Document:

EXHIBIT 10.10

 Exhibit 10.10 
  
 SECOND MODIFICATION AGREEMENT 
  
 THIS SECOND MODIFICATION AGREEMENT (“MODIFICATION”) is made as of the 22nd day of October, 2004, by and between
AVATECH SOLUTIONS SUBSIDIARY, INC. (“BORROWER”), K BANK, formerly known as KEY BANK AND TRUST (“LENDER”), AVATECH SOLUTIONS, INC. and TECHNICAL LEARNINGWARE COMPANY, INC. (collectively “GUARANTORS”). 
  
 RECITALS 
  
 Pursuant to the terms and provisions of a Loan And Security Agreement dated
September 11, 2003 by and between the BORROWER and the LENDER, as previously amended (“LOAN AGREEMENT”), the LENDER is providing to the BORROWER a revolving line of credit (“LOAN”) which is evidenced by the Amended and Restated
Demand Promissory Note dated November 24, 2003 from the BORROWER to the order of the LENDER in the stated principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00) (“NOTE”). 
  
 The BORROWER’S obligations to the LENDER under the LOAN, have been
absolutely and unconditionally guaranteed by the GUARANTORS pursuant to the terms and provisions of: (a) Guaranty Agreement dated as of September 11, 2003 from Avatech Solutions, Inc. to and for the benefit of the LENDER; and (b) Guaranty Agreement
dated as of September 11, 2003 from Technical Learningware Company, Inc. to and for the benefit of the LENDER (collectively, “GUARANTIES”). 
  
 The BORROWER has requested that the LENDER increase the maximum principal amount of the LOAN. The LENDER is willing to consent to the BORROWER’S
request subject to the terms and provisions of this MODIFICATION. 
  
 NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 
  
 Section 1. Recitals. The parties hereby acknowledge the accuracy of
the above Recitals and hereby incorporate the Recitals into this MODIFICATION. 
  
 Section 2. Amendment To Loan Agreement. The LOAN AGREEMENT is hereby amended as follows: 
  
 (a) Section 1.5. Section 1.5 of the LOAN AGREEMENT is hereby amended by deleting its present language in its entirety and substituting in lieu
thereof the following: 
  
 Section 1.5. Borrowing Base.
The term “BORROWING BASE” means: (a) eighty-five percent 

 (85%) of the face amount (less maximum discounts, credits and allowances which may be taken by or are
granted to ACCOUNT DEBTORS of the BORROWER) of billed ELIGIBLE ACCOUNTS; minus (b) such reserves as the LENDER deems appropriate from time to time; minus (c) the aggregate stated amount of all outstanding LETTERS OF CREDIT and
unsatisfied reimbursement obligations of the BORROWER arising out of LETTERS OF CREDIT and such reserves as the LENDER deems appropriate from time to time. 
  
 (b) Section 1.15. Section 1.15 of the LOAN AGREEMENT is hereby amended by deleting its present language in its entirety and substituting in lieu
thereof the following: 
  
 Section 1.15. Dollar Cap. The
term “DOLLAR CAP” means: (a) Three Million Dollars ($3,000,000.00) during the period between July 28, 2004 and November 1, 2004; and (b) Two Million Dollars ($2,000,000.00) at all other times; provided, however, if the BORROWER delivers to
the LENDER evidence that all sums owed by the BORROWER to Dassault Systemes Corp. (“Dassault”) are repaid in full or delivers to the LENDER an agreement (in a form reasonably acceptable to LENDER) executed by Dassault pursuant to which
Dassault agrees that the limit on the amount of the senior loan under the Subordination Agreement dated September 11, 2003 between Dassault and the LENDER is increased from Two Million Dollars ($2,000,000.00) to Three Million Dollars
($3,000,000.00), then the amount of the “DOLLAR CAP” shall be increased to Three Million Dollars ($3,000,000.00). 
  
 (c) Section 1.16. Section 1.16 of the LOAN AGREEMENT is hereby amended by inserting at the end thereof the following new sentence: 
  
 Notwithstanding anything contained herein to the contrary, no ACCOUNTS
acquired in connection with a PERMITTED ACQUISITION shall be an ELIGIBLE ACCOUNT unless the LENDER specifically agrees in writing to permit such ACCOUNTS to be ELIGIBLE ACCOUNTS if the other criteria as set forth herein are satisfied. 

 (d) Section 1.43. Section 1.43 of the LOAN AGREEMENT is hereby amended by inserting at the end
thereof immediately preceding the period the following: 
  
 , as
further amended and restated pursuant to the terms and provisions of the Second Amended and Restated Demand Promissory Note dated October     , 2004 from the BORROWER as the maker thereof which is payable to order of the
LENDER in the stated principal amount of Three Million Dollars ($3,000,000.00). 
  
 (e) Article 1. Article 1 of the LOAN AGREEMENT is hereby amended by inserting at the end thereof the following new Sections: 
  
 Section 1.57. Letters of Credit. The term “LETTERS OF CREDIT” means collectively letters of credit issued
from time to time by the LENDER for the account or benefit of the BORROWER. 
  
 Section 1.58. Permitted Acquisitions. The term “PERMITTED ACQUISITIONS” means any acquisition, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the equity
interest of, or a business line or division of any PERSON; provided, (i) immediately prior to, and after giving effect thereto, no DEFAULT or EVENT OF DEFAULT shall have occurred and be continuing or would result therefrom; (ii) all transactions in
connection therewith shall be consummated in accordance with all applicable laws; (iii) any PERSON or assets or division acquired in accordance herewith shall be predominantly in the same business as presently conducted by the BORROWER or businesses
which are complimentary to the lines of business in which the BORROWER is currently engaged; (iv) any and all assets acquired in connection with such transaction shall be acquired free and clear of all liens and encumbrances other than liens of the
LENDER or other liens specifically approved by the LENDER in writing; (v) any indebtedness incurred in connection with such acquisition is subordinated to the OBLIGATIONS pursuant to a written subordination agreement in a form acceptable to the
LENDER; (vi) the aggregate amount of indebtedness incurred plus cash paid in connection with any single transaction shall not exceed Five Hundred Thousand Dollars ($500,000.00) without the LENDER’S prior written consent; (vii) the aggregate
amount of indebtedness incurred and cash paid in connection with all acquisitions shall not exceed Two 

 Million Dollars ($2,000,000.00) without the LENDER’S prior written consent; and (viii) no proceeds
of the LOAN shall be used to pay for any such acquisition. 
  
 (f)
Article 2. Article 2 of the LOAN AGREEMENT is hereby amended by inserting at the end thereof immediately after the presently existing Section 2.4 the following new Section: 
  
 Section 2.5. Letters Of Credit. 
  
 2.5.1. Issuance Of Letters Of Credit. The LENDER may in its discretion issue LETTERS OF CREDIT as requested by the BORROWER, provided that: (a) no
DEFAULT or EVENT OF DEFAULT has occurred and is continuing, and (b) the aggregate amount of all LETTERS OF CREDIT issued and outstanding and any reimbursement obligations owed to the LENDER arising out of any LETTERS OF CREDIT do not exceed Five
Hundred Thousand Dollars ($500,000.00); and (c) the aggregate amount of all LETTERS OF CREDIT issued and outstanding, any reimbursement obligations owed to the LENDER arising out of LETTERS OF CREDIT and the outstanding amount of advances made under
Section 2.1, shall not exceed the MAXIMUM LOAN AMOUNT. No LETTER OF CREDIT shall have an expiry date which occurs after the stated maturity date or termination date of the LOAN. Any amounts paid by the LENDER in connection with any LETTER OF CREDIT
shall be treated as an advance of proceeds of the LOAN, shall be secured by all of the COLLATERAL, and shall bear interest (including the default rate of interest) and be payable at the same rate and in the same manner as the LOAN. 
  
 2.5.2. Indemnification. The BORROWER unconditionally
and irrevocably agrees to indemnify the LENDER and to hold the LENDER harmless from any and all losses, claims or liabilities arising from any transactions or occurrences relating to LETTERS OF CREDIT issued, established, opened or accepted for the
account of the BORROWER, and any drafts or acceptances thereunder, and all OBLIGATIONS incurred in connection therewith, other than losses, claims or liabilities arising from the gross negligence or wanton misconduct of the LENDER. 

 2.5.3. Reimbursement Obligations. The BORROWER agrees that the LENDER is
irrevocably authorized to advance proceeds of the LOAN to make payment of all draws made under any LETTER OF CREDIT. In the event there is insufficient availability under the LOAN to make payment on a draw under a LETTER OF CREDIT, the BORROWER
agrees to reimburse the LENDER on the day of drawing (or upon such later date as the BORROWER receives notice of the payment of the presented draft by the LENDER) upon any LETTER OF CREDIT (either with the proceeds of the LOAN obtained hereunder or
otherwise) in same day funds in the amount of the drawing. If the BORROWER fails to reimburse the LENDER as provided herein or as provided in any separate letter of credit application agreements or other LOAN DOCUMENTS, the unreimbursed amount of
such drawing shall bear interest at the same rate (including the default rate of interest) applicable to the LOAN. The BORROWER’S reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of
any rights of set-off, counterclaim or defense to payment the BORROWER may claim or have against the LENDER, the beneficiary of the LETTER OF CREDIT or any other PERSON, including, without limitation, any defense based on any failure of the BORROWER
to receive consideration or the legality, validity, regularity or unenforceability of the LETTER OF CREDIT or any irregularities in the presentment of the draft presented upon the LETTER OF CREDIT. 
  
 2.5.4. Fees, Charges And Other Terms. The BORROWER
agrees to pay to the LENDER such issuance, amendment, extension and other fees as the LENDER quotes from time to time with respect to each LETTER OF CREDIT upon the issuance thereof, and shall execute such applications, reimbursement agreements, or
other documents as the LENDER requires from time to time with respect to the issuance, extension, amendment, or any other requested or required action concerning a LETTER OF CREDIT. 

 (g) Article 6. Article 6 of the LOAN AGREEMENT is hereby amended by deleting Sections 6.1, 6.2,
6.4, 6.5, 6.8, 6.9, 6.11 and 6.14 in their entirety and substituting in lieu thereof the following: 
  
 Section 6.1. No Change of Name, Merger, Etc. The BORROWER shall not change its name or enter into any merger, consolidation, reorganization or
recapitalization without the consent of the LENDER, which consent shall not be unreasonably withheld, provided, however, that the BORROWER may in connection with PERMITTED ACQUISITIONS, without the LENDER’S consent, issue shares of its
capital stock at not less than seventy-five percent (75%) of the then-current market price therefor. 
  
 Section 6.2. No Sale or Transfer of Assets. Without the consent of the LENDER, which consent shall not be unreasonably withheld, the BORROWER shall
not sell, transfer, lease or otherwise dispose of all or any part of the COLLATERAL, or all or any party of its other assets, except that, without the consent of the LENDER (a) INVENTORY may be sold to ACCOUNT DEBTORS in the ordinary course of the
BORROWER’S business, (b) software of which BORROWER is the owner may be sold at not less than its fair market value, and (c) EQUIPMENT of BORROWER may be sold if such sales occur in the ordinary course of the BORROWER’S business and the
proceeds thereof are used either to make a principal payment on the LOAN or for such other purpose as the LENDER may hereafter agree. 
  
 Section 6.4. No Indebtedness. Without the consent of the LENDER, which consent shall not be unreasonably withheld, the BORROWER shall not incur,
create, assume, or permit to exist and INDEBTEDNESS except (a) the OBLIGATIONS, (b) INDEBTEDNESS secured by PERMITTED LIENS, (c) the SUBORDINATED DEBT, and (d) any indebtedness to institutional or accredited investors in the form of notes or
convertible notes issued by BORROWER in a financing transaction, so long as such indebtedness is subordinated to the OBLIGATIONS pursuant to an intercreditor or subordination agreement reasonably acceptable to LENDER. 
  
 Section 6.5. Restricted Payments. Without the consent of the LENDER,
which consent shall not be unreasonably withheld, the BORROWER shall not make any RESTRICTED PAYMENTS, except that BORROWER may, without the consent of LENDER, and so long as no other covenant in this AGREEMENT is violated or breached, (a) pay
dividends on any 

 series of preferred stock issued by BORROWER, (b) issue common stock upon conversion of shares of any
series of preferred stock of BORROWER, or upon exercise of any options or warrants issued by BORROWER, and (c) payments to consultants or other advisers so long as such payments are in amounts that are usual and customary for the services performed.

  
 Section 6.8. Loans, Investments and Sale-Leasebacks.
Without the consent of LENDER, which consent shall not be unreasonably withheld, the BORROWER shall not make any advance, loan, investment, or material acquisition of assets or enter into any sale-leaseback transactions, except that, without the
consent of LENDER, the BORROWER may (a) make PERMITTED ACQUISITIONS, and (b) advance or loan money to, or make an investment in, any affiliate of the BORROWER so long as such advance, loan, or investment does not violate or constitute a breach under
any other provision of this AGREEMENT and that the aggregate amount of such loans and investments outstanding at any time plus the aggregate amount of cash paid and indebtedness incurred in connection with PERMITTED ACQUISITIONS shall not exceed Two
Million Dollars ($2,000,000.00). 
  
 Section 6.9. No
Acquisition Of Equity In Or Assets Of Third Persons. The BORROWER shall not acquire any equity interests in, or all or substantially all of the assets of, any PERSON, other than in connection with PERMITTED ACQUISITIONS. 
  
 Section 6.11. No Alteration of Structure or Operations. Without the
consent of the LENDER, which consent shall not be unreasonably withheld, BORROWER shall not amend or change materially its capital structure or its line or scope of business, nor shall it engage in business ventures other than those in which it is
presently engaged, provided, however, that BORROWER may, without the consent of LENDER, (a) expand the scope of its business by entering into new product and service lines of business that are complementary to the lines of business in which
the BORROWER currently is engaged, (b) increase the authorized shares of its common and preferred stock, (c) engage in business ventures with providers of goods and services similar or 

 complementary to the goods and services offered by BORROWER, provided that (i) the BORROWER does not
transfer any assets to such business venture without the consent of the LENDER; and (ii) the BORROWER shall not incur any liability or indebtedness in connection with such business venture without the consent of the LENDER. 
  
 Section 6.14. Limitation on Issuance of Equity Interests. Without the
consent of the LENDER, which consent shall not be unreasonably withheld, BORROWER shall not issue or sell any equity interest in the BORROWER that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or
upon the happening of an event or passage of time would be: (A) convertible or exchangeable into a liability of the BORROWER, or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon
the happening of an event or passage of time would have, a redemption or similar payment due, provided, however, that the BORROWER may, without the consent of the LENDER, (i) issue securities that are redeemable, whether at the option of the
holder thereof or the BORROWER, by the issuance of shares of the common stock of BORROWER without the payment of cash, or (ii) issue equity interests in the BORROWER that are convertible or exchangeable into a liability of the BORROWER so long as
such liability is subordinate to the OBLIGATIONS pursuant to an intercreditor or subordination agreement with LENDER reasonably satisfactory to LENDER. 
  
 (h) Article 8. Article 8 of the LOAN AGREEMENT is hereby amended by inserting immediately after the presently existing Section 8.4 the following
new Section: 
  
 Section 8.5. Letters Of Credit. Upon the
request of the LENDER, at any time after the occurrence of an EVENT OF DEFAULT, the BORROWER shall immediately deposit in a cash collateral account at the LENDER, over which the LENDER has sole access, an amount equal to the aggregate then undrawn
and unexpired amount of all LETTERS OF CREDIT. Amounts held in such cash collateral account shall be applied by the LENDER to the payment of drafts drawn under LETTERS OF CREDIT, and the unused portion thereof after all LETTERS OF CREDIT shall have
expired or been fully drawn 

 upon shall be applied to repay the other OBLIGATIONS. After all LETTERS OF CREDIT shall have expired or
have been fully drawn upon and all other OBLIGATIONS shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the BORROWER. In the event the BORROWER fails to deposit into the cash collateral account an
amount equal to the then undrawn and unexpired amount of all LETTERS OF CREDIT, the LENDER shall be authorized to either: (a) make an advance under the LOAN in the amount of the undrawn and unexpired amount of all LETTERS OF CREDIT and deposit such
advance in to the cash collateral account; or (b) deposit into such cash collateral account proceeds from the liquidation of the COLLATERAL until the balance in such account equals the aggregate then undrawn and unexpired amount of all LETTERS OF
CREDIT. 
  
 Section 3. Consent Of Guarantors. The
GUARANTORS hereby consent to the modifications contained in this MODIFICATION. The GUARANTORS hereby ratify their obligations under the GUARANTIES and hereby confirm that pursuant to the terms of the GUARANTIES, the GUARANTORS are absolutely and
unconditionally guaranteeing all of the BORROWER’S obligations to the LENDER, whether now owed or hereafter incurred, including, but not limited to all of the BORROWER’S obligations to the LENDER under the LOAN, as modified herein.

  
 Section 4. Amendment To Note. The NOTE is hereby
amended and restated in its entirety in accordance with the terms and provisions of the Second Amended And Restated Demand Promissory Note of even date herewith from the BORROWER to the order of the LENDER in the stated principal amount of Three
Million Dollars ($3,000,000.00). 
  
 Section 5. Security.
All of the BORROWER’S obligations to the LENDER under the LOAN shall continue to be secured by all of the security interests and liens granted to the LENDER in the LOAN AGREEMENT. 
  
 Section 6. Other Terms. Except as specifically modified herein, all other terms and provisions of the LOAN AGREEMENT
and all other documents evidencing, securing or otherwise documenting the terms and provisions of the LOAN (collectively, “LOAN DOCUMENTS”) remain in full force and effect. 
  
 Section 7. Ratification Of Obligations Under Loan Documents. The BORROWER and the GUARANTORS (collectively,
“OBLIGORS”) hereby ratify and confirm all their respective 

 obligations, liabilities and indebtedness under the provisions of the LOAN DOCUMENTS. The LENDER and the OBLIGORS agree
that it is their intention that nothing herein shall be construed to extinguish, release, discharge or constitute, create or effect a novation of, or an agreement to extinguish any of the obligations, indebtedness or liabilities of any of the
OBLIGORS under the provisions of the LOAN DOCUMENTS, or the assignment or pledge to the LENDER of, or to any security interest or lien granted to the LENDER in or on, any of the security for such obligations, indebtedness and liabilities.

  
 Section 8. Waiver Of Jury Trial. The parties hereto
agree that any suit, action or proceeding, whether claim or counterclaim, brought or instituted by any party to this MODIFICATION, or any other successors or assigns on or with respect to this MODIFICATION or any of the other LOAN DOCUMENTS, or
which in any way relates, directly or indirectly to the obligations of the OBLIGORS to the LENDER under the LOAN DOCUMENTS or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury. The parties
expressly waive any right to a trial by jury in any such action or proceeding. 
  
 Section 9. Fee. In consideration for the LENDER’S agreements contained herein, the BORROWER shall pay to the LENDER on the date of this MODIFICATION a fee in the amount of Five Thousand Dollars
($5,000.00). In addition, the BORROWER shall pay to the LENDER all fees and expenses incurred by the LENDER in connection with the preparation of this MODIFICATION and the documents to be executed in connection herewith. 
  
 Section 10. Release. The OBLIGORS release, acquit and forever
discharge the LENDER and the LENDER’S subsidiaries, affiliates, officers, directors, agents, employees, servants, attorneys and representatives from any and all claims, demands, debts, actions, causes of action, suits, contracts, agreements,
accounts, defenses, offsets against the LOAN, and liabilities of any kind or character whatsoever, which any OBLIGOR ever had or has through the date of this MODIFICATION. 
  
 Section 11. Choice Of Law. The laws of the State of Maryland (excluding, however, conflict of law principles) shall
govern and be applied to determine all issues relating to this MODIFICATION and the rights and obligations of the parties hereto, including the validity, construction, interpretation, and enforceability of this MODIFICATION and its various
provisions and the consequences and legal effect of all transactions and events which resulted in the execution of this MODIFICATION or which occurred or were to occur as a direct or indirect result of this MODIFICATION having been executed.

 Section 12. Consent To Jurisdiction; Agreement As To Venue. Each of the OBLIGORS irrevocably
consent to the non-exclusive jurisdiction of the courts of the State of Maryland and of the United States District Court for the District of Maryland, if a basis for federal jurisdiction exists. The OBLIGORS agree that venue shall be proper in any
Circuit Court of the State of Maryland selected by the LENDER or in the United States District Court for the District of Maryland if a basis for federal jurisdiction exists and waives any right to object to the maintenance of a suit in any of the
state or federal courts of the State of Maryland on the basis of improper venue or of inconvenience of forum. 
  
 IN WITNESS WHEREOF, the parties have executed this MODIFICATION with the specific intention of creating a document under seal. 
  

							
	 WITNESS/ATTEST:
	 	BORROWER :
		
	 	 	AVATECH SOLUTIONS SUBSIDIARY, INC.,
	 	 	A Delaware Corporation
				
	 /s/

	 	By:	 	 /s/ Christopher D. Olander

	 	(SEAL)
	 	 	Name:	 	Christopher D. Olander	 	 
	 	 	Title:	 	Executive Vice President	 	 
		
	 	 	LENDER:
		
	 	 	K BANK
				
	 /s/

	 	By:	 	 /s/ Patrick E. Kilpatrick

	 	(SEAL)
	 	 	Name:	 	Patrick E. Kilpatrick	 	 
	 	 	Title:	 	Vice President	 	 
		
	 	 	GUARANTORS:
		
	 	 	AVATECH SOLUTIONS, INC.
				
	 /s/

	 	By:	 	 /s/ Christopher D. Olander

	 	(SEAL)
	 	 	Name:	 	Christopher D. Olander	 	 
	 	 	Title:	 	Executive Vice President	 	 
		
	 	 	TECHNICAL LEARNINGWARE COMPANY, INC.
				
	 /s/

	 	By:	 	 /s/ Christopher D. Olander

	 	(SEAL)
	 	 	Name:	 	Christopher D. Olander	 	 
	 	 	Title:	 	Executive Vice President	 	 

 ACKNOWLEDGMENTS 
  
 STATE OF MARYLAND, COUNTY OF CARROLL, TO WIT: 
  
 I HEREBY CERTIFY that on this 22nd day of October, 2004, before me, the undersigned Notary Public of the jurisdiction aforesaid, personally appeared
CHRISTOPHER D. OLANDER, and acknowledged himself to be the EVP of AVATECH SOLUTIONS SUBSIDIARY, INC., a Delaware corporation, and that he, as such EVP, being authorized so to do, executed the foregoing instrument for the purposes therein contained
by signing the name of AVATECH SOLUTIONS SUBSIDIARY, INC., by himself as EVP. 
  
 IN WITNESS MY Hand and Notarial Seal. 
  

			
	 /s/

	 	(SEAL)
	 	 	        NOTARY PUBLIC
	My Commission Expires:	 	 
	7/1/2005	 	 

  
 STATE OF MARYLAND, COUNTY OF CARROLL,
TO WIT: 
  
 I HEREBY CERTIFY that on this 22nd day of October,
2004, before me, the undersigned Notary Public of the jurisdiction aforesaid, personally appeared CHRISTOPHER D. OLANDER, and acknowledged himself to be the EVP of K BANK, a Maryland banking and trust company, and that he, as such EVP, being
authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of K BANK, by himself as EVP. 
  
 IN WITNESS MY Hand and Notarial Seal. 
  

			
	 /s/

	 	(SEAL)
	 	 	        NOTARY PUBLIC
	My Commission Expires:	 	 
	7/1/2005	 	 

 STATE OF MARYLAND, COUNTY OF CARROLL, TO WIT: 
  
 I HEREBY CERTIFY that on this 22nd day of October, 2004, before me, the undersigned Notary Public of the jurisdiction
aforesaid, personally appeared CHRISTOPHER D. OLANDER, and acknowledged himself to be the EVP of AVATECH SOLUTIONS, INC., a EVP corporation, and that he, as such EVP, being authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of AVATECH SOLUTIONS, INC., by himself as EVP. 
  
 IN WITNESS MY Hand and Notarial Seal. 
  

			
	 /s/

	 	(SEAL)
	 	 	        NOTARY PUBLIC
	My Commission Expires:	 	 
	7/1/2005	 	 

  
 STATE OF MARYLAND, COUNTY OF CARROLL,
TO WIT: 
  
 I HEREBY CERTIFY that on this 22nd day of October,
2004, before me, the undersigned Notary Public of the jurisdiction aforesaid, personally appeared CHRISTOPHER D. OLANDER, and acknowledged himself to be the EVP of TECHNICAL LEARNINGWARE COMPANY, INC., a EVP corporation, and that he, as such EVP,
being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of TECHNICAL LEARNINGWARE COMPANY, INC., by himself as EVP. 
  
 IN WITNESS MY Hand and Notarial Seal. 
  

			
	 /s/

	 	(SEAL)
	 	 	        NOTARY PUBLIC
	My Commission Expires:	 	 
	7/1/2005EXHIBIT 10.11

 Exhibit 10.11 
  
 K BANK 
  
 BUSINESS LOAN AGREEMENT 
  

															
	 Principal
 $700,000.00
	 	 Loan Date
 10-28-2004
	 	 Maturity
 12-15-2004
	 	 Loan No
 220583814
	 	Call / Coll	 	Account	 	 Officer
 PK
	 	Initials
	
	References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above
containing “***” has been omitted due to text length limitations.

  

							
	Borrower:	  	 Avatech Solutions Subsidiary, Inc.
 10715 Red Run Blvd, Ste 101
 Owings Mills, MD 21117
	  	Lender:	  	 K Bank
 7F GWYNNS MILL COURT
 OWINGS MILLS, MD 21117

  
 THIS BUSINESS LOAN AGREEMENT dated
October 28, 2004, is made and executed between Avatech Solutions Subsidiary, Inc. (“Borrower”) and K Bank (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied
to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement (“Loan”). Borrower understands and agrees that: (A) in granting,
renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to
Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement. 
  
 TERM. This Agreement shall be effective as of October 28, 2004, and shall continue in full force and effect until such time as all of Borrower’s Loans in
favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until December 15, 2004. 
  
 ADVANCE AUTHORITY. The following persons currently are authorized to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of their authority: Christopher D. Olander, Exec. V.P. of Avatech Solutions Subsidiary, Inc.; Donald R. Walsh, Chief Exec Officer; Beth
O. Maclaughlin, V.P. Fiance; Karen L. Strayer, Tax and Compliance Mgr.; and Catherine Dodson, Controller. 
  
 CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of
all of the conditions set forth in this Agreement and in the Related Documents. 
  
 Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and
all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to
Lender and Lender’s counsel. 
  
 Borrower’s
Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower
shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require. 
  
 Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified
in this Agreement or any Related Document. 
  
 Representations
and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct. 
  
 No Event of Default. There shall not exist at the time of any Advance
a condition which would constitute an Event of Default under this Agreement or under any Related Document. 
  
 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or
modification of any Loan, and at all times any Indebtedness exists: 
  
 Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to
transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times
shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 10715 Red Run Blvd, Ste 101, Owings Mills, MD 21117. Unless Borrower has designated otherwise in writing, the principal office is
the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name.
Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower’s business activities. 
  
 Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. 
  
 Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by
all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other
instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties. 
  
 Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial
condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements. 
  
 Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms. 
  
 Properties.
Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower
owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrowers properties are titled in
Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years. 
  
 Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of
Borrower’s ownership of Borrower’s Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the
Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor
any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall
be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such
inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and
shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral
for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees
to indemnify and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

  

					
	Loan No: 220583814	 	 BUSINESS LOAN AGREEMENT
 (Continued)
	 	Page 2

  
 Litigation and
Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect
Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. 
  
 Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were
required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which
adequate reserves have been provided. 
  
 Lien Priority.
Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or
indirectly securing repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral. 
  
 Binding Effect. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. 
  
 AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as
this Agreement remains in effect, Borrower will: 
  
 Notices
of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. 
  
 Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit
Lender to examine and audit Borrower’s books and records at all reasonable times. 
  
 Financial Statements. Furnish Lender with the following: 
  
 Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year,
Borrower’s balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender. 
  
 Interim Statements. As soon as available, but in no event later than thirty (30) days after the end of each month, Borrower’s balance sheet
and profit and loss statement for the period ended, prepared by Borrower. 
  
 Tax Returns. As soon as available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a
certified public accountant satisfactory to Lender. 
  
 All
financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct. 
  
 Additional Information. Furnish such additional information and
statements, as Lender may request from time to time. 
  
 Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance
companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower
or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may
require. 
  
 Insurance Reports. Furnish to Lender, upon
request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4)
the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. 
  
 Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties. 
  

			
	 Names of Guarantors

	  	Amounts

	Avatech Solutions, Inc.	  	Unlimited
	William James Hindman	  	**$700,000.00

  
 Other Agreements.
Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

  
 Loan Proceeds. Use all Loan proceeds solely for the
following specific purposes: Short Term working capital. 
  
 Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon
Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. 
  
 Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any
agreement. 
  
 Operations. Maintain executive and
management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a
reasonable and prudent manner. 
  
 Environmental Studies.
Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any
substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. 
  
 Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation,
the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to
doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, satisfactory to Lender, to protect Lender’s interest.

  
 Inspection. Permit employees or agents of Lender at
any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books,
accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense. 
  
 Environmental Compliance and Reports. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower,
any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities;
shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. 
  
 Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all
Security Interests. 
  
 LENDER’S EXPENDITURES. If any action or
proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to
discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but 

 BUSINESS LOAN AGREEMENT 
 (Continued) 
  

			
	Loan No: 220583814	 	Page 3

  
 shall not be obligated to) take any
action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower.
All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; or (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due
during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note. 
  
 NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: 
  
 Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest
in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender. 
  
 Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower
is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on
Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if
Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to
pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of
Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure. 
  
 Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create
or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business. 
  
 Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance of
Borrower’s obligations under this Agreement or in connection herewith. 
  
 CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender. 
  
 RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with
Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. 
  
 DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:  
  
 Payment Default. Borrower fails to make any payment when due under the Loan. 
  
 Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

  
 Default in Favor of Third Parties. Borrower or any
Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property
or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents. 
  
 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on
Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. 
  
 Insolvency. The dissolution or termination of Borrower’s
existence as a going business, or a trustee or receiver is appointed for Borrower or for all or a substantial portion of the assets of Borrower, or Borrower makes a general assignment for the benefit of Borrower’s creditors, or Borrower files
for bankruptcy, or an involuntary bankruptcy petition is filed against Borrower and such involuntary petition remains undismissed for sixty (60) days. 
  
 Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or lien) at any time and for any reason. 
  
 Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 
  
 Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. 
  
 Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower. 
  
 Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired. 
  
 EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s
option, all sums owing in connection with the Loans, including all principal, interest, and all other fees, costs and charges, if any, will become immediately due and payable, all without notice of any kind to Borrower, except that in the case of an
Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available
at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies. 

 
 MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this
Agreement: 
  
 Amendments. This Agreement, together with
any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment. 
  
 Attorneys’ Fees; Expenses. Borrower agrees that if Lender hires an attorney to help enforce this Agreement, Borrower will pay, subject to any limits under applicable law, Lender’s attorneys’ fees
and all of Lender’s other collection expenses, whether or not there is a lawsuit and including without limitation additional legal expenses for bankruptcy proceedings. 
  
 Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to
interpret or define the provisions of this Agreement. 
  
 Consent to Jurisdiction. Borrower irrevocably submits to the jurisdiction of any state or federal court sitting in the State of Maryland over any suit, action, or proceeding arising out of or relating to this Agreement. Borrower
irrevocably waives, to the fullest extent permitted by law, any objection that Borrower may now or hereafter have to the laying of venue of any such suit, action, or proceeding brought in any such court and 

 BUSINESS LOAN AGREEMENT 
 (Continued) 
  
  

			
	Loan No: 220583814	 	Page 4

  
 any claim that any
such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment in any such suit, action, or proceeding brought in any such court shall be conclusive and binding upon Borrower and may be enforced
in any court in which Borrower is subject to jurisdiction by a suit upon such judgment provided that service of process is effected upon Borrower as provided in this Agreement or as otherwise permitted by applicable law. 
  
 Consent to Loan Participation. Borrower agrees and consents to
Lender’s sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of
the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have
against Lender. 
  
 Governing Law. This Agreement will be
governed by, construed and enforced in accordance with federal law and the laws of the State of Maryland. This Agreement has been accepted by Lender in the State of Maryland. 
  
 JURY WAIVER. LENDER AND BORROWER EACH HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH LENDER OR BORROWER
MAY BE PARTIES, ARISING OUT OF, OR IN ANY WAY PERTAINING TO, THIS AGREEMENT. IT IS AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS. THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE BY LENDER AND BORROWER, AND LENDER AND BORROWER EACH HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. BORROWER FURTHER REPRESENTS THAT BORROWER HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF BORROWER’S OWN FREE WILL, AND THAT BORROWER HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. 
  
 No
Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations
as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and
in all cases such consent may be granted or withheld in the sole discretion of Lender. 
  
 Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, if hand delivered, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near
the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice
purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice
given to all Borrowers. 
  
 Severability. If a court of
competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law,
the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 
  
 Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it
appropriate, including without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however,
under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates. 
  
 Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any
Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any
interest therein, without the prior written consent of Lender. 
  
 Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate
or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the
extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time
as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. 
  
 Time is of the Essence. Time is of the essence in the performance of this Agreement. 
  
 DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and
the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise
defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement: 
  
 Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on
Borrower’s behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement. 
  
 Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. 
  
 Borrower. The word “Borrower” means Avatech Solutions Subsidiary, Inc. and includes all co-signers and co-makers signing the Note.

  
 Collateral. The word “Collateral” means all
property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract,
lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. 
  
 Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or regulations adopted pursuant thereto. 
  
 Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement. 
  
 GAAP. The word “GAAP” means generally accepted accounting
principles. 
  
 Grantor. The word “Grantor”
means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, and their personal representatives, successors and assigns. 
  
 Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the
Loan. 
  
 Guaranty. The word “Guaranty” means
the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. 
  
 Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical,
chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, 

 BUSINESS LOAN AGREEMENT 

					
	Loan No: 220583814	 	(Continued)	 	Page 5

  
 stored, disposed of,
generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. 
  
 Indebtedness. The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

  
 Lender. The word “Lender” means K Bank, its
successors and assigns. 
  
 Loan. The word
“Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to time. 
  
 Note. The word “Note” means the Note executed by Avatech Solutions Subsidiary, Inc. in the principal amount of $700,000.00 dated October 28, 2004, together with all modifications of and renewals,
replacements, and substitutions for the note or credit agreement. 
  
 Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested
in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled
“Indebtedness and Liens”; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute
an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets. 
  
 Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan. 
  
 Security Agreement. The words “Security Agreement” mean and
include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. 
  
 Security Interest. The words “Security Interest” mean,
without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by
law, contract, or otherwise. 
  
 BORROWER ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED OCTOBER 28, 2004. 
  
 THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

  

					
		
	BORROWER:	 	 
		
	AVATECH SOLUTIONS SUBSIDIARY, INC.	 	 
			
	By:	 	 /s/ Christopher D. Olander

	 	(Seal)
	 	 	Christopher D. Olander, Executive Vice President of Avatech Solutions Subsidiary, Inc.	 	 
		
	LENDER:	 	 
		
	K BANK	 	 
			
	By:	 	 /s/ Patrick Killpatrick

	 	(Seal)
	 	 	 Authorized Signer
	 	 

  
 LASER PRO Lending, Ver.
5.24.00.003 Copr. Harland Financial Solutions, Inc. 1997, 2004. 
 All Rights Reserved. - MD L:\CFI\LPL\C40.FC    TR-701
PR-LOC

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