Document:

Exhibit
10.12

LOAN AND SECURITY AGREEMENT

By and Among

SOVEREIGN BANK

and

INFO LOGIX INC.

and

OPT ACQUISITION LLC

and

EMBEDDED TECHNOLOGIES, LLC

Dated: March 16, 2006

TABLE OF CONTENTS

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Defined Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Accounting Terms

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  UCC Terms

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  THE LINE; TERM LOAN; USE OF PROCEEDS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Line of Credit

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Term Loan

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Use of Proceeds

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Method of Advances

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Letters of Credit

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST RATE

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Interest on the Line

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Interest on the Term Loan

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Request for LIBOR Rate

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Certain Provisions Regarding LIBOR Rates

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Prime Based Rate Fall Back

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  LIBOR Based Rate Borrowings

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7

  	
  LIBOR Unlawful

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8

  	
  LIBOR Based Rate Unascertainable or Unavailable

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Default Interest

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.10

  	
  Post Judgment Interest

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.11

  	
  Calculation

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.12

  	
  Limitation of Interest to Maximum Lawful Rate

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  PAYMENTS AND FEES

  	
   

  	
  15

  

 

 

 

	
  

  	
  4.1

  	
  Interest Payments on the Loans

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Principal Payments on the Line

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Principal and Interest Payments on the Term Loan

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Letter of Credit Fees

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Loan Fee

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Unused Fee

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Late Charge

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Termination of Line; Prepayment of Term Loan

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9

  	
  Payment Method

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Application of Payments

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.11

  	
  Loan Account

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.12

  	
  Indemnity; Loss of Margin

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13

  	
  LIBOR Indemnity

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  SECURITY; COLLECTION OF RECEIVABLES AND PROCEEDS OF
  COLLATERAL

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Personal Property

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Surety

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  General

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Collection of Receivables; Proceeds of Collateral

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Valid Organization, Good Standing and Qualification

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Licenses

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Ownership Interests

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Subsidiaries

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Financial Statements

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  No Material Adverse Change in Financial Condition

  	
   

  	
  22

  

 3
 

 

 

	
   

  	
  6.7

  	
  Pending Litigation or Proceedings

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8

  	
  Due Authorization; No Legal Restrictions

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.9

  	
  Enforceability

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10

  	
  No Default Under Other Obligations, Orders or
  Governmental Regulations

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Governmental Consents

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.12

  	
  Taxes

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13

  	
  Title to Collateral

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.14

  	
  Names; Addresses

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.15

  	
  Current Compliance

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16

  	
  Pension Plans

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.17

  	
  Leases and Contracts

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.18

  	
  Intellectual Property

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.19

  	
  Eligible Inventory Warranties

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.20

  	
  Eligible Account Warranties

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.21

  	
  Commercial Tort Claims

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.22

  	
  Deposit Accounts

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.23

  	
  Accuracy of Representations and Warranties

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.24

  	
  Interrelatedness of Borrowers

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  GENERAL COVENANTS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Payment of Principal, Interest and Other Amounts Due

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Limitation on Sale and Leaseback

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Limitation on Indebtedness

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Investments and Loans

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Guaranties

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Disposition of Assets

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Merger; Consolidation; Business Acquisitions;
  Subsidiaries

  	
   

  	
  27

  

 

 4
 

 

 

	
   

  	
  7.8

  	
  Taxes; Claims for Labor and Materials

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.9

  	
  Liens

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.10

  	
  Existence; Approvals; Qualification; Business
  Operations; Compliance with Laws

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.11

  	
  Maintenance of Properties, Intellectual Property

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.12

  	
  Insurance

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.13

  	
  Inspections; Examinations

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.14

  	
  Default Under Other Indebtedness

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.15

  	
  Pension Plans

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.16

  	
  Bank of Account

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.17

  	
  Maintenance of Management

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.18

  	
  Amendment to Organizational or Governing Documents

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.19

  	
  Dividends

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.20

  	
  Transactions with Affiliates

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.21

  	
  Restrictions on Interest Transfer

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.22

  	
  Name; Address or State of Organization Change

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.23

  	
  Notices

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.24

  	
  Additional Documents and Future Actions

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.25

  	
  Title to Equipment

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.26

  	
  Accounts Receivable

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.27

  	
  Inventory

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.28

  	
  Material Adverse Contracts

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.29

  	
  Restrictions on Use of Proceeds

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.30

  	
  Commercial Tort Claims

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.31

  	
  Possessory Collateral

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.32

  	
  Electronic Chattel Paper

  	
   

  	
  35

  

 

 5
 

 

 

	
  

  	
  7.33

  	
  Subordinated Indebtedness

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  FINANCIAL COVENANTS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Minimum Annual Net Income

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Minimum Quarterly Net Income

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Fixed Charge Coverage Ratio

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Capital Expenditures

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Changes to Financial Covenants

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Annual Statements

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Projections and Cash Flow

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Monthly Statements

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Accounts Receivable and Accounts Payable Statements

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  Inventory Certifications

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Borrowing Base Certifications and Related Documents

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Audit Reports

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Reports to Governmental Agencies and Other Creditors

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Compliance Certificates

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10

  	
  Accountant’s Certificate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11

  	
  Borrower Tax Returns

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.12

  	
  Guarantor’s Annual Statements

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.13

  	
  Requested Information

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  ENVIRONMENTAL REPRESENTATIONS AND COVENANTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Representations

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Real Property

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Covenant Regarding Compliance

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Notices

  	
   

  	
  39

  

 

 6
 

 

 

	
   

  	
  10.5

  	
  Indemnity

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Testing

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.7

  	
  Survival

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  CONDITIONS OF CLOSING

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Loan Documents

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Representations and Warranties

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  No Default

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  Proceedings and Documents

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Waiver Agreements

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.6

  	
  Delivery of Other Documents

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.7

  	
  Undrawn Availability

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.8

  	
  Non-Waiver of Rights

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Representations and Warranties

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  No Default

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Other Requirements

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  DEFAULT AND REMEDIES

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Events of Default

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Remedies

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Sale or Other Disposition of Collateral

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Actions with Respect to Accounts

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  Set-Off

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  Turnover of Property Held by Bank

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Delay or Omission Not Waiver

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Remedies Cumulative; Consents

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.9

  	
  Certain Fees, Costs, Expenses, Expenditures and
  Indemnification

  	
   

  	
  48

  

 7
 

 

 

	
   

  	
  13.10

  	
  Time is of the Essence

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.11

  	
  Acknowledgement of Confession of Judgment Provisions

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  COMMUNICATIONS AND NOTICES

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Communications and Notices

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  WAIVERS

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Waivers

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.2

  	
  Forbearance

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.3

  	
  Limitation on Liability

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  SUBMISSION TO JURISDICTION

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Submission to Jurisdiction

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  USA PATRIOT ACT PROVISIONS

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  USA Patriot Act Notice

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.2

  	
  Collateral Provisions

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.3

  	
  OFAC Compliance

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  BORROWING AGENCY PROVISIONS

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  MISCELLANEOUS

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.1

  	
  Brokers

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.2

  	
  Use of Bank’s Name

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.3

  	
  No Joint Venture

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.4

  	
  Survival

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.5

  	
  No Assignment by Borrower

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.6

  	
  Assignment or Sale by Bank

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.7

  	
  Binding Effect

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.8

  	
  Severability

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.9

  	
  No Third Party Beneficiaries

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.10

  	
  Modifications

  	
   

  	
  54

  

 

 8
 

 

 

	
  

  	
  19.11

  	
  Holidays

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.12

  	
  Law Governing

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.13

  	
  Integration

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.14

  	
  Exhibits and Schedules

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.15

  	
  Headings

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.16

  	
  Counterparts

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.17

  	
  Waiver of Right to Trial by Jury

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.18

  	
  Marketing Release

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.19

  	
  Credit Inquiries

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.20

  	
  Closing

  	
   

  	
  55

  

 

 9

 

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”)
is made effective the 16th day of March, 2006 by and among INFO LOGIX
INC., a Delaware corporation (“Infologix”), OPT ACQUISITION LLC, a Pennsylvania limited liability
company (“Optasia”), EMBEDDED
TECHNOLOGIES, LLC, a Delaware limited liability company (“Embedded”) and SOVEREIGN BANK
(“Bank”).  Infologix, Optasia and Embedded are referred
to herein jointly, severally and collectively as “Borrowers”
and each as a “Borrower”.

BACKGROUND

A.                                   Borrowers have requested that Bank extend
certain credit facilities to Borrowers, which Bank is willing to do on the
terms set forth herein.

B.                                     Capitalized terms used herein will have the
meanings set forth therefor in Section 1 of
this Agreement.

NOW,
THEREFORE, in
consideration of the terms and conditions contained herein, and of any
extensions of credit now or hereafter made to or for the benefit of Borrowers
by Bank, the parties hereto, intending to be legally bound hereby, agree as
follows:

1.                                       DEFINITIONS.

1.1                                 Defined Terms.  The following words and phrases as used in
capitalized form in this Agreement, whether in the singular or plural, shall
have the meanings indicated:

(a)                                  “Adjusted EBITDA” means for any period, EBITDA for such period,
minus taxes paid or due by Borrowers during such period, minus
unfinanced Capital Expenditures of Borrowers for such period, minus
dividends and distributions permitted under Section 7.19 and paid by Borrowers during such period, all
as determined in accordance with GAAP on a consolidated basis.

(b)                                 “Advance”
means any loan or extension of credit by Bank to any Borrower including,
without limitation, Line Advances, the Term Loan and the undrawn face amount of any letter of credit issued by Bank or
any Affiliate of Bank for the account of any Borrower.

(c)                                  “Affiliate”, as to any Person, means (i) each other
Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person in
question and (ii) any person who is an officer, director, member, manager or
partner of (A) such Person, (B) any Subsidiary of such Person, or (C) any
Person described in the preceding clause (i).

(d)                                 “Bank” shall have the meaning given such term in
the introductory paragraph of this Agreement and shall include all permitted
successors and assigns of such Person.

(e)                                  “Bank Indebtedness” shall mean all obligations and Indebtedness
of each Borrower to Bank or any Affiliate of Bank, whether now or hereafter
owing or existing, including, without limitation, all obligations under the
Loan Documents, all obligations to reimburse 

 

Bank or any Affiliate of
Bank for payments made by Bank or any such Affiliate pursuant to any letter of
credit issued for the account or benefit of any Borrower by Bank or any
Affiliate of Bank, all obligations to Bank or any Affiliate of Bank under any
Hedging Agreements, all other obligations or undertakings now or hereafter made
by or for the benefit of any Borrower to or for the benefit of Bank or any
Affiliate of Bank under any other agreement, promissory note or undertaking now
existing or hereafter entered into by any Borrower with Bank or any such
Affiliate, including, without limitation, all obligations of any Borrower to
Bank or any Affiliate of Bank under any guaranty or surety agreement and all
obligations of each Borrower to immediately pay to Bank or any Affiliate of
Bank the amount of any overdraft on any deposit account maintained with Bank or
any Affiliate of Bank, together with all interest and other sums payable in
connection with any of the foregoing.

(f)                                    “Borrower” and “Borrowers” shall have the meaning given such terms in the introductory paragraph
of this Agreement and shall include all permitted successors and assigns of
such Persons.

(g)                                 “Borrowing Agent” shall mean Infologix in its capacity as
borrowing agent.

(h)                                 “Borrowing Base Amount” means, at any time, the sum of (i) an amount
up to eighty-five percent (85%) of the amount of Infologix’s Eligible
Receivables, plus (ii) the lesser of (A) the Inventory Sublimit and (B)
an amount up to fifty percent (50%) of the Value of Infologix’s Eligible
Inventory.

(i)                                     “Business Day” means any day except a Saturday, Sunday or
other day on which banks in Philadelphia, Pennsylvania are authorized by law to
close.

(j)                                     “Capital Expenditures” means any expenditure that would be
classified as a capital expenditure on a statement of cash flow of Borrowers
prepared in accordance with GAAP.

(k)                                  “Capitalized Leases” means all lease obligations which have been or should be, in
accordance with GAAP, capitalized on the books of the lessee.

(l)                                     “Capitalized Lease Obligations” means all amounts payable with respect to a
Capitalized Lease.

(m)                               “Collateral”
shall have the meaning given such term in Section 5.6 of
this Agreement.

(n)                                 “Contract Period” means the period of time commencing on the date hereof and continuing
through and including March 15, 2009.

(o)                                 “Corporation”
means a corporation, partnership, limited liability company, trust,
unincorporated organization, association or joint stock company.

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

 

(q)                                 “Default Rate”
shall have the meaning given such term in Section  3.10 hereof.

(r)                                    “EBITDA” means, for any period, Net Income of
Borrowers for such period, plus the aggregate amounts deducted in
determining such Net Income in respect of (i) Interest Expense for such period,
(ii)  income taxes for such period, (iii)
depreciation for such period, and (iv) amortization for such period, all as
determined in accordance with GAAP on a consolidated basis.

(s)                                  “Eligible Inventory” means inventory in the possession of Infologix consisting of finished
goods in which Bank has a prior, perfected, first priority lien, which complies
with the representations set forth in Section 6.19 and
meets all specifications established by Bank, in its sole discretion, from time
to time.  Eligible Inventory shall not
include (i) work-in-process; (ii)
inventory located at any location other than an Eligible Inventory Location;
(iii) inventory which is in-transit, other than inventory in-transit to an
Eligible Inventory Location the payment for which is being made with a
merchandise letter of credit issued under this Agreement and with respect to
which all original documents of title and other evidence of ownership and
rights to possession and delivery have been delivered to Bank, with all
necessary endorsements, (iv) inventory consisting of fuels; (v) inventory consisting
of stores; (vi) obsolete, expired, slow-moving or unmerchantable inventory or
inventory which is not in good condition or not currently usable or salable in
the ordinary course of Infologix’s business as determined by Bank in its sole
discretion; (vii) inventory consisting of finished goods which do not meet the
specifications of the purchase order for which such inventory was produced;
(viii) inventory consisting of packaging, shipping materials or supplies; (ix)
inventory produced in violation of the Fair Labor Standards Act and subject to
the so-called “hot goods” provision contained in Title 29 U.S.C. Section
215(a)(1); (x) inventory held by Infologix for a period in excess of one (1)
year; (xi) inventory consisting of a controlled substance or substances for
which Bank would need a license or permit to sell or dispose of; (xii)
inventory located at a leased location, a warehouse location or a Permitted
Processor Location unless Bank has received a Waiver Agreement in form and
content satisfactory to Bank; (xiii) consigned inventory and (xiv) sample
inventory or inventory held for demonstration purposes.  Infologix shall immediately notify Bank if
any inventory previously scheduled, listed or referred to, in any statement or
report by or on behalf of Infologix and upon which Borrowers are basing
availability under the Line ceases to be Eligible Inventory.

(t)                                    “Eligible Inventory Location” means each of the locations listed on Schedule 1.1(t) hereof and each other location of which
Infologix has advised Bank in writing and, if such location is a leased
location, warehouse location or a processor location for which Bank has
received a Waiver Agreement in form and content satisfactory to Bank.

(u)                                 “Eligible Receivables” means accounts receivable of Infologix in which Bank has a prior,
perfected first priority lien, which have been outstanding no more than ninety
(90) days from the original invoice date and no more than sixty (60) days from
the original due date, are not subject to offset, deduction, counterclaim,
discount, credit, charge back, freight claim, allowance or adjustment, comply
with the representations set forth in Section 6.20 and
meet all specifications established by Bank in its sole discretion from time to
time.  Eligible Receivables shall not
include: (i) non-trade receivables; (ii) accounts receivable owed by any Person
whose corporate headquarters is located outside the United States of America or
Canada other than those fully secured by a letter of credit issued by a
financial institution acceptable to Bank in its sole 

 

discretion or covered by credit insurance acceptable to Bank in its
sole discretion in each case assigned to Bank or with respect to which Bank has
been named loss payee, as applicable; (iii) contra-accounts; (iv) intercompany
accounts or accounts from other affiliated corporations, organizations or
individuals; (v) accounts receivable from the United States government or any
of its agencies which have not been assigned to Bank under the Assignment of
Claims Act; (vi) finance charges; (vii) accounts receivable owed by a Person if
fifty percent (50%) or more of such Person’s accounts receivable owed to
Infologix have been outstanding more than ninety (90) days from the original
invoice date or more than sixty (60) days from the original due date; (viii)
accounts receivable of poor credit quality as determined by Bank in its sole
discretion; (ix) that portion of accounts receivable concentrated in individual
account debtors in excess of twenty percent (20%) (or in such other amounts or
percentages as may be established by Bank from time to time) of all Eligible
Receivables; (x) any account arising from guaranteed, pre-filed,
progress-billed, consignment or retainage sales; (xi) any account receivable
which is paid directly to a vendor or suppler of Infologix or paid to an escrow
agent for full or partial payment to a vendor or supplier of Infologix; (xii)
any account with respect to which the account debtor is located in a state
which requires Infologix, as a precondition to commencing or maintaining an
action in the courts of that state, either to (A) receive a certificate of
authority to do business and be in good standing in such state; or (B) file a
notice of business activities report or similar report with such state’s taxing
authority, unless (I) Infologix has taken one of the actions described in
clauses (A) or (B), (II) the failure to take one of the actions described in
either clause (A) or (B) may be cured retroactively by such Borrower at its
election, or (III) Infologix has proven, to Bank’s satisfaction, that it is
exempt from any such requirements under any such state’s laws and (xiii) any
account where the account debtor is a Sanctioned Person.  Infologix shall immediately notify Bank if
any account receivable previously scheduled, listed or referred to in any
certificate, statement or report by Borrowers and upon which Borrowers are
basing availability under the Line ceases to be an Eligible Receivable.

(v)                                 “Embedded Wind-Down” the intended wind-down and cessation of all
operations of Embedded.

(w)                               “Environmental Affiliate” means each Borrower, and
any other Person for whom any Borrower at any time has any liability
(contingent or otherwise) with respect to any claims arising out of the failure
of such Borrower or such Person to comply with all applicable Environmental
Requirements.

(x)                                   “Environmental Cleanup Site” shall mean any location which is listed or proposed for listing on the
National Priorities List, on CERCLIS or on any similar state list of sites
requiring investigation or cleanup, or which is the subject of any pending or
threatened action, suit, proceeding or investigation related to or arising from
any alleged violation of any Environmental Requirements.

(y)                                 “Environmental Consultants” has the meaning given such term in Section 10.6
hereof.

(z)                                   “Environmental Requirements” means any and all applicable federal, state or local laws, statutes,
ordinances, regulations or standards, administrative or court orders or
decrees, common law doctrines or private agreements, relating to (i) pollution
or protection of the environment and natural resources, (ii) exposure of
employees or other persons to Special Materials, (iii) protection of the public
health and welfare from the effects of Special Materials and 

 

their products, by-products, wastes, emissions, discharges or releases,
and (iv) regulation, licensing, approval or authorization of the manufacture,
generation, use, formulation, packaging, labeling, transporting, distributing,
handling, storing or disposing of any Special Materials.

(aa)                            “ERISA” has
the meaning given such term in Section
6.16 hereof.

(bb)                          “Event of Default” means each of the events specified in Section 13.1.

(cc)                            “Excess Cash Flow” for any period means EBITDA for such period,
minus Borrower’s Interest Expense paid during such period, minus,
principal payments paid on Borrowers long-term Indebtedness and Capitalized
Lease Obligations during such period, minus unfinanced Capital
Expenditures of Borrowers for such period, minus taxes paid by Borrower
during such period, minus dividends and distributions permitted by Section 7.19 hereof and paid by
Borrowers during such period, all as determined in accordance with GAAP on a
consolidated basis.

(dd)                          “Fixed Charge Coverage Ratio” means the ratio of Borrowers’ (a) Adjusted EBITDA for the twelve (12)
month period ending on the applicable test date to (b) Fixed Charges.

(ee)                            “Fixed Charges”
means the sum of (i) Borrowers’ Interest Expense for the twelve (12) month
period ending on the applicable test date, plus (ii) principal payments
due on Borrowers’ long-term Indebtedness and Capitalized Lease Obligations for
the ensuing twelve (12) month period commencing on the applicable test date,
all as determined in accordance with GAAP on a consolidated basis.

(ff)                                “GAAP” means
generally accepted accounting principles in the United States of America, in
effect from time to time, consistently applied and maintained.

(gg)                          “Good Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York and London, England are authorized by law to
close.

(hh)                          “Guarantors” means, jointly,
severally and collectively, Craig Wilensky, Richard Hodge and David Gulian.

(ii)                                  “Hedging Agreements” means any interest rate protection agreement, swap agreement (as
defined in 11 U.S.C. § 101), foreign currency exchange agreement,
commodity purchase or option agreement or other interest or exchange rate or
commodity price hedging agreements between any Borrower and Bank or any
Affiliate of Bank.

(jj)                                  “Indebtedness”, as applied to a Person, means:

(1)                                  all items (except items of capital stock or
of surplus) which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined;

 

(2)                                  to the extent not included in the foregoing,
all indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is
subject, whether or not the indebtedness, obligations or liabilities secured
thereby shall have been assumed by such Person; and

(3)                                  to the extent not included in the foregoing,
all indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock purchase, capital contribution or otherwise) or otherwise
to become directly or indirectly liable.

(kk)                            “Interest Expense”, as applied to Borrowers, means for any period, the amount of interest
paid or due on Indebtedness by Borrowers for such period, determined in
accordance with GAAP.

(ll)                                  “Inventory Sublimit” means an amount up to One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00).

(mm)                      “IP Security Agreement” means that certain Intellectual Property Security Agreement executed
by each of the Borrowers in favor of Bank dated of even date herewith.

(nn)                          “Letter of Credit Sublimit” means an amount up to Five Hundred Thousand Dollars ($500,000.00).

(oo)                          “LIBOR Based Rate” means the LIBOR Rate, plus the LIBOR Rate Margin.

(pp)                          “LIBOR Rate”
means, for any proposed or existing LIBOR Rate Advances, the rate of interest
for the applicable Rate Period which is determined by Bank to be the rate per
annum obtained by dividing (the resulting quotient to be rounded upward to the
nearest 1/100 of 1%) (i) the rate of interest estimated in good faith by Bank
in accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rates per annum for deposits in United
States dollars offered to major money center banks in the London interbank
market at approximately 11:00 a.m., London time, two (2) Good Business Days
prior to the first day of such Rate Period in amounts comparable to such
portion (or, if there are no such comparable amounts actively traded, the
smallest amounts actively traded) and have maturities comparable to such Rate
Period, by (ii) a number equal to 1.00 minus the LIBOR Rate Reserve Percentage
for such day.

(qq)                          “LIBOR Rate Advance” means any Advance accruing interest at the LIBOR Based Rate.

(rr)                                “LIBOR Rate Margin” means 287.5 basis points.

(ss)                            “LIBOR Rate Notification” means an irrevocable written notice in form acceptable to Bank
requesting the LIBOR Based Rate, which notice must be provided to Bank 

 

prior to 10:00 a.m. Philadelphia time on a Business Day which is at
least three (3) Good Business Days prior to the date on which such rate is
requested to take effect, specifying:

(1)                                  the principal amount which is to accrue
interest at such rate;

(2)                                  the date on which such rate is to take effect
and the Rate Period; and

(3)                                  whether such principal amount is a new
advance, a conversion from another interest rate or a renewal of another
interest rate.

(tt)                                “LIBOR Rate Reserve Percentage” for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for member banks of the
federal reserve system with respect to eurocurrency funding (currently referred
to as “Eurocurrency liabilities”) of any maturity.  Each LIBOR Based Rate shall be adjusted
automatically as of the effective date of any change in the LIBOR Rate Reserve
Percentage.

(uu)                          “Line” shall
have the meaning given such term in Section
2.1 hereof.

(vv)                          “Line Advances” shall
mean all Advances under the Line.

(ww)                      “Line Note”
shall have the meaning given such term in Section 2.1
hereof.

(xx)                              “Loan Account”
has the meaning given such term in Section
4.11 hereof.

(yy)                          “Loan Documents”
means this Agreement, the Notes, the Surety Agreements, the Subordination
Agreements, all Hedging Agreements and all other documents, executed or
delivered by any Borrower or any other Person pursuant to this Agreement or in
connection herewith, as they may be amended, modified or restated from time to
time.

(zz)                              “Loans”
means, collectively, the Line and the Term Loan.

(aaa)                      “Material Adverse Effect” means a material adverse effect, as determined by Bank in its sole
discretion (i) on the business, operations, assets, management, liabilities or
condition of any Borrower or any Guarantor, (ii) in the value of or the
perfection or priority of Bank’s lien upon the Collateral, or (iii) in the
ability of any Borrower or any Guarantor to perform its obligations under the
Loan Documents

(bbb)                   “Maximum
Line Amount” means an
amount up to Eight Million Dollars ($8,000,000.00).

(ccc)                      “Net Income”
means income (or loss) of Borrowers after income and franchise taxes and shall
have the meaning given such term by GAAP, provided that there shall be
specifically excluded therefrom (i) gains or losses from the sale of capital
assets, (ii) net income of 

 

any Person in which any Borrower has an ownership interest, unless
received by such Borrower in a cash distribution, and (iii) any gains arising
from extraordinary items, all as determined in accordance with GAAP on a
consolidated basis.

(ddd)                   “Notes” means, collectively, the Line Note.

(eee)                      “OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign
Assets Control.

(fff)                            “Out-Of-Formula Advance” means the amount by which (a) the sum of (i) the then outstanding Line
Advances, plus (ii) the face amount of all outstanding Letters of Credit
exceeds (b) the Borrowing Base Amount, subject to such restrictions on Advances
as are set forth in this Agreement.

(ggg)                   “PBGC” has the meaning given such term in Section 6.16 below.

(hhh)                   “Permitted Processor Location” means (a) 750 Ensminger Road, Suite 106,
Tonawanda, New York 14150 (occupied by Power-Up Manufacturing, Inc.) and (b)
140 Constitution  Blvd. Franklin, MA (occupied by Jaco, Inc.).

(iii)                               “Person”
means an individual, a Corporation or a government or any agency or subdivision
thereof, or any other entity.

(jjj)                               “Plan” has
the meaning given such term in Section
6.16 below.

(kkk)                      “Prime Based Line Rate” means the Prime Rate, plus the Prime Rate Line Margin (such
interest rate to change immediately upon any change in the Prime Rate).

(lll)                               “Prime Based Term Rate” means the Prime Rate, plus the Prime
Rate Term Margin (such rate to change immediately upon any change in the Prime
Rate).

(mmm)             “Prime
Rate” means the annual
interest rate established from time to time by Bank and generally known by Bank
as its “prime rate”, whether published by it publicly or only for the internal
guidance of its loan officers, which rate is used merely as a pricing index and
is not and should not be considered to represent the lowest or best rate
available to a borrower.

(nnn)                   “Prime
Rate Advance” means any
Advance accruing interest at the Prime Based Line Rate or the Prime Based Term
Rate.

(ooo)                   “Prime
Rate Line Margin” means
12.5 basis points.

(ppp)                   “Prime Rate Term Margin” means 200 basis points

(qqq)                   “Rate
Period” means, for any
principal portion of the Line for which Borrowing Agent elects the LIBOR Based
Rate, the period of time for which such rate shall apply to such principal
portion.

 

(rrr)                            “Real Property” had the meaning given such term in Section 10.2 below.

(sss)                      “Sanctioned Country” shall mean a country subject to a sanctions
program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html,
or as otherwise published from time to time.

(ttt)                            “Sanctioned Person” shall mean (i) a person named on the list of
Specially Designated Nationals or Blocked Persons maintained by OFAC available
at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as
otherwise published from time to time, or (ii) (A) an agency of the government
of a Sanctioned Country, (B) an organization controlled by a Sanctioned
Country, or (C) a person resident in a Sanctioned Country, to the extent
subject to a sanctions program administered by OFAC.

(uuu)                   “Special
Materials” means any and
all materials which, under Environmental Requirements, require special handling
in use, generation, collection, storage, treatment or disposal, or payment of
costs associated with responding to the lawful directives of any court or
agency of competent jurisdiction. 
Special Materials shall include, without limitation:  (i) any flammable substance, explosive, radioactive
material, hazardous material, hazardous waste, toxic substance, solid waste,
pollutant, contaminant or any related material, raw material, substance,
product or by-product of any substance specified in or regulated or otherwise
affected by any Environmental Requirements (including but not limited to any “hazardous
substance” as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended or any similar state or local law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities, and (iii) asbestos, gasoline, diesel fuel, motor
oil, waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon, urea formaldehyde and lead-containing
materials.

(vvv)                   “Subordinated
Indebtedness” means,
collectively, that certain Indebtedness of Borrowers owed to Cosmo DeNicola in
the principal amount of Two Hundred Thousand Dollars ($200,000.00), that
certain Indebtedness of Borrowers owed to Albert Ciardi, Jr. in the principal
amount of Two Hundred Thousand Dollars ($200,000.00), that certain Indebtedness
of  Infologix owed to Cosmo DeNicola in
the principal amount of One Hundred Forty-Seven Thousand Dollars ($147,000.00),
that certain Indebtedness of Infologix owed to Albert Ciardi, Jr. in the
principal amount of One Hundred Sixty-Five Thousand Dollars ($165,000.00), that
certain Indebtedness of Infologix owed to David Gulian in the principal amount
of Twenty-Nine Thousand Three Hundred Thirty-Four Dollars ($29,344.00), that
certain Indebtedness of Infologix owed to Craig Wilensky in the principal
amount of Twenty-Nine Thousand Three Hundred Thirty-Three Dollars ($29,333.00)
and that certain Indebtedness of Infologix owed to Richard Hodge in the
principal amount of Twenty-Nine Thousand Three Hundred Thirty-Three Dollars
($29,333.00) evidenced by the Subordinated Notes, which Indebtedness must at
all times be fully subordinated to all Bank Indebtedness on terms acceptable to
Bank in its sole discretion.

(www)             “Subordinated
Note” means,
collectively, that certain promissory note executed by Borrowers in favor of
Cosmo DeNicola in the face amount of Two Hundred Thousand Dollars ($200,000.00)
dated March 29, 2005, that certain promissory note executed by Borrowers in
favor of Albert Ciardi, Jr. in the face amount of Two Hundred Thousand Dollars 

 

($200,000.00) dated March 29, 2005, that certain promissory note
executed by Infologix in favor of Cosmo DeNicola in the face amount of One
Hundred Sixty-Five Thousand Dollars ($165,000.00) dated November 16, 2001, that
certain promissory note executed by Infologix in favor of Albert Ciardi, Jr. in
the face amount of One Hundred Sixty-Five Thousand Dollars ($165,000.00) dated
November 16, 2001, that certain promissory note executed by Infologix in favor
of David Gulian in the face amount of Forty Thousand Dollars ($40,000.00) dated
November 16, 2001, that certain promissory note executed by Infologix in favor
of Richard Hodge in the face amount of Forty Thousand Dollars ($40,000.00)
dated November 16, 2001 and that certain promissory note executed by Infologix
in favor of Craig Wilensky in the face amount of Forty Thousand Dollars
($40,000.00) dated November 16, 2001.

(xxx)                         “Subordination Agreements” means, collectively, that certain
Subordination Agreement by and among Borrowers, Bank and Cosmo DeNicola dated
of even date herewith, that certain Subordination Agreement by and among
Borrowers, Bank and Albert Ciardi, Jr. dated of even date herewith, that
certain Subordination Agreement by and among Infologix, Bank and David Gulian
dated of even date herewith, that certain Subordination Agreement by and among
Infologix, Bank and Richard Hodge dated of even date herewith and that certain
Subordination Agreement by and among Infologix, Bank and Craig Wilensky dated
of even date herewith.

(yyy)                   “Subsidiary” means a Corporation (i) which is organized
under the laws of the United States or any State thereof, or any other county
or jurisdiction, (ii) which conducts substantially all of its business and has
substantially all of its assets within the United States and (iii) of which
more than fifty percent (50%) of its outstanding voting stock of every class
(or other voting equity interest) is owned by any Borrower or one or more of
their Subsidiaries.

(zzz)                         “Surety Agreements” shall have the meaning given such term in Section  5.2
hereof.

(aaaa)                “Term
Loan” shall have the
meaning given such term in Section
2.2 hereof.

(bbbb)            “Term
Note” shall have the
meaning given such term in Section
2.2 hereof.

(cccc)                “Undrawn
Availability” at a
particular date shall mean an amount equal to (i) the lesser of (A) the
Borrowing Base Amount or (B) the Maximum Line Amount, minus (ii) the sum
of (A) the outstanding amount of Advances under the Line, plus (B) the
face amount of all outstanding Letters of Credit, plus (C) all amounts
due and owing to each Borrower’s trade creditors which are outstanding beyond
normal trade terms.

(dddd)            “Value” means, with respect to Eligible Inventory,
the lower of cost (determined on a first-in-first-out basis) or market value,
exclusive of any transportation, processing or handling charges.

(eeee)                “Waiver
Agreement” means an
agreement in form and content satisfactory to Bank in its sole discretion
executed by a landlord of a leased location of a Borrower a warehouseman of a
warehouse location of a Borrower or processor of Borrower’s inventory pursuant
to which, inter alia, such
landlord, warehouseman or processor waives any and all rights against any

 

Collateral at such location, permits Bank access to such location for
the purpose of selling and taking possession of any Collateral at such
location, waives any right of set-off or counterclaim against sums owed to any
Borrower and contains such other terms and provisions as Bank may reasonably
require.

1.2                                 Accounting Terms.  As used in this Agreement, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined elsewhere in this Agreement shall have
the respective meanings given to them under GAAP.

1.3                                 UCC Terms.  All terms
used herein and defined in the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania from time to time shall have the meanings given
therein unless otherwise defined herein.

2.                                       THE LINE; TERM LOAN; USE OF
PROCEEDS.

2.1                                 Line of Credit.  Bank will establish for
Borrowers for and during the Contract Period, subject to the terms and
conditions hereof, a revolving line of credit (the “Line”) pursuant to which Bank will
from time to time make Advances to Borrowers in an aggregate amount not
exceeding at any time the lesser of:  (a)
the Borrowing Base Amount or (b) the Maximum Line Amount.  Bank, in its sole discretion, may from time
to time (x) establish certain reserves against Eligible Receivables or Eligible
Inventory (including, without limitation, a dilution reserve) and/or (y)
increase or decrease the advance rates contained in the Borrowing Base
Amount.  Borrowers consent to any such
implementation of reserves or increase or decrease of advance rates and
acknowledge that Bank’s decrease of advance rates or implementation of reserves
may limit or restrict Advances available to Borrowers.  Within the limitations set forth above,
Borrowers may borrow, repay and reborrow under the Line.  The Line shall be subject to all terms and
conditions set forth in all of the Loan Documents, which terms and conditions
are incorporated herein.  Borrowers’
obligation to repay Line Advances shall be evidenced by Borrowers’ promissory
note (the “Line
Note”) in the face amount of Eight Million Dollars ($8,000,000.00),
which shall be in the form attached hereto as Exhibit “A”, with the
blanks appropriately filled in.

2.2                                 Term Loan.  Bank shall
lend to Borrowers and Borrowers shall borrow from Bank the aggregate amount of
One Million Five Hundred Thousand Dollars ($1,500,000.00) (the “Term Loan”).  Borrowers’ obligation to repay the Term Loan
shall be evidenced by Borrowers’ promissory note (the “Term Note”) in the face amount of One Million
Five Hundred Thousand Dollars ($1,500,000.00), which shall be in the form of Exhibit “B”, with the blanks
appropriately filled in.

2.3                                 Use
of Proceeds.  Borrowers
agree to use Advances to refinance obligations of Borrowers to Silicon Valley
Bank and for proper working capital purposes.

2.4                                 Method
of Advances.

(a)                                  Line Advances.  On
any Business Day, Borrowing Agent may request a Line Advance by delivering to
the bank officer designated by Bank no later than 12:00 (noon) Philadelphia
time on the Business Day such Advance is requested to be funded (or if Borrowing
Agent is requesting a LIBOR Rate Advance by 11:00 A.M., London time, three (3)
Good Business Days prior to the first day of the selected Rate Period) a written request for a Line Advance 

 

and a completed and executed borrowing base certificate together with
such collateral and back-up documentation as Bank may from time to time require
(and
if Borrowing Agent is requesting a LIBOR Rate Advance, such request shall
include a LIBOR Rate Notification).  Each request for an Advance under the Line
shall be signed by one of Todd Mallon, Cosmo DeNicola or David Gulian and shall
be conclusively presumed to be made by a Person authorized by Borrowers to do
so and, once received by Bank, shall be deemed irrevocable.  Availability for Advances shall be based upon the
most recent accounts receivable aging report required pursuant to Section  9.5 hereof
and the most recent inventory certification required pursuant to Section  9.6 hereof,
unless more frequent reports are required by Bank.

(b)                                 Term Loan Advance.  The entire principal amount of the Term Loan
shall be advanced on the date hereof.

(c)                                  Funding of Advances. 
Subject to the terms and conditions of this Agreement, Bank may make the
proceeds of an Advance available to Borrowers by crediting such proceeds to any
Borrowers’ deposit account with Bank.

2.5                                 Letters of Credit.  Bank, at its sole discretion, may issue for
the account of any Borrower merchandise and standby letters of credit in form
and content satisfactory to Bank, at its sole discretion, with a term not to
exceed the earlier to occur of (a) one hundred twenty (120) days (for
merchandise letters of credit), (b) twelve (12) months (for standby letters of
credit), or (c)  the last day of the
Contract Period.  Notwithstanding the
foregoing, at no time shall the (i) aggregate face amount of all outstanding
letters of credit issued under the Line exceed the Letter of Credit Sublimit;
and (ii) principal balance of the Line, plus the aggregate face amount of
all outstanding letters of credit issued under the Line, exceed the lesser of
the (A) Borrowing Base Amount or (B) Maximum Line Amount.  In addition, no letter of credit issued under
this Agreement shall have any “evergreen” or other automatic renewal provisions.

Borrowers will execute a
letter of credit application and letter of credit agreement, and such other
documents as may be required by Bank in connection with the issuance of letters
of credit hereunder.  The outstanding
face amount of all letters of credit issued by Bank pursuant hereto will reduce
Borrowers’ ability to borrow under the Line as if such face amount were a Line
Advance.  In the event that Bank pays any
sums due pursuant to such letters of credit for any reason, such payment shall
be deemed to be a Line Advance under the Line repayable by Borrowers pursuant
to the terms hereof.

In the event that the Line
is terminated for any reason or demand is made thereunder, Borrowers will
deposit with Bank an amount equal to one hundred five percent (105%) of the
face amount of all letters of credit then outstanding which have been issued
hereunder, plus all fees related thereto or to accrue thereunder.  Such funds will be held by Bank as cash
collateral to secure the Bank Indebtedness.

Borrowers hereby assume all risks of the acts or
omissions of Bank and any beneficiary of any letter of credit issued by
Bank.  Without limiting the generality of
the foregoing, Borrowers hereby indemnify and hold harmless Bank and any
Affiliate, shareholder, officer, director, official, agent, employee and
attorney of Bank and any of their respective heirs, executors, administrators,
successors and assigns (collectively, for this paragraph, the “Indemnitees”) from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever by reason of
or 

 

in connection with the execution and delivery or transfer of, or
payment or failure to pay under, any letter of credit issued by Bank or any
Indemnitee entering into any transaction described herein provided, however,
the Borrowers shall not be required to indemnify any Indemnitee for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by the willful misconduct or gross negligence of such Indemnitee.

3.                                       INTEREST RATE.

3.1                                 Interest on the Line.  Interest on outstanding Line Advances will
accrue from the date of advance until final payment thereof at the rate per
annum which is one of the two (2) interest rates options set forth below,
subject to the restrictions and in accordance with the procedures set forth in
this Agreement:

(a)                                  the LIBOR Based Rate; or

(b)                                 the Prime Based Line Rate.

3.2                                 Interest on the Term Loan.  Interest on the entire outstanding principal
balance of the Term Loan will accrue at rate per annum which is equal to the
Prime Based Term Rate.

3.3                                 Request for LIBOR Rate.  If Borrowers desire that all or part of the
Line Advances accrue interest at the LIBOR Based Rate, Borrowing Agent shall
give Bank a LIBOR Rate Notification. 
Upon delivery of a LIBOR Rate Notification, that portion of the
principal balance outstanding under the Line identified in such LIBOR Rate
Notification shall accrue interest at the LIBOR Based Rate as follows:  (a) with respect to the principal amount of
any new Line Advance from the date of such Advance until the end of the Rate
Period specified in such LIBOR Rate Notification; and/or (b) with respect to
all or any portion of Line Advances outstanding and accruing interest at
another LIBOR Based Rate at the time of the LIBOR Rate Notification related to
such Advances, from the expiration of the then current Rate Period related to
such Advances until the end of the Rate Period specified in such LIBOR Rate
Notification; and/or (c) with respect to all or any portion of the Line
Advances outstanding and accruing interest at the Prime Based Rate at the time
of the LIBOR Rate Notification related to such Advances, from the date set
forth in such LIBOR Rate Notification until the end of the Rate Period
specified in such LIBOR Rate Notification.

3.4                                 Certain Provisions Regarding LIBOR Rates.  Borrowers understand and agree that:  (a) subject to the provisions of this
Agreement, the LIBOR Based Rate may apply simultaneously to different portions
of the outstanding principal of the Line; (b) the LIBOR Based Rate may apply
simultaneously to various portions of the outstanding principal of the Line for
various Rate Periods; (c) the Rate Periods for the LIBOR Based Rate shall be
either one (1), two (2), or three (3)
months; (d) the LIBOR Based Rate applicable to any portion of the
outstanding principal of the Line may be different from the LIBOR Based Rate
applicable to any other portion of the outstanding principal of the Line; (e)
individual portions of the Line accruing interest at the LIBOR Based Rate must
be in amounts of at least Five Hundred Thousand Dollars ($500,000.00) each and
in increments of One Hundred Thousand Dollars ($100,000.00); and (f) the LIBOR
Based Rate shall not be available at any time during the continuation of an
Event of Default.

 

3.5                                 Prime Based Rate Fall Back.  After expiration of any Rate Period, any
principal portion of the Line corresponding to such Rate Period which has not
been converted or renewed in accordance with the terms of this Agreement shall
accrue interest automatically at the Prime Based Rate from the date of
expiration of such Rate Period until paid in full, unless and until receipt by
Bank of a request for another interest rate in accordance with the terms of
this Agreement.

3.6                                 LIBOR Based Rate Borrowings.  No more than three (3) separate borrowings in
the aggregate accruing interest at the LIBOR Based Rate may be outstanding at
any one time under the Line.   If at any
time Borrowers elect the LIBOR Based Rate as the applicable rate of interest
for the Term Loan, such rate shall be applicable to the entire principal
balance of the Term Loan.

3.7                                 LIBOR Unlawful.  In
the event that, as a result of any changes in applicable law or regulation or
the interpretation thereof, it becomes unlawful for Bank to maintain or fund
any Advance at the LIBOR Based Rate, then Bank shall immediately notify
Borrowing Agent thereof and Bank’s obligation to make, convert to, or maintain
any Advance at the LIBOR Based Rate shall be suspended until such time as Bank
may again cause the LIBOR Based Rate to be applicable and, until such time,
Advances subject to the LIBOR Based Rate shall accrue interest at the Prime
Based Rate.  Promptly after becoming
aware that it is no longer unlawful for Bank to maintain or fund Advances at
the LIBOR Based Rate, Bank shall notify Borrowing Agent thereof and such
suspension shall cease to exist.

3.8                                 LIBOR Based Rate Unascertainable or Unavailable.  If, at any time, Bank in good faith shall
determine (which determination shall be conclusive) that the LIBOR Based Rate
is unavailable or adequate means for ascertaining the LIBOR Based Rate do not
exist, Bank shall promptly notify Borrowing Agent of such determination.  Upon such determination, the right of
Borrowing Agent to select, maintain and/or convert to the LIBOR Based Rate
shall be suspended until notice from Bank that the LIBOR Based Rate is again
available or ascertainable and, until such time, all outstanding Advances under
the Line and the Term Loan shall accrue interest at the Prime Based Rate.

3.9                                 Default Interest.  Interest will accrue on the principal balance
of each of the Loans after the occurrence of an Event of Default or expiration
of the Contract Period at a rate which is three percent (3%) in excess of the
applicable rate of interest in effect for such Loan from time to time (the “Default Rate”).

3.10                           Post Judgment Interest.  Any judgment obtained for sums due hereunder
or under the Loan Documents will accrue interest at the applicable default rate
set forth above until paid.

3.11                           Calculation.  Interest will be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed.

3.12                           Limitation of Interest to Maximum Lawful Rate.  In no event will the rate of
interest payable hereunder exceed the maximum rate of interest permitted to be
charged by applicable law (including the choice of law rules) and any interest
paid in excess of the permitted rate will be refunded to Borrowers.  Such refund will be made by application of
the excessive amount of interest paid against any sums outstanding hereunder
and will be applied in such order as Bank may 

 

determine.  If the excessive amount of interest paid
exceeds the sums outstanding, the portion exceeding the sums outstanding will
be refunded in cash by Bank.  Any such
crediting or refunding will not cure or waive any default by Borrowers.  Borrowers agree, however, that in determining
whether or not any interest payable hereunder exceeds the highest rate
permitted by law, any non-principal payment, including without limitation
prepayment fees and late charges, will be deemed to the extent permitted by law
to be an expense, fee, premium or penalty rather than interest.

4.                                       PAYMENTS AND FEES.

4.1                                 Interest Payments on the Loans.  Borrowers will pay interest on outstanding (a) Prime Rate Advances
monthly in arrears on the first day of each calendar month commencing the first
day of the first calendar month following the date hereof and (b) LIBOR Rate Advances monthly in
arrears on the first day of each calendar month commencing the first day of the
first calendar month following the date hereof and on the last day of each Rate Period.

4.2                                 Principal Payments on the Line.  Borrowers will pay the outstanding Advances
under the Line, together with any accrued and unpaid interest thereon, and any
other sums due pursuant to the terms hereof, ON DEMAND after the occurrence of
an Event of Default or after expiration of the Contract Period.  If any Out-Of-Formula Advance arises or
exists under the Line for any reason whatsoever, including inventory or
accounts becoming ineligible, Bank decreasing advance rates or Bank
establishing reserves, Borrowers will repay such Out-Of-Formula Advance
immediately, without demand.

4.3                                 Principal and Interest Payments on the Term Loan.

(a)                                  Monthly Payment. 
Borrowers will pay the principal of the Term Loan in thirty-five (35)
equal and consecutive monthly installments of Forty-One Thousand Six Hundred
Sixty-Six and 66/100 Dollars ($41,666.66) each, on the first day of each
calendar month commencing on April 1, 2006, and in one (1) final payment of the
remaining principal balance, plus all accrued and unpaid interest thereon on
March 14, 2009.

(b)                                 Excess Cash Flow.  In
addition to the monthly Term Loan payments required by the foregoing subsection (a), at Bank’s option,
Borrower shall pay to Bank, on an annual basis contemporaneously with its
delivery of the financial statements required by Section 9.1 hereof and in any event no later than ninety
(90) days after the end of each fiscal year of Borrower, an amount equal to
fifteen percent (15%) of Excess Cash Flow for the immediately preceding fiscal
year, which payment shall be applied to the regularly scheduled payments of the
Term Loan in the inverse order in which they are due.

4.4                                 Letter of Credit Fees.  For each issuance or renewal of a documentary
letter of credit, Borrowers will pay to Bank an issuance or renewal fee in an
amount equal to .375% of the face amount of such merchandise letter of credit
for each ninety (90) day period or portion thereof during which each such
letter of credit is outstanding, payable coincident with and as a condition of
the issuance or renewal of such merchandise letter of credit.  For each issuance or renewal of a standby
letter of credit hereunder, Borrowers will pay to Bank an issuance or renewal
fee in an amount equal to 2.875% per annum of the face amount of such standby
letter of credit, payable coincident with and as a condition of the issuance or
renewal of such standby letter of credit. 
In addition, Borrowers shall pay such other fees and charges in
connection with each merchandise and 

 

standby
letter of credit as may be customarily charged by Bank.  Such fees shall be computed on the basis of a
year of 360 days.

4.5                                 Loan Fee.  In
consideration of Bank’s agreements contained herein, Borrowers shall pay to
Bank a loan fee in the amount of Twenty-Seven Thousand Five Hundred Dollars
($27,500.00), which fee may be charged as a Line Advance or charged to any bank
account of Borrowers maintained with Bank. 
The foregoing fee has been fully earned as of the date hereof and shall
be paid as follows:  (a) Thirteen
Thousand Seven Hundred Fifty Dollars ($13,750.00) on the date hereof and (b)
Thirteen Thousand Seven Hundred Fifty Dollars ($13,750.00) on the earlier of
(i) September 11, 2006 and (ii) the occurrence of any Event of Default
hereunder and demand for payment thereof by Bank.

4.6                                 Unused Fee.  So long as the Line is
outstanding and has not been terminated, and the Bank Indebtedness has not been
satisfied in full, Borrowers shall unconditionally pay to Bank a fee equal to
..25% per annum of the daily unused portion of the Line (which shall be
calculated as the difference between the Maximum Line Amount, minus the average
outstanding principal balance of cash advances under the Line for the
applicable month), which fee shall be computed on a monthly basis in arrears
and shall be due and payable on the first day of each month commencing on the
first day of the first full month after the date hereof.

4.7                                 Late Charge.  In the event that Borrowers fail to pay any
principal, interest or other fees or expenses payable hereunder for a period of
at least fifteen (15) days after any such payment is first due, in addition to
paying such sums, Borrowers will pay to Bank a late charge equal to five
percent (5%) of such past due payment as compensation for the expenses incident
to such past due payment.

4.8                                 Termination of Line;
Prepayment of Term Loan.

(a)                                  Right to Terminate. 
Borrowers may terminate the Line upon ninety (90) days prior written
notice to Bank.

(b)                                 Termination Fee.  In
the event that (i) the Line is terminated by Borrowers for any reason,
including without limitation prepayment or refinancing of the Line with another
lender or from any other source, or (ii) an Event of Default occurs and the
Line is terminated, Borrowers shall pay to Bank a termination fee calculated as
follows:

(1)                                  if the termination date is on or prior to the
first anniversary of the date hereof, the termination fee will be equal to one
percent (1%) of the sum of the (i) Maximum Line Amount, plus (ii) the
outstanding principal balance of the Term Loan; and

(2)                                  if the termination date is after the first
anniversary of the date hereof but on or prior to the second anniversary of the
date hereof, the termination fee will be equal to .5 percent (.5%) of the sum
of the (i) Maximum Line Amount, plus (ii) the outstanding principal balance of
the Term Loan.

If Borrowers request an
extension of the Contract Period, Bank reserves the right, inter  alia,
to amend the termination fees for subsequent periods as a condition of any
extension of the Line, together with such other conditions as Bank shall
require.

 

In the event Bank exercises
its right to accelerate payments under the Term Loan following an Event of
Default or otherwise, any tender of payment of the amount necessary to repay
all or part of the Term Loan made thereafter at any time by Borrowers, their
successors or assigns, or by anyone on behalf of Borrowers and any receipt by
Bank of proceeds of Collateral in payment of the Term Loan shall be deemed to
be a voluntary prepayment and in connection therewith Bank shall be entitled to
receive the premium required to be paid under the foregoing prepayment
restrictions.

(c)                                  Term Loan Co-Terminus with Line.  In the event the Line is terminated for any
reason including, without limitation, as a result of an Event of Default,
expiration of the Contract Period, pre-payment by Borrowers or otherwise, the
entire outstanding principal balance of each of the Term Loan, together with
any accrued and unpaid interest thereon and any other sums due pursuant to the
terms hereof shall be due and payable immediately.

4.9                                 Payment Method.  Borrowers irrevocably authorize Bank to debit
all payments required to be made by Borrowers hereunder or under any of the
Loans on the date due from any deposit account maintained by any Borrower with
Bank or to charge any or all of such payments as a Line Advance.  Otherwise, Borrowers will be obligated to
make such payments directly to Bank.  All
payments are to be made in immediately available funds.  If Bank accepts payment in any other form,
such payment shall not be deemed to have been made until the funds comprising
such payment have actually been received by or made available to Bank.

4.10                           Application of Payments.  Any and all payments on account of any of the
Loans will be applied to accrued and unpaid interest, outstanding principal and
other sums due hereunder or under the Loan Documents, in such order as Bank, in
its discretion, elects.  If Borrowers
make a payment or payments and such payment or payments, or any part thereof,
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or are required to be repaid to a trustee, receiver, or any other person
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or payments, the obligations or part thereof
hereunder intended to be satisfied shall be revived and continued in full force
and effect as if said payment or payments had not been made.

4.11                           Loan Account.  Bank will open and maintain on its books a
loan account (the “Loan Account”)
with respect to Advances made, repayments, prepayments, the computation and
payment of interest and fees and the computation and final payment of all other
amounts due and sums paid to Bank under this Agreement.  Except in the case of demonstrable error in
computation, the Loan Account will be conclusive and binding on Borrowers as to
the amount at any time due to Bank from any Borrower under this Agreement.

4.12                           Indemnity; Loss of Margin.  Borrowers will indemnify Bank against any
loss or expense which Bank sustains or incurs as a consequence of an Event of
Default, including, without limitation, any failure of Borrowers to pay when
due (at maturity, by acceleration or otherwise) any principal, interest, fee or
any other amount due under this Agreement or the other Loan Documents.  If Bank sustains or incurs any such loss or
expense it will from time to time notify Borrowing Agent in writing of the
amount determined in good faith by the Bank to be necessary to indemnify Bank
for the loss or expense.  Such amount
will be due and payable by Borrowers to Bank within ten (10) days after
presentation by Bank of a statement setting forth a brief explanation of and
Bank’s calculation of such amount, which statement shall be conclusively deemed
correct absent 

 

manifest
error.  Any amount payable to the Bank
under this Section will bear interest at the highest default rate payable
hereunder from the due date until paid, both before and after judgment.

In the event that any
present or future law, rule, regulation, treaty or official directive or the
interpretation or application thereof by any central bank, monetary authority
or governmental authority, or the compliance with any guideline or request of
any central bank, monetary authority or governmental authority (whether or not
having the force of law):

(a)                                  subjects Bank to any tax with respect to any
amounts payable under this Agreement or the other Loan Documents by any
Borrower or otherwise with respect to the transactions contemplated under this
Agreement or the other Loan Documents (except for taxes on the overall net
income of Bank imposed by the United States of America or any political
subdivision thereof); or

(b)                                 imposes, modifies or deems applicable any
deposit insurance, reserve, special deposit, capital maintenance, capital
adequacy, or similar requirement against assets held by, or deposits in or for
the account of, or loans or Advances or commitment to make loans or Advances
by, or
letters of credit issued or commitment to issue letters of credit by, the Bank; or

(c)                                  imposes upon Bank any other condition with
respect to Advances or extensions of credit or the commitment to make Advances
or extensions of credit under this Agreement,

and the result of any of the foregoing is to increase the costs of
Bank, reduce the income receivable by or return on equity of Bank or impose any
expense upon Bank with respect to any Advances or extensions of credit or
commitments to make Advances or extensions of credit under this Agreement, Bank
shall so notify Borrowers in writing. 
Borrowers agree to pay Bank the amount of such increase in cost, reduction
in income, reduced return on equity or capital, or additional expense within
ten (10) days after presentation by Bank of a statement concerning such
increase in cost, reduction in income, reduced return on equity or capital, or
additional expense.  Such statement shall
set forth a brief explanation of the amount and Bank’s calculation of the
amount (in determining such amount the Bank may use any reasonable averaging
and attribution methods), which statement shall be conclusively deemed correct
absent manifest error.  If the amount set
forth in such statement is not paid within ten (10) days after such
presentation of such statement, interest will be payable on the unpaid amount
at the highest default rate payable hereunder from the due date until paid,
both before and after judgment.

4.13                           LIBOR Indemnity. 
Borrowers shall indemnify Bank against any loss or expense (including
loss of margin) which Bank has sustained or incurred as a consequence of (a)
payment, prepayment or conversion of any portion of any LIBOR Rate Advances on
a day other than the last day of the corresponding Rate Period (even if such
payment is pursuant to demand by Bank pursuant to this Agreement and whether or
not any such payment, prepayment or conversion is consented to by Bank); or (b)
attempt by Borrowers to revoke in whole or in part any irrevocable LIBOR Rate
Notification pursuant to this Agreement.

If any such loss is
sustained, Bank shall from time to time notify Borrowing Agent of the amount
determined in good faith by Bank (which determination shall be conclusive) to
be necessary 

 

to indemnify Bank for such
loss or expense.  Such amount shall be
due and payable by Borrowers on demand.

5.                                      SECURITY; COLLECTION OF
RECEIVABLES AND PROCEEDS OF COLLATERAL

5.1                                 Personal Property.  As security for the full and timely payment
and performance of all Bank Indebtedness, each Borrower hereby grants to Bank
and each Affiliate of Bank a security interest in all existing and
after-acquired property of such Borrower of any nature including, without
limitation:

(a)                                  All present and future accounts, contract
rights, chattel paper, instruments and documents and all other rights to the
payment of money whether or not yet earned, for services rendered or goods
sold, consigned, leased or furnished by such Borrower or otherwise, together
with (i) all goods (including any returned, rejected, repossessed or consigned
goods), the sale, consignment, lease or other furnishing of which shall be
given or may give rise to any of the foregoing, (ii) all of such Borrower’s
rights as a consignor, consignee, unpaid vendor or other lienor in connection
therewith, including stoppage in transit, set-off, detinue, replevin and
reclamation, (iii) all general intangibles related thereto, (iv) all
guaranties, mortgages, security interests, assignments, and other encumbrances
on real or personal property, leases and other agreements or property securing
or relating to any accounts, (v) choses-in-action, claims and judgments, and
(vi) any returned or unearned premiums, which may be due upon cancellation of any
insurance policies.

(b)                                 All present and future inventory of such
Borrower (including but not limited to goods held for sale or lease or
furnished or to be furnished under contracts for service, raw materials,
work-in-process, finished goods and goods used or consumed in such Borrower’s
business) whether owned, consigned or held on consignment, together with all
merchandise, component materials, supplies, packing, packaging and shipping
materials, and all returned, rejected or repossessed goods sold, consigned,
leased or otherwise furnished by such Borrower and all embedded software
related thereto.

(c)                                  All present and future general intangibles
(including but not limited to payment intangibles, tax refunds and rebates,
manufacturing and processing rights, designs, patents, patent rights and
applications therefor, trademarks and registration or applications therefor,
tradenames, brand names, logos, inventions, copyrights and all applications and
registrations therefor), licenses, permits, approvals, software and computer
programs, license rights, royalties, trade secrets, methods, processes,
know-how, formulas, drawings, specifications, descriptions, label designs,
plans, blueprints, patterns and all memoranda, notes and records with respect
to any research and development.

(d)                                 All present and future machinery, equipment,
furniture, fixtures, motor vehicles, tools, dies, jigs, molds and other
articles of tangible personal property of every type together with all parts,
substitutions, accretions, accessions, attachments, accessories, additions,
components and replacements thereof, and all manuals of operation, maintenance
or repair, and all embedded software related thereto.

(e)                                  All present and future general ledger sheets,
files, books and records, customer lists, books of account, invoices, bills,
certificates or documents of ownership, bills of sale, 

 

business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
such Borrower or any service bureau.

(f)                                    All present and future letter of credit
rights and supporting obligations, including without limitation, all letters of
credit and letter of credit rights now existing or hereafter issued naming such
Borrower as a beneficiary or assigned to such Borrower, including the right to
receive payment thereunder, and all documents and records associated therewith.

(g)                                 All present and future deposit accounts of
such Borrower.  With respect to any
deposit accounts not maintained with Bank, such Borrower shall enter into a
control agreement satisfactory to Bank for each such deposit account.

(h)                                 All present and future financial assets and
investment property of such Borrower.

(i)                                     All of such Borrower’s commercial tort claims
from time to time listed on Schedule
5.1(i) hereto.  Each amendment adding commercial tort claims
to such Schedule
5.1(i) pursuant to the
provisions of Section
7.30 below shall
constitute a contemporaneous grant by such Borrower of a security interest in
all of such Borrower’s rights and interests in such commercial tort claims.

(j)                                     All funds, instruments, documents, policies
and evidence and certificates of insurance and rights thereunder, securities,
chattel paper and other assets of such Borrower or in which such Borrower has
an interest and all proceeds thereof, now or at any time hereafter on deposit
with or in the possession or control of Bank or owing by Bank to such Borrower
or in transit by mail or carrier to Bank or in the possession of any other
Person acting on Bank’s behalf, without regard to whether Bank received the
same in pledge, for safekeeping, as agent for collection or otherwise, or
whether Bank has conditionally released the same, and in all assets of such
Borrower in which Bank now has or may at any time hereafter obtain a lien,
mortgage, or security interest for any reason.

(k)                                  All products and proceeds of each of the
items described in the foregoing subparagraphs
(a)-(j) and all
supporting obligations related thereto.

5.2                                 Surety.  As further
security for the Bank Indebtedness, Borrowers shall cause to be executed an
delivered to Bank the absolute, unconditional, surety agreements (collectively,
the “Surety Agreements”) of each
Guarantor in form and content satisfactory to Bank.

5.3                                 General.  The collateral described above in Sections 5.1, and 5.2 is collectively
referred to herein as the “Collateral”.  The above-described security interests,
assignments, liens and guarantees
shall not be rendered void by the fact that no Bank Indebtedness exists as of any
particular date, but shall continue in full force and effect until the Bank
Indebtedness has been repaid, Bank has no agreement or commitment outstanding
pursuant to which Bank may extend credit to or on behalf of any Borrower and
Bank has executed termination statements or releases with respect thereto.  IT IS THE
EXPRESS INTENT OF THE BORROWERS THAT ALL OF THE COLLATERAL SHALL SECURE NOT
ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS, BUT ALSO ALL OTHER PRESENT AND
FUTURE OBLIGATIONS OF ANY BORROWER TO BANK.

 

5.4                                 Collection of Receivables;
Proceeds of Collateral.

(a)                                  Borrowers will collect their accounts
receivable only in the ordinary course of business.  Borrowers will notify all of their account
debtors to forward all accounts receivable collections owed to any Borrower to
a lockbox maintained by Bank, and will execute such lockbox agreements as may
be required by Bank and will pay to Bank all customary fees in connection with
such lockbox arrangement.  Immediately
upon receipt, Borrowers will forward to Bank all other checks, drafts and other
monies received by any Borrower which are proceeds of the Collateral.

(b)                                 All accounts receivable collections of
Borrowers and all checks, drafts and other monies received by any Borrower
which are proceeds of the Collateral will be deposited in a non-interest
bearing cash collateral account maintained at Bank (the “Cash Collateral Account”). 
Bank will have sole dominion and control over all items and funds in the
Cash Collateral Account and such items and funds may be withdrawn only by
Bank.  Bank will have the right to apply
all or any part of such funds towards payment of any of the Bank Indebtedness.

(c)                                  Solely for purposes of calculating interest
on the balance of the Line and availability thereunder, all items deposited
into the Cash Collateral Account will be credited by Bank as payments of the
principal balance of the Line on the Business Day following the
Business Day on which such items
are deposited into the Cash Collateral Account. 
As compensation for the foregoing arrangement, Borrowers will pay to
Bank a sum equal to two (2) days interest on all such deposits at the Prime
Based Line Rate.  Borrowers will
reimburse Bank on demand for the amount of any items credited as provided above
and subsequently returned unpaid.  Bank
may terminate the foregoing arrangement upon notice to Borrowers.

(d)                                 Borrowers agree that all monies, checks,
notes, instruments, drafts or other payments relating to or constituting
proceeds of any accounts receivable or other Collateral of Borrower which come
into the possession or under the control of any Borrower or any employees,
agents or other persons acting for or in concert with any Borrower, shall be
received and held in trust for Bank and such items shall be the sole and
exclusive property of Bank.  Immediately
upon receipt thereof, Borrower and such other persons shall remit the same or
cause the same to be remitted, in kind, to Bank.  Borrowers shall deliver or cause to be
delivered to Bank, with appropriate endorsement and assignment to Bank with
full recourse to Borrowers, all instruments, notes and chattel paper
constituting an account receivable or proceeds thereof or other
Collateral.  Bank is hereby authorized to
open all mail addressed to any Borrower and endorse all checks, drafts or other
items for payment on behalf of Borrower. 
Bank is granted a power of attorney by Borrowers with full power of
substitution to execute on behalf of Borrowers and in Borrowers’ name or to
endorse Borrowers’ name on any check, draft, instrument, note or other item of
payment or to take any other action or sign any document in order to effectuate
the foregoing.  Such power of attorney
being coupled with an interest is irrevocable.

6.                                       REPRESENTATIONS
AND WARRANTIES. Each Borrower represents and warrants as follows:

6.1                                 Valid Organization, Good Standing and Qualification.  Infologix is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.  Optasia is a limited
liability company duly formed, validly existing and in good standing 

 

under
the laws of the Commonwealth of Pennsylvania. 
Embedded is a limited liability company duly formed, validly existing
and in good standing under the laws of the State of Delaware.  Each Borrower has full power and authority to
execute, deliver and comply with the Loan Documents, and to carry on its
business as it is now being conducted and is duly licensed or qualified as a
foreign entity in good standing under the laws of each jurisdiction in which
the character or location of the properties owned by it or the business
transacted by it requires such licensing or qualification.  Schedule
6.1 lists each Borrower’s jurisdiction of organization, each
jurisdiction of foreign qualification and the organizational identification
number of each Borrower (if any) issued by each such jurisdiction.

6.2                                 Licenses.  Each Borrower and their respective employees,
servants and agents have all licenses, registrations, approvals and other
authority as may be necessary to enable such Borrower to own and operate its
business and perform all services and business which such Borrower has agreed
to perform in any state, municipality or other jurisdiction.

6.3                                 Ownership Interests.  The ownership of all equity interests,
debentures, options, warrants, bonds and other securities (debt and equity)
issued by Borrowers and all pledges, proxies, voting trusts, powers of attorney
and other agreements affecting the ownership or voting rights of said interests
is as set forth on Schedule 6.3
attached hereto.

6.4                                 Subsidiaries.  Except as set forth on Schedule 6.4 attached hereto, no
Borrower owns any shares of stock or other equity interests in any Person,
directly or indirectly (by any Subsidiary or otherwise).

6.5                                 Financial Statements.  Borrowers have furnished to Bank (a) the audited financial statements of
Borrowers and their subsidiaries
for their fiscal year ended December 31, 2004 certified without qualification
by independent public accountants and all management and comment letters in
connection therewith and (b) its internally prepared interim financial
statements as of November 30, 2005.  Such
financial statements of Borrowers (together with the related notes and
comments), are correct and complete, fairly present the financial condition and
the assets and liabilities of Borrowers at such dates, and have been prepared
in accordance with GAAP.  With respect to
the interim statements, such statements are subject to year-end adjustment and
any accompanying footnotes.

6.6                                 No Material Adverse Change in Financial Condition.  There has been no material
adverse change in the financial condition of any Borrower since the date of the
most recent financial statements of Borrowers delivered to Bank.

6.7                                 Pending Litigation or Proceedings.  Except as set forth on Schedule 6.7 attached hereto, there are
no judgments outstanding or actions, suits or proceedings pending or, to the
best of each Borrower’s knowledge, threatened against or affecting any
Borrower, at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.

6.8                                 Due Authorization; No Legal Restrictions.  The execution and delivery by
Borrowers of the Loan Documents, the consummation of the transactions
contemplated by the Loan Documents and the fulfillment and compliance with the
respective terms, conditions and provisions of the Loan Documents:  (a) have been duly authorized by all
requisite corporate or limited liability 

 

company
action of Borrowers, (b) will not conflict with or result in a breach of, or
constitute a default (or might, upon the passage of time or the giving of
notice or both, constitute a default) under, any of the terms, conditions or
provisions of any applicable statute, law, rule, regulation or ordinance, or
Borrowers’ organizational or governing documents or any indenture, mortgage, loan or credit agreement or instrument
to which any Borrower is a party or by which any Borrower may be bound or affected, or any judgment or order
of any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and (c) will not result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the property or assets of any Borrower under the terms or provisions of
any such agreement or instrument, except liens in favor of Bank.

6.9                                 Enforceability.  The Loan Documents have been duly executed by
Borrowers and delivered to Bank and constitute legal, valid and binding
obligations of Borrowers, enforceable in accordance with their terms, except as
enforceability may be limited by any bankruptcy, insolvency, reorganization,
moratorium or other laws or equitable principles affecting creditors’ rights
generally.

6.10                           No
Default Under Other Obligations, Orders or Governmental Regulations.  No Borrower is in violation of its
organizational or governing documents, and no Borrower is in default in the
performance or observance of any of its obligations, covenants or conditions
contained in any indenture or other agreement creating, evidencing or securing
any Indebtedness or pursuant to which any such Indebtedness is issued or in
violation of or in default under any other agreement or instrument or any
judgment, decree, order, statute, rule or governmental regulation, applicable
to it or by which its properties may be bound or affected.

6.11                           Governmental Consents.  No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of any Borrower is required in connection with the execution, delivery or
performance by such Borrower of the Loan Documents or the consummation of the
transactions contemplated thereby.

6.12                           Taxes.  Borrowers have filed all tax returns which
they are required to file and have paid, or made provision for the payment of,
all taxes which have or may have become due pursuant to such returns or
pursuant to any assessment received by them. 
Such tax returns are complete and accurate in all respects.  Borrowers do not know of any proposed
additional assessment or basis for any assessment of additional taxes.

6.13                           Title to Collateral.  The Collateral is and will be owned by
Borrowers free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention devices),
excepting only liens in favor of the Bank and those liens and encumbrances
permitted under Section 7.9
below.  Borrowers will defend the
Collateral against any claims of all persons or entities other than the Bank.

6.14                           Names; Addresses.  During the past five (5) years, no Borrower
has been known by any names (including trade names) other than those set forth
in Schedule 6.14 attached
hereto and has not been located at any addresses other than those set forth on Schedule 6.14 attached hereto.  The portions of the Collateral which are
tangible property and each Borrower’s books and records (both pertaining to the
Collateral and otherwise) will at all times be located at the addresses 

 

set
forth on Schedule 6.14; or
such other location determined by such Borrower after prior notice to Bank and
delivery to Bank of any items requested by Bank to maintain perfection and
priority of Bank’s security interests and access to each Borrower’s books and
records.  Schedule 6.14 identifies the chief executive office of
each Borrower.

6.15                           Current Compliance.  Each Borrower, or Borrowers, as applicable,
is/are currently in compliance with all of the terms and conditions of the Loan
Documents.

6.16                           Pension Plans.  Except as disclosed on Schedule 6.16 hereto, (a) no Borrower
has any obligations with respect to any employee pension benefit plan (“Plan”) (as such term is defined in the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (b) no events, including,
without limitation, any “Reportable Event”
or “Prohibited Transaction” (as
those terms are defined under ERISA), have occurred in connection with any Plan
of Borrower which might constitute grounds for the termination of any such Plan
by the Pension Benefit Guaranty Corporation (“PBGC”)
or for the appointment by any United States District Court of a trustee to
administer any such Plan, (c) all of each Borrower’s Plans meet with the
minimum funding standards of Section 302 of ERISA, and (d) no Borrower has any
existing liability to the PBGC.  No
Borrower is subject to or bound to make contributions to any “multi-employer
plan” as such term is defined in Section 4001(a)(3) of ERISA.

6.17                           Leases and Contracts.  Each Borrower has complied with the
provisions of all material leases, contracts, agreements or commitments of any
kind (such as employment agreements, collective bargaining agreements, powers
of attorney, distribution agreements, patent license agreements, contracts for
future purchase or delivery of goods or rendering of services, bonus, pension
and retirement plans or accrued vacation pay, insurance and welfare agreements)
to which it is a party and is not in default thereunder.  No other party is in default under any such
leases, contracts or other commitments and no event has occurred which, but for
the giving of notice or the passage of time or both, would constitute an event
of default thereunder.  Schedule 6.17 sets forth an accurate
list of all material leases, contracts, agreements and commitments to which
each Borrower is a party or by which it is found, including, without
limitation, any real or personal property leases to which such Borrower is a
party.

6.18                           Intellectual Property.  Each Borrower owns or possesses the
irrevocable right to use all of the patents, trademarks, service marks, trade
names, copyrights, licenses, franchises and permits and rights with respect to
the foregoing necessary to own and operate such Borrower’s properties and to
carry on its business as presently conducted and presently planned to be
conducted without conflict with the rights of others.  Schedule
6.18 sets forth an accurate list and description of each such
patent, trademark, service mark, trade name, copyright, license, franchise and
permit and right with respect to the foregoing, together with all registration
or application numbers or information with respect thereto.

6.19                           Eligible Inventory Warranties.  With respect to Eligible Inventory from time
to time scheduled, listed or referred to in any certificate, statement or
report prepared by or for any Borrower and delivered to Bank and upon which
Borrowers are basing availability under the Line, each Borrower warrants and
represents that (a) such inventory is located at an Eligible Inventory Location
and is not in transit except as permitted by subpart (iii) of Section 1.1(iii) hereof; (b)
Infologix has good, indefeasible and merchantable title to such inventory and
such inventory is not subject to any lien or security interest whatsoever
except for the prior, perfected security interest 

 

granted
to Bank; (c) such inventory is of good and merchantable quality, free from any
defects; (d) such inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties; (e) the
completion of the manufacture and sale or other disposition of such inventory
by Bank following an Event of Default shall not require the consent of any
person and shall not constitute a breach or default under any contract or
agreement to which Infologix is a party or to which the inventory is subject;
and (f) such inventory meets all other requirements of Eligible Inventory.

6.20                           Eligible Account Warranties.  With respect to all Eligible Receivables from
time to time scheduled, listed or referred to in any certificate, statement or
report prepared by or for any Borrower and delivered to Bank and upon which
Borrowers are basing availability under the Line, each Borrower warrants and
represents that (a) the accounts arose in the ordinary course of such Infologix’s
business; (b) the accounts are genuine, are in all respects what they purport
to be, and are not evidenced by any chattel paper, note, instrument or
judgment; (c) Infologix has absolute title to such accounts and the accounts
represent undisputed, bona fide transactions completed in accordance with the
terms thereof and as represented to Bank; (d) such accounts are not subject to any
lien whatsoever except for the prior, perfected security interest granted to
Bank; (e) no payments have been or will be made thereon, except payments
immediately delivered to Bank pursuant to the Loan Documents; (f) there are no
setoffs, counterclaims, disputes, discounts, credits, charge backs, freight
claims, allowances or adjustments existing or asserted with respect thereto and
Infologix has not made any agreement with any account debtor for any deduction
therefrom; (g) there are no facts, events or occurrences which impair the
validity or enforcement thereof or may reduce the amount payable thereunder as
shown on any certificates, statements or reports, prepared by or for Infologix
and delivered to Bank, Infologix’s books and records and all invoices and
statements delivered to Bank with respect thereto; (h) to the best of each
Borrower’s knowledge, all account debtors have the capacity to contract and are
solvent; (i) the goods sold giving rise thereto are not subject to any lien,
claim, encumbrance or security interest except that of Bank; (j) to the best of
each Borrower’s knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor’s financial condition; (k) the
account is not an account with respect to which the account debtor is an
Affiliate of any Borrower or a director, officer of employee of any Borrower or
its Affiliates; (l) the account does not arise with respect to goods which have
been returned, rejected, lost or damaged, or which have not been shipped or
arise with respect to services which have not been fully performed and accepted
as satisfactory by the account debtor; (m) the account is not an account with
respect to which the account debtor’s obligation to pay the account is
conditional upon the account debtor’s approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a consignment,
bill-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (n)
the amounts shown on the applicable certificates, statements, on Infologix’s
books and records and all invoices and statements which may be delivered to
Bank with respect to such accounts are actually and absolutely owing to
Infologix and are not in any way contingent; (o) the accounts have not been
sold, assigned or transferred to any other Person, and no Person except
Infologix has any claim thereto or (with the exception of the applicable
account debtor) any claims to the goods sold; and (p) such accounts meet all
other requirements of Eligible Receivables.

6.21                           Commercial Tort Claims.  Schedule
5.1(i) attached hereto, as it may be amended from time to
time pursuant to Section 7.30
below, lists all now existing commercial tort claims in favor of each Borrower.

 

6.22                           Deposit
Accounts.  Schedule 6.22 attached hereto
contains a list of all bank accounts maintained by each Borrower with any
Person other than Bank.

6.23                           Accuracy of Representations and Warranties.  No representation or warranty
by any Borrower contained herein or in any certificate or other document
furnished by any Borrower pursuant hereto or in connection herewith fails to
contain any statement of material fact necessary to make such representation or
warranty not misleading in light of the circumstances under which it was
made.  There is no fact which any
Borrower knows or should know and has not disclosed to Bank, which does or may
materially and adversely affect any Borrower, or any of its operations.

6.24                           Interrelatedness
of Borrowers.  The
business operations of each Borrower are interrelated and complement one
another, and such entities have a common business purpose, with intercompany
bookkeeping and accounting adjustments used to separate their respective
properties, liabilities, and transactions. 
To permit their uninterrupted and continuous operations, such entities
now require and will from time to time hereafter require funds and credit
accommodations  for general business
purposes.  The proceeds of Loans and
other credit facilities extended hereunder will directly and indirectly benefit
each Borrower severally and jointly, regardless of which Borrower requests or
which Borrower receives, part or all of the proceeds of such advances.

7.                                       GENERAL COVENANTS.

Except with the prior
written consent of Bank, each Borrower will comply with the following:

7.1                                 Payment of Principal, Interest and Other Amounts Due.  Each Borrower will pay when due
all Bank Indebtedness and all other amounts payable by it hereunder.

7.2                                 Limitation on Sale and Leaseback.  No Borrower will enter into any arrangement
whereby it will sell or transfer any real property or improvements thereon or
other fixed assets owned by it and then or thereafter rent or lease as lessee
such property, improvements or assets or any part thereof, or other property
which such Borrower shall intend to use for substantially the same purposes as
the property sold or transferred.

7.3                                 Limitation on Indebtedness.  No Borrower will have at any time outstanding
to any Person other than Bank, any Indebtedness for borrowed money, Capitalized
Lease Obligations, or any outstanding letters of credit, except:

(a)                                  Current accounts payable incurred in the
ordinary course of such Borrower’s business, accrued expenses and other current
items arising out of transactions (other than borrowings) in the ordinary
course of Borrower’s business;

(b)                                 Existing Indebtedness for borrowed money and
Capitalized Lease Obligations described on Schedule 7.3;
and

(c)                                  Future purchase money Indebtedness and
Capitalized Lease Obligations incurred to finance Capital Expenditures in an
aggregate amount at no time exceeding 

 

Five Hundred Thousand Dollars ($500,000.00) during each fiscal year of
Borrowers, provided that Bank
shall have the right of first refusal to provide such financing on reasonably
competitive terms.

Any of such existing
permitted Indebtedness may not be refinanced or replaced without the consent of
Bank.

7.4                                 Investments and Loans. No Borrower
will have or make any investments in all or a material portion of the capital
stock or securities of any Person, or any loans, advances or extensions of
credit to any Person, except:

(a)                                  Investments in direct or indirect obligations
of, or obligations unconditionally guaranteed by, the United States of America
and maturing within twelve (12) months from the date of acquisition;

(b)                                 Investments in commercial paper of Bank or
commercial paper rated “Prime-1” by Moody’s Investors Services or “A-1” by
Standard & Poor’s Corporation, or with an equivalent rating by another
rating agency of nationally recognized standing, maturing within three hundred
sixty-five (365) days from the date of acquisition;

(c)                                  Certificates of deposit maturing within
twelve (12) months from the date of acquisition issued by the Bank; and

(d)                                 Investments and loans listed on Schedule 7.4 attached hereto.

7.5                                 Guaranties.  Except with respect to the Bank Indebtedness,
no Borrower will directly or indirectly guarantee, endorse (other than for
collection or deposit in the ordinary course of business), discount, sell with
recourse or for less than the face value or agree (contingently or otherwise)
to purchase or repurchase or otherwise acquire, or otherwise become directly or
indirectly liable for, or agree (contingently or otherwise) to supply or
advance funds (whether by loan, stock purchase, capital contribution or
otherwise) in respect of, any Indebtedness, obligations or liabilities of any
Person.

7.6                                 Disposition of Assets.  No Borrower will sell, lease, transfer or
otherwise dispose of any of its property or assets, except for sales of
inventory in the ordinary course for fair consideration.

7.7                                 Merger; Consolidation; Business Acquisitions; Subsidiaries.  No Borrower will merge into or
consolidate with any Person, acquire any material portion of the stock,
ownership interests, assets or business of any Person, permit any Person to
merge into it, or form any new Subsidiaries.

7.8                                 Taxes; Claims for Labor and Materials.  Each Borrower will pay or cause to be paid
when due all taxes, assessments, governmental charges or levies imposed upon it
or its income, profits, payroll or any property belonging to it, including
without limitation all withholding taxes, and all claims for labor, materials
and supplies which, if unpaid, might become a lien or charge upon any of its
properties or assets.  No Borrower will
file or consent to the filing of, any consolidated income tax return with any
Person other than a Subsidiary.

 

7.9                                 Liens.  No Borrower will create, incur or permit to
exist any mortgage, pledge, encumbrance, lien, security interest or charge of
any kind (including liens or charges upon properties acquired or to be acquired
under conditional sales agreements or other title retention devices) on its
property or assets, whether now owned or hereafter acquired, or upon any
income, profits or proceeds therefrom, except:

(a)                                  Security interests and mortgages held by
Bank;

(b)                                 Liens incurred or deposits made in the
ordinary course of business (i) in connection with worker’s compensation, unemployment
insurance, social security and other like laws or (ii) to secure the
performance of statutory obligations, not incurred in connection with either
(A) the borrowing of money or (B) the deferred purchase price of goods or
inventory;

(c)                                  Encumbrances consisting of zoning
restrictions, easements, restrictions on the use of real property or minor
irregularities of title thereto, none of which impairs the use of such property
by such Borrower in the operation of its business;

(d)                                 Liens and security interests listed on Schedule 7.9 attached hereto; or

(e)                                  Purchase money liens or Capitalized Leases,
provided that:

(1)                                  the property subject to any of the foregoing
is acquired or leased by such Borrower in the ordinary course of its business
and the lien on any such property is created contemporaneously with such
acquisition;

(2)                                  purchase money Indebtedness or Capitalized
Lease Obligations so created shall not exceed 100% of the lesser of cost or
fair market value as of the time of acquisition or lease of the property
covered thereby;

(3)                                  the purchase money Indebtedness or
Capitalized Lease Obligations shall only be secured by the property so acquired
or leased; and

(4)                                  the purchase money Indebtedness or
Capitalized Lease Obligations are permitted by the provisions of Section 7.3.

No Borrower shall enter into
any agreement with any other Person which shall prohibit such Borrower from
granting, creating or suffering to exist, or otherwise restrict in any way
(whether by covenant, by identifying such event as a default under such
agreement or otherwise) the ability of the such Borrower to grant, create or
suffer to exist, any lien, security interest or other charge or encumbrance
upon or with respect to any of its assets in favor of the Bank.

No Borrower will apply for
or obtain any letters of credit for the payment of or to secure the payment for
any inventory or other assets to be acquired by such Borrower, except letters
of credit issued by Bank, at its discretion.

7.10                           Existence; Approvals; Qualification; Business Operations; Compliance with
Laws.  Each Borrower will (a) obtain, preserve and
keep in full force and effect its separate corporate or limited liability
company existence, as applicable, and all rights, licenses, registrations 

 

and
franchises necessary to the proper conduct of its business or affairs; (b)
qualify and remain qualified as a foreign corporation or limited liability
company, as applicable, in each jurisdiction in which the character or location
of the properties owned by it or the business transacted by it requires such
qualification; and (c) except for the Embedded Wind-down, continue to operate
its business as presently operated and will not engage in any new businesses
without the prior written consent of Bank. 
Each Borrower will comply with the requirements of all applicable laws
and all rules, regulations (including environmental regulations) and orders of
regulatory agencies and authorities having jurisdiction over it.

7.11                           Maintenance of Properties, Intellectual Property.  Except in connection with the
Embedded Wind-down, each Borrower will maintain, preserve, protect and keep or
cause to be maintained, preserved, protected and kept its real and personal
property used or useful in the conduct of its business in good working order and
condition, reasonable wear and tear excepted, and will pay and discharge when
due the cost of repairs to and maintenance of the same.

With respect to any and all
trademarks, registrations, copyrights, patents, patent rights and applications
for any of the foregoing, each Borrower shall maintain and protect the same and
shall take and assert any and all remedies available to such Borrower to
prevent any other Person from infringing upon or claiming any interest in any
such trademarks, registrations, copyrights, patents, patent rights or
application for any of the foregoing.

Each Borrower will notify
Bank immediately of (a) the creation by such Borrower or any of its employees
of any inventions; (b) any changes or improvements made to an invention created
or owned by such Borrower or any of its employees; (c) the grant of any patent
or trademark, whether domestic or foreign, to such Borrower or any of its
employees; or (d) such Borrower’s intent to abandon a patent or trademark.

Each Borrower will, if
requested by Bank, (i) execute and deliver to Bank assignments, financing
statements, patent mortgages or such other documents, in form and substance
acceptable to Bank, necessary to perfect and maintain Bank’s security interest
in all existing and future patents, patent applications, trademarks, trademark
applications, and other general intangibles owned by such Borrower; (ii)
furnish Bank with evidence satisfactory to Bank, in its sole discretion, that
all actions necessary to maintain and protect each trademark and patent owned
by such Borrower or its employees have been taken in a timely manner; and (iii)
execute and deliver to Bank an agreement permitting Bank to exercise all of
such Borrower’s rights in, to and under any patent or trademark owned by such
Borrower or any of its employees.

7.12                           Insurance.  Each Borrower will carry adequate insurance
issued by an insurer acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank, and in
addition, will carry business interruption insurance in such amounts as may be
required by Bank.  In the case of
insurance on any of the Collateral, each Borrower shall carry insurance in the
full insurable value thereof and cause Bank to be named as insured mortgagee
with respect to all real property, loss payee (with a lender’s loss payable
endorsement) with respect to all personal property, and additional insured with
respect to all liability insurance, as its interests may appear with thirty
(30) days’ notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.

 

Each Borrower shall cause to
be delivered to Bank the insurance policies therefor or, in the alternative,
evidence of insurance and at least thirty (30) business days prior to the
expiration of any such insurance, additional policies or duplicates thereof or,
in the alternative, evidence of insurance evidencing the renewal of such
insurance and payment of the premiums therefor. 
Each Borrower shall direct all insurers that in the event of any loss
thereunder or the cancellation of any insurance policy, the insurers shall make
payments for such loss and pay all returned or unearned premiums directly to
Bank and not to such Borrower and Bank jointly.

In the event of any loss,
each Borrower will give Bank immediate notice thereof and Bank may make proof
of loss whether the same is done by such Borrower.  Bank is granted a power of attorney by each
Borrower with full power of substitution to file any proof of loss in such
Borrower’s or Bank’s name, to endorse such Borrower’s name on any check, draft or
other instrument evidencing insurance proceeds, and to take any action or sign
any document to pursue any insurance loss claim.  Such power being coupled with an interest is
irrevocable.

In the event of any loss,
Bank, at its option, may (a) retain and apply all or any part of the insurance
proceeds to reduce, in such order and amounts as Bank may elect, the Bank
Indebtedness, or (b) disburse all or any part of such insurance proceeds to or
for the benefit of Borrowers for the purpose of repairing or replacing
Collateral after receiving proof satisfactory to Bank of such repair or
replacement, in either case without waiving or impairing the Bank Indebtedness
or any provision of this Agreement.  Any
deficiency thereon shall be paid by Borrowers to Bank upon demand.  No Borrower shall take out any insurance
without having Bank named as loss payee or additional insured thereon.  Each Borrower shall bear the full risk of
loss from any loss of any nature whatsoever with respect to the Collateral.

7.13                           Inspections; Examinations.  Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
to exhibit and deliver to Bank copies of any and all of such Borrower’s
financial statements, trial balances or other accounting records of any sort in
the accountant’s or auditor’s possession and copies of all reports submitted to
such Borrower by such accountants or auditors, including management letters, “comment”
letters and audit reports, and to disclose to Bank any information they may
have concerning such Borrower’s financial status and business operations.  Provided that Bank has requested information
from Borrowers, and Borrowers fail to provide such information in a timely
manner, each Borrower further authorizes all federal, state and municipal
authorities to furnish to Bank copies of reports or examinations relating to
such Borrower, whether made by such Borrower or otherwise.

The officers of Bank, or
such Persons as any of them may designate, may, at Borrowers’ sole cost and
expense, visit and inspect any of the properties of each Borrower, examine
(either by Bank’s employees or by independent accountants) any of the
Collateral or other assets of each Borrower, including the books of account of
each Borrower, and discuss the affairs, finances and accounts of each Borrower
with its officers and with its independent accountants, at such times as Bank
may desire. Prior to the occurrence of an Event of Default, Bank will provide
Borrowers with at least forty-eight (48) hours prior notice of any such
inspection but, after the occurrence of an Event of Default, Borrowers shall
not be entitled to any prior notice of any such inspection.  Additionally, Bank may obtain updated appraisals
of the Collateral at any time at Borrowers’ sole cost and expense.

 

Bank may conduct at any time
and from time to time, and Borrowers will fully cooperate with, field
examinations of the inventory, accounts receivable and business affairs of each
Borrower.  Bank intends to conduct three
(3) such field examinations per year but may conduct more or fewer field
examinations as Bank, in its sole discretion may determine.  Borrowers
shall pay Bank Eight Hundred Dollars ($800.00) per person, per day for each
field examination, plus all of Bank’s out-of-pocket costs in connection with
each such examination, provided however prior to the occurrence of an Event of
Default, Borrower will only be responsible for the fees, costs and expenses in
connection with four (4) field examinations per year. Prior to the
occurrence of an Event of Default, Bank will provide Borrower with at least
forty-eight (48) hours prior notice of any field examination but, after the
occurrence of an Event of Default, Borrower shall not be entitled to any prior
notice of any field examination. At
Bank’s option all costs, expenses and charges owing under this Section 7.13 may be charged as a Line
Advance.

7.14                           Default Under Other Indebtedness.  No Borrower will permit any of its
Indebtedness to be in default.  If any
Indebtedness of a Borrower is declared or becomes due and payable before its
expressed maturity by reason of default or otherwise or, to the knowledge of
any Borrower, the holder of any such Indebtedness shall have the right (or upon
the giving of notice or the passage of time, or both, shall have the right) to
declare such Indebtedness to be so due and payable, such Borrower will
immediately give Bank written notice of such declaration, acceleration or right
of declaration.

7.15                           Pension Plans.  Each Borrower will (a) keep in full force and
effect any and all Plans which are presently in existence or may, from time to
time, come into existence under ERISA, unless such Plans can be terminated
without material liability to such Borrower in connection with such termination
(as distinguished from any continuing funding obligation); (b) make
contributions to all of such Borrower’s Plans in a timely manner and in a
sufficient amount to comply with the requirements of ERISA; (c) comply with all
material requirements of ERISA which relate to such Plans so as to preclude the
occurrence of any Reportable Event, Prohibited Transaction or material “accumulated
funding deficiency” as such term is defined in ERISA; and (d) notify Bank
immediately upon receipt by such Borrower of any notice of the institution of
any proceeding or other action which may result in the termination of any Plan
and deliver to Bank, promptly after the filing or receipt thereof, copies of
all reports or notices which such Borrower files or receives under ERISA with
or from the Internal Revenue Service, the PBGC, or the U.S. Department of
Labor.

7.16                           Bank
of Account.  Borrowers
will maintain Bank as their primary bank of account.  Borrowers will notify Bank in writing on a
continuing basis of all accounts (including, without limitation, all deposit
accounts and certificates of deposit) maintained with any Person other than
Bank and, prior to opening any such account, will cause such Person to enter
into a control agreement regarding each such account in form and content
satisfactory to Bank.

7.17                           Maintenance
of Management.  Except as
may occur in connection with the Embedded Wind-Down, Borrowers will cause their
business to be continuously managed by their present management or such other
persons (serving in such management positions) as may be reasonably
satisfactory to Bank.  Borrowers will
notify Bank promptly in writing of any change in its board of directors or
executive officers.

7.18                           Amendment
to Organizational or Governing Documents.  Borrowers shall not make any amendment to
their organizational or governing documents without providing Bank 

 

with
thirty (30) day’s prior notice thereof. 
Borrowers will provide Bank with a copy of any proposed amendments to
any such documents prior to adoption. 
Borrowers will not cause or permit any corporate division or similar
event with respect to such Borrowers.

7.19                           Dividends. No Borrower
will (a) redeem, repurchase or otherwise make any payment, distribution, or
dividend to acquire any of its equity interests or (b) pay dividends or
distributions on account of its equity interests; provided, however, that in the event any Borrower is then a corporation
with a valid S corporation election in effect or a limited liability company
and no Default or Event of Default has occurred, and the payment of such dividend
or distribution would not result in a Default or Event of Default, such
Borrower may, from time to time, pay and declare dividends or distributions to
its shareholders or members in amounts sufficient to pay the taxes payable by
such shareholders or members resulting solely from the income generated by such
Borrower.  Borrowers will advise the Bank
in writing of any Borrower’s intent to make a dividend or distribution
permitted hereunder and a calculation of the shareholder’s or member’s
applicable tax rates at least ten (10) days prior to payment of such dividend
or distribution, and will provide the Bank with such information related
thereto as Bank may request.  Borrowers
shall submit to Bank for Bank’s review all tax returns filed by them together
with an analysis of the income of Borrowers taxable to any Borrower’s
shareholders or members and the tax rates applicable thereto.  In the event (x) the actual distribution to
shareholders or members made pursuant to this Section 7.19 exceeds the actual income tax liability of
any shareholder or member due to such Borrower’s status as a limited liability
company or S corporation, or (y) if such Borrower was a subchapter C
corporation, such Borrower would be entitled to a refund of income taxes
previously paid as a result of a tax loss during a year in which such Borrower
is a limited liability company or S corporation, then the applicable
shareholders or members shall repay such Borrower the amount of such excess or
refund, as the case may be, no later than the date the annual tax return must
be filed by such Borrower (without giving effect to any filing extensions).

7.20                           Transactions with Affiliates.  No Borrower will enter into or conduct any
transaction with any Affiliate except on terms that would be usual and
customary in a similar transaction between Persons not affiliated with each
other and except as disclosed to Bank. 
No Borrower will make any loans or extensions of credit to any of its
Affiliates, shareholders, directors or officers, except for the existing loans
described in Schedule 7.20
attached hereto.  Each Borrower will
cause all of its Indebtedness at any time owed to its Affiliates, shareholders,
directors and officers to be subordinated in all respects to all present and
future Bank Indebtedness and will not make any payments thereon, except as
approved by Bank in writing.

7.21                           Restrictions on Interest Transfer.  No Borrower will directly or indirectly
issue, transfer, sell or otherwise dispose of, or part with control of, or
permit the transfer of, any equity interests in such Borrower.

7.22                           Name; Address or State of Organization Change.  No Borrower will change its
name or change or add any address or location except upon thirty (30) days
prior written notice to Bank and delivery to Bank of any items requested by
Bank to maintain perfection and priority of Bank’s security interests and
access to such Borrower’s books and records. 
No Borrower shall change its state of organization or take any action
which would result in a change in such Borrower’s state of organization without
Bank’s prior written consent.

 

7.23                           Notices.  Each Borrower will promptly notify Bank of
(a) any action or proceeding brought against such Borrower wherein such action
or proceeding would, if determined adversely to such Borrower have a Material
Adverse Effect, or (b) the occurrence of any Default or Event of Default

7.24                           Additional Documents and Future Actions.  Each Borrower will, at its sole
cost, take such actions and provide Bank from time to time with such agreements,
financing statements and additional instruments, documents or information as
the Bank may in its discretion deem necessary or advisable to perfect, protect,
maintain or enforce the security interests in the Collateral, to permit Bank to
protect or enforce its interest in the Collateral, or to carry out the terms of
the Loan Documents.  Each Borrower hereby
authorizes and appoints Bank as its attorney-in-fact, with full power of
substitution, to take such actions as Bank may deem advisable to protect the Collateral
and its interests therein and its rights hereunder, to execute on such Borrower’s
behalf and file at Borrowers’ expense financing statements, and amendments
thereto, in those public offices deemed necessary or appropriate by Bank to
establish, maintain and protect a continuously perfected security interest in
the Collateral, and to execute on such Borrower’s behalf such other documents
and notices as Bank may deem advisable to protect the Collateral and its
interests therein and its rights hereunder. 
Such power being coupled with an interest is irrevocable.

7.25                           Title to Equipment.  Each Borrower will within thirty (30) days of
acquisition of any equipment, have Bank’s lien noted on any and all evidence of
ownership, certificates of title, or applications for title for any such
equipment and provide Bank with all original certificates of title or other
evidence of ownership.

7.26                           Accounts Receivable.  Infologix will (a) inform Bank immediately of
the rejection of goods, claims made or delay in delivery or performance in
regard to any account or contract right upon which Borrowers have based
availability for Line Advances or if any account receivable previously
scheduled, listed or referred to in any certificate, statement or report by any
Borrower and upon which Borrowers are basing availability for Line Advances
ceases to be an Eligible Receivable; (b) adjust the borrowing base calculation
under the Line to reduce the availability for Line Advances by the amount of
any account with respect to which any Borrower is required to give Bank notice
pursuant to the foregoing subsection (a) and repay any Out-Of-Formula
Advance resulting therefrom; (c) make no change in any account upon which
Borrowers have based availability for Line Advances, unless such change is
contemporaneously reflected in the borrowing base calculation; (d) furnish to
Bank all information received by Infologix affecting the financial standing of
any account debtor whose account or contract right has been specifically
assigned to Bank; (e) pay Bank the amount loaned against any account or
contract right if the goods are returned by purchaser or the contract is
canceled or terminated or adjust the borrowing base calculation to reduce the
availability for Line Advances by the amount of such account and repay any
Out-Of-Formula Advance resulting therefrom; (f) immediately notify Bank if any
of its accounts arise out of contracts with the United States or any
department, agency or instrumentality thereof, and execute any instruments and
take any steps required by Bank in order that all monies due and to become due
under such contract shall be assigned to Bank and notice thereof given to the
Government under the Federal Assignment of Claims Act; and (g) deliver to Bank,
with appropriate endorsement or assignment, any instrument or chattel paper
representing an account or contract right. 
Any permission granted to Infologix by Bank to omit any of the
requirements of this Section 7.26
may be revoked by Bank at any time.

 

Each Borrower will, if requested
by Bank (a) give Bank assignments, in form acceptable to Bank, of specific
accounts or groups of accounts and monies due and to become due under specific
contracts and specific general intangibles; (b) furnish to Bank a copy, with
such duplicate copies as Bank may request, of the invoice applicable to each
account specifically assigned to Bank or arising out of a contract right,
bearing a statement that such account has been assigned to Bank and such
additional statements as Bank may require; (c) mark its records evidencing its
accounts in a manner satisfactory to Bank so as to show which accounts have
been assigned to Bank; (d) furnish to Bank satisfactory evidence of the
shipment and receipt of any goods specified by Bank and the performance of any
services or obligations covered by accounts or contracts in which Bank has a
security interest; (e) pay Bank the unpaid portion of any account or contract
right upon which Borrowers have based availability for Line Advances if (i)
such account is not paid promptly after its maturity, (ii) an account debtor
does not accept the goods or services, (iii) any petition under the Bankruptcy
Code or any similar federal or state statute is filed by or against a
purchaser, or (iv) Bank shall at any time reject the account as unsatisfactory;
and until such payment is made by any Borrower, Bank may retain any such
account or contract right as security and may charge any deposit account of any
Borrower for any such amounts; (f) join with Bank in executing a financing statement,
notice, affidavit, security agreement, assignment or similar instrument, in
form satisfactory to Bank, and such continuation statements and other
instruments as Bank may from time to time request and pay the cost of filing
the same in any public office deemed advisable by Bank to perfect the liens and
security interests granted therein; (g) give Bank such financial statements,
reports, certificates, lists of purchasers (showing names, addresses, and
amounts owing) and other data concerning its accounts, contracts, collections,
inventory, general intangibles and other matters as Bank may from time to time
request; (h) segregate cash proceeds of Collateral so that they may be
identified readily, and deliver the same to the Bank at such time or times and
in such manner and form as the Bank may direct; (i) furnish such witnesses as
may be necessary to establish legal proof of the Collateral or records relating
to the Collateral; and (j) obtain from any owner, encumbrancer, processor, or
other person having an interest in the property where any Collateral is
located, written consent to Bank’s removal of the Collateral therefrom, without
liability on the part of the Bank to such owner, encumbrancer, processor or
other person, or from any such owner, encumbrancer, processor or other person
such waivers of any interest in the Collateral as the Bank may require.

7.27                           Inventory.  Infologix will immediately notify Bank if any
inventory previously scheduled, listed or referred to, in any certificate,
statement or report by or on behalf of Borrowers and upon which Borrowers are
basing availability under the Line ceases to be Eligible Inventory.

7.28                           Material Adverse Contracts.  No Borrower will become or be a party to any
contract or agreement which has or could have a Material Adverse Effect.  Each Borrower will deliver to Bank promptly
after execution, copies of each new material lease, contract agreement or
commitment to which it is a party and any amendment to any material lease,
contract, commencement or agreement to which such Borrower is a party.

7.29                           Restrictions on Use of Proceeds.  No Borrower will carry or purchase with the
proceeds of any of the Loans any “margin security” within the meaning of
Regulations U, G, T or X of the Board of Governors of the Federal Reserve
System.

 

7.30                           Commercial Tort Claims.  Each Borrower shall promptly
notify Bank in writing of each commercial tort claim from time to time in favor
of such Borrower and provide Bank with full descriptions for each such claim
and such additional information regarding such claim as may be required by
Bank.  Each Borrower authorizes the
amendment to Schedule 5.1(i)
hereto as necessary from time to time to reflect the current status of each
Borrower’s commercial tort claims.

7.31                           Possessory Collateral.  Immediately upon any Borrower’s receipt of
any portion of the Collateral evidenced by an agreement, instrument or
document, including, without limitation, any tangible chattel paper, letter of
credit, note, draft, instrument, investment property or financial asset, such
Borrower shall deliver the original thereof to Bank together with an
appropriate endorsement, stock power or other specific evidence of assignment
thereof to Bank (in form and substance acceptable to Bank).  If an endorsement or assignment of any such
items shall not be made for any reason, Bank is hereby irrevocably authorized,
as each Borrower’s attorney and agent-in-fact, to endorse or assign the same on
such Borrower’s behalf.

7.32                           Electronic Chattel Paper.  To the extent that any Borrower
obtains or maintains any electronic chattel paper, such Borrower shall create,
store and assign the record or records comprising the electronic chattel paper
in such a manner that (i) a single authoritative copy of the record or records
exists which is unique, identifiable and, except as otherwise provided in
clauses (iv), (v) and (vi) below, unalterable, (ii) the authoritative copy
identifies Bank as the assignee of the record or records, (iii) the
authoritative copy is communicated to and maintained by Bank or its designated
custodian, (iv) copies or revisions that add or change an identified assignee
of the authoritative copy can only be made with the participation of Bank, (v)
each copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy and (vi) any revision of the
authoritative copy is readily identifiable as an authorized or unauthorized
revision.

7.33                           Subordinated Indebtedness.  No Borrower will make any payments on any
Subordinated Indebtedness, except strictly in accordance with the Subordination
Agreements.

7.34                           Salaries and Other Compensation.  No Borrower will pay or permit to be paid to
any officer an annual salary which is greater than one hundred ten percent
(110%) of such officer’s salary for the prior year

8.                                       FINANCIAL
COVENANTS.  Except with
the prior written consent of Bank, Borrowers will comply with the following:

8.1                                 Minimum Annual Net Income.  Borrowers shall have Net Income of at least
(a) Three Hundred Fifty Thousand Dollars ($350,000.00) for Borrower’s fiscal
year ending December 31, 2005 and (b) Five Hundred Thousand Dollars
($500,000.00) for each fiscal year of Borrowers ending thereafter.

8.2                                 Minimum Quarterly Net Income.  Borrowers shall have Net Income of at least
$0 as of the end of the first three (3) fiscal quarters of Borrowers measured
on a year-to-date basis.

 

8.3                                 Fixed Charge Coverage Ratio.  Borrowers shall maintain a Fixed Charge
Coverage Ratio of not less than 1.2 to 1.0 as of Borrowers’ fiscal quarter
ending March 31, 2006 and as of each fiscal quarter of Borrowers ending
thereafter.

8.4                                 Capital Expenditures.  Borrowers will not cause, suffer or permit
Borrowers’ aggregate annual Capital Expenditures to exceed (a)  One Million Six Hundred Thousand Dollars
($1,600,000.00) for Borrowers’ fiscal year ending December 31, 2006; (b)  One Million Eight Hundred Thousand Dollars
($1,800,000.00) for Borrowers’ fiscal year ending December 31, 2007; and (c)
Two Million One Hundred Thousand Dollars ($2,100,000.00) for Borrowers’ fiscal
year ending December 31, 2008.  Borrower
may not carry-forward any unused portion of the capital expenditure limit for
any fiscal year.

8.5                                 Changes to Financial Covenants.  The Bank may, in its sole discretion,
condition extension of the Line after the Contract Period upon revision of the
foregoing financial covenants.

9.                                       ACCOUNTING
RECORDS, REPORTS AND FINANCIAL STATEMENTS.  Borrowers will maintain books of record and
account in which full, correct and current entries in accordance with GAAP will
be made of all of its dealings, business and affairs, and Borrowers will
deliver or cause to be delivered to Bank the following:

9.1                                 Annual Statements.  As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrowers:

(a)                                  the audited consolidated and consolidating income and retained earnings statements of
Borrowers and their Subsidiaries
for such fiscal year,

(b)                                 the audited consolidated and consolidating balance sheet of Borrowers and their Subsidiaries as at the end of such fiscal year, and

(c)                                  the audited consolidated and consolidating statement of cash flow of Borrowers and their Subsidiaries for such fiscal year

setting forth in comparative form the corresponding figures as at the
end of the previous fiscal year, all in reasonable detail, including all
supporting schedules and comments.  The
foregoing statements and balance sheets shall be prepared in accordance with
GAAP by independent certified public accountants of recognized standing acceptable
to Bank in the reasonable exercise of its discretion (the “Accountants”) with respect to which such
Accountants shall deliver their unqualified opinion.

9.2                                 Projections and Cash Flow.  As soon as available and in any event within
ninety (90) days prior to the end of each fiscal year of Borrowers, projections
and cash flows on a month-by-month consolidated and consolidating basis for the
next succeeding twelve (12) months, prepared by the chief financial officer of
each Borrower.   Borrowers have furnished
to Bank initial projections dated as of the date hereof and attached hereto as Schedule 9.2 containing the information
required by this Section 9.2.  Borrowers represent and covenant that (a) the
initial projections attached hereto have been and all projections required by
this Section 9.2 shall be
prepared by the chief financial officer of each Borrower and represent, and in
the future shall represent, the best available good faith estimate of Borrowers
regarding the course of each 

 

Borrower’s
business for the periods covered thereby; (b) the assumptions set forth in the
initial projections are and the assumptions set forth in the future projections
delivered hereafter shall be reasonable and realistic based on then current
economic conditions; (c) Borrowers know of no reason why Borrowers should not
be able to achieve the performance levels set forth in the initial projections
and Borrowers shall have no knowledge at the time of delivery of future
projections of any reason why Borrowers shall not be able to meet the
performance levels set forth in said projections; and (d) Borrowers have
sufficient capital as may be required for their ongoing business and to pay
their existing and anticipated debts as they mature.

9.3                                 Quarterly Statements.  As soon as available and in any event within
thirty (30) days after the end of each calendar quarter the consolidated and consolidating
statement of cash flow of Borrowers and
their Subsidiaries for such quarter setting forth in comparative form
the corresponding figures as at the end of the corresponding quarter of the
previous fiscal year (if applicable) and
the projected figures based upon the projections required under Section 9.2, all in reasonable
detail, subject to year-end adjustments, and certified by the chief financial officer of each Borrower to be
accurate and to have been prepared in accordance with GAAP.

9.4                                 Monthly Statements.  As soon as available and in any event within
thirty (30) days after the end of each calendar month:

(a)                                  the consolidated and consolidating income and retained earnings statements of
Borrowers and their Subsidiaries
for such month, and

(b)                                 the consolidated and consolidating balance sheet of Borrowers and their
Subsidiaries as of the end of
such month,

setting forth in comparative form the corresponding figures as at the
end of the corresponding month of the previous fiscal year (if applicable) and the projected figures based upon the
projections required under Section 9.2,
all in reasonable detail, subject to year-end adjustments, and certified by the chief financial officer of
each Borrower to be accurate and to have been prepared in accordance
with GAAP.

9.5                                 Accounts Receivable and Accounts Payable Statements.  As soon as available and in any
event within fifteen (15) days after the end of each calendar month, a schedule
of each Borrower’s accounts receivable and accounts payable, identifying all
Eligible Receivables, and the aging thereof by open invoice of each customer of
each Borrower, all certified as to accuracy by the chief financial officer of each Borrower.  Borrowers will also provide Bank with all
information requested by Bank with respect to any account debtor.

9.6                                 Inventory Certifications.  As soon as available and in any event within
fifteen (15) days after the end of each calendar month, a report in form
satisfactory to Bank of the level of each Borrower’s inventory, with such
details as may be requested by Bank including identification of all Eligible
Inventory, all certified as to accuracy by
the chief financial officer of each Borrower.

9.7                                 Borrowing Base Certifications and Related Documents.  At least once every seven (7) days, as a
condition of each Advance under the Line and otherwise as requested by Bank, a
borrowing base certificate in the form of Exhibit
“C” attached hereto, together with such 

 

additional
information as may be requested by Bank, certified as to accuracy by the chief
financial officer of each Borrower.

9.8                                 Audit Reports.  Promptly upon receipt thereof, one copy of
each other report submitted to any Borrower by independent accountants,
including management letters, “comment” letters, in connection with any annual,
interim or special audit report made by them of the books of Borrowers.

9.9                                 Compliance Certificates.  With the monthly statements delivered
pursuant to Section 9.4 above for the last month of each fiscal quarter of
Borrower, a certificate of the chief financial officer of each Borrower:  (a) stating that Borrowers have observed,
performed and complied with each and every undertaking contained herein, (b)
setting forth the information and computations (in sufficient detail) required
in order to establish whether Borrowers were operating in compliance with the
financial covenants in Section 8 of this Agreement, (c) with respect
to the certificate delivered for the last fiscal quarter of Borrower, a
calculation of Excess Cash Flow for the fiscal year of Borrower then ended  and (d) certifying that as of the date of
such certification, there does not exist any Default or Event of Default.  Such certificate will be in the form of Exhibit “D” attached hereto.

9.10                           Borrower
Tax Returns.  Within the
period provided in Section 9.1,
a copy of each Borrower’s annual tax returns for the immediately preceding
fiscal year.

9.11                           Guarantor’s
Annual Statements. 
Within thirty (30) days after the end of each calendar year, financial
statements of Guarantor, in a form reasonably satisfactory to Bank certified by
such Guarantor to be accurate in all respects and within thirty (30) days after
filing, a copy of the annual federal tax returns of Guarantor, certified by
Guarantor to be accurate and complete.

9.12                           Requested Information.  With reasonable promptness, all such other
data and information (including, without limitation, updated customer address
lists and contact information) in form and content satisfactory to Bank in
respect of the condition, operation and affairs of Borrowers, or Guarantors as Bank may reasonably
request from time to time.

10.                                 ENVIRONMENTAL
REPRESENTATIONS AND COVENANTS.

10.1                           Representations.  Each Borrower represents to Bank as
follows:  (a) the Environmental
Affiliates are in compliance with all Environmental Requirements and such
Borrower has no knowledge of any circumstances which may prevent or interfere
with such compliance in the future; (b) the Environmental Affiliates have all
licenses, permits, approvals and authorizations required under applicable
Environmental Requirements; (c) there are no pending or threatened claims
against any of the Environmental Affiliates or any of their assets related to
the failure to comply with any Environmental Requirements, or any facts or
circumstances which could give rise to such a claim; (d) no facility or
property now or previously owned, operated or leased by any Environmental
Affiliate is an Environmental Cleanup Site; (e) no Environmental Affiliate has
treated, stored, transported, handled or disposed of Special Materials at or
adjacent to any Environmental Cleanup Site; (f) there are no liens or claims
for cost reimbursement outstanding or threatened against any Environmental
Affiliate or any of their assets, or any facts or circumstances which could
give rise to such a lien or claim; and (g) there are no facts or circumstances
which, under the provisions of any 

 

Environmental
Requirements, could restrict the use, occupancy or transferability of any of
the Collateral or any of the facilities owned, leased or operated by any
Environmental Affiliate.

10.2                           Real Property.  Each Borrower represents and warrants to Bank
that there are no Special Materials presently located on or, to the best of its
knowledge, near any real property owned, leased or operated by any
Environmental Affiliate (collectively, “Real
Property”) except for Special Materials which are and have at all
times been treated, stored, transported, handled and disposed of in compliance
with all Environmental Requirements. 
Each Borrower represents to Bank that the Real Property is not now being
used nor, to the best of its knowledge, has it ever been used in the past for
activities involving Special Materials, including but not limited to the use,
generation, collection, storage, treatment, or disposal of any Special
Materials except for Special Materials which are and have at all times been
treated, stored, transported, handled and disposed of in compliance with all
Environmental Requirements.  Without
limiting the generality of the foregoing, the Real Property is not being used
nor, to the best of each Borrower’s knowledge, has it ever been used in the
past for a landfill, surface impoundment or other area for the treatment,
storage or disposal of solid waste (including solid waste such as sludge).

10.3                           Covenant Regarding Compliance.  Each Borrower shall take or cause all
Environmental Affiliates to take, at Borrowers’ and such Environmental
Affiliate’s sole expense, such actions as may be necessary to comply with all
Environmental Requirements, as hereinafter defined.  If any Environmental Affiliate shall fail to
take such action, Bank may make advances or payments towards performance or satisfaction
of the same but shall be under no obligation to do so.  All sums so advanced or paid, including all
sums advanced or paid by Bank in connection with any judicial or administrative
investigation or proceeding relating thereto, including, without limitation,
attorney’s fees, fines, or other penalty payments, shall be at once repayable
by Borrowers and all sums so advanced or paid shall become a part of the Bank
Indebtedness.

The Environmental Affiliates
will maintain all licenses, permits, approvals and authorizations required
under applicable Environmental Requirements. 
In connection with off-site treatment, storage, handling, transportation
or disposal of Special Materials, the Environmental Affiliates will conduct
such activities only at facilities and with carriers who operate in compliance
with all Environmental Requirements and will obtain certificates of compliance
or disposal from all contractors retained in connection with such activities.

10.4                           Notices.  In the event any Borrower becomes aware of
any past, present or future facts or circumstances which have given rise or
could give rise to a claim against any Environmental Affiliate related to a
failure to comply with any Environmental Requirements, such Borrower will
promptly give Bank notice thereof, together with a written statement of an
officer of such Borrower setting forth the details thereof and the action with
respect thereto taken or proposed to be taken by the Environmental Affiliates.

10.5                           Indemnity.  Each Borrower agrees to indemnify, defend and
hold harmless Bank, its parents, subsidiaries, successors and assigns, and any
officer, director, shareholder, employee, Affiliate or agent of Bank, for all
loss, liability, damage, cost and expenses, including, without limitation,
attorney’s fees and disbursements (including the reasonable allocated cost of
in-house counsel and staff) arising from or related to (a) the release of any
Special Materials at any facility at any time owned, leased or operated by any
Borrower or any Environmental Affiliate, (b) the release of any Special
Materials treated, stored, transported, handled, generated or disposed of by 

 

or
on behalf of any Borrower or any Environmental Affiliate at any third party
owned site, (c) any claim against any Borrower or any Environmental Affiliate
that they have failed to comply with all Environmental Requirements, and (d)
the breach by any Borrower of any representation or covenant in this Section 10.

10.6                           Testing.  Bank shall have the right from time to time
to designate such persons (“Environmental
Consultants”) as Bank may select to visit, inspect, examine and test
all properties owned, leased or operated by and all products and wastes
generated, treated, stored, transported, handled or disposed of by or on behalf
of any Environmental Affiliate, for the purpose of investigating compliance
with Environmental Requirements, any actual or potential claims related
thereto, and any condition which could result in potential liability, cost or
expenses to the Bank.  Each Borrower will
permit, and will cause all Environmental Affiliates to permit, such
Environmental Consultants to have access to all of such properties, products
and wastes and all books, records and reports related to compliance by the
Environmental Affiliates with all Environmental Requirements.  Each Borrower will supply, and will cause all
Environmental Affiliates to supply, Bank or the Environmental Consultants with
all information, records, correspondence, audits, reviews and materials related
to compliance by the Environmental Affiliates with all Environmental
Requirements and will make available to Bank or the Environmental Consultants
appropriate personnel employed by or consultants retained by the Environmental
Affiliates having knowledge of such matters.

Provided
that an Event of Default has occurred, or the Bank has a good faith belief that
any Environmental Affiliate has failed to comply with any Environmental
Requirements, the cost of such tests, examinations and inspections shall be
borne by Borrower and in the event Bank pays such costs, such sums shall be at
once repayable by Borrower and all sums so advanced or paid by Bank shall
become part of the Bank Indebtedness.  Notwithstanding the foregoing, the Bank shall
have no obligation to perform any tests, examinations or inspections or to
monitor the Environmental Affiliates’ compliance with all Environmental
Requirements.

10.7                           Survival.  The representations and covenants of
Borrowers contained in this Section 10,
including without limitation the indemnification obligation of Borrowers, shall
survive the occurrence of any event whatsoever, including the payment of the
Bank Indebtedness or any investigation by or knowledge of Bank.

11.                                 CONDITIONS
OF CLOSING.  The
obligation of Bank to make available the Loans is subject to the performance by
Borrowers of all of their agreements to be performed hereunder and to the
following further conditions (any of which may be waived by Bank):

11.1                           Loan Documents.  Borrowers, Guarantors and all other required persons will have executed and
delivered to Bank the Loan Documents.

11.2                           Representations and Warranties.  All representations and warranties of each
Borrower and each Guarantor set
forth in the Loan Documents will be true at and as of the date hereof.

11.3                           No Default.  No condition or event shall exist or have
occurred which would constitute a Default or Event of Default hereunder.

 

11.4                           Proceedings and Documents.  All proceedings taken by each Borrower in
connection with the transactions contemplated by this Agreement and all
documents incident to such transactions shall be satisfactory in form and
substance to Bank and Bank’s counsel, and Bank shall have received all
documents or other evidence which it reasonably may request in connection with
such proceedings and transactions.  Each
Borrower shall have delivered to Bank a certificate, in form and substance
satisfactory to Bank, dated the date hereof and signed on behalf of such
Borrower or by an officer of such Borrower, certifying (a) true copies of the
organizational and governing documents of such Borrower in effect on such date,
(b) true copies of all corporate or limited liability company actions taken by
such Borrower relative to the Loan Documents, and (c) the names, true
signatures and incumbency of the officers of such Borrower authorized to
execute and deliver this Agreement and the other Loan Documents.  Bank may conclusively rely on such
certificate unless and until a later certificate revising the prior certificate
has been received by Bank.

11.5                           Waiver Agreements.  Bank shall have received a Waiver Agreement,
satisfactory in form and substance to Bank, from each landlord and warehouseman
for each location leased by any Borrower or at which any Borrower warehouses
inventory.  Additionally, Bank shall have
received such letter agreements as Bank  in
its sole discretion may require from any processor, consignee, bailee or any
other third party which at any time has possession of any of the Collateral.

11.6                           Delivery of Other Documents.  The following documents shall have been
delivered by or on behalf of Borrowers to Bank:

(a)                                  Good Standing and Tax Lien Certificates.  A
good standing certificate from the state of organization of each Borrower
certifying to the good standing and status of such Borrower, good
standing/foreign qualification certificates from all other jurisdictions in
which such Borrower is required to be qualified to do business, and tax lien
certificates for such Borrower from each jurisdiction in which such Borrower is
required to be qualified to do business.

(b)                                 Authorization Documents.  Evidence of authorization of
each Borrower’s execution and full performance of this Agreement, the Loan
Documents and all other documents and actions required hereunder.

(c)                                  Insurance.  Evidence of the insurance coverage required
under Section 7.12.

(d)                                 Opinion of Counsel.  An
opinion of counsel for Borrowers and Guarantors in form and content
satisfactory to Bank.

(e)                                  Lien Search.  Copies of record searches on each Borrower
and each Guarantor (including UCC searches and judgments, suits, tax and other
lien searches) acceptable to Bank.

(f)                                    No Material Adverse Change. 
Evidence satisfactory to the Bank that no material adverse change has
occurred with respect to any Borrower or Guarantor since the date of the most
recent financial statements of such Person delivered to Bank.

 

(g)                                 Licenses and Approvals.  Copies of all licenses, approvals,
consents, authorizations and filings of each Borrower, required or necessary
for the operation by such Borrower of its business.

(h)                                 Other Documents.  Such other documents as may be required to be
submitted to Bank by the terms hereof or of any Loan Document.

11.7                           Undrawn
Availability.  Borrowers
shall have Undrawn Availability of at least One Million Dollars
($1,000,000.00).

11.8                           Non-Waiver of Rights.  By completing the closing hereunder, or by
making Advances hereunder, Bank does not thereby waive a breach of any warranty
or representation made by any Borrower or Guarantor hereunder or any agreement,
document, or instrument delivered to Bank or otherwise referred to herein, and
any claims and rights of Bank resulting from any breach or misrepresentation by
any Borrower or Guarantor are specifically reserved by Bank.

12.                                 CERTAIN
CONDITIONS TO SUBSEQUENT ADVANCES.  Subsequent Advances shall be conditioned upon
the following conditions and each request by Borrowers for an Advance shall
constitute a representation by Borrowers to Bank that each condition has been
met or satisfied:

12.1                           Representations and Warranties.  All representations and warranties of
Borrowers or Guarantors
contained herein or in the Loan Documents shall be true at and as of the date
of such Advance as if made on such date, and each request for an Advance shall
constitute reaffirmation by Borrowers or Guarantors, as applicable, that such
representations and warranties are then true.

12.2                           No Default.  No condition or event shall exist or have
occurred at or as of the date of such Advance which would constitute a Default
or Event of Default hereunder.

12.3                           Other Requirements.  Bank shall have received all certificates,
authorizations, affidavits, schedules and other documents which are provided
for hereunder or under the Loan Documents, or which Bank may reasonably
request.

13.                                 DEFAULT AND REMEDIES.

13.1                           Events of Default.  The occurrence of any one or more of the
following events shall constitute an Event or Events of Default hereunder:

(a)                                  The failure of any Borrower to pay any amount
of principal or interest on any of
the Notes, or any fee or other sums payable hereunder, or any other Bank
Indebtedness on the date on which such payment is due, whether on demand, at
the stated maturity or due date thereof, or by reason of any requirement for
the prepayment thereof, by acceleration or otherwise;

(b)                                 The failure of any Borrower to duly perform
or observe any obligation, covenant or agreement on its part contained herein
or in any other Loan Document not otherwise specifically constituting an Event
of Default under this Section 13.1
and such failure continues unremedied for a period of fifteen (15) days after
the earlier of (i) notice from Bank to 

 

Borrowers of the existence of such failure, or
(ii) any officer or principal of any Borrower knows of the existence of such
failure, provided that, in the event such failure is incapable of remedy,
consists of a default of any of the covenants contained in Sections
8 or 9.7  hereof or was willfully caused or permitted by any
Borrower, Borrowers shall not be entitled to any notice or grace hereunder;

(c)                                  The failure of any Borrower to duly perform
or observe any obligation, covenant or agreement on its part contained in Section 9.1, 9.3, 9.4, 9.5 or 9.6 of
the Loan Agreement and such failure continues unremedied for a period of five
(5) days.

(d)                                 The failure of any Borrower or any Guarantor
to pay or perform any other obligation to Bank under any other agreement or
note or otherwise arising, whether or not related to this Agreement, after the
expiration of any notice and/or grace periods permitted in such documents;

(e)                                  The adjudication of any Borrower or any Guarantor as a bankrupt or insolvent, or the entry of
an Order for Relief against any Borrower or any Guarantor or the entry of an order appointing a
receiver or trustee for any Borrower or any Guarantor or any of its respective property or
approving a petition seeking reorganization or other similar relief under the
bankruptcy or other similar laws of the United States or any state or any other
competent jurisdiction;

(f)                                    A proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law is filed by or against any Borrower or any Guarantor or any Borrower or any Guarantor makes an assignment for the benefit of
creditors, or any Borrower or any Guarantor takes any action to authorize any of the foregoing;

(g)                                 The suspension of the operation of any
Borrower’s present business, any Borrower or any Guarantor becoming unable to meet its debts as they
mature or the admission in writing by any Borrower or any Guarantor
to such effect, or any Borrower or any Guarantor
calling any meeting of all or
any material portion of its creditors for the purpose of debt restructure;

(h)                                 The indictment or threatened indictment of
any Borrower under any criminal statute, provided the penalties available under
such statute include forfeiture of any property of Borrower, or the
commencement or threatened commencement of criminal or civil proceedings
against any Borrower pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any property of any
Borrower, or any Borrower engages or participates in any “check kiting”
activity regardless of whether a criminal investigation has been commenced.

(i)                                     All or any part of the Collateral or the
assets of any Borrower or any Guarantor are attached, seized, subjected to a
writ or distress warrant, or levied upon, or come within the possession or
control of any receiver, trustee, custodian or assignee for the benefit of
creditors;

(j)                                     The entry of a final judgment against any
Borrower for the payment of money which exceeds Fifty Thousand Dollars
($50,000.00), individually or when aggregated with all other judgments against
Borrowers, which, within ten (10) days after such entry, shall not have been
discharged or execution thereof stayed pending appeal or shall not have been
discharged within five (5) days after the expiration of any such stay;

 

(k)                                  Any representation or warranty of any
Borrower in any of the Loan Documents is discovered to be untrue in any
material respect or any statement, certificate or data furnished by any
Borrower pursuant hereto is discovered to be untrue in any material respect as
of the date as of which the facts therein set forth are stated or certified;

(l)                                     Any Borrower voluntarily or involuntarily
dissolves or is dissolved, terminates, or is terminated or any Guarantor
dies;

(m)                               Any Borrower is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory agency, the effect of
which order restricts such Borrower from conducting all any material part of
its business;

(n)                                 A breach by any Borrower occurs under any material
agreement, document or instrument, whether heretofore, now or hereafter
existing between any Borrower and any other Person;

(o)                                 An event or condition occurs or fails to
occur which has a Material Adverse Effect;

(p)                                 The Collateral or the prospects of the
payment of the Bank Indebtedness is jeopardized or impaired or Bank otherwise
deems itself insecure with respect to any Borrower’s ability to pay the Bank
Indebtedness or otherwise perform hereunder;

(q)                                 Any material uninsured damage to, or loss, theft,
or destruction of, any of the Collateral occurs;

(r)                                    Any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty loss occurs
resulting in the cessation or substantial curtailment of production or other
revenue producing activities at any facility of any Borrower for more than
thirty (30) consecutive days;

(s)                                  The loss, suspension, revocation or failure
to renew any license or permit now held or hereafter acquired by any Borrower,
which loss, suspension, revocation or failure to renew might have a material
adverse effect on the business profits, assets or financial condition of such
Borrower;

(t)                                    Any change in the ownership of any Borrower
as described on Schedule
6.3, any issuance of
equity interests, debentures, warrants or other securities of any Borrower or
any pledge of the any equity interests of any Borrower;

(u)                                 Any projection delivered to Bank pursuant
hereto indicates that an Event of Default will occur;

(v)                                 Any breach by any Borrower or any creditor of
its obligations under any subordination agreement now or hereafter executed in
favor of Bank;

(w)                               The occurrence of an Event of Default under any of the other Loan
Documents; or

 

(x)                                   The validity or enforceability of this
Agreement, or any of the Loan Documents, is contested by any Borrower or any Guarantor or any equity holder of any Borrower, or any
Borrower or any Guarantor denies
that it has any or any further liability or obligation hereunder or thereunder.

13.2                           Remedies.  At the option of the Bank, upon the
occurrence of an Event of Default, or at any time thereafter:

(a)                                  The entire unpaid principal of the Loans, all
other Bank Indebtedness, or any part thereof, all interest accrued thereon, all
fees due hereunder and all other obligations of any Borrower to Bank hereunder
or under any other agreement, note or otherwise arising will become immediately
due and payable without any further demand or notice;

(b)                                 The Line will immediately terminate and
Borrowers will receive no further extensions of credit thereunder;

(c)                                  Bank may increase the interest rate on the
Loans to the applicable default rate set forth herein, without notice;

(d)                                 Bank may reduce availability for advances
under the formula in the Borrowing Base Amount, reduce the Maximum Line Amount
or require additional reserves without notice;

(e)                                  Bank may enter any premises occupied by any
Borrower and take possession of the Collateral and any records relating
thereto; and/or

(f)                                    Bank may exercise each and every right and
remedy granted to it under the Loan Documents, under the Uniform Commercial
Code and under any other applicable law or at equity.

If an Event of Default
occurs under Section 13.1(e)
or (f), all Bank
Indebtedness shall become immediately due and payable.

13.3                           Sale or Other Disposition of Collateral.  The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then
owing.  Any sales of the Collateral may
be adjourned from time to time with or without notice.  The Bank may cause the Collateral to remain
on any Borrower’s premises or otherwise or to be removed and stored at premises
owned by other persons, at Borrowers’ expense, pending sale or other
disposition of the Collateral. 
Borrowers, at Bank’s request, shall assemble the Collateral consisting
of inventory and tangible assets and make such assets available to Bank at a
place to be designated by Bank.  Bank
shall have the right to conduct such sales on any Borrower’s premises, at
Borrowers’ expense, or elsewhere, on such occasion or occasions as Bank may see
fit.  Any notice required to be given by
Bank of a sale, lease or other disposition or other intended action by Bank
with respect to any of the Collateral which is deposited in the United States mail,
postage prepaid and duly addressed to Borrowers at the address specified in Section 14.1 below, at least five (5)
business days prior to such 

 

proposed
action, shall constitute fair and reasonable notice to Borrowers of any such
action.  The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other costs and expenses related thereto including attorney fees, shall
be applied in such order as Bank, in its sole discretion, elects, toward
satisfaction of the Bank Indebtedness. 
Bank shall account to Borrowers for any surplus realized upon such sale
or other disposition, and Borrowers shall remain liable for any
deficiency.  The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect Bank’s security interest in the Collateral.  Borrowers agree that Bank has no obligation
to preserve rights to the Collateral against any other parties.  Bank is hereby granted a license or other
right to use, after an Event of Default, without charge, each Borrower’s
labels, general intangibles, intellectual property, equipment, real estate,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any inventory or other Collateral and each
Borrower’s rights under all contracts, licenses, approvals, permits, leases and
franchise agreements shall inure to Bank’s benefit.  Bank shall be under no obligation to marshal
any assets in favor of Borrowers or any other party or against or in payment of
any or all of the Bank Indebtedness.

13.4                           Actions with Respect to Accounts.  Each Borrower hereby irrevocably makes,
constitutes and appoints Bank (and any of Bank’s designated officers, employees
or agents) as its true and lawful attorney-in-fact, with full power of
substitution, with power to sign its name and to take any of the following
actions, in its name or the name of Bank, as Bank may determine, without notice
to Borrowers and at Borrowers’ expense:

(a)                                  Verify the validity and amount of or any
other matter relating to the Collateral by mail, telephone, telecopy or
otherwise;

(b)                                 After the occurrence of an Event of Default,
notify all account debtors that such Borrower’s accounts have been assigned to
Bank and that Bank has a security interest therein;

(c)                                  After the occurrence of an Event of Default,
direct all account debtors to make payment of all such Borrower’s accounts
directly to Bank and forward invoices directly to such account debtors;

(d)                                 After the occurrence of an Event of Default,
take control in any manner of any cash or non-cash items of payment or proceeds
of such accounts;

(e)                                  After the occurrence of an Event of Default,
notify the United States Postal Service to change the address for delivery of
mail addressed to such Borrower to such address as Bank may designate;

(f)                                    After the occurrence of an Event of Default,
have access to any lockbox or postal boxes into which such Borrower’s mail is
deposited and receive, open and dispose of all mail addressed to such Borrower
(any sums received pursuant to the exercise of the rights provided in Sections 13.4 (a) through (f) above may, at Bank’s option, be deposited in
the cash collateral account provided for herein);

 

(g)                                 After the occurrence of an Event of Default,
take control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to any accounts;

(h)                                 After the occurrence of an Event of Default,
enforce payment of and collect any accounts, by legal proceedings or otherwise,
and for such purpose Bank may:

(1)                                  Demand payment of any accounts or direct any
account debtors to make payment of accounts directly to Bank;

(2)                                  Receive and collect all monies due or to
become due to such Borrower;

(3)                                  Exercise all of such Borrower’s rights and
remedies with respect to the collection of accounts;

(4)                                  Settle, adjust, compromise, extend, renew,
discharge or release the accounts;

(5)                                  Sell or assign the accounts on such terms,
for such amount and at such times as Bank deems advisable;

(6)                                  Prepare, file and sign such Borrower’s name
or names on any Proof of Claim or similar document in any proceeding filed
under federal or state bankruptcy, insolvency, reorganization or other similar
law as to any account debtor;

(7)                                  Prepare, file and sign such Borrower’s name
or names on any Notice of Lien, Claim of Mechanic’s Lien, Assignment or
Satisfaction of Lien or Mechanic’s Lien or similar document in connection with
the Collateral;

(8)                                  Endorse the name of such Borrower upon any
chattel papers, documents, instruments, invoices, freight bills, bills of
lading or similar documents or agreements relating to the accounts or goods
pertaining thereto or upon any checks or other media of payment or evidences of
a security interest that may come into Bank’s possession;

(9)                                  Sign the name of such Borrower to
verifications of accounts and notices thereof sent by account debtors to such
Borrower; or

(10)                            Take all other actions necessary or desirable to protect such Borrower’s
or Bank’s interest in the accounts.

Borrowers ratify and approve
all acts of said attorneys and agrees that said attorneys shall not be liable
for any acts of commission or omission, nor for any error of judgment or
mistake of fact or law, except willful misconduct.  This power, being coupled with an interest,
is irrevocable.  Each Borrower agrees to
assist the Bank in the collection and enforcement of its accounts and not to
hinder, delay or impede the Bank in its collection or enforcement of said
accounts.

13.5                           Set-Off.  Without limiting the rights of Bank under
applicable law, Bank has and may exercise a right of set-off, a lien against
and a security interest in all property of each 

 

Borrower
now or at any time in Bank’s possession in any capacity whatsoever, including
but not limited to any balance of any deposit, trust or agency account, or any
other bank account with Bank, as security for all Bank Indebtedness.  At any time and from time to time following
the occurrence of an Event of Default, or an event which with the giving of
notice or passage of time or both would constitute an Event of Default, Bank
may without notice or demand, set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of any Borrower
against any or all of the Bank Indebtedness and the Borrowers’ obligations
under the Loan Documents.

13.6                           Turnover of Property Held by Bank.  Each Borrower irrevocably authorizes any
Affiliate of Bank, upon and following the occurrence of an Event of Default, at
the request of Bank and without further notice, to turnover to Bank any
property of such Borrower held by such Affiliate, including without limitation,
funds and securities for such Borrower’s account and to debit, for the benefit
of Bank, any deposit account maintained by such Borrower with such Affiliate
(even if such deposit account is not then due or there results a loss or
reduction of interest or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the amount requested
by Bank up to the amount of the Bank Indebtedness, and to pay or transfer such
amount or property to Bank for application to the Bank Indebtedness.

13.7                           Delay or Omission Not Waiver.  Neither the failure nor any delay on the part
of Bank to exercise any right, remedy, power or privilege under the Loan
Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege.  No waiver of any Event of
Default shall affect any later Event of Default or shall impair any rights of
Bank.  No single, partial or full
exercise of any rights, remedies, powers and privileges by the Bank shall
preclude further or other exercise thereof. 
No course of dealing between Bank and any Borrower shall operate as or
be deemed to constitute a waiver of Bank’s rights under the Loan Documents or
affect the duties or obligations of Borrowers.

13.8                           Remedies Cumulative; Consents.  The rights, remedies, powers and privileges
provided for herein shall not be deemed exclusive, but shall be cumulative and
shall be in addition to all other rights, remedies, powers and privileges in
Bank’s favor at law or in equity. 
Whenever Bank’s consent or approval is required, such consent or
approval shall be at the sole and absolute discretion of Bank.

13.9                           Certain Fees, Costs, Expenses, Expenditures and Indemnification.  Borrowers agree to pay on demand
all costs and expenses of Bank, including without limitation:

(a)                                  all costs and expenses in connection with the
preparation, review, negotiation, execution, delivery and administration of the
Loan Documents, and the other documents to be delivered in connection
therewith, or any amendments, extensions and increases to any of the foregoing
(including, without limitation, attorney’s fees and expenses, and the cost of
appraisals and reappraisals of Collateral), and the cost of periodic lien
searches and tax clearance certificates, as Bank deems advisable;

(b)                                 all losses, costs and expenses in connection
with the enforcement, protection and preservation of the Bank’s rights or
remedies under the Loan Documents, or any other agreement relating to any Bank Indebtedness,
or in connection with legal advice relating to the rights 

 

or responsibilities of Bank (including without limitation court costs,
attorney’s fees and expenses of accountants and appraisers); and

(c)                                  any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of the
Loan Documents, and all liabilities to which Bank may become subject as the
result of delay in paying or omission to pay such taxes.

In the event any Borrower
shall fail to pay taxes, insurance, assessments, costs or expenses which it is
required to pay hereunder, or fails to keep the Collateral free from security
interests or liens (except as expressly permitted herein), or fails to maintain
or repair the Collateral as required hereby, or otherwise breaches any
obligations under the Loan Documents, Bank in its discretion, may make
expenditures for such purposes and the amount so expended (including attorney’s
fees and expenses, filing fees and other charges) shall be payable by Borrowers
on demand and shall constitute part of the Bank Indebtedness.

With respect to any amount
required to be paid by Borrowers under this Section, in the event Borrower
fails to pay such amount on demand, Borrowers shall also pay to Bank interest
thereon at the highest default rate set forth herein.

Borrowers agrees to
indemnify and hold harmless, Bank and Bank’s officers, directors, shareholders,
employees and agents, from and against any and all claims, liabilities, losses,
damages, costs and expenses (whether or not such Person is a party to any
litigation), including attorney’s fees and costs and costs of investigation,
document production, attendance at depositions or other discovery with respect
to or arising out of this Agreement or any of the other Loan Documents, the use
of any proceeds advanced hereunder, the transactions contemplated hereunder, or
any claim, demand, action or cause of action being asserted against any
Borrower or any of its Affiliates.

Borrowers’ obligations under
this Section shall survive termination of this Agreement and repayment of the
Bank Indebtedness.

13.10                     Time is of the Essence.  Time is of the essence in Borrowers’
performance of its obligations under the Loan Documents.

13.11                     Acknowledgement of Confession of Judgment Provisions.  EACH BORROWER ACKNOWLEDGES AND
AGREES THAT THE NOTES AND THE LOAN DOCUMENTS CONTAIN PROVISIONS WHEREBY BANK
MAY ENTER JUDGMENT BY CONFESSION AGAINST SUCH BORROWER. BEING FULLY AWARE OF
ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE QUESTION OF THE VALIDITY OF ANY
CLAIMS THAT MAY BE ASSERTED AGAINST IT BY BANK UNDER THE NOTES AND LOAN
DOCUMENTS BEFORE JUDGMENT CAN BE ENTERED, EACH BORROWER HEREBY WAIVES THESE
RIGHTS AND AGREES AND CONSENTS TO BANK ENTERING JUDGMENT AGAINST BORROWER BY
CONFESSION.  ANY PROVISION IN A
CONFESSION OF JUDGMENT IN ANY OF THE LOAN DOCUMENTS FOR AN ATTORNEY’S
COLLECTION COMMISSION SHALL IN NO WAY LIMIT BORROWERS’ LIABILITY TO REIMBURSE
BANK FOR ALL LEGAL FEES ACTUALLY INCURRED BY BANK, EVEN IF SUCH FEES ARE IN
EXCESS OF THE ATTORNEY’S COLLECTION COMMISSION PROVIDED FOR IN SUCH CONFESSION
OF JUDGMENT.

 

14.                                 COMMUNICATIONS AND NOTICES.

14.1                           Communications and Notices.  All notices, requests and other
communications made or given in connection with the Loan Documents shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division
or department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, or
by telecopy with the original forwarded by first-class mail, in all cases, with
charges prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:

To Borrowers:

Infologix, Inc.

Opt Acquisition, LLC

Embedded Technologies, LLC

Attention: Cosmo DeNicola, Chief Executive Officer

101 E. County Line Road, Suite 210

Hatboro, PA 19040

Telecopy No.:  (215) 604-0695

With a copy to:

Albert
A. Ciardi Jr.

One
Commerce Square, Suite 2020

2005
Market Street

Philadelphia,
PA 19103

 

Cosmo DeNicola

 

To Bank:

Sovereign Bank

ABL/Specialty Lending

Centre Square West, 25th Floor

1500 Market Street

Philadelphia, PA 19102

Attention: Steven G. Fahringer, AVP

Telecopy No.: (215) 568-9587

With a copy to:

Wolf, Block, Schorr and
Solis-Cohen LLP

1650 Arch Street, 22nd Floor

Philadelphia, PA 
19103-2087

 

Attention:  Richard Zucker

Telecopy Number:  (215) 405-3908

15.                                 WAIVERS.

15.1                           Waivers.  In connection with any
proceedings under the Loan Documents, including without limitation any action
by Bank in replevin, foreclosure or other court process or in connection with
any other action related to the Loan Documents or the transactions contemplated
hereunder, Borrowers waive:

(a)                                  all errors, defects and
imperfections in such proceedings;

(b)                                  all benefits under any
present or future laws exempting any property, real or personal, or any part of
any proceeds thereof from attachment, levy or sale under execution, or
providing for any stay of execution to be issued on any judgment recovered
under any of the Loan Documents or in any replevin or foreclosure proceeding,
or otherwise providing for any valuation, appraisal or exemption;

(c)                                  presentment for payment,
demand, notice of demand, notice of non-payment, protest and notice of protest
of any of the Loan Documents, including the Notes;

(d)                                  any requirement for bonds,
security or sureties required by statute, court rule or otherwise;

(e)                                  any demand for possession of
Collateral prior to commencement of any suit; and

(f)                                    all rights to claim or
recover attorney’s fees and costs in the event that a Borrower is successful in
any action to remove, suspend or prevent the enforcement of a judgment entered
by confession.

15.2                           Forbearance.  Bank may release, compromise, forbear with
respect to, waive, suspend, extend or renew any of the terms of the Loan
Documents, without notice to any Borrower.

15.3                           Limitation on Liability.  Borrowers shall be responsible for and Bank
is hereby released from any claim or liability in connection with:

(a)                                  Safekeeping any Collateral;

(b)                                 Any loss or damage to any Collateral;

(c)                                  Any diminution in value of the Collateral; or

(d)                                 Any act or default of another Person.

Bank shall only be liable
for any act or omission on its part constituting willful misconduct.  In the event that Bank breaches its required
standard of conduct, Borrowers agree that its liability 

 

shall be only for direct
damages suffered and shall not extend to consequential or incidental
damages.  In the event any Borrower
brings suit against Bank in connection with the transactions contemplated
hereunder and Bank is found not to be liable, Borrowers will indemnify and hold
Bank harmless from all costs and expenses, including attorney’s fees, incurred
by Bank in connection with such suit. 
This Agreement is not intended to obligate Bank to take any action with
respect to the Collateral or to incur expenses or perform any obligation or
duty of any Borrower.

16.                                 SUBMISSION TO JURISDICTION.

16.1                           Submission to Jurisdiction.  Each Borrower hereby consents to the
exclusive jurisdiction of any state or federal court located within the
Commonwealth of Pennsylvania, and irrevocably agrees that, subject to the Bank’s
election, all actions or proceedings relating to the Loan Documents or the
transactions contemplated hereunder shall be litigated in such courts, and each
Borrower waives any objection which it may have based on lack of personal
jurisdiction, improper venue or forum non conveniens to the conduct of
any proceeding in any such court and waives personal service of any and all
process upon it, and consents that all such service of process be made by mail
or messenger directed to it at the address set forth in Section 14.1.  Nothing contained in this Section 16.1 shall affect the right of
Bank to serve legal process in any other manner permitted by law or affect the
right of Bank to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction.

17.                                 USA PATRIOT ACT PROVISIONS.

17.1                           USA
Patriot Act Notice.  Bank
hereby notifies the Borrowers that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), it is required to
obtain, verify and record information that identifies the Borrowers, which
information includes the name and address of the Borrowers and other
information that will allow Bank to identify the Borrowers in accordance with
the Patriot Act.

17.2                           Collateral
Provisions.

(a)                                  Without in any way limiting the generality of
Section 6 hereof, no (i)
account, instrument, chattel paper or other obligation or property of any kind
due from, owed by, or belonging to, a Sanctioned Person or (ii) lease in which
the lessee is a Sanctioned Person, shall be Collateral.

(b)                                 Bank may reject or refuse to accept any
Collateral for credit toward payment of the Lender Indebtedness that is an
account, instrument, chattel paper, lease, or other obligation or property of
any kind due from, owed by, or belonging to, a Sanctioned Person.

17.3                           OFAC
Compliance.  None of any
Borrower, any Subsidiary of any Borrower or any affiliate of any Borrower (i)
is a Sanctioned Person, (ii) has more than 15% of its assets in Sanctioned
Countries, or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned
Countries.  The proceeds of the Loans
will not be used and have not been used to fund any operations in, finance any
investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country.

 

18.                               BORROWING
AGENCY PROVISIONS.  Each
Borrower hereby irrevocably designates Borrowing Agent to be its attorney and
agent and in such capacity to borrow, sign and endorse notes, and execute and
deliver all instruments, documents, writings and further assurances now or
hereafter required hereunder, on behalf of such Borrower, and hereby authorizes
Bank to pay over or credit all loan proceeds hereunder in accordance with the
request of Borrowing Agent.

The handling of this credit facility as a
co-borrowing facility with a borrowing agent in the manner set forth in this
Agreement is solely as an accommodation to Borrowers and at their request.  Bank shall incur no liability to Borrowers as
a result thereof.  To induce Bank to do
so and in consideration thereof, each Borrower hereby indemnifies Bank and
holds Bank harmless from and against any and all liabilities, expenses, losses,
damages and claims of damage or injury asserted against Bank by any Person arising
from or incurred by reason of the handling of the financing arrangements of
Borrowers as provided herein, reliance by Bank on any request or instruction
from Borrowing Agent or any other action taken by Bank with respect to this Section 18
except due to willful misconduct or gross negligence by the indemnified
party.

All agreements, covenants, conditions and provisions
of this Agreement shall be the joint and several obligation of each Borrower,
and each Borrower shall make payment upon the maturity of the Bank Indebtedness
by acceleration or otherwise, and such obligation and liability on the part of
each Borrower shall in no way be affected by any extensions, renewals and
forbearance granted by Bank to any Borrower, failure of Bank to give any
Borrower notice of borrowing or any other notice, any failure of Bank to pursue
or preserve its rights against any Borrower, the release by Bank of any
Collateral now or hereafter acquired from any Borrower, and such agreement by
each Borrower to pay upon any notice issued pursuant hereto is unconditional
and unaffected by prior recourse by Bank to the other Borrowers or any
Collateral for such Borrower’s Bank Indebtedness or the lack thereof.  Each Borrower waives all suretyship defenses.

19.                                 MISCELLANEOUS.

19.1                           Brokers.  The transaction contemplated hereunder was
brought about and entered into by Bank and Borrowers acting as principals and
without any brokers, agents or finders being the effective procuring cause
hereof.  Borrowers represent to Bank that
no Borrower has committed Bank to the payment of any brokerage fee or
commission in connection with this transaction. 
If any such claim is made against Bank by any broker, finder or agent or
any other Person, Borrowers agree to indemnify, defend and hold Bank harmless
against any such claim, at Borrowers’ own cost and expense, including Bank’s
attorneys’ fees.  Borrowers further agree
that until any such claim or demand is adjudicated in Bank’s favor, the amount
claimed and/or demanded shall be deemed part of the Bank Indebtedness secured
by the Collateral.

19.2                           Use of Bank’s Name.  No Borrowers shall use Bank’s
name or the name of any of Bank’s Affiliates in connection with any of its
business or activities except as may otherwise be required by the rules and
regulations of the Securities and Exchange Commission or any like regulatory
body and except as may be required in its dealings with any governmental
agency.

19.3                           No Joint Venture.  Nothing contained herein is intended to
permit or authorize any Borrower to make any contract on behalf of Bank, nor
shall this Agreement be construed as creating a partnership, joint venture or
making Bank an investor in any Borrower.

 

19.4                           Survival.  All
covenants, agreements, representations and warranties made by any Borrower in
the Loan Documents or made by or on its behalf in connection with the
transactions contemplated herein shall be true at all times this Agreement is
in effect and shall survive the execution and delivery of the Loan Documents,
any investigation at any time made by Bank or on its behalf and the making by
Bank of the loans or advances to any Borrower. 
All statements contained in any certificate, statement or other document
delivered by or on behalf of any Borrower pursuant hereto or in connection with
the transactions contemplated hereunder shall be deemed representations and
warranties by such Borrower.

19.5                           No Assignment by Borrower.  No Borrower may assign any of its rights
hereunder without the prior written consent of Bank, and Bank shall not be
required to lend hereunder except to Borrowers as they presently exist.

19.6                           Assignment or Sale by Bank.  Bank may sell, assign or participate all or a
portion of its interest in the Loan Documents and in connection therewith may
make available to any prospective purchaser, assignee or participant any
information relative to any Borrower in its possession.

19.7                           Binding Effect.  This Agreement and all rights and powers
granted hereby will bind and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.

19.8                           Severability.  The provisions of this Agreement and all
other Loan Documents are deemed to be severable, and the invalidity or
unenforceability of any provision shall not affect or impair the remaining
provisions which shall continue in full force and effect.

19.9                           No Third Party Beneficiaries.  The rights and benefits of this Agreement and
the Loan Documents shall not inure to the benefit of any third party.

19.10                     Modifications.  No modification of this Agreement or any of
the Loan Documents shall be binding or enforceable unless in writing and signed
by or on behalf of the party against whom enforcement is sought.

19.11                     Holidays.  If the day provided herein for the payment of
any amount or the taking of any action falls on a Saturday, Sunday or public
holiday at the place for payment or action, then the due date for such payment
or action will be the next succeeding Business Day.

19.12                     Law Governing.  This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth, without regard
to conflict of law principles.

19.13                     Integration.  The Loan Documents shall be construed as
integrated and complementary of each other, and as augmenting and not
restricting Bank’s rights, powers, remedies and security.  The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties.  In the event of any inconsistency between the

 

terms
of this Agreement and the terms of the other Loan Documents, the terms of this
Agreement shall prevail.

19.14                     Exhibits and Schedules.  All exhibits and schedules attached hereto
are hereby made a part of this Agreement.

19.15                     Headings.  The headings of the Articles, Sections,
paragraphs and clauses of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part of this Agreement.

19.16                     Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

19.17                     Waiver
of Right to Trial by Jury.  BORROWERS AND BANK WAIVE
ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF ANY BORROWER OR BANK WITH RESPECT TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN
EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.  BORROWERS AND BANK AGREE AND CONSENT THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF BORROWERS AND BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.  BORROWERS ACKNOWLEDGE THAT THEY
HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT
THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY
AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.

19.18                     Marketing
Release.  Borrowers
hereby consent to the publication and other advertisement by Bank in various
media of the transactions occurring under this Agreement.

19.19                     Credit
Inquiries.  Borrowers
hereby consent to Bank responding from time to time to credit inquiries
regarding each of the Borrowers, after any Borrower has provided written
authorization to Bank.

19.20                     Closing.  Closing hereunder will take
place at the offices of Wolf, Block, Schorr and Solis-Cohen LLP, 1650 Arch
Street, 22nd Floor, Philadelphia, PA 
19103 effective on the date of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

	
  

  	
  INFO
  LOGIX INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T.
  Gulian

  	
   

  
	
   

  	
    David Gulian, President

  
	
   

  	
   

  
	
   

  	
  OPT
  ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T.
  Gulian

  	
   

  
	
   

  	
    David Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMBEDDED
  TECHNOLOGIES, LLC

  
	
   

  	
  By:
  INFO LOGIX INC., its sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T.
  Gulian

  	
   

  
	
   

  	
    David Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOVEREIGN
  BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Steven
  Fahringer

  	
   

  
	
   

  	
    Steven Fahringer, Vice PresidentExhibit
10.13

FIRST AMENDMENT AND
MODIFICATION

TO LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT AND
MODIFICATION TO LOAN AND SECURITY AGREEMENT (the “Amendment”) is
made effective as of the 25th day of August, 2006, by and among INFO LOGIX INC., a Delaware corporation (“Infologix”), OPT ACQUISITION LLC,
a Pennsylvania limited liability company (“Optasia”), EMBEDDED TECHNOLOGIES, LLC, a Delaware limited liability
company (“Embedded” and together with Infologix
and Optasia, jointly, severally and collectively “Borrowers”
and each a “Borrower”) and SOVEREIGN BANK (the “Bank”).

BACKGROUND

A.            Pursuant to that certain Loan and
Security Agreement dated March 16, 2006 by and among Borrowers and Bank (as the
same may hereafter be amended, modified, supplemented or restated from time to
time, being referred to herein as the “Loan Agreement”),
Bank agreed, inter alia, to
extend to Borrowers the following credit facilities:  (i) a line of credit in the maximum principal
amount of Eight Million Dollars ($8,000,000.00) and (ii) a term loan in the
original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000.00).

B.            Borrowers have requested and Bank
has agreed to amend the Loan Agreement in accordance with the terms and
conditions contained herein.

C.            All capitalized terms contained
herein and not otherwise defined herein shall have the meanings set forth in
the Loan Agreement.

NOW, THEREFORE, intending to be legally bound hereby, the
parties hereto agree as follows:

1.             Consents and Waivers.

(a)           Additional
Subordinated Debt.  Prior to the date
hereof, Infologix incurred additional Indebtedness in the aggregate principal
amount of Four Hundred Eleven Thousand Eight Hundred Forty-Six Dollars
($411,846.00) (the “Additional Subordinated
Indebtedness”).  The
Additional Subordinated Indebtedness is evidenced by (i) that certain
promissory note executed by Infologix in favor of Cosmo DeNicola in the face
amount of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars
($82,369.20) dated April 15, 2006, (ii) that certain promissory note executed
by Infologix in favor of Albert A. Ciardi, Jr. in the face amount of Eighty-Two
Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20) dated April
15, 2006, (iii) that certain promissory note executed by Infologix in favor of
David T. Gulian in the face amount of Eighty-Two Thousand Three Hundred
Sixty-Nine and 20/100 Dollars ($82,369.20) dated April 15, 2006, (iv) that
certain promissory note executed by Infologix in favor of Richard Hodge in the
face amount of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars
($82,369.20) dated April 15, 2006, and (v) that certain promissory note
executed by Infologix in favor of Craig Wilensky in the face amount of
Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20)
dated April 15, 2006 (collectively, the “Additional
Subordinated Notes”).  The
incurrence of the Additional Subordinated Indebtedness and the execution and
delivery of the Additional Subordinated Notes are referred to herein as the “Additional Subordinated Debt Transaction”.

(b)           Repayment of
Subordinated Debt.  Borrowers have
informed Bank that Borrowers desire to use Advances under Term Loan B along
with certain other funds to repay certain obligations of Infologix to Cosmo
DeNicola, Craig Wilensky, Richard Hodge, David Gulian, and/or
Albert Ciardi, Jr. in the aggregate principal amount of One Million Two Hundred
Eleven Thousand Eight Hundred Forty-Six Dollars ($1,211,846.00). (the “Subordinated Debt Repayment”).  After the Subordinated Debt Repayment,
Infologix will not have outstanding to Cosmo DeNicola, Craig
Wilensky, Richard Hodge, David Gulian and/or Albert Ciardi, Jr. any
Indebtedness for borrowed money.

(c)           Transfer of
Equity Interests.  Borrowers have
informed Bank that Ira Lubert intends to acquire a sixteen and sixty-five
hundredths percent (16.65%) equity interest, Warren V. Musser intends to
acquire a sixteen and sixty-five hundredths percent (16.65%) equity interest
and Charles Robbins intends to acquire a one and seven tenths percent (1.7%)
equity interest, thirty-five percent (35%) equity interest in the aggregate, in
Infologix (the “Ownership Restructure”)
pursuant to those certain Stock Purchase Agreements dated July 17, 2006 between
Warren V. Musser, and/or his designated assignee, and each of Cosmo DeNicola, Craig
Wilensky, Richard Hodge, David Gulian and Albert Ciardi, Jr. (collectively, the
“Purchase Agreement”).

(d)           Merger.  Borrowers have informed Bank that prior to
the Cut-Off Date, Infologix intends to merge with a to-be-formed entity (the “Merger Shell”).  Infologix, a Delaware corporation will be the
corporation surviving such merger. 
Merger Shell shall be a wholly owned subsidiary of a public holding
company (the “Public Shell”).  In connection with such merger, the equity
owners of Infologix shall receive equity interests of the Public Shell.  The ownership of the Public Shell after such
merger shall be as set forth on Exhibit “A”
hereto.  The transactions reference in
this Section 1(e) are referred
to herein as the “Merger”.

(e)           Proposed
Transactions.  The Additional
Subordinated Debt Transaction, the Subordinated Debt Repayment, the Ownership
Restructure and the Merger shall be referred to herein, collectively, as the “Proposed Transactions”.

(f)            Consent and Waiver.  Subject to the terms and conditions of Sections 12 and 13 hereof, Bank hereby
consents to the Proposed Transactions and, solely for the purpose of avoiding
the occurrence of a Default or an Event of Default which could be caused by the
Proposed Transactions, waives Borrowers’ and Guarantors’ compliance with those
provisions of the Loan Agreement and the other Loan Documents which would
prohibit the Proposed Transactions.

The foregoing consent and
waiver is given solely in connection with the Proposed Transactions and shall
not be deemed to be an agreement, obligation or commitment by Bank to consent
to any other transactions which would be prohibited by the terms and conditions
of the Loan Agreement or any of the other Loan Documents.

2.             New Term Loan B. 
The Loan Agreement is hereby amended by adding the following as Sections 2.2A, 3.2A, 4.3A and 4.3B
thereto:

“2.2A      Term Loan B.  Bank shall lend to Borrowers and Borrowers
shall borrow from Bank the aggregate amount of One Million Dollars
($1,000,000.00) (“Term Loan B”).  Borrowers’ obligation to repay Term Loan B
shall be evidenced by Borrowers’ promissory note (the

 2
 

“Term Note B”) in the face amount of One Million Dollars ($1,000,000.00).”

“3.2A      Interest on Term
Loan B.  Interest on the entire
outstanding principal balance of Term Loan B will accrue at the rate per annum
which is equal to the Prime Based Term B Rate.”

“4.3A      Principal
Payments on Term Loan B.  Subject to the next succeeding sentence,
Borrowers will pay the principal of Term Loan B in twenty-nine (29) equal and
consecutive monthly installments of Twenty-Seven Thousand Seven Hundred
Seventy-Seven and 78/100 Dollars ($27,777.78) each, on the first day of each
calendar month commencing on November 1, 2006, and in one (1) final payment of
the remaining principal balance, plus all accrued and unpaid interest thereon
on March 15, 2009.  Notwithstanding the
foregoing, if the Capital Raise Date has not occurred prior to the Cut-Off
Date, Borrower will pay the entire outstanding principal balance of Term Loan
B, plus all accrued and unpaid interest thereon on December 31, 2006.”

“4.3B      Excess Cash Flow.  In addition to the monthly Term Loan and Term
Loan B payments required by the foregoing Sections 4.3 and 4.3A,
at Bank’s option, Borrowers shall pay to Bank, on an annual basis
contemporaneously with its delivery of the financial statements required by Section 9.1 hereof and in any event
no later than ninety (90) days after the end of each fiscal year of Borrowers,
an amount equal to fifteen percent (15%) of Excess Cash Flow for the
immediately preceding fiscal year, which payment shall be applied to the
regularly scheduled payments of the Term Loan and/or Term Loan B, as Bank’s
sole option, in the inverse order in which they are due.”

3.             Definitions.

(a)           Contract Period.  Section
1.1(n) of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:

“(n)         “Contract Period” means the period of time commencing on the
date hereof and continuing through and including March 16, 2009.”

(b)           LIBOR Rate Margin.  Section
1.1(rr) of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:

“(rr)         “LIBOR Rate Margin” means (i) commencing the date hereof, 287.5
basis points and (ii) commencing on the Capital Raise Date and provided that
the Capital Raise Date occurs prior to the Cut-Off Date, 250 basis points.  If the Capital Raise Date does not occur

 3
 

prior to the Cut-Off Date, the LIBOR Rate Margin shall remain as set
forth in subsection (i) hereof.”

(c)           Maximum Line
Amount.  Section 1.1(bbb) of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

“(bbb)    “Maximum
Line Amount” means an amount up to Eight Million Five Hundred
Thousand Dollars ($8,500,000.00).”

(d)           Prime Rate
Advance.  Section 1.1(nnn) of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

“(nnn)    “Prime Rate Advance” means any Advance accruing interest at the
Prime Based Line Rate, the Prime Based Term Rate or the Prime Based Term B
Rate.”

(e)           Prime Rate Line
Margin.  Section 1.1(ooo) of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

“(ooo)    “Prime Rate Line Margin” means (i) commencing the date hereof, 12.5
basis points and (ii) commencing on the Capital Raise Date and provided that
the Capital Raise Date occurs prior to the Cut-Off Date, zero basis
points.  If the Capital Raise Date does
not occur prior to the Cut-Off Date, the Prime Rate Line Margin shall remain as
set forth in subsection (i) hereof.”

(f)            Prime Rate Term
Margin.  Section 1.1(ppp) of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

“(ppp)    “Prime
Rate Term Margin” means (i) commencing the date hereof, 200
basis points and (ii) commencing on the Capital Raise Date and provided that
the Capital Raise Date occurs prior to Cut-Off Date, 100 basis points.  If the Capital Raise Date does not occur
prior to the Cut-Off Date, the Prime Rate Term Margin shall remain as set forth
in subsection (i) hereof.”

(g)           Subordinated
Indebtedness.  Section 1.1(vvv) of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

“(vvv)    “Subordinated Indebtedness” means, collectively, (i) that certain
Indebtedness of Borrowers owed to Cosmo DeNicola in the principal amount of Two
Hundred Thousand Dollars ($200,000.00), (ii) that certain Indebtedness of
Infologix owed to Cosmo DeNicola in the principal amount of One Hundred
Forty-Seven Thousand Dollars ($147,000.00), (iii) that certain Indebtedness of
Infologix owned to Cosmo DeNicola in the principal amount of Eighty-Two
Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20),  (iv) that certain Indebtedness of Borrowers
owed to Albert Ciardi, Jr. in the principal amount of Two Hundred Thousand
Dollars ($200,000.00), ,

 4
 

(v) that certain Indebtedness of Infologix owed to Albert Ciardi, Jr.
in the principal amount of One Hundred Sixty-Five Thousand Dollars
($165,000.00), (vi) that certain Indebtedness of Infologix owned to Albert A.
Ciardi, Jr. in the principal amount of Eighty-Two Thousand Three Hundred
Sixty-Nine and 20/100 Dollars ($82,369.20), (vii) that certain Indebtedness of
Infologix owed to David Gulian in the principal amount of Twenty-Nine Thousand
Three Hundred Thirty-Four Dollars ($29,344.00), (viii) that certain
Indebtedness of Infologix owned to David T. Gulian in the principal amount of
Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20), (ix)
that certain Indebtedness of Infologix owed to Craig Wilensky in the principal
amount of Twenty-Nine Thousand Three Hundred Thirty-Three Dollars ($29,333.00),
(x) that certain Indebtedness of Infologix owned to Richard Hodge in the
principal amount of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100
Dollars ($82,369.20), (xi) that certain Indebtedness of Infologix owed to
Richard Hodge in the principal amount of Twenty-Nine Thousand Three Hundred
Thirty-Three Dollars ($29,333.00) and (xii) that certain Indebtedness of
Infologix owned to Craig Wilensky in the principal amount of Eighty-Two
Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20) evidenced by
the Subordinated Notes, which Indebtedness must at all times be fully
subordinated to all Bank Indebtedness on terms acceptable to Bank in its sole
discretion.”

(h)           Subordinated Note.  Section
1.1(www) of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:

“(www)  “Subordinated Note” means, collectively, (i) that certain
promissory note executed by Borrowers in favor of Cosmo DeNicola in the face
amount of Two Hundred Thousand Dollars ($200,000.00) dated March 29, 2005, (ii)
that certain promissory note executed by Infologix in favor of Cosmo DeNicola
in the face amount of One Hundred Sixty-Five Thousand Dollars ($165,000.00)
dated November 16, 2001, (iii) that certain promissory note executed by
Infologix in favor of Cosmo DeNicola in the face amount of Eighty-Two Thousand
Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20) dated April 15, 2006, (iv)
that certain promissory note executed by Borrowers in favor of Albert Ciardi,
Jr. in the face amount of Two Hundred Thousand Dollars ($200,000.00) dated
March 29, 2005, (v) that certain promissory note executed by Infologix in favor
of Albert Ciardi, Jr. in the face amount of One Hundred Sixty-Five Thousand
Dollars ($165,000.00) dated November 16, 2001, (vi) that certain promissory
note executed by Infologix in favor of Albert A. Ciardi, Jr. in the face amount
of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars ($82,369.20)
dated April 15, 2006, (vii) that certain promissory note executed by Infologix
in favor of David Gulian in the face amount of Forty Thousand Dollars ($40,000.00)
dated November 16, 2001,

 5
 

(viii) that certain promissory note executed by Infologix in favor of
David T. Gulian in the face amount of Eighty-Two Thousand Three Hundred
Sixty-Nine and 20/100 Dollars ($82,369.20) dated April 15, 2006, (ix) that
certain promissory note executed by Infologix in favor of Richard Hodge in the
face amount of Forty Thousand Dollars ($40,000.00) dated November 16, 2001, (x)
that certain promissory note executed by Infologix in favor of Richard Hodge in
the face amount of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100
Dollars ($82,369.20) dated April 15, 2006, (xi) that certain promissory note
executed by Infologix in favor of Craig Wilensky in the face amount of Forty
Thousand Dollars ($40,000.00) dated November 16, 2001 and (xii) that certain
promissory note executed by Infologix in favor of Craig Wilensky in the face
amount of Eighty-Two Thousand Three Hundred Sixty-Nine and 20/100 Dollars
($82,369.20) dated April 15, 2006.”

(i)            Additional
Definitions.  Section 1.1 of the Loan Agreement is
hereby amended by adding the following as Sections
1.1(j)A, 1.1(o)A, 1.1(bbb)A, 1.1(bbb)B, 1.1(lll)A, 1.1(lll)B, 1.1(aaaa)A and
1.1(bbbb)A thereto:

“(j)A       “Capital
Raise Date” means the date on which Bank has received evidence
satisfactory to Bank that Infologix has received the Minimum Capital Raise and
that the Merger has been consummated.”

“(o)A      “Cut-Off
Date” means October 31, 2006.”

“(bbb)A “Merger”
means the merger of Infologix with and into a to-be-formed entity (such
to-be-formed entity being a wholly owned subsidiary of a public holding company),
with Infologix, a Delaware corporation being the corporation surviving such
merger.”

“(bbb)B  “Minimum
Capital Raise” means a cash infusion, in the form of
subordinated debt and/or equity in form and content satisfactory to Bank in its
sole discretion, in the amount of at least Eight Million Dollars
($8,000,000.00).  If the cash infusion is
in the form of subordinated debt, Infologix shall cause the subordinated lender
to execute and deliver to Bank a subordination agreement, in form and content
satisfactory to Bank coincident with the incurrence of such debt.”

“(lll)A     “Prime
Based Term B Rate” means the Prime Rate, plus the Prime
Rate Term B Margin (such rate to change immediately upon any change in the
Prime Rate).”

“(lll)B      “Prime
Rate Term B Margin” means (i) commencing the date hereof, 350
basis points and (ii) commencing on the Capital Raise Date and provided that
the Capital Raise Date occurs prior to the Cut-Off Date, 100 basis points.  If the Capital

 6
 

Raise Date does not occur prior to the Cut-Off Date, the Prime Rate
Term B Margin shall remain as set forth in subsection (i)
hereof.”

“(aaaa)A                “Term Loan B” shall have the meaning given such term
in Section 2.2A hereof.”

“(bbb)A                 “Term Note B” shall have the meaning given such term
in Section 2.2A hereof.”

4.             Line of Credit.  The
reference to “Eight Million Dollars ($8,000,000.00)” set forth in Section 2.1 of the Loan Agreement is
hereby deleted and replaced with “Eight Million Five Hundred Thousand Dollars
($8,500,000.00)”.

5.             Use of Proceeds.  Section 2.3 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

“2.3         Use of
Proceeds.  Borrowers agree
to use Advances (other than Advances under Term Loan B) to refinance
obligations of Borrowers to Silicon Valley Bank and for proper working capital
purposes.  Borrowers agree to use
Advances under Term Loan B to repay certain obligations of Infologix to Cosmo
DeNicola, Craig Wilensky, Richard Hodge, David Gulian and/or Albert
Ciardi, Jr.  The entire principal amount
of the Term Loan B shall be advanced on the date hereof.”

6.             Term Line - Payments.

(a)           The reference to “March
14, 2009” set forth in Section 4.3(a)
of the Loan Agreement is hereby deleted and replaced with “March 16, 2009”.

(b)           Section 4.3(b) of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:  “Intentionally Deleted”.

7.             Termination of Line; Prepayment of Term Loan.  Section
4.8 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:

“4.8         Termination
of Line; Prepayment of Term Loan and/or Term Loan B.

(a)           Right to Terminate. 
Borrowers may terminate the Line upon ninety (90) days prior written
notice to Bank.

(b)           Termination Fee.  In
the event that (i) the Line is terminated by Borrowers for any reason,
including without limitation prepayment or refinancing of the Line with another
lender or from any other source, or (ii) an Event of Default occurs and the
Line is terminated, Borrowers shall pay to Bank a termination fee calculated as
follows:

 7
 

(1)           if
the termination date is on or prior to the first anniversary of the date
hereof, the termination fee will be equal to one percent (1%) of the sum of the
(i) Maximum Line Amount, plus (ii) the outstanding principal balance of Term
Loan, plus (iii) the outstanding principal balance of Term Loan B; and

(2)           if
the termination date is after the first anniversary of the date hereof but on
or prior to the second anniversary of the date hereof, the termination fee will
be equal to .5 percent (.5%) of the sum of the (i) Maximum Line Amount, plus (ii)
the outstanding principal balance of Term Loan, plus (iii) the outstanding
principal balance of Term Loan B.

If Borrowers request an extension of the Contract Period, Bank reserves
the right, inter  alia, to amend the termination fees for
subsequent periods as a condition of any extension of the Line, together with
such other conditions as Bank shall require.

In the event Bank exercises its right to accelerate payments under Term
Loan or Term Loan B following an Event of Default or otherwise, any tender of
payment of the amount necessary to repay all or part of Term Loan or Term Loan
B made thereafter at any time by Borrowers, their successors or assigns, or by
anyone on behalf of Borrowers and any receipt by Bank of proceeds of Collateral
in payment of Term Loan or Term Loan B shall be deemed to be a voluntary
prepayment and in connection therewith Bank shall be entitled to receive the
premium required to be paid under the foregoing prepayment restrictions.

(c)           Term Loan and Term
Loan B Co-Terminus with Line. 
In the event the
Line is terminated for any reason including, without limitation, as a result of
an Event of Default, expiration of the Contract Period, pre-payment by
Borrowers or otherwise, the entire outstanding principal balance of each of
Term Loan and Term Loan B, together with any accrued and unpaid interest
thereon and any other sums due pursuant to the terms hereof shall be due and
payable immediately.”

8.             Additional Reporting Requirements.  Effective as of the date on which the Merger
is consummated, Section 9
of the Loan Agreement is hereby amended by adding the following as Section 9.13 thereto:

“9.13       Stockholder
and SEC Reports. 
Borrowers shall promptly after the sending or filing thereof furnish or
cause to be furnished to Bank copies of all reports which any Borrower sends to
its stockholders generally and copies of all reports (other than routine 8-K
reports) and registration statements which any Borrower files with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.”

 8
 

9.             Release of Guaranties. 
Provided that the Capital Raise Date has occurred prior to the Cut-Off
Date, effective as of the Capital Raise Date, Bank will release and discharge Craig
Wilensky, Richard Hodge and David Gulian from each of their obligations under
the Surety Agreements.  Bank shall
provide written confirmation of such release in the form attached hereto as Exhibit “B”.  If the Capital Raise Date does not occur
prior to the Cut-Off Date, the Surety Agreements shall remain in full force and
effect pursuant to the terms thereof.

10.           Permitted
Acquisitions.

(a)           Notwithstanding the
terms and conditions of the Loan Agreement, including, without limitation, Section 7.7 thereof, provided that the
Capital Raise Date has occurred prior to the Cut-Off Date, Infologix shall be
permitted to make Permitted Acquisitions (as defined below).  If the Capital Raise Date does not occur
prior to the Cut-Off Date, Infologix shall not be permitted to make Permitted
Acquisitions.

(b)           As used herein, “Permitted Acquisition” means any
acquisition by Infologix, whether by purchase, merger or otherwise, of all or
substantially all of the assets of, all of the equity interests of, or a
business line or unit or a division of, any Person which is organized in and
whose operations and assets are conducted and located in the United States of
America; provided that,

(i)            the Acquisition
Consideration paid (A) in connection with any one acquisition shall not exceed
Four Million Dollars ($4,000,000.00) in cash and Ten Million Dollars
($10,000,000.00) in the aggregate and (B) for all Permitted Acquisitions during
any twelve (12) month period shall not exceed Eight Million Dollars ($8,000,000.00)
in cash and Twenty Million Dollars ($20,000,000.00) in the aggregate;

(ii)           both at the time of
the acquisition or the entry by Infologix into any agreement relating thereto,
there is no existing Default or Event of Default, and no Default or Event of
Default would exist immediately after the consummation of the Permitted
Acquisition;

(iii)          all transactions in
connection therewith shall be consummated, in all material respects, in
accordance with all applicable laws and in conformity with all applicable laws;

(iv)          Infologix shall have delivered to Bank at least ten
(10) Business Days prior to such proposed acquisition (A) a compliance
certificate and supporting calculations evidencing compliance with Section 8 of the Loan Agreement both before and after
giving effect to such acquisition and pro form compliance with Section 8 of the Loan
Agreement for the twelve (12) month period following such acquisition, (B) all relevant financial information with
respect to such acquired assets or equity interests (and any issuer thereof),
including, without limitation, the Acquisition Consideration for such
acquisition and any other information required to demonstrate compliance with Section 8 of the Loan
Agreement, (C) projections
prepared by Infologix giving pro-forma effect to such acquisition, in form and
content satisfactory to Bank, for the next succeeding twelve (12) month period,
showing, inter alia, that as a result of such
Permitted Acquisition there will be no breach of any of the covenants set forth
in Section 8 of the Loan
Agreement and that Infologix shall have an aggregate Net Cash Position and
Undrawn Availability of at least Two Million Dollars ($2,000,000.00) for the
thirty (30) day period following such acquisition and (D) executed copies of all material documents and agreements
(or the most current drafts of such documents if unexecuted) in connection with
such acquisition;

 9
 

(v)           any Person or assets
or division as acquired in accordance herewith shall be in same business or
lines of business in which Infologix is engaged or a similar or related
business or line of business or such other lines of businesses as may be
consented to by Bank;

(vi)          the assets subject
to such acquisition shall not be included in the calculation of the Borrowing
Base Amount until Bank has completed an audit and/or field exam with respect to
such assets which is satisfactory to Bank;

(vii)         if such acquisition
is structured as a purchase of equity interests by Infologix, all of the equity
interests acquired or otherwise issued by such Person in connection with such
acquisition shall be owned 100% by Infologix;

(viii)        if such acquisition
is structured as a purchase of equity interests by Infologix, the Person
acquired shall (A) have joined this Agreement as a Borrower and shall have
executed such documentation in connection therewith as may be required by Bank
and (B) be deemed to have made and joined in all of the representations,
warranties and covenants set forth in this Agreement and each of the other Loan
Documents, all of which shall be true and correct for such Person on and as of
the date of such acquisition and at all times thereafter;

(ix)           if such acquisition
is structured as a purchase of equity interests by Infologix, Infologix shall
have delivered to Bank (A) an assignment of and security interest in such
equity interests and (B) the original certificates therefore and blank stock
powers with respect thereto;

(x)            within ten (10)
days of the closing of such acquisition, Infologix shall have delivered to Bank
executed copies of all material documents and agreements in connection with
such acquisition.

(c)           As used herein, the
following terms shall have the following meanings:

(i)            “Acquisition Consideration” means
the purchase consideration for any Permitted Acquisition and all other payments
by Infologix in exchange for, or as part of, or in connection with, the
aggregate consideration for any Permitted Acquisition (including, without
limitation, any Indebtedness assumed by Infologix), whether paid in cash or by
exchange of properties or otherwise and whether payable at or prior to the
consummation of such Permitted Acquisition or deferred for payment at any
future time, whether or not any such future payment is subject to the
occurrence of any contingency, and includes any and all payments representing
the purchase price and any incurrence or assumption of Indebtedness, “earn-outs”
and other similar agreements to make any payment the amount of which is, or the
terms of payment of which are, in any respect subject to or contingent upon the
revenues, income, cash flow or profits (or the like) of any Person or business
acquired in such Permitted Acquisition.

(ii)           “Net Cash Position” means, as of any
date, cash and cash equivalents of Infologix on such date (specifically excluding
any deposit accounts, certificates of deposit or other similar items maintained
with a financial institution other than Bank unless Bank has received a
satisfactory control agreement with respect to such account or otherwise
obtained a first priority perfected security interest in such account or
certificate of deposit), minus outstanding Line Advances on such date.

 10
 

11.           Additional
Conditions.  If the
Capital Raise Date does not occur prior to the Cut-Off Date:

(a)           October 31, 2006
Additional Funds.  On October 31,
2006, at Borrowers’ sole option, (i) Bank shall institute a reserve against
Eligible Receivables or Eligible Inventory in an amount equal to Two Hundred
Fifty Thousand Dollars ($250,000.00) or (ii) Borrower shall deposit in a
non-interest bearing cash collateral account maintained at Bank (the “Additional Cash Collateral
Account”) an amount equal to
Two Hundred Fifty Thousand Dollars ($250,000.00).

(b)           November 30, 2006
Additional Funds.  In addition to any
reserves instituted or deposits made pursuant to subsection (a) hereof, on November 30, 2006, at Borrowers’
sole option, (i) Bank shall institute a reserve against Eligible Receivables or
Eligible Inventory in an amount equal to Two Hundred Fifty Thousand Dollars
($250,000.00) or (ii) Borrower shall deposit into the Additional Cash
Collateral Account an amount equal to Two Hundred Fifty Thousand Dollars
($250,000.00).

Bank will have sole dominion
and control over all items and funds in the Additional Cash Collateral Account
and such items and funds may be withdrawn only by Bank.  Bank will have the right to apply all or any
part of such funds towards payment of any of the Bank Indebtedness.  Items and funds in the Additional Cash
Collateral Account shall be referred to herein as the “Additional Cash
Collateral”.

(c)           Additional Equity
and/or Subordinated Debt.  Infologix
shall receive a cash infusion, in the form of subordinated debt and/or equity
in form and content reasonably satisfactory to Bank in its sole discretion, in
the amount of at least One Million Dollars ($1,000,000.00).  The proceeds of such cash infusion shall be
used to pay the entire outstanding principal balance of Term Loan B, plus all
accrued and unpaid interest thereon.  If
the cash infusion is in the form of subordinated debt, Infologix shall cause
the subordinated lender to execute and deliver to Bank a subordination
agreement, in form and content satisfactory to Bank coincident with the
incurrence of such debt.

12.           Conditions
Precedent.  Bank’s
obligations hereunder, including, without limitation, the consents and waivers
set forth in Section 1
hereof, are contingent upon receipt by Bank of the following, each of which
shall be in form and content satisfactory to Bank:

(a)           Undrawn
Availability.  Evidence that
Borrowers shall have Undrawn Availability, both prior to and after giving
effect to the Subordinated Debt Repayment, of at least Two Hundred Thousand
Dollars ($200,000.00).

(b)           Promissory Notes.  A fully executed amended and restated
promissory note in the face amount of Eight Million Five Hundred Thousand
Dollars ($8,500,000.00) (“A/R Note”)
and a fully executed Term Note B.

(c)           Purchase
Agreement.  A fully executed copy of
the Purchase Agreement, including all related schedules and exhibits, and each
of the documents executed in connection with the Purchase Agreement.

(d)           Certificate and
Resolution. An officer’s certificate of each Borrower certifying (i) the
authorizing resolution of the board of directors, members or managers, as

 11
 

applicable,
of each Borrower to execute and perform the terms and conditions of this
Amendment and each of the documents execution in connection herewith, (ii) the
incumbency of the officers, board members, members or managers, as applicable,
of such Borrower, and (iii) that except as provided for therein, there has been
no change in the formation and governing documents of such Borrower since March
16, 2006.  If there has been a change in
the formation and/or governing documents of any Borrower, a copy of such
formation and/or governing document (along with all amendments and
modifications thereto) shall be delivered to Bank along with a certification
from the applicable Borrower that such document is a true and correct copy of
the formation and/or covering document through the date of such certificate.

(e)           Good Standing
Certificates.  Within thirty (30)
days of the date hereof, a good standing certificate from the state of
incorporation of each Borrower certifying to the good standing and status of
such Borrower, good standing/foreign qualification certificates from all other
jurisdictions in which any Borrower is required to be qualified to do business.

13.           Conditions
Precedent to Merger.  The
consent and waivers set forth in Section 1
hereof with respect to the Merger, are contingent upon receipt by Bank of the
following, each of which shall be in form and content satisfactory to Bank:

(a)           A fully executed
surety agreement of Public Shell (the “Public
Shell Guaranty”);

(b)           A fully executed
securities pledge agreement executed by Public Shell (the “Public Shell Securities Pledge”) along
with the original stock certificates of Merger Shell and executed blank stock
powers;

(c)           Copy of the fully
executed authorizing resolutions regarding the Merger, certified to be true and
correct by the Secretary of Infologix and the Merger Shell;

(d)           Evidence that
Infologix is the corporation surviving the Merger and that its state of
formation after the Merger is the State of Delaware;

(e)           A copy of the
articles of merger and the plan of merger along with evidence that such
document has been delivered to the applicable Secretary of State for filing,
with a filed copy of such articles of merger and plan of merger, certified to
be true and correct by the applicable Secretary of State, within thirty (30)
days after the consummation of the Merger;

(f)            Copy of the by-laws
of the company surviving the Merger, certified to be true and correct by the
Secretary of such company;

(g)           Opinion of counsel
to Infologix regarding the Merger, which shall include, without limitation, the
following opinions:

(i)            The Merger has been
completed in accordance with all applicable laws and all necessary consents,
approvals and/or authorizations required in connection with the Merger have
been obtained and are in full force and effect.

(ii)           After the
consummation of the Merger, Infologix retains all assets, properties, rights
and remedies of Infologix prior to the consummation of the Merger, including,
without limitation, all assets of Infologix previously granted, pledged or
assigned by Infologix to

 12
 

Bank
as Collateral and Infologix is the sole legal and beneficial owner of such
assets, properties, rights and remedies.

(iii)          After the
consummation of the Merger, the debts, liabilities and duties of Infologix
prior to the consummation of the Merger shall attach to and be the
responsibility of Infologix, including, without limitation, all sums advanced
and outstanding under the Loan Agreement or any of the other Loan Documents and
all other obligations and covenants of Infologix prior to the consummation of
the Merger to Bank under the Loan Agreement or any of the other Loan Documents.

(iv)          Bank continues to
have a valid, continuing and enforceable perfected security interests in all of
Infologix’s right, title and interest in, to and under the Collateral.

(v)           After the
consummation of the Merger, Infologix is a corporation validly existing and in
good standing under the laws of the State of Delaware and has full power and
authority to execute, deliver and comply with the Loan Documents and to carry
on its business as it is now being conducted.

(vi)          All necessary
consents, approvals and/or authorizations required in connection with the
execution, deliver and performance by Infologix of the Loan Documents after the
consummation of the Merger have been obtained and are in full force and effect.

(h)           Such other items as
Bank may reasonably request, including, without limitation, such guaranties as
Bank may require.

14.           Amendment
Fee.  Upon execution of
this Amendment, Borrowers shall pay to Bank an amendment fee in the amount of
Twenty Thousand Dollars ($20,000.00) (the “Amendment Fee”).  The foregoing Amendment Fee is in addition to
the interest and other amounts which Borrowers are required to pay under the
Loan Documents, and is fully earned and nonrefundable.

15.           Amendment/References.  The
Loan Agreement and the Loan Documents are hereby amended to be consistent with
the terms of this Amendment. All references in the Loan Agreement and the Loan
Documents to (a) “Advance” shall
include, without limitation advances under Term Loan B;, (b) “Bank Indebtedness” shall include, without
limitation, all of Borrowers obligations under and in connection with Term Loan
B; (c) “Collateral” shall include,
without limitation, the Additional Cash Collateral and the assets pledged
pursuant to the Public Shell Stock Pledge; (d) the “Line Note” shall mean the A/R Note; (e) the “Loan Agreement” shall mean the Loan
Agreement as amended hereby; (f) the “Loan
Documents” shall include this Amendment, Term Loan B Note, A/R Note,
the Public Shell Guaranty, the Public Shell Stock Pledge and all other
instruments or agreements executed pursuant to or in connection with the terms
hereof; (g) “Loans” shall include,
without limitation, Term Loan B; and (h) “Note”
shall include, without limitation, the Term Loan B Note and the A/R Note.

16.           Cross-Collateralization; Confirmation of Collateral. 
Borrowers hereby confirm, acknowledge and agree that all Bank
Indebtedness is and shall be cross-collateralized and, without limiting the
foregoing, Term Line B, the other Loans, and all other Bank Indebtedness are
and shall continue to be secured by all liens, security interests, assignments,
suretyship obligations, stock pledges, rights and remedies granted to Bank in
the Loan Documents, which liens, mortgages, security interests, rights and
remedies are hereby reaffirmed and continued as security for the

 13
 

foregoing; and all of the
Loan Documents are hereby amended to reflect the same.  None of the Collateral shall be impaired by
anything contained herein and all such Collateral shall continue to secure all
present and future Bank Indebtedness.

17.           Release.  Each
Borrower and each Guarantor acknowledges and agrees that it has no claims,
suits or causes of action against Bank and hereby remises, releases and forever
discharges Bank, their officers, directors, shareholders, employees, agents,
successors and assigns, and any of them, from any claims, suits or causes of
action whatsoever, in law or at equity, which any Borrower or any Guarantor has
or may have arising from any act, omission or otherwise, at any time up to and
including the date of this Amendment.

18.           Additional
Documents; Further Assurances. 
Each Borrower covenants and agrees to execute and deliver to Bank, or to
cause to be executed and delivered to Bank contemporaneously herewith, at the
sole cost and expense of such Borrower, the Amendment and any and all
documents, agreements, statements, resolutions, searches, insurance policies,
consents, certificates, legal opinions and information as Bank may require in
connection with the execution and delivery of this Amendment or any documents
in connection herewith, or to further evidence, effect, enforce or protect any
of the terms hereof or the rights or remedies granted or intended to be granted
to Bank herein or in any of the Loan Documents, or to enforce or to protect
Bank’s interest in the Collateral.  All
such documents, agreements, statements, etc., shall be in form and content
acceptable to Bank in its sole discretion. 
Each Borrower hereby authorizes Bank to file, at such Borrower’s cost
and expense, financing statements, amendments thereto and other items as Bank
may require to evidence or perfect Bank’s continuing security interest and
liens in and against the Collateral. 
Each Borrower agrees to join with Bank in notifying any third party with
possession of any Collateral of Bank’s security interest therein and in
obtaining an acknowledgment from the third party that it is holding the
Collateral for the benefit of Bank.  Each
Borrower will cooperate with Bank in obtaining control with respect to
Collateral consisting of deposit accounts, investment property,
letter-of-credit rights and electronic chattel paper.

19.           Further Agreements and Representations.  Each
Borrower does hereby:

(a)           ratify, confirm and
acknowledge that the statements contained in the foregoing Background and in Section 1 hereof are true and complete
and that, as amended hereby, the Loan Agreement and the other Loan Documents
are in full force and effect and are valid, binding and enforceable against
each Borrower and its assets and properties, all in accordance with the terms
thereof, as amended;

(b)           covenant and agree
to perform all of such Borrower’s obligations under the Loan Agreement and the
other Loan Documents, as amended;

(c)           acknowledge and
agree that as of the date hereof, no Borrower has any defense, set-off,
counterclaim or challenge against the payment of any Bank Indebtedness or the
enforcement of any of the terms of the Loan Agreement or of the other Loan
Documents, as amended;

(d)           acknowledge and
agree that all representations and warranties of each Borrower contained in the
Loan Agreement and/or the other Loan Documents, as amended, are true, accurate
and correct on and as of the date hereof as if made on and as of the date
hereof;

 14
 

(e)           represent and
warrant that no Default or Event of Default exists;

(f)            covenant and agree
that such Borrower’s failure to comply with any of the terms of this Amendment
or any other instrument or agreement executed or delivered in connection
herewith, shall constitute an Event of Default under the Loan Agreement and
each of the other Loan Documents; and

(g)           acknowledge and
agree that nothing contained herein, and no actions taken pursuant to the terms
hereof, are intended to constitute a novation of any of the Notes, the Loan
Agreement or of any of the other Loan Documents and does not constitute a
release, termination or waiver of any existing Event of Default or of any of
the liens, security interests, rights or remedies granted to the Bank in any of
the Loan Documents, which liens, security interests, rights and remedies are
hereby expressly ratified, confirmed, extended and continued as security for
all Bank Indebtedness.

Each Borrower acknowledges
and agrees that Bank is relying on the foregoing agreements, confirmations,
representations and warranties of each Borrower and the other agreements,
representations and warranties of each Borrower contained herein in agreeing to
the amendments contained in this Amendment.

20.           Fees,
Cost, Expenses and Expenditures. 
Borrowers will pay all of Bank’s reasonable expenses in connection with
the review, preparation, negotiation, documentation and closing of this
Amendment and the consummation of the transactions contemplated hereunder,
including without limitation, fees, disbursements, expenses and disbursements
of counsel retained by Bank and all fees related to filings, recording of
documents, searches, environmental assessments and appraisal reports, whether
or not the transactions contemplated hereunder are consummated.

21.           No Waiver.  Nothing contained herein constitutes an
agreement or obligation by Bank to grant any further amendments to the Loan
Agreement or any of the other Loan Documents. 
Except as specifically set forth in Section
1 hereof, nothing contained herein constitutes a waiver or
release by Bank of any Event of Default or of any rights or remedies available
to Bank under the Loan Documents or at law or in equity.

22.           Inconsistencies.
To the extent of any inconsistencies between the terms and conditions of this
Amendment and the terms and conditions of the Loan Agreement or the other Loan
Documents, the terms and conditions of this Amendment shall prevail. All terms
and conditions of the Loan Agreement and other Loan Documents not inconsistent
herewith shall remain in full force and effect and are hereby ratified and
confirmed by Borrowers.

23.           Binding
Effect.  This Amendment,
upon due execution hereof, shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.

24.           Governing
Law.  This Amendment shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to conflict of law principles.

25.           Severability.  The
provisions of this Amendment and all other Loan Documents are deemed to be
severable, and the invalidity or unenforceability of any provision shall not
affect or impair the remaining provisions which shall continue in full force
and effect.

 15
 

26.           Modifications.  No modification
of this Amendment or any of the Loan Documents shall be binding or enforceable
unless in writing and signed by or on behalf of the party against whom
enforcement is sought.

27.           Headings.  The
headings of the Articles, Sections, paragraphs and clauses of this Amendment
are inserted for convenience only and shall not be deemed to constitute a part
of this Amendment.

28.           Counterparts.  This
Amendment may be executed in multiple counterparts, each of which shall
constitute an original and all of which together shall constitute the same
agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 16

IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have caused this Amendment to be executed the day and year first
above written.

	
   

  	
  INFO LOGIX INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T. Gulian

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPT
  ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T. Gulian

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMBEDDED
  TECHNOLOGIES, LLC

  
	
   

  	
  By:
  INFO LOGIX INC., its sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   David T. Gulian

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOVEREIGN
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Steven Fahringer

  	
   

  
	
   

  	
   

  	
  Steven Fahringer, Vice President

  
	
   

  	
   

  

 

[SIGNATURES CONTINUED ON
FOLLOWING PAGE]

[SIGNATURES CONTINUED FROM PRIOR PAGE]

Each
of the undersigned, intending to be legally bound hereby, consents and agrees
to the foregoing First Amendment
and Modification to Loan Agreement dated of even date herewith (the “Agreement”), and all terms thereof and
further agrees that (a) such Agreement shall in no way affect or impair the
undersigned’s obligations under those certain Limited Surety Agreements from the undersigned to Bank dated March
16, 2006 (collectively, the “Sureties”),
or under any other documents executed or delivered pursuant thereto or in
connection therewith and (b) the terms of the Sureties are hereby ratified and
confirmed, all as of the date hereof.

	
  

  	
   

  	
  Craig Wilensky

  	
  (SEAL)

  
	
  Witness:

  	
   

  	
  CRAIG WILENSKY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard Hodge

  	
  (SEAL)

  
	
  Witness:

  	
   

  	
  RICHARD HODGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  David T. Gulian

  	
  (SEAL)

  
	
  Witness:

  	
  DAVID GULIAN

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