Document:

LOAN
      AND SECURITY AGREEMENT

     

    THIS
      LOAN AND SECURITY AGREEMENT
      (this
“Agreement”)
      dated
      as of the Effective Date among SILICON
      VALLEY BANK,
      a
      California corporation (“Bank”),
      AIRSPAN
      NETWORKS, INC.,
      a
      corporation formed under the laws of the State of Washington (“US
      Borrower”),
      and
AIRSPAN
      COMMUNICATIONS LIMITED,
      a
      company registered under the laws of England and Wales under company number
      03501881 (“UK
      Borrower”;
      US
      Borrower and UK Borrower hereinafter referred to individually and collectively,
      jointly and severally, as “Borrower”),
      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. 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 meaning 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 outstanding principal
      amount of all Credit Extensions and accrued and unpaid interest thereon as
      and
      when due in accordance with this Agreement.

     

    2.1.1.  Revolving
      Advances.

     

    (a)  Availability.
      Subject
      to the terms and conditions of this Agreement, Bank will make Advances to
      Borrower up to the
      Availability Amount.

     

    (b)  Termination;
      Repayment.
      The
      Revolving Line terminates on the Revolving Line Maturity Date, when the
      principal amount of all Advances, the unpaid interest thereon, and all other
      Obligations relating to the Revolving Line shall be immediately due and
      payable.

     

    2.1.2.  Letters
      of Credit Sublimit

     

    (a)  As
      part
      of the Revolving Line, Bank shall issue or have issued Letters of Credit for
      Borrower’s account. The face amount of outstanding Letters of Credit (including
      drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve)
      may
      not exceed the lesser of (i) Five Million Dollars ($5,000,000) minus the FX
      Reserve or (ii) the Availability Amount. Such aggregate amounts utilized
      hereunder shall at all times reduce the amount otherwise available for Advances
      under the Revolving Line. If, on the Revolving Line Maturity Date, there are
      any
      outstanding Letters of Credit, then on such date Borrower shall provide to
      Bank
      cash collateral in an amount equal to one hundred percent (100%) of the face
      amount of all such Letters of Credit, to secure all of the Obligations relating
      to said Letters of Credit and pay all interest, fees, costs and expenses
      incurred by Bank in connection therewith. All Letters of Credit shall be in
      form
      and substance acceptable to Bank in its sole discretion and shall be subject
      to
      the terms and conditions of Bank’s standard Application and Letter of Credit
      Agreement (the “Letter
      of Credit Application”).
      Borrower agrees to execute any further documentation in connection with the
      Letters of Credit as Bank may reasonably request. Prior
      to
      or simultaneously with the opening of each Letter of Credit, Borrower shall
      pay
      to Bank a letter of credit fee in an amount equal to
      one
      percent (1.0%) per annum of
      the
      face amount of the Letter of Credit.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b)  The
      obligation of Borrower to immediately reimburse Bank for drawings made under
      Letters of Credit shall be absolute, unconditional, and irrevocable, and shall
      be performed strictly in accordance with the terms of this Agreement, such
      Letters of Credit, and the Letter of Credit Application. 

     

    (c)  Borrower
      may request that Bank issue a Letter of Credit payable in a Foreign Currency.
      If
      a demand for payment is made under any such Letter of Credit, Bank shall treat
      such demand as an Advance to Borrower of the equivalent of the amount thereof
      (plus fees and charges in connection therewith such as wire, cable, SWIFT or
      similar charges) in Dollars at the then-prevailing rate of exchange in San
      Francisco, California, for sales of the Foreign Currency for transfer to the
      country issuing such Foreign Currency.

     

    (d)  To
      guard
      against fluctuations in currency exchange rates, upon the issuance of any Letter
      of Credit payable in a Foreign Currency, Bank shall create a reserve (the
“Letter
      of Credit Reserve”)
      under
      the Revolving Line in an amount equal to ten percent (10%) of the face amount
      of
      such Letter of Credit. The amount of the Letter of Credit Reserve may be
      adjusted by Bank from time to time to account for fluctuations in the exchange
      rate; provided, however, that Bank shall give Borrower at least five (5)
      Business Days prior written notice of any adjustment to the Letter of Credit
      Reserve requirement which would require the Letter of Credit Reserve to exceed
      (10%) of the face amount of a Letter of Credit. The availability of funds under
      the Revolving Line shall be reduced by the amount of such Letter of Credit
      Reserve for as long as such Letter of Credit remains outstanding.

     

    2.1.3.  Foreign
      Exchange Sublimit.
      As part
      of the Revolving Line, Borrower may enter into foreign exchange contracts with
      Bank under which Borrower commits to purchase from or sell to Bank a specific
      amount of Foreign Currency (each, a “FX
      Forward Contract”)
      on a
      specified date (the “Settlement
      Date”).
      FX
      Forward Contracts shall have a Settlement Date of at least one (1) FX Business
      Day after the contract date and shall be subject to a reserve of ten percent
      (10%) of each outstanding FX Forward Contract in a maximum aggregate amount
      equal to the lesser of (i) Five Million Dollars ($5,000,000), minus the face
      amount of all outstanding Letters of Credit (including drawn but unreimbursed
      Letters of Credit), and minus an amount equal to all Letter of Credit Reserves
      combined or (ii) the Availability Amount (the “FX
      Reserve”).
      The
      aggregate amount of FX Forward Contracts at any one time may not exceed ten
      (10)
      times the amount of the FX Reserve. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    2.1.4.  Cash
      Management Services Sublimit.
      Borrower may use up to the lesser of (i) One Million Dollars ($1,000,000) or
      (ii) the Availability Amount (the “Cash
      Management Services Sublimit”)
      of the
      Revolving Line for Bank’s cash management services which may include merchant
      services, direct deposit of payroll, business credit card, and check cashing
      services identified in Bank’s various cash management services agreements
      (collectively, the “Cash
      Management Services”).
      Any
      amounts Bank pays on behalf of Borrower or any amounts that are not paid by
      Borrower for any Cash Management Services will be treated as Advances under
      the
      Revolving Line and will accrue interest at the interest rate applicable to
      Advances.

     

    2.2.   
      Overadvances.
      If at
      any time or for any reason the total of all outstanding Advances and all other
      monetary Obligations exceeds the Availability Amount (an “Overadvance”),
      Borrower shall pay the amount of the excess to Bank, without notice or demand,
      within two (2) Business Days after the occurrence of such Overadvance. Without
      limiting Borrower’s obligation to repay to Bank the amount of any Overadvance,
      Borrower agrees to pay Bank interest on the outstanding amount of any
      Overadvance that has been outstanding for more than three (3) Business Days,
      on
      demand, at the Default Rate.

     

    2.3.   
      Payment
      of Interest on the Credit Extensions.

     

    (a)  Interest
      Rate;
      Advances.
      Subject
      to Section 2.3(b),
      the
      amounts outstanding under the Revolving Line (which, for purposes of
      clarification, do not include the FX Reserve or any undrawn Letters of Credit
      or
      Letter of Credit Reserves) shall accrue interest at a per annum rate equal
      to
      the Prime Rate plus the following percentages: (i) one quarter of one percentage
      point (0.25%) at all times that Borrower is a Net Depositor and either (A)
      Borrower’s Quick Ratio is equal to or greater than 1.50:1.00 or (B) Borrower’s
      EBITDA, net of unfunded capital expenditures, was greater than Seven Hundred
      Fifty Thousand Dollars ($750,000) for the most recently ended fiscal quarter
      and
      was greater than Seven Hundred Fifty Thousand Dollars ($750,000) for the two
      immediately preceding fiscal quarters; (ii) three quarters of one percentage
      point (0.75%) at all other times that Borrower is a Net Depositor; and (iii)
      one
      and one half of one percentage point (1.50%) at all times that Borrower is
      a Net
      Borrower. Changes in the applicable interest rate as a result of changes in
      Borrower’s status as a Net Borrower or Net Depositor or as a result of changes
      in Borrower’s Quick Ratio shall not become effective until the first
      (1st)
      day of
      the month following such change. Any change in the applicable interest rate
      as a
      result of Borrower achieving the minimum EBITDA for two (2) consecutive calendar
      quarters in accordance with Section 2.3(a)(i) shall become effective on the
      first (1st)
      day of
      the month following such second (2nd)
      calendar quarter. Any change in the applicable interest rate as a result of
      Borrower’s failure to maintain the minimum EBITDA set forth in Section 2.3(a)(i)
      shall become effective on the first (1st)
      day of
      the month following the month in which such failure occurred.

     

    (b)  Default
      Rate.
      Immediately upon the occurrence and during the continuance of an Event of
      Default, Obligations shall bear interest at a rate per annum which is
      three percentage
      points (3%) above the rate effective immediately before the Event of Default
      (the “Default
      Rate”).
      Payment
      or acceptance of the increased interest rate provided in this
      Section 2.3(b)
      is not a
      permitted alternative to timely payment and shall not constitute a waiver of
      any
      Event of Default or otherwise prejudice or limit any rights or remedies of
      Bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c)  Adjustment
      to Interest Rate.
      Changes
      to the interest rate of any Credit Extension based on changes to the Prime Rate
      shall be effective on the effective date of any change to the Prime Rate and
      to
      the extent of any such change. 

     

    (d)  360-Day
      Year.
      Interest shall be computed on the basis of a 360-day year for the actual number
      of days elapsed.

     

    (e)  Debit
      of Accounts.
      Bank
      may debit any of Borrower’s deposit accounts, including the Designated Deposit
      Account, for principal and interest payments or any other amounts Borrower
      owes
      Bank when due. These debits shall not constitute a set-off.

     

    (f)  Payment;
      Interest Computation; Float Charge.
      Interest is payable monthly on the last calendar day of each month. In computing
      interest on the Obligations, all Payments received after 3:00 p.m. Eastern
      time
      on any day shall be deemed received on the next Business Day. In addition,
      while
      Borrower is a Net Borrower, Bank shall be entitled to charge Borrower a “float”
charge in an amount equal to two (2) Business Days interest, at the interest
      rate applicable to the Advances, on all payments received by Bank. The float
      charge for each month shall be payable on the last day of the month. Bank shall
      not, however, be required to credit Borrower's account for the amount of any
      item of payment which is unsatisfactory to Bank in its good faith business
      judgment, and Bank may charge Borrower's Designated Deposit Account for the
      amount of any item of payment which is returned to Bank unpaid.

     

    2.4.   
      Fees.
      Borrower shall pay to Bank:

     

    (a)  Commitment
      Fee.
      A fully
      earned, non-refundable commitment fee of Ninety Thousand Dollars ($90,000)
      which
      shall be paid in eight (8) quarterly installments of Eleven Thousand Two Hundred
      Fifty Dollars ($11,250) each, in advance, as follows:

     

    
      	
              Due
                Date

               

            	
              Amount
                Due

               

            
	
              August
                1, 2006

               

            	
              $11,250

               

            
	
              November
                1, 2006

               

            	
              $11,250

               

            
	
              February
                1, 2007

               

            	
              $11,250

               

            
	
              May
                1, 2007

               

            	
              $11,250

               

            
	
              August
                1, 2007

               

            	
              $11,250

               

            
	
              November
                1, 2007

               

            	
              $11,250

               

            
	
              February
                1, 2008

               

            	
              $11,250

               

            
	
              May
                1, 2008

               

            	
              $11,250

               

            

    

    

    (b)  Letter
      of Credit Fee.
      Bank’s
      customary fees and expenses for the issuance or renewal of Letters of Credit,
      upon the issuance or renewal of such Letter of Credit by Bank, provided that
      the
      Letter of Credit fee shall in no event exceed the one (1) percent fee referenced
      in Section 2.1.2(a) hereof;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c)  Termination
      Fee.
      A
      termination fee as provided under Section 4.1
      hereof;

     

    (d)  Unused
      Revolving Line Facility Fee.
      A fee
      (the “Unused
      Revolving Line Facility Fee”),
      which
      fee shall be paid monthly, in arrears, on a calendar year basis, in an amount
      equal to three hundred and seventy five hundredths of one percent (0.375%)
      per
      annum of the average sum of (i) the Revolving Line minus (ii) all outstanding
      Advances (outstanding Letters of Credit, the Letter of Credit Reserves and
      the
      FX Reserve shall not be deemed “Advances” for purposes of calculating the Unused
      Revolving Line Facility Fee under this Section 2.4(d)). Borrower shall not
      be
      entitled to any credit, rebate or repayment of any Unused Revolving Line
      Facility Fee previously earned by Bank pursuant to this Section notwithstanding
      any termination of this Agreement, or suspension or termination of Bank’s
      obligation to make loans and advances hereunder;

     

    (e)  Collateral
      Monitoring Fee.
      For
      each month (i) during which Borrower has submitted a Transaction Report or
      Interim Transaction Report reflecting that Borrower is a Net Borrower as of
      the
      date of such Transaction Report or Interim Transaction Report, or (ii) during
      which Borrower has failed to provide a Transaction Report or Interim Transaction
      Report in accordance with the terms of this Agreement during such month, a
      monthly collateral monitoring fee of One Thousand Two Hundred Fifty Dollars
      ($1,250), payable in arrears on the last day of the month in which the Borrower
      submits a Transaction Report or Interim Transaction Report showing Net Borrower
      status (prorated for any partial month with respect to the Effective Date or
      the
      termination of this Agreement, whether by acceleration of the obligations
      following an Event of Default by the Borrower under Section 4.1 below, or on
      the
      Revolving Line Maturity Date); and

     

    (f)  Bank
      Expenses.
      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.

     

    3.  CONDITIONS
      OF LOANS

     

    3.1.  
      Conditions
      Precedent to Initial Advance.
      Bank’s
      obligation 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)  Borrower
      shall have delivered duly executed original signatures to the Loan Documents
      to
      which it is a party;

     

    (b)  UK
      Borrower shall have delivered duly executed original signatures to the Mortgage
      Debenture;

     

    (c)  US
      Borrower shall have delivered duly executed original signatures to the Control
      Agreements;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (d)  Borrower
      shall have delivered its Operating Documents and a good standing certificate
      of
      US Borrower certified by the Secretary of State of the State of Washington
      as of
      a date no earlier than thirty (30) days prior to the Effective Date;

     

    (e)  Borrower
      shall have delivered duly executed original signatures to the completed
      Borrowing Resolutions for Borrower;

     

    (f)  US
      Borrower shall have delivered duly executed original signatures to the IP
      Agreements;

     

    (g)  Bank
      shall have received certified copies, dated as of a recent date, of financing
      statement searches, as Bank shall reasonably request, accompanied by written
      evidence (including any UCC termination statements) that the Liens indicated
      in
      any such financing statements either constitute Permitted Liens or have been
      or,
      in connection with the initial Advance, will be terminated or
      released;

     

    (h)  US
      Borrower shall have delivered the Perfection Certificate executed by
      Borrower;

     

    (i)  UK
      Borrower shall have delivered a Secretary’s Certificate duly executed by the
      Secretary of the UK Borrower;

     

    (j)  US
      Borrower shall have delivered a landlord’s consent executed by AVM, L.P. and
      Liberty Property Limited Partnership in favor of Bank;

     

    (k)  Borrower
      shall have delivered a legal opinion of Borrower’s counsel in the United States
      and in England dated as of the Effective Date together with the duly executed
      original signatures thereto;

     

    (l)  [Reserved];

     

    (m)  Borrower
      shall have delivered evidence satisfactory to Bank that the insurance policies
      required by Section 6.7
      hereof
      are in full force and effect, together with appropriate evidence showing loss
      payable and/or additional insured clauses or endorsements in favor of Bank;
      and

     

    (n)  Borrower
      shall have paid the fees and Bank Expenses then due as specified in Section
      2.4
      hereof.

     

    3.2.  Conditions
      Precedent to all Credit Extensions.
      Bank’s
      obligations to make each Credit Extension, including the initial Credit
      Extension, is subject to the following:

     

    (a)  except
      as
      otherwise provided in Section 3.4,
      timely
      receipt of an executed Payment/Advance Form; 

     

    (b)  the
      representations and warranties in Section 5
      shall be
      true in all material respects on the date of the Payment/Advance Form and on
      each Funding Date; provided, however, that such materiality qualifier shall
      not
      be applicable to any representations and warranties that already are qualified
      or modified by materiality in the text thereof; and provided, further
that
      those representations and warranties expressly referring to a specific date
      shall be true, accurate and complete in all material respects as of such
      date,
      and no
      Default or Event of Default shall have occurred and be continuing or result
      from
      the Credit Extension. Each Credit Extension is Borrower’s representation and
      warranty on that date that the representations and warranties in Section
5
      remain
      true in all material respects; provided, however, that such materiality
      qualifier shall not be applicable to any representations and warranties that
      already are qualified or modified by materiality in the text thereof; and
      provided, further that
      those representations and warranties expressly referring to a specific date
      shall be true, accurate and complete in all material respects as of such
      date;
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c)  in
      Bank’s
      sole discretion, there has not been a Material Adverse Change.

     

    3.3.  Covenant
      to Deliver. 

     

    Borrower
      agrees to deliver to Bank each item required to be delivered to Bank under
      this
      Agreement as a condition to any Credit Extension. Borrower expressly agrees
      that
      the extension of a Credit Extension prior to the receipt by Bank of any such
      item shall not constitute a waiver by Bank of Borrower’s obligation to deliver
      such item, and any such extension in the absence of a required item shall be
      in
      Bank’s sole discretion.

     

    3.4.  Procedures
      for Borrowing.
      Subject
      to the prior satisfaction of all other applicable conditions to the making
      of an
      Advance set forth in this Agreement, to obtain an Advance, Borrower shall notify
      Bank (which notice shall be irrevocable) by electronic mail, facsimile, or
      telephone by 3:00 p.m. Eastern time on the Funding Date of the Advance. Together
      with such notification, Borrower must promptly deliver to Bank by electronic
      mail or facsimile a completed Transaction Report executed by a Responsible
      Officer or his or her designee. Bank shall credit Advances to the Designated
      Deposit Account. Bank may make Advances under this Agreement based on
      instructions from a Responsible Officer or his or her designee or without
      instructions if the Advances are necessary to meet Obligations which have become
      due. Bank may rely on any telephone notice given by a person whom Bank believes
      is a Responsible Officer or designee.

     

    4.  CREATION
      OF SECURITY INTEREST 

     

    4.1.  
      Grant
      of Security Interest; Termination
      of Agreement and Security Interest; Termination Fee.
      US
      Borrower hereby grants Bank, to secure the payment and performance in full
      of
      all of the Obligations, 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. US Borrower represents,
      warrants, and covenants that the security interest granted herein is and shall
      at all times continue to be a first priority perfected security interest in
      the
      Collateral (subject only to Permitted Liens that may have superior priority
      to
      Bank’s Lien under this Agreement). If US Borrower shall acquire a commercial
      tort claim, US 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 reasonably
      satisfactory to Bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    This
      Agreement may be terminated prior to the Revolving Line Maturity Date by
      Borrower, effective three (3) Business Days after written notice of termination
      is given to Bank or if Bank’s obligation to fund Credit Extensions terminates
      pursuant to the terms of Section 2.1.1(b)).
      Notwithstanding any such termination, Bank’s lien and security interest in the
      Collateral shall continue until US Borrower fully satisfies its Obligations.
      If
      this Agreement is terminated prior to the Revolving Line Maturity Date at
      Borrower’s election or at Bank’s election due to the occurrence and continuance
      of an Event of Default, US Borrower shall pay to Bank, in addition to the
      payment of any other expenses or fees then-owing, (a) all remaining quarterly
      installments of the Commitment Fee, and (b) a termination fee in an amount
      equal
      to (i) one percent (1.0%) of the Revolving Line if such termination occurs
      prior
      to August 1, 2007 or (ii) one half of one percent (0.5%) of the Revolving Line
      if such termination occurs on or after August 1, 2007; provided, however, that
      no termination fee shall be charged if the credit facility hereunder terminates
      on the Revolving Line Maturity Date or is replaced with a new facility from
      Silicon Valley Bank or another division thereof. Upon payment in full of the
      Obligations and
      at
      such time as Bank’s obligation to make Credit Extensions has terminated, Bank
      shall release its liens and security interests in the Collateral and all rights
      therein shall revert to US Borrower.

     

    4.2.  
      Authorization
      to File Financing Statements. US
      Borrower
      hereby authorizes Bank to file financing statements, without notice to
US
      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. 

     

    5.  REPRESENTATIONS
      AND WARRANTIES

     

    Borrower
      represents
      and
      warrants as follows: 

     

    5.1.  
      Due
      Organization and Authorization.
      US
      Borrower is duly existing and in good standing as a Registered Organization
      only
      in the State of Washington and UK Borrower is a private limited company duly
      incorporated and validly existing under the laws of England and Wales, and
      each
      is qualified and licensed to do business and is in good standing in any
      jurisdiction in which the conduct of their business or their 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, US
      Borrower
      has delivered to Bank a completed certificate substantially in the form attached
      hereto as Exhibit C
      signed
      by US
      Borrower,
      entitled “Perfection Certificate”. US
      Borrower
      represents and warrants to Bank that (a) US
      Borrower’s
      exact legal name is that indicated on the Perfection Certificate and on the
      signature page hereof; (b) US
      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
US
      Borrower’s
      organizational identification number or accurately states that Borrower has
      none; (d) the Perfection Certificate accurately sets forth US
      Borrower’s
      place of business, or, if more than one, its chief executive office as well
      as
US
      Borrower’s
      mailing address (if different than its chief executive office); (e) US
      Borrower (and each of its predecessors) has not, in the past five (5) years,
      changed its state 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 US
      Borrower
      and each of its Subsidiaries is accurate and complete. If US
      Borrower
      is not now a Registered Organization but later becomes one, Borrower shall
      promptly notify Bank of such occurrence and provide Bank with US
      Borrower’s
      organizational identification number.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    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 it is a party
      or
      by which it is bound in which the default could reasonably be expected to have
      a
      material adverse effect on Borrower’s business.

     

    5.2.   Collateral.
      US
      Borrower
      has good title to the Collateral, free of Liens except Permitted Liens. Borrower
      has no deposit account other than the deposit accounts with Bank. 

     

    The
      Collateral is not in the possession of any third party bailee (such as a
      warehouse). Except as hereafter disclosed to Bank in writing by US
      Borrower,
      none of the components of the Collateral shall be maintained at locations other
      than as provided in the Perfection Certificate. In the event that US
      Borrower,
      after the date hereof, intends to store or otherwise deliver any portion of
      the
      Collateral to a bailee, then US
      Borrower
      will first receive the written consent of Bank and such bailee must acknowledge
      in writing that the bailee is holding such Collateral for the benefit of
      Bank.

     

    All
      Net
      Inventory is in all material respects of good and marketable quality, free
      from
      material defects.

     

    Borrower
      is the sole owner of its Intellectual Property, except for non-exclusive
      licenses granted to its customers in the ordinary course of business. Each
      Patent is valid and enforceable and no part of the Intellectual Property has
      been judged invalid or unenforceable, in whole or in part, and to the best
      of
      Borrower’s knowledge, no claim has been made that any part of the Intellectual
      Property violates the rights of any third party except to the extent such claim
      could not reasonably be expected to have a material adverse effect on Borrower’s
      business.

     

    Except
      as
      noted on the Perfection Certificate, US
      Borrower
      is not a party to, nor is bound by, any license or other agreement with respect
      to which Borrower is the licensee that prohibits or otherwise restricts Borrower
      from granting a security interest in Borrower’s interest in such license or
      agreement or any other property. Borrower shall provide written notice to Bank
      within ten (10) days of entering or becoming bound by any such license or
      agreement which is reasonably likely to have a material impact on Borrower’s
      business or financial condition (other than over-the-counter software that
      is
      commercially available to the public). 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 (such consent or authorization may include a licensor’s agreement to a
      contingent assignment of the license to Bank if Bank determines that is
      necessary in its good faith judgment), whether now existing or entered into
      in
      the future.

     

    5.3.  
      Accounts
      Receivable. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (a)  For
      each
      Account with respect to which Advances are requested, on the date each Advance
      is requested and made, such Account shall be an Eligible Account.

     

    (b)  All
      statements made and all unpaid balances appearing in all invoices, instruments
      and other documents evidencing the Accounts are and shall be true and correct
      and all such invoices, instruments and other documents, and all of Borrower's
      Books are genuine and in all respects what they purport to be. All sales and
      other transactions underlying or giving rise to each Account shall comply in
      all
      material respects with all applicable laws and governmental rules and
      regulations. Borrower has no knowledge of any actual or imminent Insolvency
      Proceeding of any Account Debtor whose accounts are an Eligible Account in
      any
      Transaction Report. To the best of Borrower’s knowledge, all signatures and
      endorsements on all documents, instruments, and agreements relating to all
      Accounts are genuine, and all such documents, instruments and agreements are
      legally enforceable in accordance with their terms. 

     

    5.4.   Litigation.
      Except
      as disclosed on the Perfection Certification, there are no actions or
      proceedings pending or, to the knowledge of the Responsible Officers, threatened
      in writing by or against Borrower or any of its Subsidiaries involving more
      than
      Two Hundred Fifty Thousand Dollars ($250,000).

     

    5.5.  
      No
      Material Deviation in Financial Statements.
      All
      consolidated financial statements for Borrower and any of its 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. US
      Borrower
      is not an “investment company” or a company “controlled” by an “investment
      company” under the Investment Company Act. US
      Borrower
      is not engaged as one of its important activities in extending credit for margin
      stock (under Regulations T and U of the Federal Reserve Board of Governors).
      US
      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 have a material adverse effect on its business.
      None of Borrower’s or any of its Subsidiaries’ 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 business as
      currently conducted.

     

    5.8.  
      Subsidiaries;
      Investments.
      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 has timely filed all required tax returns and reports, and Borrower
      has
      timely paid all foreign, federal, state, governmental and local taxes,
      assessments, deposits and contributions owed by Borrower. 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 in any part of the
      world.

     

    5.10. Use
      of Proceeds.
      Borrower shall use the proceeds of the Credit Extensions solely as working
      capital, and to fund its general business requirements and not for personal,
      family, household or agricultural purposes.

     

    5.11. 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 the 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:

     

    6.1.  
      Government
      Compliance.
      Borrower shall maintain its legal existence and good standing in its
      jurisdiction of formation and each jurisdiction in which the nature of its
      business requires them to be so qualified, except where the failure to take
      such
      action would not reasonably be expected to have a material adverse effect on
      Borrower’s business or operations, taken as a whole; provided,
      that
      Borrower may not permit its qualification to do business in the jurisdiction
      of
      its chief executive office to terminate or lapse; and provided,
      further,
      that
      this Section 6.1 shall not be construed to prohibit any other transaction that
      is otherwise permitted in Section 7 of this Agreement.

     

    Borrower
      shall 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.2.  
      Financial
      Statements, Reports, Certificates. Borrower
      shall provide Bank with the following: 

     

    (a)  at
      all
      times that Borrower is a Net Borrower, a Transaction Report, weekly and upon
      delivery of each request for an Advance; (b) at all times other than when
      Borrower is a Net Borrower, a Transaction Report monthly within thirty (30)
      days
      after the end of each month;

     

    (b)  at
      all
      times other than when Borrower is a Net Borrower, a Transaction Report monthly
      within thirty (30) days after the end of each month;

     

    (c)  within
      thirty (30) days after the end of each month, deliver to Bank (A) monthly
      accounts receivable agings, aged by invoice date, (B) monthly accounts payable
      agings, aged by invoice date, and (C) monthly reconciliations of accounts
      receivable agings (aged by invoice date), and general ledger;

     

    (d)  as
      soon
      as available, and in any event within thirty (30) days after the end of each
      month, monthly unaudited financial statements on a consolidated and
      consolidating basis;

     

    (e)  within
      thirty (30) days after the end of each month a monthly Compliance Certificate
      signed by a Responsible Officer, certifying that as of the end of such month,
      Borrower was in full compliance with all of the terms and conditions of this
      Agreement, and setting forth calculations showing compliance with the financial
      covenants set forth in this Agreement and such other information as Bank shall
      reasonably request, including, without limitation, a statement that at the
      end
      of such month there were no held checks; 

     

    (f)  no
      later
      than thirty (30) days prior to the end of each fiscal year of Borrower, (A)
      annual operating budgets (including income statements, balance sheets and cash
      flow statements, by month) for the upcoming fiscal year of Borrower, and (B)
      annual financial projections for the following fiscal year (on a quarterly
      basis) as approved by Borrower’s board of directors, together with any related
      business forecasts used in the preparation of such annual financial projections;
      

     

    (g)  as
      soon
      as available, and in any event within one hundred eighty (180) days following
      the end of Borrower's fiscal year, annual financial statements certified by,
      and
      with an unqualified opinion of, independent certified public accountants
      acceptable to Bank (for clarification, Grant Thornton LLP is deemed by Bank
      to
      be acceptable);

     

    (h)  as
      soon
      as available, but no later than five (5) days after filing with the Securities
      Exchange Commission, the US
      Borrower’s
      10K, 10Q, and 8K reports together with a Compliance Certificate;

     

    (i)  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 Two Hundred Fifty Thousand Dollars ($250,000) or more;

     

    (j)  prompt
      written notice of (i) any material change in the composition of the Intellectual
      Property, (ii) the registration of any Copyright, including any subsequent
      ownership right of Borrower in or to any Copyright, Patent or Trademark not
      shown in the IP Security Agreement, or (iii) Borrower’s knowledge of an
      event that materially adversely affects the value of the Intellectual
      Property.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Borrower’s
      10K, 10Q, and 8K reports required to be delivered pursuant to Section 6.2(h)
      shall be deemed to have been delivered on the date on which Borrower posts
      such
      report or provides a link thereto on Borrower’s or another website on the
      Internet; provided,
      that
      Borrower shall provide paper copies to Bank of the Compliance Certificates
      required by Section 6.2(h).

    

    6.3.  
      Accounts
      Receivable.

     

    (a)  Schedules
      and Documents Relating to Accounts.
      Borrower
      shall deliver to Bank transaction reports and schedules of collections, as
      provided in Section 6.2,
      on
      Bank’s standard forms; provided, however, that Borrower’s failure to execute and
      deliver the same shall not affect or limit Bank’s Lien and other rights in all
      of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a
      specific Account affect or limit Bank’s Lien and other rights therein. If
      requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s
      request, originals to the extent necessary or desirable to create or perfect
      Bank’s Lien on Collateral) of all contracts, orders, invoices, and other similar
      documents, and all shipping instructions, delivery receipts, bills of lading,
      and other evidence of delivery, for any goods the sale or disposition of which
      gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on
      its
      request, copies (or, at Bank’s request, originals to the extent necessary or
      desirable to create or perfect Bank’s Lien on Collateral) of all instruments,
      chattel paper, security agreements, guarantees and other documents and property
      evidencing or securing any Accounts, in the same form as received, with all
      necessary indorsements, and copies of all credit memos.

     

    (b)  Disputes.
      Borrower shall promptly notify Bank of all disputes or claims relating to
      Accounts to the extent such disputes or claims involve amounts in excess
      $250,000 individually or in the aggregate outstanding at any time. Borrower
      may
      forgive (completely or partially), compromise, or settle any Account for less
      than payment in full, or agree to do any of the foregoing so long as
      (i) Borrower does so in good faith, in a commercially reasonable manner, in
      the ordinary course of business, in arm’s-length transactions, and reports the
      same to Bank in the regular reports provided to Bank; (ii) no Default or
      Event of Default has occurred and is continuing; and (iii) after taking
      into account all such discounts, settlements and forgiveness, the total
      outstanding Advances will not exceed the Availability Amount. 

     

    (c)  Collection
      of Accounts.
      Borrower shall have the right to collect all Accounts, unless and until a
      Default or an Event of Default has occurred and is continuing. Whether or not
      an
      Event of Default has occurred and is continuing, Borrower shall hold all
      payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall
      immediately deliver all such payments and proceeds to Bank in their original
      form, duly endorsed, to be applied to the Obligations pursuant to the terms
      of
      Section 9.4
      hereof.
      Bank may, in its good faith business judgment, require that all proceeds of
      Domestic Accounts be deposited by US Borrower into a lockbox account, or such
      other “blocked account” as Bank may specify, pursuant to a blocked account
      agreement in such form as Bank may specify in its good faith business
      judgment.
      At all
      times that US
      Borrower
      is a Net Borrower, (i) Bank shall apply any proceeds in such lockbox account
      to
      the balance of the outstanding Obligations and (ii) Borrower shall deposit
      all
      proceeds of Foreign Accounts into a lockbox account, or such other “blocked
      account” as Bank may specify, with Royal Bank of Scotland or Barclays pursuant
      to a blocked account agreement in such form as Bank may specify in its good
      faith business judgment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (d)  Returns.
      Provided
      no Event of Default has occurred and is continuing, if any Account Debtor
      returns any Inventory to Borrower, Borrower shall promptly (i) determine
      the reason for such return, (ii) issue a credit memorandum to the Account
      Debtor in the appropriate amount, and (iii) provide a copy of such credit
      memorandum to Bank, upon request from Bank. In the event any attempted return
      occurs after the occurrence and during the continuance of any Event of Default,
      Borrower shall hold the returned Inventory in trust for Bank, and promptly
      notify Bank of the return of the Inventory. 

     

    (e)  Verification.
      Bank
      may, from time to time, verify directly with the respective Account Debtors
      the
      validity, amount and other matters relating to the Accounts, either in the
      name
      of Borrower or Bank or such other name as Bank may choose. 

     

    (f)  No
      Liability.
      Bank
      shall not be responsible or liable for any shortage or discrepancy in, damage
      to, or loss or destruction of, any goods, the sale or other disposition of
      which
      gives rise to an Account, or for any error, act, omission, or delay of any
      kind
      occurring in the settlement, failure to settle, collection or failure to collect
      any Account, or for settling any Account in good faith for less than the full
      amount thereof, nor shall Bank be deemed to be responsible for any of Borrower's
      obligations under any contract or agreement giving rise to an Account. Nothing
      herein shall, however, relieve Bank from liability for its own gross negligence
      or willful misconduct.

     

    6.4.  
      Remittance
      of Proceeds.
      Except
      as otherwise provided in Section 6.3(c),
      deliver, in kind, all proceeds arising from the disposition of any Collateral
      to
      Bank in the original form in which received by Borrower not later than five
      (5)
      Business Days after receipt by Borrower, to be applied to the Obligations
      pursuant to the terms of Section 9.4
      hereof;
      provided that, if no Default or Event of Default has occurred and is continuing,
      Borrower shall not be obligated to remit to Bank the proceeds of the sale of
      worn out or obsolete Equipment disposed of by Borrower in good faith in an
      arm’s
      length transaction for an aggregate purchase price of Two Hundred Fifty Thousand
      Dollars ($250,000) or less (for all such transactions in any fiscal year).
      Borrower agrees that it will not commingle proceeds of Collateral with any
      of
      Borrower’s other funds or property, but will hold such proceeds separate and
      apart from such other funds and property and in an express trust for Bank.
      Nothing in this Section limits the restrictions on disposition of Collateral
      set
      forth elsewhere in this Agreement.

     

    6.5.  
      Taxes;
      Pensions.
      Timely
      file all required tax returns and reports and timely pay all foreign, federal,
      state, governmental and local taxes, assessments, deposits and contributions
      owed by Borrower except for deferred payment of any taxes contested pursuant
      to
      the terms of Section 5.9
      hereof,
      and pay all amounts necessary to fund all present pension, profit sharing and
      deferred compensation plans in accordance with their terms.

     

    6.6.  
      Access
      to Collateral; Books and Records.
      So long
      as an Event of Default has not occurred and is continuing, Bank, or its agents,
      shall have the right to annually inspect the Collateral and the right to
      annually audit and copy Borrower’s Books at reasonable times, on five (5)
      Business Days’ notice (provided that no such advance notice shall be required
      after the occurrence and during the continuance of an Event of Default);
      provided, however, that at all times that Borrower is a Net Borrower, Bank,
      or
      its agents, shall have the right to inspect the Collateral quarterly or as
      conditions may warrant and the right to audit and copy Borrower’s Books
      quarterly or as conditions may warrant, at reasonable times on three (3)
      Business Days’ notice (provided that no such advance notice shall be required
      after the occurrence and during the continuance of an Event of Default). The
      foregoing inspections and audits shall be at Borrower’s expense, and the charge
      therefor shall be $750 per person per day (or, during the continuance of an
      Event of Default, such higher amount as shall represent Bank’s then-current
      standard charge for the same), plus reasonable out-of-pocket expenses. In the
      event Borrower and Bank schedule an audit more than ten (10) days in advance,
      and Borrower cancels or seeks to reschedules the audit with less than ten (10)
      days written notice to Bank, then (without limiting any of Bank’s rights or
      remedies), Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket
      expenses incurred by Bank to compensate Bank for the anticipated costs and
      expenses of the cancellation or rescheduling. Borrower
      hereby acknowledges that the first such audit will be conducted within sixty
      (60) days after the execution of this Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.7.   
      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 6.7
      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 6.7,
      and
      take any action under the policies Bank deems prudent.

     

    6.8.  
      Operating
      Accounts.

     

    (a)  Maintain
      its primary depository and operating accounts in the United States with Bank,
      and if Borrower becomes a Net Borrower at any time, then Borrower must maintain
      its primary depository and operating accounts in the United Kingdom with
      Barclays, Royal Bank of Scotland or such other institution as Bank agrees to
      in
      writing.

     

    (b)  Provide
      Bank five (5) days prior written notice before establishing any Collateral
      Account at or with any bank or financial institution other than Bank or its
      Affiliates. In addition, for each Collateral Account that Borrower at any time
      maintains, Borrower shall cause the applicable bank or financial institution
      (other than Bank) at or with which any Collateral Account is maintained (but
      in
      each case only to the extent such bank or financial institution is located
      in
      the United States) to execute and deliver a Control Agreement or other
      appropriate instrument with respect to such Collateral Account to perfect Bank’s
      Lien in such Collateral Account in accordance with the terms hereunder. 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 and identified to Bank by
      Borrower as such.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.9.  
      Financial
      Covenants.

     

    Borrower
      shall maintain at all times, to be tested as of the last day of each quarter,
      unless otherwise noted, on a consolidated basis with respect to US Borrower
      and
      UK Borrower:

     

    (a)  Tangible
      Net Worth.
      A
      Tangible Net Worth of at least Twenty Seven Million Dollars ($27,000,000),
      plus
      an amount equal to the sum of (i) fifty percent (50%) of quarterly Net Income,
      (ii) fifty percent (50%) of the proceeds received by Borrower from the sale
      of
      US Borrower’s capital stock after the Effective Date and (iii) fifty percent
      (50%) of the principal amount of Subordinated Debt incurred by Borrower after
      the Effective Date.

     

    (b)  Liquidity
      Coverage.
      A ratio
      of (i) the sum of (A) unrestricted cash and Cash Equivalents maintained at
      Bank
      and Bank’s Affiliates plus (B) fifty percent (50%) of unrestricted cash and Cash
      Equivalents held in banks in the United Kingdom with respect to which Bank
      has a
      fixed or floating charge plus (C) the Borrowing Base, minus (D) the Funded
      Debt,
      to (ii) Funded Debt, of at least the following: (i) 1.50:1.00 as of the last
      day
      of March, June, September and December of each year and (ii) 1.75:1.00 as of
      the
      last day of all other months.

     

    6.10. Protection
      and Registration 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. If Borrower decides to register
      any copyrights or mask works in the United States Copyright Office, Borrower
      shall: (x) provide Bank with at least fifteen (15) days prior written notice
      of
      its intent to register such copyrights or mask works together with a copy of
      the
      application it intends to file with the United States Copyright Office
      (excluding exhibits thereto); (y) execute an intellectual property security
      agreement or such other documents as Bank may reasonably request to maintain
      the
      perfection and priority of Bank’s security interest in the copyrights or mask
      works intended to be registered with the United States Copyright Office; and
      (z)
      record such intellectual property security agreement with the United States
      Copyright Office contemporaneously with filing the copyright or mask work
      application(s) with the United States Copyright Office. Borrower shall promptly
      provide to Bank a copy of the application(s) filed with the United States
      Copyright Office together with evidence of the recording of the intellectual
      property security agreement necessary for Bank to maintain the perfection and
      priority of its security interest in such copyrights or mask works. Borrower
      shall provide written notice to Bank of any application filed by Borrower in
      the
      United States Patent and Trademark Office for a patent or to register a
      trademark or service mark within 30 days after any such filing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.11. 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.

     

    6.12. Further
      Assurances.
      Borrower shall execute any further instruments and take further action as Bank
      reasonably requests to perfect or continue Bank’s Lien 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 or otherwise dispose of (collectively “Transfer”)
      all or
      any part of its business or property, except for: (i) of Inventory in the
      ordinary course of business; (ii) of worn-out or obsolete Equipment; (iii)
      excess Inventory in connection with that certain Purchase Contract dated April
      14, 2005, as amended, between Borrower and Yozan, Inc., provided that the
      aggregate sales price of such excess Inventory does not exceed $2,000,000;
      (iv)
      other excess Inventory not included in Section 7.1(iii) above provided that
      the
      aggregate sales price (calculated at book value) of such other excess Inventory
      does not exceed $250,000; (v) dispositions in connection with Permitted Liens
      and Permitted Investments; (vi) of non-exclusive licenses for the use of
      the property of Borrower in the ordinary course of business; (vii) Transfers
      to
      another Borrower; and (viii) Transfers to any Subsidiaries of Borrower not
      to
      exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any
      calendar year.

     

    7.2.  
      Changes
      in Business, Legal Name or Jurisdiction of Formation.
      (a)
      Engage in any material line of business other than those lines of business
      conducted by Borrower on the date hereof and any businesses reasonably related,
      complementary or incidental thereto or reasonable extensions thereof, or (b)
      liquidate or dissolve.
      Borrower
      shall not, without at least thirty (30) days prior written notice to Bank:
      (1) add any new offices or business locations, including warehouses (unless
      such new offices or business locations contain less than One Hundred Thousand
      Dollars ($100,000) in Borrower’s assets or property), (2) change its
      jurisdiction of organization, (3) change its organizational structure or
      type, (4) change its legal name, or (5) change any organizational number
      (if any) assigned by its jurisdiction of organization.

     

    7.3.  
      Mergers
      or Acquisitions.
      Merge
      or consolidate with any other Person, or acquire, all or substantially all
      of
      the capital stock or property of another Person.

     

    7.4.   Indebtedness.
      Create,
      incur, assume, or be liable for any Indebtedness other than Permitted
      Indebtedness.

     

    7.5.   Encumbrance.
      Create,
      incur, or allow any Lien on any of the Collateral, or assign or convey any
      right
      to receive income, including the sale of any Accounts, except for Permitted
      Liens, permit any Collateral not to be subject to the first priority security
      interest granted herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    7.6.  
      Maintenance
      of Collateral Accounts.
      Maintain any Collateral Account except pursuant to the terms of Section
6.8(b)
      hereof.

     

    7.7.   Investments;
      Distributions.
      (a)
      Directly or indirectly acquire or own any Person, or make any Investment in
      any
      Person, other than Permitted Investments, or (b) pay any dividends or make
      any
      distribution or payment or redeem, retire or purchase any capital stock other
      than Permitted Distributions.

     

    7.8.  
      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 (when viewed in the context
      of any series of transactions of which it may be a part, if applicable) that
      are
      no less favorable to Borrower than would be obtained in an arm’s length
      transaction with a non-affiliated Person.

     

    7.9.   Subordinated
      Debt.
      Make or
      permit any payment on or amendments of any Subordinated Debt, except as
      permitted under the terms of the applicable Subordination
      Agreement.

     

    7.10.
      Compliance.
      Become
      an “investment company” or a company controlled by an “investment company”,
      under the Investment Company Act of 1940 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 Credit Extension for that purpose; fail to meet the minimum
      funding requirements of ERISA, permit a Reportable Event or Prohibited
      Transaction, as defined in ERISA, to occur; fail to comply with the Federal
      Fair
      Labor Standards Act or violate any other law or regulation, if the violation
      could reasonably be expected to have a material adverse effect on Borrower’s
      business; 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 (a) make any payment of principal or interest on any
      Credit Extension on its due date, or (b) pay any other Obligations within
      three (3) Business Days after such Obligations are due and payable. During
      the
      cure period, the failure to cure the payment default is not an Event of Default
      (but no Credit Extension will be made during the cure period);

     

    8.2.   Covenant
      Default. 

     

    (a)  Borrower
      fails or neglects to perform any obligation in Section 6.2,
      6.8,
      6.9,
      or
      violates any covenant in Section 7;
      or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b)  Borrower
      fails or neglects to perform, keep, or observe any other term, provision,
      condition, covenant or agreement contained in this Agreement, any Loan
      Documents, and as to any default (other than those specified in this Section
      8)
      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, that if the default cannot by its nature be cured
      within the ten (10) day period or cannot after diligent attempts by Borrower
      be
      cured within such ten (10) day period, and such default is likely to be cured
      within a reasonable time, then Borrower shall have an additional period (which
      shall not in any case exceed thirty (30) days) to attempt to cure such default,
      and within such reasonable time period the failure to cure the default shall
      not
      be deemed an Event of Default (but no Credit Extensions shall be made during
      such cure period). Grace periods provided under this section shall not apply,
      among other things, to financial covenants or any other covenants set forth
      in
      subsection (a) above;

     

    8.3.  
      Material
      Adverse Change.
      A
      Material Adverse Change occurs;

     

    8.4.  
      Attachment.
      (a) Any
      material portion of Borrower’s assets is attached, seized, levied on, or comes
      into possession of a trustee or receiver or similar officer and the attachment,
      seizure or levy is not removed in ten (10) days; (b) the service of process
      upon Bank 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; (c) Borrower is enjoined, restrained, or prevented by court
      order from conducting a material part of its business; (d) a judgment or other
      claim in excess of Two Hundred Fifty Thousand Dollars ($250,000) becomes a
      Lien
      on any of Borrower’s assets; or (e) a notice of lien, levy, or assessment is
      filed against any of Borrower’s assets by any government agency and not paid
      within ten (10) days after Borrower receives notice. These are not Events of
      Default if stayed or if a bond is posted pending contest by Borrower (but no
      Credit Extensions shall be made during the cure period);

     

    8.5.   Insolvency.
      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 in the case of the US Borrower or fourteen (14)
      days in the case of the UK Borrower (but no Credit Extensions 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
      Borrower fails to (a) make any payment that is due and payable with respect
      to
      any Material Indebtedness and such failure continues after the applicable grace
      or notice period, if any, specified in the agreement or instrument relating
      thereto, or (b) perform or observe any other condition or covenant, or any
      other event shall occur or condition exist under any agreement or instrument
      relating to any Material Indebtedness, and such failure continues after the
      applicable grace or notice period, if any, specified in the agreement or
      instrument relating thereto and the effect of such failure, event or condition
      is to cause the holder or holders of such Material Indebtedness to accelerate
      the maturity of such Material Indebtedness or cause the mandatory repurchase
      of
      any Material Indebtedness; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    8.7.  
      Judgments.
      A
      judgment or judgments for the payment of money in an amount, individually or
      in
      the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) (not
      covered by independent third-party insurance) shall be rendered against Borrower
      and shall remain unsatisfied and unstayed for a period of ten (10) days after
      the entry thereof (provided that no Credit Extensions will be made prior to
      the
      satisfaction or stay of such judgment);

     

    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
      any
      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;
      or

     

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

     

    9.  BANK’S
      RIGHTS AND REMEDIES

     

    9.1.  
      Rights
      and Remedies. While 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;

     

    (c)  demand
      that Borrower (i) deposit 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)  terminate
      any FX Contracts;

     

    (e)  settle
      or
      adjust disputes and claims directly with Account Debtors for amounts on terms
      and in any order that Bank considers advisable, notify any Person owing Borrower
      money of Bank’s security interest in such funds, and verify the amount of such
      account; 

     

    (f)  make
      any
      payments and do any acts it considers necessary or reasonable to protect the
      Collateral and/or 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;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (g)  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;

     

    (h)  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;

     

    (i)  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;

     

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

     

    (k)  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.   Power
      of Attorney.
      Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact,
      exercisable upon the occurrence and during the continuance of an Event of
      Default, to: (a) endorse Borrower’s name on any checks or other forms of payment
      or security; (b) sign Borrower’s name on any invoice or bill of lading for any
      Account or drafts against Account Debtors; (c) settle and adjust disputes and
      claims about the Accounts directly with Account Debtors, for amounts and on
      terms Bank determines reasonable; (d) make, settle, and adjust all claims under
      Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
      encumbrance, security interest, and adverse claim in or to the Collateral,
      or
      any judgment based thereon, or otherwise take any action to terminate or
      discharge the same; and (f) transfer the Collateral into the name of Bank or
      a
      third party as the Code permits. Borrower hereby appoints Bank as its lawful
      attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
      or continue the perfection of any security interest regardless of whether an
      Event of Default has occurred until all Obligations have been satisfied in
      full
      and Bank is under no further obligation to make Credit Extensions hereunder.
      Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s
      rights and powers, coupled with an interest, are irrevocable until all
      Obligations have been fully repaid and performed and Bank’s obligation to
      provide Credit Extensions terminates. Nothing in this Section shall, however,
      relieve Bank from liability for its own gross negligence or willful
      misconduct.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    9.3.   Protective
      Payments.
      If
      Borrower fails to obtain the insurance called for by Section 6.7
      or fails
      to pay any premium thereon or fails to pay any other amount which Borrower
      is
      obligated to pay under this Agreement or 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 efforts 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.

     

    9.4.  
      Application
      of Payments and Proceeds.
      Unless
      an Event of Default has occurred and is continuing, Bank shall apply any funds
      in its possession, whether from Borrower account balances, payments, or proceeds
      realized as the result of any collection of Accounts or other disposition of
      the
      Collateral, first, to the principal of the Obligations; second, to Bank
      Expenses, including without limitation, the reasonable costs, expenses,
      liabilities, obligations and attorneys’ fees incurred by Bank in the exercise of
      its rights under this Agreement; third, to the interest due upon any of the
      Obligations; and finally, to any applicable fees and other charges, in such
      order as Bank shall determine in its sole discretion. Any surplus shall be
      paid
      to Borrower by credit to the Designated Deposit Account or other Persons legally
      entitled thereto; Borrower shall remain liable to Bank for any deficiency.
      If an
      Event of Default has occurred and is continuing, Bank may apply any funds in
      its
      possession, whether from Borrower account balances, payments, proceeds realized
      as the result of any collection of Accounts or other disposition of the
      Collateral, or otherwise, to the Obligations in such order as Bank shall
      determine in its sole discretion. Any surplus shall be paid to Borrower by
      credit to the Designated Deposit Account or to other Persons legally entitled
      thereto; Borrower shall remain liable to Bank for any deficiency. If Bank,
      in
      its good faith business judgment, directly or indirectly enters into a deferred
      payment or other credit transaction with any purchaser at any sale of
      Collateral, Bank shall have the option, exercisable at any time, of either
      reducing the Obligations by the principal amount of the purchase price or
      deferring the reduction of the Obligations until the actual receipt by Bank
      of
      cash therefor.

     

    9.5.  
      Bank’s
      Liability for Collateral.
      So long
      as Bank complies with reasonable banking practices regarding the safekeeping
      of
      the Collateral in the 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    9.6.  
      No
      Waiver; 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. 

     

    9.7.  
      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
      (collectively, “Communication”),
      other
      than Advance requests made pursuant to Section 3.4,
      by any
      party to this Agreement or any other Loan Document must be in writing and be
      delivered or sent by facsimile at the addresses or facsimile numbers listed
      below. Bank or Borrower may change its notice address by giving the other party
      written notice thereof. Each such Communication 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. or Canadian mail, registered
      or certified mail, return receipt requested, with proper postage prepaid; (b)
      upon transmission, when sent by facsimile transmission (with such facsimile
      promptly confirmed by delivery of a copy by personal delivery or United States
      mail as otherwise provided in this Section 10);
      (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 indicated below. Advance requests made pursuant to Section
      3.4
      must be
      in writing and may be in the form of electronic mail, delivered to Bank by
      Borrower at the e-mail address of Bank provided below and shall be deemed to
      have been validly served, given, or delivered when sent (with such electronic
      mail promptly confirmed by delivery of a copy by personal delivery or United
      States mail as otherwise provided in this Section 10).
      Bank
      or Borrower may change its address, facsimile number, or electronic mail address
      by giving the other party written notice thereof in accordance with the terms
      of
      this Section 10.
      

     

    
      
        	 	
                If
                  to US Borrower:

              	
                Airspan
                  Networks, Inc.

              
	 	 	
                777
                  Yamato Road 

              
	 	 	
                Boca
                  Raton, Florida 33431

              
	 	 	
                Attn:
                  Peter Aronstam

              
	 	 	
                Fax:
                  561-893-8671

              
	 	 	
                Email:  paronstam@airspan.com

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                If
                  to UK Borrower:

              	
                Airspan
                  Communications Limited

              
	 	 	
                c/o
                  Airspan Networks, Inc.

              
	 	 	
                777
                  Yamato Road 

              
	 	 	
                Boca
                  Raton, Florida 33431

              
	 	 	
                Attn:
                  Peter Aronstam

              
	 	 	
                Fax:
                  561-893-8671

              
	 	 	
                Email:  paronstam@airspan.com

              
	 	 	 
	 	
                If
                  to Bank:

              	
                Silicon
                  Valley Bank 

              
	 	 	
                3353
                  Peachtree Road, N.E., Suite M-10

              
	 	 	
                Atlanta,
                  Georgia 30326

              
	 	 	
                Attn:
                  Dale C. Kirkland, Senior Vice President

              
	 	 	
                Fax:
                  (404) 467-4467

              
	 	 	
                Email:
                  dkirkland@svbank.com

              

      

    

    

    11.    
      CHOICE
      OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE

     

    Georgia
      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 the State of Georgia; provided, however, that if for any
      reason the Bank cannot avail itself of the courts of the State of Georgia,
      the
      Borrower and Bank each submit to the jurisdiction of the State and Federal
      Courts in Santa Clara County, California. 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.

     

    TO
      THE EXTENT PERMITTED BY APPLICABLE LAW, 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 and the other Loan Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    12.2. Indemnification.
      Borrower
      agrees to indemnify, defend and hold Bank and its directors, officers,
      employees, agents, attorneys, or any other Person affiliated with or
      representing Bank 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 Bank 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 Bank’s
      gross negligence or willful misconduct.

     

    12.3. Limitation
      of Actions. Any
      claim
      or cause of action by Borrower against Bank, its directors, officers, employees,
      agents, accountants, attorneys, or any other Person affiliated with or
      representing Bank based upon, arising from, or relating to this Loan Agreement
      or any other Loan Document, or any other transaction contemplated hereby or
      thereby or relating hereto or thereto, or any other matter, cause or thing
      whatsoever, occurred, done, omitted or suffered to be done by Bank, its
      directors, officers, employees, agents, accountants or attorneys, shall be
      barred unless asserted by Borrower by the commencement of an action or
      proceeding in a court of competent jurisdiction by (a) the filing of a complaint
      within one year from the earlier of (i) the date any of Borrower’s officers or
      directors had knowledge of the first act, the occurrence or omission upon which
      such claim or cause of action, or any part thereof, is based, or (ii) the date
      this Agreement is terminated, and (b) the service of a summons and complaint
      on
      an officer of Bank, or on any other person authorized to accept service on
      behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such
      one-year period is a reasonable and sufficient time for Borrower to investigate
      and act upon any such claim or cause of action. The one-year period provided
      herein shall not be waived, tolled, or extended except by the written consent
      of
      Bank in its sole discretion. This provision shall survive any termination of
      this Loan Agreement or any other Loan Document.

     

    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. 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. 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.

     

    12.9. 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 Credit Extensions
      (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; and (e) as Bank considers appropriate in exercising
      remedies under this Agreement. 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.

     

    12.10. Attorneys’
      Fees, Costs and Expenses.
      In any
      action or proceeding between Borrower and Bank arising out of or relating to
      the
      Loan Documents, the prevailing party shall be entitled to recover its reasonable
      attorneys’ fees and other costs and expenses incurred, in addition to any other
      relief to which it may be entitled.

     

    13. DEFINITIONS

     

    13.1. Definitions.
      As used
      in this Agreement, the following terms have the following meanings:

     

    “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
      any
“account debtor” as defined in the Code with such additions to such term as may
      hereafter be made.

     

    “Advance”
or
      “Advances”
means
      an advance (or advances) under the Revolving Line.

     

    “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.

     

    “Agreement”
is
      defined in the preamble hereof.

     

    “Availability
      Amount”
is
      (a)
      the lesser of (i) the Revolving Line or (ii) the Borrowing Base minus
      (b) the amount of all outstanding Letters of Credit (including drawn but
      unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit
      Reserves, minus (c) the FX Reserve, and minus (d) the outstanding principal
      balance of any Advances (including any amounts used for Cash Management
      Services).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Bank”
is
      defined in the preamble hereof.

     

    “Bank
      Expenses”
are
      all
      audit fees and expenses, costs, and expenses (including reasonable attorneys’
fees and expenses) for preparing, 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.

     

    “Bankruptcy-Related
      Defaults”
is
      defined in Section 9.1.

     

    “Barclays”
      means
      Barclays Bank PLC.

     

    “Borrower”
is
      defined in the preamble hereof

     

    “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.

     

    “Borrowing
      Base”
is
      eighty percent (80%) of Eligible Accounts, as determined by Bank from Borrower’s
      most recent Transaction Report; provided, however, that Bank may decrease the
      foregoing percentages in its good faith business judgment based on events,
      conditions, contingencies, or risks which, as determined by Bank from the
      results of any audit by the Bank of the Borrower’s Collateral, may adversely
      affect Collateral.

     

    “Borrowing
      Resolutions”
are,
      with respect to any Person, those resolutions adopted by such Person’s Board of
      Directors and delivered by such Person to Bank approving the Loan Documents
      to
      which such Person is a party and the transactions contemplated thereby, together
      with a certificate executed by its secretary on behalf of such Person certifying
      that (a) such Person has the authority to execute, deliver, and perform its
      obligations under each of the Loan Documents to which it is a party,
      (b) that attached as Exhibit A to such certificate is a true, correct, and
      complete copy of the resolutions then in full force and effect authorizing
      and
      ratifying the execution, delivery, and performance by such Person of the Loan
      Documents to which it is a party, (c) the name(s) of the Person(s) authorized
      to
      execute the Loan Documents on behalf of such Person, together with a sample
      of
      the true signature(s) of such Person(s), and (d) that Bank may conclusively
      rely on such certificate unless and until such Person shall have delivered
      to
      Bank a further certificate canceling or amending such prior
      certificate.

     

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

     

    “Cash
      Equivalents” means
      (a) marketable
      direct obligations issued or unconditionally guaranteed by the United States
      or
      any agency or any State thereof having maturities of not more than one (1)
      year
      from the date of acquisition; (b) commercial paper maturing no more than
      one (1) year after its creation and having the highest rating from either
      Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., and (c)
      Bank’s certificates of deposit issued maturing no more than one (1) year after
      issue.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Cash
      Management Services”
is
      defined in Section 2.1.4.

     

    “Cash
      Management Services Sublimit”
is
      defined in Section 2.1.4.

     

    “Code”
is
      the
      Uniform Commercial Code, as the same may, from time to time, be enacted and
      in
      effect in the State of Georgia; 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 Georgia, 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
      Account”
is
      any
      Deposit Account, Securities Account, or Commodity Account.

     

    “Commodity
      Account”
is
      any
“commodity account” as defined in the Code with such additions to such term as
      may hereafter be made.

     

    “Communication”
is
      defined in Section 10.

     

    “Compliance
      Certificate”
is
      that
      certain certificate in the form attached hereto as Exhibit
      E.

     

    “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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Control
      Agreement”
is
      any
      control agreement entered into among the depository institution at which
      Borrower maintains a Deposit Account or the securities intermediary or commodity
      intermediary at which Borrower maintains a Securities Account or a Commodity
      account, pursuant to which Bank obtains control (within the meaning of the
      Code)
      over such Deposit Account, Securities Account, or Commodity
      Account.

     

    “Country
      Limitation Schedule”
      is that
      certain schedule of the EXIM Bank listed on http://www.exim.gov/tools/country/country_limits.html.

     

    “Credit
      Extension”
is
      any
      Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash
      Management Services, or any other extension of credit by Bank for Borrower’s
      benefit.

     

    “Current
      Assets”
are
      amounts that under GAAP should be included on that date as current assets on
      Borrower’s consolidated balance sheet.

     

    “Current
      Liabilities”
are
      all
      obligations and liabilities of Borrower to Bank, plus, without duplication,
      the
      aggregate amount of Borrower’s Total Liabilities that mature within one (1)
      year.

     

    “Default”
means
      any event which with notice or passage of time or both, would constitute an
      Event of Default.

     

    “Default
      Rate”
is
      defined in Section 2.3(b).

     

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

     

    “Deposit
      Account”
is
      any
“deposit account” as defined in the Code with such additions to such term as may
      hereafter be made.

     

    “Designated
      Deposit Account”
is
      Borrower’s deposit account, account number _____________, maintained with
      Bank.

     

    “Dollars,” “dollars”
and
      “$”
each
      mean lawful money of the United States.

     

    “Domestic
      Accounts”
      are
      Accounts for which the Account Debtor has its principal place of business in
      the
      United States

     

    “Domestic
      Subsidiary”
means
      a
      Subsidiary organized under the laws of the United States or any state or
      territory thereof or the District of Columbia.

     

    “EBITDA”
shall
      mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted
      in the calculation of Net Income, depreciation expense and amortization expense,
      plus (d) income tax expense, plus (e) extraordinary or unusual non-cash losses
      not incurred in the ordinary course of business, minus (f) extraordinary or
      unusual non-cash gains not incurred in the ordinary course of business, plus
      (g)
      unamortized costs, fees and expenses incurred in connection with the Borrower’s
      acquisition of all, substantially all of, or a controlling interest in the
      capital stock or property of another Person, plus (h) expenses and charges
      that
      will be indemnified or reimbursed, to the extent such expenses and charges
      are
      covered by funds in an escrow account or similar arrangement satisfactory to
      Bank, plus (i) charges related to making share-based payments to Borrower’s
      employees or directors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Effective
      Date”
is
      the
      date Bank executes this Agreement and as indicated on the signature page
      hereof.

     

    “Eligible
      Accounts”
are
      Accounts which arise in the ordinary course of Borrower’s business that meet all
      Borrower’s representations and warranties in Section 5.3.
      Bank
      reserves the right at any time and from time to time after the Effective Date
      to
      reasonably adjust any of the criteria set forth below and to reasonably
      establish new criteria; provided that Bank shall provide Borrower with five
      (5)
      Business Days prior written notice of any such adjustment to the criteria or
      establishment of new criteria. Unless Bank agrees otherwise in writing, Eligible
      Accounts shall not include:

     

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

     

    (b)  Accounts
      (other than Accounts owing from Nortel and Ericsson while Borrower is a Net
      Depositor) that the Account Debtor has not paid within ninety (90) days of
      invoice date, including Accounts owing from Nortel and Ericsson while Borrower
      is a Net Borrower;

     

    (c)  Accounts
      owing from Nortel and Ericsson while Borrower is a Net Depositor that the
      Account Debtor has not paid within one hundred twenty (120) days of invoice
      date;

     

    (d)  Accounts
      owing
      from an Account Debtor, fifty percent (50%) or more of whose Accounts owing
      have
      not been paid within ninety (90) days of invoice date;

     

    (e)  Credit
      balances over ninety (90) days from invoice date;

     

    (f)  Accounts
      owing from an Account Debtor, including Affiliates, whose total obligations
      to
      Borrower exceed twenty-five (25%) of all Accounts (except for Accounts owing
      from Nortel and Ericsson at all times that Borrower is a Net Depositor, for
      which such percentage is fifty percent (50%)) for the amounts that exceed that
      percentage, unless Bank approves in writing;

     

    (g)  Accounts
      owing from an Account Debtor which does not have its principal place of business
      in the United States except for Eligible Foreign Accounts;

     

    (h)  Eligible
      Foreign Accounts for which the Account Debtor has its principal place of
      business in any country in which EXIM Bank coverage is not available for any
      period of time greater than or equal to one (1) year (as designated by the
      EXIM
      Bank’s most recent Country Limitation Schedule).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (i)  Accounts
      owing from the United States or any department, agency, or instrumentality
      thereof unless there has been compliance, to Bank’s satisfaction,
      with the
      Federal Assignment of Claims Act of 1940, as amended;

     

    (j)  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;

     

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

     

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

     

    (m)  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;

     

    (n)  [Reserved];

     

    (o)  Accounts
      for which Bank in its good faith business judgment determines collection to
      be
      doubtful; and

     

    (p)  other
      Accounts Bank deems ineligible in the exercise of its good faith business
      judgment.

     

    “Eligible
      Foreign Accounts”
are
      Accounts for which the Account Debtor does not have its principal place of
      business in the United States but are otherwise Eligible Accounts that are
      (a)
      covered by credit insurance satisfactory to Bank, less any deductible;
      (b) supported by letter(s) of credit acceptable to Bank; or (c) that Bank
      approves in writing.

     

    “Equipment”
is
      all
“equipment” as defined in the Code with such additions to such term as may
      hereafter be made, and includes without limitation all machinery, fixtures,
      goods, vehicles (including motor vehicles and trailers), and any interest in
      any
      of the foregoing.

     

    “Ericsson”
      means
      Ericsson AB and any entity that is an Affiliate of Ericsson AB.

     

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

     

    “Event
      of Default”
is
      defined in Section 8.

     

    “EXIM
      Bank”
means
      the Export Import Bank of the United States of America.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Foreign
      Accounts”
      are
      Accounts for which the Account Debtor does not have its principal place of
      business in the United State.:

     

    “Foreign
      Currency”
      means
      lawful money of a country other than the United States.

     

    “Foreign
      Subsidiary”
      means
      any Subsidiary which is not a Domestic Subsidiary.

     

    “Funded
      Debt”
is
      all
      obligations and liabilities of Borrower to Bank, including, without limitation,
      any Advances and drawn but unreimbursed Letters of Credit, plus all Indebtedness
      owed by Borrower to Tekes and all Contingent Obligations of Borrower in
      connection with any Indebtedness owed to Tekes.

     

    “Funding
      Date”
is
      any
      date on which a Credit Extension is made to or on account of Borrower which
      shall be a Business Day.

     

    “FX
      Business Day”
      is
      any day
      when (a) Bank’s Foreign Exchange Department is conducting its normal business
      and (b) the Foreign Currency being purchased or sold by Borrower is available
      to
      Bank from the entity from which Bank shall buy or sell such Foreign
      Currency.

     

    “FX
      Forward Contract” is
      defined in Section 2.1.3.

     

    “FX
      Reserve” is
      defined in Section 2.1.3.

     

    “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.

     

    “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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

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

     

    “Intellectual
      Property” is:

     

                                                           
      (a)  Copyrights,
      Trademarks, Mask Works and Patents including amendments, renewals, extensions,
      and
      all
      licenses or other rights to use and all license fees and royalties from the
      use;

     

    (b)  Any
      trade
      secrets and any intellectual property rights in computer software, chip design,
      chip mask works and computer software products now or later existing, created,
      acquired or held;

     

    (c)  All
      design
      rights,
      including chips, masks and associated software which may be available to
      Borrower now or later created, acquired or held;

     

    (d)  Any
      claims for damages (past, present or future) for infringement of any of the
      rights above, with the right, but not the obligation, to sue and collect damages
      for use or infringement
      of the intellectual property rights above;

     

    (e)  All
      Proceeds and products of the foregoing, including all insurance, indemnity
      or
      warranty payments.

     

    “Interest
      Expense”
means
      for any fiscal period, interest expense (whether cash or non-cash) determined
      in
      accordance with GAAP for the relevant period ending on such date, including,
      in
      any event, interest expense with respect to any Credit Extension and other
      Indebtedness of Borrower, including, without limitation or duplication, all
      commissions, discounts, or related amortization and other fees and charges
      with
      respect to letters of credit and bankers’ acceptance financing and the net costs
      associated with interest rate swap, cap, and similar arrangements, and the
      interest portion of any deferred payment obligation (including leases of all
      types).

     

    “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 interest in any Person (including stock, partnership
      interest or other securities), and any loan, advance or capital contribution
      to
      any Person.

     

    “IP
      Agreements”
are
      those certain Intellectual Property Security Agreements executed and delivered
      by Borrower to Bank dated as of the date hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “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
      as
      set forth in Section 2.1.2.

     

    “Letter
      of Credit Application”
is
      defined in Section 2.1.2(a).

     

    “Letter
      of Credit Reserve”
has
      the
      meaning set forth in Section 2.1.2(d)

     

    “Lien”
is
      a
      mortgage, lien, deed of trust, charge, pledge, security interest or other
      encumbrance.

     

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

     

    “Material
      Adverse Change”
      is (a) a
      material impairment in the perfection or priority of Bank’s Lien 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;
      or
      (c) a material impairment of the prospect of repayment of any portion of the
      Obligations.

     

    “Material
      Indebtedness”
is
      any
      Indebtedness the principal amount of which is equal to or greater than Two
      Hundred Fifty Thousand Dollars ($250,000).

     

    “Mortgage
      Debenture”
      means
      that certain Mortgage Debenture between UK Borrower and Bank dated as of the
      date hereof.

     

    “Net
      Borrower”
      means
      Borrower as of the end of any calendar month in which (a) the sum of (i)
      Borrower’s unrestricted cash and investments maintained with Bank and Bank’s
      Affiliates in the United States for such calendar month and (ii) fifty percent
      (50%) of Borrower’s unrestricted cash and Cash Equivalents maintained in the
      United Kingdom with respect to which Bank has a fixed or floating charge for
      such calendar month, is less than (b) Borrower’s Funded Debt for such calendar
      month; provided that a Net Borrower shall cease to be a Net Borrower on the
      first (1st)
      day of
      the month following any month in which such Net Borrower fails to maintain
      the
      requirements set forth above. Notwithstanding the foregoing, if any Transaction
      Report submitted by Borrower reflects that the Borrower would be switching
      from
      a Net Depositor status to a Net Borrower status and such change in status is
      solely as a result of a change or adjustment by Bank of the eligibility criteria
      set forth in the definition of “Eligible Accounts” (any such Transaction Report
      being hereinafter referred to as a “Status
      Change Transaction Report”),
      then
      the Borrower shall deliver to Bank a Transaction Report (an “Interim
      Transaction Report”)
      within
      fourteen (14) days of the delivery of the applicable Status Change Transaction
      Report and shall continue to be deemed a Net Depositor (except with respect
      to
      the obligation of Borrower to pay the Collateral Monitoring Fee set forth in
      Section 2.4(e) above) for such fourteen (14) day period. Effective upon Bank’s
      receipt of the Interim Transaction Report, Borrower shall be either a Net
      Borrower or a Net Depositor based upon the information referenced in the Interim
      Transaction Report; provided, however, that Borrower shall be deemed to be
      a Net
      Borrower on the fourteenth (14th)
      day
      after delivery of the applicable Status Change Transaction Report if Borrower
      fails to submit an Interim Transaction Report within the required fourteen
      (14)
      day time period referenced above.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Net
      Depositor”
      means
      Borrower as of the end of any calendar month in which (a) the sum of (i) such
      Borrower’s unrestricted cash and investments maintained with Bank and Bank’s
      Affiliates in the United States for such calendar month (provided that Bank
      has
      a fixed charge over the account in which such cash is held) and (ii) fifty
      percent (50%) of Borrower’s unrestricted cash and Cash Equivalents maintained in
      the United Kingdom with respect to which Bank has a fixed or floating charge
      for
      such calendar month, is greater than or equal to (b) Borrower’s Funded Debt for
      such calendar month; provided that a Net Depositor shall cease to be a Net
      Depositor on the day it becomes a Net Borrower.

     

    “Net
      Income”
means,
      as calculated on a consolidated basis for Borrower for any period as at any
      date
      of determination, the net profit (or loss), after provision for taxes, of
      Borrower for such period taken as a single accounting period.

     

    “Net
      Inventory”
      is
      Inventory having a positive value on the Borrower’s balance sheet as of the end
      of the preceding fiscal quarter.

     

    “Nortel”
      means
      Nortel Networks Corp. and any entity that is an Affiliate of Nortel Networks
      Corp.

     

    “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,
      all
      obligations relating to letters of credit, cash management services, and foreign
      exchange contracts, if any, and including 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.

     

    “Operating
      Documents”
      are, for
      any Person, such Person’s formation documents, as certified with the Secretary
      of State of such Person’s state of formation on a date that is no earlier than
      30 days prior to the Effective Date, and, (a) if such Person is a corporation,
      its bylaws in current form, (b) if such Person is a limited liability company,
      its limited liability company agreement (or similar agreement), and (c) if
      such
      Person is a partnership, its partnership agreement (or similar agreement),
      each
      of the foregoing with all current amendments or modifications
      thereto.

     

    “Other
      Equipment”
is
      leasehold improvements, intangible property such as computer software and
      software licenses, equipment specifically designed or manufactured for Borrower,
      other intangible property, limited use property and other similar property
      and
      soft costs approved by Bank, including taxes, shipping, warranty charges,
      freight discounts and installation expenses. 

     

    “Payment/Advance
      Form”
is
      that
      certain form attached hereto as Exhibit
      B.

     

    “Perfection
      Certificate”
is
      defined in Section 5.1.

     

    “Permitted
      Distributions”
      means:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (a) purchases
      of capital stock from former employees, consultants and directors pursuant
      to
      repurchase agreements or other similar agreements provided that at the time
      of
      such purchase no Default or Event of Default has occurred and is
      continuing;

     

    (b) purchases
      for value of any rights distributed in connection with any stockholder rights
      plan;

     

    (c) purchases
      of capital stock or options to acquire such capital stock with the proceeds
      received from a substantially concurrent issuance of capital stock or
      convertible securities;

     

    (d) purchases
      of capital stock pledged as collateral for loans to employees;

     

    (e) purchases
      of capital stock in connection with the exercise of stock options or stock
      appreciation rights by way of cashless exercise or in connection with the
      satisfaction of withholding tax obligations;

     

    (f) purchases
      of fractional shares of capital stock arising out of stock dividends, splits
      or
      combinations or business combinations; and

     

    (g) the
      settlement or performance of such Person’s obligations under any equity
      derivative transaction, option contract or similar transaction or combination
      of
      transactions.

     

    “Permitted
      Indebtedness”
      is:

     

    (a) Borrower’s
      Indebtedness to Bank under this Agreement or any other Loan
      Document;

     

    (b) Subordinated
      Debt;

     

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

     

    (d) Indebtedness
      incurred as a result of endorsing negotiable instruments received in the
      ordinary course of business;

     

    (e) Indebtedness
      consisting of interest rate, currency, or commodity swap agreements, interest
      rate cap or collar agreements or arrangements designated to protect a Person
      against fluctuations in interest rates, currency exchange rates, or commodity
      prices; and

     

    (f) capitalized
      leases and purchase money Indebtedness not to exceed One Million Dollars
      ($1,000,000) in the aggregate in any fiscal year secured by Permitted
      Liens.

     

    “Permitted
      Investments”
      are:

     

    (a) Investments
      existing on the Effective Date;

     

    (b) (i) marketable
      direct obligations issued or unconditionally guaranteed by the United States
      or
      its agencies or any State maturing within 1 year from its acquisition, (ii)
      commercial paper maturing no more than 2 years after its creation and having
      the
      highest rating from either Standard & Poor’s Corporation or Moody’s
      Investors Service, Inc., and (iii) Bank’s certificates of deposit maturing no
      more than 2 years after issue;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c) Investments
      approved by the Borrower’s Board of Directors or otherwise pursuant to a
      Board-approved investment policy;

     

    (d) Investments
      in or to another Borrower or any of its Subsidiaries in the ordinary course
      of
      business;

     

    (e) Investments
      permitted under Section 7.1(vi) and (vii) above; and

     

    (f) Investments
      consisting of interest rate, currency, or commodity swap agreements, interest
      rate cap or collar agreements or arrangements designated to protect a Person
      against fluctuations in interest rates, currency exchange rates, or commodity
      prices.

     

    “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
      Liens other than Liens in connection with municipal taxes not yet delinquent
      or
      being contested in good faith which are entitled to priority by operation of
      law;

     

    (c) Liens
      (including with respect to capital leases) not to exceed One Million Dollars
      ($1,000,000) in the aggregate (i) on property (including accessions, additions,
      parts, replacements, fixtures, improvements and attachments thereto, and the
      proceeds thereof) acquired or held by Borrower incurred for financing such
      property (including accessions, additions, parts, replacements, fixtures,
      improvements and attachments thereto, and the proceeds thereof), or (ii)
      existing on property (and accessions, additions, parts, replacements, fixtures,
      improvements and attachments thereto, and the proceeds thereof) when acquired,
      if the Lien is confined to such property (including accessions, additions,
      parts, replacements, fixtures, improvements and attachments thereto, and the
      proceeds thereof);

     

    (d) Liens
      incurred in the extension, renewal or refinancing of the indebtedness secured
      by
      Liens described in (a) through (c), 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 it secures may not increase;

     

    (e) leases
      or
      subleases of real property granted in the ordinary course of business, and
      leases, subleases, non-exclusive licenses or sublicenses of property (other
      than
      real property or intellectual property) granted in the ordinary course of
      Borrower’s business, if
      the
      leases, subleases, licenses and sublicenses do not prohibit granting Bank a
      security interest;

     

    (f) non-exclusive
      licenses of intellectual property granted to third parties in the ordinary
      course of business;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (g) leases
      or
      subleases granted in the ordinary course of Borrower’s business, including in
      connection with Borrower’s leased premises or leased property;

     

    (h) Liens
      arising from judgments, decrees or attachments in circumstances not constituting
      an Event of Default under Sections 8.4 or 8.7;

     

    (i) Liens
      in
      favor of other financial institutions arising in connection with Borrower’s
      deposit or securities accounts held at such institutions;

     

    (j) carriers’,
      warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
      arising in the ordinary course of business which are not overdue for a period
      of
      more than 30 days or which are being contested in good faith and by appropriate
      proceeding if adequate reserves with respect thereto are maintained on the
      books
      of the applicable Person; and

     

    (k) pledges
      or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and compliance with other social security
      requirements applicable to Borrower.

     

    “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.

     

    “Quick
      Assets”
is,
      on
      any date, (i) Borrower’s unrestricted cash and Cash Equivalents maintained with
      Bank held or Bank’s Affiliates in the United States, plus (ii) fifty percent
      (50%) of Borrower’s unrestricted Cash and Cash Equivalents maintained in the
      United Kingdom with respect to which Bank has a fixed or floating charge, plus
      (iii) Eligible Accounts.

     

    “Quick
      Ratio” is
      the
      ratio of (i) Quick Assets to (ii) Current Liabilities minus Deferred
      Revenue.

     

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

     

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

     

    “Revolving
      Line”
is
      an
      Advance or Advances in an aggregate amount of up to Ten Million Dollars
      ($10,000,000) outstanding at any time.

     

    “Revolving
      Line Maturity Date” is
      July
      31, 2008.

     

    “Royal
      Bank of Scotland”
      means
      Royal Bank of Scotland PLC.

     

    “Secretary’s
      Certificate”
      means a
      certificate of the Secretary of the UK Borrower substantially in the form
      attached as Exhibit F hereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Securities
      Account”
is
      any
“securities account” as defined in the Code with such additions to such term as
      may hereafter be made.

     

    “Settlement
      Date” is
      defined in Section 2.1.3.

     

    “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 (a “Subordination
      Agreement”)),
      on
      terms acceptable to Bank.

     

    “Subsidiary”
means,
      with respect to any Person, any Person of which more than fifty percent (50%)
      of
      the voting stock or other equity interests is owned or controlled, directly
      or
      indirectly, by such Person or one or more Affiliates of such
      Person.

     

    “Tangible
      Net Worth”
is,
      on
      any date, the consolidated total assets of Borrower minus
      (a) any
      amounts attributable to (i) goodwill, (ii) intangible items including
      unamortized debt discount and expense, patents, trade and service marks and
      names, copyrights and research and development expenses except prepaid expenses,
      (iii) notes,
      accounts receivable and other obligations owing to Borrower from its officers
      or
      other Affiliates,
      and (iv)
      reserves not already deducted from assets, minus
      (b)
      Total Liabilities.

     

    “Tekes”
      means
      the National Technology Agency of Finland (TEKES), Valtiokonttori and each
      successor and assignee of either of them in connection with Indebtedness owed
      by
      Borrower to either entity or in connection with Contingent Obligations of
      Borrower with respect to Indebtedness owed to either entity.

     

    “Total
      Liabilities”
is
      on
      any day, obligations that should, under GAAP, be classified as liabilities
      on
      Borrower’s consolidated balance sheet, including all Indebtedness, and current
      portion of Subordinated Debt permitted by Bank to be paid by Borrower, but
      excluding all other Subordinated Debt.

     

    “Transaction
      Report”
      is that
      certain form attached hereto as Exhibit
      D.

     

    “Transfer”
is
      defined in Section 7.1.

     

    “Unused
      Revolving Line Facility Fee”
is
      defined in Section 2.4(d).

     

    [Signature
      page follows.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    BORROWER:

     

    AIRSPAN
      NETWORKS, INC.

     

    
      	 	 	 	 
	By
              /s/ Guy Insley 	 	 	 
	
              
Name:
Guy
              Insley	 	 	
            
	
              

              Title: Finance
              Director	 	 	 
	
              
 	 	 	 

    

    
    

    AIRSPAN
      COMMUNICATIONS LIMITED

    
       

      
        	 	 	 	 
	By
                /s/ Eric Stonestrom 	 	 	 
	
                
Name:
Eric
                Stonestrom	 	 	
              
	
                

                Title: Director	 	 	 
	
                
 	 	 	 

      

    

    
    

    BANK:

     

    SILICON
      VALLEY BANK

    
      
         

        
          	 	 	 	 
	By
                  /s/ Dale Kirkland	 	 	 
	
                  
Name:
Dale
                  Kirkland	 	 	
                
	
                  

                  Title: Senior
                  VicePresident	 	 	 
	
                  
Effective
                  Date: August 1, 2006	 	 	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      A

     

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

     

    All
      goods, Accounts (including health-care receivables), Equipment, Inventory,
      contract rights or rights to payment of money, leases, license agreements,
      franchise agreements, General Intangibles, commercial tort claims, 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), securities, and all
      other investment property, supporting obligations, and financial assets, whether
      now owned or hereafter acquired, wherever located; 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.

     

    
      
        

      

       

    

    All
      other
      terms contained in this Exhibit, unless otherwise indicated, shall have the
      meanings provided by the Code (as defined herein), to the extent such terms
      are
      defined in the Code. For purposes hereof, the following terms shall have the
      following meanings:

     

    “Accounts”
      are all existing and later arising accounts, contract rights, and other
      obligations owed Borrower in connection with its sale or lease of goods
      (including licensing software and other technology) or provision of services,
      all credit insurance, guaranties, other security and all merchandise returned
      or
      reclaimed by Borrower and Borrower’s Books relating to any of the foregoing, as
      such definition may be amended from time to time according to the
      Code.

     

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

     

    “Code”
is
      the Uniform Commercial Code as adopted in Georgia as amended and in effect
      from
      time to time.

     

    “Equipment”
      is all present and future machinery, equipment, tenant improvements, furniture,
      fixtures, vehicles, tools, parts and attachments in which Borrower has any
      interest.

     

    “Inventory”
      is present and future inventory in which Borrower has any interest, including
      merchandise, raw materials, parts, supplies, packing and shipping materials,
      work in process and finished products intended for sale or lease or to be
      furnished under a contract of service, of every kind and description now or
      later owned by or in the custody or possession, actual or constructive, of
      Borrower, including inventory temporarily out of its custody or possession
      or in
      transit and including returns on any accounts or other proceeds (including
      insurance proceeds) from the sale or disposition of any of the foregoing and
      any
      documents of title.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Letter-of-Credit
      Right” means a right to payment or performance under a letter of credit, whether
      or not the beneficiary has demanded or is at the time entitled to demand payment
      or performance.

     

    “Proceeds”
      has the meaning described in the Code as in effect from time to time.

     

    “Supporting
      Obligation” means a letter-of-credit right, secondary obligation or obligation
      of a secondary obligor or that supports the payment or performance of an
      account, chattel paper, a document, a general intangible, an instrument or
      investment property.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    LOAN
      PAYMENT/ADVANCE REQUEST FORM

     

    Deadline
      for same day processing is 3:00 pm E.S.T.

     

    
      
        	Fax
                To:
                (404) 467-1471	
                Date:

              	                             
                

      

    

    

      
        	
                LOAN
                  PAYMENT:

              	 	 	 	 
	Borrower:
                Airspan Networks, Inc. and Airspan Communications, LTD.
	 	 	 	 	 
	
                From
                  Account #

              	                                      
                	 	
                To
                  Account #

              	                          
                       
	 	
                (Deposit
                  Account #)

              	 	 	
                (Loan
                  Account #)

              
	
                Principal

              	                                                  
                  	 	
                and/or
                  Interest $

              	                           
                                
                
	 	 	 	 	 
	
                Authorized
                  Signature:

              	                                                   
                	 	
                Phone
                  Number: 

              	                    
                           
	
                Print
                  Name/Title: 

              	                                                   
                	 	 	 

      

      

      
        	
                Loan
                  Advance:

              	 	 	 	 
	 	 	 	 	 
	
                Complete
                  Outgoing
                  Wire Request
                  section below if all or a portion of the funds from this loan advance
                  are
                  for an outgoing wire.

              	 
	 	 	 	 	 
	
                From
                  Account #

              	                                              
                	 	
                To
                  Account #

              	                                
                
	
                (Loan
                  Account #)

              	                                      
                	 	 	
                (Deposit
                  Account #)

              
	 	 	 	 	 
	
                Amount
                  of Advance $

              	                         
                	 	 	 
	 	 	 	 	 
	
                All
                  Borrower’s representations and warranties in the Loan and Security
                  Agreement are true, correct and complete in all material respects
                  on the
                  date of the request for an advance; provided, however, that such
                  materiality qualifier shall not be applicable to any representations
                  and
                  warranties that already are qualified or modified by materiality
                  in the
                  text thereof; and provided, further that
                  those representations and warranties expressly referring to a specific
                  date shall be true, accurate and complete in all material respects
                  as of
                  such date:

              
	 	 	 	 	 
	
                Authorized
                  Signature:

              	                           
                	 	Phone
                Number: 	
                                                    
                  

              
	
                Print
                  Name/Title: 

              	                         
                	 	 	 

      

      

       

      
        	
                Outgoing
                  Wire Request:

              	 	 	 	 
	
                Complete
                  only if all or a portion of funds from the loan advance above is
                  to be
                  wired.

              	 
	
                Deadline
                  for same day processing is 3:00 E.S.T. 

              	 	 	 
	 	 	 	 	 
	
                Beneficiary
                  Name: 

              	               
                	 	
                Amount
                  of Wire: $

              	             
                
	
                Beneficiary
                  Bank: 

              	                      
                	 	
                Account
                  Number: 

              	                      
                
	
                City
                  and State: 

              	                    
                	 	 	 
	 	 	 	 	 
	
                Beneficiary
                  Bank Transit (ABA) #: 

              	                    
                	 	
                Beneficiary
                  Bank Code (Swift, Sort, Chip, etc.): 

              	                     
                
	
                 

              	 	 	(For
                International Wire Only)	 
	 	 	 	 	 
	
                Intermediary
                  Bank: 

              	                     
                	 	
                Transit
                  (ABA) #: 

              	                  
                
	
                For
                  Further Credit to: 

              	                   
                
	 	 	 	 	 
	
                Special
                  Instruction: 

              	                                                        
                
	 	 	 	 	 
	
                By
                  signing below, I (we) acknowledge and agree that my (our) funds
                  transfer
                  request shall be processed in accordance with and subject to the
                  terms and
                  conditions set forth in the agreements(s) covering funds transfer
                  service(s), which agreements(s) were previously received and executed
                  by
                  me (us).

              
	 	 	 	 	 
	
                Authorized
                  Signature: 

              	                      
                	 	
                2nd
                  Signature (if required):

              	                                         
                
	
                Print
                  Name/Title: 

              	                   
                	 	
                Print
                  Name/Title:

              	                
                
	
                Telephone
                  #: 

              	                      
                	 	
                Telephone
                  #:

              	              
                

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      D

    TRANSACTION
      REPORT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

     

    COMPLIANCE
      CERTIFICATE

     

    
      	TO: SILICON
              VALLEY BANK	
              Date:

            	                                       
              

    

    
      
        	FROM:	                                                   
                

      
         

    The
      undersigned authorized officer of AIRSPAN NETWORKS, INC. and AIRSPAN
      COMMUNICATIONS LIMITED (individually and collectively, jointly and severally,
      “Borrower”) certifies that under the terms and conditions of the Loan and
      Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is
      in complete compliance for the period ending _______________ with all required
      covenants except as noted below, (2) there are no Events of Default,
      (3) all representations and warranties in the Agreement are true and
      correct in all material respects on this date except as noted below; provided,
      however, that such materiality qualifier shall not be applicable to any
      representations and warranties that already are qualified or modified by
      materiality in the text thereof; and provided, further that
      those representations and warranties expressly referring to a specific date
      shall be true, accurate and complete in all material respects as of such
      date,
      (4)
      Borrower has timely filed all required tax returns and reports, and Borrower
      has timely paid all foreign, federal, state, governmental and local taxes,
      assessments, deposits and contributions owed by Borrower
      except
      as otherwise permitted pursuant to the terms of Section 5.9
      of the
      Agreement, and (5) no Liens have been levied or claims made against Borrower
      relating to unpaid employee payroll or benefits of which Borrower has not
      previously provided written notification to Bank. Attached are the required
      documents supporting the certification. The undersigned certifies that these
      are
      prepared in accordance with GAAP consistently applied from one period to the
      next except as explained in an accompanying letter or footnotes. The undersigned
      acknowledges that no borrowings may be requested at any time or date of
      determination that Borrower is not in compliance with any of the terms of the
      Agreement, and that compliance is determined not just at the date this
      certificate is delivered. Capitalized terms used but not otherwise defined
      herein shall have the meanings given them in the Agreement.

     

    
      	
              Please
                indicate compliance status by circling Yes/No under “Complies”
                column.

            

    

     

    
      	
              Reporting
                Covenant

            	
              Required

            	
              Complies

            
	 	 	 
	
              Monthly
                financial statements with 

              Compliance
                Certificate

            	
              Monthly
                within 30 days

            	
              Yes
                No

            
	
              Annual
                financial statement (CPA Audited) + CC

            	
              FYE
                within 120 days

            	
              Yes
                No

            
	
              10-Q,
                10-K and 8-K

            	
              Within
                5 days after filing with SEC

            	
              Yes
                No

            
	
              Transaction
                Reports

            	
              Monthly
                within 30 days**

            	 
	
              A/R
                & A/P Agings, reconciliations

            	
              Monthly
                within 30 days

            	
              Yes
                No

            
	
              Annual
                operating budget and projections

            	
              Annually
                no later than 30 days prior to year-end

            	
              Yes
                No

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              Financial
                Covenant

            	
              Required

            	
              Actual

            	
              Complies

            
	 	 	 	 
	
              Maintain
                on a Quarterly Basis:

            	 	 	 
	
              Minimum
                Tangible Net Worth

            	
              $_______

            	
              $27,000,000*

            	
              Yes
                No

            
	
              Liquidity
                Coverage

            	 	 	 
	
              The
                last day of March, June, September and December

              of
                each year

            	
              1.50:1.0

            	
              __:1.0

            	
              Yes
                No

            
	
              The
                last day of all other months

            	
              1.75:1.0

            	
              __:1.0

            	
              Yes
                No

            

    

    

    *
      plus
      50%
      of quarterly Net Income, 50% of new equity and 50% of new Subordinated
      Debt

     

    **
      weekly
      at
      all times that Borrower is a Net Borrower

     

    The
      following financial covenant analyses and information set forth in Schedule
      1
      attached hereto are true and accurate as of the date of this
      Certificate.

     

    The
      following are the exceptions with respect to the certification above: (If no
      exceptions exist, state “No exceptions to note.”)

     

    
      
        

      

    

    
      
        

      

    

    
      
        

      

       

    

    
      	Borrower:	 	 	BANK
              USE ONLY
	 	 	 	 
	AIRSPAN NETWORKS, INC.	 	Received by: 	 
	AIRSPAN COMMUNICATIONS LIMITED	 	 	
              
                

              

              authorized
                signer

            
	 	 	Date:	 
	 	 	Verified:	
              
                

              

            
	By:	 	 	
              
                

              

              authorized
                signer

            
	
              
Name:
	 	Date:
              	
               

            
	
              
Title:
	 	 	
              
                
authorized
                signer

            
	
              
 	 	 	
            
	 	 	Compliance Status: 	Yes No

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    SCHEDULE
      1 TO COMPLIANCE CERTIFICATE

     

    FINANCIAL
      COVENANTS OF BORROWER

     

    Dated: ____________________

     

    I. Tangible
      Net Worth
      (Section
6.9
      (a))

     

    Required:
      $27,000,000 plus 50% quarterly Net Income, 50% of new equity and 50% of new
      Subordinated Debt

     

    Actual:

    

    
      	
              A.

            	
              Aggregate
                value of total assets of Borrower

            	
              $___________ 

            
	
              B.

            	
              Aggregate
                value of goodwill of Borrower

            	
              $___________ 

            
	
              C.

            	
              Aggregate
                value of intangible assets of Borrower

            	
              $___________ 

            
	
              D.

            	
              Aggregate
                value of any reserves not already deducted from assets

            	
              $___________ 

            
	
              E.

            	
              Aggregate
                value of liabilities of Borrower (including all
                Indebtedness) and
                current portion of Subordinated Debt permitted by Bank to be paid
                by
                Borrower (but no other Subordinated Debt).

            	
              $___________ 

            
	
              F.

            	
              Tangible
                Net Worth (line A minus line B minus line C minus line D minus line
                E)

            	
              $___________ 

            
	
              G.

            	
              Quarterly
                Net Income after the Effective Date

            	
              $___________ 

            
	
              H.

            	
              Proceeds
                from the sale of US Borrower’s capital stock after the Effective
                Date

            	
              $___________ 

            
	
              I.

            	
              Subordinated
                Debt received after the Effective Date

            	
              $___________ 

            
	
              J.

            	
              Required
                Tangible Net Worth ($27,000,000 plus 50% of the sum of line G plus
                line H
                plus line I)

            	
              $___________ 

            

    

    

    Is
      line F
      equal to or greater than line J?

     

    
      	 	                             
              	No,
              not
              in compliance	                            
              	
            	Yes,
              in
              compliance

    

     

    X. Liquidity
      Coverage
      (Section
6.9
      (b))

     

    Required: 

    
       

      
        	
                Date

                 

              	
                Liquidity
                  Coverage

                 

              
	
                The
                  last day of March, June, September and December of each year

                 

              	
                1.50:1.0

                 

              
	
                The
                  last day of all other months

                 

              	
                1.75:1.0

                 

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Actual:

    

    
      	
              A.

            	
              Unrestricted
                cash and Cash Equivalents

            	
              $___________ 

            
	
              B.

            	
              Unrestricted
                cash and Cash Equivalents held at Bank and Bank’s
                Affiliates

            	
              $___________ 

            
	
              C.

            	
              Borrowing
                Base

            	
              $___________ 

            
	
              D.

            	
              Liquidity
                (line A plus line B plus line C)

            	
              $___________ 

            
	
              E.

            	
              Funded
                Debt (Aggregate value of Obligations to Bank plus all Indebtedness
                owed by
                Borrower to Tekes and all Contingent Obligations of Borrower with
                respect
                to any Indebtedness owed to Tekes)

            	
              $___________ 

            
	
              F

            	
              Liquidity
                Coverage (line D divided by line E)

               

            	
              ___:1.0

            

    

    Is
      line F
      equal to or greater than the following?

     

    
      	
              Date

               

            	
              Liquidity
                Coverage

               

            
	
              The
                last day of March, June, September and December of each year

               

            	
              1.50:1.0

               

            
	
              The
                last day of all other months

               

            	
              1.75:1.0

               

            

    

    
       

      
        	 	                             
                	No,
                not
                in compliance	                            
                	
              	Yes,
                in
                compliance

      

    

     

     

    
      
        
        

      

      
        

          Schedule
            1 to Compliance Certificate

          Page
            2SPECIMEN
      WARRANT CERTIFICATE

    

    FORTISSIMO
      ACQUISITION CORP.

    

    (SEE
      REVERSE SIDE FOR LEGEND)

    

    
      	
              NUMBER

            	 	
              [                       ]
                WARRANTS

            
	
              ________-

            	 	 

    

    

    (THIS
      WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO 5:00 P.M. NEW YORK CITY TIME,
      

    __________,
      2010)

    

    CUSIP
      [      ]

    WARRANT

    

    THIS
      CERTIFIES THAT, for value received

    

    _____________________________________is
      the registered holder of a Warrant or Warrants expiring ________, 2010 (the
      "Warrant") to purchase one fully paid and non-assessable share of Common Stock,
      par value $.0001 per share ("Shares"), of FORTISSIMO ACQUISITION CORP. a
      Delaware corporation (the "Company"), for each Warrant evidenced by this Warrant
      Certificate. The Warrant entitles the holder thereof to purchase from the
      Company, commencing on the later of (i) the Company's completion of a merger,
      capital stock exchange, asset acquisition or other similar business combination
      and (ii) ______________, 2007, such number of Shares of the Company at the
      price
      of $5.00 per share, upon surrender of this Warrant Certificate and payment
      of
      the Warrant Price at the office or agency of the Warrant Agent, American
      Stock Transfer & Trust Company, but only subject to the conditions set forth
      herein and in the Warrant Agreement between the Company and American Stock
      Transfer & Trust Company. The
      Company shall not be obligated to deliver any securities pursuant to the
      exercise of a Warrant and shall have no obligation to settle a Warrant exercise
      unless a registration statement under the Securities Act of 1933, as amended,
      (the “Act”) with respect to the Common Stock is effective, subject to the
      Company satisfying its obligations under Section 7.4 of the Warrant
      Agreement to use its best efforts. In the event that a registration statement
      with respect to the Common Stock underlying a Warrant is not effective under
      the
      Act, the holder of such Warrant shall not be entitled to exercise such Warrant
      and such Warrant may have no value and expire worthless. In no event will the
      Company be required to net cash settle the warrant exercise. The
      Warrant Agreement provides that upon the occurrence of certain events the
      Warrant Price and the number of Warrant Shares purchasable hereunder, set forth
      on the face hereof, may, subject to certain conditions, be adjusted. The term
      Warrant Price as used in this Warrant Certificate refers to the price per Share
      at which Shares may be purchased at the time the Warrant is
      exercised.

    

    No
      fraction of a Share will be issued upon any exercise of a Warrant. If the holder
      of a Warrant would be entitled to receive a fraction of a Share upon any
      exercise of a Warrant, the Company shall, upon such exercise, round up to the
      nearest whole number the number of Shares to be issued to such holder.

    

    Upon
      any
      exercise of the Warrant for less than the total number of full Shares provided
      for herein, there shall be issued to the registered holder hereof or the
      registered holder's assignee a new Warrant Certificate covering the number
      of
      Shares for which the Warrant has not been exercised.

    

    Warrant
      Certificates, when surrendered at the office or agency of the Warrant Agent
      by
      the registered holder hereof in person or by attorney duly authorized in
      writing, may be exchanged in the manner and subject to the limitations provided
      in the Warrant Agreement, but without payment of any service charge, for another
      Warrant Certificate or Warrant Certificates of like tenor and evidencing in
      the
      aggregate a like number of Warrants.

    

    Upon
      due
      presentment for registration of transfer of the Warrant Certificate at the
      office or agency of the Warrant Agent, a new Warrant Certificate or Warrant
      Certificates of like tenor and evidencing in the aggregate a like number of
      Warrants shall be issued to the transferee in exchange for this Warrant
      Certificate, subject to the limitations provided in the Warrant Agreement,
      without charge except for any applicable tax or other governmental
      charge.

    

    The
      Company and the Warrant Agent may deem and treat the registered holder as the
      absolute owner of this Warrant Certificate (notwithstanding any notation of
      ownership or other writing hereon made by anyone), for the purpose of any
      exercise hereof, of any distribution to the registered holder, and for all
      other
      purposes, and neither the Company nor the Warrant Agent shall be affected by
      any
      notice to the contrary.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Warrant does not entitle the registered holder to any of the rights of a
      stockholder of the Company.

    

    The
      Company reserves the right to call the Warrant at any time prior to its
      exercise, with the prior consent of EarlyBirdCapital, Inc., with a notice of
      call in writing to the holders of record of the Warrant, giving 30 days’ notice
      of such
      call at any time while the Warrant is exercisable if the last sale price of
      the Shares has been at least $8.50 per share on each of 20 trading days within
      any 30 trading day period ending on the third business day prior to the date
      on
      which notice of such call is given. The call price of the Warrants is to be
      $.01
      per Warrant. Any Warrant either not exercised or tendered back to the Company
      by
      the end of the date specified in the notice of call shall be canceled on the
      books of the Company and have no further value except for the $.01 call
      price.

     

    
      In
        the
        event the Company calls the Warrants for redemption, the Company shall have
        the
        ability to determine whether holders of those Warrants shall be required
        to pay
        the Warrant Price in cash or whether they shall be required to exercise the
        Warrants on a cashless basis. If the Company requires holders of the Warrants
        to
        exercise the Warrants on a cashless basis, the holder of such Warrants shall
        pay
        the Warrant Price by surrendering such Warrants for that number of shares
        of
        common stock equal to the quotient obtained by dividing (x) the product of
        the
        number of shares of common stock underlying the Warrants, multiplied by the
        difference between the Warrant Price of the Warrants and the “redemption fair
        market value” (defined below) by (y) the redemption fair market value. The
“redemption fair market value” shall mean the average reported last sale price
        of the common stock for the ten trading days ending on the third trading
        day
        prior to the date on which the notice of redemption is sent to holders of
        the
        Warrants.

    By

    

    
      	
              __________________________

            	 	
              ____________________________

            
	
              Secretary

            	 	
              Chairman
                of the Board

            

    

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SUBSCRIPTION
      FORM

    

    To
      Be
      Executed by the Registered Holder in Order to Exercise Warrants

    

    The
      undersigned Registered Holder irrevocably elects to exercise ______________
      Warrants represented by this Warrant Certificate, and to purchase the shares
      of
      Common Stock issuable upon the exercise of such Warrants, and requests that
      Certificates for such shares shall be issued in the name of 

    ________________________________________________

    (PLEASE
      TYPE OR PRINT NAME AND ADDRESS)

    

    ________________________________________________

    

    ________________________________________________

    

    ________________________________________________

    (SOCIAL
      SECURITY OR TAX IDENTIFICATION NUMBER)

    

    and
      be
      delivered to

    

    ________________________________________________

    (PLEASE
      PRINT OR TYPE NAME AND ADDRESS)

    ________________________________________________

    

    ________________________________________________

    

    ________________________________________________

    

    and,
      if
      such number of Warrants shall not be all the Warrants evidenced by this Warrant
      Certificate, that a new Warrant Certificate for the balance of such Warrants
      be
      registered in the name of, and delivered to, the Registered Holder at the
      address stated below:

    

    Dated:

    ________________________________________________

    (SIGNATURE)

    

    ________________________________________________

    (ADDRESS)

    ________________________________________________

    

    ________________________________________________

    (TAX
      IDENTIFICATION NUMBER)

    

    

    ASSIGNMENT

    To
      Be
      Executed by the Registered Holder in Order to Assign Warrants

    

    For
      Value
      Received, __________________ hereby sell, assign, and transfer unto

    

    ________________________________________________

    (PLEASE
      TYPE OR PRINT NAME AND ADDRESS)

    ________________________________________________

    

    ________________________________________________

    

    ________________________________________________

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ________________________________________________

    (SOCIAL
      SECURITY OR TAX IDENTIFICATION NUMBER)

    

    and
      be
      delivered to

    ________________________________________________

    (PLEASE
      PRINT OR TYPE NAME AND ADDRESS)

    

    ________________________________________________

    

    ______________________
      of the Warrants represented by this Warrant Certificate,

    and
      hereby irrevocably constitute and appoint _________________________________
      Attorney to transfer this Warrant Certificate on the books of the Company,
      with
      full power of substitution in the premises.

    

    Dated:

    ________________________________________________

    (SIGNATURE)

    

    THE
      SIGNATURE TO THE ASSIGNMENT OF THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
      NAME
      WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
      ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED
      BY A
      COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK
      EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR CHICAGO STOCK
      EXCHANGE.

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