Document:

<PAGE>

                                                                   Exhibit 10.18

                        SECOND AMENDMENT TO OFFICE LEASE

      This Second Amendment to Office Lease ("Second Amendment") is made and
entered into on this 4th day of August 2006 between SELIG REAL ESTATE HOLDINGS
FOURTEEN, a Washington Limited Liability Company, whose address is 1000 Second
Avenue, Suite 1800, Seattle, Washington (hereinafter, the "Lessor") and ISILON
SYSTEMS, INC., a Delaware Corporation, whose address is 3101 Western Avenue,
Seattle, Washington (hereinafter, the "Lessee").

A. Recitals

1. Lessor is the owner of the 3101 Western Avenue Building, located at 3101
Western Avenue, Seattle, Washington 98121 (hereinafter, referred to as the
"Building").

      2. On or about November 11, 2005, Lessor entered into an office lease (the
"Master Lease") with Lessee whereby Lessee leased 43,950 rentable square feet
situated on the entire 5th and 6th floor levels of the Building (the "Initial
Premises"), and on or about December 2, 2005, Lessor and Lessee amended the
lease to include an additional 21,613 rentable square feet ("First Expansion
Premises") of raised floor/ mechanical space located on the "C" Level of the
Building (hereinafter, the "Premises").

      3. Lessee wishes to lease additional space of approximately 21,975
rentable square feet being the entire 7th floor of the Building; Lessor and
Lessee hereby agree to amend the Lease to include the additional premises on the
terms and conditions set forth below.

B. Agreement

      1.    Additional Leased Premises: The additional premises leased by Lessee
            pursuant to this Second Amendment consist of approximately 21,975
            rentable square feet of office space (hereinafter, the "Second
            Expansion Premises") located on the 7th floor of the Building and
            more specifically depicted on the attached Exhibit "A". The exact
            amount of rentable square footage constituting the Second Expansion
            Premises shall be measured by Lessor's architect in compliance with
            1996 BOMA Standards. Such measurements shall be subject to
            confirmation by Lessee's architect within ten (10) days after Lessor
            provides Lessee with its measurements. Paragraph 1 of the Master
            Lease, DESCRIPTION, shall be changed from the original leased space
            of 43,950 rentable square feet to 65,925 rentable square feet
            (which, together with the First Expansion Premises, shall constitute
            the "Premises").

      2.    Term: The term of the lease of the Second Expansion Premises shall
            be seven (7) years and five (5) months to commence January 1, 2007
            and shall expire June 30, 2014. Additionally, the term for the
            Initial Premises shall be extended through June 30, 2014.

<PAGE>

      3     Delivery of Second Expansion Premises: Lessor shall deliver the
            Second Expansion Premises to Lessee in turnkey condition prior to
            January 1, 2007 subject to Paragraph 6 below. In the event the
            Second Expansion Premises are not ready for occupancy on the date
            set forth above, whether occasioned by Lessor or Lessee, the lease
            term shall be extended in such a manner as to reflect the delay
            occasioned by the failure of the Second Expansion Premises to be
            ready for occupancy. Notwithstanding anything to the contrary
            herein, and provided that Lessor has received final approval and
            signed off construction documents not later than the close of
            business October 1, 2006, if Lessor has not delivered the Second
            Expansion Premises to Lessee as substantially complete by March 1,
            2007, except to the extent that such delay was caused by events of
            Force Majeure or Tenant Delay, then Lessee shall be entitled to two
            (2) day of free rent for each day that the Second Expansion Premises
            are not ready for occupancy after March 1, 2007.

      4.    Base Rental: Base Rental payable by Lessee for the Second Expansion
            Premises shall be as follows:

<TABLE>
<CAPTION>
Months                                  Base Rental/RSF
------                                  ---------------
<S>                                     <C>
January 1, 2007- June 1, 2007:              $ 0.00
July 1, 2007 - March 31,  2008:             $23.60
April 1, 2008 - March 31, 2009:             $24.60
April 1, 2009 - March 31, 2010 :            $26.10
April 1, 2010 - March 31, 2011 :            $27.60
April 1, 2011 - March 31, 2012 :            $29.10
April 1, 2012 - March 31, 2013 :            $30.60
April 1, 2013 - June 30, 2014 :             $32.10
</TABLE>

                  Base Rental for the Initial Premises extended term (April 1,
                  2013 - June 30, 2014 shall be $32.10/RSF.

      5.    Design Services: Lessor shall, at Lessor's expense provide for all
            space planning, design, documentation and contract administration in
            connection with all work to be done in the Second Expansion Premises
            in order to prepare the Second Expansion Premises for Lessee's
            effective occupancy. Lessor will be responsible for the
            architectural fees and expenses for the above work. Lessor will
            furthermore contract with and pay for the design and engineering
            services pertaining to structural, mechanical, electrical, and fire
            protection. Lessor shall, at Lessor's expense, furnish to Lessee,
            for Lessee's approval, all drawings necessary for the preparation of
            the Second Expansion Premises for Lessee's use and occupancy.

      6.    Finish Work: The space would be completed on a turn-key basis in
            accordance with mutually approved working drawings prepared by SKB
            Architects. The turnkey improvement package shall include all hard
            construction costs and all other miscellaneous costs (including but
            not limited to required permits, architectural fees and engineering
            fees ). Such

<PAGE>

            improvements shall include finishes to match the Initial Premises
            based on a general office configuration that is substantially
            similar to that currently occupied by Lessee on the 5th floor of the
            Building.

            Except as provided for above, Lessor shall not be responsible for
            the payment, including installation costs, of any of Lessee's
            built-in furniture, trade fixtures, or other "custom-made"
            improvements. Lessor shall not be responsible for installation of
            telephone and computer equipment.

      7.    Parking: Lessee shall be provided parking for twenty (20) additional
            cars inside the Building garage and an additional ten (10) stalls
            outside the Building, all at market rate subject to the cap set
            forth in Paragraph 39 of the Master Lease.

      8.    Space Pocket: Of this additional space for the Second Expansion
            Premises, Lessee shall have the option to designate up to 5,475
            rentable square feet as a space pocket. The pocketed area may be
            comprised of space located in various areas throughout the Second
            Expansion Premises. Lessee shall not pay rent on the space pocketed
            area as long as the space remains unused. Lessor and Lessee agree
            that this 5,475 square foot pocket shall be incorporated into
            rentable area upon commencement of month ten (10) of the lease term
            for the Second Expansion Premises, i.e. September 1, 2007, or upon
            the actual use thereof if such use occurs between June 1, 2007 and
            August 31, 2007.

      9.    Agency/Commission: Lessor recognizes that GVA Kidder Mathews
            represents Lessee in this transaction and agrees to pay a real
            estate commission equivalent to $6.00 per rentable square foot on
            the 7th floor and $1.00 per rentable square foot on the Initial
            Premises term extension. Said real estate commissions shall be
            payable one half (1/2) upon full execution of this Second Amendment
            and one half (1/2) upon commencement of the lease for the Second
            Expansion Premises. If not paid by Lessor when due, the commission
            amount shall be paid directly by Lessee and Lessee shall be given a
            rent credit for the amount so paid.

      10.   Entire Agreement: This is the entire agreement between the parties
            relative to the subject matter of this Second Amendment. It cannot
            be modified or added without a writing signed by both parties.
            Except as expressly modified herein, all other provisions of the
            Master Lease remain in full force and effect.

SELIG REAL ESTATE HOLDINGS              ISILON SYSTEMS, INC.
FOURTEEN, LLC

By: Martin Selig                        By: ____________________________________
    -----------------------------

Its:   Managing Member                  Its:____________________________________

Dated:___________________________       Dated:__________________________________<PAGE>

                                                                   Exhibit 10.19

                       VENTURE LOAN AND SECURITY AGREEMENT

                                                      DATED AS OF MARCH 22, 2006

                                 BY AND BETWEEN

                     HORIZON TECHNOLOGY FUNDING COMPANY LLC,
                      A DELAWARE LIMITED LIABILITY COMPANY
                             76 BATTERSON PARK ROAD
                              FARMINGTON, CT 06032

                                    AS LENDER

                                       AND

                              ISILON SYSTEMS, INC.,
                             A DELAWARE CORPORATION
                              220 W. MERCER STREET
                            SEATTLE, WASHINGTON 98119

                                   AS BORROWER

                          COMMITMENT AMOUNT: $6,000,000

Commitment Termination Date: March 31, 2006

<PAGE>

      The Lender and Borrower hereby agree as follows:

                                    AGREEMENT

      1. Definitions and Construction.

            1.1 Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:

                  "Account Control Agreement" means an agreement acceptable to
Lender which perfects via
control Lender's security interest in Borrower's deposit accounts and/or
accounts holding securities.

                  "Affiliate" means any Person that owns or controls directly or
indirectly ten percent (10%) or more of the stock of another Person, any Person
that controls or is controlled by or is under common control with such Person
and each of such Person's officers, directors, joint venturers or partners.

                  "Agreement" means this certain Venture Loan and Security
Agreement by and between Borrower and Lender dated as of the date on the cover
page hereto (as it may from time to time be amended or supplemented in writing
signed by the Borrower and Lender).

                  "Borrower" means the Borrower as set forth on the cover page
of this Agreement.

                  "Borrower's Home State" means Washington.

                  "Business Day" means any day that is not a Saturday, Sunday,
or other day on which banking institutions are authorized or required to close
in Connecticut or Borrower's Home State.

                  "Claim" has the meaning given such term in Section 10.3 of
this Agreement.

                  "Code" means the Uniform Commercial Code as adopted and in
effect in the State of Connecticut, as amended from time to time; provided that
if by reason of mandatory provisions of law, the creation and/or perfection or
the effect of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than Connecticut, the term "Code" shall also mean the Uniform
Commercial Code as in effect from time to time in such jurisdiction for purposes
of the provisions hereof relating to such creation, perfection or effect of
perfection or non-perfection.

                  "Collateral" has the meaning given such term in Section 4.1 of
this Agreement.

<PAGE>

                  "Commitment Amount" has the meaning as set forth on the cover
page of this Agreement.

                  "Commitment Fee" has the meaning given such term in Section
2.6(c) of this Agreement.

                  "Commitment Termination Date" has the meaning as set forth on
the cover page of this Agreement.

                  "Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default hereunder.

                  "Default Rate" means the per annum rate of interest equal to
five percent (5%) over the Loan Rate, but such rate shall in no event be more
than the highest rate permitted by applicable law to be charged on commercial
loans in a default situation.

                  "Disclosure Schedule" means Exhibit A attached hereto.

                  "Environmental Laws" means all foreign, federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act.

                  "Equity Securities" of any Person means (a) all common stock,
preferred stock, participations, shares, partnership interests, membership
interests or other equity interests in and of such Person (regardless of how
designated and whether or not voting or non-voting) and (b) all warrants,
options and other rights to acquire any of the foregoing.

                  "ERISA" has the meaning given to such term in Section 7.12 of
this Agreement.

                  "Event of Default" has the meaning given to such term in
Section 8 of this Agreement.

                  "Funding Certificate" means a certificate executed by a
Responsible Officer of Borrower substantially in the form of Exhibit B or such
other form as Lender may agree to accept.

                  "Funding Date" means any date on which the Loan is made to or
on account of Borrower under this Agreement.

                  "GAAP" means generally accepted accounting principles as in
effect in the United States of America from time to time, consistently applied.

                                      -2-
<PAGE>

                  "Good Faith Deposit" has the meaning given such term in
Section 2.6(a) of this Agreement.

                  "Governmental Authority" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, (c) any court or administrative
tribunal, or (d) with respect to any Person, any arbitration tribunal or other
non-governmental authority to whose jurisdiction that Person has consented.

                  "Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special waste,
hazardous substance, hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste.

                  "Indebtedness" means, with respect to Borrower or any
Subsidiary, the aggregate amount of, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services
(excluding trade payables aged less than one hundred eighty (180) days), (d) all
capital lease obligations of such Person, (e) all obligations or liabilities of
others secured by a Lien on any asset of such Person, whether or not such
obligation or liability is assumed, and (f) all Indebtedness of others
guaranteed by such Person. Unless otherwise indicated, the term "Indebtedness"
shall include all Indebtedness of Borrower and the Subsidiaries.

                  "Indemnified Person" has the meaning given such term in
Section 10.3 of this Agreement.

                  "Intellectual Property" means all of Borrower's right, title
and interest in and to patents, patent rights (and applications and
registrations therefor), trademarks and service marks (and applications and
registrations therefor), inventions, copyrights, mask works (and applications
and registrations therefor), trade names, trade styles, software and computer
programs, source code, object code, trade secrets, methods, processes, know how,
drawings, specifications, descriptions, and all memoranda, notes, and records
with respect to any research and development, all whether now owned or
subsequently acquired or developed by Borrower and whether in tangible or
intangible form or contained on magnetic media readable by machine together with
all such magnetic media (but not including embedded computer programs and
supporting information included within the definition of "goods" under the
Code).

                  "Investment" means the purchase or acquisition of any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or the extension of any advance, loan, extension of
credit or capital contribution to, or any other investment in, or deposit with,
any Person.

                  "Landlord Agreement" means an agreement by which a lessor of
real property to Borrower furnishes its consent to removal of personal property
by Lender under certain

                                      -3-
<PAGE>

conditions, substantially in the form provided by Lender to Borrower or such
other form as is reasonably acceptable to Lender.

                  "Lender" means the Lender as set forth on the cover page of
this Agreement.

                  "Lender's Expenses" means all reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, documentation, administration and funding of the
Loan Documents; and Lender's reasonable attorneys' fees, costs and expenses
incurred in amending, modifying, enforcing or defending the Loan Documents
(including fees and expenses of appeal or review), including the exercise of any
rights or remedies afforded hereunder or under applicable law, whether or not
suit is brought, whether before or after bankruptcy or insolvency, including
without limitation all fees and costs incurred by Lender in connection with
Lender's enforcement of its rights in a bankruptcy or insolvency proceeding
filed by or against Borrower or its Property.

                  "Lien" means any voluntary or involuntary security interest,
pledge, bailment, lease, mortgage, hypothecation, conditional sales and title
retention agreement, encumbrance or other lien with respect to any Property in
favor of any Person.

                  "Loan" means the advance of credit by Lender to Borrower under
this Agreement.

                  "Loan Documents" means, collectively, this Agreement, the
Notes, the Warrant, any Landlord Agreement, any Account Control Agreement and
all other documents, instruments and agreements entered into in connection with
this Agreement, all as amended or extended from time to time.

                  "Loan Rate" means, with respect to the Loan, the per annum
rate of interest (based on a year of twelve 30-day months) equal to the greater
of (a) 11.10% or (b) 11.10% plus the difference between (i) the one month LIBOR
Rate, as reported in The Wall Street Journal, on the date which is three (3)
Business Days before the Funding Date for such Loan (or, if The Wall Street
Journal is not published on such date, the next earlier date on which it is
published), rounded to the nearest one hundredth of one percent and (ii) 4.10%.

                  "Maturity Date" means July 1,2009, or if earlier, the date of
acceleration of the Loan following an Event of Default or the date of
prepayment, whichever is applicable.

                  "Note" means the promissory note executed in connection with
the Loan in substantially the form of Exhibit C attached hereto.

                  "Obligations" means all debt, principal, interest, fees,
charges, expenses and attorneys' fees and costs and other amounts, obligations,
covenants, and duties owing by Borrower to Lender of any kind and description
(whether pursuant to or evidenced by the Loan Documents (other than the
Borrower's obligations pursuant to the terms of the Warrant), or by any other
agreement between Lender and Borrower, and whether or not for the payment of
money), whether

                                      -4-
<PAGE>

direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, including all Lender's Expenses.

                  "Officer's Certificate" means a certificate executed by a
Responsible Officer substantially in the form of Exhibit E or such other form as
Lender may agree to accept.

                  "Payment Date" has the meaning given such term in Section
2.2(a) of this Agreement.

                  "Permitted Indebtedness" means and includes:

                        (a) Indebtedness of Borrower to Lender;

                        (b) Indebztedness of Borrower secured by Liens permitted
under clause (e) of the definition of Permitted Liens;

                        (c) Indebtedness arising from the endorsement of
instruments in the ordinary course of business;

                        (d) Indebtedness existing on the date hereof and set
forth on the Disclosure Schedule;

                        (e) Indebtedness from Silicon Valley Bank consisting of
(i) a revolving credit facility in an aggregate principal amount outstanding at
any one time does not exceed Six Million Dollars ($6,000,000) in which (1) loans
are limited to not more than One Hundred Percent (100%) of Borrower's
outstanding accounts receivable, inventory and cash, and (2) may include cash
management services (including credit card lines of credit), letter of credit
arrangements or foreign currency hedging arrangements and (ii) equipment term
loans where advances are limited to the purchase price of equipment purchased by
Borrower plus soft costs related thereto and the maximum aggregate original
principal amount of such term loans does not exceed Two Million Three Hundred
Twenty Thousand Dollars ($2,320,000);

                        (f) Other Indebtedness in an aggregate original
principal amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) at
any time; and

                        (g) Extensions, refinancings and renewals of any items
of Permitted Indebtedness, provided that the principal amount is not increased
or the terms modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

                  "Permitted Investments" means and includes any of the
following Investments as to which Lender has a perfected security interest:

                        (a) Deposits and deposit accounts with commercial banks
organized under the laws of the United States or a state thereof to the extent:
(i) the deposit accounts of each such institution are insured by the Federal
Deposit Insurance Corporation up to the legal limit; and

                                      -5-
<PAGE>

(ii) each such institution has an aggregate capital and surplus of not less than
One Hundred Million Dollars ($100,000,000);

                        (b) Investments consisting of securities accounts;

                        (c) Investments in marketable obligations issued or
fully guaranteed by the United States and maturing not more than one (1) year
from the date of issuance;

                        (d) Investments in open market commercial paper rated at
least "A1" or "P1" or higher by a national credit rating agency and maturing not
more than one (1) year from the creation thereof and Investments in money market
accounts and certificates of deposit;

                        (e) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business;

                        (f) Investments consisting of (1) travel advances and
employee relocation loans and other employee loans and advances in the ordinary
course of business; provided the aggregate amount of such loans do not exceed
$250,000 at any one time outstanding and (2) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower pursuant to
employee stock purchase plans or agreements approved by Borrower's Board of
Directors; provided the aggregate amount of such do not exceed $250,000 at any
one time outstanding (exclusive of any non-cash based loan options, pursuant to
which no cash is distributed from the Borrower to such employee, officer or
director, to acquire such securities);

                        (g) Investments consisting of 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;

                        (h) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions to, customers who are not
Affiliates, in the ordinary course business;

                        (i) Investments to fund operating expenses or capital
costs of Borrower's subsidiaries operations, provided that such Investments are
consistent with Borrower's annual operating budget and plan as delivered to
Lender each year pursuant to Section 6.3 of this Agreement; and

                        (j) Other Investments aggregating not in excess of Two
Hundred Fifty Thousand Dollars ($250,000) at any time.

                  "Permitted Liens" means and includes:

                        (a) the Lien created by this Agreement;

                        (b) Liens for fees, taxes, levies, imposts, duties or
other governmental charges of any kind which are not yet delinquent or which are
being contested in good faith by

                                      -6-
<PAGE>

appropriate proceedings which suspend the collection thereof (provided that such
appropriate proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any material item of Collateral which in the aggregate is
material to Borrower and that Borrower has adequately bonded such Lien or
reserves sufficient to discharge such Lien have been provided on the books of
Borrower);

                        (c) Liens identified on the Disclosure Schedule;

                        (d) carriers', warehousemen's, mechanics',
materiahnen's, repairmen's or other similar Liens arising in the ordinary course
of business and which are not delinquent or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings (provided
that such appropriate proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any material item of Collateral or Collateral which
in the aggregate is material to Borrower and that Borrower has adequately bonded
such Lien or reserves sufficient to discharge such Lien have been provided on
the books of Borrower);

                        (e) Liens upon any equipment or other personal property
acquired by Borrower after the date hereof to secure (i) the purchase price of
such equipment or other personal property, or (ii) lease obligations or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment or other personal property; provided that (A) such Liens are
confined solely to the equipment or other personal property so acquired and the
amount secured does not exceed the acquisition price thereof, and (B) no such
Lien shall be created, incurred, assumed or suffered to exist in favor of
Borrower's officers, directors or shareholders holding five percent (5%) or more
of Borrower's Equity Securities;

                        (f) Liens granted to a lender providing Indebtedness
permitted under subparagraph (e) of the definition of Permitted Indebtedness;

                        (g) non-exclusive licenses of Intellectual Property
entered into in the ordinary course of business, or exclusive licenses of
Intellectual Property (A) to customers in connection with Borrower's
customization of software or other products for such customers, or (B) in
connection with "end-of-life" source code where such source code is no longer
integral to Borrower's business;

                        (h) Liens arising from judgments, decrees or attachments
in circumstances not constituting an Event of Default;

                        (i) Leases or subleases and licenses and sublicenses
granted in the ordinary course of business;

                        (j) Liens in favor of customs and revenue authorities
arising as a matter of law, in the ordinary course of Borrower's business, to
secure payment of customs duties in connection with the importation of goods;

                        (k) Liens on insurance proceeds securing the payment of
financed insurance premiums; and

                                      -7-
<PAGE>

                        (l) Deposits in the ordinary course of business under
worker's compensation, unemployment insurance, social security and other similar
laws, or to secure the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations (other than
liens arising under ERISA or environmental liens) or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds.

                  "Person" means and includes any individual, any partnership,
any corporation, any business trust, any joint stock company, any limited
liability company, any unincorporated association or any other entity and any
domestic or foreign national, state or local government, any political
subdivision thereof, and any department, agency, authority or bureau of any of
the foregoing.

                  "Property" means any interest in any kind of property or
asset, whether real, personal or mixed, whether tangible or intangible.

                  "Responsible Officer" has the meaning given such term in
Section 6.3 of this Agreement.

                  "Scheduled Payments" has the meaning given such term in
Section 2.2(a) of this Agreement.

                  "Solvent" has the meaning given such term in Section 5.11 of
this Agreement.

                  "Subsidiary" means any corporation or other entity of which a
majority of the outstanding Equity Securities entitled to vote for the election
of directors or other governing body (otherwise than as the result of a default)
is owned by Borrower directly or indirectly through Subsidiaries.

                  "Third Party Equipment" has the meaning given such term in
Section 4.8 of this Agreement.

                  "Transfer" has the meaning given such term in Section 7.4 of
this Agreement.

                  "Warrant" means the separate warrant or warrants dated on or
about the date hereof in favor of the Lender or its designees to purchase
securities of Borrower.

            1.2 Construction. References in this Agreement to "Articles,"
"Sections," "Exhibits," "Schedules" and "Annexes" are to recitals, articles,
sections, exhibits, schedules and annexes herein and hereto unless otherwise
indicated. References in this Agreement and each of the other Loan Documents to
any document, instrument or agreement shall include (a) all exhibits, schedules,
annexes and other attachments thereto, (b) all documents, instruments or
agreements issued or executed in replacement thereof, and (c) such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
modified and supplemented from time to time and in effect at any given time. The
words "hereof," "herein" and "hereunder" and words of similar

                                      -8-
<PAGE>

import when used in this Agreement or any other Loan Document shall refer to
this Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Loan Document,
as the case may be. The words "include" and "including" and words of similar
import when used in this Agreement or any other Loan Document shall not be
construed to be limiting or exclusive. Unless otherwise indicated in this
Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all accounting and
financial computations hereunder or thereunder shall be computed, in accordance
with GAAP, and all terms describing Collateral shall be construed in accordance
with the Code. The terms and information set forth on the cover page of this
Agreement are incorporated into this Agreement.

      2. Loan; Repayment.

            2.1 Commitment.

                  (a) The Commitment Amount. Subject to the terms and conditions
of this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, Lender agrees to lend to Borrower
prior to the Commitment Termination Date, the Loan in the Commitment Amount.

                  (b) The Loan and the Note. The obligation of Borrower to repay
the unpaid principal amount of and interest on the Loan shall be evidenced by
the Note issued to Lender.

                  (c) Use of Proceeds. The proceeds of the Loan shall be used
solely for working capital or general corporate purposes of Borrower.

                  (d) Termination of Commitment to Lend. Notwithstanding
anything in the Loan Documents, Lender's obligation to lend the undisbursed
portion of the Commitment Amount to Borrower hereunder shall terminate on the
earlier of (i) at Lender's sole election, the occurrence and continuance of any
Default or Event of Default hereunder, and (ii) the Commitment Termination Date.
Notwithstanding the foregoing, Lender's obligation to lend the undisbursed
portion of the Commitment Amount to Borrower shall terminate if, in Lender's
sole judgment, there has been a material adverse change in the general affairs,
management, results of operations, condition (financial or otherwise) or
prospects of Borrower, whether or not arising from transactions in the ordinary
course of business, or there has been any material adverse deviation by Borrower
from the business plan of Borrower presented to Lender on or before the date of
this Agreement.

            2.2 Payments.

                  (a) Scheduled Payments. Borrower shall make (i) payments of
accrued interest only on the outstanding principal amount of the Loan commencing
on the first day of the calendar month following the Funding Date through and
including January 1,2007 and (ii) equal payments of principal plus accrued
interest on the outstanding principal amount of the Loan commencing February 1,
2007 through and including July 1,2009 (collectively, the "Scheduled Payments").
Borrower shall make such Scheduled Payments commencing on the date set forth in
the Note applicable to such Loan and continuing thereafter on the first Business
Day of each

                                      -9-
<PAGE>

calendar month (each a "Payment Date") through the Maturity Date. In any event,
all unpaid principal and accrued interest shall be due and payable in full on
the Maturity Date.

                  (b) Interim Payment. Unless the Funding Date for the Loan is
the first day of a calendar month, Borrower shall pay the per diem interest
(accruing at the Loan Rate from the Funding Date through the last day of that
month) payable with respect to the Loan on the first Business Day of the next
calendar month following the Funding Date.

                  (c) Payment of Interest. Borrower shall pay interest on the
Loan at a per annum rate of interest equal to the Loan Rate. All computations of
interest (including interest at the Default Rate, if applicable) shall be based
on a year of twelve 30-day months. Notwithstanding any other provision hereof,
the amount of interest payable hereunder shall not in any event exceed the
maximum amount permitted by the law applicable to interest charged on commercial
loans.

                  (d) Application of Payments. All payments received by Lender
when no Event of Default exists shall be applied as follows: (1) first, to
Lender's Expenses then due and owing; and (2) second to all Scheduled Payments
then due and owing (provided, however, if such payments are not sufficient to
pay the whole amount then due, such payments shall be applied first to unpaid
interest at the Loan Rate, then to the remaining amount then due). During the
existence of an Event of Default, all payments and application of proceeds shall
be made as set forth in Section 9.7.

                  (e) Late Payment Fee. Borrower shall pay to Lender a late
payment fee equal to three percent (3%) of any Scheduled Payment not paid when
due.

                  (f) Default Rate. Borrower shall pay interest at a per annum
rate equal to the Default Rate on any amounts required to be paid by Borrower
under this Agreement or the other Loan Documents (including Scheduled Payments),
payable with respect to the Loan, accrued and unpaid interest, and any fees or
other amounts which remain unpaid after such amounts are due. If an Event of
Default has occurred and the Obligations have been accelerated (whether
automatically or by Lender's election), Borrower shall pay interest on the
aggregate, outstanding accelerated balance hereunder from the date of the Event
of Default until all Events of Default are cured, at a per annum rate equal to
the Default Rate.

            2.3 Prepayments.

                  (a) Mandatory Prepayment Upon an Acceleration. If the Loan is
accelerated following the occurrence of an Event of Default pursuant to Section
9.1(a) hereof, then Borrower, in addition to any other amounts which may be due
and owing hereunder, shall immediately pay to Lender the amount set forth in
Section 2.3(b) below, as if the Borrower had opted to prepay on the date of such
acceleration.

                  (b) Optional Prepayment. Upon ten (10) Business Days' prior
written notice to Lender, Borrower may, at its option, at any time on or after
December 31,2006, prepay the Loan by paying to Lender an amount equal to (i) any
accrued and unpaid interest on the outstanding principal balance of the Loan;
(ii) an amount equal to (A) if the Loan is prepaid in calendar year 2007, three
(3%) percent of the then outstanding principal balance of the Loan, or (B) if
the Loan is

                                      -10-
<PAGE>

prepaid on or after January 1, 2008, one and one-half of one percent (1.5%) of
the then outstanding principal balance of the Loan; (iii) the outstanding
principal balance of the Loan and (iv) all other sums, if any, that shall have
become due and payable hereunder.

            2.4 Other Payment Terms.

                  (a) Place and Manner. Borrower shall make all payments due to
Lender in lawful money of the United States. All payments of principal,
interest, fees and other amounts payable by Borrower hereunder shall be made, in
immediately available funds, not later than 4:00 p.m. Connecticut time, on the
date on which such payment is due. Borrower shall make such payments to Lender
via wire transfer as follows:

      Payment via wire transfer:

      Credit:                        Horizon Technology Funding Company LLC
      Bank Name:                     ABN Amro/LaSalle Bank NA CDO Trust Services
      Bank Address:                  135 South LaSalle Street, Suite 1625
                                     Chicago, Illinois 60603
                                     Attn: Greg Meyers, 312-904-0283

      Account No.:
      FFCT-Reference Account Number:
      ABA Routing No.:
      Reference:                     Isilon Systems Invoice #__________

                  (b) Date. Whenever any payment is due hereunder on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall be included in the computation of interest
or fees, as the case may be.

            2.5 Procedure for Making the Loans.

                  (a) Notice. Borrower shall notify Lender of the date on which
Borrower desires Lender to make the Loan at least five (5) Business Days in
advance of the desired Funding Date, unless Lender elects at its sole discretion
to allow the Funding Date to be within five (5) Business Days of Borrower's
notice. Borrower's execution and delivery to Lender of a Note shall be
Borrower's agreement to the terms and calculations thereunder with respect to
the Loan. Lender's obligation to make the Loan shall be expressly subject to the
satisfaction of the conditions set forth in Section 3.

                  (b) Loan Rate Calculation. Prior to the Funding Date, Lender
shall establish the Loan Rate with respect to the Loan, which shall be set forth
in the Note to be executed by Borrower with respect to the Loan and shall be
conclusive in the absence of a manifest error.

                  (c) Disbursement. Lender shall disburse the proceeds of the
Loan by wire transfer to Borrower at the account specified in the Funding
Certificate for the Loan.

                                      -11-
<PAGE>

            2.6 Good Faith Deposit; Legal and Closing Expenses; and Commitment
Fee.

                  (a) Good Faith Deposit. Borrower has delivered to Lender a
good faith deposit in the amount of Thirty Seven Thousand Five Hundred Dollars
($37,500) (the "Good Faith Deposit"). The Good Faith Deposit will be utilized to
pay the Commitment Fee.

                  (b) Legal Due Diligence and Documentation Expenses. Borrower
shall pay to Lender concurrently with its execution and delivery of this
Agreement an amount equal to Lender's actual legal (including in-house legal),
due diligence and documentation expenses in connection with the negotiation and
documentation of this Agreement and the Loan Documents, provided that Borrower's
obligations under this Section 2.6(b) shall not exceed Twelve Thousand Dollars
($12,000).

                  (c) Commitment Fee. Borrower shall pay Lender concurrently
with its execution and delivery of this Agreement a commitment fee in the amount
of Thirty Seven Thousand Five Hundred Dollars ($37,500) (the "Commitment Fee").
The Commitment Fee shall be retained by Lender and be deemed fully earned upon
receipt.

      3. Conditions of Loan.

            3.1 Conditions Precedent to Closing. At the time of the execution
and delivery of this Agreement, Lender shall have received, in form and
substance reasonably satisfactory to Lender, all of the following (unless Lender
has agreed to waive such condition or document, in which case such condition or
document shall be a condition precedent to the making of the Loan and shall be
deemed added to Section 3.2):

                  (a) Loan Agreement. This Agreement duly executed by Borrower
and Lender.

                  (b) Warrant. The Warrant duly executed by Borrower.

                  (c) Secretary's Certificate. A certificate of the secretary or
assistant secretary of Borrower with copies of the following documents attached:
(i) the certificate of incorporation and bylaws of Borrower certified by
Borrower as being complete and in full force and effect on the date thereof,
(ii) incumbency and representative signatures, and (iii) resolutions authorizing
the execution and delivery of this Agreement and each of the other Loan
Documents.

                  (d) Good Standing Certificates. A good standing certificate
from Borrower's state of incorporation and the state in which Borrower's
principal place of business is located, each dated as of a recent date.

                  (e) Certificate of Insurance. Evidence of the insurance
coverage required by Section 6.8 of this Agreement.

                                      -12-
<PAGE>

                  (f) Consents. All necessary consents of shareholders and other
third parties with respect to the execution, delivery and performance of this
Agreement, the Warrant and the other Loan Documents.

                  (g) Legal Opinion. A legal opinion of Borrower's counsel
covering the matters set forth in Exhibit D hereto.

                  (h) Grants of Security Interests in Intellectual Property.
Grants of security interests in any U.S. federally registered Intellectual
Property, in the forms provided by Lender.

                  (i) Other Documents. Such other documents and completion of
such other matters, as Lender may reasonably deem necessary or appropriate.

            3.2 Conditions Precedent to Making the Loan. The obligation of
Lender to make the Loan is further subject to the following conditions:

                  (a) No Default. No Default or Event of Default shall have
occurred and be continuing.

                  (b) Landlord Agreements. Borrower shall have provided Lender
with a Landlord Agreement from its landlord for its office located at 3101
Western Avenue, Seattle, Washington 98121.

                  (c) Note. Borrower shall have duly executed and delivered to
Lender a Note in the amount of the Loan.

                  (d) UCC Financing Statements. Lender shall have received such
documents, instruments and agreements, including UCC financing statements or
amendments to UCC financing statements, as Lender shall reasonably request to
evidence the perfection and priority of the security interests granted to Lender
pursuant to Section 4. Borrower authorizes Lender to file any UCC financing
statements, continuations of or amendments to UCC financing statements it deems
necessary to perfect its security interest in the Collateral.

                  (e) Funding Certificate. Borrower shall have duly executed and
delivered to Lender a Funding Certificate for the Loan.

                  (f) Subordination Agreement. A Subordination Agreement with
respect to the Indebtedness constituting Permitted Indebtedness under subsection
(e) of the definition of Permitted Indebtedness, executed by the lender
providing such Indebtedness.

                  (g) Other Documents. Such other documents and completion of
such other matters, as Lender may reasonably deem necessary or appropriate.

            3.3 Covenant to Deliver. Borrower agrees (not as a condition but as
a covenant) to deliver to Lender each item required to be delivered to Lender as
a condition to the Loan, if the Loan is advanced. Borrower expressly agrees that
the extension of the Loan prior to the receipt by

                                      -13-
<PAGE>

Lender of any such item shall not constitute a waiver by Lender of Borrower's
obligation to deliver such item, and any such extension in the absence of a
required item shall be in Lender's sole discretion.

      4. Creation of Security Interest.

            4.1 Grant of Security Interest. Borrower grants to Lender a valid
and continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt, full and complete
payment of any and all Obligations and in order to secure prompt, full and
complete performance by Borrower of each of its covenants and duties under each
of the Loan Documents (other than the Warrant). The "Collateral" shall mean and
include all right, title, interest, claims and demands of Borrower in and to all
personal property of Borrower, including without limitation, all of the
following:

                  (a) All goods (and embedded computer programs and supporting
information included within the definition of "goods" under the Code) and
equipment now owned or hereafter acquired, including, without limitation, all
laboratory equipment, computer equipment, office equipment, machinery, fixtures,
vehicles (including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located;

                  (b) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's books relating to any of the foregoing;

                  (c) All contract rights and general intangibles (including
Intellectual Property), now owned or hereafter acquired, including, without
limitation, goodwill, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
software, computer programs, computer disks, computer tapes, literature,
reports, catalogs, design rights, income tax refunds, payment intangibles,
commercial tort claims, payments of insurance and rights to payment of any kind;

                  (d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights, license fees and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods, the
licensing of technology or the rendering of services by Borrower (subject, in
each case, to the contractual rights of third parties to require funds received
by Borrower to be expended in a particular manner), whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower's books relating to any of the foregoing;

                  (e) All documents, cash, deposit accounts, letters of credit
(whether or not the letter of credit is evidenced by a writing), certificates of
deposit, instruments, promissory notes, chattel paper (whether tangible or
electronic) and investment property, including, without limitation,

                                      -14-
<PAGE>

all securities, whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts, and all
financial assets held in any securities account or otherwise, wherever located,
now owned or hereafter acquired and Borrower's books relating to the foregoing;
and

                  (f) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof, including, without limitation, insurance, condemnation, requisition or
similar payments and proceeds of the sale or licensing of Intellectual Property.

      Notwithstanding the foregoing, the term "Collateral" shall not include (i)
any equipment (including any additions, accessions or replacements thereto) to
the extent the granting of a security interest therein is prohibited by or would
constitute a default under any agreement or document governing such property
(but only to the extent such prohibition is enforceable under applicable law),
provided that upon the termination or lapsing of any such prohibition, such
property shall automatically be part of the Collateral and (ii) any capita]
stock of a controlled foreign corporation (as defined in the Internal Revenue
Code of 1986, as amended), in excess of 65% of the voting power of all classes
of capital stock of such controlled foreign corporations entitled to vote.

            4.2 After-Acquired Property. If Borrower shall at any time acquire a
commercial tort claim, as defined in the Code, Borrower shall promptly notify
Lender in writing signed by Borrower of the brief details thereof and grant to
Lender 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 satisfactory to Lender.

            4.3 Duration of Security Interest. Lender's security interest in the
Collateral shall continue until the payment in full and the satisfaction of all
Obligations (other than indemnity obligations that have not yet arisen) and
termination of Lender's commitment to fund the Loan, whereupon such security
interest shall terminate. Lender shall, at Borrower's sole cost and expense,
execute such further documents and take such further actions as may be
reasonably necessary to make effective the release contemplated by this Section
4.3, including duly executing and delivering termination statements for filing
in all relevant jurisdictions under the Code.

            4.4 Location and Possession of Collateral. Except for equipment used
by Borrower's sales employees (provided that such equipment shall not have a
value in excess of Five Thousand Dollars ($5,000) per employee), the Collateral
is and shall remain in the possession of Borrower at its location listed on the
cover page hereof or as set forth in the Disclosure Schedule. Borrower shall
remain in full possession, enjoyment and control of the Collateral (except only
as may be otherwise required by Lender for perfection of its security interest
therein) and so long as no Event of Default exists, shall be entitled to manage,
operate and use the same and each part thereof with the rights and franchises
appertaining thereto; provided that the possession, enjoyment, control and use
of the Collateral shall at all time be subject to the observance and performance
of the terms of this Agreement.

            4.5 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Lender, at the request of Lender, all
financing statements and other

                                      -15-
<PAGE>

documents Lender may reasonably request, in form satisfactory to Lender, to
perfect and continue Lender's perfected security interests in the Collateral and
in order to consummate fully all of the transactions contemplated under the Loan
Documents.

            4.6 Right to Inspect. Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's books
and records and to make copies thereof and to inspect, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.

            4.7 Intellectual Property.

                  (a) Registration of Existing and Future Copyrights. Unless
Borrower provides ten (10) days prior written notice to Lender, Borrower shall
not register or cause to be registered with the United States Copyright Office
(i) any software (material to the business of Borrower) developed or acquired by
Borrower in connection with any product developed or acquired for sale or
licensing, (ii) any software (material to the business of Borrower) developed or
acquired by Borrower hereafter from time to time in connection with any product
developed or acquired for sale or licensing, or (iii) any major revisions or
upgrades to any software that has previously been registered by or on behalf of
Borrower with the United States Copyright Office.

                  (b) Additional Intellectual Property. Borrower shall promptly
notify Lender on or before the federal registration or filing by Borrower of any
patent or patent application, or trademark or trademark application, or
copyright or copyright application and shall promptly execute and deliver to
Lender any grants of security interests in same, in form acceptable to Lender,
to file with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable.

                  (c) Protection of Intellectual Property. Borrower shall (i)
protect, defend and maintain the validity and enforceability of its Intellectual
Property and promptly advise Lender in writing of material infringements, and
(ii) not allow any Intellectual Property material to Borrower's business to be
abandoned, forfeited or dedicated to the public without Lender's written
consent.

            4.8 Lien Subordination. Lender agrees that the Liens granted to it
hereunder shall be subordinate to the Liens to secure the Indebtedness permitted
under clause (e) of the definition of Permitted Indebtedness. Lender agrees that
the Liens granted to it hereunder in Third Party Equipment shall be subordinate
to the Liens of future lenders providing equipment financing and equipment
lessors for equipment and other personal property acquired by Borrower after the
date hereof ("Third Party Equipment"); provided that in the case of equipment
financings and leasing such Liens are confined solely to the equipment so
financed and the proceeds thereof and are Permitted Liens. Notwithstanding the
foregoing, the Obligations hereunder shall not be subordinate in right of
payment to any obligations to other equipment lenders or equipment lessors,
unless specifically subordinated pursuant to a Subordination Agreement and
Lender's rights and remedies hereunder shall not in any way be subordinate to
the rights and remedies of any such lenders or equipment lessors, except for its
rights and remedies with respect to Third Party Equipment. So long

                                      -16-
<PAGE>

as no Event of Default exists, Lender agrees to execute and deliver such
agreements and documents as may be reasonably requested by Borrower from time to
time which set forth the lien subordination described in this Section 4.8 and
are reasonably acceptable to Lender. Lender shall have no obligation to execute
any agreement or document which would impose obligations, restrictions or lien
priority on Lender which are less favorable to Lender than those described in
this Section 4.8.

      5. Representations and Warranties. Except as set forth in the Disclosure
Schedule, Borrower represents and warrants as follows:

            5.1 Organization and Qualification. Borrower is a corporation duly
organized and validly existing under the laws of its state of incorporation and
qualified and licensed to do business in, and is in good standing in, any state
in which the conduct of its business or its ownership of Property requires that
it be so qualified or in which the Collateral is located, except for such states
as to which any failure to so qualify would not have a material adverse effect
on Borrower.

            5.2 Authority. Borrower has all necessary power and authority to
execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority
to own and operate its Property and to carry on its businesses as now conducted.

            5.3 Conflict with Other Instruments, etc. Neither the execution and
delivery of any Loan Document to which Borrower is a party nor the consummation
of the transactions therein contemplated nor compliance with the terms,
conditions and provisions thereof will conflict with or result in a breach of
any of the terms, conditions or provisions of the certificate of incorporation,
the by-laws, or any other organizational documents of Borrower or any law or any
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or any material agreement or instrument to which Borrower is a
party or by which it or any of its Property is bound or to which it or any of
its Property is subject, or constitute a default thereunder or result in the
creation or imposition of any Lien, other than Permitted Liens.

            5.4 Authorization; Enforceability. The execution and delivery of
this Agreement, the granting of the security interest in the Collateral, the
incurring of the Loan, the execution and delivery of the other Loan Documents to
which Borrower is a party and the consummation of the transactions herein and
therein contemplated have each been duly authorized by all necessary action on
the part of Borrower. No authorization, consent, approval, license or exemption
of, and no registration, qualification, designation, declaration or filing with,
or notice to, any Person is, was or will be necessary to (i) the valid execution
and delivery of any Loan Document to which Borrower is a party, (ii) the
performance of Borrower's obligations under any Loan Document, or (iii) the
granting of the security interest in the Collateral, except for filings in
connection with the perfection of the security interest in any of the Collateral
or the issuance of the Warrant. The Loan Documents have been duly executed and
delivered and constitute legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws of genera] application relating to or affecting the enforcement of
creditors' rights or by general principles of equity.

                                      -17-
<PAGE>

            5.5 No Prior Encumbrances. Borrower has good and marketable title to
the Collateral, free and clear of Liens except for Permitted Liens. Borrower has
good title and ownership of, or is licensed under, all of Borrower's current
Intellectual Property that is necessary to operate its business. Borrower has
not received any communications alleging that Borrower has violated, or by
conducting its business as proposed, would violate any proprietary rights of any
other Person. Borrower has no knowledge of any infringement or violation by it
of the intellectual property rights of any third party and has no knowledge of
any violation or infringement by a third party of any of its Intellectual
Property. The Collateral and the Intellectual Property constitute substantially
all of the assets and property of Borrower.

            5.6 Name; Location of Chief Executive Office, Principal Place of
Business and Collateral. Borrower has not done business under any name other
than that specified on the signature page hereof. Borrower's jurisdiction of
incorporation, chief executive office, principal place of business, and the
place where Borrower maintains its records concerning the Collateral are
presently located in the state and at the address set forth on the cover page of
this Agreement. The Collateral is presently located at the address set forth on
the cover page hereof or as set forth in the Disclosure Schedule.

            5.7 Litigation. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency in which an adverse
decision could have a material adverse effect on Borrower or the aggregate value
of the Collateral. Borrower does not have knowledge of any such pending or
threatened actions or proceedings.

            5.8 Financial Statements. All financial statements relating to
Borrower or any Affiliate that have been or may hereafter be delivered by
Borrower to Lender present fairly in all material respects Borrower's financial
condition as of the date thereof and Borrower's results of operations for the
period then ended.

            5.9 No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower since
January 2, 2005 (or, if Borrower has delivered to Lender its audited financial
statements more recently, then since such date of delivery of such audited
financial statements).

            5.10 Full Disclosure. No representation, warranty or other statement
made by Borrower in any Loan Document (including the Disclosure Schedule),
certificate or written statement furnished to Lender contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained in such certificates or statements not
misleading (it being recognized by the Lender that projections and estimates as
to future events, although reflecting Borrower's good faith projections or
forecasts based on methods and data which Borrower believes to be reasonable and
accurate, are not to be viewed as facts and that the actual results during the
period or periods covered by any such projections and estimates may differ from
projected or estimated results). There is no fact known to Borrower which
materially adversely affects, or which could in the future be reasonably
expected to materially adversely affect, its ability to perform its obligations
under this Agreement.

                                      -18-
<PAGE>

            5.11 Solvency. Etc. Borrower is Solvent (as defined below) and,
after the execution and delivery of the Loan Documents and the consummation of
the transactions contemplated thereby, Borrower will be Solvent. "Solvent"
means, with respect to any Person on any date, that on such date (a) the fair
value of the property of such Person is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small capital.

            5.12 Subsidiaries. Borrower has no Subsidiaries.

            5.13 Catastrophic Events; Labor Disputes. Neither Borrower nor its
properties is or has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or other casualty that could reasonably be expected to have a material
adverse effect on the financial condition, business or operations of Borrower.
There are no disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements, employment
contracts or employee welfare or incentive plans to which Borrower is a party,
and there are no strikes, lockouts, work stoppages or slowdowns, or, to the
knowledge of Borrower, jurisdictional disputes or organizing activity occurring
or threatened which could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower.

            5.14 Certain Agreements of Officers, Employees and Consultants.

                  (a) No Violation. To the knowledge of Borrower, no officer,
employee or consultant of Borrower is, or is now expected to be, in violation of
any term of any employment contract, proprietary information agreement,
nondisclosure agreement, noncompetition agreement or any other material contract
or agreement or any restrictive covenant relating to the right of any such
officer, employee or consultant to be employed by Borrower because of the nature
of the business conducted or to be conducted by Borrower or relating to the use
of trade secrets or proprietary information of others, and to Borrower's
knowledge, the continued employment of Borrower's officers, employees and
consultants does not subject Borrower to any material liability for any claim or
claims arising out of or in connection with any such contract, agreement, or
covenant.

                  (b) No Present Intention to Terminate. To the knowledge of
Borrower, no officer of Borrower, and no employee or consultant of Borrower
whose termination, either individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the financial condition, business
or operations of Borrower, has any present intention of terminating his or her
employment or consulting relationship with Borrower.

                                      -19-
<PAGE>

      6. Affirmative Covenants. Borrower, until the full and complete payment of
the Obligations (other than indemnity obligations that have not yet arisen),
covenants and agrees that:

            6.1 Good Standing. Borrower shall maintain its corporate existence
and its good standing in its jurisdiction of incorporation and maintain
qualification in each jurisdiction in which the failure to so qualify could
reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force
all licenses, approvals and agreements, the loss of which could reasonably be
expected to have a material adverse effect on its financial condition,
operations or business.

            6.2 Government Compliance. Borrower shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to materially adversely
affect the financial condition, operations or business of Borrower.

            6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Lender: (a) as soon as available, but in any event within thirty (30)
days after the end of each month, a company prepared balance sheet, income
statement and cash flow statement covering Borrower's operations during such
period, certified by Borrower's president, treasurer or chief financial officer
(each, a "Responsible Officer"); (b) as soon as available, but in any event
within one hundred eighty (180) days after the end of Borrower's fiscal year,
audited financial statements of Borrower prepared in accordance with GAAP,
together with an unqualified opinion on such financial statements of a
nationally recognized or other independent public accounting firm reasonably
acceptable to Lender, and (c) as soon as available, but in any event within
ninety (90) days after the end of Borrower's fiscal year or, if later, the date
of Borrower's board of directors' adoption, Borrower's operating budget and plan
for the next fiscal year, and (d) such other financial information as Lender may
reasonably request from time to time. From and after such time as Borrower
becomes a publicly reporting company, promptly as they are available and in any
event: (x) at the time of filing of Borrower's Form 10-K with the Securities and
Exchange Commission after the end of each fiscal year of Borrower, the financial
statements of Borrower filed with such Form 10-K; and (y) at the time of filing
of Borrower's Form 10-Q with the Securities and Exchange Commission after the
end of each of the first three fiscal quarters of Borrower, the financial
statements of Borrower filed with such Form 10-Q. In addition, Borrower shall
deliver to Lender (i) promptly upon becoming available, copies of all
statements, reports and notices sent or made available generally by Borrower to
its security holders; and (ii) immediately upon receipt of notice thereof, a
report of any material legal actions pending or threatened in writing against
Borrower or the commencement of any action, proceeding or governmental
investigation involving Borrower is commenced that is reasonably expected to
result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars
($250,000).

            6.4 Certificates of Compliance. Each time financial statements are
furnished pursuant to Section 6.3 above, Borrower shall deliver to Lender an
Officer's Certificate signed by a Responsible Officer in the form of, and
certifying to the matters set forth in Exhibit E hereto.

                                      -20-
<PAGE>

            6.5 Notice of Defaults. As soon as possible, and in any event within
five (5) days after the discovery of a Default or an Event of Default, Borrower
shall provide Lender with an Officer's Certificate setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.

            6.6 Taxes. Borrower shall make due and timely payment or deposit of
all material federal, state, and local taxes, assessments, or contributions
required of it by law or imposed upon any Property belonging to it, and will
execute and deliver to Lender, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make timely payment or deposit
of all material tax payments and withholding taxes required of it by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Lender
with proof satisfactory to Lender indicating that Borrower has made such
payments or deposits; provided that Borrower need not make any payment if the
amount or validity of such payment is contested in good faith by appropriate
proceedings which suspend the collection thereof (provided that such proceedings
do not involve any substantial danger of the sale, forfeiture or loss of any
material item of Collateral or Collateral which in the aggregate is material to
Borrower and that Borrower has adequately bonded such amounts or reserves
sufficient to discharge such amounts have been provided on the books of
Borrower).

            6.7 Use; Maintenance. Borrower shall keep and maintain all items of
equipment and other similar types of personal property that form any significant
portion or portions of the Collateral in good operating condition and repair and
shall make all necessary replacements thereof and renewals thereto so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. Borrower shall not permit any such material item of Collateral to
become a fixture to real estate or an accession to other personal property,
without the prior written consent of Lender. Borrower shall not permit any such
material item of Collateral to be operated or maintained in violation of any
applicable law, statute, rule or regulation. With respect to items of leased
equipment (to the extent Lender has any security interest in any residual
Borrower's interest in such equipment under the lease), Borrower shall keep,
maintain, repair, replace and operate such leased equipment in accordance with
the terms of the applicable lease.

            6.8 Insurance. Borrower shall keep its business and the Collateral
insured for risks and in amounts, and as Lender may reasonably request.
Insurance policies shall be in a form, with companies, and in amounts that are
satisfactory to Lender. All property policies shall have a lender's loss payable
endorsement showing Lender as an additional loss payee and all liability
policies shall show Lender as an additional insured and all policies shall
provide that the insurer must give Lender at least thirty (30) days notice
before canceling its policy. At Lender's request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Lender's option, be payable to Lender on
account of the Obligations. Notwithstanding the foregoing, so long as no Event
of Default has occurred and is continuing, Borrower shall have the option of
applying the proceeds of any casualty policy, toward the replacement or repair
of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Lender has been
granted a first priority security interest and (ii) after the occurrence and
during the continuation of an Event of Default all proceeds payable

                                      -21-
<PAGE>

under such casualty policy shall, at the option of Lender, be payable to Lender,
on account of the Obligations. If Borrower fails to obtain insurance as required
under Section 6.8 or to pay any amount or furnish any required proof of payment
to third persons and Lender, Lender may make all or part of such payment or
obtain such insurance policies required in Section 6.8, and take any action
under the policies Lender deems prudent. On or prior to the first Funding Date
and prior to each policy renewal, Borrower shall furnish to Lender certificates
of insurance or other evidence satisfactory to Lender that insurance complying
with all of the above requirements is in effect.

            6.9 Security Interest. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Lender
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests to the extent that a security interest in such
Collateral can be perfected by the filing of a UCC-1 financing statement (except
to the extent any Permitted Liens may have a superior priority to Lender's Lien
under this Agreement) and (ii) are and will continue to be superior and prior to
the rights of all other creditors of Borrower to the extent that a security
interest in such Collateral can be perfected by the filing of a UCC-1 financing
statement (except to the extent of such Permitted Liens). Except as set forth in
the Disclosure Schedule, none of Borrower's Intellectual Property is registered
with either the US Patent and Trademark Office or the US Copyright Office.

            6.10 Repayment of Equipment Debt. Immediately upon Borrower's
receipt of the proceeds of not less than Five Million Dollars ($5,000,000) from
the sale of its Equity Securities, Borrower shall repay the outstanding balance
of any outstanding equipment loans which were previously permitted under
subsection (e)(ii) of the definition of Permitted Indebtedness.

            6.11 Further Assurances. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to make effective the purposes of this
Agreement, including without limitation, the continued perfection and priority
of Lender's security interest in the Collateral.

      7. Negative Covenants. Borrower, until the full and complete payment of
the Obligations (other than indemnity obligations that have not yet arisen),
covenants and agrees that Borrower shall not:

            7.1 Chief Executive Office. Change its name, jurisdiction of
incorporation, chief executive office, principal place of business or any of the
items set forth in Section 1 of the Disclosure Schedule without prior written
notice to Lender.

            7.2 Collateral Control. Subject to its rights under Sections 4.4 and
7.4, remove any items of Collateral from Borrower's facility located at the
address set forth on the cover page hereof or as set forth on the Disclosure
Schedule.

            7.3 Liens. Create, incur, assume or suffer to exist any Lien of any
kind upon any of Borrower's Property, whether now owned or hereafter acquired,
except Permitted Liens.

                                      -22-
<PAGE>

            7.4 Other Dispositions of Collateral. Convey, sell, lease or
otherwise dispose of all or any part of the Collateral to any Person
(collectively, a "Transfer"),' except for: (i) Transfers of inventory in the
ordinary course of business; (ii) Transfers of worn-out or obsolete equipment;
(iii) Transfers permitted under subclause (f) of the definition of Permitted
Liens with respect to Collateral, (iv) Transfers otherwise permitted under
Section 7, (v) Transfers of non-exclusive licenses of property in the ordinary
course of business and (vi) Transfers of exclusive licenses of Intellectual
Property (A) to customers in connection with Borrower's customization of
software or other products for such customers, (B) in connection with
"end-of-life" source code where such source code is no longer integral to
Borrower's business or (C) that are limited to geographic locations, field of
use or limited duration of time.

            7.5 Distributions. (i) Pay any dividends or make any distributions
on its Equity Securities, except for dividends payable in capital stock; (ii)
purchase, redeem, retire, defease or otherwise acquire for value any of its
Equity Securities (other than repurchases pursuant to the terms of employee
stock purchase plans, employee restricted stock agreements or similar
arrangements in an aggregate amount not to exceed Three Hundred Fifty Thousand
Dollars ($350,000) or by cancellation of Indebtedness); (iii) except as
permitted by Section 7.5(ii), return any capital to any holder of its Equity
Securities as such; (iv) except for distributions of capital stock, make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or (v) set apart any sum for any such
purpose; provided, however, Borrower may pay dividends payable solely in capital
stock.

            7.6 Mergers or Acquisitions. Merge or consolidate with or into any
other Person or acquire all or substantially all of the capital stock or assets
of another Person.

            7.7 Change in Ownership. Engage in or permit any of its Subsidiaries
to engage in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto or have a material change in its
ownership of greater than forty-nine percent (49%) (other than by the sale by
Borrower of Borrower's Equity Securities in a public offering or to venture
capital investors so long as Borrower identifies to Lender the venture capital
investors prior to the closing of the investment).

            7.8 Transactions With Affiliates. Except for transactions between
Borrower and its Subsidiaries that are not otherwise prohibited by any other
provision of this Section 7, enter into any contractual obligation with any
Affiliate or engage in any other transaction with any Affiliate except upon
terms at least as favorable to Borrower as an arms-length transaction with
Persons who are not Affiliates of Borrower.

            7.9 Indebtedness Payments. (i) Except for the conversion of
Indebtedness to Equity Securities and the payment of cash in lieu of issuing
fractional shares upon the conversion thereof, prepay, redeem, purchase, defease
or otherwise satisfy in any manner prior to the scheduled repayment thereof any
Indebtedness for borrowed money (other than amounts due or permitted to be
prepaid under this Agreement or under any revolving credit agreement
constituting Permitted Indebtedness under clause (e) of the definition of
Permitted Indebtedness) or lease obligations, (ii) except as otherwise permitted
pursuant to Section 7.9(i), amend, modify or otherwise change the

                                      -23-
<PAGE>

terms of any Indebtedness for borrowed money or lease obligations so as to
accelerate the scheduled repayment thereof or (iii) repay any notes to officers,
directors or shareholders.

            7.10 Indebtedness. Create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.

            7.11 Investments. Make any Investment except for Permitted
Investments.

            7.12 Compliance. Become regulated as an "investment company" or a
company controlled by an "investment company" under the Investment Company Act
of 1940 or undertake as one of its important activities extending credit to
purchase or carry margin stock, or use the proceeds of any Loan for that
purpose; fail to meet the minimum funding requirements of the Employment
Retirement Income Security Act of 1974, and its regulations, as amended from
time to time ("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 Borrower's business or operations
or could reasonably be expected to cause a material adverse change, or permit
any of its Subsidiaries to do so.

            7.13 Maintenance of Accounts. (i) If no lender is providing
Indebtedness permitted under clause (e) of the definition of Permitted
Indebtedness, maintain any deposit account or account holding securities (other
than those maintained in jurisdictions outside of the United States) owned by
Borrower except accounts with respect to which Lender is able to take such
actions as it deems necessary to obtain a perfected security interest in such
accounts through one or more Account Control Agreements; or (ii) grant or allow
any other Person (other than Lender) to perfect a security interest in, or enter
into any agreements with any Persons (other than Lender) accomplishing
perfection via control as to, any of its deposit accounts or accounts holding
securities, other than any lender providing Indebtedness permitted under clause
(e) of the definition of Permitted Indebtedness.

      8. Events of Default. Any one or more of the following events shall
constitute an "Event of Default" by Borrower under this Agreement:

            8.1 Failure to Pay. If Borrower fails to pay when due and payable or
when declared due and payable in accordance with the Loan Documents: (i) any
Scheduled Payment within three (3) days of the relevant Payment Date or the
relevant Maturity Date, or (ii) any other portion of the Obligations within ten
(10) days after receipt of written notice from Lender that such payment is due.

            8.2 Certain Covenant Defaults. If Borrower fails to perform any
obligation under Section 6.8 or violates any of the covenants contained in
Section 7 of this Agreement.

            8.3 Other Covenant Defaults. If Borrower fails or neglects to
perform, keep, or observe any other material term, provision, condition,
covenant, or agreement contained in this Agreement (other than as set forth in
Sections 8.1. 8.2 or 8.4 through 8.13). in any of the other Loan Documents and
Borrower has failed to cure such default within thirty (30) days of the
occurrence of such default.

                                      -24-
<PAGE>

            8.4 Intentionally Omitted.

            8.5 Seizure of Assets, Etc. If any material portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or Person
acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within thirty (30)
days, or if Borrower is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs, or if a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of Borrower's assets by the
United States Government, or any department, agency, or instrumentality thereof,
or by any state, county, municipal, or governmental agency, and the same is not
paid within thirty (30) days after Borrower receives notice thereof; provided
that none of the foregoing shall constitute an Event of Default where such
action or event is stayed or an adequate bond has been posted pending a good
faith contest by Borrower.

            8.6 Service of Process. The service of process upon Lender seeking
to attach by a trustee or other process any funds of the Borrower on deposit or
otherwise held by Lender, or the delivery upon Lender of a notice of foreclosure
by any Person seeking to attach or foreclose on any funds of the Borrower on
deposit or otherwise held by Lender, or the delivery of a notice of foreclosure
or exclusive control to any entity holding or maintaining Borrower's deposit
accounts or accounts holding securities by any Person (other than Lender)
seeking to foreclose or attach any such accounts or securities.

            8.7 Default on Indebtedness. One or more defaults shall exist under
any agreement with any third party or parties which consists of the failure to
pay any Indebtedness at maturity or which results in a right by such third party
or parties, whether or not exercised, to accelerate the maturity of Indebtedness
in an aggregate amount in excess of Two Hundred Fifty Thousand Dollars
($250,000) or a default shall exist under any financing agreement with Lender or
any of Lender's Affiliates.

            8.8 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Two Hundred Fifty
Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days or more.

            8.9 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty, representation,
statement, certification, or report made to Lender by Borrower or any officer,
employee, agent, or director of Borrower.

            8.10 Breach of Warrant. If Borrower shall breach any material term
of the Warrant.

            8.11 Unenforceable Loan Document. If any Loan Document shall in any
material respect cease to be, or Borrower shall assert that any Loan Document is
not, a legal, valid and binding obligation of Borrower enforceable in accordance
with its terms.

                                      -25-
<PAGE>

            8.12 Involuntary Insolvency Proceeding. If a proceeding shall have
been instituted in a court having jurisdiction in the premises seeking a decree
or order for relief in respect of Borrower in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee (or similar official) of Borrower or for any substantial part of its
Property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) consecutive days or such court shall enter a decree or order granting
the relief sought in such proceeding.

            8.13 Voluntary Insolvency Proceeding. If Borrower shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian (or
other similar official) of Borrower or for any substantial part of its Property,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action in furtherance of any of the foregoing.

      9. Lender's Rights and Remedies.

            9.1 Rights and Remedies. Upon the occurrence and during the
continuance of any Default or Event of Default, Lender shall not have any
further obligation to advance money or extend credit to or for the benefit of
Borrower. In addition, upon the occurrence and during the continuance of an
Event of Default, Lender shall have the rights, options, duties and remedies of
a secured party as permitted by law and, in addition to and without limitation
of the foregoing, Lender may, at its election, without notice of election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:

                  (a) Acceleration of Obligations. Declare all Obligations,
whether evidenced by this Agreement, by any of the other Loan Documents, or
otherwise, including (i) any accrued and unpaid interest, (ii) the amounts which
would have otherwise come due under Section 2.3(b)(ii) if the Loan had been
voluntarily prepaid, (iii) the unpaid principal balance of the Loan and (iv) all
other sums, if any, that shall have become due and payable hereunder,
immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.12 or 8.13 all Obligations shall become
immediately due and payable without any action by Lender);

                  (b) Protection of Collateral. Make such payments and do such
acts as Lender considers necessary or reasonable to protect Lender's security
interest in the Collateral. Borrower agrees to assemble the Collateral if Lender
so requires and to make the Collateral available to Lender as Lender may
designate. Borrower authorizes Lender and its designees and agents to enter the
premises where the Collateral is located, to take and. maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien which in Lender's determination appears or is claimed to be prior or
superior to its security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned premises, Borrower hereby
grants Lender a license to enter into possession of such premises and to occupy
the

                                      -26-
<PAGE>

same, without charge, for up to one hundred twenty (120) days in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;

                  (c) Preparation of Collateral for Sale. Ship, reclaim,
recover, store, finish, maintain, repair, prepare for sale, advertise for sale,
and sell (in the manner provided for herein) the Collateral. Lender and its
agents and any purchasers at or after foreclosure are hereby granted a
non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other
right, solely pursuant to the provisions of this Section 9.1, to use, without
charge, Borrower's Intellectual Property, including without limitation, labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any Property of a similar
nature, now or at any time hereafter owned or acquired by Borrower or in which
Borrower now or at any time hereafter has any rights; provided that such license
shall only be exercisable in connection with the disposition of Collateral upon
Lender's exercise of its remedies hereunder;

                  (d) Sale of Collateral. Sell the Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Lender determines are commercially reasonable; and

                  (e) Purchase of Collateral. Credit bid and purchase all or any
portion of the Collateral at any public sale.

Any deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Borrower.

            9.2 Set Off Right. Lender may set off and apply to the Obligations
any and all indebtedness at any time owing to or for the credit or the account
of Borrower or any other assets of Borrower in Lender's possession or control.

            9.3 Effect of Sale. Upon the occurrence and during the continuance
of an Event of Default, to the extent permitted by law, Borrower covenants that
it will not at any time insist upon or plead, or in any manner whatsoever claim
or take any benefit or advantage of, any stay or extension law now or at any
time hereafter in force, nor claim, take nor insist upon any benefit or
advantage of or from any law now or hereafter in force providing for the
valuation or appraisement of the Collateral or any part thereof prior to any
sale or sales thereof to be made pursuant to any provision herein contained, or
to the decree, judgment or order of any court of competent jurisdiction; nor,
after such sale or sales, claim or exercise any right under any statute now or
hereafter made or enacted by any state or otherwise to redeem the property so
sold or any part thereof, and, to the full extent legally permitted, except as
to rights expressly provided herein, hereby expressly waives for itself and on
behalf of each and every Person, except decree or judgment creditors of
Borrower, acquiring any interest in or title to the Collateral or any part
thereof subsequent to the date of this Agreement, all benefit and advantage of
any such law or laws, and covenants that it will not invoke or utilize any such
law or laws or otherwise hinder, delay or impede the execution of any power
herein granted and delegated to Lender, but will suffer and permit the execution
of every such power as though no such power, law or laws had been made or
enacted. Any sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim
and demand whatsoever, either at law or in equity, of

                                      -27-
<PAGE>

Borrower in and to the Property sold, and shall be a perpetual bar, both at law
and in equity, against Borrower, its successors and assigns, and against any and
all Persons claiming the Property sold or any part thereof under, by or through
Borrower, its successors or assigns.

            9.4 Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint Lender (which appointment is coupled with an
interest), the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name to file any notices of security interests,
financing statements and continuations and amendments thereof pursuant to the
Code or federal law, as may be necessary to perfect, or to continue the
perfection of Lender's security interests in the Collateral. Borrower does
hereby irrevocably appoint Lender (which appointment is coupled with an
interest) during the existence of an Event of Default, the true and lawful
attorney in fact of Borrower with full power of substitution, for it and in its
name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and
give acquittance for any and all rents, issues, profits, avails, distributions,
income, payment draws and other sums in which a security interest is granted
under Section 4 with full power to settle, adjust or compromise any claim
thereunder as fully as if Lender were Borrower itself; (b) to receive payment of
and to endorse the name of Borrower to any items of Collateral (including
checks, drafts and other orders for the payment of money) that come into
Lender's possession or under Lender's control; (c) to make all demands, consents
and waivers, or take any other action with respect to, the Collateral; (d) in
Lender's discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of Borrower or otherwise, which Lender may
reasonably deem necessary or appropriate to protect and preserve the right,
title and interest of Lender in and to the Collateral; (e) endorse Borrower's
name on any checks or other forms of payment or security; (f) sign Borrower's
name on any invoice or bill of lading for any account or drafts against account
debtors; (g) make, settle, and adjust all claims under Borrower's insurance
policies; (h) settle and adjust disputes and claims about the accounts directly
with account debtors, for amounts and on terms Lender determines reasonable; (i)
transfer the Collateral into the name of Lender or a third party as the Code
permits; and (j) to otherwise act with respect thereto as though Lender were the
outright owner of the Collateral.

            9.5 Lender's Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and
maintain insurance policies of the type discussed in Section 6.8 of this
Agreement, and take any action with respect to such policies as Lender deems
prudent. Any amounts paid or deposited by Lender shall constitute Lender's
Expenses, shall be immediately due and payable, shall bear interest at the
Default Rate and shall be secured by the Collateral. Any payments made by Lender
shall not constitute an agreement by Lender to make similar payments in the
future or a waiver by Lender of any Event of Default under this Agreement
Borrower shall pay all reasonable fees and expenses, including without
limitation, Lender's Expenses, incurred by Lender in the enforcement or attempt
to enforce any of the Obligations hereunder not performed when due.

            9.6 Remedies Cumulative. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other

                                      -28-
<PAGE>

rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by Lender of one right or remedy shall be deemed
an election, and no waiver by Lender of any Event of Default on Borrower's part
shall be deemed a continuing waiver. No delay by Lender shall constitute a
waiver, election, or acquiescence by it.

            9.7 Application of Collateral Proceeds. The proceeds and/or avails
of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lender, at
the time of or received by Lender after the occurrence and during the
continuance of an Event of Default hereunder) shall be paid to and applied as
follows:

                  (a) First to the payment of out-of-pocket costs and expenses,
including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and attorneys' fees, incurred or made
hereunder by Lender, including, without limitation, Lender's Expenses;

                  (b) Second, to the payment to Lender of the amount then owing
or unpaid on the Loan for any accrued and unpaid interest, the amounts which
would have otherwise come due under Section 2.3(b)(ii), if the Loan had been
voluntarily prepaid, the principal balance of the Loan, and all other
Obligations with respect to the Loan (provided, however, if such proceeds shall
be insufficient to pay in full the whole amount so due, owing or unpaid upon the
Loan, then to the unpaid interest thereon, then to the amounts which would have
otherwise come due under Section 2.3(b)(ii), if the Loan had been voluntarily
prepaid, then to the principal balance of the Loan, and then to the payment of
other amounts then payable to Lender under any of the Loan Documents); and

                  (c) Third, to the payment of the surplus, if any, to Borrower,
its successors and assigns, or to the Person lawfully entitled to receive the
same.

            9.8 Reinstatement of Rights. If Lender shall have proceeded to
enforce any right under this Agreement or any other Loan Document by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Lender shall be restored to its former position and
rights hereunder with respect to the Property subject to the security interest
created under this Agreement.

      10. Waivers; Indemnification.

            10.1 Demand; Protest. Borrower waives demand, protest, notice of
protest, 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 at any time held by Lender on which Borrower may in any way be
liable.

                                      -29-
<PAGE>

            10.2 Lender's Liability for Collateral. So long as Lender complies
with its obligations, if any, under the Code, Lender shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause other than Lender's gross negligence or willful misconduct; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.

            10.3 Indemnification and Waiver. Whether or not the transactions
contemplated hereby shall be consummated:

                  (a) General Indemnity. Borrower agrees upon demand to pay or
reimburse Lender for all liabilities, obligations and out-of-pocket expenses,
including Lender's Expenses and reasonable fees and expenses of counsel for
Lender from time to time arising in connection with the enforcement or
collection of sums due under the Loan Documents, and in connection with any
amendment or modification of the Loan Documents or any "work-out" in connection
with the Loan Documents. Borrower shall indemnify, reimburse and hold Lender,
and each of its respective successors, assigns, agents, attorneys, officers,
directors, shareholders, servants, agents and employees (each an "Indemnified
Person") harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such Indemnified
Person in connection therewith (including reasonable attorneys' fees and
expenses), fines, penalties (and other charges of any applicable Governmental
Authority), licensing fees relating to any item of Collateral, damage to or loss
of use of property (including consequential or special damages to third parties
or damages to Borrower's property), or bodily injury to or death of any person
(including any agent or employee of Borrower) (each, a "Claim"), directly or
indirectly relating to or arising out of the use of the proceeds of the Loans or
otherwise, the falsity of any representation or warranty of Borrower or
Borrower's failure to comply with the terms of this Agreement or any other Loan
Document. The foregoing indemnity shall cover, without limitation, (i) any Claim
in connection with a design or other defect (latent or patent) in any item of
equipment or product included in the Collateral, (ii) any Claim for infringement
of any patent, copyright, trademark or other intellectual property right, (iii)
any Claim resulting from the presence on or under or the escape, seepage,
leakage, spillage, discharge, emission or release of any Hazardous Materials on
the premises owned, occupied or leased by Borrower, including any Claims
asserted or arising under any Environmental Law, (iv) any Claim for negligence
or strict or absolute liability in tort, or (v) any Claim asserted as to or
arising under any Account Control Agreement or any Landlord Agreement; provided,
however, Borrower shall not indemnify Lender for any liability incurred by
Lender as a direct and sole result of Lender's gross negligence or willful
misconduct. Such indemnities shall continue in full force and effect,
notwithstanding the expiration or termination of this Agreement. Upon Lender's
written demand, Borrower shall assume and diligently conduct, at its sole cost
and expense, the entire defense of Lender, each of its partners, and each of
their respective, agents, employees, directors, officers, shareholders,
successors and assigns against any indemnified Claim described in this Section
10.3(a). Borrower shall not settle or compromise any Claim against or involving
Lender without first obtaining Lender's written consent thereto, which consent
shall not be unreasonably withheld.

                                      -30-
<PAGE>

                  (b) Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM
LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

                  (c) Survival; Defense. The obligations in this Section 10.3
shall survive payment of all other Obligations pursuant to Section 12.8. At the
election of any Indemnified Person, Borrower shall defend such Indemnified
Person using legal counsel satisfactory to such Indemnified Person in such
Person's reasonable discretion, at the sole cost and expense of Borrower. All
amounts owing under this Section 10.3 shall be paid within thirty (30) days
after written demand.

      11. Notices. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by certified mail,
postage prepaid, return receipt requested, by prepaid nationally recognized
overnight courier, or by prepaid facsimile to Borrower or to Lender, as the case
may be, at their respective addresses set forth below:

            If to Borrower:   Isilon Systems, Inc.
                              220 W. Mercer Street
                              Seattle, Washington 98119
                              Attention:
                              Fax:
                              Ph:

            If to Lender:     Horizon Technology Funding Company LLC
                              76 Batterson Park Road
                              Farmington, CT 06032
                              Attention: Legal Department
                              Fax: (860) 676-8655
                              Ph: (860) 676-8654

      The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.

      12. General Provisions.

            12.1 Successors and Assigns. This Agreement and the Loan Documents
shall bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties; provided, however, neither this Agreement nor
any rights hereunder may be assigned by Borrower without Lender's prior written
consent, which consent may be granted or withheld in Lender's sole discretion.
Lender shall have the right without the consent of or notice to Borrower to
sell, transfer, assign, negotiate, or grant participations in all or any part
of, or any interest in Lender's rights and benefits hereunder, except that
Lender may not sell, transfer, assign, negotiate or grant participations in all
or any part of, or any interest in Lender's rights and benefits hereunder to any
competitor of

                                      -31-
<PAGE>

Borrower. Lender may disclose the Loan Documents and any other financial or
other information relating to Borrower or any Subsidiary to any potential
participant or assignee of any of the Loan, provided that such participant or
assignee agrees to protect the confidentiality of such documents and information
using the same measures that it uses to protect its own confidential
information.

            12.2 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.

            12.3 Severability of Provisions. Each provision of this Agreement
shall be several from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

            12.4 Entire Agreement; Construction; Amendments and Waivers.

                  (a) Entire Agreement. This Agreement and each of the other
Loan Documents dated as of the date hereof, taken together, constitute and
contain the entire agreement between Borrower and Lender and supersede any and
all prior agreements, negotiations, correspondence, understandings and
communications between the parties, whether written or oral, respecting the
subject matter hereof. Borrower acknowledges that it is not relying on any
representation or agreement made by Lender or any employee, attorney or agent
thereof, other than the specific agreements set forth in this Agreement and the
Loan Documents.

                  (b) Construction. This Agreement is the result of negotiations
between and has been reviewed by each of Borrower and Lender executing this
Agreement as of the date hereof and their respective counsel; accordingly, this
Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against Borrower or Lender. Borrower
and Lender agree that they intend the literal words of this Agreement and the
other Loan Documents and that no parol evidence shall be necessary or
appropriate to establish Borrower's or Lender's actual intentions.

                  (c) Amendments and Waivers. Any and all amendments and
modifications of this Agreement or of any of the other Loan Documents shall not
be effective without the written consent of Lender and Borrower. Any and all
discharges or waivers of, or consents to any departures from any provision of
this Agreement or of any of the other Loan Documents shall not be effective
without the written consent of Lender. Any waiver or consent with respect to any
provision of the Loan Documents shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment, modification, waiver or
consent affected in accordance with this Section 12.4 shall be binding upon
Lender and on Borrower.

            12.5 Reliance by Lender. All covenants, agreements, representations
and warranties made herein by Borrower shall be deemed to be material to and to
have been relied upon by Lender, notwithstanding any investigation by Lender.

                                      -32-
<PAGE>

            12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant
to this Agreement or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever.

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

            12.8 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations (other than indemnity obligations that have not yet arisen) or
commitment to fund remain outstanding. The obligations of Borrower to indemnify
Lender with respect to the expenses, damages, losses, costs and liabilities
described in Section 10.3 shall survive until all applicable statute of
limitations periods with respect to actions that may be brought against Lender
have run.

      13. Relationship of Parties. Borrower and Lender acknowledge, understand
and agree that the relationship between Borrower, on the one hand, and Lender,
on the other, is, and at all time shall remain solely that of a borrower and
lender. Lender shall not under any circumstances be construed to be a partner or
a joint venturer of Borrower or any of its Affiliates; nor shall Lender under
any circumstances be deemed to be in a relationship of confidence or trust or a
fiduciary relationship with Borrower or any of its Affiliates, or to owe any
fiduciary duty to Borrower or any of its Affiliates. Lender does not undertake
or assume any responsibility or duty to Borrower or any of its Affiliates to
select, review, inspect, supervise, pass judgment upon or otherwise inform
Borrower or any of its Affiliates of any matter in connection with its or their
Property, any Collateral held by Lender or the operations of Borrower or any of
its Affiliates. Borrower and each of its Affiliates shall rely entirely on their
own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by Lender in connection with such matters is solely for the protection of Lender
and neither Borrower nor any Affiliate is entitled to rely thereon.

      14. Confidentiality. All information (other than periodic reports filed by
Borrower with the Securities and Exchange Commission) disclosed by Borrower to
Lender in writing or through inspection pursuant to this Agreement that is
marked confidential or a reasonable person would expect to be confidential,
shall be considered confidential, except for information that (a) was known to
the public prior to disclosure by Borrower under this Agreement, (b) becomes
known to the public through no fault of Lender, (c) is disclosed to Lender by a
third party having a legal right to make such disclosure, or (d) is
independently developed by Lender. Lender agrees to use the same degree of care
to safeguard and prevent disclosure of such confidential information as Lender
uses with its own confidential information, but in any event no less than a
reasonable degree of care. Lender shall not disclose such information to any
third party (other than to Lender's partners, attorneys, governmental
regulators, or auditors, or to Lender's subsidiaries and affiliates and
prospective transferees and purchasers of the Loans, all subject to the same
confidentiality obligation set forth herein or as required by law, regulation,
subpoena or other order to be disclosed) and shall use such information only for
purposes of evaluation of its investment in Borrower and the exercise of

                                      -33-
<PAGE>

Lender's rights and the enforcement of its remedies under this Agreement and the
other Loan Documents. Notwithstanding the foregoing, Lender's agreement of
confidentiality shall not apply if Lender has acquired indefeasible title to any
Collateral or in connection with any enforcement or exercise of Lender's rights
and remedies under this Agreement following an Event of Default, including the
enforcement of Lender's security interest in the Collateral.

      15. Choice Of Law and Venue; Jury Trial Waiver. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER
AND LENDER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN THE STATE OF CONNECTICUT. BORROWER AND LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

                  [Remainder of page intentionally left blank.]

                                      -34-
<PAGE>

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

                                     BORROWER:

                                     1SILON SYSTEMS, INC.

                                     By:  /s/ Steve Goldman
                                          -------------------------------------
                                          Name: Steve Goldman
                                          Title: CEO

                                     LENDER:

                                     HORIZON TECHNOLOGY FUNDING
                                     COMPANY LLC

                                     By:  Horizon Technology Finance, LLC,
                                          its sole member

                                     By:  /s/ Robert D. Pomeroy, Jr.
                                          -------------------------------------
                                          Name: Robert D. Pomeroy, Jr.
                                          Title: Managing Member

<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES

Exhibit A   Disclosure Schedule
Exhibit B   Funding Certificate
Exhibit C   Form of Note
Exhibit D   Form of Legal Opinion
Exhibit E   Form of Officer's Certificate
<PAGE>

                                    EXHIBIT A

                               DISCLOSURE SCHEDULE

                                       A-1
<PAGE>

                                    EXHIBIT B

                               FUNDING CERTIFICATE

      The undersigned, being the duly elected and acting________________________
of ISILON SYSTEMS, INC., a Delaware corporation ("Borrower"), does hereby
certify to HORIZON TECHNOLOGY FUNDING COMPANY LLC (the "Lender") in connection
with that certain Venture Loan and Security Agreement dated as of [Date] by and
between Borrower and Lender (the "Loan Agreement"; with other capitalized terms
used below having the meanings ascribed thereto in the Loan Agreement) that:

      1.    The representations and warranties made by Borrower in Section 5 of
            the Loan Agreement and in the other Loan Documents are true and
            correct in all material respects as of the date hereof.

      2.    No event or condition has occurred and is continuing that would
            constitute a Default or an Event of Default under the Loan Agreement
            or any other Loan Document.

      3.    Borrower is in compliance with the covenants and requirements
            contained in Sections 4, 6 and 7 of the Loan Agreement.

      4.    All conditions referred to in Section 3 of the Loan Agreement to the
            making of the Loan to be made on or about the date hereof have been
            satisfied.

      5.    No material adverse change in the general affairs, management,
            results of operations, condition (financial or otherwise) or
            prospects of Borrower, whether or not arising from transactions in
            the ordinary course of business, has occurred.

      6.    The proceeds for the Loan should be disbursed as follows:

            Disbursement from Lender:

<TABLE>
<S>                        <C>
Loan Amount                $6,000,000

Less:

Legal Fees                 $

Balance of Commitment Fee  $        0
</TABLE>

            Net Proceeds due from Lender: $

                                       B-1
<PAGE>

      7.    The aggregate net proceeds of the Loan in the amount of
            $______________ shall be transferred to Borrower's account as
            follows:

            Account Name:   ISILON SYSTEMS INC

            Bank Name:      SIL VLY BK SJ

            Account Number:

            ABA Number:

Dated: ___________,2006

                                              BORROWER:
                                              ISILON SYSTEMS, INC.

                                              By: ______________________________

                                              Name: ____________________________

                                              Title: ___________________________

                                       B-2

<PAGE>

                                    EXHIBIT C

                             SECURED PROMISSORY NOTE

$6,000,000.00                                                      Dated: [Date]

      FOR VALUE RECEIVED, the undersigned, ISILON SYSTEMS, INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of HORIZON
TECHNOLOGY FUNDING COMPANY LLC, a Delaware limited liability company ("Lender")
the principal amount of Six Million Dollars ($6,000,000.00) or such lesser
amount as shall equal the outstanding principal balance of the Loan made to
Borrower by Lender pursuant to the Loan Agreement (as defined below), and to pay
all other amounts due with respect to the Loan on the dates and in the amounts
set forth in the Loan Agreement.

      Interest on the principal amount of this Note from the date of this Note
shall accrue at the Loan Rate or, if applicable, the Default Rate. The Loan Rate
for this Note is ____% per annum based on a year of twelve 30-day months. If the
Funding Date is not the first day of the month, interim interest accruing from
the Funding Date through the last day of that month shall be paid on the first
calendar day of the next calendar month. Commencing __________, 200_, through
and including January 1, 2007, on the first day of each month (each an "Interest
Payment Date") Borrower shall make payments of accrued interest only on the
outstanding principal amount of the Loan. Commencing on February 1, 2007, and
continuing on the first day of each month thereafter through and including July
1, 2009 (each a "Principal and Interest Payment Date" and, collectively with
each Interest Payment Date, each a "Payment Date"). Borrower shall make to
Lender equal payments of principal plus accrued interest on the then outstanding
principal amount due hereunder of ______________ Dollars ($_________). If not
sooner paid, all outstanding amounts hereunder and under the Loan Agreement
shall become due and payable on July 1, 2009.

      Principal, interest and all other amounts due with respect to the Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement. The principal amount of this Note and the interest
rate applicable thereto, and all payments made with respect thereto, shall be
recorded by Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Note.

      This Note is referred to in, and is entitled to the benefits of, the
Venture Loan and Security Agreement dated as of the date hereof by and between
Borrower and Lender (the "Loan Agreement"). The Loan Agreement, among other
things, (a) provides for the making of a secured Loan to Borrower, and (b)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events.

      This Note may not be prepaid, except as set forth in Section 2.3 of the
Loan Agreement.

                                       C-1
<PAGE>

      This Note and the obligation of Borrower to repay the unpaid principal
amount of the Loan, interest on the Loan and all other amounts due Lender under
the Loan Agreement is secured under the Loan Agreement

      Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.

      Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower's obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Connecticut.

      Note Register; Ownership of Note. The ownership of an interest in this
Note shall be registered on a record of ownership maintained by Borrower or its
agent. Borrower shall register any transfers of any interest in this Note on
such register within ten (10) days of notice by the last registered holder of
such transfer. Notwithstanding anything else in this Note to the contrary, the
right to the principal of, and stated interest on, this Note may be transferred
only if the transfer is registered on such record of ownership and the
transferee is identified as the owner of an interest in the obligation. Borrower
shall be entitled to treat the registered holder of this Note (as recorded on
such record of ownership) as the owner in fact thereof for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
this Note on the part of any other person or entity.

      IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.

                                            BORROWER:
                                            ISILON SYSTEMS, INC.

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                       C-2
<PAGE>

                                    EXHIBIT D

              ITEMS TO BE COVERED BY OPINION OF BORROWER'S COUNSEL

              [TO BE AGREEED UPON BY LENDER AND BORROWERS COUNSEL]

                                       D-1
<PAGE>

                                    EXHIBIT E

                          FORM OF OFFICER'S CERTIFICATE

      TO: HORIZON TECHNOLOGY FUNDING COMPANY LLC

      Reference is made to the Venture Loan and Security Agreement dated as of
_______, 2006 (as it may be amended from time to time, the "Loan Agreement") by
and between ISILON SYSTEMS, INC. ("Borrower") and HORIZON TECHNOLOGY FUNDING
COMPANY LLC ("Lender"). Unless otherwise defined herein, capitalized terms have
the meanings given such terms in the Loan Agreement.

      The undersigned Responsible Officer of Borrower hereby certifies to Lender
that:

      1.    No Event of Default or Default has occurred and is continuing under
            the Loan Agreement. (If a Default or Event of Default has occurred,
            specify the nature and extent thereof and the action Borrower
            proposes to take with respect thereto.)

      2.    The information provided in Section 1 of the Disclosure Schedule is
            currently true and accurate, except as noted below.

      3.    The Disclosure Schedule accurately lists all of Borrower's
            Intellectual Property as to which Borrower has made filings,
            applications or registrations with the United States Copyright
            Office or the United States Patent and Trademark Office except as
            noted below.

      4.    Borrower is in compliance with the provisions of Sections 4. 6 and 7
            of the Loan Agreement, except as noted below.

      5.    Attached herewith are the [monthly financial statements pursuant to
            Section 6.3(a) of the Loan Agreement/annual audited financial
            statements pursuant to Section 6.3(b) of the Loan Agreement]. These
            have been prepared in accordance with GAAP and are consistent from
            one period to the next except as noted below.

            NOTES TO ABOVE CERTIFICATIONS:

                                            BORROWER:
                                            ISILON SYSTEMS, INC.

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                      E-1

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