Document:

EX-10.40

EXHIBIT 10.40

EMPLOYMENT AGREEMENT

THIS AGREEMENT (the “Agreement”) is made and entered into effective the 1st day of January,
2011 (the “Effective Date”), by and between NORTHRIM BANCORP, INC. and its wholly owned subsidiary,
NORTHRIM BANK, a state-chartered commercial bank, with its principal office in Anchorage, Alaska
(collectively, the “Employer”), and Steven L. Hartung (the “Executive”).

In consideration of the mutual promises made in this Agreement, the parties agree as follows:

1. Employment.

Employer employs Executive and Executive accepts employment with Employer as its Executive
Vice President, Chief Credit Officer.

2. Term.

The term of this Agreement (the “Term”) shall commence on the Effective Date and shall
continue through December 31, 2011; provided, however, that on January 1, 2012 and each succeeding
January 1, the Term shall automatically be extended for one additional year unless, not later than
ninety (90) days prior to any such January 1, either party shall have given written notice to the
other that it does not wish to extend the Term. In the event the Term is not extended, Executive
shall have no rights to any of the severance payments or benefits continuation described in Section
5 except as specifically provided for in Section 5 (a).

3. Duties.

The Executive will serve as Executive Vice President, Chief Credit Officer of the Employer.
Executive shall render such executive, management and administrative services and perform such
tasks in connection with the affairs and overall operation of the Employer as is customary for his
position, subject to the direction of Employer’s President and Board of Directors. Executive shall
devote necessary time, attention and effort to Employer’s business in order to properly discharge
his responsibilities under this Agreement.

4. Compensation, Benefits, Reimbursement and Bonus.

a. Base Salary. In consideration for all services rendered by Executive during the term of
this Agreement, Employer shall pay Executive an annual base salary (before all customary and proper
payroll deductions) of $220,000 as adjusted from time to time (“Base Salary”). The Board of
Directors of the Employer shall review Executive’s salary each year, in a manner consistent with
that used for all management employees of the Employer, and in its sole discretion may adjust such
salary commensurate with the Executive’s performance under this Agreement.

b. Incentive Compensation. Under the Employer’s Executive Incentive Compensation Plan,
Executive shall be eligible to receive an annual bonus based on performance as defined by the Board
of Directors. Executive’s annual target bonus will equal 30% of Base Salary. This is the amount
payable for ambitious, but expected, results as determined by the Board of Directors. Executive’s
bonus may be more or less than this amount at the Board of Directors discretion but may not exceed
40% of Base Salary. If Employer is required to prepare an accounting restatement due to “material
noncompliance of the Employer”, the Employer will recover from the Executive any incentive
compensation during the three years prior to the date of the restatement, the excess of what would
have been paid under the restatement. The Employer reserves the right to substitute a profit
sharing plan in lieu of the Executive Incentive Compensation Plan at any time during the life of
this contract. If such a profit sharing plan is put in place Employer will be under no obligation
to provide incentive compensation payments to Executive.

c. Stock Options. Executive shall be eligible for stock option grants under the Employer’s
Stock Incentive Plan. The timing and size of awards will be at the discretion of the Board of
Directors.

d. SERP and Deferred Compensation Plan. Executive shall be entitled to receive an annual
contribution equal to 25% of annual Base Salary in accordance with the Employer’s Supplemental
Executive Retirement Plan, as may be adjusted at the discretion of the Board of Directors from time
to time. The Executive may also participate in the Employer’s Deferred Compensation Plan.

e. Other Benefits. Throughout the term of this Agreement, Employer shall provide Executive
with reasonable health insurance, disability and other employee benefits. Executive shall
participate in all employee benefit plans and programs of Employer on a basis at least as favorable
as that accorded to any other officer of Employer.

f. Expenses. Employer shall reimburse Executive for his reasonable expenses (including,
without limitation, travel, entertainment, and similar expenses) incurred in performing and
promoting the business of Employer. Executive shall present from time to time itemized accounts of
any such expenses as required by Employer, subject to any limits of company policy and the rules
and regulations of the Internal Revenue Service.

g. Automobile Allowance. Executive shall receive a SEVEN HUNDRED DOLLAR ($700.00) monthly
automobile allowance for his automobile, fuel and maintenance expenses for Bank business. No other
expense reimbursement will be provided for use of his vehicle.

5. Termination of Agreement.

a. Termination Due to a Change of Control. If (A) Employer (either Northrim BanCorp,
Inc. or Northrim Bank) is subjected to a Change of Control (as defined in Section 5(f)(i)), and
(B) either Employer or its assigns terminates Executive’s employment without Cause (either during
the annual term of this Agreement or by refusing to extend this Agreement when the annual
termination occurs every December 31) or Executive terminates his employment for Good Reason within
730 days of such Change of Control, then Employer shall pay Executive (i) all Base Salary earned
and all reimbursable expenses incurred under this Agreement through such termination date; (ii) an
amount equal to one (1) times Executive’s highest Base Salary over the prior three (3) years; and
(iii) benefits described in Sections 5(b)(I) and (II) below. The amounts described in Section
5(a)(i) and (ii) herein shall be paid no later than 45 days after the day on which employment is
terminated. No payment will be made pursuant to Section 5(a)(ii) unless the Executive has signed
an agreement, in a form acceptable to Employer, that releases and holds Employer harmless from all
known and unknown claims and liabilities arising out of Executive’s employment with Employer or the
performance of this Agreement (“Release Agreement”) and the Release Agreement has become
irrevocable prior to the payment date.

b. Termination by Employer Without Cause or by Executive for Good Reason. If Employer
terminates Executive’s employment without Cause, or if Executive terminates his employment for Good
Reason, Employer shall pay Executive in a lump sum: (i) all Base Salary earned and all
reimbursable expenses incurred under this Agreement through such termination date; and (ii) an
amount equal to one (1) times Executive’s highest Base Salary over the prior three (3) years. The
amount described in 5(b)(i) herein shall be paid no later than 45 days after the day on which
employment is terminated. The amount described in 5(b)(ii) herein shall be paid on the first day
of the month following a period of six (6) months after the termination of employment, provided
that the payment may be made sooner if either (i) the amount does not exceed the IRC Safe Harbor
or (ii) at the Executive’s election, the amount described in Section 5(a)(ii) is reduced to fit
within the IRC Safe Harbor. No payment will be made pursuant to Section 5(a)(ii) unless the
Executive has signed a Release Agreement.

(I) Benefits Continuation. In addition, Executive shall be entitled to health and dental
insurance benefits for a period of eighteen (18) months following the termination of this
Agreement. These benefits will be provided at Employer’s expense, but such period shall count
towards the Employer’s continuation of coverage obligation under Section 4980B of the Internal
Revenue Code (commonly referred to as “COBRA”).

(II) Age and Service Credit. Executive shall also be entitled to receive age credit and
credit for period of service towards all SERP plans for the remaining period of time covered by
this Agreement. If Executive is hired by Employer, its assigns, any company in control of
Employer, or any company controlled by Employer during the period covered by this Agreement, then
Executive will be entitled to be treated for all purposes relating to future compensation, and
benefits, as if this Agreement had never been terminated and as if Executive had performed his
responsibilities as an Executive throughout the period originally covered by this Agreement.

c. Termination by Employer for Cause or by Executive Without Good Reason. If Employer
terminates Executive’s employment for Cause or if Executive terminates his employment without Good
Reason, Employer shall pay Executive upon the effective date of such termination only such Base
Salary earned and expenses reimbursable under this Agreement incurred through such termination
date. In such case, Executive shall have no right to receive compensation or other benefits for
any period after termination under this Agreement.

d. Termination Due to Disability. If Employer terminates Executive’s employment on
account of any mental or physical Disability that prevents Executive from discharging his duties
under this Agreement, even with reasonable accommodation, Executive shall be entitled to: (i) all
Base Salary earned and reimbursement for expenses incurred under this Agreement through the
termination date, (ii) full Base Salary for the year following the termination date (less the
amount of any payments received by Executive during such one (1) year period under any
Employer-sponsored disability plan), and (iii) health and dental insurance benefits for a period of
one (1) year following the termination date, which benefits will be provided at Employer’s expense,
but such period shall count towards the Employer’s continuation of coverage obligation under
Section 4980B of Code (commonly referred to as “COBRA”). All such compensation shall be paid
Executive in one lump sum the first day of the month following a period of six (6) months after
Executive’s employment was terminated, provided that Executive has signed a Release Agreement in a
form acceptable to Employer.

If any disputed termination under Section 5(c) is subsequently determined to have been without
Cause, Executive’s recovery shall be limited to those payments and benefits set out under Section
5(b).

e. Termination Upon Death of Executive. Executive’s employment under this Agreement
shall be terminated upon the death of Executive. In such case, the Employer shall be obligated to
pay to the surviving spouse of Executive, or if there is none, to the Executive’s estate: (i) that
portion of Executive’s Base Salary that would otherwise have been paid to him for the month in
which his death occurred, and (ii) any amounts due him pursuant to the Employer’s pension plan, any
supplemental deferred compensation plan, and any other death, insurance, employee benefit plan or
stock benefit plan provided to Executive by the Employer, according to the terms of the respective
plans.

f. Termination Definitions.

(i) “Change of Control.” For purposes of this Agreement, the term “Change of Control” shall
mean the occurrence of one or more of the following events: (A) One person or entity acquiring or
otherwise becoming the owner of twenty-five percent or more of Employer’s outstanding common stock;
(B) Replacement of a majority of the incumbent directors of Northrim BanCorp, Inc. or Northrim Bank
by directors whose elections have not been supported by a majority of the Board of either company,
as appropriate; (C) Dissolution or sale of fifty percent or more in value of the assets, of either
Northrim BanCorp, Inc. or Northrim Bank; or (D) A change “in the ownership or effective control” or
“in the ownership of a substantial portion of the assets” of Employer, within the meaning of
Section 280G of the Internal Revenue Code.

(ii) “Cause.” For purposes of this Agreement, termination for “Cause” shall include
termination because Executive (A) continually fails to substantially perform his duties with the
Employer, (B) is adjudged guilty of a felony, any crime involving dishonesty or breach of trust or
any crime involving a breach of his fiduciary duties to the Employer, (C) is willfully and
continually failing to comply with any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease and desist order of a regulatory agency having jurisdiction over
Employer, (D)  commits a material act of dishonesty or disloyalty related to the business of the
Employer, or (E) is unable to substantially perform his duties with the Employer due to drug
addiction or chronic alcoholism. Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Employer’s Board of Directors at a meeting of the Board called for such purpose
(after reasonable notice to Executive and an opportunity for him, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board, he was guilty of
conduct that constitutes Cause (as defined above) and specifying the conduct in detail.

(iii) “Disability.” For purposes of this Agreement, “Disability” shall mean a medically
diagnosed physical or mental impairment that may be expected to result in death, or to be of long,
continued duration, and that renders Executive incapable of performing the essential duties
required under this Agreement even with reasonable accommodation. Employer’s Board of Directors,
acting in good faith, shall make the final determination of whether Executive is suffering under
any Disability (as herein defined) and, for purposes of making such determination, may require
Executive to submit himself to a physical examination by a physician mutually agreed upon by the
Executive and Employer’s Board of Directors at Employer’s expense.

(iv) “Good Reason.” For purposes of this Agreement, termination for “Good Reason” shall mean
termination by Executive as a result of any material breach of this Agreement by Employer. Good
Reason shall include, but not be limited to: (A) a material reduction in Executive’s compensation
defined as a reduction equal to or greater than five percent (5%) of Executive’s then annual base
salary, (B) a material reduction in Executive’s duties and responsibilities, but not merely a
change in title, or (C) relocation of Executive’s primary workplace by more than fifty (50) miles.
“Good Reason” will only be deemed to occur if, within ninety (90) days after a material reduction
or change described above first occurs, the Executive provides notice to the Employer of the
existence of Good Reason and of the Executive’s intended termination of employment due to Good
Reason, and the Employer does not remove Good Reason condition within ninety (90) days after
receiving such notice from the Executive. The Executive’s written notice must explain the basis on
which the Executive believes Good Reason exists, the cure period, and the date on which the
Executive intends to terminate employment, which must be no later than six (6) months after the
existence of the Good Reason. The provisions of Section 5(f)(iv) are intended to comply with the
Good Reason safe harbor provisions of Code Section 409A and applicable regulations.

(v) Termination from Employment. A termination from employment under this Agreement shall
mean a “Separation from Service” as interpreted in accordance with Code Section 409A and generally
meaning the date on which the Executive is no longer performing services for the Employer. The
Executive shall not have a Separation from Service while on military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six (6) months, or if
longer, so long as the Executive retains a right to reemployment under an applicable statute or
contract. A leave of absence constitutes a bona fide leave of absence only if there is a
reasonable expectation that the Executive will return to perform services.

6. Limit on Severance Payment for Change of Control.

Notwithstanding anything above in Section 5(a), if the severance payment provided for in that
Section, together with any other payments which the Executive has the right to receive from the
Employer, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code),
the severance payment shall be reduced. The reduction shall be in an amount so that the present
value of the total amount received by the Executive from the Employer or its affiliates and
subsidiaries will be 2.99 times the Executive’s base amount (as defined in Section 280G of the
Code) and so that no portion of the amounts received by the Executive shall be subject to the
excise tax imposed by Section 4999 of the Code (excise tax). Insofar as permitted by the Code,
Employer shall reduce those elements of the severance pay package specified by the Executive,
provided, however, that Employer will not reduce the SERP credits provided for in Section 5(b)(II).
The determination as to whether any reduction in the severance payment is necessary shall be made
by the Employer in good faith, and the determination shall be conclusive and binding on Executive.
If through error or otherwise Executive should receive payments under this Plan, together with
other payments the Executive has the right to receive from the Employer, in excess of 2.99 times
his base amount Executive shall immediately repay the excess to Employer upon notification that an
overpayment has been made.

7. Covenant Not To Compete.

a. Executive agrees that for the term of this Agreement and for a period of two (2) years
after this Agreement is terminated pursuant to Section 5(a) or (b) (with the understanding that the
two (2) year period will be shortened to one (1) year upon the completion of a transaction
constituting a Change of Control, as defined in Section 5(f)(i)), Executive will not directly or
indirectly be employed by, own, manage, operate, support, join, or benefit in any way from any
business activity that is competitive with Employer’s business or reasonably anticipated business
of which Executive has knowledge. For purposes of the foregoing, Executive will be deemed to be
connected with such business if the business is carried on by: (i) a partnership in which
Executive is a general or limited partner; or (ii) a corporation of which Executive is a
shareholder (other than a shareholder owning less than 5% of the total outstanding shares of the
corporation), officer, director, employee or consultant, whether paid or unpaid.

b. The parties agree that if a trial judge with jurisdiction over a dispute related to this
Agreement should determine that the restrictive covenant set forth above is unreasonably broad, the
parties authorize such trial judge to narrow the covenant so as to make it reasonable, given all
relevant circumstances, and to enforce such covenant. The provisions of this paragraph shall
survive termination of this Agreement.

8. Nondisclosure of Confidential Information.

a. During the term of Executive’s employment and thereafter, Executive agrees to hold
Employer’s Confidential Information in strict confidence, and not disclose or use it at any time
except as authorized by Employer and for Employer’s benefit. If anyone tries to compel Executive
to disclose any Confidential Information, by subpoena or otherwise, Executive agrees immediately to
notify Employer so that Employer may take any actions it deems necessary to protect its interests.
Executive’s agreement to protect Employer’s Confidential Information applies both during the term
of this Agreement and after employment ends, regardless of the reason it ends.

b. “Confidential Information” includes, without limitation, any information in whatever form
that Employer considers to be confidential, proprietary, information and that is not publicly or
generally available relating to Employer’s: trade secrets (as defined by the Uniform Trade Secrets
Act); know-how; concepts; methods; research and development; product, content and technology
development plans; marketing plans; databases; inventions; research data and mechanisms; software
(including functional specifications, source code and object code); procedures; engineering;
purchasing; accounting; marketing; sales; customers; advertisers; joint venture partners;
suppliers; financial status; contracts or employees. Confidential Information includes information
developed by Executive, alone or with others, or entrusted to Employer by its customers or others.

9. Nonsolicitation.

During the course of Executive’s employment and for a period of two (2) years from the date of
termination of employment for any reason, Executive shall not directly or indirectly solicit or
entice any of the following to cease, terminate or reduce any relationship with Employer or to
divert any business from Employer: (a) any person who was an employee of Employer during the one-
(1) year period immediately preceding the termination of Executive’s employment; (b) any customer
or client of Employer; or (c) any prospective customer or client of Employer from whom Executive
actively solicited business within the last one (1) year of Executive’s employment.

10. Non-Disparagement.

Executive will not, during the Term or after the termination or expiration of this Agreement
or Executive’s employment, make disparaging statements, in any form, about Employer’s officers,
directors, agents, employees, products or services which Executive knows, or has reason to believe,
are false or misleading.

11. Mutual Agreement to Arbitrate.

a. In the event of a dispute or claim between Executive and Employer related to Employee’s
employment or termination of employment, all such disputes or claims will be resolved exclusively
by confidential arbitration in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association (“AAA”). This means that the parties agree to
waive their rights to have such disputes or claims decided in court by a jury. Instead, such
disputes or claims will be resolved by an impartial AAA arbitrator whose decision will be final.

b. The only disputes or claims that are not subject to arbitration are any claims by Executive
for workers’ compensation or unemployment benefits, and any claim by Executive for benefits under
an employee benefit plan that provides its own arbitration procedure. Also, Executive and Employer
may seek injunctive relief in court in appropriate circumstances.

c. The arbitration procedure will afford Executive and Employer the full range of statutory
remedies. Employer will pay all costs that are unique to arbitration, except that the party who
initiates arbitration will pay the filing fee charged by AAA. Executive and Employer shall be
entitled to discovery sufficient to adequately arbitrate their claims, including access to
essential documents and witnesses, as determined by the arbitrator and subject to limited judicial
review. In order for any judicial review of the arbitrator’s decision to be successfully
accomplished, the arbitrator will issue a written decision that will decide all issues submitted
and will reveal the essential findings and conclusions on which the award is based.

12. Miscellaneous.

a. This Agreement contains the entire agreement between the parties with respect to
Executive’s employment with Employer, and is subject to modification or amendment only upon
agreement in writing signed by both parties.

b. This Agreement shall bind and inure to the benefit of the heirs, legal representatives,
successors and assigns of the parties, except that Employer’s rights and obligations may not be
assigned.

c. If any provision of this Agreement is invalid or otherwise unenforceable, in whole or in
part, then such provision shall be modified so as to be enforceable to the maximum extent permitted
by law. If such provision cannot be modified to be enforceable, the provision shall be severed
from the Agreement to the extent it is unenforceable. All other provisions and any partially
enforceable provisions shall remain unaffected and shall remain in full force and effect.

d. In the event of any claim or dispute arising out of this Agreement, the party that
substantially prevails shall be entitled to reimbursement of all expenses incurred in connection
with such claim or dispute, including, without limitation, attorneys’ fees and other professional
fees. This paragraph shall apply to expenses incurred with or without suit, and in any judicial,
arbitration or administrative proceedings, including all appeals therefrom.

e. Any notice required to be given under this Agreement to either party shall be given by
personal service or by depositing a copy of such notice in the United States registered or
certified mail, postage prepaid, addressed to the following address, or such other address as
addressee shall designate in writing:

Employer:

3111 “C” Street

Anchorage, AK 99503

Executive:

4127 Raspberry Road

Anchorage, AK 99502

f. This Agreement shall in all respects, including all matters of construction, validity and
performance, be governed by and construed and enforced according to the laws of the State of
Alaska.

g. This Agreement is intended to comply and shall be interpreted and construed in a manner
consistent with the provisions of Internal Revenue Code Section 409A, including any rule or
regulation promulgated thereunder. In the event that any provision of the Agreement would cause a
benefit or amount provided hereunder to be subject to tax under the Internal Revenue Code prior to
the time such amount is paid, such provision shall, without the necessity of further action by the
signatories to this Agreement, be null and void as of the Effective Date.

EMPLOYER:

NORTHRIM BANCORP, INC.

By: /s/ Ronald A. Davis

Ronald A. Davis

Its: Chairman of the Compensation Committee of The Board of Directors

NORTHRIM BANK

By: /s/ Ronald A. Davis

Ronald A. Davis

Its: Chairman of the Compensation Committee of The Board of Directors

EXECUTIVE:

/s/ Steven L. Hartung

Steven L. HartungEX-10.1

FOURTH AMENDMENT AND JOINDER TO REVOLVING CREDIT

AND SECURITY AGREEMENT

This Fourth Amendment to Revolving Credit and Security Agreement (the “Amendment”) is
effective as of this 31st day of December, 2010 by and among RAND A TECHNOLOGY
CORPORATION, a corporation organized under the laws of the Province of Ontario (“Foreign
Borrower”), RAND WORLDWIDE SUBSIDIARY, INC., a Delaware corporation and successor by merger of Rand
Worldwide U.S., Rand Imaginit and Rand Michigan, each as defined below (f/k/a Avatech Worldwide
Subsidiary, Inc., “Joining “Borrower” or “US Borrower” and together with the Foreign Borrower,
collectively the “Borrowers” and each a “Borrower”), the financial institutions which are now or
which hereafter become a party hereto (collectively, the “Lenders” and each individually a
“Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity,
the “Agent”).

BACKGROUND

A. On August 14, 2009, Rand Worldwide U.S. Holdings, Inc., a corporation organized under the
laws of the State of Delaware (“Rand Worldwide U.S.”), Rand Imaginit Technologies, Inc., a
corporation organized under the laws of the State of Delaware (“Rand Imaginit”), Rand Technologies
of Michigan, Inc., a corporation organized under the laws of the State of Michigan (“Rand
Michigan”), Foreign Borrower, Lenders and Agent entered into that certain Revolving Credit and
Security Agreement (as same has been or may be amended, modified, renewed, extended, replaced or
substituted from time to time, the “Loan Agreement”) to reflect certain financing arrangements
between the parties thereto. The Loan Agreement and all other documents executed in connection
therewith to the date hereof are collectively referred to as the “Existing Financing Agreements.”
All capitalized terms used herein and not otherwise defined herein shall have the meaning assigned
to such terms in the Loan Agreement.

B. Effective as of December 31, 2010, (a) Rand Imaginit merged with and into Rand Worldwide
U.S., (b) Rand Michigan merged with and into Rand Worldwide U.S., and (c) Rand Worldwide U.S.
merged with and into Joining Borrower and, in connection therewith, the name of the Joining
Borrower has been changed from “Avatech Solutions Subsidiary, Inc.” to “Rand Worldwide Subsidiary,
Inc.” (the “Transactions”).

C. As a result of the Transactions, Agent and Lenders agree that (i) that certain Collateral
Pledge Agreement dated as of August 14, 2009 by Rand Worldwide U.S. in favor of Agent shall be
terminated effective as of the Effective Date and (ii) that certain Collateral Pledge Agreement
dated as of August 14, 2009 by Rand Worldwide Foreign Holdings, Inc., a Delaware corporation (f/k/a
Rand Worldwide, Inc.), in favor of Agent shall be amended such that the Equity Interests in Rand
Worldwide U.S. shall no longer constitute Pledged Collateral (as such term is defined therein) as
of the Effective Date.

D. Borrowers have requested that Agent and Lenders (i) modify certain provisions contained in
the Loan Agreement, (ii) join Joining Borrower as a Borrower to the Loan Agreement, (iii) consent
to the Transactions, and (iv) terminate the Guaranty executed by each Ampersand Guarantor, and
Agent and Lenders are willing to do so on the terms and conditions hereafter set forth.

NOW, THEREFORE, with the foregoing background hereinafter deemed incorporated by reference
herein and made part hereof, the parties hereto, intending to be legally bound, promise and agree
as follows:

1. Joinder.

(a) Upon the effectiveness of this Amendment, Joining Borrower joins in as, assumes the
obligations and liabilities of, adopts the obligations, liabilities and role of, and becomes, a
Borrower under the Loan Agreement and the Existing Financing Agreements. All references to
Borrower or Borrowers contained in the Existing Financing Documents are hereby deemed for all
purposes to also refer to and include Joining Borrower as a Borrower and Joining Borrower hereby
agrees to comply with all terms and conditions of the Existing Financing Agreements as if Joining
Borrower were an original signatory thereto.

(b) Without limiting the generality of the provisions of paragraph (a) above, Joining Borrower
hereby becomes liable on a joint and several basis, along with all other Borrowers, for all
Advances made by Lenders under the Existing Financing Agreements and all Obligations under the
Existing Financing Agreements.

2. Amendments to Loan Agreement.

(a) On the Effective Date, a new definition shall be added to the Loan Agreement in its
appropriate alphabetical location as follows:

“Fourth Amendment Closing Date” shall mean December
31, 2010.

“Rand Subsidiary” shall mean Rand Worldwide
Subsidiary, Inc., a Delaware corporation formerly known as
Avatech Solutions Subsidiary, Inc.

“Rand Worldwide” shall mean Rand Worldwide, Inc., a
Delaware corporation, formerly known as Avatech Solutions
Inc.

(b) On the Effective Date, the following definitions contained in Section 1.2 of the Loan
Agreement are hereby amended and restated in their entirety as follows:

“Applicable Margin” for Revolving Advances and the facility
fee under Section 3.3(b) hereof (herein referred to as the “Facility
Fee”) shall mean, as of the Fourth Amendment Closing Date and
through the delivery of the quarterly financial statements of
Borrowers on a Consolidated Basis for the fiscal quarter ending
December 31, 2011, the applicable percentage specified below:

	 	 	 	 	 	 	 	 	 
	APPLICABLE MARGINS FOR

REVOLVING ADVANCES THAT

ARE DOMESTIC RATE LOANS
	 	APPLICABLE MARGINS FOR

REVOLVING ADVANCES THAT

ARE EURODOLLAR RATE

LOANS

	 	APPLICABLE MARGINS FOR

FACILITY FEE

	 	 	 	 	 

	 	 	 	 
	 	1.75	%	 	2.75%

	 	 	.375	%
	 	 	 	 	 

	 	 	 	 

Thereafter, effective as of the first Business Day following receipt by Agent of the
quarterly financial statements of Borrowers on a Consolidated Basis for the previous
fiscal quarter (each day of such delivery, an “Adjustment Date”), the
Applicable Margin for the Revolving Advances or the Facility Fee, as applicable,
shall be adjusted, if necessary, to the applicable percent per annum set forth in the
pricing table below corresponding to the Fixed Charge Coverage Ratio (as determined
in accordance with Section 6.5) ending on the last day of the most recently completed
fiscal quarter prior to the applicable Adjustment Date (each such period, a
“Calculation Period”):

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed Charge Coverage

Ratio

	 	Applicable Margins

for Revolving

Advances that are

Domestic Rate Loans
	 	Applicable Margins

for Revolving

Advances that are

Eurodollar Rate

Loans
	 	Applicable Margins

for Facility Fee

	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Less than 1.75 to 1.00

	 	 	2.50	%	 	 	3.25	%	 	 	.5	%
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal

to 1.75 to 1.00 but

less than 2.75 to

1.00

	 	2.25%

	 	3.00%

	 	.5%

	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal

to 2.75 to 1.00

	 	1.75%

	 	2.75%

	 	.375%

	 

	 	 	 	 	 	 	 	 	 	 	 	 

If the Borrowers shall fail to deliver the financial statements,
certificates and/or other information required under Sections 9.7 or
9.8 by the dates required pursuant to such section, each Applicable
Margin shall be conclusively presumed to equal the highest Applicable
Margin specified in the pricing table set forth above until the date
of delivery of such financial statements, certificates and/or other
information, at which time the rate will be adjusted based upon the
Fixed Charge Coverage Ratio reflected in such statements.

If, as a result of any restatement of, or other adjustment to, the
financial statements of Borrowers on a Consolidated Basis or for any
other reason, the Agent determines that (a) the Fixed Charge Coverage
Ratio as previously calculated as of any applicable date was
inaccurate, and (b) the proper calculation of the Fixed Charge
Coverage Ratio would have resulted in different pricing for any
period, then (i) if the proper calculation of the Fixed Charge
Coverage Ratio would have resulted in higher pricing for such period,
the Borrowers shall automatically and retroactively be obligated to
pay to the Agent, promptly upon demand by the Agent, an amount equal
to the excess of the amount of interest that should have been paid
for such period over the amount of interest actually paid for such
period; and (ii) if the proper calculation of the Fixed Charge
Coverage Ratio would have resulted in lower pricing for such period,
Lenders shall have no obligation to repay interest to the Borrowers;
provided, that, if as a result of any restatement or other event a
proper calculation of the Fixed Charge Coverage Ratio would have
resulted in higher pricing for one or more periods and lower pricing
for one or more other periods (due to the shifting of income or
expenses from one period to another period or any similar reason),
then the amount payable by the Borrowers pursuant to clause (i) above
shall be based upon the excess, if any, of the amount of interest
that should have been paid for all applicable periods over the
amounts of interest actually paid for such periods.

“Change of Ownership” shall mean (a) 100% of the Equity
Interests of Rand Subsidiary is no longer owned or controlled by a
Person who is its Original Owner, (b) 100% of the Equity Interests
of Holdings is no longer owned or controlled by a Person who is its
Original Owner, (c) 100% of the Equity Interests of Rand A is no
longer owned or controlled by a Person who is its Original Owner,
(d) 51% of the Equity Interests of Rand Worldwide is no longer owned
or controlled by a Person who is its Original Owner, (e) 80% of the
Equity Interests of RWW LLC is no longer owned or controlled by a
Person who its Original Owner or (f) any merger, consolidation or
sale of substantially all of the property or assets of any Borrower
unless such Borrower is merged or consolidated with and into another
Borrower or such sale of property or assets is to another Borrower.

“Domestic Subsidiary Stock” shall mean all of the issued and
outstanding Equity Interests owned by Rand Worldwide of Rand
Subsidiary and Holdings.

“Fixed Charge Coverage Ratio” shall mean and include, with
respect to any fiscal period, the ratio of (a) EBITDA, minus
Unfunded Capital Expenditures made during such period, minus
distributions (including tax distributions) made during such
period and dividends, minus cash taxes paid during such
period, plus, to the extent deducted in the calculation of
EBITDA, expenses incurred in connection with the Avatech Solutions,
Inc. merger in an aggregate amount not to exceed $1,800,000 to (b)
all Debt Payments (other than prepayments of Advances) made during
such period.

“Guarantor” shall mean Holdings and any other Person who may
hereafter guarantee payment or performance of the whole or any part
of the Obligations and “Guarantors” means collectively all such
“Persons.”

“Holdings” shall mean Rand Worldwide Foreign Holdings, Inc.,
a Delaware corporation formerly known as Rand Worldwide, Inc.

“Maximum Loan Amount” shall mean $9,000,000.

“Maximum Revolving Advance Amount” shall mean $9,000,000;
provided, however, that when such term is used with respect solely
to US Borrowers it shall mean the Maximum US Revolving Advance
Amount and when used with respect solely to Foreign Borrower it
shall mean the Maximum Foreign Revolving Advance Amount.

“Maximum US Revolving Advance Amount” shall mean $9,000,000.

“Original Owner” shall mean with respect to (i) RWW LLC, the
Ampersand Guarantors, (ii) Rand Worldwide, RWW LLC, (iii) Holdings,
Rand Worldwide, (iv) Rand Subsidiary, Rand Worldwide, and (v) Rand
A, Holdings.

“Pledge Agreement” shall mean, collectively, that Pledge
Agreement dated as of August 14, 2009 executed by Holdings in favor
or Agent, as amended from time to time; Pledge Agreement dated as of
December 31, 2010 executed by Rand Worldwide in favor of Agent; and
any other pledge agreement executed by any other Person to secure
the Obligations.

(c) On the Effective Date, Section 1.1 shall be deleted in its entirety and replaced as
follows:

Accounting Terms. As used in this Agreement, the Other
Documents or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not defined
in Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, shall have
the respective meanings given to them under GAAP; provided, however,
whenever such accounting terms are used for the purposes of
determining compliance with financial covenants in this Agreement,
such accounting terms shall be defined in accordance with GAAP as
applied in preparation of the unaudited financial statements of
Borrowers on a consolidated and consolidating basis for the fiscal
year ended December 31, 2010.

(d) On the Effective Date, Section 6.5 shall be deleted in its entirety and replaced as
follows:

Fixed Charge Coverage Ratio. Commencing as of March 31,
2011, cause to be maintained as of the end of each fiscal quarter, a
Fixed Charge Coverage Ratio of not less than 1.5 to 1.0, measured on
a rolling four (4) quarter basis; provided, however, the calculation
for the fiscal quarter ending (i) March 31, 2011 shall be measured on
a trailing three (3) month basis, (ii) June 30, 2011 shall be
measured on a trailing six (6) month basis, and (iii) September 30,
2011 shall be measured on a trailing nine (9) month basis.

(e) On the Effective Date, Section 9.7 shall be deleted in its entirety and replaced as
follows:

Annual Financial Statements. Furnish Agent and Lenders
within one hundred twenty (120) days after the end of each fiscal
year of Borrowers, financial statements of Rand Worldwide on a
consolidating and consolidated basis including, but not limited to,
statements of income and stockholders’ equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year
and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with
prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm
selected by Borrowers and satisfactory to Agent (the “Accountants”).
The report of the Accountants shall be accompanied by a statement
of the Accountants certifying that (i) they have caused this
Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their attention
which to their knowledge constituted an Event of Default or a
Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or
Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto
calculations which set forth Borrowers’ compliance with the
requirements or restrictions imposed by Sections 6.5, 7.4, 7.5,7.6,
7.7, 7.8 and 7.11 hereof. In addition, the reports shall be
accompanied by a Compliance Certificate.

(f) On the Effective Date, Section 13.1 shall be deleted in its entirety and replaced as
follows:

Term. This Agreement, which shall inure to the benefit of
and shall be binding upon the respective successors and permitted
assigns of each Borrower, Agent and each Lender, shall become
effective on the date hereof and shall continue in full force and
effect until December 31, 2012 (the “Term”) unless sooner terminated
as herein provided. Borrowers may terminate this Agreement at any
time upon ninety (90) days’ prior written notice upon payment in
full of the Obligations. In the event the Obligations are prepaid
in full prior to the last day of the Term (the date of such
prepayment hereinafter referred to as the “Early Termination Date”),
Borrowers shall pay to Agent for the benefit of Lenders an early
termination fee in an amount equal to (i) $120,000 if the Early
Termination Date occurs on or after the Closing Date to and
including December 31, 2011 and (ii) $60,000 if the Early
Termination Date occurs on or after January 1, 2012 to and including
the date immediately preceding the expiration of the Term.
Notwithstanding the foregoing, if Borrowers refinance the
Obligations with the proceeds of another credit facility with PNC as
Agent at any time on or after January 1, 2012, the early termination
fee payable under section (ii) hereof shall be waived.

3. Security Interest. As security for the payment of the Obligations, and satisfaction
by Borrowers of all covenants and undertakings contained in the Loan Agreement, the Other Documents
and the Existing Financing Agreements, each Borrower reconfirms the prior grant of the security
interest in and first priority, perfected lien in favor of Agent for its benefit and the ratable
benefit of each Lender, upon and to, all of its right, title and interest in and to the Collateral,
whether now owned or hereafter acquired, created or arising and wherever located, and Joining
Borrower hereby assigns and grants in favor of Agent for its benefit and the ratable benefit of
each Lender, a continuing first priority, perfected lien and security interest in and upon the
Collateral of Joining Borrower, whether now owned or hereafter acquired or arising and wherever
located.

4. Representations and Warranties of Borrowers. Each Borrower hereby:

(a) reaffirms all representations and warranties made to Agent and Lenders under the Loan
Agreement and all of the other Existing Financing Agreements and confirms that all are true and
correct in all material respects as of the date hereof (except to the extent any such
representations and warranties specifically relate to a specific date, in which case such
representations and warranties were true and correct in all material respects on and as of such
other specific date);

(b) reaffirms all of the covenants contained in the Loan Agreement (as amended hereby),
covenants to abide thereby until all Advances, Obligations and other liabilities of Borrowers to
Agent and Lenders under the Loan Agreement of whatever nature and whenever incurred, are satisfied
and/or released by Agent and Lenders;

(c) represents and warrants that no Default or Event of Default (other than a Potential
Default (as defined below)) has occurred and is continuing under any of the Existing Financing
Agreements or would occur after giving effect to this Amendment;

(d) represents and warrants that it has the authority and legal right to execute, deliver and
carry out the terms of this Amendment, that such actions were duly authorized by all necessary
limited liability company or corporate action, as applicable, and that the officers executing this
Amendment on its behalf were similarly authorized and empowered, and that this Amendment does not
contravene any provisions of its certificate of incorporation or formation, operating agreement,
bylaws, or other formation documents, as applicable, or of any contract or agreement to which it
is a party or by which any of its properties are bound; and

(e) represents and warrants that this Amendment and all assignments, instruments, documents,
and agreements executed and delivered in connection herewith, are valid, binding and enforceable in
accordance with their respective terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally.

5. Fee. On the date first noted above, Borrowers shall deliver to Agent, for the
benefit of Lenders, a non-refundable fee of $35,000 in immediately available funds, such fee to be
fully earned upon receipt and not subject to proration.

6. Consent and Waiver. The Agent and Lenders hereby consent to the Transactions and
waive any Defaults or Events of Default existing as of the date hereof (“Potential Default”) as a
result of the Transactions.

7. Amendment of Pledge. The Agent and Lenders hereby agree that, as of the Effective
Date, the Pledge Agreement dated as of August 14, 2009 by Rand Worldwide Foreign Holdings, Inc., a
Delaware corporation (f/k/a Rand Worldwide, Inc.), in favor of Agent shall be amended such that
the Equity Interests in Rand Worldwide U.S. shall no longer constitute Pledged Collateral.

8. Termination of Guarantees. The Agent and Lenders hereby agree that the following
agreements are terminated effective as of the Effective Date: (a) that certain Amended and
Restated Guaranty and Suretyship Agreement dated as of July 23, 2010 by Ampersand 2001 Limited
Partnership in favor of Agent and Lenders; (b) that certain Amended and Restated Guaranty and
Suretyship Agreement dated as of July 23, 2010 by Ampersand 2006 Limited Partnership in favor of
Agent and Lenders; and (c) Amended and Restated Guaranty and Suretyship Agreement dated as of July
23, 2010 by Ampersand 2001 Companion Fund Limited Partnership in favor of Agent and Lenders.

9. Conditions Precedent/Effectiveness Conditions. This Amendment shall be effective
upon the date of satisfaction of the following conditions precedent (“Effective Date”) (all
documents to be in form and substance reasonably satisfactory to Agent and Agent’s counsel):

(a) Agent shall have received this Amendment fully executed by the Borrowers.

(b) Agent shall have received an Amended and Restated Revolving Credit Note fully executed by
Rand Subsidiary.

(c) Agent shall have received a Pledge Agreement pursuant to which the Equity Interests of
Joining Borrower are pledged to Agent by Rand Worldwide, Inc., a Delaware corporation, (“Rand
Worldwide”) as security for the Obligations.

(d) Agent shall have received Joining Borrower’s state certified Certificate of Incorporation
and Joining Borrower’s Bylaws, certified by an officer of Joining Borrower.

(e) Agent shall have received an incumbency certificate for Joining Borrower identifying all
authorized officers with specimen signatures.

(f) Agent shall have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the board of directors, managers or members of each Borrower, as
applicable, authorizing the execution and delivery of, and the performance of such Borrower’s
obligations under, this Amendment and any related agreements, in each case certified by an officer
of such Borrower, as of the Effective Date; and each such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date
of such certificate.

(g) Agent shall have received the results of the Uniform Commercial Code, judgment and state
and federal tax lien searches against Joining Borrower showing no Liens on any of the assets or
property of Joining Borrower.

(h) Agent shall have received a good standing certificate for Joining Borrower dated not more
than thirty (30) days prior to the date of this Amendment, issued by the Secretary of State of the
jurisdiction of incorporation of Joining Borrower.

(i) Agent shall have received an opinion from Edwards Angell Palmer & Dodge LLP concerning
Joining Borrower and its execution, delivery and performance of the Loan Agreement and the Other
Documents to which it shall be party, satisfactory to Agent and dated as of the Fourth Amendment
Closing Date.

(j) Agent shall have received such other agreements, documents or information as requested by
Agent in its reasonable discretion.

10. Post-Closing Conditions. Within ten (10) days of the Effective Date, Agent shall
have received all original stock certificates accompanied by stock powers, assignments in blank or
other instruments of transfer evidencing all Equity Interests held by Rand Worldwide in the Joining
Borrower, all in form and substance reasonably satisfactory to Agent.

11. Further Assurances. Each Borrower hereby agrees to take all such actions and to
execute and/or deliver to Agent and Lenders all such documents, assignments, financing statements
and other documents, as Agent and Lenders may reasonably require from time to time, to effectuate
and implement the purposes of this Amendment.

12. Payment of Expenses. Borrowers shall pay or reimburse Agent and Lenders for its
reasonable attorneys’ fees and expenses in connection with the preparation, negotiation and
execution of this Amendment and the documents provided for herein or related hereto.

13. Reaffirmation of Loan Agreement. Except as modified by the terms hereof, all of
the terms and conditions of the Loan Agreement, as amended, and all other of the Existing Financing
Agreements are hereby reaffirmed and shall continue in full force and effect as therein written.

14. Confirmation of Indebtedness. Borrowers confirm and acknowledge that as of the
close of business on December 27, 2010, US Borrowers were indebted to Agent and Lenders for the
Advances under the Loan Agreement without any deduction, defense, setoff, claim or counterclaim, of
any nature, in the aggregate principal amount of $3,905,245.43, due on account of Revolving
Advances and $195,000 on account of undrawn Letters of Credit, Foreign Borrower was indebted to
Agent and Lenders for the Advances under the Loan Agreement without any deduction, defense, setoff,
claim or counterclaim, of any nature, in the aggregate principal amount of $0, plus in each
case all fees, costs and expenses incurred to date in connection with the Loan Agreement and the
Other Documents.

15. Acknowledgment of Guarantors. By execution of this Amendment, each Guarantor
hereby covenants and agrees that its Guaranty shall remain in full force and effect and shall
continue to cover all of the Borrowers’ Obligations to Agent and Lenders in accordance with its
respective Guaranty.

16. Miscellaneous. 

(a) Third Party Rights. No rights are intended to be created hereunder for the
benefit of any third party donee, creditor, or incidental beneficiary.

(b) Headings. The headings of any paragraph of this Amendment are for convenience
only and shall not be used to interpret any provision hereof.

(c) Modifications. No modification hereof or any agreement referred to herein shall
be binding or enforceable unless in writing and signed on behalf of the party against whom
enforcement is sought.

(d) Governing Law. The terms and conditions of this Amendment shall be governed by
the laws of the State of Illinois.

(e) Counterparts. This Amendment may be executed in any number of and by different
parties hereto on separate counterparts, all of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile or pdf transmission shall be deemed to be an original signature
hereto.

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

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

BORROWERS:

	 	 	 	 	 
	RAND WORLDWIDE SUBSIDIARY, INC.
	By:	 	/s/ Lawrence Rychlak

	 	 	 

	 	 	Name:

	 	Lawrence Rychlak

	 	 	Title: President and Chief Financial Officer

	 	 	 	 	 
	RAND A TECHNOLOGY CORPORATION
	By:	 	/s/ Lawrence Rychlak

	 	 	 

	 	 	Name:

	 	Lawrence Rychlak

	 	 	Title: President and Chief Financial Officer

	 	 	 
	PNC BANK, NATIONAL ASSOCIATION,

	as Lender and as Agent

	By:

	 	/s/ John M. Cunningham
	
 
	 	 

	 	 	Name: John M. Cunningham

Title: Vice President

GUARANTORS:

RAND WORLDWIDE FOREIGN HOLDINGS, INC.

	 	 	 	 	 
	By:	 	/s/ Lawrence Rychlak

	 	 	 

	 	 	Name:

	 	Lawrence Rychlak

	 	 	Title: President and Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}]]