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Exhibit 10.20

 

 

 

 

 

 

 

 

 

MOBILITY TECHNOLOGIES, INC.

 

LOAN
AND SECURITY AGREEMENT

 

 

 

 

This LOAN AND SECURITY AGREEMENT is entered into as of
December 7, 2003, by and between COMERICA BANK (“Bank”) and MOBILITY
TECHNOLOGIES, INC. (“Borrower”).

RECITALS

Borrower wishes to obtain credit from time to time
from Bank, and Bank desires to extend credit to Borrower.  This Agreement sets forth the terms on which
Bank will advance credit to Borrower, and Borrower will repay the amounts owing
to Bank.

AGREEMENT

The parties agree as follows:

1.             DEFINITIONS AND
CONSTRUCTION.

1.1           Definitions.  As used in this Agreement, the following
terms shall have the following definitions:

“Accounts” means all presently existing and hereafter
arising accounts, contract rights, payment intangibles, and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods
(including, without limitation, the licensing of software and other technology)
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower’s
Books relating to any of the foregoing.

“Advance” or “Advances” means a cash advance or
cash-advances under the Revolving Facility.

“Affiliate” means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person
that controls or is controlled by or is under common control with such Person,
and each of such Person’s senior executive officers, directors, and partners.

“Bank Expenses” means all: reasonable costs or
expenses (including reasonable attorneys’ fees and expenses) incurred in
connection with the preparation, negotiation, administration, and enforcement
of the Loan Documents; reasonable Collateral audit fees (except that, unless an
Event of Default has occurred and is continuing, such Collateral audit fees
shall not exceed $4,000 per audit); and Bank’s reasonable attorneys’ fees and
expenses incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.

“Borrower’s Books” means all of Borrower’s books and records
including: ledgers; records concerning Borrower’s assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.

“Borrowing Base” means an amount equal to sixty
percent (60%) of Eligible Accounts, as determined by Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrower, provided that,
subject to an audit of Borrower’s Accounts acceptable to Bank, “Borrowing Base”
shall mean an amount equal to seventy percent (70%) of Eligible Accounts as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrower, after Borrower reports a monthly Operating Profit of
greater than One Dollar ($1) for a period of at least six (6) consecutive
months.

“Business Day” means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California or the
Commonwealth of Pennsylvania are authorized or required to close.

“Change in Control”
shall mean a transaction in which any “person” or “group” (within the meaning
of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of a sufficient number of shares of all 

 

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classes of stock then
outstanding of Borrower ordinarily entitled to vote in the election of
directors, empowering such “person” or “group” to elect a majority of the Board
of Directors of Borrower, who did not have such power before such transaction.

“Closing Date” means the date of this Agreement.

“Code” means the California Uniform Commercial Code.

“Collateral” means the property described on Exhibit A
attached hereto.

“Contingent Obligation” means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of
credit or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect
to undrawn letters of credit, corporate credit cards, or merchant services
issued or provided for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement; interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designed to protect such Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term “Contingent Obligation” shall not include
endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determined amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith; provided, however,
that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.

“Copyrights” means any and all copyright rights,
copyright applications, copyright registrations and like protections in each
work or authorship and derivative work thereof, whether published or
unpublished and whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held.

“Credit Extension” means each Advance, use of credit
card services, or any other extension of credit by Bank for the benefit of
Borrower hereunder.

“Daily Balance” means the amount of the Obligations
owed at the end of a given day.

“Eligible Accounts” means those Accounts that arise in
the ordinary course of Borrower’s business that comply in all material respects
with all of Borrower’s representations and warranties to Bank set forth in
Section 5.4; provided that standards of eligibility may be fixed and revised
from time to time by Bank in Bank’s reasonable judgment and upon notification
thereof to Borrower in accordance with the provisions hereof.  Unless otherwise agreed by Bank, Eligible
Accounts shall not include the following:

(a)           Accounts that the account debtor has
failed to pay within ninety (90) days of invoice date, provided, however, that
Eligible Accounts shall include Accounts that are otherwise Eligible Accounts,
in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000)
at any time, that the account debtor has failed to pay more than ninety (90)
but less than one hundred twenty (120) days after invoice date;

(b)           Accounts with respect to an account
debtor, twenty-five percent (25%) of whose Accounts the account debtor has
failed to pay within one hundred twenty (120) days of invoice date;

(c)           Accounts with respect to which the account
debtor is an officer, employee, or agent of Borrower;

(d)           Accounts with respect to which goods
are placed on consignment, guaranteed sale, sale or return, sale on approval,
bill and hold, or other terms by reason of which the payment by the account debtor
may be conditional;

 

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(e)           Accounts with respect to which the
account debtor is an Affiliate of Borrower;

(f)            Accounts with respect to which the
account debtor does not have its principal place of business in the United
States, except for Eligible Foreign Accounts;

(g)           Government Accounts;

(h)           Accounts with respect to which
Borrower is liable to the account debtor for goods sold or services rendered by
the account debtor to Borrower or for deposits or other property of the account
debtor held by Borrower, but only to the extent of any amounts owing to the
account debtor against amounts owed to Borrower;

(i)            Accounts with respect to an account
debtor, including Subsidiaries and Affiliates, whose total obligations to
Borrower exceed twenty-five percent (25%) of all Accounts, to the extent such
obligations exceed the aforementioned percentage, except as approved in writing
by Bank;

(j)            Accounts with respect to which the
account debtor disputes liability or makes any claim with respect thereto as to
which Bank believes, in its sole discretion, that there may be a basis for
dispute (but only to the extent of the amount subject to such dispute or
claim), or is subject to any Insolvency Proceeding, or becomes insolvent, or
goes out of business; and

(k)           Accounts the collection of which Bank
reasonably determines to be doubtful.

“Eligible Foreign Accounts” means Accounts with
respect to which the account debtor does not have its principal place of
business in the United States and that (i) are supported by one or more
letters of credit in an amount and of a tenor, and issued by a financial
institution, acceptable to Bank, or (ii) that Bank approves on a
case-by-case basis.

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

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.

“Event of Default” has the meaning assigned in Article
8.

“GAAP” means generally accepted accounting principles
as in effect from time to time.

“Government Accounts” means Accounts with respect to
which the account debtor is the United States or any department, agency, or
instrumentality of the United States or any state or territory of the United
States, or with respect to which the account debtor is any other Person
overseeing, admininstering or conducting any program pursuant to which the
Borrower receives or is entitled to receive any payment, directly or
indirectly, from the United States or any department, agency or instrumentality
of the United States or any state or territory of the United States.  An Account that is a Media Account is not a
Government Account.

“Indebtedness” means (a) all indebtedness for borrowed
money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all capital lease obligations and
(d) all Contingent Obligations.

“Insolvency
Proceeding” means any proceeding commenced by or against any person or entity
under any provision of the United States Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, formal or informal moratoria, compositions, extension generally
with its creditors, or proceedings seeking reorganization, arrangement, or
other relief.

 

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“Intellectual Property Collateral” means all of
Borrower’s right, title, and interest in and to the following:

(a)           Copyrights, Trademarks and Patents;

(b)           Any and all trade secrets, and any
and all intellectual property rights in computer software and computer software
products now or hereafter existing, created, acquired or held;

(c)           Any and all design rights which may
be available to Borrower now or hereafter existing, created, acquired or held;

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

(e)           All licenses or other rights to use
any of the Copyrights, Patents or Trademarks, and all license fees and
royalties arising from such use to the extent permitted by such license or
rights;

(f)            All amendments, renewals and
extensions of any of the Copyrights, Trademarks or Patents; and

(g)           All proceeds and products of the
foregoing, including without limitation all payments under insurance or any
indemnity or warranty payable in respect of any of the foregoing.

“Intercreditor Agreement” means that certain
Intercreditor Agreement dated as of December 7, 2003 by and between Bank and
PAMCO.

“Inventory” means all 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 at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above, and Borrower’s Books
relating to any of the foregoing.

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

“IRC” means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.

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

“Loan Documents” means, collectively, this Agreement,
any note or notes executed by Borrower, and any other agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

“Material Adverse Effect” means a material adverse
effect on (i) the business operations, condition (financial or otherwise)
or prospects of Borrower and its Subsidiaries taken as a whole or (ii) the
ability of Borrower to repay the Obligations or otherwise perform its
obligations under the Loan Documents or (iii) the value or priority of
Bank’s security interests in the Collateral.

“Media Accounts” means all Accounts for which the
account debtor is obligated to Borrower for payment in connection with the
purchase of advertising airtime from Borrower.

“Negotiable Collateral” means all of Borrower’s
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, securities, documents of title, and chattel paper, and
Borrower’s Books relating to any of the foregoing.

 

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“Obligations” means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.

“Operating Profit” means, at any date as of which the
amount thereof shall be determined, the net income of Borrower plus
expenses for interest, taxes, depreciation and amortization, as determined in
accordance with GAAP.

“PAMCO” means Potomac Asset Management Company.

“PAMCO Agreement” means the Amended and Restated
Credit Agreement dated as of March 29, 2002, between Borrower and PAMCO, on
behalf of the National Electrical Benefit Fund, as such agreement may be
amended, restated or otherwise modified from time to time.

“Patents” means all patents, patent applications and
like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same.

“Periodic Payments” means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.

“Permitted Indebtedness” means:

(a)           Indebtedness of Borrower in favor of
Bank arising under this Agreement or any other agreement;

(b)           Indebtedness existing on the Closing
Date and disclosed in the Schedule;

(c)           Indebtedness under the PAMCO
Agreement not to exceed a maximum principal amount of $22,400,000, plus any
payment premiums, interest, penalties, attorneys’ fees and collection costs
payable in respect thereto;

(d)           Indebtedness secured by a lien
described in clause (d) of the defined term “Permitted Liens,” provided
such secured Indebtedness does not exceed the lesser of the cost or fair market
value of the equipment financed with such Indebtedness and provided the
additional secured Indebtedness does not exceed $3,000,000 in the aggregate at
any given time; and

(e)           Subordinated Debt.

“Permitted Investment” means:

(a)           Investments
existing on the Closing Date disclosed in the Schedule; and

 

(b)           marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one (1) year from
the date of acquisition thereof, (ii) commercial paper maturing no more
than one (1) year from the date of creation thereof and currently having rating
of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) certificates of deposit maturing no more than one
(1) year from the date of investment therein issued by Bank and (iv) Bank’s
money market accounts.

“Permitted Liens” means the following:

(a)           Any Liens existing on the Closing
Date and disclosed in the Schedule or arising 

 

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under this Agreement or
the other agreements with Bank;

(b)           Liens for taxes, fees, assessments or
other governmental charges or levies, either not delinquent or being contested
in good faith by appropriate proceedings, provided the same have no priority
over any of Bank’s security interests;

(c)           Liens in favor of PAMCO to which Bank’s
Lien shall be subordinated, provided that no such Liens in favor of PAMCO
encumbering Media Accounts shall be Permitted Liens except to the extent
subordinated to Bank’s Lien on terms satisfactory to Bank (collectively, the “PAMCO
Permitted Lien”), it being acknowledged that the subordination set forth in the
Intercreditor Agreement is satisfactory;

(d)           Liens (i) upon or in any
equipment which was not financed by Bank acquired or held by Borrower or any of
its Subsidiaries to secure the purchase price of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment,
or (ii) existing on such equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such equipment;

(e)           Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Liens of the
type described in clauses (a) through (c) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.

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

“Prime Rate” means the variable rate of interest, per
annum, most recently announced by Bank, as its “prime rate,” whether or not
such announced rate is the lowest rate available from Bank.

“Responsible Officer” means each of the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer and
the Vice President - Finance of Borrower.

“Revolving Facility” means the facility under which
Borrower may request Bank to issue Advances, as specified in Section 2.1(a)
hereof.

“Revolving Line” means a credit extension of up to Six
Million Five Hundred Thousand Dollars ($6,500,000), provided that the Revolving
Line shall mean a credit extension of up to Eight Million Dollars ($8,000,000)
at all times (a) after which Borrower reports an Operating Profit of
greater than One Dollar ($1) for a period of at least six (6) consecutive
months, or (b) during which Borrower has a Tangible Net Worth greater than
One Dollar ($1).

“Revolving Maturity Date” means the day before the
first anniversary of the Closing Date.

“Schedule” means the schedule of exceptions attached
hereto and approved by Bank, if any.

“Subordinated Debt” means any debt incurred by
Borrower that is subordinated to the debt owing by Borrower to Bank on terms
acceptable to Bank (and identified as being such by Borrower and Bank);
provided that for avoidance of doubt any Indebtedness owing under the PAMCO
Agreement shall not be deemed Subordinated Debt.

“Subsidiary” means
any corporation, company or partnership in which (i) any general
partnership interest or (ii) more than 50% of the stock or other units of
ownership which by the terms thereof has the ordinary voting power to elect the
Board of Directors, managers or trustees of the entity, at the time as of which
any determination is being made, is owned by Borrower, either directly or
through an Affiliate.

 

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“Tangible Net Worth” means at any date as of which the
amount thereof shall be determined, the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated deficit) of
Borrower minus intangible assets, plus Subordinated Debt, on a consolidated
basis determined in accordance with GAAP.

“Trademarks” means any trademark and servicemark
rights, whether registered or not, applications to register and registrations
of the same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by such trademarks.

1.2           Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP.  When used herein, the terms “financial
statements” shall include the notes and schedules thereto.

2.             LOAN AND TERMS
OF PAYMENT.

2.1           Credit Extensions.

(a)           Subject to and upon the terms and
conditions of this Agreement, Borrower may request Advances in an aggregate
outstanding amount not to exceed the lesser of (i) the Revolving Line or
(ii) the Borrowing Base.  Subject to
the terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(a) shall be
immediately due and payable.  Borrower
may prepay any Advances without penalty or premium.

(b)           Whenever Borrower desires an Advance,
Borrower will notify Bank by facsimile transmission or telephone no later than
3:30 p.m. Eastern time, on the Business Day that the Advance is to be made.  Each such notification shall be promptly
confirmed by a Payment/Advance Form in substantially the form of Exhibit B
hereto.  Bank is authorized to make
Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank’s discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid.  Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a
Responsible Officer or a designee thereof, and Borrower shall indemnify and
hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance.  Bank will credit the amount of
Advances made under Section 2.1 to Borrower’s deposit account.

2.2           Overadvances.  If the aggregate amount of the outstanding
Advances exceeds the lesser of the Revolving Line or the Borrowing Base at any
time, Borrower shall immediately pay to Bank, in cash, the amount of such
excess.

2.3           Interest Rates, Payments, and
Calculations.

(a)           Interest Rates.  Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding Daily Balance thereof, at a
rate equal to one and one half percent (1.50%) above the Prime Rate.

(b)           Default Rate.  If any payment is not made within ten (10)
days after the date such payment is due, Borrower shall pay Bank a late fee
equal to the lesser of (i) five percent (5%) of the amount of such unpaid
amount or (ii) the maximum amount permitted to be charged under applicable
law.  All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to two (2) percentage points above the interest
rate applicable immediately prior to the occurrence of the Event of Default.

(c)           Payments.  Borrower promises to pay to the order of Bank,
in lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to Borrower hereunder in
accordance with the terms hereof.  Borrower
shall also pay interest on the unpaid principal amount of such Credit
Extensions at rates in accordance with the terms hereof.  Interest hereunder shall be due and 

 

8

 

payable on the first calendar day of each month during
the term hereof.  Subject to the
Intercreditor Agreement, Bank shall, at its option, charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts
or against the Revolving Line, in which case those amounts shall thereafter
accrue interest at the rate then applicable hereunder.  Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.  All payments shall be free and clear of any
taxes, withholdings, duties, impositions or other charges, to the end that Bank
will receive the entire amount of any Obligations payable hereunder, regardless
of source of payment.

(d)           Computation.  In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.  All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed. 
The Bank shall deliver written notice of any such change in the Prime
Rate within 5 days of any such change.

2.4           Crediting Payments.  Bank shall credit a wire transfer of funds,
check or other item of payment to such deposit account or Obligation as
Borrower specifies, provided that after the occurrence and during the
continuation of an Event of Default, the receipt by Bank of any wire transfer
of funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment.  Notwithstanding anything to the
contrary contained herein, any wire transfer or payment received by Bank after
3:30 p.m. Eastern time shall be deemed to have been received by Bank as of the
opening of business on the immediately following Business Day.  Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

2.5           Fees.  Borrower shall pay to Bank the following:

(a)           Facility Fee.  A one-time fee equal to $40,000, payable in
ten equal monthly installments of $4,000 on the first day of each month,
beginning on the first day of the month immediately following the Closing Date,
all of which fee shall be nonrefundable; and

(b)           Bank Expenses.  On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys’ fees and,
after the Closing Date, all Bank Expenses, including reasonable attorneys’ fees
and expenses, as and when they are incurred by Bank.  Bank acknowledges receipt of a $15,000
deposit paid in August 2003, which shall be applied against Bank Expenses.

2.6           Lock Box Account.  Borrower shall open and maintain with Bank an
account (the “Lock Box Account”) into which all funds, cash or otherwise,
received by Borrower on account of Media Accounts shall immediately be deposited.  Borrower shall direct all customers to mail
or deliver all checks or other forms of payment for amounts owing to Borrower
in respect of Media Accounts to a post office box designated by Bank, over
which Bank shall have exclusive and unrestricted access.  Bank shall collect the mail delivered to such
post office box, open such mail, and endorse and credit all items to the Lock
Box Account.  Borrower shall direct all
customers or other persons owing money to Borrower in respect of Media Accounts
who make payments by electronic transfer of funds to wire such funds directly
to the Lock Box Account.  Borrower shall
hold in trust for Bank all amounts that Borrower receives in respect of Media
Accounts despite the direction to make payment to the post office box or Lock
Box Account, and immediately deliver such payments to Bank in their original
form as received from the customer, with proper endorsement for deposit into
the Lock Box Account.  Borrower
irrevocably authorizes Bank to transfer to the Lock Box Account any funds
received in respect of Media Accounts that have been deposited into any other
accounts or that Bank has received by wire transfer, check, cash or otherwise.  Bank shall have all right, title and interest
in all of the items from time to time in the Lock Box Account and their
proceeds.  Neither Borrower nor any
person claiming through Borrower shall have any right or control over the use
of, or any right to withdraw any amount from, the Lock Box Account, which shall
be under the sole control of Bank.  On a
daily basis, Bank shall apply all funds in the Lock Box Account to the
outstanding balance of Obligations, and shall transfer any remaining balance to
Borrower’s operating account with Bank.

 

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2.7           Additional Costs.  In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):

(a)           subjects Bank to any tax with respect
to payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of Bank imposed by the United
States of America or any political subdivision thereof);

(b)           imposes, modifies or deems applicable
any deposit insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, Bank; or

(c)           imposes upon Bank any other condition
with respect to its performance under

(d)           this Agreement,

and the result of any of the foregoing is to increase
the cost to Bank, reduce the income receivable by Bank or impose any expense
upon Bank with respect to the Obligations, Bank shall notify Borrower thereof.  Borrower agrees to pay to Bank the amount of
such increase in cost, reduction in income or additional expense as and when
such cost, reduction or expense is incurred or determined, upon presentation by
Bank of a statement of the amount and setting forth Bank’s calculation thereof,
all in reasonable detail, which statement shall be deemed true and correct
absent manifest error.

2.8           Term.  This Agreement shall become effective on the
Closing Date and, subject to Section 12.7, shall continue in full force and
effect for so long as any Obligations remain outstanding or Bank has any
obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, Bank shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.  Notwithstanding termination, Bank’s Lien on
the Collateral shall remain in effect for so long as any Obligations are
outstanding.

3.             CONDITIONS OF
CREDIT EXTENSIONS.

3.1           Conditions Precedent to Initial
Credit Extension.  The obligation of
Bank to make the initial Credit Extension is subject to the condition precedent
that Bank shall have received, in form and substance satisfactory to Bank, the
following:

(a)           this Agreement;

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

(c)           UCC National Form Financing
Statement;

(d)           an intellectual property security
agreement;

(e)           a warrant to purchase stock;

(f)            an agreement to provide insurance;

(g)           the Intercreditor Agreement;

(h)           account control agreement(s);

(i)            payment of the fees and Bank
Expenses then due specified in Section 23.5

 

10

 

hereof;

(j)            current financial statements of
Borrower;

(k)           an audit of the Collateral, the
results of which shall be satisfactory to Bank; and

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

3.2           Conditions Precedent to all Credit
Extensions.  The obligation of Bank
to make each Credit Extension, including the initial Credit Extension, is
further subject to the following conditions:

(a)           timely receipt by Bank of the
Payment/Advance Form as provided in Section 2.1 and a Borrowing Base
Certificate in substantially the form of Exhibit C attached hereto; and

(b)           the representations and warranties
contained in Section 5 shall be true and correct in all material respects on
and as of the date of such Payment/Advance Form and on the effective date of
each Credit Extension as though made at and as of each such date, and no Event
of Default shall have occurred and be continuing, or would exist after giving
effect to such Credit Extension (provided, however, that those representations
and warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date).  The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2.

4.             CREATION OF
SECURITY INTEREST.

4.1           Grant of Security Interest.  Borrower grants and pledges to Bank a
continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents.  Except for the Permitted Liens and as
otherwise set forth in the Schedule, such security interest constitutes a
valid, first priority security interest in the presently existing Collateral,
and will constitute a valid, first priority security interest in Collateral
acquired after the date hereof.

4.2           Delivery of Additional
Documentation Required.  Borrower
shall from time to time execute and deliver to Bank, at the request of Bank,
all financing statements and other documents that Bank may reasonably request,
in form satisfactory to Bank, to perfect and continue the perfection of Bank’s security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.  Borrower from time to time may deposit with
Bank specific time deposit accounts to secure specific Obligations.  Borrower authorizes Bank to hold such
balances in pledge and to decline to honor any drafts thereon or any request by
Borrower or any other Person to pay or otherwise transfer any part of such
balances for so long as the Obligations are outstanding.

4.3           Right to Inspect Bank (through
any of its officers, employees, or agents) shall have the right, upon
reasonable prior notice, from time to time during Borrower’s usual business
hours but no more than twice a year (unless an Event of Default has occurred
and is continuing), to inspect Borrower’s Books and to make copies thereof and
to check, test, and appraise the Collateral in order to verify Borrower’s
financial condition or the amount, condition of, or any other matter relating
to, the Collateral.

5.             REPRESENTATIONS
AND WARRANTIES.

Borrower represents and warrants as follows:

5.1           Due Organization and Qualification.  Borrower and each Subsidiary is a corporation
duly existing under the laws of its state of incorporation and qualified and
licensed to do business in any state in which the conduct of its business or
its ownership of property requires that it be so qualified.

 

11

 

5.2           Due Authorization; No Conflict.  The execution, delivery, and performance of
the Loan Documents are within Borrower’s powers, have been duly authorized, and
are not in conflict with nor constitute a breach of any provision contained in
Borrower’s Articles of Incorporation or Bylaws, nor will they constitute an
event of default under any material agreement to which Borrower is a party or
by which Borrower is bound.  Borrower is
not in default under any material agreement to which it is a party or by which
it is bound.

5.3           No Prior Encumbrances.  Borrower has good and marketable title to its
property, free and clear of Liens, except for Permitted Liens.

5.4           Bona Fide Eligible Accounts.  The Eligible Accounts are bona fide existing
obligations.  The property and services
giving rise to such Eligible Accounts has been delivered or rendered to the
account debtor or to the account debtor’s agent for immediate and unconditional
acceptance by the account debtor.  Borrower
has not received notice of actual or imminent Insolvency Proceeding of any
account debtor that is included in any Borrowing Base Certificate as an
Eligible Account.

5.5           Merchantable Inventory.  All Inventory is in all material respects of
good and marketable quality, free from all material defects, except for
Inventory for which adequate reserves have been made.

5.6           Intellectual Property Collateral.  Except as disclosed in the Schedule: Borrower
is the sole owner of the Intellectual Property Collateral, other than licenses
granted by Borrower in the ordinary course of business; each of the Patents is
valid and enforceable, and no part of the Intellectual Property Collateral has
been judged invalid or unenforceable, in whole or in part, and no claim has
been made that any part of the Intellectual Property Collateral violates the
rights of any third party; Borrower’s rights as a licensee of intellectual
property do not give rise to more than five percent (5%) of its gross revenue
in any given month, including without limitation revenue derived from the sale,
licensing, rendering or disposition of any product or service; and, other than
the Pamco Agreement, Borrower is not a party to, or bound by, any agreement
that restricts the grant by Borrower of a security interest in Borrower’s
rights under such agreement.

5.7           Name; Location of Chief Executive
Office.  Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof.  The
chief executive office of Borrower is located at the address indicated in
Section 10 hereof.

5.8           Litigation.  Except as set forth in the Schedule, there
are no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could
have a Material Adverse Effect, or a material adverse effect on Borrower’s
interest or Bank’s security interest in the Collateral.

5.9           No Material Adverse Change in
Financial Statements.  All
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that Bank has received from Borrower fairly present in all material
respects Borrower’s financial condition as of the date thereof and Borrower’s
consolidated and consolidating results of operations for the period then ended.  There has not been a material adverse change
in the consolidated or the consolidating financial condition of Borrower since
the date of the most recent of such financial statements submitted to Bank.

5.10         Solvency, Payment of Debts.  Borrower is solvent and able to pay its debts
(including trade debts) as they mature.

5.11         Regulatory
Compliance.  Borrower and each
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA, and no event has occurred
resulting from Borrower’s failure to comply in any material respect with ERISA
that could result in Borrower’s incurring any material liability.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940.  Borrower
is not engaged principally, or as one of the important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T and U of the Board of Governors of
the Federal Reserve System).  Borrower
has complied in all material respects with all the provisions of the Federal
Fair Labor Standards 

 

12

 

Act.  Borrower
has not violated any statutes, laws, ordinances or rules applicable to it,
violation of which could have a Material Adverse Effect.

5.12         Environmental Condition.  Except as disclosed in the Schedule, none of
Borrower’s or any Subsidiary’s properties or assets has ever been used by
Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
owners or operators, in the disposal of, or to produce, store, handle, treat,
release, or transport, any hazardous waste or hazardous substance other than in
accordance with applicable law, to the best of Borrower’s knowledge, none of
Borrower’s properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous
waste or hazardous substances into the environment.

5.13         Taxes.  Borrower and each Subsidiary have filed or
caused to be filed all tax returns required to be filed, and have paid, or have
made adequate provision for the payment of, all taxes reflected therein.

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

5.15         Government Consents.  Borrower and each Subsidiary have obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower’s business as currently conducted, the
failure to obtain which could have a Material Adverse Effect.

5.16         Accounts.  Except as disclosed on the Schedule, all of
the cash and investment property of Borrower and each Subsidiary is maintained
or invested with Bank, provided that existing cash and investments shall
be transferred to Bank only upon maturity of any certificates of deposit or
other investments as to which Borrower would be charged a penalty or premium
for termination or withdrawal prior to such maturity.

5.17         Full Disclosure.  No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.

6.             AFFIRMATIVE
COVENANTS.

Borrower covenants and agrees that, until payment in
full of all outstanding Obligations, and for so long as Bank may have any
commitment to make a Credit Extension hereunder, Borrower shall do all of the
following:

6.1           Good Standing.  Borrower shall maintain its and each of its
Subsidiaries’ corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which it is
required under applicable law.  Borrower
shall maintain, and shall cause each of its Subsidiaries to maintain, in force
all licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.

6.2           Government Compliance.  Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. 
Borrower shall comply, and shall cause each Subsidiary to comply, with
all statutes, laws, ordinances and government rules and regulations to which it
is subject, noncompliance with which could have a Material Adverse Effect.

6.3           Financial
Statements, Reports, Certificates.  Borrower
shall deliver the following to Bank in each case at both the Reston address
referenced in Section 10 and Comerica Bank, 3000 El Camino Real, Palo

 

13

 

Alto, CA 94306, Attn: Compliance: (a) as soon as
available, but in any event within thirty (30) days after the end of each
calendar month, a company prepared consolidated balance sheet, income, and cash
flow statement covering Borrower’s consolidated operations during such period,
prepared in accordance with GAAP, consistently applied, in a form acceptable to
Bank and certified by a Responsible Officer; (b) as soon as available, but
in any event within forty five (45) days after the end of each fiscal quarter,
a company prepared consolidated balance sheet, income, and cash flow statement
covering Borrower’s consolidated operations during such period, prepared in
accordance with GAAP, consistently applied, in a form acceptable to Bank and
certified by a Responsible Officer; (c) as soon as available, but in any
event within one hundred twenty (120) days after the end of Borrower’s fiscal
year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an unqualified
opinion on such financial statements of an independent certified public
accounting firm reasonably acceptable to Bank; (d) copies of all
statements, reports and notices sent or made available generally by Borrower to
its security holders or to any holders of Subordinated Debt and, if applicable,
all reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission; (e) promptly upon receipt of notice thereof, a 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; (f) within thirty (30) days
after the last day of each fiscal year, an annual budget for the current fiscal
year in form and substance reasonably satisfactory to Bank; (g) such
budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time; and (h) within thirty (30)
days of the last day of each fiscal quarter, a report signed by Borrower, in
form reasonably acceptable to Bank, listing any applications or registrations
that Borrower has made or filed in respect of any Patents, Copyrights or
Trademarks and the status of any outstanding applications or registrations, as
well as any material change in Borrower’s intellectual property, including but
not limited to any subsequent ownership right of Borrower in or to any
Trademark, Patent or Copyright not specified in Exhibits A, B,
and C of the Intellectual Property Security Agreement delivered to Bank
by Borrower in connection with this Agreement.

Every Friday, for the preceding week, or, if there are
no Obligations owing by Borrower to Bank, within thirty (30) days after the
last day of each month, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in substantially the form of Exhibit
C hereto, together with aged listings of accounts receivable and accounts
payable.

Borrower shall deliver to Bank with the monthly and
quarterly financial statements, at both the Reston address referenced in
Section 10 and Comerica Bank, 3000 El Camino Real, Palo Alto, CA 94306, Attn:
Compliance, a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.

Bank shall have a right from time to time hereafter to
audit Borrower’s Accounts and appraise Collateral at Borrower’s expense (not to
exceed $4,000 per audit, unless an Event of Default has occurred and is
continuing), provided that such audits will be conducted no more often than
every six (6) months unless an Event of Default has occurred and is continuing.

6.4           Inventory; Returns.  Borrower shall keep all Inventory in good and
marketable condition, free from all material defects except for Inventory for
which adequate reserves have been made.  Returns
and allowances, if any, as between Borrower and its account debtors shall be on
the same basis and in accordance with the usual customary practices of
Borrower, as they exist at the time of the execution and delivery of this
Agreement.  Borrower shall promptly
notify Bank of all returns and recoveries and of all disputes and claims, where
the return, recovery, dispute or claim involves more than Two Hundred Fifty
Thousand Dollars ($250,000).

6.5           Taxes.  Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower will make, and will
cause each Subsidiary to make, timely payment or deposit of all material tax
payments and withholding taxes required of it by applicable laws, including,
but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability,
and local, state, and federal income taxes, and will, upon request, furnish
Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary
has made such payments or deposits; provided that Borrower or a Subsidiary need
not make any payment if the amount or validity of such payment is contested in
good faith by appropriate proceedings and is reserved against (to the extent
required by GAAP) by Borrower.

 

14

 

6.6           Insurance.

(a)           Borrower, at its expense, shall keep
the Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the
locations where Borrower’s business is conducted on the date hereof.  Borrower shall also maintain insurance
relating to Borrower’s business, ownership and use of the Collateral in amounts
and of a type that are customary to businesses similar to Borrower’s.

(b)           All such policies of insurance shall
be in such form, with such companies, and in such amounts as are reasonably
satisfactory to Bank.  All such policies
of property insurance shall contain a lender’s loss payable endorsement, in a
form satisfactory to Bank, showing Bank as an additional loss payee thereof,
and all liability insurance policies shall show the Bank as an additional
insured and shall specify that the insurer must give at least twenty (20) days
notice to Bank before canceling its policy for any reason.  Upon Bank’s request, Borrower shall deliver
to Bank certified copies of such policies of insurance and evidence of the
payments of all premiums therefor.  Subject
to the terms of the Intercreditor Agreement, all proceeds payable under any
such policy shall, at the option of Bank, be payable to Bank to be applied on
account of the Obligations.

6.7           Accounts.  Borrower shall maintain and shall cause each
of its Subsidiaries to maintain its depository, operating, and investment
accounts with Bank and/or its Affiliates, subject to control agreements in
favor of PAMCO and Bank.

6.8           Losses/Profits.  Borrower shall not suffer a net loss
(excluding non-cash accrued warrant expense) for the three month period ending
on the following months in excess of the loss set forth opposite such month or
a net profit less than the profit set forth opposite such month:

	
  Maximum Net Loss

  	
   

  	
  3-month Period Ending

  	
   

  
	
  ($6,358,000)

  	
   

  	
  October 2003

  	
   

  
	
  ($5,944,000)

  	
   

  	
  November 2003

  	
   

  
	
  ($5,584,000)

  	
   

  	
  December 2003

  	
   

  
	
  ($6,346,000)

  	
   

  	
  January 2004

  	
   

  
	
  ($7,302,000)

  	
   

  	
  February 2004

  	
   

  
	
  ($7,890,000)

  	
   

  	
  March 2004

  	
   

  
	
  ($6,586,000)

  	
   

  	
  April 2004

  	
   

  
	
  ($4,584,000)

  	
   

  	
  May 2004

  	
   

  
	
  ($2,408,000)

  	
   

  	
  June 2004

  	
   

  
	
  ($1,016,000)

  	
   

  	
  July 2004

  	
   

  
	
  ($5,000)

  	
   

  	
  August 2004

  	
   

  
	
  $421,000

  	
   

  	
  September 2004

  	
   

  
	
  $986,000

  	
   

  	
  October 2004

  	
   

  
	
  $1,620,000

  	
   

  	
  November 2004

  	
   

  

 

6.9           Liquidity.  Borrower shall maintain at Bank and/or Bank’s
Affiliates at all times, measured as of the last day of each month, a balance
of unrestricted cash of at least Three Million Six Hundred Thousand Dollars
($3,600,000) which balance shall be subject to Bank’s rights hereunder,
including, without limitation, Bank’s rights pursuant to Section 9(e) hereof.

6.10         Intellectual Property Rights.

(a)           Bank acknowledges that Borrower has
granted a first priority security interest to PAMCO in the Intellectual
Property.  Borrower shall register or
cause to be registered (to the extent not already registered) with the United
States Patent and Trademark Office or the United States Copyright Office, as
the case may be, those registerable intellectual property rights now owned or
hereafter developed or acquired by Borrower, to the extent that Borrower, in
its reasonable business judgment, deems it appropriate to so protect such
intellectual property rights.

(b)           Borrower shall promptly give Bank
written notice of any applications or

 

15

 

registrations of intellectual property rights filed
with the United States Patent and Trademark Office, including the date of such
filing and the registration or application numbers, if any Borrower shall (i) give
Bank not less than 30 days prior written notice of the filing of any
applications or registrations with the United States Copyright Office,
including the title of such intellectual property rights to be registered, as
such title will appear on such applications or registrations, and the date such
applications or registrations will be filed, and (ii) prior to the filing
of any such applications or registrations, shall execute such documents as Bank
may reasonably request for Bank to maintain its perfection in such intellectual
property rights to be registered by Borrower, and upon the request of Bank,
shall file such documents simultaneously with the filing of any such
applications or registrations.  Upon
filing any such applications or registrations with the United States Copyright
Office, Borrower shall promptly provide Bank with (i) a copy of such
applications or registrations, without the exhibits, if any, thereto, (ii) evidence
of the filing of any documents requested by Bank to be filed for Bank to
maintain the perfection and priority of its security interest in such
intellectual property rights, and (iii) the date of such filing.

(c)           Borrower shall execute and deliver
such additional instruments and documents from time to time as Bank shall
reasonably request to perfect and maintain the priority of Bank’s security
interest in the Intellectual Property Collateral.  Borrower shall (i) protect, defend and
maintain the validity and enforceability of the trade secrets, Trademarks,
Patents and Copyrights, (ii) use commercially reasonable efforts to detect
infringements of the Trademarks, Patents and Copyrights and promptly advise
Bank in writing of material infringements detected and (iii) not allow any
material Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Bank, which shall not be
unreasonably withheld.

(d)           Bank may audit Borrower’s
Intellectual Property Collateral to confirm compliance with this Section,
provided such audit may not occur more often than twice per year, unless an
Event of Default has occurred and is continuing.  Bank shall have the right, but not the
obligation, to take, at Borrower’s sole expense, any actions that Borrower is
required under this Section to take but which Borrower fails to take, after 15
days notice to Borrower.  Borrower shall
reimburse and indemnify Bank for all reasonable costs and reasonable expenses
incurred in the reasonable exercise of its rights under this Section.

6.11         Further Assurances.  At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this
Agreement.

7.             NEGATIVE
COVENANTS.

Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until payment in full of the
outstanding Obligations or for so long as Bank may have any commitment to make
any Credit Extensions, Borrower will not do any of the following:

7.1           Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, a “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than:  (i) Transfers of Inventory in the
ordinary course of business; (ii) execution of licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; or (iii) Transfers of worn-out or obsolete
Equipment which was not financed by Bank.

7.2           Change in Business; Change in
Control or Executive Office.  Engage
in any business, or permit any of its Subsidiaries to engage in any business, other
than the businesses currently engaged in by Borrower and any business
substantially similar or related thereto (or incidental thereto); or cease to
conduct business in the manner conducted by Borrower as of the Closing Date; or
suffer or permit a Change in Control; or without thirty (30) days prior written
notification to Bank, relocate its chief executive office or state of
incorporation or change its legal name; or without Bank’s prior written
consent, change the date on which its fiscal year ends.

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

 

16

 

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

7.5           Encumbrances.  Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.  Other than in the PAMCO Agreement, agree with
any Person other than Bank not to grant a security interest in, or otherwise
encumber, any of its property, or permit any Subsidiary to do so.

7.6           Distributions.  Except with respect to a payment of
approximately $528,000 to redeem certain stock from an existing stockholder,
pay any dividends or make any other distribution or payment on account of or in
redemption, retirement or purchase of any capital stock, or permit any of its
Subsidiaries to do so, except that Borrower may repurchase the stock of former
employees pursuant to stock repurchase agreements as long as an Event of
Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase.

7.7           Investments.  Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments; or maintain or invest any of its
property with a Person other than Bank or permit any of its Subsidiaries to do
so unless such Person has entered into an account control agreement with Bank
in form and substance satisfactory to Bank; or suffer or permit any Subsidiary
to be a party to, or be bound by, an agreement that restricts such Subsidiary
from paying dividends or otherwise distributing property to Borrower.

7.8           Transactions with Affiliates.  Except as set forth on Schedule 7.8, directly
or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower except for transactions that are in the ordinary course
of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction
with a non-affiliated Person.

7.9           Subordinated Debt.  Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank’s prior written consent.

7.10         Inventory and Equipment.  Store the Inventory or the Equipment with a
bailee, warehouseman, or other third party unless the third party has been
notified of Bank’s security interest and Bank (a) has received an
acknowledgment from the third party that it is holding or will hold the
Inventory or Equipment for Bank’s benefit or (b) is in pledge possession
of the warehouse receipt, where negotiable, covering such Inventory or
Equipment, or store or maintain any Equipment or Inventory at a location other
than the locations of which Bank has received prior written notice.

7.11         Compliance.  Become an “investment company” or be
controlled by an “investment company,” within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit
Extension for such 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 in any
material respect with the Federal Fair Labor Standards Act or violate any law
or regulation, which violation could have a Material Adverse Effect, or a
material adverse effect on the Collateral or the priority of Bank’s Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.

7.12         Negative Pledge Agreements.  Permit the inclusion in any contract to which
it or a Subsidiary becomes a party of any provisions that could restrict or
invalidate the creation of a security interest in any of Borrower’s or such
Subsidiary’s property.

8.             EVENTS OF
DEFAULT. 

Any one or more of the
following events shall constitute an Event of Default by Borrower under this 

 

17

 

Agreement:

8.1           Payment Default.  If Borrower fails to pay, within 3 days of
the date when due, any Obligations;

8.2           Covenant Default.

(a)           If Borrower fails to perform any
obligation under Article 6 or violates any of the covenants contained in
Article 7 of this Agreement.

(b)           If Borrower fails or neglects to
perform or observe any other material term, provision, condition, covenant
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such term, provision, condition or covenant that can be cured, has failed
to cure such default within thirty days after Borrower receives written notice
thereof or any officer of Borrower becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the thirty day period
or cannot after diligent attempts by Borrower be cured within such thirty day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional reasonable period (which shall not in any
case exceed 30 days) to attempt to cure such default, and within such reasonable
time period the failure to have cured such default shall not be deemed an Event
of Default but no Credit Extensions will be made.

8.3           Material Adverse Effect.  If there occurs any circumstance or
circumstances that have Material Adverse Effect;

8.4           Attachment.  If any portion of Borrower’s assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within ten (10) days after Borrower receives notice thereof, provided that none
of the foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good faith
contest by Borrower (provided that no Credit Extensions will be required to be
made during such cure period);

8.5           Insolvency.  If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Credit Extensions will be made prior to the dismissal of
such Insolvency Proceeding);

8.6           Other Agreements.  If there is a default or other failure to
perform in (i) the PAMCO Agreement, as amended from time to time; or (ii) a
default or other failure to perform in any other agreement to which Borrower is
a party or by which it is bound resulting in a right by a third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of Three Hundred Thousand Dollars
($300,000) or which could have a Material Adverse Effect;

8.7           Subordinated Debt.  If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;

8.8           Judgments.  If 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) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided that
no Credit Extensions will be made prior to the satisfaction or stay of such
judgment);

 

18

 

8.9           Media Accounts.  If Borrower receives any payment on account
of any Media Account other than in strict accordance with Section 2.6 of this
Agreement, or fails in any respect to comply with Section 2.6 of this
Agreement; or

8.10         Misrepresentations.  If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or
any other Loan Document.

9.             BANK’S RIGHTS
AND REMEDIES.

9.1           Rights and Remedies.  Upon the occurrence and during the continuance
of an Event of Default, but subject to the Intercreditor Agreement, Bank may,
at its election, without notice of its election and without demand, do any one
or more of the following, all of which are authorized by Borrower:

(a)           Declare all Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.5, all Obligations shall become immediately due
and payable without any action by Bank);

(b)           Cease advancing money or extending
credit to or for the benefit of Borrower under this Agreement or under any
other agreement between Borrower and Bank;

(c)           Settle or adjust disputes and claims
directly with account debtors for amounts, upon terms and in whatever order
that Bank reasonably considers advisable;

(d)           Make such payments and do such acts
as Bank considers necessary or reasonable to protect its security interest in
the Collateral.  Borrower agrees to assemble
the Collateral if Bank so requires, and to make the Collateral available to
Bank as Bank may designate.  Borrower
authorizes Bank to enter the premises where the Collateral is located, to take
and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s
determination appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned
premises, Borrower hereby grants Bank a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any
of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

(e)           Set off and apply to the Obligations
any and all (i) balances and deposits of Borrower held by Bank, or (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by Bank;
provided, however, that such right shall be subject to the Intercreditor
Agreement.

(f)            Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell (in
the manner provided for herein) the Collateral. 
Bank is hereby granted a license or other right, solely pursuant to the provisions
of this Section 9.1, to use, without charge, Borrower’s labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, 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 9.1, Borrower’s rights under all licenses and all
franchise agreements shall inure to Bank’s benefit;

(g)           Dispose of the Collateral by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Borrower’s premises) as Bank determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate;

(h)           Bank may credit bid and purchase at
any public sale; and

 

19

 

(i)            Any deficiency that exists after
disposition of the Collateral as provided above will be paid immediately by
Borrower.

9.2           Power of Attorney.  Effective only upon the occurrence and during
the continuance of an Event of Default, but subject to the Intercreditor
Agreement, Borrower hereby irrevocably appoints Bank (and any of Bank’s
designated officers, or employees) as Borrower’s true and lawful attorney to:
(a) send requests for verification of Accounts or notify account debtors
of Bank’s security interest in the Accounts; (b) endorse Borrower’s name
on any checks or other forms of payment or security that may come into Bank’s
possession; (c) sign Borrower’s name on any invoice or bill of lading
relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust
all claims under and decisions with respect to Borrower’s policies of
insurance; (f) settle and adjust disputes and claims respecting the
accounts directly with account debtors, for amounts and upon terms which Bank
determines to be reasonable; (g) to file, in its sole discretion, one or
more financing or continuation statements and amendments thereto, relative to
any of the Collateral; and (h) to transfer the Intellectual Property
Collateral into the name of Bank or a third party to the extent permitted under
the California Uniform Commercial Code; provided Bank may exercise such power
of attorney to sign the name of Borrower on any of the documents described in
Section 4.2 regardless of whether an Event of Default has occurred, including
without limitation to modify, in its sole discretion, any intellectual property
security agreement entered into between Borrower and Bank without first
obtaining Borrower’s approval of or signature to such modification by amending
Exhibits A, B, and C, thereof, as appropriate, to include reference to any
right, title or interest in any Copyrights, Patents or Trademarks acquired by
Borrower after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents or Trademarks in which Borrower no
longer has or claims to have any right, title or interest.  The appointment of Bank as Borrower’s
attorney in fact, and each and every one of Bank’s rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Bank’s obligation to provide Credit Extensions
hereunder is terminated.

9.3           Accounts Collection.  Subject to the terms of the Intercreditor
Agreement, effective only upon the occurrence and during the continuance of an
Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s
security interest in such funds and verify the amount of such Account.  Subject to the terms of the Intercreditor
Agreement, Borrower shall collect all amounts owing to Borrower for Bank,
receive in trust all payments as Bank’s trustee, and immediately deliver such
payments to Bank in their original form as received from the account debtor,
with proper endorsements for deposit.

9.4           Bank Expenses.  If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following after reasonable notice to Borrower (a) make payment of the same
or any part thereof; (b) set up such reserves under a loan facility in
Section 2.1 as Bank deems necessary to protect Bank from the exposure created
by such failure; or (c) obtain and maintain insurance policies of the type
discussed in Section 6.6 of this Agreement, and take any action with respect to
such policies as Bank deems prudent.  Any
amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral.  Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the future or a
waiver by Bank of any Event of Default under this Agreement.

9.5           Bank’s Liability for Collateral.  So long as Bank complies with reasonable banking
practices, Bank shall not in any way or manner be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other person whomsoever.  All risk of loss, damage or destruction of
the Collateral shall be borne by Borrower.

9.6           Remedies Cumulative.  Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative.  Bank shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by Bank of one right or remedy
shall be deemed an election, and no waiver by Bank of any Event of Default on
Borrower’s part shall be deemed a continuing waiver.  No delay by Bank shall constitute a waiver,
election, or acquiescence by it.  No
waiver by Bank shall be effective unless made in a written document signed on
behalf of Bank and then shall be effective only in the 

 

20

 

specific instance and for the specific purpose for
which it was given.

9.7           Demand: Protest.  Borrower
waives demand, protest, notice of protest, 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 at any time held by Bank on which
Borrower may in any way be liable.

10.           NOTICES.

Unless otherwise provided in this Agreement, all notices
or demands by any party relating to this Agreement or any other agreement
entered into in connection herewith shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to Borrower or to Bank; as the case may
be, at its addresses set forth below:

If to Borrower:                                                                   Mobility Technologies, Inc. 

851 Duportail Road, Suite 220 

Wayne, PA  19087 

Attn: Jim McDevitt 

FAX: (610) 725-0530

with a copy to:                                                                 Morgan Lewis & Bockius LLP 

1701 Market Street 

Philadelphia, PA  19103 

Attn: Andrew Hamilton 

FAX: (215) 963-5001

If to Bank:                                                                                         Comerica Bank

9920 S. La Cienega Blvd., Suite 1401 

Inglewood, CA  90301 

Attn: Manager

FAX:. (310) 338-6110

with a copy to:                                                                 Comerica Bank

11921 Freedom Drive, Suite 920 

Reston, VA  20190

Attn: Carl Kopfinger 

FAX: (703) 467-9308

Failure to deliver a notice to a non-party to this
Agreement shall not invalidate a notice that would otherwise be effective
hereunder.  The parties hereto may change
the address at which they are to receive notices hereunder, by notice in
writing in the foregoing manner given to the other.

11.           CHOICE OF LAW AND
VENUE: JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in
accordance with, the internal laws of the Commonwealth of Pennsylvania, without
regard to principles of conflicts of law. 
Each of Borrower and Bank hereby submits to the jurisdiction of the
state and Federal courts located in the County of Montgomery, Commonwealth of
Pennsylvania and the County of Santa Clara, State of California.  BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT.  EACH PARTY REPRESENTS AND 

 

21

 

WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.

12.           GENERAL
PROVISIONS.

12.1         Successors and Assigns.  This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank’s prior written consent.  Bank shall have the right without the consent
of or noticeto Borrower to sell, transfer, negotiate, or grant participation in
all or any part of, or any interest in, Bank’s obligations, rights and benefits
hereunder.

12.2         Indemnification.  Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by
Bank as a result of or in any way arising directly out of the, transactions
between Bank and Borrower whether under this Agreement, or otherwise (including
without limitation reasonable attorneys’ fees and expenses), except for losses
caused by Bank’s gross negligence or willful misconduct.  In no event shall Borrower be liable for
indirect, special or consequential damages.

12.3         Time of Essence.  Time is of the essence for the performance of
all obligations set forth in this Agreement.

12.4         Severability of Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

12.5         Amendments in Writing, Integration.  Neither this Agreement nor the Loan Documents
can be amended or terminated orally.  All
prior agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement
and the Loan Documents, if any, are merged into this Agreement and the Loan
Documents.

12.6         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, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.

12.7         Survival.  All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions to Borrower.  The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses,
costs and liabilities described in Section 12.2 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Bank have run.

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date first above written.

	
   

  	
  MOBILITY TECHNOLOGIES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
				

 

 

22

 

	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

 

 

 

 

 

23

 

DEBTOR               Mobility Technologies, Inc.

SECURED PARTY:             Comerica
Bank

EXHIBIT A

COLLATERAL DESCRIPTION
ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to
as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:

(a)           all accounts (including
health-care-insurance receivables), chattel paper (including tangible and
electronic chattel paper), deposit accounts, documents (including negotiable
documents), equipment (including all accessions and additions thereto), general
intangibles (including payment intangibles and software), goods (including
fixtures), instruments (including promissory notes), inventory (including all
goods held for sale or lease or to be furnished under a contract of service,
and including returns and repossessions), investment property (including
securities and securities entitlements), letter of credit rights, money, and
all of Debtor’s books and records with respect to any of the foregoing, and the
computers and equipment containing said books and records;

(b)           all common law and statutory
copyrights and copyright registrations, applications for registration, now
existing or hereafter arising, in the United States of America or in any
foreign jurisdiction, obtained or to be obtained on or in connection with any
of the forgoing, or any parts thereof or any underlying or component elements
of any of the forgoing, together with the right to copyright and all rights to
renew or extend such copyrights and the right (but not the obligation) of
Secured Party to sue in its own name and/or in the name of the Debtor for past,
present and future infringements of copyright;

(c)           all trademarks, service marks, trade
names and service names and the goodwill associated therewith, together with
the right to trademark and all rights to renew or extend such trademarks and
the right (but not the obligation) of Secured Party to sue in its own name
and/or in the name of the Debtor for past, present and future infringements of
trademark;

(d)           all (i) patents and patent
applications filed in the United States Patent and Trademark Office or any
similar officeof any foreign jurisdiction, and interests under patent license
agreements, including, without limitation, the inventions and improvements
described and claimed therein, (ii) licenses pertaining to any patent
whether Debtor is licensor or licensee, (iii) income, royalties, damages,
payments, accounts and accounts receivable now or hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, (iv) right
(but not the obligation) to sue in the name of Debtor and/or in the name of
Secured Party for past, present and future infringements thereof, (v) rights
corresponding thereto throughout the world in all jurisdictions in which such
patents have been issued or applied for, and (vi) reissues, divisions,
continuations, renewals, extensions and continuations-in-part with respect to
any of the foregoing; and

(e)           any and all cash proceeds and/or
noncash proceeds of any of the foregoing, including, without limitation,
insurance proceeds, and all supporting obligations and the security therefor or
for any right to payment.  All terms
above have the meanings given to them in the California Uniform Commercial
Code, as amended or supplemented from time to time, including revised Division
9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999,
c.991 (S.B. 45), Section 35, operative July 1, 2001.

 

24

 

EXHIBIT B

TECHNOLOGY & LIFE
SCIENCES DIVISION

LOAN ANALYSIS

LOAN ADVANCE/PAYDOWN REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 3:30 P.M. Eastern Time

DEADLINE FOR WIRE TRANSFERS IS 3:30 P.M. Eastern Time

	
  TO: Loan Analysis FAX #: (650)
  846-6840

  	
  DATE:

  	
  TIME:

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
  Mobility
  Technologies, Inc. 

  	
  TELEPHONE
  REQUEST (For Bank Use Only):

  
	
   

  	
  Borrower’s
  Name 

  	
  The
  following person is authorized to request the loan payment transfer/loan
  advance on the designated account and is known to me.

  
	
   

  	
   

  
	
  FROM:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer’s Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Request & Phone #

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FROM:

  	
  Authorized Signature
  (Borrower)

  	
   

  	
  Received by (Bank) &
  Phone #

  
	
  PHONE #:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FROM
  ACCOUNT#:

  	
   

  	
   

  	
   

  
	
  (please
  include Note number, if applicable)

  	
   

  	
  Authorized Signature (Bank)

  
	
   

  	
   

  
	
  TO
  ACCOUNT#:

  	
   

  	
   

  	
   

  
	
  (please
  include Note number, if applicable)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

	
  REQUESTED TRANSACTION TYPE

  	
  REQUESTED DOLLAR AMOUNT

  	
  For
  Bank Use Only

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL INCREASE*
  (ADVANCE)

  	
  $

  	
   

  	
  Date Rec’d:

  	
   

  	
   

  
	
  PRINCIPAL PAYMENT (ONLY)

  	
  $

  	
   

  	
  Time:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Comp. Status:

  	
  YES

  	
  NO

  
	
   

  	
   

  	
   

  	
  Status Date:

  	
   

  	
   

  
	
  OTHER INSTRUCTIONS:

  	
  Time:

  	
   

  	
   

  
	
   

  	
  Approval:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

All representations and warranties of Borrower
stated in the Loan and Security Agreement are true, correct and complete in all
material respects as of the date of the telephone request for and advance
confirmed by this Borrowing Certificate, including without limitation the
representation that Borrower has paid for and owns the equipment financed by
the Bank; provided, however, that those representations and warranties the date
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.

	
  *IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE? (PLEASE CIRCLE
  ONE)

  	
  YES

  	
  NO

  

 

If
YES, the Outgoing Wire Transfer Instructions must be completed below.

	
  OUTGOING WIRE TRANSFER
  INSTRUCTIONS

  	
  Fed
  Reference Number

  	
  Bank Transfer Number

  
	
   

  	
   

  	
   

  
	
  The
  Items marked with an asterisk (*) are required to be completed.

  
	
  *Beneficiary Name

  	
   

  
	
  *Beneficiary Account Number

  	
   

  
	
  *Beneficiary Address

  	
   

  
	
  Currency Type

  	
  US
  DOLLARS ONLY

  
	
  *ABA Routing Number (9
  Digits)

  	
   

  
	
  *Receiving Institution Name

  	
   

  
	
  *Receiving Institution
  Address

  	
   

  
	
  *Wire Account

  	
   

  
				

 

 

EXHIBIT C

BORROWING BASE
CERTIFICATE

	
  Borrower:
  Mobility Technologies, Inc.

  	
  Lender: Comerica Bank

  
	
  Commitment-Amount:
  $6,500/000$8,000,000

  	
   

  	
   

  
	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  
	
  1.

  	
  Accounts
  Receivable Book Value as of

  	
   

  	
  $

  	
   

  
	
  2.

  	
  Additions
  (please explain on reverse)

  	
   

  	
  $

  	
   

  
	
  3.

  	
  TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
  $

  	
   

  
	
  ACCOUNTS
  RECEIVABLE                DEDUCTIONS
  (without duplication)

  	
   

  	
   

  
	
  4.

  	
  Amounts
  over 90 days due

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
  4(a).
  Amounts over 120 days due

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
  4(b).
  Amounts over 90 but under 120 days due, over $500,000

  	
  $

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of
  25% over 90 day accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration
  Limits

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign
  Accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental
  Accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra
  Accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo
  Accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee
  Accounts

  	
  $

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other
  (please explain on reverse).

  	
  $

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  	
   

  
	
  14.

  	
  Eligible
  Accounts (#3 minus #13)

  	
   

  	
  $

  	
   

  
	
  15.

  	
  LOAN VALUE
  OF ACCOUNTS (60% of #14)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  
	
  16.

  	
  Maximum
  Loan Amount

  	
   

  	
  $6,500,000/ $8,000,000

  
	
  17.

  	
  Total Funds
  Available [Lesser of #16 or #15]

  	
   

  	
  $

  	
   

  
	
  18.

  	
  Present
  balance owing on Line of Credit

  	
   

  	
  $

  	
   

  
	
  19.

  	
  Outstanding
  under Sublimits

  	
   

  	
  $

  	
   

  
	
  20.

  	
  RESERVE POSITION
  (#17 minus #18 and #19)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

The undersigned represents and
warrants that the foregoing is true, complete and correct, and that the
information reflected in this Borrowing Base Certificate complies with the
representations and warranties set forth in the Loan and Security Agreement
between the undersigned and Comerica Bank.

	
  Mobility Technologies, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

EXHIBIT
D

COMPLIANCE
CERTIFICATE

TO:         COMERICA
BANK

FROM:   MOBILITY
TECHNOLOGIES, INC.

The undersigned authorized officer of Mobility
Technologies, Inc. hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(i) Borrower is in complete compliance for the period ending ____________ with
all required covenants except as noted below and (ii) all representations
and warranties of Borrower stated in the Agreement are true and correct as of
the date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

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

  
	
   

  
	
  Reporting Covenant

  	
  Required

  	
   

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial
  statements

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
  No

  
	
  Annual (CPA Audited)

  	
  FYE within 120 days

  	
   

  	
  Yes

  	
  No

  
	
  Quarterly financial
  statements

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
  No

  
	
  AIR & A/P Agings,
  Borrowing Base Cert.

  	
  Weekly or, if no
  borrowings, monthly within 30 days

  	
   

  	
  Yes

  	
  No

  
	
  A/R Audit

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
  No

  
	
  IP Report

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Covenant

  	
  Required

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Losses/Minimum
  Profits (Trailing 3 month basis)

  	
  (1)

  	
  $

  	
   

  	
  Yes

  	
  No

  
	
  Minimum Cash at Bank

  	
  $3,600,000

  	
  $

  	
   

  	
   

  	
   

  
	
  Amount in Monarch Account

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  Amount in T-Bills

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  Borrower’s Total Liquidity

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

1  October 03 ($6,358,000); November 03
($5,944,000); December 03 ($5,584,000); January 04 ($6,346,000); February 04
($7,302,000); March 04 ($7,890,000); April 04 ($6,586,000); May 04
($4,584,000); June 04 ($2,408,000); July 04 ($1,016,000); August 04 ($5,000);
September 04 $421,000; October 04 $986,000; November 04’$1,620,000

	
  Comments Regarding
  Exceptions: See Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
  Sincerely,

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status

  	
  Yes

  	
  No

  
	
  DATE

  	
   

  	
   

  
										

 

 

Mobility Technologies,
Inc.

851 Duportail Road, Suite
220

Wayne, PA 19087

This document, dated December _, 2003 is the Mobility
Technologies, Inc. (the “Company”) Schedule (the “Schedule”) referred
to in the Loan and Security Agreement executed as of the date hereof (the “Agreement”)
between the Company and Comerica Bank.

The disclosures in this Schedule constitute the facts
or circumstances which qualify the representations and warranties of the
Company set forth in the Agreement.

General Terms:

1.             Any terms used in this Schedule, but not defined herein,
shall have the same meanings ascribed thereto in the Agreement.

2.             No disclosure of any matter contained in this Schedule
shall create an implication that such matter meets any standard of materiality.

3.             The headings, sub-headings and introductory paragraphs
contained in this Schedule are used for convenience only and shall not affect
in any way the meaning or interpretation hereof.

4.             All section references set forth in this Schedule
correspond to the respective representations and warranties or other applicable
sections set forth in the Agreement. Any matter disclosed in one section of
this Schedule shall be deemed disclosed for all sections of this Schedule to
the extent the Agreement requires such disclosure and to the extent the
relevance and significance of such disclosure is evident from such disclosure
or cross-reference. The representations or warranties of the Company are made,
given or undertaken subject to the disclosure in this Schedule and as provided
in the Agreement.

 

 

Schedule 1.1

A) Permitted Indebtedness

During 2000, the Company purchased ten motor vehicles
for use in traffic information gathering activities. The related borrowings are
for sixty months and therefore extend through 2005. During 2001, the Company
purchased a Ford Explorer in connection with an affiliate agreement. The
related borrowings are for 36 months and expire in 2004. The total amount
outstanding under these agreements is approximately $100,000.

B) Permitted Investments

	
  Name

  	
  Jurisdiction of Incorporation

  	
  Authorized Capital Stock

  	
  Issued and Outstanding Shares

  	
  Owner

  
	
  Sensor Management Systems, Inc.
  (a) (b)

  	
  New
  Mexico

  	
  NA

  	
  NA

  	
  Mobility Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(a) Mobility Technologies, Inc. acquired Sensor
Management Systems, Inc. in March 1999.  In
March 2000, Mobility Technologies, Inc. sold the assets to the former owners,
of Sensor Management Systems, Inc.

(b) The following entities are subsidiaries of
Sensor Management Systems, Inc.:

                1.
Traffic Monitoring Systems, Inc. 

                2.
Northern Transportation Systems Corp. 

                3.
Port of Entry Services Corp. 

                4.
Southern Transportation Systems Corp.

* All companies are inactive and are in the process of
being dissolved.

C) Permitted Liens

	
  Debtor

  	
  Secured Party

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L. .

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L. .

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L. .

  
	
  Traffic.com, Inc.

  	
  Dell Financial Services, L.P.

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Subaru American Credit

  
	
  Mobility Technologies, Inc.

  	
  Primus Financial Services

  
	
  Mobility Technologies, Inc.

  	
  Primus Financial Services

  
	
  Mobility Technologies, Inc.

  	
  Ford Motor Credit

  

 

Schedule 5.6

Intellectual Property
Collateral

None.

 

 

Schedule 5.7

Name: Location of Chief
Executive Office

 

	
  Argus Networks,
  Inc.

  
	
  traffic.com,
  Inc.

  
	
  Traffic Pulse
  Networks

  
	
  TA Marketing

  

 

 

Schedule
5.8 

Litigation

Santa Fe Technology v. Argus Networks, Inc.
(predecessor to traffic.com, Inc.)

During 1998, in connection with the preparation of a
bid on a federal traffic-monitoring contract, the Company was engaged in
negotiations to purchase another company and those discussions were
subsequently terminated in February 1999. In July 1999, the target company
filed a civil suit claiming a right to the lost opportunity represented by the
federal contract.  Counsel has been
engaged and, despite the multiple years that have elapsed since the case was
filed, it is still in the discovery stage with some depositions scheduled for
January 2004.  In connection with this
matter, the Company and certain individuals have filed a countersuit.

Richard Ramirez v. Mobility Technologies, Inc., et al

In June 2001, the Company’s CEO was terminated. His
letter of employment included a negotiated six-month severance. The Company
complied with the terms of that letter.  Ramirez
subsequently filed suit seeking unspecified damages.  The court dismissed the suit and noted the
arbitration clause that was part of Ramirez’s employment paperwork.  An arbitrator has been agreed upon by the
parties and discovery requests have been exchanged.  Ramirez left the Delaware Valley and returned
to Boston to become assistant manager of a television station there in March
2003.  We understand that he is no longer
employed by that station as of November 2003.  The Company’s D&O insurance carrier has
been advised of the matter. No accrual has been made in the financial
statements.

Newscopters of America, Inc. v. Mobility Technologies,
Inc.

In order to support contractual commitments to certain
broadcasters in Dallas, TX, the Company entered into an agreement with an
aviation service (headquartered in Florida) to provide aerial surveillance,
including camera images.  The aviation
service failed dramatically (unable to fly due to equipment failures, unable to
provide camera images or radio transmissions, grounded by the FAA, etc.) and
the Company terminated the contract for non-performance.  Subsequently, the vendor filed suit in Florida
for the full future value of the contract.  Significant precedents exist that indicate the
suit is without any merit.  Counsel was
engaged and filed a request for dismissal of the entire matter and for removal
to Federal court.  In addition, the
Company is preparing a countersuit to recover the additional costs incurred to
service the contract and for damage to the Company’s reputation as a result of
the vendor’s failure to perform.  No
accrual has been made in the financial statements.

ICI .v. Mobility Technologies, Inc.

During 2002, the Company engaged a computer consultant
to provide, install, customize, and make ready for service certain back office
software at the corporate headquarters.  The vendor failed to meet the contracted
deadlines to perform and the vendor abandoned the relationship; however, the
vendor filed suit to cause payment of invoices submitted in connection with the
project.  The invoices were deemed
inappropriate, excessive, and outside the terms of the contract by the Company
and intentionally not satisfied.  Discovery
requests have been served on the plaintiff and a court date has been set for
March 2004.  No accrual has been made in
the financial statements.

Mary Fields v. Traffic.com and Ann McNamara

During January 2002, an employee of the Company
(McNamara) assigned to the Secaucus, NJ operations center became involved in a
traffic accident in New York City while on routine patrol and in search of
reportable traffic conditions.  The
plaintiff claims damages in the amount of $2 million.  The defense is being handled by the Company’s
insurance carrier.

Joseph Mills v. James Bell and Sensor Management
Systems

During August 1999, an employee of a subsidiary of the
Company (Bell) assigned to a project in Western Pennsylvania became involved in
a traffic accident in a Company truck while returning home at the end of the
day.  The plaintiff claims damages in the
amount of $75,000.  The defense is being
handled by the Company’s insurance

 

 

carrier at this time.

Management does not
believe that any of the suits, threats, or other information above will result
in a material adverse impact on the financial condition or results of
operations of the Company.  Any accruals
recorded represent reasonable estimates made by management to anticipate
potential expenses attributable to prior periods.  Such liabilities are subject to periodic
evaluation for continuing applicability.  All related expense of counsel is recognized
as period cost.

 

 

Schedule 5.12

Environmental Condition

None.

 

 

Schedule
5.16

Accounts

1.               All operating, payroll and investment accounts are
currently with Smith Barney and will be transferred to Comerica Bank pursuant
to the terms set forth in the Agreement.

2.               Merchant Credit Card account with PNC Bank, which will
be transferred to Comerica Bank upon resolution of the merchant services.

 

 

Schedule
7.8

Transactions
with Affiliates

1.               The following employees and/or stockholders are
indebted to the Company as of December 31, 2002:

	
   

  	
   

  	
  Amount of Loan

  	
   

  	
  Interest Rate

  	
   

  	
  Date of

  Borrowing

  	
   

  	
  Accrued

  Interest as of

  11/30/03

  	
   

  
	
  Purchase money indebtedness:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ramirez

  	
   

  	
  99,750

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  12/31/00

  	
   

  	
  13,085

  	
   

  
	
  Bums

  	
   

  	
  62,500

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  12/31/00

  	
   

  	
  8,199

  	
   

  
	
  Jannetta

  	
   

  	
  31,250

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  12/31/00

  	
   

  	
  4,099

  	
   

  
	
  McGowan

  	
   

  	
  14,110

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  12/31/00

  	
   

  	
  1,851

  	
   

  
	
  Burns

  	
   

  	
  5,000

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  1/1/01

  	
   

  	
  655

  	
   

  
	
  Jannetta

  	
   

  	
  16,625

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  1/1/01

  	
   

  	
  2,178

  	
   

  
	
  Greco

  	
   

  	
  26,650

  	
   

  	
  5.50

  	
  %

  	
  9/5/03

  	
   

  	
  71

  	
   

  
	
  Stone

  	
   

  	
  25,819

  	
   

  	
  5.50

  	
  %

  	
  11/12/03

  	
   

  	
  122

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tax loans:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ramirez

  	
   

  	
  33,975

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  4/16/01

  	
   

  	
  3,812

  	
   

  
	
  Burns

  	
   

  	
  20,000

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  4/16/01

  	
   

  	
  2,244

  	
   

  
	
  McGowan

  	
   

  	
  50,453

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  4/16/01

  	
   

  	
  5,661

  	
   

  
	
  Jannetta

  	
   

  	
  93,484

  	
   

  	
  2.55 - 5.90

  	
  %

  	
  4/16/01

  	
   

  	
  10,488

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

2.               The Company has an agreement with Internet Capital
Group to share the services and related compensation of the Company’s Chief
Executive Officer Doug Alexander.

3.               PAMCO is the compensated agent for the PAMCO
Agreement.

4.               Agreement with Brian Malewicz to provide consulting
services for television.

 

WAIVER
AND AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

THIS WAIVER AND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is made as of the 29 day of April, 2004 by and between MOBILITY
TECHNOLOGIES, INC., a Delaware corporation (the “Borrower”),
and COMERICA BANK (the “Bank”).

WHEREAS, pursuant to a certain
Loan and Security Agreement dated December 7, 2003 by and between Borrower and
the Bank (the “Loan Agreement”), the Bank provided Borrower with a
revolving credit line of up to an aggregate principal amount equal to
$8,000,000;

WHEREAS, the Borrower is about to
be or is currently in default under the terms of (a) Section 8.2 of the Loan
Agreement for failing to have delivered to the Bank audited financial
statements for the Borrower for the year ended December 31, 2003 on or before
the one hundred and twentieth (120th) day after the end of such
fiscal year pursuant to Section 6.3 of the Loan Agreement (the “Reporting
Default”), and (b) Section 8.6 of the Loan Agreement for failing to have
performed and defaulting under the PAMCO Agreement (as defined in the Loan
Agreement) (the “Cross Default,” and together with the Reporting
Default, the “Defaults”); and

WHEREAS, Borrower has requested
that the Bank waive the Defaults, and the Bank is willing to grant such waiver
upon the terms and conditions set forth herein.

NOW, THEREFORE, the parties
hereto, in consideration of their mutual covenants and agreements contained in
the Loan Agreement, the other Loan Documents, and in this Amendment and
intending to be legally bound hereby, covenant and agree as follows:

1.             CAPITALIZED TERMS. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Loan Agreement, as amended
hereby.

2.             WAIVER. Subject to the satisfaction of the terms and conditions set
forth herein, the Bank hereby:

(a)           waives the Cross Default; and

(b)           waives the Reporting Default, and extends the
delivery date of the Borrower’s audited financial statements for the year ended
December 31, 2003 to May 10, 2004; provided that the failure to deliver such
financial statements on or before May 10, 2004 shall constitute a breach of
Section 8.2 of the Loan Agreement.

This waiver is specific as to content and time, shall be limited
precisely as written, and shall not constitute a waiver of any other current or
future default or breach of any covenants contained in the Loan Agreement or
the terms and conditions of any other Loan Documents signed by Borrower in
favor of Bank.  The Bank may still
exercise its rights or any other or further rights against Borrower because of
any other breach not waived above.

 

3.             AMENDMENTS TO LOAN AGREEMENT.

3.1          The following definition
shall be alphabetically added as set forth below to Section 1.1. of the Loan
Agreement:

“Agreement” shall mean that certain Loan and Security Agreement between
the Bank and the Borrower dated as of December 7, 2003, as may be amended from
time to time, including without limitation, the Waiver and Amendment to Loan
and Security Agreement, dated as of April 30, 2004, by and between the Bank and
the Borrower.

3.2          Section 6.8 of the Loan Agreement shall be deleted in its entirety and
replaced with the following:

6.8
Losses/Profits. Borrower shall not suffer a net loss (excluding non-cash
accrued warrant expense) for the three month period ending on the following
months in excess of the loss set forth opposite such month or a net profit less
than the profit set forth opposite such month:

	
   

  	
  Maximum Net Loss

  	
  3-month Period Ending

  	
   

  
	
   

  	
  ($6,358,000)

  	
   

  	
  October
  2003

  	
   

  
	
   

  	
  ($5,944,000)

  	
   

  	
  November
  2003

  	
   

  
	
   

  	
  ($5,584,000)

  	
   

  	
  December
  2003

  	
   

  
	
   

  	
  ($6,346,000)

  	
   

  	
  January
  2004

  	
   

  
	
   

  	
  ($7,302,000)

  	
   

  	
  February
  2004

  	
   

  
	
   

  	
  ($7,890,000)

  	
   

  	
  March 2004

  	
   

  
	
   

  	
  ($6,700,000)

  	
   

  	
  April 2004

  	
   

  
	
   

  	
  ($6,300,000)

  	
   

  	
  May 2004

  	
   

  
	
   

  	
  ($6,600,000)

  	
   

  	
  June 2004

  	
   

  
	
   

  	
  ($7,000,000)

  	
   

  	
  July 2004

  	
   

  
	
   

  	
  ($7,400,000)

  	
   

  	
  August
  2004

  	
   

  
	
   

  	
  ($7,900,000)

  	
   

  	
  September
  2004

  	
   

  
	
   

  	
  ($6,300,000)

  	
   

  	
  October
  2004

  	
   

  
	
   

  	
  ($5,000,000)

  	
   

  	
  November
  2004

  	
   

  
	
   

  	
  ($3,300,000)

  	
   

  	
  December
  2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

3.3          Section 6.9 of the Loan Agreement shall be deleted in its entirety and
replaced with the following:

6.9 Liquidity. Borrower shall maintain at Bank and/or Bank’s
Affiliates, measured as of the last day of each month, a balance of
unrestricted cash of at least Three Million Dollars ($3,000,000) which balance
shall be subject to Bank’s rights hereunder, including, without limitation,
Bank’s rights pursuant to Section 9(e) hereof.

4.             CONDITIONS
TO EFFECTIVENESS OF AMENDMENT.  The effectiveness of
this Amendment is subject to the Borrower’s satisfaction of the following
conditions in a manner satisfactory to the Bank:

 

2

 

4.1          The Bank shall
have received, on or prior to the date hereof, written evidence that PAMCO has
irrevocably waived any default under the PAMCO Agreement and related documents
caused by or related to the Defaults; and

4.2          The Bank shall
have received, on or prior to the date hereof, a certificate of the Secretary
or Assistant Secretary of the Borrower, certifying the resolutions of the Board
of Directors of the Borrower approving and authorizing the
execution, delivery and performance by the Borrower of this Amendment.

4.3          Receipt by Bank of a
restructuring fee of $2,500.00.

5.             REFERENCE
TO AND EFFECT UPON THE LOAN AGREEMENT.

5.1          The Borrower agrees,
acknowledges and affirms that the Collateral securing the Obligations under the
Loan Agreement and the other Loan Documents, and the Bank’s rights thereunder
(as applicable) and hereunder shall continue to be secured in all respects as
provided therein and herein.

5.2          The Borrower agrees,
acknowledges and affirms that its liabilities and obligations under the Loan
Agreement and the other Loan Documents shall, except as expressly modified by
this Amendment, remain in full force and effect, and shall not be released,
impaired, diminished, or in any other way modified or amended as a result of
the execution and delivery of this Amendment.

5.3          The execution, delivery, and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Bank under the Loan Agreement or any other Loan
Document, nor constitute a waiver of any provision of the Loan Agreement or any
other Loan Document, except as specifically set forth herein.

6.             COSTS AND EXPENSES.  The Borrower agrees to reimburse the Bank for all
reasonable fees, costs, and expenses, including the reasonable fees, costs, and
expenses of counsel or other advisors in connection with this Amendment and the
subject matter related thereto.

7.             GOVERNING LAW.  This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applied to
contracts to be performed wholly within the Commonwealth of Pennsylvania.

8.             COUNTERPARTS.  This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

[SIGNATURE PAGES FOLLOW]

 

 

3

 

[SIGNATURE PAGE TO WAIVER AND AMENDMENT]

IN WITNESS WHEREOF, the parties hereto, by their
officers thereunto duly authorized, have executed this Amendment as of the day
and year first above written.

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MOBILITY TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robert
  [            ]           

  
	
   

  	
  Name:

  	
        Robert
  [            ]           

  
	
   

  	
  Title:

  	
        CEO                          

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ Peter
  [Gibson]           

  
	
   

  	
  Name:

  	
        Peter
  [Gibson]           

  
	
   

  	
  Title:

  	
        VP                           

  

 

 

4

SECOND AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Second Amendment to Loan and Security Agreement
is entered into as of July 8, 2004 (the “Amendment”), by and between COMERICA
BANK (“Bank”) and MOBILITY TECHNOLOGIES, INC. (“Borrower”).

RECITALS

Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of December 7, 2003, as amended, including without
limitation by that certain Waiver and Amendment to Loan and Security Agreement
dated as of April 29, 2004 (collectively, the “Agreement”).  The parties desire to amend the Agreement in
accordance with the terms of this Amendment.

NOW, THEREFORE, the parties agree as follows:

1.             The following
defined terms are hereby added to or amended in Section 1.1 of the Agreement to
read as follows:

“Borrowing Base” means an amount equal to
seventy percent (70%) of Eligible Accounts which are Media Accounts as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrower.

“EBITDA” means net income plus interest,
taxes, depreciation, and amortization.

“Revolving Line” means a credit extension of
up to Seven Million Five Hundred Thousand Dollars ($7,500,000).  Notwithstanding the foregoing, after such
time as Borrower’s EBITDA has exceeded One Dollar ($1.00) for any calendar
month during the term of this Agreement, “Revolving Line” shall mean a credit
extension of up to the lesser of (A) Eight Million Five Hundred Thousand
Dollars ($8,500,000) or (B) Trailing Three Month Collections.  Notwithstanding any of the foregoing, after
such time as Borrower’s EBITDA has exceeded One Dollar ($1.00) for any two
consecutive calendar months during the term of this Agreement, “Revolving Line”
shall mean a credit extension of up to the lesser of (A) Ten Million Dollars
($10,000,000) or (B) Trailing Three Months Collections, but shall in no event
be less than Eight Million Five Hundred Thousand Dollars ($8,500,000).

“Trailing Three Month Collections” means the
aggregate amount of Borrower’s collections from Eligible Accounts in the three
months immediately preceding the date of measurement.

 

2.             A new Section 13 is hereby added to the Agreement to read as
follows:

13.           REFERENCE PROVISION.

If and only if the jury
trial waiver set forth in Section 11 of this Agreement is invalidated for any
reason by a court of law, statute or otherwise, the reference provisions set
forth below shall be substituted in place of the jury trial waiver.  So long as the jury trial waiver remains
valid, the reference provisions set forth in this Section shall be
inapplicable.

(a)           Each
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement, any security agreement executed by Borrower
in favor of Bank arising out of or relating to this Agreement, any note
executed by Borrower in favor of Bank arising out of or relating to this
Agreement or any other document, instrument or agreement executed by Borrower
with or in favor of Bank arising out of or relating to this Agreement
(collectively in this Section, the “Loan Documents”), other than (i) all
matters in connection with nonjudicial foreclosure of security interests in
real or personal property; or (ii) the appointment of a receiver or the
exercise of other provisional remedies (any of which may be initiated pursuant
to applicable law) that are not settled in writing within fifteen (15) days
after the date on which a party subject to the Loan Documents gives written
notice to all other parties that a Claim exists (the “Claim Date”) shall be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure, or
their successor sections (“CCP”), which shall constitute the exclusive remedy
for the resolution of any Claim concerning the Loan Documents, including
whether such Claim is subject to the reference proceeding.  Except as set forth in this section, the
parties waive the right to initiate legal proceedings against each other
concerning each such Claim.  Venue for
these proceedings shall be in the Superior Court in the County where the real
property, if any, is located or in a County where venue is otherwise
appropriate under state law (the “Court”). 
By mutual agreement, the parties shall select a retired Judge of the
Court to serve as referee, and if they cannot so agree within fifteen (15) days
after the Claim Date, the Presiding Judge of the Court (or his or her
representative) shall promptly select the referee.  A request for appointment of a referee may be
heard on an ex parte or expedited basis. 
The referee shall be appointed to sit as a temporary judge, with all the
powers for a temporary judge, as authorized by law, and upon selection should
take and subscribe to the oath of office as provided for in Rule 244 of the California
Rules of Court (or any subsequently enacted Rule).  Each party shall have one peremptory
challenge pursuant to CCP § 170.6.  Upon
being selected, the referee shall (a) be requested to set the matter for a
status and trial-setting conference within fifteen (15) days after the date of
selection and (b) if practicable, try any and all issues of law or fact and
report a statement of decision upon them within ninety (90) days of the date of
selection.  The referee will have power
to expand or limit the amount of discovery a party may employ.  Any decision rendered by the referee will be
final, binding and conclusive, and judgment shall be entered pursuant to CCP
§644 in any court in the State of California having jurisdiction.  The parties shall complete all discovery no
later than fifteen (15) days before the first trial date established by the
referee.  The referee may extend such
period in the event of a party’s refusal to provide requested

 

2

 

discovery
for any reason whatsoever, including, without limitation, legal objections
raised to such discovery or unavailability of a witness due to absence or
illness.  No party shall be entitled to “priority”
in conducting discovery.  Either party
may take depositions upon seven (7) days written notice, and shall respond to
requests for production or inspection of documents within ten (10) days after
service.  All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the referee
whose decision shall be final and binding upon the parties.  Pending appointment of the referee as
provided herein, the Superior Court is empowered to issue temporary and/or
provisional remedies, as appropriate.

(b)           Except
as expressly set forth herein, the referee shall determine the manner in which
the reference proceeding is conducted including the time and place of all
hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding.  Except for trial, all proceedings and
hearings conducted before the referee shall be conducted without a court
reporter unless a party requests a court reporter.  The party making such a request shall have
the obligation to arrange for and pay for the court reporter.  Subject to the referee’s power to award costs
to the prevailing party, the parties shall equally bear the costs of the court
reporter at the trial and the referee’s expenses.

(c)           The
referee shall determine all issues in accordance with existing California case
and statutory law.  California rules of
evidence applicable to proceedings at law will apply to the reference
proceeding.  The referee shall be
empowered to enter equitable as well as legal relief, to provide all temporary
and/or provisional remedies and to enter equitable orders that shall be binding
upon the parties.  At the close of the
reference proceeding, the referee shall issue a single judgment at disposing of
all the claims of the parties that are the subject of the reference.  The parties reserve the right (i) to contest
or appeal from the final judgment or any appealable order or appealable
judgment entered by the referee and (ii) to obtain findings of fact,
conclusions of laws, a written statement of decision, and (iii) to move for a
new trial or a different judgment, which new trial, if granted, shall be a
reference proceeding under this provision.

(d)           If
the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by the reference procedure herein described
will be resolved and determined by arbitration conducted by a retired judge of
the Court, in accordance with the California Arbitration Act § 1280 through §
1294.2 of the CCP as amended from time to time. 
The limitations with respect to discovery as set forth in this Section
shall apply to any such arbitration proceeding.

3.             Exhibit
C to the Agreement is hereby
amended and replaced in its entirety by Exhibit C attached hereto.

4.             Unless
otherwise defined, all initially capitalized terms in this Amendment shall be
as defined in the Agreement.  The
Agreement, as amended hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and confirmed in
all respects.  Except as expressly set
forth herein, the execution, delivery, and performance of

 

3

this Amendment shall not operate as a waiver of, or as an amendment of, any
right, power, or remedy of Bank under the Agreement, as in effect prior to the
date hereof.  Borrower ratifies and
reaffirms the continuing effectiveness of all promissory notes, guaranties,
security agreements, mortgages, deeds of trust, environmental agreements, and
all other instruments, documents and agreements entered into in connection with
the Agreement.

5.             Borrower
represents and warrants that the representations and warranties contained in
the Agreement are true and correct as of the date of this Amendment, and that
no Event of Default has occurred and is continuing.

6.             This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one instrument.

7.             As a
condition to the effectiveness of this Amendment, Bank shall have received, in
form and substance satisfactory to Bank, the following:

(a)           this Amendment, duly executed by
Borrower;

(b)           disbursement instructions, agreement
to provide insurance, and auto-debit authorization;

(c)           Warrant to Purchase Series E
Preferred Stock;

(d)           Affirmation of Subordination and
Intercreditor Agreement;

(e)           a one-time nonrefundable amendment
fee equal to $7,500 plus all Bank Expenses incurred through the date of this
Amendment; and

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

 

4

 

IN WITNESS WHEREOF, the
undersigned have executed this Amendment as of the first date above written.

 

	
   

  	
  MOBILITY
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive
  Officerr

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

5

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	
   

  
	
   

  
	
  Borrower: Mobility
  Technologies, Inc.

  	
  Lender: Comerica Bank

  
	
  Commitment Amount: up to
  $10,000,000

  
	
   

  

 

	
  ACCOUNTS RECEIVABLE

  
	
  1.

  	
  Accounts Receivable Book
  Value as of ___

  	
   

  	
  $______

  	 

	
  2.

  	
  Additions (please explain
  on reverse)

  	
   

  	
  $______

  	 

	
  3.

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
  $______

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ACCOUNTS RECEIVABLE
  DEDUCTIONS (without duplication)

  
	
  4.

  	
  Past Due Accounts.

  	
  $______

  	
   

  	 

	
   

  	
  4(a).
  Amounts over 120 days due

  	
  $______

  	
   

  	 

	
   

  	
  4(b).
  Amounts over 90 but under 120 days due, over $500,000

  	
  $______

  	
   

  	 

	
  5.

  	
  Balance of 25% over 120
  day accounts

  	
  $______

  	
   

  	 

	
  6.

  	
  Concentration Limits

  	
   

  	
   

  	 

	
  7.

  	
  Foreign Accounts

  	
  $______

  	
   

  	 

	
  8.

  	
  Governmental Accounts

  	
  $______

  	
   

  	 

	
  9.

  	
  Contra Accounts

  	
  $______

  	
   

  	 

	
  10.

  	
  Demo Accounts

  	
  $______

  	
   

  	 

	
  11.

  	
  Intercompany/Employee
  Accounts

  	
  $______

  	
   

  	 

	
  12.

  	
  Other (please explain on
  reverse)

  	
  $______

  	
   

  	 

	
  13.

  	
  TOTAL ACCOUNTS RECEIVABLE
  DEDUCTIONS

  	
   

  	
  $______

  	 

	
  14.

  	
  Eligible Accounts (#3
  minus #13)

  	
   

  	
  $______

  	 

	
  15.

  	
  LOAN VALUE OF ACCOUNTS
  (70% of #14)

  	
   

  	
  $______

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  BALANCES

  
	
  16.

  	
  Maximum Loan Amount

  	
   

  	
   

  	 

	
  17.

  	
  Total Funds Available
  [Lesser of #16 or #15]

  	
   

  	
   

  	 

	
  18.

  	
  Present balance owing on
  Line of Credit

  	
   

  	
   

  	 

	
  19.

  	
  RESERVE POSITION (#17
  minus #18)

  	
   

  	
   

  	 

 

The
undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.

 

	
  Mobility Technologies,
  Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
				

 

6

 

THIRD AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Third Amendment to Loan
and Security Agreement is entered into and effective as of April 20, 2005 (the “Amendment”),
by and between COMERICA BANK (“Bank”) and TRAFFIC.COM, INC., formerly known as
Mobility Technologies, Inc. (“Borrower”).

RECITALS

Borrower and Bank are
parties to that certain Loan and Security Agreement dated as of December 7,
2003, as amended, including without limitation by that certain Waiver and
Amendment to Loan and Security Agreement dated as of April 29, 2004, that
certain Second Amendment to Loan and Security Agreement dated as of July 8,
2004, and those certain bilateral letter agreements dated December 6, 2004,
February 6, 2005, and March 10, 2005 (collectively, the “Agreement”).  The parties desire to amend the Agreement in
accordance with the terms of this Amendment.

NOW, THEREFORE, the parties
agree as follows:

1.             The following defined terms are hereby added to or
amended in Section 1.1 of the Agreement to read as follows:

“Columbia” means Columbia
Partners, L.L.C. Investment Management, as successor agent to Potomac Asset
Management Company, Inc.

“Columbia Agreement” means
the Amended and Restated Credit Agreement dated as of March 29, 2002, between
Borrower and Columbia, on behalf of the National Electrical Benefit Fund, as
such agreement may be amended, restated or otherwise modified from time to
time.

“Equity Commitment Letter”
means the Equity Commitment Letter, between Borrower and the Guarantors, in the
form of the draft dated April 20, 2005.

“Guarantors” shall have the
meaning given to such term in the Investor Guaranty Agreement.

“Investor Guaranty Agreement”
means the Investor Guaranty Agreement, to be executed and delivered by each of
the Guarantors to Columbia, in the form of the draft dated April 20, 2005.

“Revolving Line” means a
credit extension of up to Ten Million Dollars ($10,000,000).  Notwithstanding the foregoing, “Revolving
Line” shall initially mean Six Million Dollars ($6,000,000).  After Borrower receives at least Five Million
Dollars ($5,000,000) after March 31, 2005 from a Qualified Equity Financing (as
such term is defined in the Fifth Amendment to the Columbia Credit Agreement,
in the form of the draft dated April 20, 2005), “Revolving Line” shall mean Seven
Million Dollars ($7,000,000).  After
Borrower receives an aggregate of Ten Million Dollars 

 

($10,000,000)
(inclusive of the $5,000,000 referred to in the previous sentence) after March
31, 2005 from a Qualified Equity Financing, “Revolving Line” shall mean Eight
Million Five Hundred Thousand Dollars ($8,500,000).  After the Revolving Line has been increased
to Eight Million Five Hundred Thousand Dollars ($8,500,000) pursuant to the
requirements of the previous sentence, and after Borrower’s EBITDA has exceeded
One Dollar ($1.00) for any two consecutive calendar months during the term of
this Agreement, “Revolving Line” shall mean a credit extension of up to the
lesser of (A) Ten Million Dollars ($10,000,000) or (B) Trailing Three Month
Collections, but shall in no event be less than Eight Million Five Hundred
Thousand Dollars ($8,500,000).

“Revolving Maturity Date”
means March 7, 2006.

2.             All references in the Loan Agreement to “PAMCO” are
hereby amended to read “Columbia”.  All
references in the Loan Agreement to “PAMCO Agreement” are hereby amended to
read “Columbia Agreement”.

3.             Subsection (c) of the defined term “Permitted
Indebtedness” in Section 1.1 of the Agreement is hereby amended to read as
follows:

(c)           Indebtedness under
the PAMCO Agreement not to exceed a maximum principal amount of $29,400,000,
plus any payment premiums, interest, penalties, attorneys’ fees and collection
costs payable in respect thereto;

4.             Section 6.3(c) of the Loan Agreement is amended to read
as follows: “(c) as soon as available, but in any event within one hundred
twenty (120) days after the end of Borrower’s fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of
an independent certified public accounting firm reasonably acceptable to Bank
(provided that such financial statements for the fiscal year ended December 31,
2004 shall be delivered on or before May 10, 2005);”.

5.             Section 6.8 of the Loan Agreement is amended to read as
follows:

6.8           Losses/Profits.  Borrower shall not suffer a net loss
(excluding non-cash accrued warrant expense) for the three month period ending
on the following months in excess of the loss set forth opposite such month:

 

2

 

	
     Maximum Net Loss

  	
   

  	
  3-Month Period Ending

  	
   

  
	
  ($6,030,000)

  	
   

  	
   

  	
  January 31, 2005

  	
   

  
	
  ($7,580,000)

  	
   

  	
   

  	
  February 28, 2005

  	
   

  
	
  ($9,444,444)

  	
   

  	
   

  	
  March 31, 2005

  	
   

  
	
  ($9,210,000)

  	
   

  	
   

  	
  April 30, 2005

  	
   

  
	
  ($7,825,000)

  	
   

  	
   

  	
  May 31, 2005

  	
   

  
	
  ($6,420,000)

  	
   

  	
   

  	
  June 30, 2005

  	
   

  
	
  ($5,952,000)

  	
   

  	
   

  	
  July 31, 2005

  	
   

  
	
  ($6,550,000)

  	
   

  	
   

  	
  August 31, 2005

  	
   

  
	
  ($7,011,000)

  	
   

  	
   

  	
  September 30, 2005

  	
   

  
	
  ($4,823,000)

  	
   

  	
   

  	
  October 31, 2005

  	
   

  
	
  ($2,888,000)

  	
   

  	
   

  	
  November 30, 2005

  	
   

  
	
  ($952,000)

  	
   

  	
   

  	
  December 31, 2005

  	
   

  

6.             Borrower and Bank shall set a
mutually acceptable net loss covenant for the period ending January 31, 2006,
based upon a 2006 financial plan approved by Borrower’s Board of Directors and
Bank, which plan Borrower shall submit to Bank not later than December 1, 2005.

7.             The reference in Section 6.9 to “Three Million Dollars
($3,000,000)” is amended to read “Two Million Five Hundred Thousand Dollars
($2,500,000)”.

8.             Exhibit D is amended to be in the form of Exhibit
D attached hereto.

9.             By May 1, 2005, Borrower shall (i) deliver copies to
Bank of the executed Consent and First Amendment to Subordination and
Intercreditor Agreement, Investor Guaranty Agreement, Equity Commitment Letter
and Fifth Amendment to the Columbia Credit Agreement, and (ii) receive at least
Ten Million Dollars ($10,000,000) of proceeds from the Loan, as defined in the
Columbia Credit Agreement.

10.           Bank consents to the receipt by May 10, 2005 of audited
financial statements for the fiscal year ended December 2004.

11.           Unless otherwise defined, all initially capitalized terms
in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be
and remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the
execution, delivery, and performance of 

 

3

 

this Amendment shall not
operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the
continuing effectiveness of all promissory notes, guaranties, security
agreements, mortgages, deeds of trust, environmental agreements, and all other
instruments, documents and agreements entered into in connection with the
Agreement.

12.           Bank waives the Event of Defaults (A) under Section 8.6
caused by (i) Borrower’s failure under Section 6.1.16 of the Columbia Agreement
to deliver certificates certifying Borrower’s cash balance and (ii) Borrower’s
failure to comply with Section 6.2.4 of the Columbia Agreement arising out of
the loan Borrower made to Robert Verratti in the amount of $324,161 (the “Verratti
Loan”), provided that Columbia waives each of these same defaults and (B) under
Section 7.7 arising out of the Verratti Loan.

13.           Borrower authorizes Bank to file an amendment to financing
statement that reflects the change of Borrower’s name.

14.           Except as set forth in the replacement disclosure Schedule attached hereto, Borrower represents and warrants that the
representations and warranties contained in the Agreement are true and correct
as of the date of this Amendment.

15.           This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

16.           As a condition to the effectiveness of this Amendment,
Bank shall have received, in form and substance satisfactory to Bank, the
following:

(a)           this Amendment, duly executed by
Borrower;

(b)           agreement to provide insurance and
auto-debit authorization;

(c)           a one-time nonrefundable amendment
fee equal to $10,000 plus all Bank Expenses incurred through the date of this
Amendment; and

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

 

4

 

IN WITNESS WHEREOF, the
undersigned have executed this Amendment as of the first date above written.

	
   

  	
  TRAFFIC.COM,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Sr.
  Vice President

  

 

 

 

5

 

EXHIBIT
D

COMPLIANCE CERTIFICATE

TO:                                        COMERICA BANK

FROM:                     TRAFFIC.COM, INC.

The undersigned authorized
officer of Traffic.com, Inc. hereby certifies that in accordance with the terms
and conditions of the Loan and Security Agreement between Borrower and Bank
(the “Agreement”), (i) Borrower is in complete compliance for the period ending
___________________ with all required covenants except as noted below and (ii)
all representations and warranties of Borrower stated in the Agreement are true
and correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

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

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
      Complies

  	
   

  
	
  Monthly financial
  statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days*

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Quarterly financial
  statements

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings,
  Borrowing Base Cert.

  	
   

  	
  Weekly or, if no
  borrowings, monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

* provided that such financial statements for
the fiscal year ended December 31, 2004 shall be delivered on or before May 10,
2005

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Losses/Minimum
  Profits (Trailing 

  	
   

  	
  See Section 6.8

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  3-month basis)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Cash at Bank

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Amount in Monarch Account

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amount in T-Bills

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ___________________

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ___________________

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower’s Total Liquidity

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

6

 

	
  Comments Regarding Exceptions: See
  Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  Received by: 

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE

  	
   

  	
  Compliance
  Status        Yes          No

  
						

 

 

 

7

 

USA
PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight
the funding of terrorism and money laundering activities, Federal law requires
all financial institutions to obtain, verify, and record information that
identifies each person who opens an account.

WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your
name, address, date of birth, and other information that will allow us to
identify you.  We may also ask to see
your driver’s license or other identifying documents.

 

8

 

AGREEMENT
TO PROVIDE INSURANCE

TO:                                        COMERICA BANK                                                                                                                                                                                                                                                  Date: March 31,
2005

Attn:
Deni M. Snider, MC 4770

75 E. Trimble Road                                                                                                                                                                                                                                                        Borrower:
TRAFFIC.COM, INC.

San Jose, CA 95131

In consideration of a loan
in the amount of $10,000,000, secured by all tangible personal property
including inventory and equipment.

I/We agree to obtain
adequate insurance coverage to remain in force during the term of the loan.

I/We also agree to advise
the below named agent to add Comerica Bank as lender’s loss payable on the new
or existing insurance policy, and to furnish Bank at above address with a copy
of said policy/endorsements and any subsequent renewal policies.

I/We understand that the
policy must contain:

1.             Fire and extended coverage in an amount sufficient to
cover:

(a)           The amount of the loan, OR

(b)           All existing encumbrances, whichever
is greater,

But not in excess of the
replacement value of the improvements on the real property.

2.             Lender’s “Loss Payable” Endorsement Form 438 BFU in
favor of Comerica Bank, or any other form acceptable to Bank.

INSURANCE INFORMATION

	
  Insurance Co./Agent

  	
   

  	
  Telephone No.:

  
	
   

  	
   

  	
   

  
	
  Agent’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of Obligor: 

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  

 

 

	
  FOR BANK USE ONLY

  
	
   

  
	
  INSURANCE VERIFICATION: 

  	
  Date:

  
	
   

  	
   

  
	
  Person Spoken to:

  	
   

  
	
   

  	
   

  
	
  Policy Number:

  	
   

  
	
   

  	
   

  
	
  Effective From:

  	
   

  	
   To:

  	
   

  
	
   

  	
   

  
	
  Verified by:

  	
   

  
					

 

 

 

 

 

 

 

	
  COMERICA BANK

  AUTOMATIC DEBIT AUTHORIZATION

  Member FDIC

  

 

	
  To:          Comerica Bank

   

  Re:          Loan #________________________

   

  You are hereby authorized
  and instructed to charge account No. 1892627884 in the name of

  TRAFFIC.COM, INC.                                                                                   
                                   

  
	
  for principal, interest
  and other payments due on above referenced loan as set forth below and credit
  the loan referenced above.

   

  X             Debit each interest payment as it
  becomes due according to the terms of the Loan and Security Agreement and any
  renewals or amendments thereof.

  X             Debit each principal payment as
  it becomes due according to the terms of the Loan and Security Agreement and
  any renewals or amendments thereof.

  X             Debit each payment for Bank
  Expenses as it becomes due according to the terms of the Loan and Security
  Agreement and any renewals or amendments thereof.

  This Authorization is to
  remain in full force and effect until revoked in writing.

  

 

	
  Borrower Signature

  	
  Date

  
	
   

  	
   

  
	
     /s/

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

FOURTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Fourth Amendment to
Loan and Security Agreement (the “Amendment”) is entered into as of July 11,
2005, by and between COMERICA BANK (“Bank”) and TRAFFIC.COM, INC., formerly
known as Mobility Technologies, Inc. (“Borrower”).

RECITALS

Borrower and Bank are
parties to that certain Loan and Security Agreement dated as of December 7,
2003 (as amended from time to time, including without limitation by that
certain Waiver and Amendment to Loan and Security Agreement dated as of April
29, 2004, that certain Second Amendment to Loan and Security Agreement dated as
of July 8, 2004, those certain bilateral letter agreements dated December 6,
2004, February 6, 2005, and March 10, 2005, and that certain Third Amendment to
Loan and Security Agreement dated as of April 20, 2005, together with any
related agreements, the “Agreement”). The parties desire to amend the Agreement
in accordance with the terms of this Amendment.

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

AGREEMENT

I.                                         Amendment to the Agreement. Subject to the satisfaction of the conditions
precedent as set forth in Article III hereof, the Agreement is hereby amended
as set forth below.

A.                                   The definition of “Borrowing Base” in
Section 1.1 of the Agreement is hereby amended and restated in its entirety to
read as follows:

“Borrowing Base” means an amount equal to eighty
percent (80%) of Eligible Accounts as determined by Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrower.

B.                                     Bank’s addresses for notices set forth in
Section 10 of the Agreement are hereby amended in their entirety to read as
follows:

	
  “If to Bank:

  	
  Comerica Bank

  
	
   

  	
  2321 Rosecrans
  Ave., Suite 5000

  
	
   

  	
  El Segundo, CA
  90245

  
	
   

  	
  Attn: Manager

  
	
   

  	
  FAX: (310)
  297-2290

  
	
  With a copy to:

  	
  Comerica Bank

  
	
   

  	
  11921 Freedom
  Drive, Suite 920

  
	
   

  	
  Reston, VA 20190

  
	
   

  	
  Attn: Elizabeth
  Kinsey

  
	
   

  	
  FAX: (703)
  467-9308”

  

C.                                     Exhibit C to the Agreement is hereby replaced with the attached
Exhibit C.

 

1

 

II.                                     Legal Effect.

Unless otherwise defined, all initially capitalized terms in this
Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. Except
as expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof. Borrower ratifies and reaffirms the continuing effectiveness of all
promissory notes, guaranties, security agreements, mortgages, deeds of trust,
environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.

III.                                 Conditions Precedent. Except as specifically set forth in this Amendment,
all of the terms and conditions of the Agreement remain in full force and
effect. The effectiveness of this Amendment is conditioned upon receipt by Bank
of this Amendment, and any other documents which Bank may reasonably require to
carry out the terms hereof, including but not limited to the following:

A.                                   This Amendment, duly executed by
Borrower; and

B.                                     Such other documents, and completion of
such other matters, as Bank may reasonably deem necessary or appropriate.

IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written. 

	
  TRAFFIC.COM,
  INC.

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
  Title:

  	
  VP Finance

  	
   

  	
  Title:

  	
  Sr. Vice
  President

  	
   

  

 

 

2

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	
  Borrower:

  	
  Traffic.com, Inc.

  	
  Bank:

  	
  Comerica Bank

  
	
   

  	
   

  	
   

  	
  Technology & Life
  Sciences Division

  
	
  Commitment Amount:

  	
  $10,000,000

  	
   

  	
  Loan Analysis
  Department

  
	
   

  	
   

  	
   

  	
  Five Palo Alto Square,
  Suite 800

  
	
   

  	
   

  	
   

  	
  3000 El Camino Real

  
	
   

  	
   

  	
   

  	
  Palo Alto, CA 94306

  
	
   

  	
   

  	
   

  	
  Phone: (650) 846-6820

  
	
   

  	
   

  	
   

  	
  Fax: (650) 846-6840

  
						

 

	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  
	
  1. Accounts
  Receivable Book Value as of

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $                  

  
	
  2. Additions
  (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $                  

  
	
  3. TOTAL
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $                  

  
	
  ACCOUNTS
  RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  
	
  4. Amounts over
  90 days

  	
   

  	
  $

  	
   

  	
                       

  
	
  4a. Amounts over
  90 but under 120 days due, over $500,000

  	
   

  	
   

  	
   

  	
   

  
	
  4b. Amounts over
  120 days due

  	
   

  	
   

  	
   

  	
   

  
	
  5. Balance of
  25% over 120 days

  	
   

  	
  $

  	
   

  	
                       

  
	
  6. Concentration
  limits 25%

  	
   

  	
  $

  	
   

  	
                       

  
	
  7. Foreign
  Accounts

  	
   

  	
  $

  	
   

  	
                       

  
	
  8. Government
  Accounts

  	
   

  	
  $

  	
   

  	
                       

  
	
  9. Contra
  Accounts

  	
   

  	
  $

  	
   

  	
                       

  
	
  10. Promotion or
  Demo Accounts

  	
   

  	
  $

  	
   

  	
                       

  
	
  11.
  Intercompany/Employee Accounts

  	
   

  	
  $

  	
   

  	
                       

  
	
  12. Other
  (please explain below)

  	
   

  	
  $                  

  	
   

  	
   

  
	
  13. TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $           0.00

  
	
  14. Eligible
  Accounts (#3 Minus #13)

  	
   

  	
  $

  	
   

  	
                       

  
	
  15. LOAN VALUE
  OF ACCOUNTS RECEIVABLE (80% of #14)

  	
   

  	
   

  	
   

  	
  $           0.00

  
	
  BALANCES 

  	
   

  	
   

  	
   

  	
   

  
	
  16. Maximum Loan
  Amount

  	
   

  	
   

  	
   

  	
   

  
	
  17. Total Funds
  Available (the lesser of #15 or #16)

  	
   

  	
   

  	
   

  	
  $           0.00

  
	
  18. Outstanding
  under Sublimits (Letters of Credit)

  	
   

  	
   

  	
   

  	
  $                  

  
	
  19. Present
  balance outstanding on Line of Credit

  	
   

  	
   

  	
   

  	
  $           0.00

  
	
  20. Reserve
  Position (#17 minus #18 and #19)

  	
   

  	
   

  	
   

  	
  $           0.00

  
							

The undersigned
represents and warrants that the foregoing is true, complete and correct, and
that the information reflected in this Borrowing Base Certificate complies with
the representations and warranties set forth in the Loan & Security
Agreement between the undersigned and Comerica Bank.

 

Comments:

Traffic.com, Inc.

Sincerely,

	
   

  	
   

  	
   

  
	
  Authorized Signer

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   Rec’d By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   Date:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   Reviewed By:

  	
   

  	
   

  
	
   

  	
   

  	
   Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 
 

FIFTH AMENDMENT
  TO
  LOAN AND SECURITY AGREEMENT    

        This
Fifth Amendment to Loan and Security Agreement is entered into as of August 30, 2005 (the "Amendment"), by and between COMERICA BANK ("Bank") and TRAFFIC.COM, INC.
formerly known as Mobility Technologies, Inc. ("Borrower"). 

 
 

RECITALS    
    

        Borrower and Bank are parties to that certain Loan and Security Agreement dated as of December 7, 2003 (as amended, including without limitation by that
certain Waiver and Amendment to Loan and Security Agreement dated as of April 29, 2004, that certain Second Amendment to Loan and Security Agreement dated as of July 8, 2004, those
certain bilateral letter agreements dated December 6, 2004, February 6, 2005 and March 10, 2005, that certain Third Amendment to Loan and Security Agreement dated as of
April 20, 2005 and that certain Fourth Amendment to Loan and Security Agreement dated as of July 11, 2005, the "Agreement"). The parties desire to amend the Agreement in accordance with
the terms of this Amendment. 

        NOW,
THEREFORE, the parties agree as follows: 

        1.     Section 6.8
of the Agreement is hereby amended in full to read as follows: 

"6.8    Losses/Profits. Borrower shall not suffer a net loss (excluding non-cash accrued warrant expense) for the three month
period ending on the following months in excess of the loss set forth opposite such month: 

	Maximum Net Loss
	 	3-month Period Ending

	($4,643,000)	 	June 30, 2005
	($5,281,000)	 	July 31, 2005
	($6,425,000)	 	August 31, 2005
	($7,743,000)	 	September 30, 2005
	($7,266,000)	 	October 31, 2005
	($6,728,000)	 	November 30, 2005
	($6,240,000)	 	December 31, 2005 and the last day of each three-month period thereafter until such covenant is revised by Bank in its sole discretion

        2.     Exhibit D to the Agreement is hereby amended and replaced in its entirety by  Exhibit D attached hereto. 

        3.     Section 8.8
of the Agreement provides that Bank shall not make Credit Extensions prior to the satisfaction or stay of any judgment against Borrower for the payment
of money in an amount, individually or in the aggregate, equal to or in excess of Two Hundred Fifty Thousand Dollars ($250,000). On August 19, 2005, a judgment for compensatory damages (the
"Judgment") in the amount of Six Million One Hundred Sixty Thousand Dollars ($6,160,000) was entered against Borrower and in favor of Santa Fe Technologies, Inc. by the Albuquerque District
Court in connection with Case Number D-202-CV-9907715. The Judgment has not been satisfied or stayed. Accordingly, the parties agree that Bank currently has no
obligation to make Credit Extensions to Borrower. Borrower has requested that Bank continue to make Credit Extensions to it notwithstanding the outstanding nature of the Judgment. Bank is willing to
grant the requested accommodation and continue making Credit Extensions provided that Bank retains the right, in its sole discretion and without notice to Borrower, to cease making Credit Extensions
in connection with the accommodation requested hereunder. 

        Bank
expressly reserves all of its various rights, remedies, powers and privileges under the Agreement, the other Loan Documents and applicable laws, including without limitation those
arising out of the Judgment. 

 

        4.     Unless
otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in
full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of
this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms
the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust, environmental agreements, and all other instruments, documents and agreements entered
into in connection with the Agreement. 

        5.     Borrower
represents and warrants that no Event of Default has occurred and is continuing. 

        6.     This
Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 

        7.     As
a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following: 

        (a)   this
Amendment, duly executed by Borrower; 

        (b)   Affirmation
of Subordination and Intercreditor Agreement; and 

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

        8.     This
Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 

[Signature
page follows] 

2

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written. 

	 	 	TRAFFIC.COM, INC.
	

 	
 	

By:	

/s/
	 	 	 	

	 	 	Title:	VP Finance
	 	 	 	

	

 	
 	

COMERICA BANK
	

 	
 	

By:	

 
	 	 	 	

	 	 	Title:	 
	 	 	 	

  

 
 

EXHIBIT D
  COMPLIANCE CERTIFICATE    
    

TO:
COMERICA BANK 

FROM:
TRAFFIC.COM, INC. 

        The
undersigned authorized officer of Traffic.com, Inc. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending                        with all required
covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying
letter or footnotes. 

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

	Reporting Covenant
 
	 	Required
	 	Complies

	Monthly financial statements	 	Monthly within 30 days	 	Yes	 	No
	Annual (CPA Audited)	 	FYE within 120 days	 	Yes	 	No
	Quarterly financial statements	 	Quarterly within 45 days	 	Yes	 	No
	A/R & A/P Agings, Borrowing Base Cert.	 	Weekly or, if no borrowings, monthly within 30 days	 	Yes	 	No
	A/R Audit	 	Initial and Semi-Annual	 	Yes	 	No
	IP Report	 	Quarterly within 30 days	 	Yes	 	No

	Financial Covenant
 
	 	Required
	 	Actual
	 	Complies
	 	 

	Maximum Losses/Minimum Profits (Trailing 3-month basis)	 	(1)	 	$	 	 	Yes	 	No	 	 
	Minimum Cash at Bank	 	$2,500,000	 	$	 	 	Yes	 	No	 	 
	Amount in Monarch Account	 	 	 	$	 	 	 	 	 	 	 
	Amount in T-Bills	 	 	 	$	 	 	 	 	 	 	 
	 	 	 	 	$	 	 	 	 	 	 	 
	 	 	 	 	$	 	 	 	 	 	 	 
	Borrower's Total Liquidity	 	 	 	$	 	 	 	 	 	 	 

	(1)
	June
05 ($4,463,000); July 05 ($5,281,000); August 05 ($6,425,000); September 05 ($7,743,000); October 05 ($7,266,000); November 05 ($6,728,000); December 05 and each three-month
period thereafter until Bank revises covenant ($6,240,000). 

4

 

Comments Regarding Exceptions:    See Attached. 

Sincerely,

	    
 SIGNATURE
	    
 TITLE
	    
 DATE

BANK USE ONLY  

	Received by:	 	    
 AUTHORIZED SIGNER
	

Date:	
 	

    

	

Verified:	
 	

    
 AUTHORIZED SIGNER
	

Date:	
 	

    

	 	 	 	 	 
	Compliance Status	 	Yes	 	No

5

  

 
 

AFFIRMATION OF SUBORDINATION AND INTERCREDITOR AGREEMENT    

        THIS
AFFIRMATION OF SUBORDINATION AND INTERCREDITOR AGREEMENT is made as of August 30, 2005, by the undersigned creditor and its agent (collectively, "Creditor") and Comerica Bank
("Bank"). 

 
 

RECITALS    
    

        TRAFFIC.COM, INC. ("Borrower") and Bank are parties to that certain Loan and Security Agreement dated as of December 7, 2003, as amended, including
without limitation by that certain Waiver and Amendment to Loan and Security Agreement dated as of April 29, 2004, those certain bilateral letter agreements dated December 6, 2004,
February 6, 2005 and March 10, 2005, that certain Third Amendment to Loan and Security Agreement dated as of April 20, 2005 and that certain Fourth Amendment to Loan and Security
Agreement dated as of July 11, 2005 (collectively, the "Loan Agreement"). Borrower and Bank propose to enter into a Fifth Amendment to Loan and Security Agreement dated as of the date hereof
(the "Amendment"), which amends the Maximum Losses/Minimum Profits covenant set forth in the Loan Agreement and provides that Bank may continue, in its sole discretion, to make Credit Extensions to
Borrower although Bank is not currently obligated to make Credit Extensions under the terms of Section 8.8 of the Loan Agreement. Creditor and Bank executed a Subordination and Intercreditor
Agreement dated as of December 7, 2003 (the "Intercreditor Agreement"). Bank has agreed to enter into the Amendment provided, among other things, that Creditor consents to the entry by Borrower
into the Amendment and agrees that the Intercreditor Agreement will remain effective. 

 
 

AGREEMENT    
    

        NOW, THEREFORE, Creditor agrees as follows: 

        1.     Creditor
consents to the execution, delivery and performance by the Borrower of the Amendment and the modifications to the Loan Agreement affected by the Amendment. The
Intercreditor Agreement shall remain in full force and effect with respect to all of Borrower's obligations to Bank, under the Loan Agreement as modified by the Amendment, and otherwise. 

        2.     Bank
and Creditor each affirm their respective obligations under the Intercreditor Agreement. 

        3.     Unless
otherwise defined, capitalized terms in this Affirmation shall have the meaning assigned in the Intercreditor Agreement. This Affirmation may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument. 

1

 

        IN
WITNESS WHEREOF, the undersigned have executed this Affirmation of Subordination and Intercreditor Agreement as of the first date above written. 

	

"Bank"
	

COMERICA BANK
	

By:	
 	

	
 	

 	
 	

 

	

Name:	
 	

	
 	

 	
 	

 
	

Title:	
 	

	
 	

 	
 	

 

	

"Creditor"
	

COLUMBIA PARTNERS L.L.C., INVESTMENT MANAGEMENT,

successor in interest to Potomac Asset Management Company, Inc.
	

By:	
 	

	
 	

 	
 	

 

	

Name:	
 	

	
 	

 	
 	

 
	

Title:	
 	

	
 	

 	
 	

 

	

NATIONAL ELECTRIC BENEFIT FUND
	

By: COLUMBIA PARTNERS L.L.C., INVESTMENT MANAGEMENT, its Authorized Signatory
	

By:	
 	

	
 	

 	
 	

 

	

Name:	
 	

	
 	

 	
 	

 
	

Title:	
 	

	
 	

 	
 	

 

The
undersigned approves of the terms of this Agreement. 

	

"Borrower"
	

TRAFFIC.COM, INC.
	

By:	
 	

/s/        
	
 	

 	
 	

 

	Title:	 	VP Finance
	 	 	 	 

2

SIXTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Sixth Amendment to Loan and Security Agreement is
entered into as of November 3, 2005 (the “Amendment”), by and between COMERICA
BANK (“Bank”) and TRAFFIC.COM, INC., formerly known as Mobility Technologies,
Inc. (“Borrower”).

RECITALS

Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of December 7, 2003 (as amended, including without
limitation by that certain Waiver and Amendment to Loan and Security Agreement
dated as of April 29, 2004, that certain Second Amendment to Loan and Security
Agreement dated as of July 8, 2004, those certain bilateral letter agreements
dated December 6, 2004, February 6, 2005 and March 10, 2005, that certain Third
Amendment to  Loan and Security Agreement
dated as of April 20, 2005, that certain Fourth Amendment to Loan and Security
Agreement dated as of July 11, 2005 and that certain Fifth Amendment to Loan
and Security Agreement dated as of August 30, 2005, the “Agreement”).  The parties desire to amend the Agreement in
accordance with the terms of this Amendment.

NOW, THEREFORE, the parties agree as follows:

1.                   
The following definitions are
added to Section 1.1 of the Agreement in the appropriate alphabetical order:

                "'Judgment'
means the judgment entered against Borrower for Six Million One Hundred Sixty
Thousand Dollars ($6,160,000) in compensatory damages, on a joint and several
basis with an affiliate of one of Borrower’s investors, and for Five Million
Dollars ($5,000,000) in punitive damages in favor of Santa Fe Technologies,
Inc. by the Albuquerque District Court in connection with Case Number
D-202-CV-9907715." 

                "'Lawsuit'
means the lawsuit identified as Case Number D-202-CV-9907715 brought in
Albuquerque District Court against Borrower, and all appeals and other
proceedings related thereto."

2.                   
The first clause of Section 6.8 of
the Agreement  is hereby amended to read in
its entirety as  follows:

"6.8         Losses/Profits.  Borrower shall not suffer a net loss
(excluding (a) non-cash accrued warrant expense and (b) a one-time
accrual made in connection with the Judgment in an aggregate amount not to
exceed Eight Million One Hundred Thousand Dollars ($8,100,000) ("Reserve
Amount"); which Reserve Amount may be used by Borrower only to make
payments to (i) satisfy the Judgment, (ii) settle the Lawsuit or (iii) pay or
post any appeal bond required to be paid or posted by Borrower in connection
with an appeal of the Judgment) for the three month period ending on the
following months in excess of the loss set forth opposite such month:"

3.                   
A new Section 7.13 is hereby added
to the Agreement to read in its entirety as follows:

                "7.13       Cash Payments in Connection with the
Lawsuit.  Make any cash payment in
connection with the Lawsuit in excess of Eight Million One Hundred Thousand
Dollars ($8,100,000) in the aggregate, including without limit payments made in
connection with settlement of the Lawsuit, the Judgment or an appeal bond in
connection with an appeal of the Judgment (excluding, however, cash payments made
in connection with legal fees and expenses)."

4.                   
Subject to the satisfaction of the
terms and conditions set forth herein, Bank hereby waives any Event of Default
under Section 8.8 of the Agreement that may arise from the Judgment remaining
unsatisfied or unstayed for a period greater than 30 days.

1

5.                   
Bank expressly reserves all of its
various rights, remedies, powers and privileges under the Agreement, the other
Loan Documents and applicable laws, including without limitation those arising
out of the Judgment.

6.                   
Bank's address for notices set
forth in Section 10 of the Agreement is hereby amended to read in its entirety
as follows:

	
   

  	
  "If to Bank:

  	
  Comerica Bank

  	
   

  
	
   

  	
   

  	
  11921 Freedom Drive, Suite 920

  
	
   

  	
   

  	
  Reston, VA 20190

  
	
   

  	
   

  	
  Attn: Elizabeth Kinsey

  
	
   

  	
   

  	
  FAX: (703) 467-9308"

  

7.                   
Unless otherwise defined, all
initially capitalized terms in this Amendment shall be as defined in the
Agreement.  The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power, or remedy of Bank under the
Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the
continuing effectiveness of all promissory notes, guaranties, security
agreements, mortgages, deeds of trust, environmental agreements, and all other
instruments, documents and agreements entered into in connection with the
Agreement.

8.                   
Borrower represents and warrants
that no Event of Default has occurred and is continuing, except to the extent
that the Reserve Amount referred to in Section 2 of this Amendment would
constitute an Event of Default.

9.                   
This Amendment may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.

10.                
Within thirty (30) days of the
date of this Amendment, Borrower shall cause the Affirmation of Subordination
and Intercreditor Agreement attached hereto to be executed and delivered to
Bank.

11.                
Within fifteen (15) days of the
date of this Amendment, Borrower shall deliver a Certificate of the Secretary
of Borrower with respect to incumbency and resolutions of Borrower authorizing
the execution and delivery of this Amendment, which Certificate and underlying
resolutions shall be in form and substance reasonably acceptable to Bank.

12.                
As a condition to the
effectiveness of this Amendment, Bank shall have received, in form and
substance satisfactory to Bank, the following:

(a)                
this Amendment, duly executed by
Borrower;

(b)                
all Bank Expenses incurred through
the date of this Amendment,  which expenses
may be debited from Borrower's accounts; and

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

13.                
This Amendment may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.

 

[Signature page follows] 

2

                IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.

	
   

  	
  TRAFFIC.COM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

3

AFFIRMATION OF
SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS AFFIRMATION OF SUBORDINATION AND INTERCREDITOR
AGREEMENT is made as of _________________, 2005, by the undersigned creditor
and its agent (collectively, “Creditor”) and Comerica Bank (“Bank”).

RECITALS

TRAFFIC.COM, INC. (“Borrower”) and Bank are parties to
that certain Loan and Security Agreement dated as of December 7, 2003, as
amended, including without limitation by that certain Waiver and Amendment to
Loan and Security Agreement dated as of April 29, 2004, those certain bilateral
letter agreements dated December 6, 2004, February 6, 2005 and March 10, 2005,
that certain Third Amendment to  Loan and
Security Agreement dated as of April 20, 2005, that certain Fourth Amendment to
Loan and Security Agreement dated as of July 11, 2005 and that certain Fifth
Amendment to Loan and Security Agreement dated as of August 30, 2005  (collectively, the “Loan Agreement”).  Borrower and Bank propose to enter into a Sixth
Amendment to Loan and Security Agreement dated as of the date hereof (the
“Amendment”), which amends the Maximum Losses/Minimum Profits covenant set
forth in the Loan Agreement and adds a 
provision to Article 7 (Negative Covenants) related to the lawsuit
brought against Borrower in Albuquerque District Court with Case Number
D-202-CV-9907715.  Creditor and Bank
executed a  Subordination and
Intercreditor Agreement dated as of December 7, 2003 (the “Intercreditor
Agreement”).  Bank has agreed to enter
into the Amendment provided, among other things,  that Creditor consents to the entry by
Borrower into the Amendment and agrees that the Intercreditor Agreement will
remain effective.

AGREEMENT

NOW, THEREFORE, Creditor agrees as follows:

1.                   
Creditor consents to the execution,
delivery and performance by the Borrower of the Amendment and the modifications
to the Loan Agreement affected by the Amendment. The Intercreditor Agreement
shall remain in full force and effect with respect to all of Borrower’s
obligations to Bank, under the Loan Agreement as modified by the Amendment, and
otherwise.

2.       
                        Bank and Creditor each affirm
their respective obligations under the Intercreditor Agreement.

3.                   
Unless otherwise defined,
capitalized terms in this Affirmation shall have the meaning assigned in the
Intercreditor Agreement.  This
Affirmation may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one instrument.

 

1

IN WITNESS WHEREOF, the undersigned have executed this
Affirmation of Subordination and Intercreditor Agreement as of the first date
above written.

	
  “Bank”

  	
   

  	 

	
   

  	
   

  	
   

  
	
  COMERICA BANK

  	
   

  	 

				

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  
	
  “Creditor”

  	
   

  	 

 

	
  COLUMBIA PARTNERS L.L.C., INVESTMENT MANAGEMENT, 

  successor in interest to Potomac Asset Management Company, Inc. 

  
	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Title:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

 

	
  NATIONAL ELECTRIC BENEFIT FUND

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: COLUMBIA PARTNERS L.L.C., INVESTMENT MANAGEMENT, its Authorized
  Signatory

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

	
  Acknowledged by:

  	
   

  
	
   

  	
   

  
	
  “Borrower”

  	
   

  
	
   

  	
   

  
	
  TRAFFIC.COM, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

2

QuickLinks

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

RECITALS

EXHIBIT D COMPLIANCE CERTIFICATE

AFFIRMATION OF SUBORDINATION AND INTERCREDITOR AGREEMENT

RECITALS

AGREEMENTQuickLinks
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Exhibit 10.1    
    

 
 

AMENDMENT ONE TO REVOLVING CREDIT AGREEMENT    
    

        THIS AMENDMENT ONE TO REVOLVING CREDIT AGREEMENT (this "Amendment") dated as of August 30, 2005, by and
between EDISON MISSION MARKETING & TRADING, INC., a California corporation, as borrower ("Borrower"), and MIDWEST GENERATION, LLC, a
Delaware limited liability company, as lender ("Lender"). 

        WHEREAS,
the Borrower and the Lender entered into a Revolving Credit Agreement dated as of April 27, 2004 (the "Credit Agreement"); 

        WHEREAS,
the Borrower has requested that the Lenders increase the amount of loans permitted to be made under the Credit Agreement; and 

        WHEREAS,
Lender is willing to agree to the amendments provided for in this Amendment on the terms and conditions hereof. 

        ACCORDINGLY,
the parties hereto agree as follows: 

        Section 1.    Definitions.    Except as otherwise defined in this Amendment, terms defined in the Credit
Agreement are used herein (and in the introductions and recitals hereto) as defined therein. 

        Section 2.    Amendment to the Credit Agreement.    The Credit Agreement shall hereby be amended as follows: 

        (a)   Section 2.1
of the Credit Agreement is hereby amended and restated in its entirety as follows: 

Borrowings/Letters
of Credit. From time to time on any day occurring prior to the Termination Date, Lender shall make loans to Borrower (each a "Revolving
Loan"), and/or cause to be issued letters of credit on behalf of Borrower (each a "Letter of Credit") in the amounts requested
in writing by a Borrower's Representative; provided that (i) the aggregate amount of Revolving Loans and Letters of Credit outstanding shall not
at any time exceed $500,000,000 (the "Revolver Commitment") and (ii) Lender shall not be required to make any such loan or cause the issuance of
such letters of credit unless doing so would constitute the provision of Permitted Marketing Support by Lender.    Borrower may from time to time borrow, prepay, in whole or in part, and
reborrow Revolving Loans and/or request the cancellation or reissuance of Letters of Credit. Simultaneously herewith, borrower shall execute a promissory note for Revolving Loans in form and substance
substantially similar to Exhibit A hereto or otherwise in form and substance as is agreed by the parties hereto (the
"Revolver Note"), in either case in the principal amount of the Revolver Commitment. 

        (b)   The
form of Note attached as Exhibit A to the Credit Agreement is hereby amended and restated in its entirety as set forth in Exhibit A to this Amendment.
Borrower shall execute and deliver to Lender a new promissory note in the form of Exhibit A to this Amendment (the "Replacement Note"), whereupon Lender shall (a) update the grid of the
Replacement Note to reflect all Borrowings then in place under the Credit Agreement; and (b) cancel and return to Borrower the Note previously executed in connection with the Credit Agreement. 

        Section 3.    Miscellaneous.    Except as expressly amended hereby, all of the terms and provisions of the
Credit Agreement are and shall remain unchanged and in full force and effect. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. This Amendment shall be governed by, and construed in accordance with, the law of the State of
New York. 

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

	 	 	EDISON MISSION MARKETING & TRADING, INC.
	

 	
 	

By:	
 	

/s/ Paul Jacob
 Name: Paul Jacob

Title: President
	
 	
 	

MIDWEST GENERATION, LLC,
	

 	
 	

By:	
 	

/s/ Jim Scilacci
 Name: Jim Scilacci

Title: Senior Vice President and Chief Financial Officer

 
 

EXHIBIT A
  to Credit Agreement

 
 

[FORM OF]
  NOTE    
    

	$500,000,000	 	[DATE]

        FOR
VALUE RECEIVED, the undersigned, EDISON MISSION MARKETING TRADING, INC., a California corporation ("Borrower"), promises to pay
to the order of MIDWEST GENERATION, LLC, a Delaware limited liability company ("Lender"), on or before the Termination Date, the principal sum of
$500,000,000 or such lesser amount which Lender advances to Borrower from time to time pursuant to that certain Revolving Credit Agreement, dated as of April 27, 2004, as amended from time to
time (the "Revolving Credit Agreement"), by and between Borrower and Lender. All requests by Borrower for advances under this Note shall be made in such
manner and form and with such prior notice as prescribed in the Revolving Credit Agreement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Revolving
Credit Agreement. 

        Borrower
also promises to pay to Lender the amounts specified in Section 2.4 of the Revolving Credit Agreement. Payments of such amounts and of principal are to be in Dollars in
same day or immediately available funds to the account designated in a writing delivered by Lender to Borrower. 

        This
Note evidences Indebtedness incurred under the Revolving Credit Agreement to which reference is made for a statement of the terms and conditions on which Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. 

        The
Borrower hereby irrevocably authorizes the Lender to make (or cause to be made) appropriate notations on the grid attached to this Note (or on any continuation of such grid), which
notations, if made, shall evidence, inter alia, the date of, the outstanding principal balance of the Revolving Loans evidenced hereby. Such notations shall be rebuttable presumptive evidence of the
information so set forth; provided, however, that the failure of Lender to make any such notations shall not limit or otherwise affect any obligations of Borrower. 

        All
parties hereto, whether as makers, endorsers or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. 

        If
any payment on this Note becomes due and payable on a date which is not a Business Day, such payment shall be made on the next succeeding Business Day. 

        THIS
NOTE HAS BEEN DELIVERED IN NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.   

	 	 	EDISON MISSION MARKETING & TRADING, INC.
	

 	
 	

By:	
 	

    
 Name:

Title:

 
 

REVOLVING LOANS AND PRINCIPAL PAYMENTS    
    

	Date
 
	 	Amount of

Revolving Loan
	 	Amount of

Principal Repaid
	 	Unpaid Principal

Balance
	 	Notation Made By

	 	 	 	 	 	 	 	 	 

QuickLinks

Exhibit 10.1

AMENDMENT ONE TO REVOLVING CREDIT AGREEMENT

EXHIBIT A to Credit Agreement

[FORM OF] NOTE

REVOLVING LOANS AND PRINCIPAL PAYMENTS

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