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Exhibit 10.11  

 
  LOAN AND SECURITY AGREEMENT    
    

        THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of
the Effective Date between SILICON VALLEY BANK, a California corporation and with a loan production office located at One Newton Executive Park, Suite
200, 2221 Washington Street, Newton, Massachusetts 02462 ("Bank"), and EQUALLOGIC, INC., a
Delaware corporation ("Borrower"), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 

        1    ACCOUNTING AND OTHER TERMS    

        Accounting
terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein. 

        2    LOAN AND TERMS OF PAYMENT    

        2.1    Promise to Pay.    Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all
Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement. 

        2.1.1    Revolving Advances.    

        (a)    Availability.    Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding
the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent
herein. 

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

        2.1.2    Letters of Credit Sublimit.    

        (a)   As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower's account. The face amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Five Million Dollars ($5,000,000.00), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.3 and
2.1.4. Such aggregate amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. If, on the Revolving Line Maturity Date, there are any
outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of
Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank's standard Application and Letter of Credit Agreement (the
"Letter of Credit Application"). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably
request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower's account or by Bank's
interpretations of any Letter of Credit issued by Bank for Borrower's account. 

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

 

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

        (d)   To
guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the
"Letter of Credit Reserve") under the Revolving Line in an amount equal to ten percent (10%) of the face amount of such Letter of Credit. Upon five
(5) Business Days notice to the Borrower, and after consultation with the Borrower, the amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for
fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains
outstanding. 

        2.1.3    Foreign Exchange Sublimit.    As part of the Revolving Line, Borrower may enter into foreign exchange
contracts with Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a "FX Forward Contract")
on a specified date (the "Settlement Date"). FX Forward Contracts shall have a Settlement Date of at least one (1) FX Business Day after the
contract date and shall be subject to a reserve of ten percent (10%) of each outstanding FX Forward Contract in a maximum aggregate amount equal to Five Million Dollars ($5,000,000.00) (the
"FX Reserve"), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.4. The aggregate amount of FX Forward Contracts at any one time
may not exceed ten (10) times the amount of the FX Reserve. The obligations of Borrower relating to this section may not exceed the Availability Amount. 

        2.1.4    Cash Management Services Sublimit.    Borrower may use up to Five Million Dollars ($5,000,000.00) (the
"Cash Management Services Sublimit"), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.3, of the Revolving Line for Bank's cash
management services which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in Bank's various cash management services agreements
(collectively, the "Cash Management Services"). Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash
Management Services will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances. 

        2.2    Overadvances.    If, at any time, the Credit Extensions under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the
lesser of either (a) the Revolving Line or (b) the Borrowing Base, Borrower shall immediately pay to Bank in cash such excess. 

        2.3    Payment of Interest on the Credit Extensions.    

        (a)    Interest Rate.    Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line
shall accrue interest at a floating per annum rate equal to one and three quarters of one percentage points (1.75%) above the Prime Rate, which interest shall be payable monthly in accordance with
Section 2.3(f) below; provided, however that upon Borrower's provision of evidence to Bank that Borrower's Tangible Net Worth is greater than Seven Hundred Fifty Thousand Dollars ($750,000.00),
then the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one half of one percentage point (0.50%) above the Prime Rate and for so long
as Borrower's Tangible Net Worth exceeds Seven Hundred Fifty Thousand Dollars ($750,000.00). 

        (b)    Default Rate.    Immediately upon the occurrence and during the continuance of an Event of Default, Obligations
shall bear interest at a rate per annum which is three percentage points 

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above
the rate effective immediately before the Event of Default (the "Default Rate"). Payment or acceptance of the increased interest rate provided in
this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 

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

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

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

        (f)    Payments.    Unless otherwise provided, interest is payable monthly on the first calendar day of each month.
Payments of principal and/or interest received after 12:00 noon Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue to accrue. 

        2.4    Fees.    Borrower shall pay to Bank: 

        (a)    Commitment Fee.    A fully earned, non-refundable commitment fee of Fifty Thousand Dollars is due
on the Effective Date, and payable on the earlier of: (i) quarterly payments in the amount of Twelve Thousand Five Hundred Dollars ($12,500.00) each, beginning on December 31, 2005, and
on the last day of each of the following three quarters; (ii) the occurrence of an Event of Default; (iii) the Revolving Line Maturity Date; or (iv) the termination of this
Agreement by the Borrower; 

        (b)    Letter of Credit Fee.    Bank's customary fees and expenses for the issuance or renewal of Letters of Credit,
including, without limitation, a Letter of Credit Fee of two percent (2.0%) per annum of the face amount of each Letter of Credit issued, upon the issuance, each anniversary of the issuance, and the
renewal of such Letter of Credit; 

        (c)    Unused Revolving Line Facility Fee.    A fee (the "Unused Revolving Line Facility
Fee"), payable quarterly, in arrears, on a calendar year basis, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the
Revolving Line, as reasonably determined by Bank. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this
Section notwithstanding any termination of the Agreement or the suspension or termination of Bank's obligation to make loans and advances hereunder; and 

        (d)    Bank Expenses.    All Bank Expenses (including reasonable attorneys' fees and expenses, plus expenses, for
documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. 

        2.5    Lockbox.    Borrower shall establish a lockbox for all accounts receivable within sixty (60) days of the
Closing Date. 

        3    CONDITIONS OF LOANS    

        3.1    Conditions Precedent to Initial Credit Extension.    Bank's obligation to make the initial Credit Extension is
subject to the condition precedent that Bank shall have received, in form and 

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substance
satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation: 

        (a)   Duly
executed original signatures to the Loan Documents to which it is a party; 

        (b)   Duly
executed original signatures to the Control Agreement(s); 

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

        (d)   Duly
executed original signatures to the completed Borrowing Resolutions for Borrower; 

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

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

        (g)   establishment
of a lockbox for all accounts receivable; 

        (h)   Borrower
shall have delivered a legal opinion of Borrower's counsel dated as of the Effective Date together with the duly executed original signatures thereto; 

        (i)    Borrower
shall have delivered evidence satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Bank; and 

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

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

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

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

        (c)   in
Bank's sole discretion, there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of
repayment of the Obligations, or there has not been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank. 

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        3.3    Covenant to Deliver.    

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

        3.4    Procedures for Borrowing.    Subject to the prior satisfaction of all other applicable conditions to the making
of an Advance set forth in this Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail,
facsimile, or telephone by 12:00 noon Eastern time on the Funding Date of the Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or
facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer
or designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which have become due. 

        4    CREATION OF SECURITY INTEREST    

        4.1    Grant of Security Interest.    Borrower hereby grants Bank, to secure the payment and performance in full of
all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is
and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank's Lien under this
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank. 

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

        4.2    Authorization to File Financing Statements.    Borrower hereby authorizes Bank to file financing statements,
without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank's interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower
or any other Person, shall be deemed to violate the rights of Bank under the Code. 

        5    REPRESENTATIONS AND WARRANTIES    

        Borrower
represents and warrants as follows: 

        5.1    Due Organization and Authorization.    Borrower and each of its Subsidiaries are duly existing and in good
standing, as Registered Organizations in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of
their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower's
business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled "Perfection Certificate". Borrower represents and warrants to Bank that 

5

 

(a) Borrower's
exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower's organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower's place of business, or, if more than one, its chief executive office as well as Borrower's mailing address (if different
than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or
type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is
accurate and complete in all material respects. If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with
Borrower's organizational identification number. 

        The
execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's organizational documents, nor constitute an event of default
under any material agreement by which Borrower is bound. As of the date hereof, Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default would
reasonably be expected to have a material adverse effect on Borrower's business. 

        5.2    Collateral.    Borrower has good title to, has rights in, and the power to transfer each item of the Collateral
upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. As of the date hereof, and as of the date of any future request for a Credit Extension, or
Compliance Certificate, Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank in
connection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein. The Accounts are bona fide, existing
obligations of the Account Debtors. 

        The
Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the
Collateral valued in excess of Fifty Thousand Dollars ($50,000.00), in the aggregate, shall be maintained at locations other than as provided in the Perfection Certificate or as Borrower has given
Bank notice pursuant to Section 7.2. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee in excess of Fifty
Thousand Dollars ($50,000.00), in the aggregate, then Borrower will first receive the written consent of Bank and such bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion. 

        Except
as noted on the Perfection Certificate, Borrower is not a party to, nor is bound by, any license or other agreement with respect to which Borrower is the licensee that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's interest in such license or agreement or any other property. Borrower shall provide written notice to Bank within ten
(10) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower's business or financial condition (other than
over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for all such licenses or contract rights to be deemed "Collateral" and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement (such consent or authorization may include a licenser's agreement to a contingent assignment of the license to Bank if Bank determines that is necessary in its
good faith judgment), whether now existing or entered into in the future. Notwithstanding the foregoing, the terms of this paragraph shall not apply to, and the Collateral shall not include, license
agreements solely for the use of intellectual property of a third party, with respect to which license Borrower is the licensee. 

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

        5.4    Litigation.    As of the date hereof, and as of the date of any future request for a Credit Extension or
Compliance Certificate, there are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving
more than Two Hundred Fifty Thousand Dollars ($250,000.00). 

        5.5    No Material Deviation in Financial Statements.    All consolidated financial statements for Borrower and any of
its Subsidiaries delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations (for the period presented,
subject to year-end adjustments). There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements
submitted to Bank. 

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

        5.7    Regulatory Compliance.    Borrower is not an "investment company" or a company "controlled" by an "investment
company" under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve
Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which would
reasonably be expected to have a material adverse effect on its business. None of Borrower's or any of its Subsidiaries' properties or assets has been used by Borrower or any Subsidiary or, to the
best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have
obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to obtain or make such consents, declarations, notices or filings would not reasonably be expected to have a material adverse effect on its business. 

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

        5.9    Tax Returns and Payments; Pension Contributions.    Borrower has timely filed all required tax returns and
reports, and Borrower and its Subsidiaries have timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted,
(b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a "Permitted Lien". Borrower 

7

 

is
unaware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

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

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

        6    AFFIRMATIVE COVENANTS    

        Borrower
shall do all of the following: 

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

        6.2    Financial Statements, Reports, Certificates.    

        (a)   Deliver
to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no
later than one hundred twenty (120) days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion; (iii) in the event that Borrower becomes
subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, within five (5) days of filing or delivery, copies of all statements, reports and notices made
available to Borrowers security holders or to any holden of Subordinated Debt; all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission or a link thereto on Borrower's or another website on the Internet; (iv) projections, as and when approved by the Board; (v) a prompt report of any legal actions pending or
threatened against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00) or more; and
(vi) budgets, sales projections, operating plans and other financial information reasonably requested by Bank. 

        (b)   Within
thirty (30) days after the last day of each month, deliver to Bank a duly completed Borrowing Base Certificate signed by a Responsible Officer, with aged
listings of accounts receivable (by invoice date). 

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        (c)   Within
thirty (30) days after the last day of each month, deliver to Bank with the monthly financial statements, a duly completed Compliance Certificate signed by
a Responsible Officer setting forth calculations showing compliance with the financial covenants set forth in this Agreement. 

        (d)   Allow
Bank to audit Borrower's Collateral at Borrower's expense. Such audits shall be conducted no more often than once every twelve (12) months unless a Default
or an Event of Default has occurred and is continuing. Notwithstanding the foregoing, the Initial Audit shall be completed within sixty (60) days of the Effective Date. 

        (e)   Within
thirty (30) days after the last day of each month, deliver to Bank a Deferred Revenue report, in form acceptable to Bank. 

        6.3    Taxes; Pensions.    Make, and cause each of its Subsidiaries to make, timely payment of all foreign, federal,
state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5.9 hereof) and shall deliver to Bank, on demand,
appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms. 

        6.4    Insurance.    Keep its business and the Collateral insured for risks and in amounts standard for companies in
Borrower's industry and location and as Bank. may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Bank. All property
policies shall have a loss payable endorsement showing Bank as an additional loss payee and waive subrogation against Bank, and all liability policies shall show, or have endorsements showing, Bank as
an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the insurer must give Bank at least thirty (30) days notice before canceling,
amending, or declining to renew its policy. At Bank's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at
Bank's option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy up to $250,000.00, in the aggregate, toward the replacement or repair of destroyed
or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral
in which Bank has been granted a first priority security interest, and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish
any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the
policies Bank deems prudent. 

        6.5    Operating Accounts.    

        (a)   Maintain
all of its and its Subsidiaries' depository, operating and securities accounts with Bank and Bank's affiliates (to the extent available for non-U.S.
financial accounts for foreign offices or Subsidiaries). Notwithstanding the foregoing, Borrower and its Subsidiaries may maintain up to a maximum amount of Two Million Dollars ($2,000,000.00) in the
aggregate, with non-U.S. financial accounts (the "Permitted Accounts") 

        (b)   Provide
Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or its
Affiliates, with the exception of the Permitted Accounts. In addition, for each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account
to perfect Bank's Lien in 

9

 

such
Collateral Account in accordance with the terms hereunder. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower's employees and identified to Bank by borrower as such. 

        6.6    Financial Covenants.    

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

        (a)    Ajdusted Quick Ratio.    To be tested as of the last day of each month, Borrower shall maintain a ratio of
Quick Assets to Current Liabilities minus Deferred Revenue of greater than or equal to: (i) 1.25 to 1.0 for the months ending September 30, 2005 through and including February 28,
2006; (ii) 1.0 to 1.0 for
the months ending March 31, 2006 through May 31, 2006; and (iii) 1.25 to 1.0 for the month ending June 30, 2006 and as of the last day of each month thereafter. 

        (b)    Minimum Revenue.    To be tested on the last day of each quarter, Borrower shall maintain Minimum Revenue of at
least: (i) Six Million Two Hundred Six Thousand One Hundred Fifty One Dollars ($6,206,151.00) as of the quarter ending September 30, 2005; (ii) Six Million Six Hundred Thirty Nine
Thousand Three Hundred Sixty Two Dollars ($6,639,362.00) as of the quarter ending December 31, 2005; (iii) Ten Million One Hundred Eighty Nine Thousand Two Hundred Thirty One Dollars
($10,189,231.00) as of the quarter ending March 31, 2006; and (iv) Twelve Million Two Hundred Sixty-Six Thousand Six Hundred Fifteen Dollars ($12,266,615.00) as of the
quarter ending June 30, 2006 and as of the last day of each quarter thereafter. 

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

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

        7    NEGATIVE COVENANTS    

        Borrower
shall not do any of the following without Bank's prior written consent: 

        7.1    Dispositions.    Convey, sell, lease, transfer or otherwise dispose of (collectively,  "Transfer"), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in
the ordinary course of business; (b) of worn-out, excess or obsolete Equipment; (c) in connection with Permitted Liens and Permitted Investments; and (d) of
non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business. Borrower shall not enter into an agreement with any Person other than
Bank which restricts the subsequent granting of a security interest in the Intellectual Property owned by Borrower. 

        7.2    Changes in Business, Management, Ownership, or Business Locations.    (a) Engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve;
or (c) (i) if any Key Person ceases to hold such office with Borrower or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower
immediately prior to the first such transaction own less than 20.0% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other
than by the sale of Borrower's equity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the 

10

 

venture
capital investors prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or
business locations, including warehouses (unless such new offices or business locations contain less than One Hundred Thousand Dollars ($100,000.00) in Borrower's assets or property),
(2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization. 

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

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

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

        7.6    Maintenance of Collateral Accounts.    Maintain any Collateral Account except pursuant to the terms of
Section 6.5(b) hereof. 

        7.7    Distributions; Investments.    (a) Directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, provided that
(i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may
pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does
not exist at the time of such repurchase
and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate of $250,000.00 per fiscal year. 

        7.8    Transactions with Affiliates.    Directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms 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.    (a) Make or permit any payment on any Subordinated Debt, except under the terms of
the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Bank. 

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

11

 

Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 

        8    EVENTS OF DEFAULT    

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

        8.1    Payment Default.    Borrower fails to pay any Obligation within three (3) Business Days after such
Obligations are due and payable. During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period); 

        8.2    Covenant Default.    

        (a)   Borrower
fails or neglects to perform any obligation in Sections 6.2, 6.5, or 6.6, or violates any covenant in Section 7; or 

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

        8.3    Material Adverse Change.    A Material Adverse Change occurs; 

        8.4    Attachment.    (a) Any material portion of Borrower's assets is attached, seized, levied on, or comes
into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process upon Borrower seeking to attach, by trustee or
similar process, any funds of Borrower on deposit with Bank, or any entity under control of Bank (including a subsidiary); (c) Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business; (d) a judgment or other claim in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) becomes a Lien on any of Borrower's assets; or
(e) a notice of lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are
not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure period); 

        8.5    Insolvency.    (a) Borrower is unable to pay its debts (including trade debts) as they become due or
otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within
forty-five (45) days (but no Credit Extensions shall be made while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is
dismissed); 

12

   
        8.6    Other Agreements.    There is a default in any agreement for borrowed money to which Borrower or any
Guarantor
is a party with a third party or parties resulting in the acceleration of the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000.00); 

        8.7    Judgments.    A judgment or judgments for the payment of money in an amount, individually or in the aggregate,
of at least Two Hundred Fifty Thousand Dollars ($250,000.00) (not covered by independent third-party insurance) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a
period of ten (10) days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); 

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

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

        9    BANK'S RIGHTS AND REMEDIES    

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

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

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

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

        (d)   terminate
any FX Contracts; 

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

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

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

        (h)   ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right 

13

 

to
use, without charge, Borrower's labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section,
Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit; 

        (i)    deliver
a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral; 

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

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

        9.2    Power of Attorney.    Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower's name on any checks or other forms of
payment or security; (b) sign Borrower's name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the
Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower's insurance policies; (e) pay, contest
or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same;
and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred until all Obligations have been
satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's attorney in fact, and all of Bank's rights and powers, coupled
with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions terminates. 

        9.3    Accounts Verification; Collection.    Upon the occurrence and during the continuation of an Event of Default,
Bank may notify any Person owing Borrower money of Bank's security interest in such funds and verify the amount of such account. After the occurrence of an Event of Default, any amounts received by
Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank, Borrower shall immediately deliver such receipts to Bank in the form received from the Account Debtor, with proper
endorsements for deposit. 

        9.4    Protective Payments.    If Borrower fails to obtain the insurance called for by Section 6.5 or fails to
pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank will make reasonable efforts to
provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in
the future or Bank's waiver of any Event of Default. 

        9.5    Application of Payments and Proceeds.    Unless an Event of Default has occurred and is continuing, Bank shall
apply any funds in its possession, whether from Borrower account balances, payments, or proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, first, to
Bank Expenses, including without limitation, the reasonable costs, expenses, liabilities, obligations and attorneys' fees incurred by Bank in the exercise of its rights under this 

14

 

Agreement;
second, to the interest due upon any of the Obligations; and third, to the principal of the Obligations and any applicable fees and other charges, in such order as Bank shall determine in
its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If an Event of Default has occurred and
is continuing, Bank may apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall determine in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower
shall remain liable to Bank for any deficiency. If Bank, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at
any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor. 

        9.6    Bank's Liability for Collateral.    So long as Bank complies with reasonable banking practices regarding the
safekeeping of the Collateral in the possession or under the control of Bank and Section 9-207 of the Code, Bank shall not be liable or responsible for (a) the safekeeping of
the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person. Borrower bears all risk of loss, damage or destruction of the Collateral. 

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

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

        10    NOTICES    

        All
notices, consents, requests, approvals, demands, or other communication (collectively, "Communication") by any party to this Agreement
or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the U.S. mail, fast class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile
transmission; (e) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email 

15

 

address
indicated below. Bank or Borrower may change its address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10. 

	If to Borrower:	 	EqualLogic, Inc.

9 Townsend West

Nashua, New Hampshire 03063

Attn: Chief Financial Officer

Fax: (603) 579-6910

Email: pbernard@equillogic.com
	

If to Bank:	
 	

Silicon Valley Bank

One Newton Executive Park, Suite 2000

2221 Washington Street

Newton, Massachusetts 02462

Attn: Mr. Mark Gallagher

Fax: (617) 969-4395

Email: MGallagh@svbank.com
	

with a copy to:	
 	

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attn: David A. Ephraim, Esquire

Fax: (617) 880-3456

Email: DEphraim@riemerlaw.com

        11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER    

        Massachusetts
law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts
in Massachusetts; provided, however, that if for any reason Bank cannot avail itself of such courts in the Commonwealth of Massachusetts, Borrower accepts jurisdiction of the courts and venue in Santa
Clara County, California. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK
DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK'S RIGHTS AGAINST BORROWER OR ITS PROPERTY. 

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

        12    GENERAL PROVISIONS    

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

        12.2    Indemnification.    Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Bank harmless 

16

 

against:
(a) all obligations, demands, claims, and liabilities (collectively, "Claims") asserted by any other party in connection with the transactions contemplated by the Loan Documents; and
(b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising from transactions between Bank and Borrower (including reasonable attorneys' fees and expenses), except for
Claims and/or losses directly caused by Bank's gross negligence or willful misconduct. 

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

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

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

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

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

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

        12.9    Confidentiality.    In handling any confidential information, Bank shall exercise the same degree of care that
it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank's Subsidiaries or Affiliates in connection with their business with Borrower or Bank
(provided such entities agree to this provision or are otherwise bound by a confidentiality provision that protects proprietary information of third parties); (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts to obtain such prospective transferee's or purchaser's agreement to the terms of
this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank's regulators or as 

17

 

otherwise
required in connection with Bank's examination or audit; and (e) as Bank considers appropriate in exercising remedies under this Agreement. Bank's obligation under this paragraph
shall not apply with respect to confidential information that either: (i) is in the public domain or in Bank's possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 

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

        13    DEFINITIONS    

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

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

        "Account Debtor" is any "account debtor" as defined in the Code with such additions to such term as may hereafter be made. 

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

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

        "Agreement" is defined in the preamble hereof. 

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

        "Bank" is defined in the preamble hereof. 

        "Bank Expenses" are all audit fees and expenses, costs, and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings). 

        "Board" is Borrower's Board of Directors. 

        "Borrower" is defined in the preamble hereof 

18

 

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

        "Borrowing Base" is eighty percent (80.0%) of Eligible Accounts, as determined by Bank from Borrower's most recent Borrowing Base
Certificate; provided, however, following consultation with the Borrower, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions,
contingencies, or risks which, as determined by Bank, may adversely affect Collateral. 

        "Borrowing Base Certificate" is that certain certificate in the form attached hereto as  Exhibit C.

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

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

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

        "Cash Management Services" is defined in Section 2.1.4. 

        "Cash Management Services Sublimit" is defined in Section 2.1.4. 

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

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

        "Collateral Account" is any Deposit Account, Securities Account, or Commodity Account. 

19

 

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

        "Communication" is defined in Section 10. 

        "Compliance Certificate" is that certain certificate in the form attached hereto as  Exhibit D.

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

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

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

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

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

        "Default Rate" is defined in Section 2.3(b). 

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

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

        "Designated Deposit Account" is Borrower's deposit account, account number maintained with Bank. 

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

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

        "Eligible Accounts" are Accounts which arise in the ordinary course of Borrower's business that meet all Borrower's representations and
warranties in Section 5.3. Bank reserves the right, at any time and from time to time after the Effective Date following consultation with the Borrower, 

20

 

to
adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank agrees otherwise in writing, Eligible Accounts shall not include: 

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

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

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

        (d)   Accounts
owing from an Account Debtor, including Affiliates, whose total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the amounts
that exceed that percentage, unless Bank approves in writing; 

        (e)   Accounts
owing from an Account Debtor which does not have its principal place of business in the United States; 

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

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

        (h)   Accounts
for demonstration or promotional equipment, or in which goods are consigned, or sold on a "sale guarantees", "sale or return", "sale on approval", "bill and
hold", or other terms if Account Debtor's payment may be conditional; 

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

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

        (k)   Accounts
owing from an Account Debtor with respect to which Borrower has received deferred revenue (but only to the extent of such deferred revenue); 

        (l)    Accounts
for which Bank in its good faith business judgment, after consultation with the Borrower, determines collection to be doubtful; and 

        (m)  other
Accounts Bank deems ineligible in the exercise of its good faith business judgment, after consultation with the Borrower. 

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

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

        "Event of Default" is defined in Section 8. 

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

21

 

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

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

        "FX Forward Contract" is defined in Section 2.1.3. 

        "FX Reserve" is defined in Section 2.1.3. 

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

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

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

        "Initial Audit" shall be the receipt by Bank of the results of a complete audit of Borrower's Accounts, with results satisfactory to Bank
in its sole and absolute discretion. 

        "Key Person" is any of Borrower's Chief Executive Officer (currently Don Bulens), Chief Financial Officer (currently Paul Bernard), and
the Vice President of Operations and Business Development (currently Peter Hayden). 

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

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

        "Investment" is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person. 

22

 

        "Letter of Credit" means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity
or similar agreement on the part of Bank as set forth in Section 2.1.2. 

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

        "Letter of Credit Reserve" has the meaning set forth in Section 2.1.2(d). 

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

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

        "Material Adverse Change" is (a) a material impairment in the perfection or priority of Bank's Lien in the Collateral or in the
value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of
repayment of any portion of the Obligations; or (d) Bank determines, after inquiry and discussion with Borrower, if appropriate under the circumstances, based upon information available to it
and in its reasonable judgment, that there is a substantial likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding
financial reporting period. 

        "Minimum Revenue" shall be determined in accordance with GAAP. 

        "Obligations" are Borrower's obligation to pay when due any debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank
now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower's
duties under the Loan Documents. 

        "Operating Documents" are, for any Person, such Person's formation documents, as certified with the Secretary of State of such Person's
state of formation on a date that is no earlier than 30 days prior to the Effective Date, and its bylaws in current form, each of the foregoing with all current amendments or modifications
thereto. 

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

        "Perfection Certificate" is defined in Section 5.1. 

        "Permitted Accounts" is defined in Section 6.5(a). 

        "Permitted Indebtedness" is: 

        (a)   Borrower's
Indebtedness to Bank under this Agreement and the other Loan Documents; 

        (b)   Indebtedness
existing on the Effective Date and shown on the Perfection Certificate; 

        (c)   Subordinated
Debt; 

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

        (e)   extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (d) above, provided that the
principal amount thereof is 

23

 

not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 

        "Permitted Investments" are: 

        (a)   Investments
shown on the Perfection Certificate and existing on the Effective Date; 

        (b)   Cash
Equivalents; and 

        (c)   Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by
Borrower's Board of Directors. 

        "Permitted Liens" are: 

        (a)   Liens
existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents; 

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

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

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

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

        (f)    Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7. 

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

        "Prime Rate" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate. 

        "Quick Assets" is, on any date, Borrower's unrestricted cash maintained with Bank, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP. 

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

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

24

 

        "Revolving Line" is an Advance or Advances in an aggregate amount of up to Five Million Dollars ($5,000,000.00) outstanding at any time. 

        "Revolving Line Maturity Date" is the earliest of (a) January 19, 2007, or (b) the occurrence of an Event of Default. 

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

        "Settlement Date" is defined in Section 2.1.3. 

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

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

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

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

        "Transfer" is defined in Section 7.1. 

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

[Signature page follows.]

25

 

        WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the Commonwealth of Maachusetts as of the Effective Date. 

	BORROWER:	 	 
	

EQUALLOGIC, INC.	
 	

 
	

By	

/s/  PAUL M. BERNARD      
	
 	

 
	Name:	Paul M. Bernard
	 	 
	Title:	CFO
	 	 
	

BANK	
 	

 
	

SILICON VALLEY BANK	
 	

 
	

By	

/s/  [ILLEGIBLE]      
	
 	

 
	Name:	[Illegible]
	 	 
	Title:	Relationship Manager
	 	 
	Effective Date:	January 20, 2006
	 	 

[Signature
page to Loan and Security Agreement] 

26

EXHIBIT A  

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

        All
goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements (but excluding
license agreements solely for the use of intellectual property of a third party, with respect to which license Borrower is the licensee), franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, all certificates of deposit, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned
or hereafter acquired, wherever located; and 

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

        Notwithstanding
the foregoing, the Collateral does not include any of the following, whether now owned or hereafter acquired any copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing; provided, however, the Collateral shall include all Accounts, License and royalty
fees and other revenues, proceeds, or income arising out of or relating to any of the foregoing. 

        Pursuant
to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable Law, any applications therefor, whether
registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions,
and any claims for damage by way of any past, present, or future infringement of any of the foregoing, without Bank's prior written consent. 

EXHIBIT B  

 Loan Payment/Advance Request Form  

DEADLINE FOR SAME DAY PROCESSING IS NOON E.S.T.*  

	Fax To:	 	Date:	 
	 	 	 	

	

LOAN PAYMENT:  

EQUALLOGIC, INC.

	From Account #	 	 	To Account #	 
	 	
 (Deposit Account #)	 	 	
 (Loan Account #)
	Principal $	 	 	and/or Interest $	 
	 	
	 	 	

	Authorized Signature:	 	 	Phone Number:	 
	 	
	 	 	

	Print Name/Title:	 	 	 	 
	 	
	 	 	 
	

LOAN ADVANCE:  

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

	From Account #	 	 	To Account #	 
	 	
 (Loan Account #)	 	 	
 (Deposit Account #)
	Amount of Advance $	            
	 	 	 
	

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

Authorized Signature:	

 	
 	

Phone Number:	

 
	 	
	 	 	

	Print Name/Title:	 	 	 	 
	 	
	 	 	 
	

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be wired.
  Deadline for same day processing is noon, E.S.T. 

	Beneficiary Name:	 	 	Amount of Wire: $	 
	 	
	 	 	

	Beneficiary Bank:	 	 	Account Number:	 
	 	
	 	 	

	City and State:	 	 	 	 
	 	
	 	 	 

	

Beneficiary Bank Transit (ABA) #:	

 	
 	

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

 
	 	
	 	(For International Wire Only)	

	

Intermediary Bank:	

 	
 	

Transit (ABA) #:	

 
	 	
	 	 	

	

For Further Credit to:	

	

Special Instruction:	

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

Authorized Signature:	

 	
 	

2nd Signature (if required):	

 
	 	
	 	 	

	Print Name/Title:	 	 	Print Name/Title:	 
	 	
	 	 	

	Telephone #:	 	 	Telephone #:	 
	 	
	 	 	

	

	*
	Unless
otherwise provided for an Advance bearing interest at LIBOR. 

EXHIBIT C  

 BORROWING BASE CERTIFICATE  

Borrower:
EqualLogic, Inc.

Lender: Silicon Valley Bank

Commitment Amount: $5,000,000.00 

	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	 	$	 
	 	 	 	 	

	5.	 	Balance of 50% over 90 day accounts	 	$	 
	 	 	 	 	

	6.	 	Credit balances over 90 days	 	$	 
	 	 	 	 	

	7.	 	Concentration Limits	 	$	 
	 	 	 	 	

	8.	 	Foreign Accounts	 	$	 
	 	 	 	 	

	9.	 	Governmental Accounts	 	$	 
	 	 	 	 	

	10.	 	Contra Accounts	 	$	 
	 	 	 	 	

	11.	 	Promotion or Demo Accounts	 	$	 
	 	 	 	 	

	12.	 	Intercompany/Employee Accounts	 	$	 
	 	 	 	 	

	13.	 	Disputed Accounts	 	$	 
	 	 	 	 	

	14.	 	Deferred Revenue	 	$	 
	 	 	 	 	

	15.	 	Other (please explain on reverse)	 	$	 
	 	 	 	 	

	16.	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	 	$	 
	 	 	 	 	

	17.	 	Eligible Accounts (#3 minus #16)	 	$	 
	 	 	 	 	

	18.	 	ELIGIBLE AMOUNT' OF ACCOUNTS (80.0% of #17)	 	$	 
	 	 	 	 	

	

BALANCES	
 	
 	

 
	19.	 	Maximum Loan Amount	 	$	 
	 	 	 	 	

	20.	 	Total Funds Available [Lesser of #19 or #18]	 	$	 
	 	 	 	 	

	21.	 	Present balance owing on Line of Credit	 	$	 
	 	 	 	 	

	22.	 	Outstanding under Sublimits	 	$	 
	 	 	 	 	

	23.	 	RESERVE POSITION (#20 minus #21 and #22)	 	$	 
	 	 	 	 	

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

	 	 	 	BANK USE ONLY
	COMMENTS:	 	Received by:	    
 AUTHORIZED SIGNER
	 	 	 	Date:	    

	By:	    
 Authorized Signer	 	Verified:	    
 AUTHORIZED SIGNER
	Date:	    
	 	Date:	    

	 	 	 	Compliance Status:        Yes    No

EXHIBIT D  

 COMPLIANCE CERTIFICATE  

	TO:	SILICON VALLEY BANK	 	Date:	    

	FROM:	EQUALLOGIC, INC.	 	 	 

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

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

	Reporting Covenant
 
	 	Required
	 	Complies

	Monthly financial statements with Compliance Certificate	 	Monthly within 30 days	 	Yes    No
	Annual financial statement (CPA Audited)	 	FYE within 120 days	 	Yes    No
	l0-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes    No
	Borrowing Base Certificate, A/R Agings and Deferred Revenue Report	 	Monthly within 30 days	 	Yes    No
	Board Projections	 	Upon approval by Board	 	Yes    No
	Collateral Audit	 	Annually	 	Yes    No

	
Financial Covenant
 
	
 	

Required
	
 	

Actual
	
 	

Complies

	Minimum Adjusted Quick Ratio (monthly)	 	 	        :1.0	*	 	        :1.0	 	Yes    No
	Minimum Revenue (quarterly)	 	$	 	 	$	 	 	Yes    No

	*
	As
set forth in Section 6.6 of the Agreement. 

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

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

	

EQUALLOGIC, INC.	
 	
BANK USE ONLY
	

 	

 	
 	

Received by:	

    
 AUTHORIZED SIGNER
	By:	    
	 	Date:	    

	Name:	    
	 	Verified:	    
 AUTHORIZED SIGNER
	Title:	    
	 	Date:	    

	

 	

 	
 	

Compliance Status:        Yes    No

Schedule 1 to Compliance Certificate  

 Financial Covenants of Borrower  

Dated:

	I.	 	Adjusted Quick Ratio (Section 6.b(a))	 	$	 
	A.	 	Aggregate value of the unrestricted cash of Borrower at Bank	 	$	 
	B.	 	Aggregate value of the net billed accounts receivable of Borrower	 	$	 
	C.	 	Aggregate value of the Investments with maturities of fewer than 12 months of Borrower	 	$	 
	D.	 	Quick Assets (the sum of lines A through C)	 	$	 
	E.	 	Aggregate value of Obligations to Bank	 	$	 
	F.	 	Aggregate value of liabilities of Borrower (including all Indebtedness) that matures within one (1) year and current portion of Subordinated Debt permitted by Bank to be paid by Borrower	 	$	 
	G.	 	Current Liabilities (the sum of lines E and F)	 	$	 
	H.	 	Quick Ratio (line D divided by line G)	 	$	 
	To obtain actual ratio:	 	 	 
	A.	 	Value of Line I.D. (Quick Assets)	 	$	 
	B.	 	Value of Line I.G. (Current Liabilities)	 	$	 
	C.	 	Aggregate value of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue	 	$	 
	D.	 	Line B minus line C	 	$	 
	E.	 	Adjusted Quick Ratio (line A divided by line C)	 	$	 

Is
line E equal to or greater than            :l:00? 

No,
not in
compliance                                        
                  Yes, in compliance 

 
 

FIRST LOAN MODIFICATION AGREEMENT    
    

        This First Loan Modification Agreement (this "Loan Modification Agreement") is entered into as of January 18, 2007, by and between SILICON VALLEY BANK, a
California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton Executive Park,
Suite 200, 2221 Washington Street, Newton, Massachusetts 02462 ("Bank") and EQUALLOGIC, INC., a Delaware corporation with its chief executive office located at 9 Townsend
West, Nashua, New Hampshire 03063 ("Borrower"). 

        1.     DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS.    Among other indebtedness and obligations which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of January 20, 2006, evidenced by, among other documents, a certain Loan and Security Agreement
dated as of January 20, 2006, between Borrower and Bank (as amended, the "Loan Agreement"). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement. 

        2.     DESCRIPTION OF COLLATERAL.    Repayment of the Obligations is secured by the Collateral as described in the Loan
Agreement (together with any other collateral security granted to Bank, the "Security Documents"). 

        Hereinafter,
the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the "Existing Loan Documents". 

        3.     DESCRIPTION OF CHANGE IN TERMS.

A.
Modifications to Loan Agreement. 

1    The
Loan Agreement shall be amended by deleting the following definition appearing in Section 13.1 thereof: 

""Revolving Line Maturity Date" is the earliest of (a) January 19, 2007, or (b) the occurrence of an Event of Default." 

and
inserting in lieu thereof the following: 

""Revolving Line Maturity Date" is the earliest of (a) April 19, 2007, or (b) the occurrence of an Event of Default." 

        4.     FEES.    Borrower shall pay to Bank a modification fee equal to Twelve Thousand Five Hundred Dollars
($12,500.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents. 

        5.     RATIFICATION OF PERFECTION CERTIFICATE.    Borrower hereby ratifies, confirms and reaffirms, all and singular,
the terms and disclosures contained in a certain Perfection Certificate dated as of January 20, 2006 between Borrower and Bank, and acknowledges, confirms and agrees the disclosures and
information above Borrower provided to Bank in the Perfection Certificate has not changed, except as noted in the attached Exhibit A as of the date hereof. 

        6.     AUTHORIZATION TO FILE.    Borrower hereby authorizes Bank to file UCC financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to further perfect or protect Bank's interest in the Collateral, including a notice that any disposition of the
Collateral, by either the Borrower or any other Person, shall be deemed to violate the rights of the Bank under the Code. 

        7.     CONSISTENT CHANGES.    The Existing Loan Documents are hereby amended wherever necessary to reflect the changes
described above. 

        8.     RATIFICATION OF LOAN DOCUMENTS.    Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of
all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations. 

        9.     NO DEFENSES OF BORROWER.    Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses,
claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank,
whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder. 

        10.   CONTINUING VALIDITY.    Borrower understands and agrees that in modifying the existing Obligations, Bank is
relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms
of the Existing Loan Documents remain unchanged and in full force and effect. Bank's agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall
obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and
Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification
Agreement. 

        11.   COUNTERSIGNATURE.    This Loan Modification Agreement shall become effective only when it shall have been
executed by Borrower and Bank. 

[The remainder of this page is intentionally left blank]

        This
Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above. 

	BORROWER:	 	BANK:
	
EQUALLOGIC, INC.	
 	
SILICON VALLEY BANK
	

By:	

/s/ Richard S. Haak, Jr.
	
 	

By:	

/s/ Mark Gallagher

	Name:	Richard S. Haak, Jr.
	 	Name:	Mark Gallagher

	Title:	CFO
	 	Title:	SVP

 
 

Exhibit A—to First Loan Modification Agreement    
    

        The Perfection Certificate dated January 20, 2006 between Borrower and Bank is amended as follows: 

	1.(c)
	The
following is a list of all subsidiaries of the Company:

	•
	Equallogic
UK Ltd

	•
	Equallogic
Deutschland GmbH

	•
	Equallogic
BV

	1.(h)
	(4)  Other
 depository/operating accounts — 

        The
Company maintains a separate local operating account for each of its foreign subsidiaries: 

	•
	The
Royal Bank of Scotland, Newbury, Berks, UK

	•
	Hypo
Vereinsbank, Munich, Germany

	•
	ABN
AMRO Bank N.V., Amsterdam, The Netherlands

	1.(e)
	The
Company has approximately 110 spare parts depots worldwide with an average of $8600 worth of parts at each station. These depots are managed by 2 different
logistics providers and support our service agreement obligations. 

 
 

SECOND LOAN MODIFICATION AGREEMENT    
    

        This Second Loan Modification Agreement (this "Loan Modification Agreement") is entered into as of May 10, 2007, and effective as of April 18, 2007,
by and between SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One
Newton Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462 ("Bank") and EQUALLOGIC, INC., a Delaware corporation with its chief executive office located at 9 Townsend
West, Nashua, New Hampshire 03063 ("Borrower"). 

1.    DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS.    Among other indebtedness and obligations which may be owing by
Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of January 20, 2006, evidenced by, among other documents, a certain Loan and Security Agreement dated as
of January 20, 2006, between Borrower and Bank, as amended by a certain First Loan Modification Agreement dated as of January 18, 2007, between Borrower and Bank (as amended, the Loan
Agreement). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement. 

2.    DESCRIPTION OF COLLATERAL.    Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement
(together with any other collateral security granted to Bank, the "Security Documents"). 

Hereinafter,
the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the "Existing Loan Documents". 

3.    DESCRIPTION OF CHANGE IN TERMS.

	A.
	Modifications
to Loan Agreement.

	1
	The
Loan Agreement shall be amended by deleting the following text appearing in Section 2.1.2 thereof, entitled "Letters of Credit Sublimit" 

"(a)    As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower's account. The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Five Million Dollars ($5,000,000.00), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.3 and 2.1.4. Such
aggregate amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. If, on the Revolving Line Maturity Date, there are any outstanding
Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees and costs due or
to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in
form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank's standard Application and Letter of Credit Agreement (the  "Letter of Credit Application"). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably
request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower's account or by Bank's
interpretations of any Letter of Credit issued by Bank for Borrower's account" 

        and
inserting in lieu thereof the following: 

"(a)    As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower's account. The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Fifteen Million Dollars ($15,000,000.00), inclusive of Credit 

Extensions
relating to Sections 2.1.1, 2.1.3 and 2.1.4. Such aggregate amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the Revolving Line. If, on
the Revolving Line Maturity Date, there are any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all
such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations
relating to said Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank's standard
Application and Letter of Credit Agreement (the "Letter of Credit Application"). Borrower agrees to execute any further documentation in connection with
the Letters of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened
for Borrower's account or by Bank's interpretations of any Letter of Credit issued by Bank for Borrower's account." 

	2
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 2.1.3 thereof, entitled "Foreign Exchange Sublimit": 

"2.1.3    Foreign Exchange Sublimit.    As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank
under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a "FX Forward Contract") on a specified date
(the "Settlement Date"). FX Forward Contracts shall have a Settlement Date of at least one (1) FX Business Day after the contract date and shall
be subject to a reserve of ten percent (10%) of each outstanding FX Forward Contract in a maximum aggregate amount equal to Five Million Dollars ($5,000,000.00) (the "FX
Reserve"), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.4. The aggregate amount of FX Forward Contracts at any one time may not exceed ten
(10) times the amount of the FX Reserve. The obligations of Borrower relating to this section may not exceed the Availability Amount." 

        and
inserting in lieu thereof the following: 

"2.1.3    Foreign Exchange Sublimit.    As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank
under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a "FX Forward Contract") on a specified date
(the "Settlement Date"). FX Forward Contracts shall have a Settlement Date of at least one (1) FX Business Day after the contract date and shall
be subject to a reserve of ten percent (10%) of each outstanding FX Forward Contract in a maximum aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000.00) (the "FX Reserve"). The aggregate amount of FX Forward Contracts at any one time may not exceed ten (10) times the amount
of the FX Reserve and the aggregate amount of FX Forward Contracts may not exceed Fifteen Million Dollars ($15,000,000.00), inclusive of Credit Extensions relating to Sections 2.1.2 and 2.1.4." 

	3
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 2.1.4 thereof, entitled "Cash Management Services Sublimit": 

"2.1.4    Cash Management Services Sublimit.    Borrower may use up to Five Million Dollars ($5,000,000.00) (the  "Cash Management Services
Sublimit"), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.3. of the Revolving Line for Bank's cash
management services which may include merchant services direct deposit of payroll, business credit card, and check cashing services identified in Bank's various cash management services agreements
(collectively, the "Cash Management  

 Services"). Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances under the
Revolving Line and will accrue interest at the interest rate applicable to Advances." 

        and
inserting in lieu thereof the following: 

"2.1.4    Cash Management Services Sublimit.    Borrower may use up to Fifteen Million Dollars ($15,000,000.00) (the  "Cash Management Services
Sublimit"), inclusive of Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.3, of the Revolving Line for Bank's cash
management services which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in Bank's various cash management services agreements
(collectively, the "Cash Management Services"). Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash
Management Services will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances." 

	4
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 2.2 thereof, entitled "Overadvances": 

"Overadvances.    If, at any time, the Credit Extensions under Sections 2.1.1, 2.1 2, 2.1.3 and 2.1.4 exceed the lesser of either
(a) the Revolving Line or (b) the Borrowing Base, Borrower shall immediately pay to Bank in cash such excess." 

        and
inserting in lieu thereof the following: 

"Overadvances.    If, at any time, the Credit Extensions under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the lesser of either
(i) the Revolving Line or (ii) the aggregate of (A) the Borrowing Base, plus (B) the Permitted Overadvances Borrower shall immediately pay to Bank in cash such excess." 

	5
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 2.3(a) thereof, entitled "Interest Rate": 

"(a)    Interest Rate.    Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue
interest at a floating per annum rate equal to one and three quarters of one percentage points (1.75%) above the Prime Rate, which interest shall be payable monthly in accordance with
Section 2.3(f) below; provided, however that upon Borrower's provision of evidence to Bank that Borrower's Tangible Net Worth is greater than Seven Hundred Fifty Thousand Dollars ($750,000.00),
then the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one half of one percentage point (0.50%) above the Prime Rate and for so long
as Borrower's Tangible Net Worth exceeds Seven Hundred Fifty Thousand Dollars ($750,000.00)." 

        and
inserting in lieu thereof the following: 

"(a)    Interest Rate.    Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue
interest at a floating per annum rate equal to one and three quarters of one percentage points (1.75%) above the Prime Rate, which interest shall be payable monthly in accordance with
Section 2.3(f) below; provided, however that upon Borrower's provision of evidence to Bank that Borrower's Tangible Net Worth is greater than Seven Hundred Fifty Thousand Dollars ($750,000.00),
then the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one half of one percentage point (0.50%) above the Prime Rate and for so long
as Borrower's Tangible Net Worth exceeds Seven Hundred Fifty Thousand Dollars ($750,000.00). Notwithstanding the foregoing, subject to Section 2.3(b), the principal amount 

outstanding
under the Revolving Line on or after the 2007 Closing Date shall accrue interest at a floating per annum rate equal to one half of one percentage point (0.5%) above the Prime Rate, which
interest shall be payable monthly in accordance with Section 2.3(f) below." 

	6
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 2.4(b) thereof, entitled "Letter of Credit Fee": 

"(b)    Letter of Credit Fee.    Bank's customary fees and expenses for the issuance or renewal of Letters of Credit, including,
without limitation, a Letter of Credit Fee of two percent (2.0%) per annum of the face amount of each Letter of Credit issued, upon the issuance, each anniversary of the issuance, and the renewal of
such Letter of Credit;" 

        and
inserting in lieu thereof the following: 

"(b)    Letter of Credit Fee.    Bank's customary fees and expenses for the issuance or renewal of Letters of Credit, including,
without limitation, a Letter of Credit Fee of (i) two percent (2.0%) per annum of the face amount of each Letter of Credit issued prior to the 2007 Closing Date, upon the issuance, each
anniversary of the issuance, and the renewal of such Letter of Credit, and (ii) one percent (1.0%) per annum of the face amount of each Letter of Credit issued on or after the 2007 Closing
Date, upon the issuance, each anniversary of the issuance, and the renewal of such Letter of Credit;" 

	7
	The
Loan Agreement shall be amended by inserting the following text to appear as Section 2.4(e) thereof, entitled "Success Fee": 

"(e)    Success Fee.    In the event that Borrower consummates a Liquidity Event on or before 5:00 PM, Eastern time, on
May 8, 2009, then in connection with such Liquidity Event and simultaneously with the closing thereof, the Borrower shall pay to Bank a success fee (the "Success Fee") in the amount of One
Hundred Fifty Thousand Dollars ($150,000.00). The Success Fee shall be fully earned by the Bank upon and as of the closing of a Liquidity Event and shall be paid in cash in immediately available funds
to the Bank at such closing. The failure of Borrower to pay the Success Fee as and when due shall result in an immediate Event of Default, for which there shall be no grace or cure period, and the
unpaid portion of the Success Fee shall bear interest, payable on demand by the Bank, at the Default Rate, or the highest rate permitted under applicable law, if less, until paid in full. The
Borrower's obligation to pay the Success Fee, and the terms of this Section 2.4(e) shall survive the repayment of the Obligations and any expiration or termination of this Agreement." 

	8
	The
Loan Agreement shall be amended by deleting the following text appearing as subsection (a)(ii) of Section 6.2 thereof, entitled "Financial Statements, Reports,
Certificates": 

"(ii) as
soon as available, but no later than one hundred twenty (120) days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion;" 

        and
inserting in lieu thereof the following: 

"(ii) as
soon as available, but no later than one hundred eighty (180) days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the 

financial
statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion;" 

	9
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 6.6(a) thereof, entitled "Adjusted Quick Ratio": 

"(a)    Adjusted Quick Ratio.    To be tested as of the last day of each month, Borrower shall maintain a ratio of Quick Assets to
Current Liabilities minus Deferred Revenue of greater than or equal to: (i) 1.25 to
1.0 for the months ending September 30, 2005 through and including February 28, 2006; (ii) 1.0 to 1.0 for the months ending March 31, 2006 through May 3l, 2006; and
(iii) 1.25 to 1.0 for the month ending June 30, 2006 and as of the last day of each month thereafter." 

        and
inserting in lieu thereof the following: 

"(a)    Adjusted Quick Ratio.    To be tested as of the last day of each month, Borrower shall maintain a ratio of Quick Assets to
Current Liabilities minus Deferred Revenue of greater than or equal to: (i) 1.25 to 1.0 for the months ending September 30, 2005 through and including February 28, 2006;
(ii) 1.0 to 1.0 for the months ending March 31, 2006 through May 31, 2006; (iii) 1.25 to 1.0 for the months ending June 30, 2006 through March 31, 2007; and
(iv) 1.0 to 1.0 for the month ending April 30, 2007, and as of the last day of each month thereafter." 

	10
	The
Loan Agreement shall be amended by deleting the following text appearing as Section 6.6(b) thereof, entitled "Minimum Revenue": 

"(b)    Minimum Revenue.    To be tested on the last day of each quarter, Borrower shall maintain Minimum Revenue of at least:
(i) Six Million Two Hundred Six Thousand One Hundred Fifty One Dollars ($6,206,151.00) as of the quarter ending September 30, 2005; (ii) Six Million Six Hundred Thirty Nine
Thousand Three Hundred Sixty Two Dollars ($6,639,362.00) as of the quarter ending December 31, 2005; (iii) Ten Million One Hundred Eighty Nine Thousand Two Hundred Thirty One Dollars
($10,189,231.00) as of the quarter ending March 31, 2006; and (iv) Twelve Million Two Hundred Sixty-Six Thousand Six Hundred Fifteen Dollars ($12,266,615.00) as of the
quarter ending June 30, 2006 and as of the last day of each quarter thereafter." 

        and
inserting in lieu thereof the following: 

"(b)    Minimum Revenue.    Borrower shall maintain Minimum Revenue, measured on a cumulative basis as of the last day of each
quarter, of at least: (i) Twenty Million Dollars ($20,000,000.00) as of the quarter ending March 31, 2007; (ii) Forty-Two Million Dollars ($42,000,000.00) as of the
quarter ending June 30, 2007; (iii) Sixty Eight Million Dollars ($68,000,000.00) as of the quarter ending September 30, 2007; (iv) Ninety Seven Million Dollars
($97,000,000.00) as of the quarter ending December 31, 2007; and (v) for all subsequent quarters, an amount equal to the greater of (a) eighty percent (80%) of Board approved
projections issued at the beginning or prior to the subject quarter, or (b) the minimum cumulative revenue amount for the same period one year prior to the subject quarter." 

	11
	The
Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof: 

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

"Borrowing Base" is eighty percent (80.0%) of Eligible Accounts, as determined by Bank from Borrower's most recent Borrowing Base Certificate; provided,
however, following consultation with the Borrower, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as
determined by Bank, may adversely affect Collateral." 

"Obligations" are Borrower's obligation to pay when due any debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign exchange contracts,
if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower's duties under the Loan
Documents." 

"Revolving Line" is an Advance or Advances in an aggregate amount of up to Five Million Dollars ($5,000,000.00) outstanding at any time." 

"Revolving Line Maturity Date" is the earliest of (a) April 19, 2007, or (b) the occurrence of an Event of Default." 

        and
inserting in lieu thereof the following: 

"Availability Amount" is (i) the lesser of (A) the Revolving Line or (B) the aggregate of (1) the Borrowing Base, plus
(2) the Permitted Overadvances, minus (ii) the FX Reserve, and minus (iii) the outstanding principal balance of any Advances (including any amounts used for Cash Management
Services) Borrower shall immediately pay to Bank in cash such excess." 

"Borrowing Base" is (i) prior to the 2007 Closing Date, eighty percent (80.0%) of Eligible Accounts, and (ii) on or after the 2007 Closing
Date, eighty-five percent (85%) of Eligible Accounts, as determined by Bank from Borrower's most recent Borrowing Base Certificate; provided, however, following consultation with the
Borrower, that Bank may decrease the foregoing percentages in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect
Collateral." 

"Obligations" are Borrower's obligation to pay when due any debts, principal, interest, Bank Expenses, Success Fee, and other amounts Borrower owes Bank
now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower's
duties under the Loan Documents." 

"Revolving Line" is an Advance or Advances in an aggregate amount of up to Fifteen Million Dollars ($15,000,000.00) (including Permitted Overadvances)
outstanding at any time." 

"Revolving Line Maturity Date" is the earliest of (a) May 8, 2009, or (b) the occurrence of an Event of Default." 

	12
	The
Loan Agreement shall be amended by inserting the following definitions to appear alphabetically in Section 13.1 thereof: 

"2007 Closing Date" is May 10, 2007." 

"Liquidity Event" means any of the following where the valuation of the Borrower in connection with such transaction exceeds $500,000,000: (i) a
sale by the Borrower of 

all
or substantially all of its assets in an arms-length transaction to an unaffiliated buyer or buyers; (ii) a merger or consolidation of the Borrower into or with an unaffiliated
person or entity; (iii) any sale, in a single transaction or series of related transactions, by the holders of the Borrower's outstanding voting equity securities, to one or more buyers, of
such securities; or (iv) the Borrower's initial public offering and sale of its Common Stock or other common voting equity securities pursuant to an effective registration statement under the
Securities Act of 1933, as amended." 

"Permitted Overadvances" is an Advance or Advances under the Revolving Line of up to Four Million Dollars ($4,000,000.00) (except for the last month of
each calendar quarter, which shall be in an amount of up to One Million Dollars ($1,000,000.00))." 

"Success Fee" is defined in Section 2.4(e)." 

	13
	The
Borrowing Base Certificate appearing as Exhibit C to the Loan Agreement is hereby replaced with the Borrowing Base
Certificate attached as Exhibit A hereto.

	14
	The
Compliance Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B hereto. 

4.    FEES.    A fully earned, non-refundable modification fee of One Hundred Twelve Thousand Eight Hundred Dollars
($112,800.00) is earned as of the date hereof and is payable as follows: (i) Twenty Eight Thousand Two Hundred Dollars ($28,200.00) on the date hereof; and (ii) Eighty Three Thousand
Fifty Dollars ($83,050.00) on the earlier to occur of: (a) quarterly payments in the amount of Twenty Eight Thousand Two Hundred Dollars ($28,200.00) on June 30, 2007,
September 30, 2007, and December 31, 2007; (b) the occurrence of an Event of Default; (c) the Revolving Line Maturity Date; or (d) the termination of this Agreement
by the Borrower. 

5.    RATIFICATION OF PERFECTION CERTIFICATE.    Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in the Perfection Certificate as updated pursuant to Exhibit A of that certain First Loan Modification Agreement by and
between Borrower and Bank dated as of January 18, 2007, and acknowledges, confirms and agrees the disclosures and information above Borrower provided to Bank in the Perfection Certificate have
not changed as of the date hereof. 

7.    CONSISTENT CHANGES.    The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described
above. 

8.    RATIFICATION OF LOAN DOCUMENTS.    Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security
or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations. 

9.    NO DEFENSES OF BORROWER.    Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or
counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder. 

10.    CONTINUING
VALIDITY.    Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower's representations, warranties, and
agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in
full force and effect. Bank's agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing
Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement. 

11.    COUNTERSIGNATURE.    This Loan Modification Agreement shall become effective only when it shall have been executed by
Borrower and Bank. 

        [The remainder of this page is intentionally left blank]

        This
Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above. 

	BORROWER:	 	BANK:
	
EQUALLOGIC, INC.	
 	
SILICON VALLEY BANK
	

By:	

/s/ Richard S. Hood, Jr.
	
 	

By:	

/s/ Mark Gallagher

	Name:	Richard S. Hood, Jr.
	 	Name:	Mark Gallagher

	Title:	CFO
	 	Title:	SVP

EXHIBIT A  

 BORROWING BASE CERTIFICATE  

Borrower:
EqualLogic, Inc.

Lender: Silicon Valley Bank

Commitment Amount: $15,000,000.00 

	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	 	$	            
	 	 	 	 	

	5.	 	Balance of 50% over 90 day accounts	 	$	            
	 	 	 	 	

	6.	 	Credit balances over 90 days	 	$	            
	 	 	 	 	

	7.	 	Concentration Limits	 	$	            
	 	 	 	 	

	8.	 	Foreign Accounts	 	$	            
	 	 	 	 	

	9.	 	Governmental Accounts	 	$	            
	 	 	 	 	

	10.	 	Contra Accounts	 	$	            
	 	 	 	 	

	11.	 	Promotion or Demo Accounts	 	$	            
	 	 	 	 	

	12.	 	Intercompany/Employee Accounts	 	$	            
	 	 	 	 	

	13.	 	Disputed Accounts	 	$	            
	 	 	 	 	

	14.	 	Deferred Revenue	 	$	            
	 	 	 	 	

	15.	 	Other (please explain on reverse)	 	$	            
	 	 	 	 	

	16.	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	 	$	            
	 	 	 	 	

	17.	 	Eligible Accounts (#3 minus #16)	 	$	            
	 	 	 	 	

	18.	 	ELIGIBLE AMOUNT OF ACCOUNTS (85.0% of #17)	 	$	            
	 	 	 	 	

	

BALANCES	
 	
 	

 
	19.	 	Maximum Loan Amount	 	$	            
	 	 	 	 	

	20.	 	Total Funds Available [Lesser of #19 or #18]	 	$	            
	 	 	 	 	

	21.	 	Present balance owing on Line of Credit	 	$	            
	 	 	 	 	

	22.	 	Outstanding under Sublimits	 	$	            
	 	 	 	 	

	23.	 	Permitted Overadvance	 	$	            
	 	 	 	 	

	24.	 	RESERVE POSITION (#20 minus #21 and #22, plus #23)	 	$	            
	 	 	 	 	

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

	 	 	 	BANK USE ONLY
	COMMENTS:	 	Received by:	    
 AUTHORIZED SIGNER
	 	 	 	Date:	    
	By:	    
 Authorized Signer	 	Verified:	    
 AUTHORIZED SIGNER
	Date:	    
	 	Date:	    

	 	 	 	Compliance
Status:                                Yes    No

EXHIBIT D  

 COMPLIANCE CERTIFICATE  

	TO:	SILICON VALLEY BANK	 	Date:	    

	FROM:	EQUALLOGIC, INC.	 	 	 

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

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

	Reporting Covenant
 
	 	Required
	 	Complies

	Monthly financial statements with Compliance Certificate	 	Monthly within 30 days	 	Yes    No
	Annual financial statement (CPA Audited)	 	FYE within 180 days	 	Yes    No
	10-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes    No
	Borrowing Base Certificate, A/R Agings and Deferred Revenue Report	 	Monthly within 30 days	 	Yes    No
	Board Projections	 	Upon approval by Board	 	Yes    No
	Collateral Audit	 	Annually	 	Yes    No

	
Financial Covenant
 
	
 	

Required
	
 	

Actual
	
 	

Complies

	Minimum Adjusted Quick Ratio (monthly)	 	 	        :1.0	*	 	        :1.0	 	Yes    No
	Minimum Revenue (quarterly)	 	$	        	*	$	        	 	Yes    No

	*
	As
set forth in Section 6.6 of the Agreement. 

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

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

	

EQUALLOGIC, INC.	
 	
BANK USE ONLY
	

 	

 	
 	

Received by:	

    
 AUTHORIZED SIGNER
	By:	    
	 	Date:	    

	Name:	    
	 	Verified:	    
 AUTHORIZED SIGNER
	Title:	    
	 	Date:	    

	

 	

 	
 	

Compliance Status:        Yes    No

Schedule 1 to Compliance Certificate  

 Financial Covenants of Borrower  

Dated:

	I.	 	Adjusted Quick Ratio (Section 6.6(a))	 	 	 
	A.	 	Aggregate value of the unrestricted cash of Borrower at Bank	 	$	 
	B.	 	Aggregate value of the net billed accounts receivable of Borrower	 	$	 
	C.	 	Aggregate value of the Investments with maturities of fewer than 12 months of Borrower	 	$	 
	D.	 	Quick Assets (the sum of lines A through C)	 	$	 
	E.	 	Aggregate value of Obligations to Bank	 	$	 
	F.	 	Aggregate value of liabilities of Borrower (including all Indebtedness) that matures within one (1) year and current portion of Subordinated Debt permitted by Bank to be paid by Borrower	 	$	 
	G.	 	Current Liabilities (the sum of lines E and F)	 	$	 
	H.	 	Quick Ratio (line D divided by line G)	 	 	 
	To obtain actual ratio:	 	 	 
	A.	 	Value of Line I.D. (Quick Assets)	 	$	 
	B.	 	Value of Line I.G. (Current Liabilities)	 	$	 
	C.	 	Aggregate value of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue	 	$	 
	D.	 	Line B minus line C	 	$	 
	E.	 	Adjusted Quick Ratio (line A divided by line C)	 	 	 

Is
line E equal to or greater than            :1:00? 

No,
not in
compliance                                        
                  Yes, in compliance 

QuickLinks

LOAN AND SECURITY AGREEMENT

FIRST LOAN MODIFICATION AGREEMENT

Exhibit A—to First Loan Modification Agreement

SECOND LOAN MODIFICATION AGREEMENTExhibit 10.12  

EQUALLOGIC VALUE ADDED RESELLER AGREEMENT  

        THIS VALUE ADDED RESELLER AGREEMENT ("Agreement"), dated as of the 1st day of January, 2007
(the "Effective Date"), is by and between EqualLogic, Inc., a Delaware corporation having its principal offices at 9 Townsend West Nashua, New Hampshire 03063 ("EqualLogic"), and
                        . ("VAR"), a corporation having its principal offices
at                        . 

        Subject
to the terms and conditions of this Agreement, EqualLogic hereby accepts VAR as a Value Added Reseller of the EqualLogic storage products described on the attached  Schedule 1 (the "Products"). NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Equallogic and VAR, intending to be legally bound, hereby agree as follows: 

SECTION 1: DEFINITIONS  

        Capitalized terms referred to herein that are not defined herein shall have the following meanings: 

        "Confidential Information" means any competitively sensitive or secret business, marketing, or technical information of EqualLogic. In all
cases, EqualLogic's Confidential Information shall include the Software and Documentation, the pricing and cost of its products (including its deal registration process), its supplier and customer
lists, sales strategies, business and marketing plans, production processes and techniques, research and development data and inventions, assets or liabilities, financial condition, prospects, and any
other information that is marked "confidential" or "proprietary" or that given its nature should reasonably be considered to be Confidential Information. Confidential Information shall not include,
however, information that (1) is generally known to the public or readily ascertainable from public sources (other than as a result of a breach of this Agreement by VAR or any of its
employees), (2) is independently developed without reference to or reliance on any Confidential
Information, or (3) is obtained from an independent third party who created or acquired such information without reference to or reliance on Confidential Information. 

        "Customer" means an Eligible Prospect that has paid for the license of the Products and has by shipment of the Products agreed to
EqualLogic's end user agreement and limited warranty included in the shipment of the Products. 

        "Documentation" means the user documentation relating to the Products provided by EqualLogic to VAR and any other documentation provided
to VAR by EqualLogic for VAR to provide to Eligible Prospects. The Documentation shall include all changes provided to VAR or applicable Eligible Prospects by EqualLogic. 

        "Eligible Prospects" means any potential end user customer, or reseller acknowledged in writing by EqualLogic to be an EqualLogic
Authorized Value Added Reseller. 

        "Hardware" means any Equallogic PS Series array along with customer manuals generally supplied by EqualLogic for use with the Hardware.. 

        "License Agreement" means EqualLogic's current End User License Agreement as outlined on the EqualLogic Partner extranet, which may be
modified by EqualLogic from time to time, that governs the Customer's use of the Products (a current copy of which is attached hereto as  Schedule 3) or in such other form as EqualLogic may approve
in writing. EqualLogic reserves the right to require different terms and conditions
for each Eligible Prospect depending on the circumstances. EqualLogic shall provide a copy of the License Agreement with each product shipment 

1

 

        "Object Code" means computer programs assembled, compiled, or converted to magnetic or electronic binary form on software or hardware
media, which are readable and usable by computer equipment, but not generally readable by humans without reverse assembly, reverse compiling, reverse conversion, reverse engineering and/or any other
disassembly or decompilation. 

        "Products" means, collectively, the Hardware, Software, and Third Party Products supplied in accordance with the terms and conditions of
this Agreement. 

        "Software" means EqualLogic's storage management software products and related Documentation made generally available by EqualLogic from
time to time. The Software all be provided in Object Code form only. No source code will be provided. The term "Software" shall include any and all software, firmware, and micro code running on
Hardware or any computer system, including all Maintenance Releases and updates supplied in accordance with this Agreement. 

        "Territory" means The United States and Canada. 

        "Third Party Products" means any hardware or software licensed or distributed by EqualLogic to Customer under this Agreement, the
intellectual property rights for which are not owned by EqualLogic. 

SECTION 2: APPOINTMENT OF VAR  

        2.1    Distribution License to VAR.    Subject to the terms and conditions of this Agreement, EqualLogic grants to VAR
a non-exclusive, non-transferable right and license, during the term of this Agreement and solely within the Territory to market, demonstrate, and distribute the Products
solely to Eligible Prospects. 

        2.2    Training, Demonstration and Development Units.    VAR may purchase two Products, subject to the terms and
conditions of this Agreement for the non-refundable training and demonstration unit price described in Schedule 2 and may use such
Products for internal uses only (subject to the restriction set forth herein and the License Agreement). For these purposes, internal use refers only to use of the Products to assist in the provision
of sales demonstrations, training, professional services and/or support services to specific Customers as contemplated under Sections 3.7 of this Agreement. VAR is prohibited from using the Products
to develop modifications and/or derivatives of any nature for the purpose of redistribution without the express prior written consent of EqualLogic in each instance. These Training, Demonstration and
Development licenses may not be resold except as provided in Schedule 2. 

        2.3    Orders for Products.    All orders for Products shall be submitted by VAR to EqualLogic on VAR's standard
purchase order and must specify model numbers, quantities and required delivery dates. All orders are subject to acceptance by EqualLogic which shall be deemed to have occurred upon shipment to VAR or
VAR's Customer. All orders must include all Customer information including name, address, contact name and phone number. All shipments shall occur under the shipment terms detailed on
Schedule 5. The terms of this Agreement all prevail over any different or additional terms contained in any order or other document submitted by VAR. VAR may not reschedule any part of an order
less than ten (10) calendar days before the scheduled shipment date, or cancel any part of an order less than
thirty (30) calendar days before the scheduled shipment date. Orders cancelled less than (30) calendar days before the scheduled shipment date will be subject to a 20% of EqualLogic's
U.S. Customer list price cancellation charge. 

SECTION 3: RESPONSIBILITIES  

        3.1    Promotion.    VAR shall use commercially reasonable efforts to promote and market the Products to Eligible
Prospects in the Territory during the term of this Agreement. EqualLogic all have 

2

 

the
right to review in advance any marketing materials to be used to promote the Products to Eligible Prospects. EqualLogic's web and software content ("Content") may be utilized by the VAR in the
promotion of the EqualLogic Products with the following restrictions: (i) this usage right is dependent on the VAR utilizing the Content on an "as is" basis, (ii) any modifications to
this Content must be pre-approved in writing by EqualLogic before being utilized by the VAR, and (iii) any such Content that is password protected (requires the VAR to submit a
password to obtain the Content) may not be redistributed to any party without the prior written consent of EqualLogic. Any product reviews of the EqualLogic Products paid for, conducted by or
otherwise commissioned by the VAR must be approved in writing by EqualLogic prior to being placed into the public domain. All of the foregoing Content and any modifications thereto, and all
intellectual property rights therein, shall be owned exclusively by EqualLogic. 

        3.2    Sales Forecast and Pipeline.    VAR shall provide information regarding its sales, forecasts and pipeline
activity for the Products in such form and with such level of detail as may be reasonably requested by EqualLogic. EqualLogic shall utilize this information only in its business management. VAR must
register all deals via the EQUALLOGIC PSPP website. 

        3.3    Product Prices.    VAR all pay EqualLogic the minimum fees set forth on Schedule 1 attached hereto on
orders of Products for delivery within the Territory which are accepted during the Term of this Agreement by EqualLogic. Prices shall not apply to orders which request shipment more than three months
after receipt of order. Prices on the attached Schedule 1 apply only to purchases for use in the Territory. In order for VAR to receive the registered prices listed in Schedule 1, VAR
must register each opportunity as detailed on EqualLogic's Partner extranet. Although EqualLogic may provide quotation assistance to assist VAR in the pricing of the product, the prices set out in
Schedule 1 shall govern all orders placed by VAR unless the parties otherwise agree in writing. The discounted prices allowed under this Section are VAR's sole compensation for its purchases
and services under this Agreement. EqualLogic may in its sole discretion change prices on the Products upon 30 days written notice to the VAR. Prices do not include freight, taxes, insurance,
customs, import duties, local
delivery, special handling or any special packaging. VAR shall have the full freedom to determine the prices that it charges its Customers for the Products. 

        3.4    Out-of-Territory Exception:    At EqualLogic's sole discretion, individual Product
purchases may be approved for sale outside Territory. VAR shall notify EqualLogic promptly upon determining that an order is destined for export. Exception approval must be in writing from EqualLogic,
and different Product pricing may apply. 

        3.5    Delivery    Shipment shall be as outlined in EqualLogic's standard terms and conditions (a current copy is
included on Schedule 5). Title (other than to the Software which shall remain with EqualLogic) and risk of loss of the Products shall pass to the VAR as detailed on Schedule 5. VAR shall
be responsible for storage charges, if any, and for transportation and insurance charges. EqualLogic shall not be liable for delays for cause beyond EqualLogic's control. In the event EqualLogic ships
to VAR for redistribution to end user, VAR shall not remove, alter, substitute or otherwise modify the contents of the Product as shipped by EqualLogic 

        3.6    Sales Support: License Agreement.    EqualLogic and VAR shall each assign a relationship account manager for
each Eligible Prospect, who shall jointly determine the sales strategy for such Eligible Prospect. Confidential Information may only be disclosed or provided to Eligible Prospects who have executed a
confidentiality agreement supplied or approved by EqualLogic, and only to the extent reasonably necessary to market and sell the Products. Copies of the Products (and/or any access to the Products)
shall be provided to an Eligible Prospect (for use, or any other purpose) only pursuant to the License Agreement furnished with the Product. 

        3.7    Training.    EqualLogic shall provide sales and technical training to VAR for the purposes of marketing and
selling the Products, subject to Section 7.4 hereof. VAR shall maintain trained staff in 

3

 

accordance
with EqualLogic's Partner Program as outlined on the EqualLogic partner extranet. EqualLogic reserves the right to modify these training requirements from time to time. As part of its
obligation under this agreement, EqualLogic will make trained technical support engineers available to VAR's authorized contacts to answer technical questions and address potential errors in the
Products. Such availability may be by telephone, fax, electronic mail or other means as determined necessary by EqualLogic. EqualLogic will make such support available to VAR during its normal hours
of operation. 

	3.7
	Technical Services.

	3.7.1
	Installation Support.    VAR shall be responsible for the successful installation of the Products. Upon
installation, the VAR must ensure that the Customer also registers the product for support directly with EqualLogic.

	3.7.2
	Maintenance Services.    VAR may sell EqualLogic Maintenance and Support Services contracts for the Products
directly to its Customers for the first year following the Customer's purchase of Products. Thereafter, EqualLogic Maintenance and Support Services contract renewals may be sold by VAR to the extent
that (a) VAR is still an authorized value added reseller for the Products, and (b) EqualLogic is still supporting such Products for its customers and resellers. A description of
EqualLogic's current standard Maintenance and Support Services is included herein as Schedule 4 (this schedule may be modified by EqualLogic from time to time). VAR shall charge Customers for
Maintenance and Support Services based on EqualLogic's then current standard price for such services and shall receive a discount for such services as described in Schedule 1 to this Agreement.
Each Party shall designate a support contact person to serve as the principal contact for support issues.

	3.7.3
	Accessories:    Product only includes power cords when shipped to selective geographies. Where Product does
not include power cords, VAR shall, at VAR's expense, procure and supply to Customer any and all power cords required by Customer for proper Product
operation.

	3.8
	Security Screening    VAR shall provide EqualLogic with the necessary information required of EqualLogic to
screen Customers as required by the United States Government or by applicable law. This information includes at a minimum for each order the items outlined on the Customer form as outlined on the
EqualLogic Partner extranet (a current copy of which is listed as Schedule 6). 

SECTION 4: TERM  

	4.1
	Term.    Subject to earlier termination as provided herein, this Agreement shall have an initial term
commencing on the Effective Date of this Agreement and continuing until December 31, 2006. Unless notified in writing by EqualLogic, this Agreement shall automatically renew for successive
12 month periods. 

        This
Agreement may be terminated earlier, at EqualLogic's election, if VAR if (i) VAR fails to perform its obligations hereunder in any material respect; provided that EqualLogic
notifies VAR of such breach and gives VAR a reasonable period of time, not to exceed thirty (30) days to cure such breach from the date of such notification being given; or
(ii) effective immediately and without any requirement of notice, in the event that (a) VAR files a petition in bankruptcy or winding up, files a petition seeking any reorganization,
arrangement, composition or similar relief under any law regarding insolvency or relief for debtors; or makes an assignment for the benefit of creditors, (b) a receiver, trustee or similar
officer is appointed for the business or property of VAR, (c) any involuntary petition or proceeding under bankruptcy or insolvency law is instituted against VAR and is not stayed, enjoined, or
discharged within 60 days, or (d) VAR adopts a resolution for, or undertakes to effect a, discontinuance of its business or dissolution. During the continuation of any breach of this
Agreement by VAR, EqualLogic shall have the right to suspend shipments (including stoppage in transit) in 

4

 

addition
to any other rights or remedies available at law or in equity or under this Agreement. Termination by EqualLogic for material breach shall not limit any other rights EqualLogic may have as a
result of a breach or failure of VAR to satisfy any provision of this Agreement. 

        4.2    Effect.    Upon termination or expiration of this Agreement, the licenses granted under Section 2
(including all rights to market and distribute the Products) shall terminate and VAR than immediately deliver to EqualLogic, at VAR's own expense, all copies of the Products and any other materials
related to EqualLogic in the possession of VAR: provided, however that unless this Agreement is terminated by EqualLogic due to a material breach by VAR, VAR's license to use the Products for internal
development purposes as described in Section 2.2 shall continue provided VAR has previously purchased a fully-paid up perpetual license prior to such termination date. All
authorized sublicenses of Products to Customers pursuant to License Agreements shall continue after termination of this Agreement until the termination of such License Agreements; provided that any
amendments to such License Agreements shall require the written consent of EqualLogic. Sections 4.2 and 5 through 16 hereof shall survive termination or expiration of this Agreement and shall
thereafter remain in effect in accordance with their terms. 

SECTION 5: TITLE; INTELLECTUAL PROPERTY  

        5.1    Title to Software.    The Software is (a) protected by U.S. and international copyright laws, treaties,
and conventions (b) copyrighted work under U.S. and foreign laws; (c) protected as trade secrets and Confidential Information. EqualLogic retains all right, title, and interest in and to
the Software, and all patent, copyright, trade secret and other intellectual property rights contained therein and all derivatives thereto, subject only to the licenses granted to VAR in
Section 2 hereof. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary, nothing in this Agreement shall be construed as
limiting or restricting in any manner EqualLogic's right
or ability to market, distribute, license or otherwise exploit in any manner the Products, or to appoint dealers, distributors, resellers, licensees, agents or representatives of any kind for the
Products. VAR agrees that all intellectual property rights and all other ownership in any ideas, modifications, or suggestions it proposes, creates, or authors relating to the Products ("Suggestions")
are hereby assigned to EqualLogic and shall be the sole and exclusive property of EqualLogic. EqualLogic shall have sole discretion as to whether and how to implement any such Suggestions into the
Products. 

        5.2    Enforcement.    VAR shall enforce against all Customers and other third parties (such as subcontractors to VAR)
the provisions of any agreement (including but not limited to any License Agreement) that VAR is a party to, that affect EqualLogic's proprietary or confidentiality rights in the Products or in any
other intellectual property rights of EqualLogic. If VAR learns that any such person has breached any such provision, VAR will immediately notify EqualLogic and take, at VAR's expense, all steps that
may be available to it to enforce the License Agreement, including but not limited to availing itself of actions for seizure or injunctive relief. If VAR fails to take these steps in a timely and
adequate manner, EqualLogic may, at VAR's expense, (i) take them in its own or VAR's name, (ii) take all other necessary steps to prevent subsequent unauthorized use or dissemination,
and/or (iii) demand return of all Confidential Information and enter VAR's or other applicable entities' facilities to collect such Confidential Information. 

        5.3    Restrictions.    Except as expressly permitted in this Agreement, VAR shall not, and shall not permit others
to, (i) use, modify, copy, or otherwise reproduce the Products in whole or in part, (ii) reverse engineer, decompile, disassemble, or otherwise attempt to derive the source code form or
structure of any Software sold with or contained in the Products, (iii) distribute, sublicense, assign, share, timeshare, sell, rent, lease, grant a security interest in, use for service bureau
purposes, or otherwise transfer the Products or VAR's right to use the Products, or (iv) remove any proprietary notices or labels on the Products (including without limitation, any copyright,
trademark or "powered 

5

 

by
EqualLogic" notices). VAR may not use the Products in any way except as expressly provided in this Agreement and may not appoint any sub-distributors or resellers without EqualLogic's
prior written consent and then only if (i) each such sub-distributor or reseller is bound by a written agreement with EqualLogic (ii) VAR does not grant a
sub-distributor or reseller any right relative to the Products not granted by EqualLogic; 

        5.4    Trademarks; Advertising.    During the term of this Agreement, VAR is authorized by EqualLogic to use the
phrase "AUTHORIZED EQUALLOGIC VAR" in connection with the VAR's promotion and sale of the Products. EqualLogic's trademarks may be used by VAR only to denote the origin of the Products. If used, they
shall be depicted in capital letters with the appropriate notation for U.S. registered trademarks and common law trademarks and a notation that the marks are owned by EqualLogic. Any other use of
trademarks, trade names or logos of EqualLogic or its suppliers shall be subject to express prior approval of EqualLogic. In all other respects, this Agreement confers no right or license with regard
to EqualLogic's trade name, trademarks, service marks, logos, or packaging, or any related goodwill, all of which shall be the exclusive property of EqualLogic. VAR shall immediately notify EqualLogic
upon discovery of any infringement or other misuse of thereof. EqualLogic reserves the right to amend any EqualLogic trademark, service mark or logo and agrees to notify VAR of any
such amendments that are relevant to VAR's business. VAR agrees to ensure that its use of any such mark and/or logo is amended accordingly. VAR shall not place VAR's own mark on any of the Products or
their packaging without EqualLogic's prior written consent. VAR shall not remove, obscure or otherwise deface any of EqualLogic's trademarks, service marks or logos on any of the Products. VAR shall
assist EqualLogic, at EqualLogic's request, in perfecting and maintaining EqualLogic's rights under trademark and similar laws in the Territory by advising EqualLogic of any special registration,
recording, or notice requirements. EqualLogic may identify VAR as a sales partner in EqualLogic advertising and marketing materials. VAR shall not make any representations concerning the Products that
are inconsistent with EqualLogic's marketing materials and advertising which are provided to VAR or made available by EqualLogic. 

SECTION 6: CONFIDENTIALITY  

        6.1    Confidentiality.    VAR agrees at all times to maintain the complete confidentiality of the Software and any
schematics or similar materials related to the Products and all other Confidential Information and not to use, copy or disclose the Products and other Confidential Information except as expressly
permitted by this Agreement. Confidential Information shall include but not be limited to information relating to the performance, functionality, reliability or any benchmarking tests or results of
the EqualLogic Products. VAR agrees to limit disclosure of such Confidential Information to its employees who reasonably require access to such information to enable VAR to carry out its rights and
obligations under this Agreement and who are bound by a written agreement to maintain the confidentiality of such Confidential Information no less protective than the provisions of this
Section 6. 

        6.2    Required Disclosure.    VAR may disclose necessary portions of the Products or other Confidential Information
to governmental regulatory authorities if such disclosure is required for compliance with applicable laws, but VAR shall notify EqualLogic of the applicable legal requirements before such disclosure
occurs and VAR shall use its best efforts to help EqualLogic obtain protection as may be available to preserve the confidentiality of such information following disclosure. 

        6.3    Protection of Products.    EqualLogic shall have the right to enter the premises of VAR at any time upon
reasonable request during regular business hours in a non-disruptive manner, for the purpose of inspecting the location and use of the Products and the standard procedures of VAR regarding
retention, safekeeping, and disposal of all materials pertaining thereto. 

        6.4    General.    Subject to the terms and conditions of this Agreement, upon any termination of VAR's right to
possess and/or use Confidential Information, VAR shall turn over to EqualLogic (or, if 

6

 

agreed
by EqualLogic, destroy) any disk drives, storage arrays, software media, documentation, drawings, blueprints, notes, memoranda, specifications, devices, documents, or any other tangible
embodiments of any such Confidential Information. Notwithstanding any other provision of this Agreement, VAR agrees that money damages would not be a sufficient remedy for any breach of this
Section 6 and that in addition to all other remedies that may be available, EqualLogic shall be entitled to seek equitable relief as a remedy for such breach. 

SECTION 7: FEES AND CHARGES; PAYMENT  

        7.1    Hardware and Software License Fees.    All agreements shall provide for the payment of hardware and software
license fees ("Fees") by Customers directly to VAR and VAR shall be responsible for invoice and collection of such Fees. The fees to be paid by VAR to EqualLogic are set forth in  Schedule 1. VAR
shall pay EqualLogic all fees due within thirty (30) days from the date EqualLogic ships the Products to VAR or a
Customer. 

        7.2    Maintenance Fees.    VAR shall be responsible for invoicing and collection of maintenance fees from Customers
to whom it has sold Maintenance and Support Services. VAR shall pay EqualLogic within thirty (30) days following the date of associated Product shipment, and renewals thereafter as long as the
Customer remains on active maintenance with VAR, the fees for such Maintenance and Support fees as described on Schedule 1 (the "Maintenance
Fee"). 

        7.3    Records and Inspection Rights.    VAR will keep and maintain proper records and books of account relating to
its distribution of the Products to Customers. EqualLogic may have an independent audit firm inspect and audit on its behalf, any such records to verify VAR's compliance with its payment obligations
hereunder. Any such inspection will be conducted during regular business hours, upon at least five (5) business days advance written notice, at VAR's offices in a manner that does not
unreasonably interfere with VAR's business activities. The person or entity conducting such audit must execute an appropriate confidentiality agreement with respect to VAR's non-public or
proprietary information. Such inspection shall be at EqualLogic's cost and expense, unless the inspection reveals that VAR underpaid the amount actually owing by five percent (5%) or more over any
quarterly period, in which case VAR shall pay such reasonable out of pocket costs and expenses. Such audits may be conducted no more than once in any twelve (12) month period. In the event that
EqualLogic wishes to inspect such books and records, VAR will make all relevant records available. VAR shall use reasonable commercial efforts to compel its Customers to permit EqualLogic to inspect
the records of such Customer as provided in this Section, the cost of such inspections to be borne
equally by the parties and the parties agree to discuss in good faith the necessity of any such inspection. 

        7.4    Training Costs.    Each party shall cover their own costs with regards to training of the VAR staff. These
costs include any travel expenses incurred as a result of this training. 

        7.5    Taxes.    VAR shall collect, report, and pay to the relevant taxing authority, and indemnify EqualLogic for any
liability relating to, all applicable excise, property, value-added tax (VAT), sales and use, or similar taxes, any withholding requirement in addition to or in lieu thereof, and any customs, import,
export or other duties, levies, tariffs, taxes, or other similar charges (except for taxes related to EqualLogic's income) that are imposed by any jurisdiction relating to VAR's obligations herein. 

        7.6    Payment Terms and Interest.    Standard payment terms are net 30 days from the date of shipment unless
otherwise agreed in writing by EqualLogic's Chief Financial Officer or his designee. On occasion alternative payment terms may need to be set when orders exceed VAR's established credit limit or if a
shipment is being shipped outside of the United States or Canada (these terms will be set prior to any shipment of products to the VAR. VAR may make payments to EqualLogic via a major credit card;
however a 3% processing fee will be added on all credit card orders. Any payment which is delayed for more than thirty (30) days beyond the due date shall be subject to an interest and 

7

 

service
charge of one and one-half percent (1.5%) per month, or, if less, the maximum allowed by applicable law, compounded monthly from the date such payment first became due until paid. 

        7.7    Payment Method.    All payments made hereunder shall be made in U.S. dollars by wire transfer, check, or other
reasonable payment means and to such bank account(s) indicated by EqualLogic in writing from time to time. 

SECTION 8: WARRANTY; LIMITATIONS  

        8.1    Disclaimer.    OTHER THAN THE LIMITED WARRANTY MADE DIRECTLY TO CUSTOMERS OF THE PRODUCTS PURSUANT TO AND AS
EXPRESSLY SET FORTH IN THE LICENSE AGREEMENT, EQUALLOGIC MAKES NO WARRANTIES OR REPRESENTATIONS AS TO ANY PRODUCT OR AS TO ANY SERVICES RENDERED TO VAR, ITS CUSTOMERS OR ANY
OTHER PERSON. EQUALLOGIC RESERVES THE RIGHT TO CHANGE ITS WARRANTY AND SERVICE POLICIES AT ANY TIME, WITHOUT FURTHER NOTICE AND WITHOUT LIABILITY TO VAR OR ANY OTHER PERSON. EXCEPT AS SET FORTH ABOVE,
AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, EQUALLOGIC DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES, ORAL OR WRITTEN, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NON INFRINGEMENT AND ANY WARRANTIES ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF THE TRADE. 

        8.2    Limitations.    The cumulative liability of EqualLogic to VAR for all claims relating to the Products and any
services EqualLogic renders hereunder, in contract, tort, or otherwise, shall not exceed the total amount of all fees paid by VAR to EqualLogic under this Agreement within the prior year. This
limitation shall not apply to the indemnification provided in Section 9 below. In no event shall either party be liable to the other for any consequential, special, incidental or other indirect
damages, including without limitation lost profits, even if advised of the possibility thereof, except that this limitation shall not apply to a breach by VAR of Sections 5.3 or a breach by a party of
Section 6. 

SECTION 9: INTELLECTUAL PROPERTY INDEMNIFICATION  

        9.1    Indemnification By EqualLogic.    EqualLogic shall (as long as VAR is not in default under this Agreement or
any other agreement with EqualLogic) defend and indemnify VAR from and against any and all damages, costs and expenses, including attorneys' reasonable fees, incurred by VAR in connection with any
third-party claim of infringement by the Products of any U.S copyright or misappropriation of any trade secret, provided EqualLogic is promptly notified of any and all threats, claims and proceedings
related thereto and given reasonable assistance by VAR and the opportunity to assume sole control over defense and settlement of any claim. EqualLogic will not be responsible for any settlement it
does not approve in writing. The foregoing obligations do not apply with respect to the Products or portions or components thereof (a) modified after delivery by EqualLogic, (b) combined
with other products, processes or materials to the extent the alleged infringement relates to such combination, or (c) used other than as specified in the accompanying documentation. In the
event that the Products are held, or is believed by EqualLogic, to be infringing, EqualLogic shall have the option, at its expense, to (i) modify the Products to be non-infringing,
(ii) obtain a license for continued use of the Products, (iii) replace the Products with functionally equivalent noninfringing products or (iv) cease selling the Products pursuant
to this Agreement. THIS SECTION STATES THE ENTIRE LIABILITY OF EQUALLOGIC AND VAR'S SOLE AND EXCLUSIVE REMEDIES FOR ANY INFRINGEMENT BY THE PRODUCTS. 

        9.2    Indemnification By VAR.    VAR shall defend, indemnify and hold harmless EqualLogic and its affiliated
companies, and their respective officers, directors, employees and agents from and against any and all damages, costs and expenses, including attorneys' reasonable fees, incurred by EqualLogic in 

8

 

connection
with any third-party claim (i) against EqualLogic by a Customer that relates to such Customer's relationship with VAR (and not to any direct relationship which EqualLogic may have
with such Customer) including but not limited to representations made by, actions or omissions by VAR inconsistent with this Agreement, or (ii) events described in (a) through
(c) of Section 9.1 above, or (iii) any violation under Section 15 below. 

SECTION 10: POWER AND AUTHORITY  

        Each party hereby represents and warrants to the other party hereto that it has full power and authority to enter into and perform under the terms of this
Agreement, and the person executing this Agreement on behalf of such party has been properly authorized and empowered to so execute this Agreement. 

SECTION 11: NOTICES  

        All notices or other communications to be given hereunder shall be in writing and delivered either by telecopy (confirmation by air mail) or by international
second-day courier, courier charges prepaid, and addressed to the appropriate party as follows: If to VAR:                        ,
 and if to EqualLogic: EqualLogic, Inc., 9 Townsend West,
Nashua, NH 03063, Attn.: Mgr. Contracts. Notices delivered personally shall be effective upon delivery and notices delivered by any other authorized method shall be effective upon their receipt by the
party to whom they are addressed. 

SECTION 12: ASSIGNMENT; CHANGE OF CONTROL  

        This Agreement (and rights and obligations hereunder) may not be assigned or transferred in any manner, whether in whole or in part, by VAR, nor may VAR delegate,
sublicense or subcontract any obligation incurred hereunder without the prior written consent of EqualLogic. Subject to the foregoing, this Agreement shall inure to the benefit of, and shall be
binding on, the parties hereto, their successors and assigns. In the event of a Change of Control (as defined below) of VAR this Agreement shall automatically terminate unless VAR obtains the written
consent of EqualLogic at least thirty (30) days before such Change of Control takes place. For the purposes of this agreement, the
term "Change of Control" shall refer to any merger, acquisition or similar business combination by VAR, or a sale of more than 50% of VAR's assets or
voting stock to any third party 

SECTION 13: GOVERNING LAW AND LANGUAGE  

        This Agreement and the rights and obligations of the parties shall be governed and construed in accordance with the laws of the State of New Hampshire and the
United States. Any action brought pursuant to or in connection with this Agreement shall be brought only in the state or federal courts within the State of New Hampshire without regard to its conflict
of laws provisions. In any such action, the parties all submit to the personal jurisdiction of the courts of the State of New Hampshire and waive any objections to venue in such courts. The United
Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. 

SECTION 14: ENTIRE AGREEMENT; WAIVER; SEVERABILITY  

        The Agreement, including the attached Schedules, constitutes the entire agreement between the parties, and supersedes all prior oral or written agreements or
communications with regard to the subject matters described. No additional or conflicting term in a purchase order or other document shall have any effect on the terms of this Agreement. This
Agreement may not be modified except by a writing signed by authorized representatives of both parties. A waiver by either party of its rights hereunder shall not be binding unless contained in a
writing signed by an authorized representative of the party waiving its rights. The non-enforcement or waiver of any provision on one occasion shall not 

9

 

constitute
a waiver of such provision on any other occasions unless expressly so agreed in writing. It is agreed that no usage of trade or other regular practice or method of dealing between the
parties hereto shall be used to modify, interpret, supplement, or alter in any manner the terms of this Agreement. If any provision of this Agreement is held to be invalid, illegal or unenforceable,
in whole or in part, such holding will not affect the validity of the other provisions of this Agreement. By signing this Agreement, VAR releases all claims against EqualLogic which may exist under
any prior agreement for the sale of the Products. VAR IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY NOT EXPRESSLY CONTAINED IN THIS AGREEMENT 

SECTION 15: COMPLIANCE WITH LAWS  

        VAR shall, at its own expense, comply with all laws relating to the marketing, sublicensing and distribution of the Products as contemplated hereunder (including
but not limited to all import and export laws), and shall procure all licenses and pay all fees and other charges required thereby. In furtherance but not in limitation of the above neither VAR nor
any of its directors, officers, employees, or agents all make or offer to make any payment or gift directly or indirectly to any employee, officer, or representative of any governmental entity or
instrumentality or to any foreign political party, any official of a foreign political party, or candidate, when such payment would constitute a bribe, kickback, or illegal payment under U.S. or
applicable foreign laws. Additionally, the VAR shall comply with the regulations set forth on the EqualLogic Partner extranet (a current copy of which is attached as Schedule 7) including but
not limited to (i) not permitting any of the Products to be shipped or distributed or otherwise exported or re-exported by VAR or any third party (i) into (or to a national
or resident of) any country to which the United States of America has embargoed goods; or (ii) to anyone on the United States of America's Treasury Department's list of Specially Designated
Nationals, the United States of America's Commerce Department's Table of Denial Orders or the Office of Foreign Asset Control List. 

SECTION 16: INDEPENDENT CONTRACTOR  

        Each party hereto shall be and remain an independent contractor; nothing herein shall be deemed to constitute the parties as partners, and neither party shall
have any authority to act, or attempt to act, or represent itself, directly or by implication, as an agent of the other or in any manner assume or create, or attempt to assume or create, any
obligation on behalf of or in the name of the other, nor all either be deemed the agent or employee of the other. VAR shall conduct business in a manner that reflects favorably at all times on
EqualLogic's products, goodwill and reputation and make no false or misleading representations with regard to EqualLogic, it affiliates or product. 

SECTION 17: GENERAL  

        Except with respect to the payment of monies due, neither party shall be deemed to be in default for delay in performance under this Agreement resulting directly
or indirectly from acts of God, war, civil disturbances, accidents, fire, explosions, strikes, labor disputes, fuel shortages, natural calamities, or from failure to receive on a timely basis suitable
parts, labor, materials, or transportation. The time for performance so delayed shall be extended for the period of such delay. Reseller all not provide any form of compensation or gifts to an
EqualLogic employee without the written consent of EqualLogic's CEO or CFO. 

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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above-written. This Agreement may be
executed by facsimile in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. 

	EQUALLOGIC, INC.:	 
	

 	

 Signature	

 
	

 	

Title	

 
	

 	

 Date	

 
	
VAR:	

 
	

 	

 Signature	

 
	

 	

Printed Name	

 
	

 	

 Title	

 
	

 	

 Date	

 

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