to this Amendment, (a) no Default or Event of Default has occurred and
      is
      continuing and (b) all representations and warranties of the Borrower contained
      in the Credit Agreement are true and correct in all material respects with
      the
      same effect as if made on and as of such date (or if any such representation
      or
      warranty is expressly stated to have been made as of a specific date, as of
      such
      date).

    

    Section
      4.2. Counterparts.
      This
      Amendment may be executed by the parties hereto in any number of separate
      counterparts, and all of said counterparts taken together shall be deemed to
      constitute one and the same instrument.

    

    Section
      4.3. GOVERNING
      LAW.
      THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
      AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
      WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
      OF LAWS THEREOF.

    

    Section
      4.4. Reservation
      of Rights.
      Notwithstanding anything contained in this Amendment, the Borrower acknowledges
      that the Bank does not waive, and expressly reserves, the right to exercise,
      at
      any time, any and all of its rights and remedies under the Credit Agreement,
      any
      other related document and applicable law on account of any future Default
      or
      Event of Default.

    

    [Signature
      Page to Follow]

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
      executed and delivered by their proper and duly authorized officers as of the
      date first above written.

    

    
      	
              LAZARE
                KAPLAN INTERNATIONAL INC.

            
	 	 
	
              By:

            	    

	 	
              Title:

            
	 	 
	
              BANK
                LEUMI USA

            
	 	 
	
              By:

            	  

	 	
              Title:

            
	 	 
	
              By:

            	   

	 	
              Title:

            

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    Guarantor’s
      Acknowledgement and Consent

     

    Each
      of
      the undersigned heretofore executed and delivered to the Bank a Guaranty dated
      September 30, 2007. Each of the undersigned hereby consents to the Amendment
      to
      the Credit Agreement as set forth above and confirms that its Guaranty and
      all
      of the undersigned’s obligations thereunder remain in full force and effect.
      Each of the undersigned further agrees that the consent thereof to any further
      amendments to the Credit Agreement shall not be required as a result of this
      consent having been obtained, except to the extent, if any, required by the
      Guaranty referred to above.

     

    
      	
              Lazare
                Kaplan Europe Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   

	 	 
	
              Lazare
                Kaplan Japan Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   

	 	 
	
              Lazare
                Kaplan Africa Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   

    

    
      
         

      

      
        -5-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]