Document:

Exhibit
4.5

     

    THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO NEW ORIENTAL ENERGY & CHEMICAL CORP. THAT
SUCH REGISTRATION IS NOT REQUIRED.

     

    Right to
Purchase up to [________] Shares of Common Stock of

    New
Oriental Energy & Chemical Corp.

     

    (subject
to adjustment as provided herein)

     

    COMMON
STOCK PURCHASE WARRANT

     

    
      	
              No.                                    

            	
              Date:   [___],
      2010

            

    

     

    New Oriental Energy & Chemical
Corp., a corporation organized under the laws of the State of Delaware
(the “Company”), hereby
certifies that, for value received, [_____________________] or its assigns (the
“Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company from and
after [___], 2010 (a date that is six (6) months after the issuance of this
Common Stock Purchase Warrant (the “Warrant”) in connection with a
private placement by the Company) (the “Issue Date”) and at any time
or from time to time before 5:00 p.m., New York time, through the close of
business [___], 2013 (a date that is three (3) years after the issuance of the
Warrant) (the “Expiration
Date”), up to [______] fully paid and nonassessable shares of Common
Stock (as hereinafter defined), $0.001 par value per share, at the applicable
Exercise Price (as defined below) per share.  The number and character
of such shares of Common Stock and the applicable Exercise Price per share are
subject to adjustment as provided herein.

     

    As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:

     

    (a)           “Common
Stock” means (i) the Company’s Common Stock, par value $0.001 per share; and
(ii) any other securities into which or for which any of the securities
described in the preceding clause (i) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.

     

    (b)           “Company”
means New Oriental Energy & Chemical Corp. and any person or entity which
shall succeed, or assume the obligations of, New Oriental Energy & Chemical
Corp. hereunder.

     

    (c)           “Exercise
Price” means a price of $2.00.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           “Other
Securities” means any stock (other than Common Stock) and other securities of
the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 3 or
otherwise.

     

    9.            EXERCISE OF
WARRANT.

     

    (a)           Number of Shares Issuable
upon Exercise.  From and after the Issue Date through and
including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as Exhibit A (the “Exercise Notice”), shares of
Common Stock of the Company, subject to adjustment pursuant to Section
4.

     

    (b)           Company
Acknowledgment.  The Company will, at the time of the exercise
of this Warrant, upon the request of the Holder hereof, acknowledge in writing
its continuing obligation to afford to such Holder any rights to which such
Holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant.  If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.

     

    (c)           Trustee for Warrant
Holders.  In the event that a bank or trust company shall have
been appointed as trustee for the Holders of this Warrant pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

     

    10.          PROCEDURE FOR
EXERCISE.

     

    (a)           Delivery of Stock
Certificates, Etc., on Exercise.  The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed
to be issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment shall have been made for such shares in accordance
herewith.  Each date on which an Exercise Notice is delivered or
telecopied to the Company in accordance with the provisions hereof shall be
deemed an Exercise Date (the “Exercise
Date”).  Pursuant to the terms of each Exercise Notice, the
Company at its expense (including the payment by it of any applicable issue
taxes) will issue instructions to the transfer agent within one (1) business day
of the date of the delivery to the Company of an Exercise Notice and shall cause
the transfer agent to transmit the certificates representing the shares of
Common Stock (“Warrant
Shares”) purchased and issuable upon such exercise to the Holder by
crediting the account of the Holder’s designated broker with the Depository
Trust Corporation (“DTC”) through its Deposit
Withdrawal Agent Commission (“DWAC”) system within three (3)
business days after receipt by the Company of the Exercise Notice.  In
the case of the exercise of this Warrant such exercise shall be deemed to have
been exercised and the Warrant Shares shall be deemed to have been issued upon
the date of receipt by the Company of the Exercise Notice.  The Holder
shall be treated for all purposes as the record holder of the Warrant
Shares.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)          Exercise.  Payment
may be made either in cash, by wire transfer, or by certified or official bank
check payable to the order of the Company in an amount equal to the applicable
aggregate Exercise Price, for the number of shares of Common Stock specified in
the Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

     

    11.          EFFECT OF REORGANIZATION,
ETC.; ADJUSTMENT OF EXERCISE PRICE.

     

    (a)           Reorganization,
Consolidation, Merger, Etc.  In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder, on the exercise
hereof as provided in Section 2, at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such transaction, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

     

    (b)          Dissolution.  In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the
Holder  pursuant to Section 3.1, or, if the Holder shall so instruct
the Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder  (the
“Trustee”).

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (c)           Continuation of
Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided hereunder.  In
the event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holder  will be delivered to the Holder or the Trustee as contemplated
by Section 3.2.

     

    12.           EXTRAORDINARY EVENTS
REGARDING COMMON STOCK.  IF THE COMPANY AT ANY TIME ON OR AFTER
THE ISSUE DATE SUBDIVIDES (BY ANY STOCK SPLIT, STOCK DIVIDEND, RECAPITALIZATION
OR OTHERWISE) ONE OR MORE CLASSES OF ITS OUTSTANDING SHARES OF COMMON STOCK INTO
A GREATER NUMBER OF SHARES, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO
SUCH SUBDIVISION WILL BE PROPORTIONATELY REDUCED AND THE NUMBER OF WARRANT
SHARES WILL BE PROPORTIONATELY INCREASED.  IF THE COMPANY AT ANY TIME
ON OR AFTER THE ISSUE DATE COMBINES (BY COMBINATION, REVERSE STOCK SPLIT OR
OTHERWISE) ONE OR MORE CLASSES OF ITS OUTSTANDING SHARES OF COMMON STOCK INTO A
SMALLER NUMBER OF SHARES, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH
COMBINATION WILL BE PROPORTIONATELY INCREASED AND THE NUMBER OF WARRANT SHARES
WILL BE PROPORTIONATELY DECREASED. IN NO EVENT SHALL THE HOLDER PAY AN EXERCISE
PRICE THAT IN THE AGGREGATE EXCEEDS THE AGGREGATE EXERCISE PRICE IN EFFECT PRIOR
TO THE PROPOSED ADJUSTMENT.  ANY ADJUSTMENT UNDER THIS SECTION 4 SHALL
BECOME EFFECTIVE AT THE CLOSE OF BUSINESS ON THE DATE THE SUBDIVISION OR
COMBINATION BECOMES EFFECTIVE.

     

    13.           CERTIFICATE AS TO
ADJUSTMENTS.  IN EACH CASE OF ANY ADJUSTMENT OR READJUSTMENT IN
THE SHARES OF COMMON STOCK (OR OTHER SECURITIES) ISSUABLE ON THE EXERCISE OF
THIS WARRANT, THE COMPANY AT ITS EXPENSE WILL PROMPTLY CAUSE ITS CHIEF FINANCIAL
OFFICER OR OTHER APPROPRIATE DESIGNEE TO COMPUTE SUCH ADJUSTMENT OR READJUSTMENT
IN ACCORDANCE WITH THE TERMS OF THIS WARRANT AND PREPARE A CERTIFICATE SETTING
FORTH SUCH ADJUSTMENT OR READJUSTMENT AND SHOWING IN DETAIL THE FACTS UPON WHICH
SUCH ADJUSTMENT OR READJUSTMENT IS BASED, INCLUDING A STATEMENT OF (A) THE
CONSIDERATION RECEIVED OR RECEIVABLE BY THE COMPANY FOR ANY ADDITIONAL SHARES OF
COMMON STOCK (OR OTHER SECURITIES) ISSUED OR SOLD OR DEEMED TO HAVE BEEN ISSUED
OR SOLD, (B) THE NUMBER OF SHARES OF COMMON STOCK (OR OTHER SECURITIES)
OUTSTANDING OR DEEMED TO BE OUTSTANDING, AND (C) THE EXERCISE PRICE AND THE
NUMBER OF SHARES OF COMMON STOCK TO BE RECEIVED UPON EXERCISE OF THIS WARRANT,
IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT OR READJUSTMENT AND AS ADJUSTED
OR READJUSTED AS PROVIDED IN THIS WARRANT.  THE COMPANY WILL FORTHWITH
MAIL A COPY OF EACH SUCH CERTIFICATE TO THE HOLDER AND ANY WARRANT AGENT OF THE
COMPANY (APPOINTED PURSUANT TO SECTION 10 HEREOF).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    14.           RESERVATION OF STOCK, ETC.,
ISSUABLE ON EXERCISE OF WARRANT.  THE COMPANY WILL AT ALL TIMES
RESERVE AND KEEP AVAILABLE, SOLELY FOR ISSUANCE AND DELIVERY ON THE EXERCISE OF
THIS WARRANT, SHARES OF COMMON STOCK (OR OTHER SECURITIES) FROM TIME TO TIME
ISSUABLE ON THE EXERCISE OF THIS WARRANT.

     

    15.           ASSIGNMENT; EXCHANGE OF
WARRANT.  SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
LAWS, THIS WARRANT, AND THE RIGHTS EVIDENCED HEREBY, MAY BE TRANSFERRED BY ANY
REGISTERED HOLDER HEREOF (A “TRANSFEROR”) IN WHOLE OR IN
PART.  ON THE SURRENDER FOR EXCHANGE OF THIS WARRANT, WITH THE
TRANSFEROR’S ENDORSEMENT IN THE FORM OF EXHIBIT B ATTACHED
HERETO (THE “TRANSFEROR
ENDORSEMENT FORM”) AND TOGETHER WITH EVIDENCE REASONABLY SATISFACTORY TO
THE COMPANY DEMONSTRATING COMPLIANCE WITH APPLICABLE SECURITIES LAWS, WHICH
SHALL INCLUDE, WITHOUT LIMITATION, THE PROVISION OF A LEGAL OPINION FROM THE
TRANSFEROR’S COUNSEL (AT THE COMPANY’S EXPENSE) THAT SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE SECURITIES LAWS, THE COMPANY AT
ITS EXPENSE (BUT WITH PAYMENT BY THE TRANSFEROR OF ANY APPLICABLE TRANSFER
TAXES) WILL ISSUE AND DELIVER TO OR ON THE ORDER OF THE TRANSFEROR THEREOF A NEW
WARRANT OF LIKE TENOR, IN THE NAME OF THE TRANSFEROR AND/OR THE TRANSFEREE(S)
SPECIFIED IN SUCH TRANSFEROR ENDORSEMENT FORM (EACH A “TRANSFEREE”), CALLING IN THE
AGGREGATE ON THE FACE OR FACES THEREOF FOR THE NUMBER OF SHARES OF COMMON STOCK
CALLED FOR ON THE FACE OR FACES OF THE WARRANT SO SURRENDERED BY THE
TRANSFEROR.

     

    16.           REPLACEMENT OF
WARRANT.  ON RECEIPT OF EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY OF THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS WARRANT AND, IN
THE CASE OF ANY SUCH LOSS, THEFT OR DESTRUCTION OF THIS WARRANT, ON DELIVERY OF
AN INDEMNITY AGREEMENT OR SECURITY REASONABLY SATISFACTORY IN FORM AND AMOUNT TO
THE COMPANY OR, IN THE CASE OF ANY SUCH MUTILATION, ON SURRENDER AND
CANCELLATION OF THIS WARRANT, THE COMPANY AT ITS EXPENSE WILL EXECUTE AND
DELIVER, IN LIEU THEREOF, A NEW WARRANT OF LIKE TENOR.

     

    17.           MAXIMUM
EXERCISE.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, THE HOLDER SHALL NOT BE ENTITLED TO EXERCISE THIS WARRANT IN
CONNECTION WITH THAT NUMBER OF SHARES OF COMMON STOCK WHICH WOULD EXCEED THE
DIFFERENCE BETWEEN (I) 19.99% OF THE ISSUED AND OUTSTANDING SHARES OF COMMON
STOCK AND (II) THE NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY THE
HOLDER.  FOR THE PURPOSES OF THE IMMEDIATELY PRECEDING SENTENCE,
BENEFICIAL OWNERSHIP SHALL BE DETERMINED IN ACCORDANCE WITH SECTION 13(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND REGULATION 13D-3
THEREUNDER.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    18.           WARRANT
AGENT.  THE COMPANY MAY, BY WRITTEN NOTICE TO THE HOLDER OF THE
WARRANT, APPOINT AN AGENT FOR THE PURPOSE OF ISSUING COMMON STOCK (OR OTHER
SECURITIES) ON THE EXERCISE OF THIS WARRANT PURSUANT TO SECTION 1, EXCHANGING
THIS WARRANT PURSUANT TO SECTION 7, AND REPLACING THIS WARRANT PURSUANT TO
SECTION 8, OR ANY OF THE FOREGOING, AND THEREAFTER ANY SUCH ISSUANCE, EXCHANGE
OR REPLACEMENT, AS THE CASE MAY BE, SHALL BE MADE AT SUCH OFFICE BY SUCH
AGENT.

     

    19.           TRANSFER ON THE COMPANY’S
BOOKS.  UNTIL THIS WARRANT IS TRANSFERRED ON THE BOOKS OF THE
COMPANY, THE COMPANY MAY TREAT THE REGISTERED HOLDER HEREOF AS THE ABSOLUTE
OWNER HEREOF FOR ALL PURPOSES, NOTWITHSTANDING ANY NOTICE TO THE
CONTRARY.

     

    20.           NOTICES,
ETC.  ALL NOTICES AND OTHER COMMUNICATIONS FROM THE COMPANY TO
THE HOLDER SHALL BE MAILED BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, AT SUCH ADDRESS AS MAY HAVE BEEN FURNISHED TO THE COMPANY IN WRITING BY
SUCH HOLDER OR, UNTIL ANY SUCH HOLDER FURNISHES TO THE COMPANY AN ADDRESS, THEN
TO, AND AT THE ADDRESS OF, THE LAST HOLDER WHO HAS SO FURNISHED AN ADDRESS TO
THE COMPANY.

     

    21.           MISCELLANEOUS.  THIS
WARRANT AND ANY TERM HEREOF MAY BE CHANGED, WAIVED, DISCHARGED OR TERMINATED
ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY AGAINST WHICH ENFORCEMENT
OF SUCH CHANGE, WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.  THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.  ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY
THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE
FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE
HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE
OF NEW YORK.  THE INDIVIDUALS EXECUTING THIS WARRANT ON BEHALF OF THE
COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY
JURY.  THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE
OTHER PARTY ITS REASONABLE ATTORNEYS’ FEES AND COSTS.  IN THE EVENT
THAT ANY PROVISION OF THIS WARRANT IS INVALID OR UNENFORCEABLE UNDER ANY
APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED
INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED
MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW.  ANY SUCH
PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
WARRANT.  THE HEADINGS IN THIS WARRANT ARE FOR PURPOSES OF REFERENCE
ONLY, AND SHALL NOT LIMIT OR OTHERWISE AFFECT ANY OF THE TERMS
HEREOF.  THE COMPANY ACKNOWLEDGES THAT LEGAL COUNSEL PARTICIPATED IN
THE PREPARATION OF THIS WARRANT AND, THEREFORE, STIPULATES THAT THE RULE OF
CONSTRUCTION THAT AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY
SHALL NOT BE APPLIED IN THE INTERPRETATION OF THIS WARRANT TO FAVOR ANY PARTY
AGAINST THE OTHER PARTY.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     [BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

    SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has executed this Common Stock Purchase Warrant as
of the date first written above.

     

    
      
        
          
            
              
                
                  	 
      	
                          NEW
      ORIENTAL ENERGY & CHEMICAL CORP.

                        
	 
      	 
      
	 
      	
                          By:

                        	 
      
	 
      	 
      	
                          Name:

                        	 
      
	 
      	 
      	
                          Title:

                        	 
      
	 
      	 
      

                

              

            

          

        

      

    

    [Signature
Page to Investor Warrant]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

     

    FORM
OF SUBSCRIPTION

    (To Be
Signed Only On Exercise Of Warrant)

     

    TO:       
NEW ORIENTAL ENERGY & CHEMICAL CORP.

    [_____________________]

    [_____________________]

     

    Attention:             Chief
Financial Officer

     

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by such Warrant.

     

    The
undersigned herewith makes payment of the full Exercise Price for such shares at
the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of $__________ in lawful
money of the United States.

     

    The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to
_________________________________________________________________ whose address
is
______________________________________________________________________________________________.

     

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act.

     

    
      
        
          
            
              
                
                  
                    
                      	
                              Dated:

                            	 
      	 
      	 
      
	 
      	
                              (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

                            
	 
      	 
      
	 
      	
                              Address:

                            	 
      
	 
      	 
      	 
      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    Exhibit
B

     

    FORM
OF TRANSFEROR ENDORSEMENT

    (To Be
Signed Only On Transfer Of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of New Oriental Energy & Chemical Corp. into which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person attorney to transfer its respective right on the books of New
Oriental Energy & Chemical Corp. with full power of substitution in the
premises.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	
                                                        Transferees

                                                      	 
      	
                                                        Address

                                                      	 
      	
                                                        Percentage

                                                        Transferred

                                                      	 
      	
                                                        Number

                                                        Transferred

                                                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                        
                                                            

                                                        

                                                      	 
      	
                                                        
                                                            

                                                        

                                                      	 
      	
                                                        
                                                            

                                                        

                                                      	 
      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Dated:

                                      	 
      	 
      	 
      
	 
      	
                                        (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

                                      
	 
      	 
      
	 
      	
                                        Address:

                                      	 
      
	 
      	 
      	 
      
	 	 
	 
      	
                                        SIGNED
      IN THE PRESENCE OF:

                                      
	 	 
	 
      	 
      
	 
      	
                                        (Name)

                                      
	
                                        ACCEPTED
      AND AGREED:

                                      	 
      
	
                                        [TRANSFEREE]

                                      	 
      
	 	 
	 
      	 
      
	
                                        (Name)Unassociated Document

    LOAN
AND SECURITY AGREEMENT

     

    THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of July
23, 2010 (the “Effective
Date”) between SILICON
VALLEY BANK, a California corporation (“Bank”), and DERYCZ SCIENTIFIC,
INC., a Nevada corporation, REPRINTS DESK, INC., a Delaware corporation and
POOLS PRESS, INC., an Illinois corporation (each a “Borrower” and collectively
“Borrowers”), provides
the terms on which Bank shall lend to Borrowers and Borrowers shall repay
Bank.  The parties agree as follows:

     

    1           ACCOUNTING AND OTHER
TERMS

     

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

     

    2           LOAN AND TERMS OF
PAYMENT

     

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

     

    2.1.1     Revolving
Advances.

     

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

     

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

     

    2.1.2     Letters
of Credit Sublimit.

     

    (a)           As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit
denominated in Dollars or a Foreign Currency for a Borrower’s
account.  The aggregate Dollar Equivalent amount utilized for the
issuance of Letters of Credit shall at all times reduce the amount otherwise
available for Advances under the Revolving Line.  The aggregate Dollar
Equivalent of the face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not
exceed the lesser of (A) Five Hundred Thousand Dollars ($500,000), minus (i) the
sum of all amounts used for Cash Management Services, and minus (ii) the FX
Reduction Amount, or (B) the lesser of Revolving Line or the Borrowing Base,
minus (i) the sum of all outstanding principal amounts of any Advances
(including any amounts used for Cash Management Services), and minus (ii) the FX
Reduction Amount.

     

    (b)           If,
on the Revolving Line Maturity Date (or the effective date of any termination of
this Agreement), there are any outstanding Letters of Credit, then on such date
Borrowers shall provide to Bank cash collateral in an amount equal to one
hundred ten percent (110%) of the Dollar Equivalent of the face amount of all
such Letters of Credit plus all interest, fees, and costs due or to become due
in connection therewith (as estimated by Bank in its good faith business
judgment), to secure all of the Obligations relating to such Letters of
Credit.  All Letters of Credit shall be in form and substance
acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank’s standard Application and Letter of Credit Agreement (the
“Letter of Credit
Application”).  Borrowers agree to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.  Borrowers further agree to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for a Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for a Borrower’s account, and Borrowers understand and
agree that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following a Borrower’s instructions or
those contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (d)           Borrowers
may request that Bank issue a Letter of Credit payable in a Foreign
Currency.  If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrowers of the Dollar
Equivalent of the amount thereof (plus fees and charges in connection therewith
such as wire, cable, SWIFT or similar charges).

     

    (e)           To
guard against fluctuations in currency exchange rates, upon the issuance of any
Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the
“Letter of Credit
Reserve”) under the Revolving Line in an amount equal to ten percent
(10%) of the face amount of such Letter of Credit.  The amount of the
Letter of Credit Reserve may be adjusted by Bank from time to time to account
for fluctuations in the exchange rate.  The availability of funds
under the Revolving Line shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letter of Credit remains outstanding.

     

    2.1.3     Foreign Exchange
Sublimit.  As part of the Revolving Line, Borrowers may enter
into foreign exchange contracts with Bank under which a Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a
“FX Forward Contract”)
on a specified date (the “Settlement
Date”).  FX Forward Contracts shall have a Settlement Date of
at least one (1) FX Business Day after the contract date and shall be subject to
a reserve of ten percent (10%) of each outstanding FX Forward Contract (the
“FX
Reserve”).  The aggregate amount of FX Forward Contracts at any
one time may not exceed ten (10) times the lesser of (A) Five Hundred Thousand
Dollars ($500,000), minus (i) the sum of all amounts used for Cash Management
Services, and minus (ii) the Dollar Equivalent of the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve), or (B) the lesser of Revolving Line or
the Borrowing Base, minus (i) the sum of all outstanding principal amounts of
any Advances (including any amounts used for Cash Management Services), and
minus (ii) the Dollar Equivalent of the face amount of any outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve).  The amount otherwise available for Credit Extensions
under the Revolving Line shall be reduced by an amount equal to ten percent
(10%) of each outstanding FX Forward Contract (the “FX Reduction
Amount”).  Any amounts needed to fully reimburse Bank for any
amounts not paid by Borrowers in connection with FX Forward Contracts will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.

     

    2.1.4     Cash Management Services
Sublimit.  Borrowers may use the Revolving Line for Bank’s cash
management services, which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in Bank’s
various cash management services agreements (collectively, the “Cash Management Services”), in
an aggregate amount not to exceed the lesser of (A) Five Hundred Thousand
Dollars ($500,000), minus (i) the Dollar Equivalent of the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve), and minus (ii) the FX Reduction
Amount, or (B) the lesser of Revolving Line or the Borrowing Base, minus (i) the
sum of all outstanding principal amounts of any Advances, minus the Dollar
Equivalent of the face amount of any outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve), and
minus (iii) the FX Reduction Amount.  Any amounts Bank pays on behalf
of Borrowers for any Cash Management Services will be treated as Advances under
the Revolving Line and will accrue interest at the interest rate applicable to
Advances.

     

    2.2        Overadvances.  If,
at any time, the sum of (a) the outstanding principal amount of any Advances
(including any amounts used for Cash Management Services), plus (b) the face
amount of any outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve), plus (c) the FX Reduction
Amount (such sum being an “Overadvance”) exceeds the
lesser of either the Revolving Line or the Borrowing Base, Borrowers shall
immediately pay to Bank in cash such Overadvance.  Without limiting
Borrowers’ obligation to repay Bank any amount of the Overadvance, Borrowers
agree to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    2.3        Payment of Interest on the Credit
Extensions.

     

    (a)           Advances.  Subject
to Section 2.3(b), the principal amount outstanding under the Revolving Line
shall accrue interest at a floating per annum rate equal to (i) at all times
when a Streamline Period is in effect, two percentage points (2.00%) above the
Prime Rate and (ii) at all times when a Streamline Period is not in effect, four
percentage points (4.00%) above the Prime Rate, which interest shall, in either
case, be payable monthly in accordance with Section 2.3(f) below.

     

    (b)           Default
Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points (5.00%) above the rate that is
otherwise applicable thereto (the “Default Rate”) unless Bank
otherwise elects from time to time in its sole discretion to impose a smaller
increase.  Fees and expenses which are required to be paid by
Borrowers pursuant to the Loan Documents (including, without limitation, Bank
Expenses) but are not paid when due shall bear interest until paid at a rate
equal to the highest rate applicable to the Obligations.  Payment or
acceptance of the increased interest rate provided in this Section 2.3(b) is not
a permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.

     

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

     

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

     

    (e)           Lockbox; Account Collection
Services.

     

    (i)           Borrower
shall direct each Account Debtor (and each depository institution where proceeds
of Accounts are on deposit) to remit payments with respect to the Accounts to a
lockbox account established with Bank or to wire transfer payments to a cash
collateral account that Bank controls (collectively, the “Lockbox”).  It will
be considered an immediate Event of Default if the Lockbox is not set-up and
operational within thirty (30) days of the Effective Date.

     

    (ii)           Provided
no Event of Default exists or an event that with notice or lapse of time will be
an Event of Default, for so long as a Streamline Period is not in effect, within
three (3) Business Days of receipt of such amounts by Bank, Bank will turn over
to Borrower the proceeds of such collections, less any amounts owing to Bank
with respect to all outstanding Advances and all other Obligations then due and
owing.  Provided no Event of Default exists or an event that with
notice or lapse of time will be an Event of Default, for so long as a Streamline
Period is in effect, within three (3) Business Days of receipt of such amounts
by Bank, Bank will turn over to Borrower the proceeds of such collections. This
Section does not impose any affirmative duty on Bank to perform any act other
than as specifically set forth herein.

     

    (f)           Payment; Interest
Computation; Float Charge.  Interest is payable monthly on the
last calendar day of each month and shall be computed on the basis of a 360-day
year for the actual number of days elapsed.  In computing interest,
(i) all Payments received after 12:00 p.m. Pacific time on any day shall be
deemed received at the opening of business on the next Business Day, and (ii)
the date of the making of any Credit Extension shall be included and the date of
payment shall be excluded; provided, however, that if
any Credit Extension is repaid on the same day on which it is made, such day
shall be included in computing interest on such Credit Extension.  In
addition, Bank shall be entitled to charge Borrowers a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Advances, if any Advances are outstanding, on all Payments
received by Bank.  Such float charge is not included in interest for
purposes of computing Minimum Monthly Interest (if any) under this
Agreement.  The float charge for each month shall be payable on the
last day of the month.  Bank shall not, however, be required to credit
Borrowers’ account for the amount of any item of payment which is unsatisfactory
to Bank in its good faith business judgment, and Bank may charge Borrowers’
Designated Deposit Account for the amount of any item of payment which is
returned to Bank unpaid.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    2.4        Fees.  Borrowers
shall pay to Bank:

     

    (a)           Commitment
Fee.  A fully earned, non-refundable commitment fee of Twenty
Two Thousand Five Hundred Dollars ($22,500) on the Effective Date;

     

    (b)           Letter of Credit
Fee.  Bank’s customary fees and expenses for the issuance or
renewal of Letters of Credit, upon the issuance of such Letter of Credit, each
anniversary of the issuance during the term of such Letter of Credit, and upon
the renewal of such Letter of Credit by Bank;

     

    (c)           Collateral Monitoring
Fee.  A monthly collateral monitoring fee of (i) One Thousand
Dollars ($1,000) when a Streamline Period is in effect or (ii) Two Thousand Five
Hundred Dollars ($2,500) when a Streamline Period is not in effect, in both
cases, payable in arrears on the last day of each month (prorated for any
partial month at the beginning and upon termination of this Agreement);
and

     

    (d)           Bank
Expenses.  All Bank Expenses (including reasonable attorneys’
fees and expenses for documentation and negotiation of this Agreement) incurred
through and after the Effective Date, when due.  Bank shall notify
Borrower if Bank Expenses incurred through the Effective Date exceed Ten
Thousand Dollars ($10,000).

     

    2.5        Payments;
Application of Payments.

     

    (a)           All
payments (including prepayments) to be made by Borrowers under any Loan Document
shall be made in immediately available funds in U.S. Dollars, without setoff or
counterclaim, before 12:00 p.m. Pacific time on the date when
due.  Payments of principal and/or interest received after 12:00 p.m.
Pacific time are considered received at the opening of business on the next
Business Day.  When a payment is due on a day that is not a Business
Day, the payment shall be due the next Business Day, and additional fees or
interest, as applicable, shall continue to accrue until paid.

     

    (b)           All
payments with respect to the Obligations may be applied in such order and manner
as Bank shall determine in its sole discretion.  Borrowers shall have
no right to specify the order or the accounts to which Bank shall allocate or
apply any payments required to be made by Borrowers to Bank or otherwise
received by Bank under this Agreement when any such allocation or application is
not specified elsewhere in this Agreement.

     

    3           CONDITIONS OF
LOANS

     

    3.1    
   Conditions
Precedent to Initial Credit Extension.  Bank’s obligation to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation:

     

    (a)           duly
executed original signatures to the Loan Documents;

     

    (b)           duly
executed original signatures to the Control Agreement(s), if any;

     

    (c)           each
Borrower’s Operating Documents and a good standing certificate of each Borrower
certified by the Secretary of State of the State of Nevada, Delaware and/or
Illinois (as applicable to each Borrower) as of a date no earlier than thirty
(30) days prior to the Effective Date;

     

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

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

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

     

    (f)          
 the Perfection Certificate of each Borrower, together with the duly
executed original signatures thereto;

     

    (g)           a
landlord’s consent in favor of Bank for Borrowers’ Santa Monica location by the
respective landlord thereof, together with the duly executed original signatures
thereto;

     

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

     

    (i)         
  the completion of the Initial Audit with results satisfactory to
Bank in its sole and absolute discretion; and

     

    (j)       
    payment of the fees and Bank Expenses then due as
specified in Section 2.4 hereof.

     

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

     

    (a)           except
as otherwise provided in Section 3.5(a), timely receipt of an executed
Transaction Report;

     

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

     

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

     

    3.3        Intentionally
Omitted.

     

    3.4        Covenant
to Deliver.

     

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

     

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

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    4           CREATION
OF SECURITY INTEREST

     

    4.1        Grant of Security
Interest.  Each Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products
thereof.

     

    4.2        Priority of Security
Interest.  Each Borrower represents, warrants, and covenants
that the security interest granted herein is and shall at all times continue to
be a first priority perfected security interest in the Collateral (subject only
to Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement).  If any Borrower shall acquire a commercial tort claim,
such Borrower shall promptly notify Bank in a writing signed by such Borrower of
the general details thereof and grant to Bank in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to Bank.

     

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

     

    4.3        Authorization to File Financing
Statements.  Each Borrower hereby authorizes Bank to file
financing statements, without notice to such Borrower, with all appropriate
jurisdictions to perfect or protect Bank’s interest or rights hereunder,
including a notice that any disposition of the Collateral, by either Borrower or
any other Person, shall be deemed to violate the rights of Bank under the
Code.   Such financing statements may indicate the Collateral as
“all assets of the Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Bank’s discretion.

     

    5           REPRESENTATIONS AND
WARRANTIES

     

    Each
Borrower represents and warrants as follows:

     

    5.1        Due Organization, Authorization;
Power and Authority.  Borrower is duly existing and in good
standing as a Registered Organization in its jurisdiction of formation and is
qualified and licensed to do business and is in good standing in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on Borrower’s
business.  In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and warrants to Bank that (a)
Borrower’s exact legal name is that indicated on the Perfection Certificate and
on the signature page hereof; (b) Borrower is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational
identification number or accurately states that Borrower has none; (d) the
Perfection Certificate accurately sets forth Borrower’s place of business, or,
if more than one, its chief executive office as well as Borrower’s mailing
address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its
jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
each of its Subsidiaries is accurate and complete (it being understood and
agreed that Borrower may from time to time update certain information in the
Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement).  If Borrower is not
now a Registered Organization but later becomes one, Borrower shall promptly
notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    The
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party have been duly authorized, and do not (i) conflict with any of
Borrower’s organizational documents, (ii) contravene, conflict with, constitute
a default under or violate any material Requirement of Law, (iii) contravene,
conflict or violate any applicable order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority by which Borrower or any of
its Subsidiaries or any of their property or assets may be bound or affected,
(iv) require any action by, filing, registration, or qualification with, or
Governmental Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force and effect or (v) constitute an
event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which it is
a party or by which it is bound in which the default could reasonably be
expected to have a material adverse effect on Borrower’s business.

     

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

     

    The
Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection
Certificate.  None of the components of the Collateral shall be
maintained at locations other than as provided in the Perfection Certificate or
as permitted pursuant to Section 7.2.

     

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

     

    Borrower
is the sole owner of the Intellectual Property which it owns or purports to own
except for (a) non-exclusive licenses granted to its customers in the ordinary
course of business, (b) over-the-counter software that is commercially available
to the public, and (c) material Intellectual Property licensed to Borrower and
noted on the Perfection Certificate.  Each Patent which it owns or
purports to own and which is material to Borrower’s business is valid and
enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  To the best of
Borrower’s knowledge, no claim has been made that any part of the Intellectual
Property violates the rights of any third party except to the extent such claim
would not reasonably be expected to have a material adverse effect on Borrower’s
business.

     

    Except as
noted on the Perfection Certificate, Borrower is not a party to, nor is it bound
by, any Restricted License.

     

    5.3        Accounts
Receivable.

     

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

     

    (b)           All
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing the Eligible Accounts are and shall be true and
correct and all such invoices, instruments and other documents, and all of
Borrower's Books are genuine and in all respects what they purport to
be.  Whether or not an Event of Default has occurred and is
continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s
security interest in such funds and verify the amount of such Eligible
Account.  All sales and other transactions underlying or giving rise
to each Eligible Account shall comply in all material respects with all
applicable laws and governmental rules and regulations.  Borrower has
no knowledge of any actual or imminent Insolvency Proceeding of any Account
Debtor whose accounts are Eligible Accounts in any Transaction
Report.  To the best of Borrower’s knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Eligible Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    5.4        Litigation.  There
are no actions or proceedings pending or, to the knowledge of the Responsible
Officers, threatened in writing by or against Borrower or any of its
Subsidiaries involving more than Fifty Thousand Dollars ($50,000), individually
or in the aggregate.

     

    5.5        Financial Statements; Financial
Condition.  All consolidated financial statements for Borrower
and any of its Subsidiaries delivered to Bank fairly present in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations.  There has not been any material deterioration
in Borrower’s consolidated financial condition since the date of the most recent
financial statements submitted to Bank.

     

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

     

    5.7        Regulatory
Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors).  Borrower has complied in all
material respects with the Federal Fair Labor Standards Act.  Neither
Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of
a “holding company” or a “subsidiary company” of a “holding company” as each
term is defined and used in the Public Utility Holding Company Act of
2005.  Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to have a material adverse
effect on its business.  None of Borrower’s or any of its
Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally.  Borrower and each of its Subsidiaries have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Government Authorities that are necessary to
continue their respective businesses as currently conducted.

     

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

     

    5.9        Tax Returns and Payments; Pension
Contributions.  Borrower has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by
Borrower.  Borrower may defer payment of any contested taxes, provided
that Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b)
notifies Bank in writing of the commencement of, and any material development
in, the proceedings, (c) posts bonds or takes any other steps required to
prevent the governmental authority levying such contested taxes from obtaining a
Lien upon any of the Collateral that is other than a “Permitted
Lien”.  Borrower is unaware of any claims or adjustments proposed for
any of Borrower's prior tax years which could result in additional taxes
becoming due and payable by Borrower.  Borrower has paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.

     

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

     

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

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    5.12      Definition of “Knowledge.”  For purposes of
the Loan Documents, whenever a representation or warranty is made to Borrower’s
knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge, after
reasonable investigation, of the Responsible Officers.

     

    6           AFFIRMATIVE
COVENANTS

     

    Borrowers
shall do all of the following:

     

    6.1        Government
Compliance.

     

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

     

    (b)           Obtain
all of the Governmental Approvals necessary for the performance by Borrowers of
their obligations under the Loan Documents to which it is a party and the grant
of a security interest to Bank in all of its property.  Borrowers shall
promptly provide copies of any such obtained Governmental Approvals to
Bank.

     

    6.2        Financial Statements, Reports,
Certificates.  Provide Bank with the following:

     

    (a)           Weekly
when a Streamline Period is not in effect, within twenty (20) days after the
last day of each month when a Streamline Period is in effect and with each
request for an Advance, a Transaction Report (and any schedules related
thereto);

     

    (b)           within
twenty (20) days after the end of each month, (A) monthly accounts receivable
agings, aged by invoice date, (B) monthly accounts payable agings, aged by
invoice date, and outstanding or held check registers, if any, and (C) monthly
reconciliations of accounts receivable agings (aged by invoice date),
transaction reports and general ledger.

     

    (c)           as
soon as available, but no later than thirty (30) days after the last day of each
month, a company prepared consolidated and consolidating balance sheet and
income statement covering Borrowers’ and each of their Subsidiary’s operations
for such month certified by a Responsible Officer and in a form acceptable to
Bank (the “Monthly Financial
Statements”);

     

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

     

    (e)           within
thirty (30) days after the end of each fiscal year of Borrowers (or more
frequently as updated), (A) annual operating budgets (including income
statements, balance sheets and cash flow statements, by month) for the upcoming
fiscal year of Borrower, and (B) annual financial projections for the following
fiscal year (on a quarterly basis) as approved by each Borrower’s board of
directors, together with any related business forecasts used in the preparation
of such annual financial projections; and

     

    (f)           within
five (5) days of filing, copies of all periodic and other reports, proxy
statements and other materials filed by such Borrower with the SEC, any
Governmental Authority succeeding to any or all of the functions of the SEC or
with any national securities exchange, or distributed to its shareholders, as
the case may be.  Documents required to be delivered pursuant to the
terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which such
Borrower posts such documents, or provides a link thereto, on such Borrower’s
website on the Internet at such Borrower’s website address;

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (g)           within
five (5) days of delivery, copies of all statements, reports and notices made
available to each Borrower’s security holders or to any holders of Subordinated
Debt;

     

    (h)           prompt
written notice of (i) any material change in the composition of the Intellectual
Property, (ii) the registration of any copyright, including any subsequent
ownership right of a Borrower in or to any copyright, patent or trademark not
shown in the IP Security Agreements or previously disclosed in writing to Bank,
and (iii) a Borrower’s knowledge of an event that could reasonably be expected
to materially and adversely affect the value of the Intellectual
Property;

     

    (i)       
    prompt report of any legal actions pending or threatened
in writing against a Borrower or any of its Subsidiaries that could result in
damages or costs to a Borrower or any of its Subsidiaries of, individually or in
the aggregate, Fifty Thousand Dollars ($50,000) or more; and

     

    (j)         
  other financial information reasonably requested by
Bank.

     

    6.3        Accounts
Receivable.

     

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

     

    (b)           Disputes.  Borrowers
shall promptly notify Bank of all disputes or claims relating to
Accounts.  Borrowers may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do
any of the foregoing so long as (i) Borrowers do so in good faith, in a
commercially reasonable manner, in the ordinary course of business, in
arm’s-length transactions, and report the same to Bank in the regular reports
provided to Bank; (ii) no Event of Default has occurred and is continuing; and
(iii) after taking into account all such discounts, settlements and forgiveness,
the total outstanding Advances will not exceed the lesser of the Revolving Line
or the Borrowing Base.

     

    (c)           Collection of
Accounts.  Borrowers shall have the right to collect all
Accounts, unless and until an Event of Default has occurred and is
continuing.  Bank shall require that all proceeds of Accounts be
deposited by Borrowers into a lockbox account in accordance with Section 2.3(e)
hereof, or such other “blocked account” as specified by Bank, pursuant to a
blocked account agreement in such form as Bank may specify in its good faith
business judgment.  Whether or not an Event of Default has occurred
and is continuing, Borrowers shall immediately deliver all payments on and
proceeds of Accounts to an account maintained with Bank to be applied (i) prior
to an Event of Default, pursuant to the terms of Section 2.5(b) hereof, and (ii)
after the occurrence and during the continuance of an Event of Default, pursuant
to the terms of Section 9.4 hereof.

     

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

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.4        Remittance of
Proceeds.  Except as otherwise provided in Section 6.3(c),
deliver, in kind, all proceeds arising from the disposition of any Collateral to
Bank in the original form in which received by a Borrower not later than the
following Business Day after receipt by Borrower, to be applied to the
Obligations (a) prior to an Event of Default, pursuant to the terms of Section
2.5(b) hereof, and (b) after the occurrence and during the continuance of an
Event of Default, pursuant to the terms of Section 9.4 hereof; provided that, if
no Event of Default has occurred and is continuing, Borrowers shall not be
obligated to remit to Bank the proceeds of the sale of worn out or obsolete
Equipment disposed of by Borrowers in good faith in an arm’s length transaction
for an aggregate purchase price of $25,000 or less (for all such transactions in
any fiscal year).  Each Borrower agrees that it will maintain all
proceeds of Collateral in an account maintained with Bank.  Nothing in
this Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.

     

    6.5        Taxes;
Pensions.  Timely file, and require each of their Subsidiaries
to timely file, all required tax returns and reports and timely pay, and require
each of their Subsidiaries to timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrowers and each of
their Subsidiaries, except for deferred payment of any taxes contested pursuant
to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand,
appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.

     

    6.6        Access to Collateral; Books and
Records.  At reasonable times, on one (1) Business Day’s notice
(provided no notice is required if an Event of Default has occurred and is
continuing), Bank, or its agents, shall have the right to inspect the Collateral
and the right to audit and copy each Borrower’s Books.  The foregoing
inspections and audits shall be at Borrowers’ expense, and the charge therefor
shall be Eight Hundred Fifty Dollars ($850) per person per day (or such higher
amount as shall represent Bank’s then-current standard charge for the same),
plus reasonable out-of-pocket expenses.  In the event a Borrower and
Bank schedule an audit more than ten (10) days in advance, and such Borrower
cancels or seeks to reschedules the audit with less than ten (10) days written
notice to Bank, then (without limiting any of Bank’s rights or remedies),
Borrowers shall pay Bank a fee of One Thousand Dollars ($1,000) plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated
costs and expenses of the cancellation or rescheduling.

     

    6.7        Insurance.  Keep
their businesses and the Collateral insured for risks and in amounts standard
for companies in Borrowers’ respective industries and locations and as Bank may
reasonably request.  Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank.  All property
policies shall have a lender’s loss payable endorsement showing Bank as lender
loss payee and waive subrogation against Bank.  All liability policies
shall show, or have endorsements showing, Bank as an additional
insured.  All policies (or the loss payable and additional insured
endorsements) shall provide that the insurer shall give Bank at least twenty
(20) days notice before canceling, amending, or declining to renew its
policy.  At Bank’s request, Borrowers shall deliver certified copies
of policies and evidence of all premium payments.  Proceeds payable
under any property policy shall, at Bank’s option, be payable to Bank on account
of the Obligations.  If a Borrower fails to obtain insurance as
required under this Section 6.7 or to pay any amount or furnish any required
proof of payment to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section 6.7, and take
any action under the policies Bank deems prudent.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    6.8        Operating
Accounts.

     

    (a)           Maintain
their primary and their Subsidiaries’ primary operating and other deposit
accounts and securities accounts with Bank and Bank’s Affiliates, which accounts shall
represent at least eighty five percent (85%) of the dollar value of Borrowers’
and such Subsidiaries accounts at all financial institutions. 

     

    (b)           Provide
Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or Bank’s
Affiliates. For each Collateral Account that a Borrower at any time maintains,
such Borrower shall cause the applicable bank or financial institution (other
than Bank) at or with which any Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of Bank.  The provisions
of the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of a Borrower’s employees and identified to Bank by such
Borrower as such.

     

    6.9        Financial
Covenants.

     

    Maintain
at all times, to be tested as of the last day of each month, unless otherwise
noted, on a consolidated basis with respect to Borrowers:

     

    (a)           Quick
Ratio.  A ratio of Quick Assets to Current Liabilities of at
least 0.80 to 1.0.

     

    (b)           Tangible Net
Worth.  A Tangible Net Worth of at least One Million Five
Hundred Thousand Dollars ($1,500,000) increasing by fifty percent (50%) of
issuances of equity after the Effective Date.

     

    6.10      Protection
and Registration of Intellectual Property Rights.

     

    (a)           (i)
Protect, defend and maintain the validity and enforceability of its Intellectual
Property; (ii) promptly advise Bank in writing of material infringements of its
Intellectual Property; and (iii) not allow any Intellectual Property material to
a Borrower’s business to be abandoned, forfeited or dedicated to the public
without Bank’s written consent.

     

    (b)           If
a Borrower (i) obtains any Patent, registered Trademark, registered Copyright,
registered mask work, or any pending application for any of the foregoing,
whether as owner, licensee or otherwise, or (ii) applies for any Patent or the
registration of any Trademark, then such Borrower shall immediately provide
written notice thereof to Bank and shall execute such intellectual property
security agreements and other documents and take such other actions as Bank
shall request in its good faith business judgment to perfect and maintain a
first priority perfected security interest in favor of Bank in such
property.  If a Borrower decides to register any Copyrights or mask
works in the United States Copyright Office, such Borrower shall: (x) provide
Bank with at least fifteen (15) days prior written notice of such Borrower’s
intent to register such Copyrights or mask works together with a copy of the
application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as Bank may
request in its good faith business judgment to perfect and maintain a first
priority perfected security interest in favor of Bank in the Copyrights or mask
works intended to be registered with the United States Copyright Office; and (z)
record such intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the Copyright or mask work
application(s) with the United States Copyright Office.  Each Borrower
shall promptly provide to Bank copies of all applications that it files for
Patents or for the registration of Trademarks, Copyrights or mask works,
together with evidence of the recording of the intellectual property security
agreement necessary for Bank to perfect and maintain a first priority perfected
security interest in such property.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (c)           Provide
written notice to Bank within thirty (30) days of entering or becoming bound by
any Restricted License (other than over-the-counter software that is
commercially available to the public).  Borrowers shall take such
steps as Bank requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (i) any Restricted License to be deemed
“Collateral” and for Bank to have a security interest in it that might otherwise
be restricted or prohibited by law or by the terms of any such Restricted
License, whether now existing or entered into in the future, and (ii) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of
such Collateral in accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents.

     

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

     

    6.12      Formation or Acquisition of
Subsidiaries.  At the time that a Borrower forms any direct or
indirect Subsidiary or acquires any direct or indirect Subsidiary after the
Effective Date, such Borrower shall (a) cause such new Subsidiary to provide to
Bank a joinder to the Loan Agreement to cause such Subsidiary to become a
co-borrower hereunder,
together with such appropriate financing statements and/or Control
Agreements, all in form and substance satisfactory to Bank (including being
sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Bank appropriate certificates and powers and financing statements, pledging all
of the direct or beneficial ownership interest in such new Subsidiary, in form
and substance satisfactory to Bank, and (c) provide to Bank all other
documentation in form and substance satisfactory to Bank which in its opinion is
appropriate with respect to the execution and delivery of the applicable
documentation referred to above.  Any document, agreement, or
instrument executed or issued pursuant to this Section 6.12 shall be a Loan
Document.

     

    6.13      Further
Assurances.  Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement.  Deliver to
Bank, within five
(5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrowers or any of
their Subsidiaries.

     

    7           NEGATIVE
COVENANTS

     

    Borrowers
shall not do any of the following without Bank’s prior written
consent:

     

    7.1        Dispositions.  Convey,
sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of
their Subsidiaries to Transfer, all or any part of their businesses or property,
except for Transfers (a) of Inventory in the ordinary course of business; (b) of
worn-out or obsolete Equipment; and (c) in connection with Permitted Liens and
Permitted Investments.

     

    7.2        Changes in Business, Management,
Control, or Business Locations.  (a) Engage in or permit any of
their Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrowers and their Subsidiaries, as applicable, or reasonably
related thereto; (b) liquidate or dissolve; or (c) (i) have a change in senior
management; or (ii) enter into any transaction or series of related transactions
in which the stockholders of a Borrower who were not stockholders immediately
prior to the first such transaction own more than forty percent (40%) of the
voting stock of such Borrower immediately after giving effect to such
transaction or related series of such transactions (other than by the sale of
such Borrower’s equity securities in a public offering or to venture capital
investors so long as such Borrower identifies to Bank the venture capital
investors prior to the closing of the transaction and provides to Bank a
description of the material terms of the transaction).

     

    No
Borrower shall, without at least thirty (30) days prior written notice to Bank:
(1) add any new offices or business locations, including warehouses (unless such
new offices or business locations contain less than Ten Thousand Dollars
($10,000) in such Borrower’s assets or property) or deliver any portion of the
Collateral valued, individually or in the aggregate, in excess of Ten Thousand
Dollars ($10,000) to a bailee at a location other than to a bailee and at a
location already disclosed in the Perfection Certificate, (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.  If Borrower intends to
deliver any portion of the Collateral valued, individually or in the aggregate,
in excess of Ten Thousand Dollars ($10,000) to a bailee, and Bank and such
bailee are not already parties to a bailee agreement governing both the
Collateral and the location to which Borrower intends to deliver the Collateral,
then Borrower will first receive the written consent of Bank, and such bailee
shall execute and deliver a bailee agreement in form and substance satisfactory
to Bank in its sole discretion.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    7.3        Mergers or
Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person except where (a) total cash
consideration for all such transactions does not in the aggregate exceed Five
Hundred Thousand Dollars ($500,000) during the term of this Agreement; (b) no
Event of Default has occurred and is continuing or would exist after giving
effect to the transactions; and (c) a Borrower is the surviving legal
entity.  A Subsidiary may merge or consolidate into another Subsidiary
or into a Borrower.

     

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

     

    7.5        Encumbrance.  Create,
incur, allow, or suffer any Lien on any of its property, or assign or convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not
to be subject to the first priority security interest granted herein, or enter
into any agreement, document, instrument or other arrangement (except with or in
favor of Bank) with any Person which directly or indirectly prohibits or has the
effect of prohibiting any Borrower or any Subsidiary from assigning, mortgaging,
pledging, granting a security interest in or upon, or encumbering any of a
Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise
permitted in Section 7.1 hereof and the definition of “Permitted Liens”
herein.

     

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

     

    7.7        Distributions;
Investments.  (a) Pay any dividends or make any distribution or
payment or redeem, retire or purchase any capital stock provided that (i) a
Borrower may convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise in exchange
thereof, (ii) a Borrower may pay dividends solely in common stock; and (iii) a
Borrower may repurchase the stock of former employees or consultants pursuant to
stock repurchase agreements so long as an Event of Default does not exist at the
time of such repurchase and would not exist after giving effect to such
repurchase, provided such repurchase does not exceed in the aggregate Fifty
Thousand Dollars ($50,000) per fiscal year; or (b) directly or indirectly make
any Investment other than Permitted Investments, or permit any of its
Subsidiaries to do so.

     

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

     

    7.9        Subordinated
Debt.  (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Bank.

     

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

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    8           EVENTS OF
DEFAULT

     

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

     

    8.1        Payment
Default.  Borrowers fail to (a) make any payment of principal
or interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day cure period shall not apply to payments
due on the Revolving Line Maturity Date).  During the cure period, the
failure to make or pay any payment specified under clause (a) or (b) hereunder
is not an Event of Default (but no Credit Extension will be made during the cure
period);

     

    8.2        Covenant
Default.

     

    (a)           Borrowers
fail or neglect to perform any obligation in Sections 6.2, 6.5, 6.7, 6.8, 6.9,
6.10(c) or 6.12 or violate any covenant in Section 7; or

     

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

     

    8.3        Material Adverse
Change.  A Material Adverse Change occurs;

     

    8.4        Attachment;
Levy; Restraint on Business.

     

    (a)           (i)
The service of process seeking to attach, by trustee or similar process, any
funds of a Borrower or of any entity under the control of a Borrower (including
a Subsidiary) on deposit or otherwise maintained with Bank or any Bank
Affiliate, or (ii) a notice of lien or levy is filed against any of a Borrower’s
assets by any government agency, and the same under subclauses (i) and (ii)
hereof are not, within ten (10) days after the occurrence thereof, discharged or
stayed (whether through the posting of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period;
or

     

    (b)           (i)
any material portion of a Borrower’s assets is attached, seized, levied on, or
comes into possession of a trustee or receiver, or (ii) any court order enjoins,
restrains, or prevents a Borrower from conducting any material part of its
business;

     

    8.5        Insolvency.  (a)
A Borrower is
unable to pay its debts (including trade debts) as they become due or otherwise
becomes insolvent; (b) a Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against a Borrower and not dismissed or stayed
within thirty (30) days (but no Credit Extensions shall be made while of any of
the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    8.6        Other
Agreements.  There is, under any agreement to which any
Borrower is a party with a third party or parties, (a) any default resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount individually or in the aggregate
in excess of Fifty Thousand Dollars ($50,000); or (b) any default by such
Borrower, the result of which could have a material adverse effect on such
Borrower’s business;

     

    8.7        Judgments.  One or
more final judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000)
(not covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against a Borrower and the
same are not, within ten (10) days after the entry thereof, discharged or
execution thereof stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit
Extensions will be made prior to the discharge, stay, or bonding of such
judgment, order, or decree);

     

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

     

    8.9        Subordinated
Debt.  Any document, instrument, or agreement evidencing any
Subordinated Debt shall for any reason be revoked or invalidated or otherwise
cease to be in full force and effect, any Person shall be in breach thereof or
contest in any manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder, or the Obligations shall for any
reason be subordinated or shall not have the priority contemplated by this
Agreement or the applicable Subordination Agreement; or

     

    8.10      Governmental
Approvals.  Any Governmental Approval shall have been (a)
revoked, rescinded, suspended, modified in an adverse manner or not renewed in
the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of a
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of a Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.

     

    9           BANK’S RIGHTS AND
REMEDIES

     

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

     

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

     

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

     

    (c)           demand
that Borrowers (i) deposit cash with Bank in an amount equal to one hundred ten
percent (110%) of the Dollar Equivalent of the aggregate face amount of all
Letters of Credit remaining undrawn (plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment)), to secure all of the Obligations relating to such Letters
of Credit, as collateral security for the repayment of any future drawings under
such Letters of Credit, and Borrowers shall forthwith deposit and pay such
amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid
or payable over the remaining term of any Letters of Credit;

     

    (d)           terminate
any FX Forward Contracts;

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (h)           ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, a
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, a Borrower’s rights under all
licenses and all franchise agreements inure to Bank’s benefit;

     

    (i)      
     place a “hold” on any account maintained with Bank
and/or deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;

     

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

     

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

     

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

     

    9.3        Protective
Payments.  If a Borrower fails to obtain the insurance called
for by Section 6.7 or fails to pay any premium thereon or fails to pay any other
amount which such Borrower is obligated to pay under this Agreement or any other
Loan Document, Bank may obtain such insurance or make such payment, and all
amounts so paid by Bank are Bank Expenses and immediately due and payable,
bearing interest at the then highest rate applicable to the Obligations, and
secured by the Collateral.  Bank will make reasonable efforts to
provide Borrowers with notice of Bank obtaining such insurance at the time it is
obtained or within a reasonable time thereafter.  No payments by Bank
are deemed an agreement to make similar payments in the future or Bank’s waiver
of any Event of Default.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

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

     

    9.5        Bank’s Liability for
Collateral.  So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under
the control of Bank, Bank shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person.  Borrowers bear all
risk of loss, damage or destruction of the Collateral.

     

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

     

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

     

    10         NOTICES

     

    All
notices, consents, requests, approvals, demands, or other communication by any
party to this Agreement or any other Loan Document must be in writing and shall
be deemed to have been validly served, given, or delivered: (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or any Borrower may change its mailing or electronic mail
address or facsimile number by giving the other party written notice thereof in
accordance with the terms of this Section 10.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                	
                        If
      to Borrowers:

                      	 	
                        DERYCZ
      SCIENTIFIC, INC., on behalf of all Borrower

                      
	 
      	 	
                        1524
      Cloverfield Blvd., Suite E

                      
	 
      	 	
                        Santa
      Monica, CA 90404

                      
	 
      	 	
                        Attn:  General
      Counsel

                      
	 
      	 	
                        Fax:  323/446-8490

                      
	 
      	 	
                        Email:
      rmckilligan@reprintsdesk.com

                      
	 	 	 
	
                        If
      to Bank:

                      	 	
                        Silicon
      Valley Bank

                      
	 
      	 	
                        38
      Technology Drive West, Suite 150

                      
	 
      	 	
                        Irvine CA 92618-5313

                      
	 
      	 	
                        Attn:
      Brian Lowry

                      
	 
      	 	
                        Fax:  949-790-9028

                      
	 
      	 	
                        Email:
      blowry@svb.com

                      

              

            

          

        

      

    

     

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

     

    California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrowers and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank.  Each
Borrower expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such court, and each Borrower hereby waives any
objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to the granting of such legal
or equitable relief as is deemed appropriate by such court.  Each
Borrower hereby waives personal service of the summons, complaints, and other
process issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail
addressed to such Borrower at the address set forth in, or subsequently provided
by such Borrower in accordance with, Section 10 of this Agreement and that
service so made shall be deemed completed upon the earlier to occur of a
Borrower’s actual receipt thereof or three (3) days after deposit in the U.S.
mails, proper postage prepaid.

     

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

     

    WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is
not enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided by
a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be
conducted pursuant to and in accordance with the provisions of California Code
of Civil Procedure Sec.Sec. 638 through 645.1, inclusive.  The private
judge shall have the power, among others, to grant provisional relief, including
without limitation, entering temporary restraining orders, issuing preliminary
and permanent injunctions and appointing receivers.  All such
proceedings shall be closed to the public and confidential and all records
relating thereto shall be permanently sealed.  If during the course of
any dispute, a party desires to seek provisional relief, but a judge has not
been appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the Santa Clara County, California Superior Court for
such relief.  The proceeding before the private judge shall be
conducted in the same manner as it would be before a court under the rules of
evidence applicable to judicial proceedings.  The parties shall be
entitled to discovery which shall be conducted in the same manner as it would be
before a court under the rules of discovery applicable to judicial
proceedings.  The private judge shall oversee discovery and may
enforce all discovery rules and orders applicable to judicial proceedings in the
same manner as a trial court judge.  The parties agree that the
selected or appointed private judge shall have the power to decide all issues in
the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to California Code of Civil Procedure
Sec. 644(a).  Nothing in this paragraph shall limit the right of any
party at any time to exercise self-help remedies, foreclose against collateral,
or obtain provisional remedies.  The private judge shall also
determine all issues relating to the applicability, interpretation, and
enforceability of this paragraph.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    12         GENERAL
PROVISIONS

     

    12.1      Termination Prior to Revolving Line
Maturity Date.  This Agreement may be terminated prior to the
Revolving Line Maturity Date by Borrowers, effective three (3) Business Days
after written notice of termination is given to Bank.  Notwithstanding
any such termination, Bank’s lien and security interest in the Collateral shall
continue until Borrowers fully satisfy their Obligations.

     

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

     

    12.3      Indemnification.  Borrowers
agree to indemnify, defend and hold Bank and its directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Bank
(each, an “Indemnified
Person”) harmless against:  (a) all obligations, demands,
claims, and liabilities (collectively, “Claims”) claimed or asserted
by any other party in connection with the transactions contemplated by the Loan
Documents; and (b) all losses or expenses (including Bank Expenses) in any way
suffered, incurred, or paid by such Indemnified Person as a result of, following
from, consequential to, or arising from transactions between Bank and Borrowers
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by such Indemnified Person’s gross negligence or willful
misconduct.

     

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

     

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

     

    12.6      Correction of Loan
Documents.  Bank may correct patent errors and fill in any
blanks in the Loan Documents consistent with the agreement of the parties so
long as Bank provides Borrowers with written notice of such correction and
allows Borrowers at least ten (10) days to object to such
correction.  In the event of such objection, such correction shall not
be made except by an amendment signed by both Bank and Borrowers.

     

    12.7      Amendments in Writing; Waiver;
Integration.  No purported amendment or modification of any
Loan Document, or waiver, discharge or termination of any obligation under any
Loan Document, shall be enforceable or admissible unless, and only to the
extent, expressly set forth in a writing signed by the party against which
enforcement or admission is sought.  Without limiting the generality
of the foregoing, no oral promise or statement, nor any action, inaction, delay,
failure to require performance or course of conduct shall operate as, or
evidence, an amendment, supplement or waiver or have any other effect on any
Loan Document.  Any waiver granted shall be limited to the specific
circumstance expressly described in it, and shall not apply to any subsequent or
other circumstance, whether similar or dissimilar, or give rise to, or evidence,
any obligation or commitment to grant any further waiver.  The Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of the Loan Documents merge into the Loan
Documents.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

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

     

    12.9      Survival.  All
covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied.  The obligation of Borrowers in Section 12.3 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

     

    12.10   Confidentiality.  In
handling any confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use its best efforts to obtain any prospective
transferee’s or purchaser’s agreement to the terms of this provision; (c) as
required by law, regulation, subpoena, or other order; (d) to Bank’s regulators
or as otherwise required in connection with Bank’s examination or audit; (e) as
Bank considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such service providers
have executed a confidentiality agreement with Bank with terms no less
restrictive than those contained herein.  Confidential information
does not include information that is either: (i) in the public domain or in
Bank’s possession when disclosed to Bank, or becomes part of the public domain
after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the
information.

     

    Bank may
use confidential information for the development of databases, reporting
purposes, and market analysis so long as such confidential information is
aggregated and anonymized prior to distribution unless otherwise expressly
permitted by Borrowers.  The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.

     

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

     

    12.12   Electronic Execution of
Documents.  The words “execution,” “signed,” “signature” and
words of like import in any Loan Document shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity and enforceability as a manually executed
signature or the use of a paper-based recordkeeping systems, as the case may be,
to the extent and as provided for in any applicable law, including, without
limitation, any state law based on the Uniform Electronic Transactions
Act.

     

    12.13   Captions.  The
headings used in this Agreement are for convenience only and shall not affect
the interpretation of this Agreement.

     

    12.14   Construction of
Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed
without regard to which of the parties caused the uncertainty to
exist.

     

    12.15   Relationship.  The
relationship of the parties to this Agreement is determined solely by the
provisions of this Agreement.  The parties do not intend to create any
agency, partnership, joint venture, trust, fiduciary or other relationship with
duties or incidents different from those of parties to an arm’s-length
contract.

     

    12.16   Third
Parties.  Nothing in this Agreement, whether express or
implied, is intended to: (a) confer any benefits, rights or remedies under or by
reason of this Agreement on any persons other than the express parties to it and
their respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    13         DEFINITIONS

     

    13.1      Definitions.  As
used in the Loan Documents, the word “shall” is mandatory, the word “may” is
permissive, the word “or” is not exclusive, the words “includes” and “including”
are not limiting, the singular includes the plural, and numbers denoting amounts
that are set off in brackets are negative.  As used in this Agreement,
the following capitalized terms have the following meanings:

     

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

     

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

     

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

     

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

     

    “Agreement” is defined in the
preamble hereof.

     

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

     

    “Bank” is defined in the
preamble hereof.

     

    “Bank Expenses” are all audit
fees and expenses, costs, and expenses (including reasonable attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred with
respect to Borrowers.

     

     “Borrowers” is defined in the
preamble hereof

     

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

     

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

     

    “Borrowing Resolutions” are,
with respect to any Person, those resolutions substantially in the form attached
hereto as Exhibit E.

     

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

     

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

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    “Cash Management Services” is
defined in Section 2.1.4.

     

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

    

    “Collateral” is any and all
properties, rights and assets of Borrowers described on Exhibit
A.

     

    “Collateral Account” is any
Deposit Account, Securities Account, or Commodity Account.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    “Dollars,” “dollars” or use of the sign
“$” means only lawful
money of the United States and not any other currency, regardless of whether
that currency uses the “$” sign to denote its currency or may be readily
converted into lawful money of the United States.

     

    “Dollar Equivalent” is, at any
time, (a) with respect to any amount denominated in Dollars, such amount, and
(b) with respect to any amount denominated in a Foreign Currency, the equivalent
amount therefor in Dollars as determined by Bank at such time on the basis of
the then-prevailing rate of exchange in San Francisco, California, for sales of
the Foreign Currency for transfer to the country issuing such Foreign
Currency.

     

    “Effective Date” is defined in
the preamble hereof.

     

    “Eligible Accounts” means
Accounts which arise in the ordinary course of a Borrower’s business that meet
all Borrowers’ representations and warranties in Section 5.3.  Bank
reserves the right upon prior written notice to Borrowers at any time after the
Effective Date to adjust any of the criteria set forth below and to establish
new criteria in its good faith business judgment.  Unless Bank
otherwise agrees in writing, Eligible Accounts shall not include:

     

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

     

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

     

    (c)           Accounts
owing from an Account Debtor which does not have its principal place of business
in the United States unless Bank otherwise approves of in writing, such approval
to be granted in Bank’s sole discretion;

     

    (d)           Accounts
billed and/or payable outside of the United States unless Bank has a first
priority, perfected security interest or other enforceable Lien in such Accounts
under all applicable laws, including foreign laws;

     

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

     

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

     

    (g)           Accounts
with credit balances over ninety (90) days from invoice date;

     

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

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (k)           Accounts
owing from an Account Debtor where goods or services have not yet been rendered
to the Account Debtor (sometimes called memo billings or
pre-billings);

     

    (l)         
  Accounts subject to contractual arrangements between a Borrower and
an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of
offset for damages suffered as a result of such Borrower’s failure to perform in
accordance with the contract (sometimes called contracts accounts receivable,
progress billings, milestone billings, or fulfillment contracts);

     

    (m)           Accounts
owing from an Account Debtor the amount of which may be subject to withholding
based on the Account Debtor’s satisfaction of a Borrower’s complete performance
(but only to the extent of the amount withheld; sometimes called retainage
billings);

     

    (n)           Accounts
subject to trust provisions, subrogation rights of a bonding company, or a
statutory trust;

     

    (o)           Accounts
owing from an Account Debtor that has been invoiced for goods that have not been
shipped to the Account Debtor unless Bank, the relevant Borrower, and the
Account Debtor have entered into an agreement acceptable to Bank in its sole
discretion wherein the Account Debtor acknowledges that (i) it has title to and
has ownership of the goods wherever located, (ii) a bona fide sale of the goods
has occurred, and (iii) it owes payment for such goods in accordance with
invoices from such Borrower (sometimes called “bill and hold”
accounts);

     

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

     

    (q)           Accounts
that represent non-trade receivables or that are derived by means other than in
the ordinary course of a Borrower’s business;

     

    (r)      
     Accounts for which a Borrower has permitted
Account Debtor’s payment to extend beyond 90 days;

     

    (s)           Accounts
subject to chargebacks or others payment deductions taken by an Account
Debtor;

     

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

     

    (u)           Accounts
owing from an Account Debtor with respect to which a Borrower has received
Deferred Revenue (but only to the extent of such Deferred Revenue);
and

     

    (v)           Accounts
for which Bank in its good faith business judgment Borrowers determines
collection to be doubtful.

     

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

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

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

     

    “Event of Default” is defined
in Section 8.

     

    “Exchange Act” is the
Securities Exchange Act of 1934, as amended.

     

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

     

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

     

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

     

    “FX Forward Contract” is defined in Section
2.1.3.

     

    “FX Reduction Amount” is
defined in Section 2.1.3.

     

    “FX Reserve” is defined in Section
2.1.3.

     

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

     

    “General Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation, all Intellectual Property, claims, income and other tax refunds,
security and other deposits, payment intangibles, contract rights, options to
purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business
interruption insurance), payments of insurance and rights to payment of any
kind.

     

    “Governmental Approval” is any
consent, authorization, approval, order, license, franchise, permit,
certificate, accreditation, registration, filing or notice, of, issued by, from
or to, or other act by or in respect of, any Governmental
Authority.

     

    “Governmental Authority” is any
nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

     

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

     

    “Indemnified Person” is defined
in Section 12.3.

     

    “Initial Audit” is Bank’s
inspection of each Borrower’s Accounts, each Borrower’s Books and the other
Collateral.

     

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

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

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

     

    (a)     
     its Copyrights, Trademarks and
Patents;

     

    (b)          any
and all trade secrets and trade secret rights, including, without limitation,
any rights to unpatented inventions, know-how, operating manuals;

     

    (c)          any
and all source code;

     

    (d)          any
and all design rights which may be available to a Borrower;

     

    (e)          any
and all claims for damages by way of past, present and future infringement of
any of the foregoing, with the right, but not the obligation, to sue for and
collect such damages for said use or infringement of the Intellectual Property
rights identified above; and

     

    (f)           all
amendments, renewals and extensions of any of the Copyrights, Trademarks or
Patents.

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Lien” is a claim, mortgage,
deed of trust, levy, charge, pledge, security interest or other encumbrance of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise against any property.

     

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

     

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

     

    “Monthly Financial Statements”
is defined in Section 6.2(c).

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    “Net Cash” means the balance of
Borrowers’ unrestricted cash maintained at Bank less all Indebtedness owing from
Borrowers to Bank.

     

    “Obligations” are Borrowers’
obligations to pay when due any debts, principal, interest, Bank Expenses and
other amounts Borrowers owe Bank now or later, whether under this Agreement, the
other Loan Documents, or otherwise, including, without limitation, all
obligations relating to letters of credit (including reimbursement obligations
for drawn and undrawn letters of credit), cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrowers assigned
to Bank, and to perform Borrowers’ duties under the Loan Documents.

     

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

     

    “Overadvance” is defined in
Section 2.2.

     

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

     

    “Payment” means all checks,
wire transfers and other items of payment received by Bank (including proceeds
of Accounts and payment of the Obligations in full) for credit to Borrowers’
outstanding Credit Extensions or, if the balance of the Credit Extensions has
been reduced to zero, for credit to its deposit accounts.

     

    “Perfection Certificate” is
defined in Section 5.1.

     

    “Permitted Indebtedness”
is:

     

    (a)           Borrowers’
Indebtedness to Bank under this Agreement and the other Loan
Documents;

     

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

     

    (c)           Subordinated
Debt;

     

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

     

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

     

    (f)          
 Indebtedness secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder;

     

    (g)           Indebtedness
of one Borrower to another Borrower; and

     

    (h)          
extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (g) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon a Borrower or its Subsidiary, as the case
may be.

     

    “Permitted Investments”
are:

     

    (a)           Investments
(including, without limitation, Subsidiaries) existing on the Effective Date and
shown on the Perfection Certificate;

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

    (b)           (i)
Investments consisting of Cash Equivalents, and (ii) any Investments permitted
by a Borrower’s investment policy, as amended from time to time, provided that
such investment policy (and any such amendment thereto) has been approved in
writing by Bank;

     

    (c)           Investments
consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of a
Borrower;

     

    (d)           Investments
consisting of deposit accounts in which Bank has a perfected security
interest;

     

    (e)           Investments
accepted in connection with Transfers permitted by Section 7.1;

     

    (f)         
  Investments by a Borrower in another Borrower;

     

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

     

    (h)           Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the
ordinary course of business; and

     

    (i)           Investments
consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business; provided that this paragraph (i) shall not apply to
Investments of a Borrower in any Subsidiary.

     

     “Permitted Liens”
are:

     

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

     

    (b)           Liens
for taxes, fees, assessments or other government charges or levies, either (i)
not due and payable or (ii) being contested in good faith and for which a
Borrower maintains adequate reserves on its Books, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;

     

    (c)           purchase
money Liens (i) on Equipment acquired or held by a Borrower incurred for
financing the acquisition of the Equipment securing no more than Fifty Thousand
Dollars ($50,000) in the aggregate amount outstanding, or (ii) existing on
Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the
Equipment;

     

    (d)           Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in
nature arising in the ordinary course of business so long as such Liens attach
only to Inventory, securing liabilities in the aggregate amount not to exceed
Fifty Thousand Dollars ($50,000) and which are not delinquent or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;

     

    (e)           Liens
to secure payment of workers’ compensation, employment insurance, old-age
pensions, social security and other like obligations incurred in the ordinary
course of business (other than Liens imposed by ERISA);

     

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

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

     

    (g)         leases
or subleases of real property granted in the ordinary course of a Borrower’s
business (or, if referring to another Person, in the ordinary course of such
Person’s business), and leases, subleases, non-exclusive licenses or sublicenses
of personal property (other than Intellectual Property) granted in the ordinary
course of a Borrower’s business (or, if referring to another Person, in the
ordinary course of such Person’s business), if the leases,
subleases, licenses and sublicenses do not prohibit granting Bank a security
interest therein;

     

    (h)         non-exclusive
license of Intellectual Property granted to third parties in the ordinary course
of business;

     

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

     

    (j)           Liens
in favor of other financial institutions arising in connection with a Borrower’s
deposit and/or securities accounts held at such institutions, provided that Bank
has a perfected security interest in the amounts held in such deposit and/or
securities accounts.

     

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

     

    “Prime Rate” is the greater of
(i) Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate or (ii) four percent (4.00%) per annum.

     

    “Quick Assets’ is Borrowers’
unrestricted cash plus net Accounts receivable.

     

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

     

    “Requirement of Law” is as to
any Person, the organizational or governing documents of such Person, and any
law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

     

    “Reserves” means, as of any
date of determination, such amounts as Bank may from time to time establish and
revise in its good faith business judgment, reducing the amount of Advances and
other financial accommodations which would otherwise be available to Borrowers
(a) to reflect events, conditions, contingencies or risks which, as determined
by Bank in its good faith business judgment, do or may adversely affect (i) the
Collateral or any other property which is security for the Obligations or its
value (including without limitation any increase in delinquencies of Accounts),
(ii) the assets, business or prospects of a Borrower, or (iii) the security
interests and other rights of Bank in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Bank's good
faith belief that any collateral report or financial information furnished by or
on behalf of a Borrower or to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts
which Bank determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.

     

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

     

    “Restricted License” is any
material license or other agreement with respect to which a Borrower is the
licensee (a) that prohibits or otherwise restricts such Borrower from granting a
security interest in such Borrower’s interest in such license or agreement or
any other property, or (b) for which a default under or termination of could
interfere with the Bank’s right to sell any Collateral.

     

    “Revolving Line” is an Advance
or Advances in an amount equal to Three Million Dollars
($3,000,000).

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    “Revolving Line Maturity Date”
is the date three hundred sixty four (364) days from the Effective
Date.

     

    “SEC” shall mean the Securities
and Exchange Commission, any successor thereto, and any analogous Governmental
Authority.

     

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

     

    “Settlement Date” is defined in Section
2.1.3.

     

    “Streamline Period” means any
month, where at all times during the prior calendar month, Borrowers maintained
Net Cash at Bank of at least Eight Hundred Thousand Dollars ($800,000) at all
times.

     

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

     

    “Subsidiary” is, as to any
Person, a corporation, partnership, limited liability company or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person.  Unless the context otherwise requires, each reference to a
Subsidiary herein shall be a reference to a Subsidiary of a
Borrower.

     

    “Tangible Net Worth” is, on any
date, the stated value of the consolidated total assets of Borrowers minus intangible
assets.

     

    “Total Liabilities” is on any
day, obligations that should, under GAAP be classified as
liabilities on Borrower’s consolidated balance sheet, including all
Indebtedness.

     

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

     

    “Transaction Report” is that
certain report of transactions and schedule of collections in the form attached
hereto as Exhibit D.

     

    “Transfer” is defined in
Section 7.1.

     

     [Signature page
follows.]

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

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

     

    BORROWERS:

     

    DERYCZ
SCIENTIFIC, INC.

     

    By  /s/
Richard McKilligan

    Name:  Richard
McKilligan

    Title:  Chief
Financial Officer

    

    REPRINTS
DESK, INC.

     

    By  /s/
Peter Derycz

    Name:  Peter
Derycz

    Title:  Chief
Executive Officer

    

     

    POOLS
PRESS, INC.

     

    By  /s/
Richard McKilligan

    Name:  Richard
McKilligan

    Title:  Secretary

    

     

    BANK:

     

    SILICON
VALLEY BANK

     

    By  /s/
Derek Hoyt

    Name:  Derek
Hoyt

    Title:  Deal
Team Leader

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT A – COLLATERAL
DESCRIPTION

    

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

     

    All
goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and

     

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT B – LOAN
PAYMENT/ADVANCE REQUEST FORM

    
       

      Deadline for
same day processing is Noon Pacific Time*

       

    

    
      
        	
                Fax
      To:

              	
                Date:
      _____________________

              

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        Loan
Payment:

                                         

                                      

                                      
                                        DERYCZ SCIENTIFIC, INC.,
REPRINTS DESK, INC. and POOLS PRESS, INC.

                                         

                                      

                                    

                                    	
                                            From
      Account #____________________________

                                          	 	
                                            To
      Account #_______________________________

                                          	 	 
      
	
                                                                            
        (Deposit Account #)

                                          	 	
                                                                                
      (Loan Account #)

                                          	 	 
      
	 	 	 	 	 
	
                                            Principal
      $________________________________

                                          	 	
                                            and/or
      Interest $_____________________________

                                          	 	 
      
	 
      	 	 
      	 	 
      
	
                                            Authorized
      Signature: ________________________

                                          	 	Phone
      Number: _____________________________	 	
                                             

                                          
	
                                            Print
      Name/Title: ___________________________

                                          	 	 
      	 	 
      

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            Loan
Advance:

                                             

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

                                             

                                          

                                        

                                        
                                          
                                            
                                              
                                                
                                                  
                                                    	
                                                            From
      Account #____________________________

                                                          	 	
                                                            To
      Account #_______________________________

                                                          	 	 
      
	
                                                                                            
        (Loan Account #)

                                                          	 	
                                                                                                
      (Deposit Account #)

                                                          	 	 
      
	 	 	 	 	 
	Amount of
      Advance $________________________	 	
                                                             

                                                          	 	 
      
	 	 	 	 	 
	

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

                                                          
	 
      	 	 
      	 	 
      
	
                                                            Authorized
      Signature: ________________________

                                                          	 	Phone
      Number: _____________________________	 	
                                                             

                                                          
	
                                                            Print
      Name/Title: ___________________________

                                                          	 	 
      	 	 
      

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                Outgoing Wire
Request:

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

                                                Deadline
for same day processing is noon, Pacific Time

                                              

                                               

                                            

                                          

                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            	
                                                                                                                    Beneficiary
      Name: ___________________________ 

                                                                                                                  	 	
                                                                                                                    Amount
      of Wire: $____________________________________

                                                                                                                  
	
                                                                                                                    Beneficiary
      Bank: ___________________________

                                                                                                                  	 	
                                                                                                                    Account
      Number: _____________________________________

                                                                                                                  
	City
      and State: ______________________________	 	 	 	 
	 	 	
                                                                                                                     

                                                                                                                  	 	 
      
	Beneficiary
      Bank Transit (ABA) #: ______________	 	Beneficiary
      Bank Code (Swift, Sort, Chip, etc.): ______________
	 	 	       
      (For International Wire Only)
	 
      	 	 
      	 	 
      
	
                                                                                                                    Intermediary
      Bank: __________________________

                                                                                                                  	 	Transit
      (ABA) #: _____________________________________
	
                                                                                                                    For
      Further Credit to:
      ___________________________________________________________________________________

                                                                                                                  
	 	 	 	 	 
	

                                                                                                                    
                                                                                                                      Special
      Instruction:
      _____________________________________________________________________________________

                                                                                                                    

                                                                                                                  
	 	 	 	 	 
	

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

                                                                                                                  

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                           

                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  	
                                                                                                                          Authorized
      Signature: ______________________

                                                                                                                        	 	
                                                                                                                          2nd
      Signature (if required): ________________________

                                                                                                                        
	
                                                                                                                          Print
      Name/Title: _________________________

                                                                                                                        	 	
                                                                                                                          Print
      Name/Title: ______________________________

                                                                                                                        
	Telephone
      #: _____________________________	 	Telephone
      #:
__________________________________

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                           

                                        

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
       

      
        

      

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

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

    

    EXHIBIT
C

    

    COMPLIANCE
CERTIFICATE

     

    
      
        
          
            
              
                
                  	
                          TO:       
      

                        	 	SILICON
      VALLEY BANK	
                          Date:
      ___________________

                        
	FROM: 	 	DERYCZ
      SCIENTIFIC, INC. on behalf of itself and the other Borrowers	 

                

              

            

          

        

      

    

     

    The
undersigned authorized officer of DERYCZ SCIENTIFIC, INC. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrowers and Bank (the “Agreement”):

     

    (1)
Borrowers are in complete compliance for the period ending _______________ with
all required covenants except as noted below; (2) there are no Events of
Default; (3) all representations and warranties in the Agreement are true and
correct in all material respects on this date except as noted below; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; (4)
Borrowers, and each of their Subsidiaries, has timely filed all required tax
returns and reports, and Borrowers have timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrowers
except as otherwise permitted pursuant to the terms of Section 5.9 of the
Agreement; and (5) no Liens have been levied or claims made against any Borrower
or any of its Subsidiaries relating to unpaid employee payroll or benefits of
which Borrowers have not previously provided written notification to
Bank.

    

    Attached
are the required documents supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that
no borrowings may be requested at any time or date of determination that
Borrowers are not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is
delivered.  Capitalized terms used but not otherwise defined herein
shall have the meanings given them in the Agreement.

     

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

     

    
      
        
          
            
              
                
                  	
                          Reporting Covenant

                        	
                          Required

                        	
                          Complies

                        
	 
      	 
      	 
      
	
                          Monthly
      financial statements with

                          Compliance
      Certificate

                        	
                          Monthly
      within 30 days

                        	
                          Yes   No

                        
	
                          Annual
      projections

                        	
                          FYE
      within 30 days

                        	
                          Yes   No

                        
	
                          10-Q,
      10-K and 8-K

                        	
                          Within
      5 days after filing with SEC

                        	
                          Yes   No

                        
	
                          A/R
      & A/P Agings

                        	
                          Monthly
      within 20 days

                        	
                          Yes   No

                        
	
                          Transaction
      Report

                        	
                          Weekly
      when not on Streamline,

                          Monthly
      within 20 days when on Streamline

                          and
      with each Advance request

                        	
                          Yes   No

                        
	 
      
	
                          The
      following Intellectual Property was registered (or a registration
      application submitted) after the Effective Date

                          (if
      no registrations, state “None”)

                          ___________________________________________________________________________________________

                          ___________________________________________________________________________________________

                           

                        

                

              

            

          

        

      

    

    

    
      
        
          
            	
                    Financial Covenant

                  	
                    Required

                  	
                    Actual

                  	
                    Complies

                  
	
                     
      

                  	 
      	 
      	 
      
	
                    Maintain
      on a Monthly Basis:

                  	 
      	 
      	 
      
	
                    Minimum
      Quick Ratio

                  	
                    0.80:1.0

                  	
                    _____:1.0

                  	
                    Yes   No

                  
	
                    Minimum
      Tangible Net Worth

                  	
                    *

                  	
                    $_________

                  	
                    Yes   No

                  

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          	
                  *at least One Million Five
      Hundred Thousand Dollars ($1,500,000) increasing by fifty percent (50%) of
      issuances of equity after the Effective
  Date.

                

        

      

    

     

    
      
      

    

    
      
        
          	
                  Streamline Period

                	
                  Applies

                
	 
      	 
      	 
      
	
                  Net
      Cash at least $800,000 at all times

                	
                  Streamline
      Period in Effect

                	
                  Yes   No

                
	
                  Net
      Cash less than $800,000 at any time

                	
                  Streamline
      Period not in Effect

                	
                  Yes   No

                

        

      

    

    

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

     

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

     

    
      

    

    
      

    

    
      

    

     

    
      
        	
                DERYCZ
      SCIENTIFIC, INC. on behalf of itself and the other Borrowers

                 

                 

                By:
      ___________________________

                Name:
      _________________________

                Title:
      __________________________

              	 	
                BANK
      USE ONLY

                 

                Received
      by: ___________________________

                                                  
      authorized signer

                Date:
      _________________________________

                 

                Verified:
      _______________________________

                                                  
      authorized signer

                Date: _________________________________

                 

                Compliance
      Status:       
      Yes     No

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule 1 to Compliance
Certificate

    

    Financial Covenants of
Borrowers

    

    In the
event of a conflict between this Schedule and the Loan Agreement, the terms of
the Loan Agreement shall govern.

     

    Dated: ____________________

    

    I.           Quick Ratio (Section
6.7(a))

     

    Required:         0.80:1.00

    

    Actual:

     

    
      
        
          
            
              
                
                  
                    	
                            A.

                          	
                            Aggregate
      value of the unrestricted cash of Borrowers

                          	
                            $_______

                          
	 	 	 
	
                            B.

                          	
                            Aggregate
      value of the net billed accounts receivable of Borrowers

                          	
                            

                              $_______

                            

                          
	 	 	 
	
                            C.

                          	
                            Quick
      Assets (the sum of lines A and B)

                          	
                            

                              $_______

                            

                          
	 	 	 
	
                            D.

                          	
                            Aggregate
      value of Obligations to Bank

                          	
                            

                              $_______

                            

                          
	 	 	 
	
                            E.

                          	
                            Aggregate
      value of liabilities that should, under GAAP, be classified as liabilities
      on Borrowers’ consolidated balance sheet, including all Indebtedness, and
      not otherwise reflected in line D above that matures within one (1)
      year

                          	
                            

                              $_______

                            

                          
	 	 	 
	
                            F.

                          	
                            Current
      Liabilities (the sum of lines D and E)

                          	
                            

                              $_______

                            

                          
	 	 	 
	
                            G.

                          	
                            Quick
      Ratio (line C divided by line F)

                          	
                            _________ 

                          

                  

                

              

            

          

        

      

    

     

     

    Is line G
equal to or greater than 0.80:1:00?

    

    _______
No, not in
compliance                                                                          
_______ Yes, in compliance

    

    

    II.          Tangible Net Worth (Section
6.7(b))

    

    Required:       
One Million Five Hundred Thousand Dollars ($1,500,000) increasing by fifty
percent (50%) of issuances of equity after the Effective Date.

    

    Actual:

    

    
      
        
          	
                  A.

                	
                  Aggregate
      stated value of total assets of Borrowers

                	
                  

                    $_______

                  

                
	 	 	 
	
                  B.

                	
                  Aggregate
      value of intangible assets of Borrowers

                	
                  

                    $_______

                  

                
	 	 	 
	
                  C.

                	
                  Tangible
      Net Worth (line A minus line B)

                	
                  

                    $_______

                  

                

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Is line C
equal to or greater than at least One Million Five Hundred Thousand Dollars
($1,500,000) increasing by fifty percent (50%) of issuances of equity after the
Effective Date.?

     

    _______ No, not
in
compliance                                                                          
_______ Yes, in compliance

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
D

     

    Transaction
Report

     

    [EXCEL
spreadsheet to be provided separately from lending officer.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
E

    

    BORROWING
RESOLUTIONS

    

    

    

    CORPORATE
BORROWING CERTIFICATE

     

     

    
      
        
          
            	
                    Borrower:

                  	 	
                    DERYCZ
      SCIENTIFIC, INC.

                  	
                    Date:
      June __,
      2010

                  
	
                    Bank:

                  	 	
                    Silicon
      Valley Bank

                  	 
      

          

           

        

      

    

    I hereby
certify as follows, as of the date set forth above:

     

    1.  I
am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

    

    2.  Borrower’s
exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.

                                                                                                                         
                                                                    
   [print name of state]

    

    3.  Attached
hereto are true, correct and complete copies of Borrower’s Articles/Certificate
of Incorporation (including amendments), as filed with the Secretary of State of
the state in which Borrower is incorporated as set forth in paragraph 2
above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

    

    4.  The
following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from
Borrower.

     

    
      Resolved,
that any one of the
following officers or employees of Borrower, whose names, titles and signatures
are below, may act on behalf of Borrower:

       

    

    
      	
              Name

            	 	
              Title

            	 	
              Signature

            	 	
              Authorized
      to Add or 

              Remove Signatories

            
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
              o

            
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
              o

            
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
              o

            
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
              o

            

    

     

    Resolved
Further, that any
one of the persons designated above with a checked box beside his or her
name may, from time to time, add or remove any individuals to and from the above
list of persons authorized to act on behalf of Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Resolved
Further, that
such individuals may, on behalf of Borrower:

    

    Borrow
Money.  Borrow money from Silicon Valley Bank
(“Bank”).

    Execute Loan
Documents.  Execute any loan documents Bank
requires.

    Grant
Security.  Grant Bank a security interest in any of Borrower’s
assets.

    Negotiate
Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

    Letters of
Credit.  Apply for letters of credit from Bank.

    Foreign Exchange
Contracts.  Execute spot or forward foreign exchange
contracts.

    Issue
Warrants.  Issue warrants for Borrower’s capital
stock.

    Further
Acts.  Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

    

    Resolved
Further, that all
acts authorized by the above resolutions and any prior acts relating thereto are
ratified.

    

    5.  The
persons listed above are Borrower’s officers or employees with their titles and
signatures shown next to their names.

     

    DERYCZ
SCIENTIFIC, INC.

    

    By:
______________________________

    Name:
____________________________

    Title:
_____________________________

    

    

               ***
If the Secretary, Assistant
Secretary or other certifying officer executing above is designated by the
resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director
of Borrower.

    

    

               I,
the __________________________ of Borrower, hereby certify as to paragraphs 1
through 5 above, as of the date set forth above.

              [print
title]

    

     

    
      By:
______________________________

      Name:
____________________________

      Title:
_____________________________

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    BORROWING
RESOLUTIONS

    

    

    

    CORPORATE
BORROWING CERTIFICATE

     

     

    
      
        
          
            
              	
                      Borrower:

                    	 	REPRINTS DESK,
      INC.	
                      Date:
      June __,
      2010

                    
	
                      Bank:

                    	 	Silicon Valley
      Bank	 
      

            

          

        

      

    

     

    I hereby
certify as follows, as of the date set forth above:

     

    1.  I
am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

    

    2.  Borrower’s
exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.

                                                                                                    
                           
                                                                
   [print name of state]

       

    

    3.  Attached
hereto are true, correct and complete copies of Borrower’s Articles/Certificate
of Incorporation (including amendments), as filed with the Secretary of State of
the state in which Borrower is incorporated as set forth in paragraph 2
above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

    

    4.  The
following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from
Borrower.

     

    
      Resolved,
that any one of the
following officers or employees of Borrower, whose names, titles and signatures
are below, may act on behalf of Borrower:

       

    

    
      
        	
                Name

              	 	
                Title

              	 	
                Signature

              	 	
                Authorized
      to Add or 

                Remove Signatories

              
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                o

              
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                o

              
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                o

              
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                o

              

      

       

      Resolved
Further, that any
one of the persons designated above with a checked box beside his or her
name may, from time to time, add or remove any individuals to and from the above
list of persons authorized to act on behalf of Borrower.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Resolved
Further, that
such individuals may, on behalf of Borrower:

    

    Borrow
Money.  Borrow money from Silicon Valley Bank
(“Bank”).

    Execute Loan
Documents.  Execute any loan documents Bank
requires.

    Grant
Security.  Grant Bank a security interest in any of Borrower’s
assets.

    Negotiate
Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

    Letters of
Credit.  Apply for letters of credit from Bank.

    Foreign Exchange
Contracts.  Execute spot or forward foreign exchange
contracts.

    Issue
Warrants.  Issue warrants for Borrower’s capital
stock.

    Further
Acts.  Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

    

    Resolved
Further, that all
acts authorized by the above resolutions and any prior acts relating thereto are
ratified.

    

    5.  The
persons listed above are Borrower’s officers or employees with their titles and
signatures shown next to their names.

    

    REPRINTS
DESK, INC.

     

    
      By:
______________________________

      Name:
____________________________

      Title:
_____________________________

    

     

    

               ***
If the Secretary, Assistant
Secretary or other certifying officer executing above is designated by the
resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director
of Borrower.

    

    

               I,
the __________________________ of Borrower, hereby certify as to paragraphs 1
through 5 above, as of the date set forth above.

              [print
title]

     

    

      By:
______________________________

      Name:
____________________________

      Title:
_____________________________

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                                          

    BORROWING
RESOLUTIONS

    

    

    

    CORPORATE
BORROWING CERTIFICATE

     

     

    
      
        
          
            
              
                	
                        Borrower:

                      	 	POOLS PRESS,
      INC.  	
                        Date:
      June __,
      2010

                      
	
                        Bank:

                      	 	Silicon Valley
      Bank	 
      

              

            

          

        

      

       

    

    I hereby
certify as follows, as of the date set forth above:

     

    1.  I
am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

    

    2.  Borrower’s
exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of _____________________.

                                                                            
                                                       
                                                            
   [print name of state]

       

    

    3.  Attached
hereto are true, correct and complete copies of Borrower’s Articles/Certificate
of Incorporation (including amendments), as filed with the Secretary of State of
the state in which Borrower is incorporated as set forth in paragraph 2
above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

    

    4.  The
following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from
Borrower.

     

    Resolved,
that any one of the
following officers or employees of Borrower, whose names, titles and signatures
are below, may act on behalf of Borrower:

     

    
      
        
          	
                  Name

                	 	
                  Title

                	 	
                  Signature

                	 	
                  Authorized
      to Add or 

                  Remove Signatories

                
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                  o

                
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                  o

                
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                  o

                
	 	 	 	 	 	 	 
	 
      	 	 
      	 	 
      	 	
                  o

                

        

         

      

    

    Resolved
Further, that any
one of the persons designated above with a checked box beside his or her
name may, from time to time, add or remove any individuals to and from the above
list of persons authorized to act on behalf of Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Resolved
Further, that
such individuals may, on behalf of Borrower:

    

    Borrow
Money.  Borrow money from Silicon Valley Bank
(“Bank”).

    Execute Loan
Documents.  Execute any loan documents Bank
requires.

    Grant
Security.  Grant Bank a security interest in any of Borrower’s
assets.

    Negotiate
Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

    Letters of
Credit.  Apply for letters of credit from Bank.

    Foreign Exchange
Contracts.  Execute spot or forward foreign exchange
contracts.

    Issue
Warrants.  Issue warrants for Borrower’s capital
stock.

    Further
Acts.  Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

    

    Resolved
Further, that all
acts authorized by the above resolutions and any prior acts relating thereto are
ratified.

    

    5.  The
persons listed above are Borrower’s officers or employees with their titles and
signatures shown next to their names.

    

    POOLS
PRESS, INC.

     

    
      
        By:
______________________________

        Name:
____________________________

        Title:
_____________________________      

      

    

     

     

               ***
If the Secretary, Assistant
Secretary or other certifying officer executing above is designated by the
resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director
of Borrower.

    

    

               I,
the __________________________ of Borrower, hereby certify as to paragraphs 1
through 5 above, as of the date set forth above.

              [print
title]

     

     

    
      
        By:
______________________________

        Name:
____________________________

        Title:
_____________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]