Document:

Exhibit 10.6

 

	
  AUSTRALIAN CAPITAL TERRITORY
  GOVERNMENT

  	
   

  
	
  LEASE

  	
  SL

  
	
  LAND TITLES ACT 1925

  	
   

  

 

The lessor as registered
proprietor of the land in Item 1 leases to the lessee the area described in
Item 5. This lease is subject to the mortgages, encumbrances and other
instruments affecting the land, including any created by dealings lodged prior
to this lease.

 

	
  1.

  	
  LAND

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DISTRICT/DIVISION

  	
   

  	
  SECTION

  	
   

  	
  BLOCK

  	
   

  	
  UNIT

  (Unit Titles)

  	
   

  	
  VOL:FOL

  	
   

  	
  INSTRUMENT NO.

  	
   

  
	
   

  	
  Deakin

  	
   

  	
  35

  	
   

  	
  36

  	
   

  	
  3 and 4

  	
   

  	
  1453:53 and 1453:54

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LESSOR (FULL NAME AND
  ADDRESS OF LESSOR / SUBLESSOR / UNDERLESSOR)

  	 

	
   

  	
  Smartlink Holdings Pty Ltd
  having its registered office at 2/26 Jonathan Avenue, Burwood East, Victoria
  3151

  	 

	
   

  	
   

  	 

	
  3.

  	
  LESSEE (FULL NAME
  AND ADDRESS OF LESSEE / SUBLESSEE / UNDERLESSEE, SURNAME LAST)

  	 

	
   

  	
  Activldentity Australia Pty Ltd
  having its offices at 7 Phipps Close, Deakin ACT 2600

  	 

	
   

  	
   

  	 

	
  4.

  	
  FORM OF TENANCY

  	 

	
   

  	
  Not applicable

  	 

	
   

  	
   

  	 

	
  5.

  	
  AREA BEING LEASED
  (EG: WHOLE OR DESCRIPTION OF SUBLET AREA)

  	 

	
   

  	
  Units 3 and 4 on Units Plan 1282 (231 square metres)

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  6.

  	
  TERM OF LEASE

  	
   

  	
   

  	 

	
   

  	
  TERM: 3 years
  (with option of vacating giving three months notice after 2 years)

  	
   

  	
  COMMENCING: 1
  August 2006

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  TERMINATING: 31
  July 2009

  	
   

  	
  YEARLY RENT: $68,145
  per annum ($295.00 per square metre) excluding GST

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  ·      THE
  COVENANTS AND CONDITIONS SET OUT IN THE ANNEXURES B HERETO ARE DEEMED TO BE
  INCORPORATED HEREIN

  	 

	
   

  	
   

  	 

	
   

  	
  (DELETE
  IF INAPPLICABLE)

  	 

	
   

  	
   

  	 

	
  7.

  	
  CONSENTING PARTY / PARTIES

  	 

	
   

  	
  I / WE CONSENT HERETO:

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  SIGNATURE/S

  	 

																

 

1

 

	
  8. 

  	
  DATE

  	
   

  
	
   

  	
  4 OCTOBER 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  9. 

  	
  EXECUTION

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSOR:

  	
   

  
	
   

  	
   

  	
  ANDREW CASTLE

  
	
   

  	
  /s/ [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ Andrew Castle

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSEE:

  	
   

  
	
   

  	
   

  	
  DAVID GOSNELL

  
	
   

  	
  /s/ [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ David Gosnell

  	
   

  

 

 

2

 

	
  TERM:

  	
   

  	
  3 years

  	
   

  	
  Term Commences:

  	
   

  	
  1 August 2006

  
	
   

  	
   

  	
   

  	
   

  	
  Term Ends:

  	
   

  	
  31 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPECIAL CONDITION:

  	
   

  	
  Should ActivIdentity wish to vacate the above
  premises prior to three years, three months notice must be given after a term
  of two (2) years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RENTAL:

  	
   

  	
  Rental to be paid on lst day of each
  month. A monthly invoice to be provided.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CPI ADJUSTMENT:

  	
   

  	
  A rental increase will be charged according to CPI
  on:

  1 July 2007

  1 July 2008

  1 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

3

 

 

	
  AUSTRALIAN CAPITAL TERRITORY
  GOVERNMENT

  	
   

  
	
  LEASE

  	
  SL

  
	
  LAND TITLES ACT 1925

  	
   

  

 

The lessor as registered
proprietor of the land in Item 1 leases to the lessee the area described in
Item 5. This lease is subject to the mortgages, encumbrances and other instruments
affecting the land, including any created by dealings lodged prior to this
lease.

 

	
  1.

  	
  LAND

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DISTRICT/DIVISION

  	
   

  	
  SECTION

  	
   

  	
  BLOCK

  	
   

  	
  UNIT 

  (Unit Titles)

  	
   

  	
  VOL:FOL

  	
   

  	
  INSTRUMENT NO.

  	
   

  
	
   

  	
  Deakin

  	
   

  	
  35

  	
   

  	
  36

  	
   

  	
  5 and 6

  	
   

  	
  1453:56 and 1453:55

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LESSOR (FULL NAME
  AND ADDRESS OF LESSOR / SUBLESSOR / UNDERLESSOR)

  	 

	
   

  	
  Smartlink Holdings Pty Ltd
  having its registered office at 2/26 Jonathan Avenue, Burwood East, Victoria
  3151

  	 

	
   

  	
   

  	 

	
  3.

  	
  LESSEE (FULL NAME
  AND ADDRESS OF LESSEE / SUBLESSEE / UNDERLESSEE, SURNAME LAST)

  	 

	
   

  	
  ActivIdentity Australia Pty Ltd
  having its offices at 7 Phipps Close, Deakin ACT 2600

  	 

	
   

  	
   

  	 

	
  4.

  	
  FORM OF TENANCY

  	 

	
   

  	
  Not applicable

  	 

	
   

  	
   

  	 

	
  5.

  	
  AREA BEING LEASED
  (EG: WHOLE OR DESCRIPTION OF SUBLET AREA)

  	 

	
   

  	
  Units 5 and 6 (Level 1) on Units
  Plan 1282 (463 square metres)

  	 

	
   

  	
   

  	 

	
  6.

  	
  TERM OF LEASE

  	
   

  	
   

  	 

	
   

  	
  TERM: 3 years
  (with option of vacating giving three months notice after 2 years)

  	
   

  	
  COMMENCING: 1 August 2006

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  TERMINATING: 31 July 2009

  	
   

  	
  YEARLY RENT: $136,585
  per annum ($295.00 per square metre) excluding GST

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  ·      THE
  COVENANTS AND CONDITIONS SET OUT IN THE ANNEXURES B HERETO ARE DEEMED TO BE
  INCORPORATED HEREIN

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  (DELETE IF INAPPLICABLE)

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  7.

  	
  CONSENTING PARTY / PARTIES

  	
   

  	
   

  	 

	
   

  	
  I /WE CONSENT HERETO:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  SIGNATURE/S

  	 

	
   

  	
   

  	
   

  	
  CONTINUED
  OVERLEAF

  	 

																	

 

 

1

 

	
  8. 

  	
  DATE

  	
   

  
	
   

  	
  4 October 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  9. 

  	
  EXECUTION

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSOR:

  	
   

  
	
   

  	
   

  	
  ANDREW CASTLE

  
	
   

  	
  /s/  [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ Andrew Castle

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSEE:

  	
   

  
	
   

  	
   

  	
  DAVID GOSNELL

  
	
   

  	
  /s/ [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ David Gosnell

  	
   

  

 

 

2

 

	
  TERM:

  	
   

  	
  3 years

  	
   

  	
  Term Commences:

  	
   

  	
  1 August 2006

  
	
   

  	
   

  	
   

  	
   

  	
  Term Ends:

  	
   

  	
  31 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPECIAL CONDITION:

  	
   

  	
  Should ActivIdentity wish to vacate the above
  premises prior to three years, three months notice must be given after a term
  of two (2) years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RENTAL:

  	
   

  	
  Rental to be paid on lst day of each
  month. A monthly invoice to be provided.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CPI ADJUSTMENT:

  	
   

  	
  A rental increase will be charged according to CPI
  on: 

  1 July 2007

  1 July 2008

  1 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

3

 

	
  AUSTRALIAN CAPITAL TERRITORY
  GOVERNMENT

  	
   

  
	
  LEASE

  	
  SL

  
	
  LAND TITLES ACT 1925

  	
   

  

 

The lessor as registered
proprietor of the land in Item 1 leases to the lessee the area described in
Item 5. This lease is subject to the mortgages, encumbrances and other instruments
affecting the land, including any created by dealings lodged prior to this
lease.

 

	
  1.

  	
  LAND

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DISTRICT/DIVISION

  	
   

  	
  SECTION

  	
   

  	
  BLOCK

  	
   

  	
  UNIT

  (Unit Titles)

  	
   

  	
  VOL:FOL

  	
   

  	
  INSTRUMENT NO.

  	
   

  
	
   

  	
  Deakin

  	
   

  	
  35

  	
   

  	
  36

  	
   

  	
  1 and 2

  	
   

  	
  1453:51 and 1453:52

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LESSOR (FULL NAME
  AND ADDRESS OF LESSOR / SUBLESSOR / UNDERLESSOR)

  	 

	
   

  	
  Smartlink Holdings Pty Ltd
  having its registered office at 2/26 Jonathan Avenue, Burwood East, Victoria
  3151

  	 

	
   

  	
   

  	 

	
  3.

  	
  LESSEE (FULL NAME
  AND ADDRESS OF LESSEE / SUBLESSEE / UNDERLESSEE, SURNAME LAST)

  	 

	
   

  	
  ActivIdentity Australia Pty Ltd
  having its offices at 7 Phipps Close, Deakin ACT 2600

  	 

	
   

  	
   

  	 

	
  4.

  	
  FORM OF TENANCY

  	 

	
   

  	
  Not applicable

  	 

	
   

  	
   

  	 

	
  5.

  	
  AREA BEING LEASED
  (EG: WHOLE OR DESCRIPTION OF SUBLET AREA)

  	 

	
   

  	
  Units 1 and 2 on Units Plan 1282
  (232 square metres)

  	 

	
   

  	
   

  	 

	
  6.

  	
  TERM OF LEASE

  	
   

  	
   

  	 

	
   

  	
  TERM: 3 years
  (with option of vacating giving three months notice after 2 years)

  	
   

  	
  COMMENCING: 1 August 2006

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  TERMINATING: 31 July 2009

  	
   

  	
  YEARLY RENT: $68,440
  per annum ($295.00 per square metre) excluding GST

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  ·      THE
  COVENANTS AND CONDITIONS SET OUT IN THE ANNEXURES B HERETO ARE DEEMED TO BE
  INCORPORATED HEREIN

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  (DELETE IF
  INAPPLICABLE)

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  7.

  	
  CONSENTING PARTY / PARTIES

  	
   

  	
   

  	 

	
   

  	
  I / WE CONSENT HERETO:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  SIGNATURE/S

  	 

	
   

  	
   

  	
   

  	
  CONTINUED
  OVERLEAF

  	 

																	

 

1

 

	
  8. 

  	
  DATE

  	
   

  
	
   

  	
  4 October 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  9. 

  	
  EXECUTION

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSOR:

  	
   

  
	
   

  	
   

  	
  Andrew Castle

  
	
   

  	
  /s/ [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ Andrew Castle

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNED IN MY PRESENCE BY THE LESSEE:

  	
   

  
	
   

  	
   

  	
  David Gosnell

  
	
   

  	
  /s/ [Illegible]

  	
   

  	
  FULL NAME AND SIGNATURE OF WITNESS.

  
	
   

  	
  SIGNATURE OF LESSEE.

  	
  /s/ David Gosnell

  	
   

  

 

 

2

 

	
  TERM:

  	
   

  	
  3 years

  	
   

  	
  Term Commences:

  	
   

  	
  1 August 2006

  
	
   

  	
   

  	
   

  	
   

  	
  Term Ends:

  	
   

  	
  31 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPECIAL CONDITION:

  	
   

  	
  Should ActivIdentity wish to vacate the above
  premises prior to three years, three months notice must be given after a term
  of two (2) years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RENTAL:

  	
   

  	
  Rental to be paid on 1st day of each
  month. A monthly invoice to be provided.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CPI ADJUSTMENT:

  	
   

  	
  A rental increase will be charged according to CPI
  on: 

  1 July 2007

  1 July 2008

  1 July 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

3Exhibit 10.38

 

LOAN AND
SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT
(this “Agreement”) dated as of May 6,
2008 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”),
and NMS COMMUNICATIONS CORPORATION, a
Delaware corporation (“Borrower”),
provides the terms on which Bank shall lend to Borrower and Borrower shall
repay Bank.  The parties agree as
follows:

 

1             ACCOUNTING AND OTHER TERMS

 

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

 

2             LOAN AND TERMS OF PAYMENT

 

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

 

2.1.1                     Revolving
Advances.

 

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

 

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

 

2.1.2                     Letters of
Credit Sublimit.

 

(a)           As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit
for Borrower’s account.  The face amount
of outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) may not exceed Six Million Dollars
($6,000,000.00), inclusive of Credit Extensions relating to Sections 2.1.1,
2.1.3 and 2.1.4.  Such aggregate amounts
utilized hereunder shall at all times reduce the amount otherwise available for
Advances under the Revolving Line.  If,
on the Revolving Line Maturity Date, there are any outstanding Letters of
Credit, then on such date Borrower shall provide to Bank cash collateral in an
amount equal to 105% of the face amount of all such Letters of Credit plus all
interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its reasonable business judgment), to secure all of the
Obligations relating to said Letters of Credit. 
All Letters of Credit shall be in form and substance acceptable to Bank
in its sole discretion and shall be subject to the terms and conditions of Bank’s
standard Application and Letter of Credit Agreement (the “Letter of
Credit Application”).  Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.  Borrower further agrees to be bound by the regulations
and interpretations of the issuer of any Letters of Credit guarantied by Bank
and opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower’s instructions or
those contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.

 

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

 

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

 

 

SWIFT or similar charges)
in Dollars at the then-prevailing rate of exchange in San Francisco,
California, for sales of the Foreign Currency for transfer to the country
issuing such Foreign Currency.

 

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

 

2.1.3                     Foreign
Exchange Sublimit.  As part of the
Revolving Line, Borrower may enter into foreign exchange contracts with Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency (each, a “FX Forward
Contract”) on a specified date (the “Settlement Date”).  FX
Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten
percent (10%) of each outstanding FX Forward Contract in a maximum aggregate
amount equal to Six Million Dollars ($6,000,000.00) (the “FX Reserve”), inclusive of Credit
Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.4.  The aggregate amount of FX Forward Contracts
at any one time may not exceed ten (10) times the amount of the FX
Reserve.  The amount otherwise available
for Credit Extensions under the Revolving Line shall be reduced by an amount
equal to ten percent (10%) of each outstanding FX Forward Contract.  Any amounts needed to fully reimburse Bank
will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances.

 

2.1.4                     Cash
Management Services Sublimit. 
Borrower may use up to Six Million Dollars ($6,000,000.00) (the “Cash Management Services Sublimit”), inclusive of Credit
Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.3 of the Revolving Line
for Bank’s cash management services which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified
in Bank’s various cash management services agreements (collectively, the “Cash Management Services”). 
The dollar amount of any Cash Management Services provided under this
sublimit will reduce the amount otherwise available under the Revolving
Line.  Any amounts used or reserved by
Borrower for any Cash Management Services will reduce the amount otherwise
available for Credit Extensions under the Revolving Line.  Any amounts Bank pays on behalf of Borrower
for any Cash Management Services will be treated as Advances under the
Revolving Line and will accrue interest at the interest rate applicable to
Advances.

 

2.2                               Overadvances.  If, at any time, the Credit Extensions
outstanding under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the lesser of
either (a) the Revolving Line or (b) the Borrowing Base, Borrower
shall immediately pay to Bank in cash such excess.  Notwithstanding the foregoing, if at any time
during any Non-Formula Period, the Credit Extensions outstanding under Sections
2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the Non-Formula Amount (an “Overadvance”), then, within fifteen (15) days of the date of
any such Overadvance (the “Overadvance Cure Period”),
Borrower shall (a) make payments to Bank and/or deposit unrestricted cash
with Bank in an amount sufficient to cure the Overadvance, or (b) provide
Bank with a Borrowing Base Certificate which evidences that Borrower has
Eligible Accounts equal to at least one hundred twenty-five percent (125%) of
the aggregate amount of the Credit Extensions (not merely the Overadvance)
which are outstanding under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4.  Borrower may not have more than one (1) Overadvance
Cure Period during each rolling thirty (30) day period.  The failure of Borrower to comply with the
provision in the immediately preceding sentence shall result in an immediate
Event of Default for which there shall be no grace or cure period.

 

2.3                               Payment
of Interest on the Credit Extensions.

 

(a)                                  Interest
Rate.  Subject to Section 2.3(b),
the principal amount outstanding under the Revolving Line shall accrue interest
at a floating per annum rate equal to the Prime Rate, which interest shall be
payable monthly in arrears in accordance with Section 2.3(f) below.

 

(b)                                 Default
Rate. Immediately upon the occurrence and during the continuance of an
Event of Default, Obligations shall bear interest at a rate per annum which is
four percentage points above the rate effective immediately before the Event of
Default (the “Default Rate”).  Payment or
acceptance of the increased interest rate provided in this Section 2.3(b) is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of Bank.

 

2

 

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

 

(d)           360-Day
Year.  Interest shall be computed on
the basis of a 360-day year for the actual number of days elapsed.

 

(e)           Debit
of Accounts.  Bank may debit the
Designated Deposit Account, for principal and interest payments or any other
amounts Borrower owes Bank when due. 
These debits shall not constitute a set-off.

 

(f)            Payments.  Unless otherwise provided, interest is
payable monthly on the first (1st) calendar cay of each month.  Payments of principal and/or interest
received after 12:00 noon Eastern time are considered received at the opening
of business on the next Business Day. 
When a payment is due on a day that is not a Business Day, the payment
is due the next Business Day and additional fees or interest, as applicable,
shall continue to accrue.

 

2.4          Early Termination.  This
Agreement may be terminated prior to the Revolving Line Maturity Date as
follows: (i) by Borrower, effective three Business Days after written
notice of termination is given to Bank; or (ii) by Bank at any time after
the occurrence of  an Event of Default,
without notice, effective immediately. 
If this Agreement is terminated (A) by Bank in accordance with
clause (ii) in the foregoing sentence, or (B) by Borrower for any
reason, Borrower shall pay to Bank a termination fee in an amount equal to one
percent (1.0%) of the Revolving Line (the “Early Termination Fee”).  The Early Termination Fee shall be due and
payable on the effective date of such termination and thereafter shall bear
interest at a rate equal to the highest rate applicable to any of the
Obligations.  Notwithstanding the
foregoing, Bank agrees to waive the Early Termination Fee if Bank agrees to
refinance and redocument this Agreement under another division of Bank (in its
sole and exclusive discretion) prior to the Revolving Line Maturity Date.

 

2.5          Fees.  Borrower shall pay to Bank:

 

(a)           Commitment
Fee.  A non-refundable commitment fee
of Twenty-Two Thousand Five Hundred Dollars ($22,500.00) was previously fully
earned upon Borrower’s execution of the term sheet and shall be due and payable
on the Effective Date;

 

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

 

(c)           Unused
Revolving Line Facility Fee.  A fee
(the “Unused Revolving Line Facility Fee”), payable quarterly, in arrears, on a
calendar year basis, in an amount equal to one-half of one percent (0.50%) per
annum of the average unused portion of the Revolving Line, as determined by
Bank.  Borrower shall not be entitled to
any credit, rebate or repayment of any Unused Revolving Line Facility Fee
previously earned by Bank pursuant to this Section notwithstanding any
termination of the Agreement or the suspension or termination of Bank’s
obligation to make loans and advances hereunder;

 

(d)           Early
Termination Fee.  The Early
Termination Fee, when due and payable hereunder;

 

(e)           Bank
Expenses.  All Bank Expenses incurred
through and after the Effective Date, when due.

 

3             CONDITIONS OF LOANS

 

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

 

(a)           Duly
executed original signatures to the Loan Documents to which it is a party;

 

3

 

(b)                                 Borrower
shall have delivered its Operating Documents and a good standing certificate of
Borrower and Guarantor certified by the Secretary of State of the State of
Delaware as of a date no earlier than thirty (30) days prior to the Effective
Date;

 

(c)                                  Duly
executed original signatures to the completed Borrowing Resolutions for
Borrower;

 

(d)                                 With
respect to both Borrower and Guarantor, Bank shall have received certified copies,
dated as of a recent date, of financing statement searches, as Bank shall
request, accompanied by written evidence (including any Code termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial
Credit Extension, will be terminated or released;

 

(e)                                  unconditional
guaranty by the Guarantor;

 

(f)                                    security
agreement by the Guarantor;

 

(g)                                 Borrower
shall have delivered a legal opinion of Borrower’s and each Guarantor’s counsel
dated as of the Effective Date together with the duly executed original
signatures thereto;

 

(h)                                 Borrower
shall have delivered evidence satisfactory to Bank that the insurance policies
required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements in favor of Bank; and

 

(i)                                     Borrower
shall have paid the fees and Bank Expenses then due as specified in Section 2.5
hereof.

 

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

 

(a)                                  except
as otherwise provided in Section 3.4, timely receipt of an executed
Payment/Advance Form;

 

(b)                                 the
representations and warranties in Section 5 shall be true, accurate and
complete in all material respects on the date of the Payment/Advance Form and
on the Funding Date of each Credit Extension; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Default or Event of Default shall
have occurred and be continuing or result from the Credit Extension.  Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and
warranties in Section 5 remain true in all material respects; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and

 

(c)                                  in
Bank’s sole discretion, there has not been any material impairment in the
general affairs, senior management, results of operation, financial condition
or the prospect of repayment of the Obligations, nor has there been any
material adverse deviation by Borrower from the most recent business plan of
Borrower presented to and accepted by Bank.

 

3.3                               Covenant
to Deliver.

 

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

 

3.4                               Procedures
for Borrowing.  Subject to the prior
satisfaction of all other applicable conditions to the making of an Advance set
forth in this Agreement, to obtain an Advance (other than Advances under
Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or 

 

4

 

telephone by 12:00 noon Eastern time on the Funding
Date of the Advance.  Together with any
such electronic or facsimile notification, Borrower shall deliver to Bank by
electronic mail or facsimile a completed Payment/Advance Form executed by
a Responsible Officer or his or her designee. 
Bank may rely on any telephone notice given by a person whom Bank
believes is a Responsible Officer or designee. 
Bank shall credit Advances to the Designated Deposit Account.  Bank may make Advances under this Agreement
based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which
have become due.

 

4             CREATION OF SECURITY INTEREST

 

4.1                               Grant
of Security Interest.  Borrower
hereby grants Bank, to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to Bank, the
Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof. 
Borrower represents, warrants, and covenants that the security interest
granted herein is and shall at all times continue to be a first priority
perfected security interest in the Collateral (subject only to Permitted Liens
that may have superior priority to Bank’s Lien under this Agreement).  If Borrower shall acquire a commercial tort
claim, Borrower shall promptly notify Bank in a writing signed by Borrower of
the general details thereof and grant to Bank in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to Bank.

 

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

 

4.2                               Authorization
to File Financing Statements. 
Borrower hereby authorizes Bank to file financing statements, without
notice to Borrower, with all appropriate jurisdictions to perfect or protect
Bank’s interest or rights hereunder, including a notice that any disposition of
the Collateral, by either Borrower or any other Person, shall be deemed to
violate the rights of Bank under the Code.

 

5             REPRESENTATIONS AND WARRANTIES

 

Borrower
represents and warrants as follows:

 

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

 

The execution, delivery
and performance of the Loan Documents have been duly authorized, and do not
conflict with Borrower’s organizational documents, nor constitute an event of
default under any material agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could have a material adverse effect on Borrower’s business.

 

5

 

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

 

The Collateral is not in the possession of any third
party bailee (such as a warehouse) except as otherwise provided in the
Perfection Certificate and except with respect to mobile equipment in
possession of employees with an aggregate value not exceeding Fifty Thousand
Dollars ($50,000.00).  None of the
components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as Borrower has given Bank notice
pursuant to Section 7.2, except for mobile equipment in possession of
employees with an aggregate value not exceeding Fifty Thousand Dollars
($50,000.00).  In the event that
Borrower, after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee (except with respect to mobile equipment
in possession of employees with an aggregate value not exceeding Fifty Thousand
Dollars ($50,000.00)), then Borrower will first receive the written consent of
Bank and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its reasonable discretion.

 

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

 

Except as noted on the Perfection Certificate,
Borrower is not a party to, nor is bound by, any material license or other
agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property.  Borrower shall provide written notice to Bank
within ten (10) days of entering or becoming bound by any such license or
agreement which is reasonably likely to have a material impact on Borrower’s
business or financial condition (other than over-the-counter software that is
commercially available to the public). 
Borrower shall take such steps as Bank requests to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for all such
licenses or contract rights to be deemed “Collateral” and for Bank to have a
security interest in it that might otherwise be restricted or prohibited by law
or by the terms of any such license or agreement (such consent or authorization
may include a licensor’s agreement to a contingent assignment of the license to
Bank if Bank determines that is necessary in its reasonable business judgment),
whether now existing or entered into in the future.

 

5.3                               Accounts
Receivable.  For any Eligible Account  in any Borrowing Base Certificate, all statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing such Eligible Accounts are and shall be true and correct and all
such invoices, instruments and other documents, and all of Borrower’s Books are
genuine and in all respects what they purport to be.  All sales and other transactions underlying
or giving rise to each Eligible Account shall comply in all material respects
with all applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Eligible Accounts are genuine, and all such documents,
instruments and agreements are legally enforceable in accordance with their
terms.

 

5.4                               Litigation.  Except as set forth on the Perfection
Certificate for Groove Mobile, Inc., there are no actions or proceedings
pending or, to the knowledge of the Responsible Officers, threatened in writing
by or against Borrower or any of its Subsidiaries involving more than Two
Hundred Fifty Thousand Dollars ($250,000.00).

 

5.5                               No
Material Deterioration in Financial Statements.  All consolidated financial statements for
Borrower and any of its Subsidiaries delivered to Bank fairly present in all
material respects Borrower’s consolidated financial condition and Borrower’s
consolidated results of operations. 
There has not been any material deterioration in Borrower’s consolidated
financial condition since the date of the most recent financial statements
submitted to Bank.

 

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

 

5.7                               Regulatory
Compliance.  Borrower is not an “investment
company” or a company “controlled” by an “investment company” under the
Investment Company Act of 1940.  Borrower
is not engaged as one of its 

 

6

 

important activities in extending credit for margin
stock (under Regulations T and U of the Federal Reserve Board of
Governors).  Borrower has complied in all
material respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
have a material adverse effect on its business. 
None of Borrower’s or any of its Subsidiaries’ properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally.  Borrower and each of its Subsidiaries have
obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted.

 

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

 

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

 

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

 

5.11        Excluded
Entities.  (a) The aggregate
value of cash and Cash Equivalents held by the Excluded Entities does not and
will not exceed, in the aggregate, Fifty Thousand Dollars ($50,000.00); and (b) the
aggregate value of the tangible property held by each individual Excluded
Entity does not exceed, in the aggregate, Two Hundred Thousand Dollars
($200,000.00) per Excluded Entity.

 

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

 

6              AFFIRMATIVE COVENANTS

 

Borrower shall do all of
the following:

 

6.1          Government
Compliance.  Except as permitted
under Section 7.3, maintain its and all its Subsidiaries’ legal existence
and good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower’s business
or operations.  Borrower shall comply,
and have each Subsidiary comply, with all laws, ordinances and regulations to
which it is subject, the noncompliance with which could have a material adverse
effect on Borrower’s business.

 

7

 

6.2                               Financial
Statements, Reports, Certificates.

 

(a)                                  Deliver
to Bank:  (i) as soon as available,
but no later than thirty (30) days after the last day of each month in which
Obligations are outstanding or in which any Credit Extensions have been
requested (or, if no such Obligations are outstanding or Credit Extensions are
requested, within forty-five (45) days of the end of the current fiscal
quarter), a company prepared consolidated and consolidating balance sheet,
income statement and cash flow statement covering Borrower’s consolidated operations
during the period certified by a Responsible Officer and in a form acceptable
to Bank; (ii) within five (5) days of delivery, copies of all
statements, reports and notices made available to Borrower’s security holders
or to any holders of Subordinated Debt; (iii) within five (5) days of
filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission or a link thereto on Borrower’s or another website on
the Internet; (iv) a prompt report of any legal actions pending or
threatened against Borrower or any of its Subsidiaries that could result in
damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty
Thousand Dollars ($250,000.00) or more; (v) as soon as available, but no
later than forty-five (45) days after the last day of Borrower’s fiscal year,
and in connection with any amendments, Borrower’s financial projections for the
subsequent fiscal year as approved by Borrower’s board of directors; and (vi) budgets,
sales projections, operating plans and other financial information reasonably
requested by Bank.

 

(b)                                 Within
thirty (30) days after the last day of each month in which Obligations are
outstanding or in which any Credit Extensions have been requested (or, if no
such Obligations are outstanding or Credit Extensions are requested, within
forty-five (45) days of the end of the current fiscal quarter), deliver to Bank
a duly completed Borrowing Base Certificate signed by a Responsible Officer,
with aged listings of accounts receivable (by invoice date).

 

(c)                                  Within
thirty (30) days after the last day of each month in which Obligations are
outstanding or in which any Credit Extensions have been requested (or, if no
such Obligations are outstanding or Credit Extensions are requested, within
forty-five (45) days of the end of the current fiscal quarter), deliver to Bank
with the financial statements required to be delivered pursuant to Section 6.2(a)(i) above,
a duly completed Compliance Certificate signed by a Responsible Officer setting
forth calculations showing compliance with the financial covenants set forth in
this Agreement.

 

(d)                                 Allow
Bank to audit Borrower’s Collateral at Borrower’s expense.  Such audits shall be conducted no more often
than once every twelve (12) months unless a Default or an Event of Default has
occurred and is continuing.  Borrower
hereby acknowledges that the first such audit shall be conducted within one
hundred twenty (120) days of the Effective Date.

 

6.3                               Inventory;
Returns.  Keep all Inventory in good
and marketable condition, free from material defects.  Returns and allowances between Borrower and
its Account Debtors shall follow Borrower’s customary practices as they exist
at the Effective Date.  Borrower must
promptly notify Bank of all returns, recoveries, disputes and claims that
involve more than Two Hundred Fifty Thousand Dollars ($250,000.00).

 

6.4                               Taxes;
Pensions.  Make, and cause each of
its Subsidiaries to make, timely payment of all foreign, federal, state, and
local taxes or assessments (other than taxes and assessments which Borrower is
contesting pursuant to the terms of Section 5.9 hereof) and shall deliver
to Bank, on demand, appropriate certificates attesting to such payments, and
pay all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms.

 

6.5                               Insurance.  Keep its business and the Collateral insured
for risks and in amounts standard for companies in Borrower’s industry and
location and as Bank may reasonably request. 
Insurance policies shall be in a form, with companies, and in amounts
that are satisfactory to Bank, it being agreed that the insurance maintained by
Borrower as of the Effective Date is satisfactory to Bank as of the Effective
Date.  All property policies shall have a
loss payable endorsement showing Bank as the sole loss payee and waive
subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured.  All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer must give Bank
at least twenty (20) days notice before canceling, amending, or declining to
renew its policy.  At Bank’s reasonable
request, Borrower shall deliver certified copies of policies and evidence of
all premium payments.  Proceeds payable
under any policy shall, at Bank’s option, be payable to Bank on account of the
Obligations.  If Borrower fails to obtain
insurance as required under this Section 6.5 or to pay any amount or
furnish any required proof of payment to third persons and Bank, Bank may make
all or part of such payment or obtain such insurance policies required in this Section 6.5,
and take any action under the policies Bank deems prudent.

 

8

 

6.6                               Operating
Accounts.

 

(a)                                  Maintain
its and its Subsidiaries’ primary operating accounts with Bank and Bank’s
affiliates.  In addition, Borrower and
its Subsidiaries shall maintain cash or securities with Bank and Bank’s
affiliates in an amount equal to a majority of Borrower’s and such Subsidiaries’
cash or securities in excess of that amount used for Borrower’s and such
Subsidiaries’ current operations. 
Subject to the foregoing, Borrower and its Subsidiaries may maintain
accounts with financial institutions outside of the United States with
financial institutions other than Bank and Bank’s affiliates.

 

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

 

6.7                               Financial
Covenants.

 

Borrower shall
maintain at all times, on a consolidated basis with respect to Borrower and its
Subsidiaries:

 

(a)                                  Adjusted
Quick Ratio.  For any month in which
Obligations are outstanding, or for any month in which a Credit Extension is
requested, Borrower shall maintain at all times, to be tested as of the last
day of each such month, an Adjusted Quick Ratio of at least 1.5 to 1.0;
provided, however, if the Adjusted Quick Ratio is not tested for any month
pursuant to this Section 6.7(a), Borrower shall maintain at all times, to
be tested as of the last day of the current fiscal quarter, an Adjusted Quick
Ratio of at least 1.5 to 1.0.

 

(b)                                 Minimum
Profit.  Borrower shall have
quarterly Profit of at least: (i) ($2,000,000.00) as of the quarter ended March 31,
2008; (ii) ($1,250,000.00) as of the quarter ending June 30, 2008; (iii) $0.00
as of the quarter ending September 30, 2008; and (iv) $1,750,000.00
as of the quarter ending December 31, 2008 and as of the last day of each
quarter thereafter.

 

6.8                               Protection
of Intellectual Property Rights. 
Borrower shall protect, defend and maintain the validity and
enforceability of its intellectual property material to Borrower’s business.

 

6.9                               Litigation
Cooperation.  From the date hereof
and continuing through the termination of this Agreement, make available to
Bank, without expense to Bank, Borrower and its officers, employees and agents
and Borrower’s books and records, to the extent that Bank may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Bank with respect to any Collateral or relating to Borrower;
provided, however, prior to the occurrence and continuance of an Event of
Default, such materials shall be made available to Bank during regular business
hours and upon reasonable prior notice by Bank.

 

6.10                        Natural
MicroSystems Securities Corporation. 
Borrower shall, within thirty (30) days of the Effective Date, deliver
to Bank evidence that it has dissolved its wholly-owned Subsidiary, Natural
MicroSystems Securities Corporation, and cause such Subsidiary to transfer all
of its property to Borrower.

 

6.11                        Post-Closing
Requirements.  Borrower shall deliver
to Bank:

 

(a)           Within thirty (30) days
of the Effective Date, a fully-executed landlord’s consent, in form and
substance acceptable to Bank in Bank’s sole and absolute discretion, with
respect to Borrower’s location at 100 Crossing Blvd., Framingham, Massachusetts
01702.

 

(b)           Within thirty (30) days
of the Effective Date, a fully-executed landlord’s consent for each Guarantor,
in form and substance acceptable to Bank in Bank’s sole and absolute
discretion, with respect to each Guarantor’s location at 100 Crossing Blvd.,
Framingham, Massachusetts 01702.

 

9

 

(c)           Within thirty (30) days
of the Effective Date, a fully-executed bailee’s waiver, in form and substance
acceptable to Bank in Bank’s sole and absolute discretion, with respect to
Borrower’s location at Plexus Service Corp., 55 Jewelers Park Drive, Neenah,
Wisconsin 54957.

 

(d)           Within ten (10) days
of the Effective Date, insurance certificates for Borrower and each Guarantor
(on forms Acord 25 and Acord 28), in form and substance acceptable to Bank in
Bank’s sole and absolute discretion.

 

6.12        Further
Assurances.  Execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank’s Lien in the Collateral or to effect the purposes of this
Agreement.

 

7              NEGATIVE COVENANTS

 

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

 

7.1          Dispositions.  Convey, sell, lease, transfer, assign, or
otherwise dispose of (collectively “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for:

 

(a)           Transfers in the ordinary course of
business for reasonably equivalent consideration;

 

(b)           Transfers of property in connection with
sale-leaseback transactions;

 

(c)           Transfers of property to the extent such
property is exchanged for credit against, or proceeds are promptly applied to,
the purchase price of other property used or useful in the business of Borrower
or its Subsidiaries;

 

(d)           Transfers constituting non-exclusive
licenses and similar arrangements for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business and other non-perpetual
licenses that may be exclusive in some respects other than territory (and/or
that may be exclusive as to territory only in discreet geographical areas
outside of the United States), but that could not result in a legal transfer of
Borrower’s title in the licensed property;

 

(e)           Transfers otherwise permitted by the Loan
Documents;

 

(f)            sales or discounting of delinquent
accounts in the ordinary course of business;

 

(g)           Transfers associated with the making or
disposition of a Permitted Investment;

 

(h)           Transfers in connection with a permitted
acquisition of a portion of the assets or rights acquired;

 

(i)            Transfers of cash to its Subsidiaries for
the ordinary and necessary current operating expenses of such Subsidiaries in
an amount not to exceed Two Million Two Hundred Fifty Thousand Dollars
($2,250,000.00) per fiscal quarter; and

 

(j)            Transfers of assets (other than Accounts
and Inventory (unless such Transfer is in the ordinary course of Borrower’s
business)) not otherwise permitted in this Section 7.1, provided, that the
aggregate book value of all such Transfers by Borrower and its Subsidiaries,
together, shall not exceed in any fiscal year, Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate.

 

7.2          Changes
in Business, Management, or Business Locations.  (a) Engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably
related thereto; (b) liquidate or dissolve; or (c) have a change in
management such that a Key Person departs and a replacement reasonably
acceptable to Bank is not made within ninety (90) days of such Key Person’s
departure.  Borrower shall not, without
at least thirty (30) days prior written notice to Bank: (1) add any new
offices or business locations, including warehouses (unless each such new
office or business location contains less than Twenty-Five Thousand Dollars
($25,000) in Borrower’s assets or property), (2) change its jurisdiction
of organization, (3) change its organizational structure or type, (4) change
its legal name, or (5) change any organizational number (if any) assigned by
its jurisdiction of organization.

 

7.3          Mergers
or Acquisitions.  Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with
any Person other than with Borrower or any Subsidiary, or acquire, or permit
any of its

 

10

 

Subsidiaries to acquire, all or substantially all of
the capital stock or property of a Person other than Borrower or any
Subsidiary, except where no Event of Default has occurred and is continuing or
would result from such action during the term of this Agreement, and (a) Borrower
is the surviving entity or (b) such merger or consolidation is a Transfer
otherwise permitted pursuant to Section 7.1 hereof.

 

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

 

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

 

7.6          Maintenance of
Collateral Accounts.  Maintain any
Collateral Account except pursuant to the terms of Section 6.6(b) hereof.

 

7.7          Distributions;
Investments.  (a) Pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock other than Permitted Distributions; or (b) directly or
indirectly acquire or own any Person, or make any Investment in any Person,
other than Permitted Investments, or permit any of its Subsidiaries to do so.

 

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

 

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

 

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

 

8              EVENTS OF DEFAULT

 

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

 

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

 

11

 

8.2          Covenant Default.

 

(a) Borrower fails
or neglects to perform any obligation in Sections 6.2, 6.5, 6.6, 6.7, 6.11, or
violates any covenant in Section 7; or

 

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

 

8.3          Material Adverse Change.  A Material Adverse Change occurs;

 

8.4          Attachment.  (a) Any material portion of Borrower’s
assets is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in ten (10) days;
(b) the service of process seeking to attach, by trustee or similar
process, any funds of Borrower, or of any entity under control of Borrower
(including a Subsidiary), on deposit with Bank or Bank’s Affiliate; (c) Borrower
is enjoined, restrained, or prevented by court order from conducting a material
part of its business; (d) a judgment or other claim in excess of One
Hundred Thousand Dollars ($100,000) becomes a Lien on any of Borrower’s assets;
or (e) a notice of lien, levy, or assessment is filed against any of
Borrower’s assets by any government agency and not paid within ten (10) days
after Borrower receives notice.  These
are not Events of Default if stayed or if a bond is posted pending contest by
Borrower (but no Credit Extensions shall be made during the cure period);

 

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

 

8.6          Other Agreements.  If Borrower fails to (a) make any
payment that is due and payable with respect to any Material Indebtedness and
such failure continues after the applicable grace or notice period, if any,
specified in the agreement or instrument relating thereto, or (b) perform
or observe any other condition or covenant, or any other event shall occur or
condition exist under any agreement or instrument relating to any Material
Indebtedness, and such failure continues after the applicable grace or notice
period, if any, specified in the agreement or instrument relating thereto and
the effect of such failure, event or condition is to cause the holder or
holders of such Material Indebtedness to accelerate the maturity of such
Material Indebtedness or cause the mandatory repurchase of any Material
Indebtedness;

 

8.7          Judgments.  A judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One Hundred
Thousand Dollars ($100,000) (not covered by independent third-party insurance)
shall be rendered against Borrower and shall remain unsatisfied and unstayed
for a period of ten (10) days after the entry thereof (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such
judgment);

 

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

 

8.9          Subordinated Debt.  A default or breach occurs under any
agreement between Borrower and any creditor of Borrower that signed a
subordination, intercreditor, or other similar agreement with Bank, or any
creditor that has signed such an agreement with Bank breaches any terms of such
agreement; or

 

8.10        Guaranty.  (a) Any guaranty of any Obligations
terminates or ceases for any reason to be in full force and effect; (b) any
Guarantor does not perform any obligation or covenant under any guaranty of the
Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5,
8.7, or 8.8. occurs with respect to any Guarantor, (d) the liquidation,
winding up, or termination of existence of any Guarantor; or (e) (i) a
material 

 

12

 

impairment in the perfection or priority of Bank’s
Lien in the collateral provided by Guarantor or in the value of such collateral
or (ii) a material adverse change in the general affairs, management,
results of operation, condition (financial or otherwise) or the prospect of
repayment of the Obligations occurs with respect to any Guarantor.

 

9             BANK’S RIGHTS AND REMEDIES

 

9.1          Rights and Remedies.  While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following,
to the extent not prohibited by applicable law:

 

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

 

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

 

(c)           demand that Borrower (i) deposits
cash with Bank in an amount equal to the aggregate amount of any Letters of
Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all Letter of Credit
fees scheduled to be paid or payable over the remaining term of any Letters of
Credit;

 

(d)           terminate any FX
Forward Contracts;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.2          Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse
Borrower’s name on any checks or other forms of payment or security; (b) sign
Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) settle and adjust disputes and claims about
the Accounts 

 

13

 

directly with Account Debtors, for amounts and on terms
Bank determines reasonable; (d) make, settle, and adjust all claims under
Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits.  Borrower hereby appoints Bank as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Bank’s security interest in the Collateral
regardless of whether an Event of Default has occurred until all Obligations
have been satisfied in full and Bank is under no further obligation to make Credit
Extensions hereunder.  Bank’s foregoing
appointment as Borrower’s attorney in fact, and all of Bank’s rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.

 

9.3          Accounts Verification;
Collection.  Whether or not an Event
of Default has occurred and is continuing, Bank may notify any Person owing
Borrower money of Bank’s security interest in such funds and verify the amount
of such account.  After the occurrence of
an Event of Default, any amounts received by Borrower shall be held in trust by
Borrower for Bank, and, if requested by Bank, Borrower shall immediately
deliver such receipts to Bank in the form received from the Account Debtor,
with proper endorsements for deposit.

 

9.4          Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.5 or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this Agreement or
any other Loan Document, Bank may obtain such insurance or make such payment,
and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest applicable rate charged by Bank,
and secured by the Collateral.  Bank will
make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time thereafter.  No payments by Bank are deemed an agreement
to make similar payments in the future or Bank’s waiver of any Event of
Default.

 

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

 

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

 

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

 

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

 

10           NOTICES

 

All notices, consents,
requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement or any other
Loan Document must be in writing and shall be 

 

14

 

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

 

	
   

  	
  If to Borrower:

  	
  NMS Communications Corporation

  
	
   

  	
   

  	
  100 Crossing Boulevard

  
	
   

  	
   

  	
  Framingham, MA 01702

  
	
   

  	
   

  	
  Attn: Corporate Controller & Chief
  Accounting Officer

  
	
   

  	
   

  	
  Fax: (508) 271-1300

  
	
   

  	
   

  	
  Email: todd_donahue@nmss.com

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  Goodwin Procter LLP

  
	
   

  	
   

  	
  53 State Street

  
	
   

  	
   

  	
  Boston, Massachusetts 02109

  
	
   

  	
   

  	
  Attn: Mark T. Bettencourt

  
	
   

  	
   

  	
  Fax: (617) 523-1231

  
	
   

  	
   

  	
  Email: mbettencourt@goodwinprocter.com

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Bank:

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
  One Newton Executive Park, Suite 200

  
	
   

  	
   

  	
  2221 Washington Street

  
	
   

  	
   

  	
  Newton, Massachusetts 02462

  
	
   

  	
   

  	
  Attn: Ms. Lara Chilton

  
	
   

  	
   

  	
  Fax: (617) 969-5973

  
	
   

  	
   

  	
  Email:  LChilton@svb.com

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  Riemer & Braunstein LLP

  
	
   

  	
   

  	
  Three Center Plaza

  
	
   

  	
   

  	
  Boston, Massachusetts 02108

  
	
   

  	
   

  	
  Attn: David A. Ephraim, Esquire

  
	
   

  	
   

  	
  Fax: (617) 880-3456

  
	
   

  	
   

  	
  Email: DEphraim@riemerlaw.com

  

 

15

 

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

 

Massachusetts law governs the Loan Documents without
regard to principles of conflicts of law. 
Borrower and Bank each submit to the exclusive jurisdiction of the State
and Federal courts in Massachusetts; provided, however, that if for any reason
Bank cannot avail itself of such courts in the Commonwealth of Massachusetts,
Borrower accepts jurisdiction of the courts and venue in Santa Clara County,
California.  NOTWITHSTANDING THE FOREGOING,
BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY
OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE
BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.

 

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

 

12           GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

12.5        Amendments in Writing;
Integration.  All amendments to this
Agreement must be in writing signed by both Bank and Borrower.  This Agreement and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements.  All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement and the Loan
Documents merge into this Agreement and the Loan Documents.

 

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

 

12.7        Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied.  The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run.

 

12.8        Confidentiality.  In handling any financial statements of
Borrower or other confidential information, Bank shall exercise the same degree
of care that it exercises for its own proprietary information, but 

 

16

 

disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required
by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; and (e) as
Bank considers appropriate in exercising remedies under this Agreement.  Confidential information does not include
information that either: (i) is in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the
information.

 

12.9        Right of Set Off.   Borrower hereby grants to Bank, a lien,
security interest and right of set off as security for all Obligations to Bank,
whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them.  At any time after the occurrence and during
the continuance of an Event of Default, without demand or notice, Bank may set
off the same or any part thereof and apply the same to any Obligation of
Borrower then due and payable regardless of the adequacy of any other
collateral securing the Obligations.  ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

13           DEFINITIONS

 

13.1       Definitions.  As used in this Agreement, the following
terms have the following meanings:

 

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

 

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

 

“Adjusted Quick Ratio”
is a ratio of (a) Quick Assets to (b) Current Liabilities minus
Deferred Revenue.

 

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

 

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

 

“Agreement” is
defined in the preamble hereof.

 

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

 

“Bank” is
defined in the preamble hereof.

 

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

 

“Borrower” is
defined in the preamble hereof

 

17

 

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

 

“Borrowing Base”
is (a) during the absence of an Overadvance, or during the Overadvance
Cure Period, or upon Borrower’s written request to Bank that the Borrowing Base
be the Non-Formula Amount and until Borrower provides subsequent written notice
to Bank stating otherwise (the “Non-Formula Period”),
the Non-Formula Amount, and (b) for any time other than a Non-Formula
Period, eighty percent (80.0%) of Eligible Accounts, as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank
may, after consultation with Borrower, decrease the foregoing percentages in
its reasonable business judgment based on events, conditions, contingencies, or
risks which, as determined by Bank may adversely affect Collateral.

 

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

 

“Borrowing Resolutions”
are, with respect to any Person, those resolutions adopted by such Person’s
Board of Directors and delivered by such Person to Bank approving the Loan
Documents to which such Person is a party and the transactions contemplated
thereby, together with a certificate executed by its secretary on behalf of
such Person certifying that (a) such Person has the authority to execute,
deliver, and perform its obligations under each of the Loan Documents to which
it is a party, (b) that attached as Exhibit A to such certificate is
a true, correct, and complete copy of the resolutions then in full force and
effect authorizing and ratifying the execution, delivery, and performance by
such Person of the Loan Documents to which it is a party, (c) the name(s) of
the Person(s) authorized to execute the Loan Documents on behalf of such
Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and
until such Person shall have delivered to Bank a further certificate canceling
or amending such prior certificate.

 

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

 

“Cash Equivalents”
are (a) marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having maturities of
not more than one (1) year from the date of acquisition; (b) commercial
paper maturing no more than one (1) year after its creation and having the
highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (c) Bank’s certificates of deposit issued
maturing no more than one (1) year after issue; and (d) money market
funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.

 

“Cash Management Services” is
defined in Section 2.1.4.

 

“Cash Management Services Sublimit” is
defined in Section 2.1.4.

 

“Claims” are defined in Section 12.2.
 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 

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

 

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

 

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

 

“Communication”
is defined in Section 10.

 

18

 

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

 

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

 

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

 

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

 

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

 

 “Default” is any event which with notice or passage of time
or both, would constitute an Event of Default.

 

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

 

“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts
and not yet recognized as revenue, but specifically excluding inventory in the
channel and systems shipped to customers from which Borrower is awaiting
acceptance.

 

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

 

“Designated Deposit Account”
is Borrower’s deposit account, account number
                          ,
maintained with Bank.

 

“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.

 

“Domestic Subsidiary”
means a Subsidiary organized under the laws of the United States or any state
or territory thereof or the District of Columbia.

 

“Early Termination Fee”
is defined in Section 2.4.

 

“EBITDA”
shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to
the extent deducted in the calculation of Net Income, depreciation expense,
amortization expense and non-stock compensation expense, plus (d) income
tax expense.

 

“Effective Date”
is defined in the preamble of this Agreement.

 

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

 

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

 

19

 

(b)           Accounts
that the Account Debtor has not paid within ninety (90) days of invoice date;

 

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

 

(d)           Credit
balances over ninety (90) days from invoice date;

 

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

 

(f)            Accounts
owing from an Account Debtor which does not have its principal place of
business in the United States unless otherwise approved by Bank in writing on a
case-by-case basis in Bank’s sole discretion;

 

(g)           Accounts
owing from an Account Debtor which is a federal, state or local government
entity or any department, agency, or instrumentality thereof;

 

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

 

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

 

(k)           Accounts for which the
Account Debtor is any Obligor’s Affiliate, Subsidiary, officer, employee, or
agent;

 

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

 

(m)          Accounts owing from an
Account Debtor with respect to which any Obligor has received deferred revenue
(but only to the extent of such deferred revenue);

 

(n)           Accounts owing from an
Account Debtor with respect to which an Obligor maintains a reserve in
connection with such Obligor’s provision of a right of return to the Account
Debtor (but only to the extent of such reserve);

 

(o)           Accounts for which Bank
in its reasonable business judgment after consultation with Borrower determines
collection to be doubtful; and

 

(p)           other Accounts Bank
deems ineligible in the exercise of its reasonable business judgment after
consultation with Borrower.

 

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

 

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

 

“Event of Default”
is defined in Section 8.

 

“Excluded Entities”
is NMS Communications Korea Corporation, a Delaware corporation, Openera
Technologies, Inc., a Texas corporation, and Openera Technologies, Inc.,
a Delaware corporation.

 

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

 

20

 

“Foreign Subsidiary” means any Subsidiary which is not a
Domestic Subsidiary.

 

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

 

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

 

“FX Forward Contract”  is defined in Section 2.1.3.

 

“FX Reserve”  is defined in Section 2.1.3.

 

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

 

“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.

 

“Guarantor”  is any present or future guarantor of the Obligations
including, without limitation, NMS Communications International Corporation,
LiveWire Mobile, Inc. and Groove Mobile, Inc.

 

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

 

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

 

“Interest Expense”
means for any fiscal period, interest expense (whether cash or non-cash)
determined in accordance with GAAP for the relevant period ending on such date,
including, in any event, interest expense with respect to any Credit Extension
and other Indebtedness of Borrower, including, without limitation or
duplication, all commissions, discounts, or related amortization and other fees
and charges with respect to letters of credit and bankers’ acceptance financing
and the net costs associated with interest rate swap, cap, and similar
arrangements, and the interest portion of any deferred payment obligation
(including leases of all types).

 

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

 

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

 

“Key Person”  is either of Borrower’s Chief Executive
Officer and Chief Financial Officer.

 

21

 

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

 

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

 

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

 

“Lien” is a
mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

 

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

 

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

 

“Material Indebtedness”
is any Indebtedness the principal amount of which is equal to or greater than
Two Hundred Fifty Thousand Dollars ($250,000.00).

 

“Net Income”
means, as calculated for Borrower for any period as at any date of
determination, the net profit (or loss), after provision for taxes, of Borrower
for such period taken as a single accounting period.

 

“Non-Formula Amount”
is, at any given time, an amount equal to the lesser of (a) Three Million
Dollars ($3,000,000.00), and (b) the aggregate amount of Borrower’s
unrestricted and unencumbered cash at Bank and/or SVB Securities.

 

“Non-Formula Period”
is defined in the definition of Borrowing Base.

 

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

 

“Obligors” are
Borrower, NMS Communications International Corporation, LiveWire Mobile, Inc.
and Groove Mobile, Inc.

 

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

 

“Overadvance” is
defined in Section 2.2.

 

“Overadvance Cure Period”
is defined in Section 2.2.

 

“Payment/Advance Form”
is that certain form attached hereto as Exhibit B.

 

“Perfection Certificate”
is defined in Section 5.1.

 

“Permitted Distributions”
means:

 

22

 

(a)                                  open market share repurchases and
purchases of capital stock from former employees, consultants and directors
pursuant to repurchase agreements or other similar agreements in an aggregate
amount not to exceed One Hundred Thousand Dollars ($100,000.00) in the
aggregate in any fiscal year provided that at the time of such repurchase or
purchase no Default or Event of Default has occurred and is continuing;

 

(b)                                 distributions or dividends consisting
solely of Borrower’s capital stock;

 

(c)                                  purchases for value of any rights
distributed in connection with any stockholder rights plan;

 

(d)                                 purchases of capital stock or options to
acquire such capital stock with the proceeds received from a substantially
concurrent issuance of capital stock or convertible securities;

 

(e)                                  purchases of capital stock pledged as
collateral for loans to employees;

 

(f)                                    purchases of capital stock in connection
with the exercise of stock options or stock appreciation rights by way of
cashless exercise or in connection with the satisfaction of withholding tax
obligations;

 

(g)                                 purchases of fractional shares of capital
stock arising out of stock dividends, splits or combinations or business
combinations; and

 

(h)                                 the
settlement or performance of such Person’s obligations under any equity
derivative transaction, option contract or similar transaction or combination
of transactions.

 

“Permitted Indebtedness”
is:

 

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

 

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

 

(c)                                  Subordinated
Debt;

 

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

 

(e)                                  Indebtedness
secured by the Liens described in subsection (c) of the definition of
Permitted Liens in an amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate outstanding at any time; and

 

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

 

“Permitted Investments”
are:

 

(a)                                  Investments
shown on the Perfection Certificate and existing on the Effective Date; and

 

(b)                                 Cash
Equivalents.

 

“Permitted Liens”
are:

 

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

 

(b)                                 Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on Borrower’s Books, if they have no priority over any
of Bank’s Liens;

 

(c)                                  purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for
financing the acquisition of the Equipment securing no more than Two Hundred
Fifty Thousand Dollars ($250,000.00) in the 

 

23

 

aggregate amount outstanding, or (ii) existing on
Equipment when acquired, if the Lien is confined to the property and
improvements and the proceeds of the Equipment; and

 

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

 

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

 

“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

 

“Profit” is, for
any period, Borrower’s (a) EBITDA, minus (b) capital expenditures.

 

“Quick Assets”
is, on any date, Borrower’s unrestricted cash and net billed accounts
receivable determined according to GAAP.

 

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

 

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

 

“Revolving Line”
is an Advance or Advances in an aggregate amount of up to Six Million Dollars
($6,000,000.00) outstanding at any time.

 

“Revolving Line Maturity Date” is
May 5, 2010.

 

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

 

“Settlement Date”  is defined in Section 2.1.3.

 

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

 

“Subsidiary” is,
with respect to any Person, any Person of which more than 50% of the voting
stock or other equity interests (in the case of Persons other than corporations)
is owned or controlled, directly or indirectly, by such Person or one or more
Affiliates of such Person.

 

“Total Liabilities”
is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s balance sheet, including all Indebtedness, and
current portion of Subordinated Debt permitted by Bank to be paid by Borrower,
but excluding all other Subordinated Debt.

 

 “Transfer” is defined in Section 7.1.

 

“Unused Revolving Line
Facility Fee” is defined in Section 2.5(c).

 

[Signature page follows.]

 

24

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the Effective Date.

 

BORROWER:

 

NMS COMMUNICATIONS CORPORATION

 

	
  By

  	
  /s/ Herbert Shumway

  	
   

  
	
  Name:

  	
  Herbert Shumway

  	
   

  
	
  Title:

  	
  CFO

  	
   

  
	
   

  
	
  BANK:

  
	
   

  
	
  SILICON VALLEY BANK

  
	
   

  
	
  By

  	
  /s/ Larisa B. Chilton

  	
   

  
	
  Name:

  	
  Larisa B. Chilton

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
					

 

 

[Signature page to Loan
and Security Agreement]

 

 

EXHIBIT A

 

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

 

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

 

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

 

Notwithstanding the
foregoing, the Collateral does not include any of the following, whether now
owned or hereafter acquired, (a) more than 66.67% of the presently
existing and hereafter arising issued and outstanding shares of capital stock
owned by Borrower of any Foreign Subsidiary which shares entitle the holder
thereof to vote for directors or any other matter, or (b) any copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative work, whether published or unpublished,
any patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and continuations-in-part
of the same, trademarks, service marks and, to the extent permitted under
applicable law, any applications therefor, whether registered or not, and the
goodwill of the business of Borrower connected with and symbolized thereby,
know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing.

 

Pursuant to the terms of
a certain negative pledge arrangement with Bank, Borrower has agreed not to
encumber any of its copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, patent applications and
like protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks,
service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, rights to unpatented inventions, and any claims
for damage by way of any past, present, or future infringement of any of the
foregoing, without Bank’s prior written consent.

 

1

 

EXHIBIT B

 

Loan Payment/Advance Request Form

 

DEADLINE FOR SAME DAY PROCESSING IS NOON E.S.T.*

 

	
  Fax To:

  	
   

  	
  Date:

  	
   

  

 

LOAN
PAYMENT:

 

NMS Communications Corporation

 

	
  From Account #

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
   

  	
  (Deposit Account #)

  	
   

  	
  (Loan Account #)

  
	
   

  	
   

  
	
  Principal $

  	
   

  	
   

  	
  and/or Interest $

  	
   

  	
   

  
	
   

  	
   

  
	
  Authorized Signature:

  	
   

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  
																

 

LOAN
ADVANCE:

 

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

 

	
  From Account #

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
   

  	
  (Loan Account #)

  	
   

  	
  (Deposit Account #)

  
	
   

  	
   

  
	
  Amount of Advance $

  	
   

  	
   

  	
   

  
										

 

 

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

 

	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  
								

 

OUTGOING
WIRE REQUEST:

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

Deadline
for same day processing is noon, E.S.T.

 

	
  Beneficiary Name:

  	
   

  	
   

  	
  Amount of Wire: $

  	
   

  
	
  Beneficiary Bank:

  	
   

  	
   

  	
  Account Number:

  	
   

  
	
  City and State:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Beneficiary Bank Transit (ABA) #:

  	
   

  	
   

  	
  Beneficiary Bank Code (Swift, Sort, Chip, etc.):

  	
   

  
	
   

  	
  (For International Wire Only)

  
	
   

  	
   

  
	
  Intermediary Bank:

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  
	
  For Further Credit to:

  	
   

  
	
   

  	
   

  	
   

  
	
  Special Instruction:

  	
   

  
															

 

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

 

	
  Authorized Signature:

  	
   

  	
   

  	
  2nd Signature (if required):

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
  Print Name/Title:

  	
   

  	
   

  
	
  Telephone #:

  	
   

  	
   

  	
  Telephone #:

  	
   

  	
   

  
										

 

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

 

1

 

EXHIBIT C

 

BORROWING BASE CERTIFICATE

 

Borrower: NMS Communications Corporation

Lender:        Silicon
Valley Bank

Commitment Amount:                            $6,000,000.00

 

	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  
	
  1.

  	
  Accounts Receivable Book Value as of

  	
  $

  	
   

  
	
  2.

  	
  Additions (please explain on reverse)

  	
  $

  	
   

  
	
  3.

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE
  DEDUCTIONS (without duplication)

  	
   

  	
   

  
	
  4.

  	
  Amounts over 90 days due

  	
  $

  	
   

  
	
  5.

  	
  Balance of 50% over 90 day accounts

  	
  $

  	
   

  
	
  6.

  	
  Credit balances over 90 days

  	
  $

  	
   

  
	
  7.

  	
  Concentration Limits

  	
  $

  	
   

  
	
  8.

  	
  Foreign Accounts

  	
  $

  	
   

  
	
  9.

  	
  Governmental Accounts

  	
  $

  	
   

  
	
  10.

  	
  Contra Accounts

  	
  $

  	
   

  
	
  11.

  	
  Promotion or Demo
  Accounts

  	
  $

  	
   

  
	
  12.

  	
  Intercompany/Employee
  Accounts

  	
  $

  	
   

  
	
  13.

  	
  Disputed Accounts

  	
  $

  	
   

  
	
  14.

  	
  Deferred Revenue

  	
  $

  	
   

  
	
  15.

  	
  Right of Return Offset

  	
  $

  	
   

  
	
  16.

  	
  Other (please explain
  on reverse)

  	
   

  	
   

  
	
  17.

  	
  TOTAL ACCOUNTS
  RECEIVABLE DEDUCTIONS

  	
  $

  	
   

  
	
  18.

  	
  Eligible Accounts (#3
  minus #17)

  	
  $

  	
   

  
	
  19.

  	
  ELIGIBLE AMOUNT OF
  ACCOUNTS (80.0% of #18)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Non-Formula Amount

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  
	
  21.

  	
  Maximum Loan Amount

  	
  $

  	
   

  
	
  22.

  	
  Total Funds Available
  (#20 during any Non-Formula Period and #19 otherwise)

  	
  $

  	
   

  
	
  23.

  	
  Present balance owing
  on Line of Credit

  	
  $

  	
   

  
	
  24.

  	
  Outstanding under
  Sublimits

  	
  $

  	
   

  
	
  25.

  	
  RESERVE POSITION (#22
  minus #23 and #24)

  	
  $

  	
   

  

 

The undersigned represents and warrants that this
is true, complete and correct, and that the information in this Borrowing Base
Certificate complies with the representations and warranties in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.

 

	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  
	
  COMMENTS:

  	
  Received
  by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
  Date:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  Authorized Signer

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  Compliance
  Status:

  	
  Yes     No

  
													

 

1

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

	
  TO:

  	
  SILICON VALLEY BANK

  	
  Date:

  	
   

  
	
  FROM:

  	
  NMS COMMUNICATIONS CORPORATION

  	
   

  	
   

  

 

The undersigned authorized officer of NMS
Communications Corporation (“Borrower”) certifies that under the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(1) Borrower is in complete compliance for the period ending
                              
with all required covenants except as noted below, (2) there are no Events
of Default, (3) all representations and warranties in the Agreement are
true and correct in all material respects on this date except as noted below;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (4) Borrower,
and each of its Subsidiaries, has timely filed all required tax returns and
reports, and Borrower has timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower except as
otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (5) no Liens have been levied or claims made against Borrower or any
of its Subsidiaries relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank.  Attached are the required documents
supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The
undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

 

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

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  financial statements with Compliance Certificate

  	
   

  	
  Monthly
  within 30 days (or quarterly within 45 days if no Obligations are outstanding
  or no Credit Extensions are requested)

  	
   

  	
  Yes   No

  
	
  10-Q,
  10-K and 8-K

  	
   

  	
  Within
  5 days after filing with SEC

  	
   

  	
  Yes   No

  
	
  Borrowing
  Base Certificate and A/R Agings

  	
   

  	
  Monthly
  within 30 (or quarterly within 45 days if no Obligations are outstanding or
  no Credit Extensions are requested)

  	
   

  	
  Yes   No

  
	
  Board
  Projections

  	
   

  	
  Annually
  within 45 days after year end and with updates

  	
   

  	
  Yes   No

  

 

	
  Maintain:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjusted
  Quick Ratio (*monthly/quarterly)

  	
   

  	
  1.5:1.0

  	
   

  	
  :1.0

  	
   

  	
  Yes   No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Profit

  	
   

  	
  $

  	
   

  	
  **

  	
  $

  	
   

  	
  Yes   No

  
								

 

*As set forth in Section 6.7(a) of the
Loan and Security Agreement

**As set forth in Section 6.7(b) of the
Loan and Security Agreement

 

1

 

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

 

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

 

 

	
  NMS Communications Corporation

  	
  BANK
  USE ONLY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Received
  by:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Compliance
  Status:

  	
  Yes    No

  	
   

  
														

 

2

 

Schedule 1 to Compliance
Certificate

 

Financial Covenants of Borrower

 

Dated:                            

 

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

 

I.                                         Adjusted  Quick Ratio (Section 6.7(a))
(to be calculated and tested on a consolidated basis)

 

	
  Required:

  	
  1.50:1.00

  	
   

  
	
  Actual:

  	
          :1.00

  	
   

  

 

	
  A.

  	
   

  	
  Aggregate value of the
  unrestricted cash of Borrower

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Aggregate value of the
  net billed accounts receivable of Borrower

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Quick Assets (the sum
  of lines A through B)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Aggregate value of
  Obligations to Bank

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate value of
  liabilities of Borrower (including all Indebtedness) that matures within one
  (1) year and current portion of Subordinated Debt permitted by Bank to
  be paid by Borrower

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Current Liabilities
  (the sum of lines D and E)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G

  	
   

  	
  Deferred Revenue

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H

  	
   

  	
  Line F minus line G

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Adjusted Quick Ratio
  (line C divided by line H)

  	
   

  	
   

  

 

Is line I equal to or
greater than 1.50:1:00?

 

	
   

  	
   

  	
  No, not in compliance

  	
   

  	
   

  	
   

  	
  Yes, in compliance

  

 

II.                                     Minimum Profit (Section 6.7(b))

 

Required:                                             $                  
(as set forth in Section 6.7(b)) (to be calculated and tested on a consolidated basis)

 

Actual:                                                         $

 

	
   

  	
   

  	
  No,
  not in compliance

  	
   

  	
   

  	
   

  	
  Yes,
  in compliance

  

 

3

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