Document:

Exhibit 10.12.2

 

AMENDMENT TO
EMPLOYMENT AGREEMENT

 

This AMENDMENT, dated as
of March 20, 2008, by and between Principal Financial Group, Inc., a
Delaware corporation (together with all successors thereto “PFGI”), Principal
Financial Securities, Inc., an Iowa corporation, and Principal Life
Insurance Company, an Iowa corporation (together with all successors thereto “Life”)
(each of the foregoing referred to individually as a “Company” or,
collectively, as “Companies”) and J. Barry Griswell (“Executive”), is to that
certain Employment Agreement dated as of April 1, 2004, by and between
Companies and Executive (as supplemented to date, the “Agreement”).

 

WHEREAS, Executive plans
to retire from employment with Companies on December 31, 2008 (“Executive’s
Retirement Date”), and

 

WHEREAS, in contemplation
of and preparation for Executive’s upcoming Retirement, prior to Executive’s
Retirement Date, some of Executive’s duties shall be transferred to other
personnel of Companies.

 

NOW, THEREFORE, in
consideration of the mutual agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Companies and Executive hereby agree as follows:

 

1.     Effective May 1, 2008, notwithstanding anything
to the contrary set forth in Section 2.1 of the Agreement, Executive’s
position with each of PFGI and Life shall be Chairman.

 

2.     Executive’s Employment Period under the Agreement
shall end on Executive’s Retirement Date. 
Executive and PFGI waive all rights with respect to receipt of written
notice as provided in Section 3.1 of the Agreement (but expressly do not
waive any rights or requirements under or in connection with Section 6.5
of the Agreement).

 

3.     Notwithstanding Executive’s Retirement, PFGI shall use
commercially reasonable efforts to cause Executive to continue as a board
member of PFGI through completion of Executive’s current term on such board,
which expires May, 2009.

 

4.     The provisions of Section 5.1 of the Agreement
shall continue in force for two (2) years from Executive’s Retirement
Date.

 

5.     Notwithstanding anything to the contrary set forth in Section 7.4
of the Agreement, all work product of Executive’s relating to his book
initially titled The Savvy Quotient shall be the
property of Executive.

 

6.     It is expressly understood and agreed that nothing
herein or contemplated hereby constitutes or shall constitute “Good Reason”
under the Agreement or shall constitute a termination of any kind except a
Termination for Retirement under the Agreement.

 

Except as otherwise set
forth herein, the terms and provisions of the Agreement shall continue in full
force and effect.

 

IN WITNESS WHEREOF, the
parties have executed this Amendment on the date first above written.

 

	
   

  	
   

  	
  PRINCIPAL FINANCIAL
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman, Human
  Resources Committee of the

  
	
   

  	
   

  	
  Board of Directors

  

 

 

	
   

  	
   

  	
  PRINCIPAL LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman, Human
  Resources Committee of the

  
	
   

  	
   

  	
  Board of Directors

  
	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  PRINCIPAL FINANCIAL
  SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman, Human
  Resources Committee of the

  
	
   

  	
   

  	
  Board of Directors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J. Barry Griswell

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ J. Barry Griswell

  

 

2Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY
AGREEMENT is made and dated as of May 1, 2008 and is entered into by and
among InfoLogix, Inc., a Delaware corporation (“Parent Borrower”),
InfoLogix Systems Corporation, a Delaware corporation (“ISC”), Embedded
Technologies, LLC, a Delaware limited liability company (“Embedded”), Opt
Acquisition LLC, a Pennsylvania limited liability company (“Opt”) and InfoLogix–DDMS, Inc.,
a Delaware corporation (“DDMS”) (Parent Borrower, ISC, Embedded, Opt and DDMS
are each referred to herein as a “Borrower” and collectively as the “Borrowers”)
and Hercules Technology Growth Capital, Inc., a Maryland corporation (“Lender”).

 

RECITALS

 

A.            Borrowers have requested Lender to
make available to them a loan (the “Term Loan”) in an aggregate principal
amount of up to Twelve Million Five Hundred Thousand Dollars ($12,500,000.00)
(the “Term Loan Commitment”);

 

B.            Borrowers have requested Lender to
make available to them a revolving facility (the “Revolving Loan”) in an
aggregate principal amount of up to Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00) (the “Revolving Loan Commitment”); and

 

C.            Lender is willing to make the Term
Loan and the Revolving Loan on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, each
Borrower and Lender agree as follows:

 

SECTION 1.         DEFINITIONS
AND RULES OF CONSTRUCTION

 

1.1.          Unless otherwise defined herein, the
following capitalized terms shall have the following meanings:

 

“Account Control Agreement(s)”
means any agreement entered into by and among the Lender, any Borrower and a
third party Bank or other institution (including a securities intermediary) in
which such Borrower maintains a deposit account or an account holding
Investment Property and which grants Lender a perfected first priority security
interest in the subject account or accounts.

 

“ACH Authorization” means
the ACH Debit Authorization Agreement in substantially the form of Exhibit I.

 

“Acquisition Agreement”
means the acquisition agreement entered into in connection with a Permitted
Acquisition.

 

“Acquisition Documents”
means the Acquisition Agreement and each other agreement, instrument, side
letter or other document executed and delivered in connection with a Permitted
Acquisition.

 

 

“Advance(s)” means a Term
Loan Advance and/or a Revolving Loan Advance.

 

“Advance Date” means the
funding date of any Advance.

 

“Advance Request” means a
request for an Advance submitted by Parent Borrower on behalf of itself and of
each Borrower to Lender in substantially the form of Exhibit A.

 

“Affiliate” means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.  “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Agreement” means this Loan
and Security Agreement, as amended from time to time.

 

“Approved Projections” means
those projections of the annual operational budget of the Parent Borrower and
its Subsidiaries on a consolidated basis, balance sheets and cash flow
statements though the Term Loan Maturity Date in form and substance, and with
such supporting documentation and underlying assumptions, as reasonably
acceptable to Lender and approved by Lender in writing.

 

“Assignee” has the meaning
given to it in Section 11.13.

 

“Average Total Enterprise
Value Differential” shall mean the amount, if any, by which (i) the
average of the Parent Borrower’s market capitalization for the 30-day period
preceding any payments described in Section 2.7(b) exceeds (ii) $100,000,000.  In the event such market capitalization does
not exceed $100,000,000, then the Average Total Enterprise Value Differential
shall be deemed to be zero (0).

 

“Borrower Products” means
all products, software, service offerings, technical data or technology
currently being designed, manufactured or sold by any Borrower or which any
Borrower intends to sell, license, or distribute in the future including any
products or service offerings under development, collectively, together with
all service offerings that have been licensed or distributed by any Borrower
since its respective incorporation or formation.

 

“Borrowing Base” means 85%
of Eligible Accounts.

 

“Borrowing Base Certificate”
means a borrowing base certificate substantially in the form of Exhibit H.

 

“Business Day” means a day
in which the banking institutions in the State of California are open for
business.

 

“Capital Stock” means, with
respect to any Person, any and all shares of capital stock, any membership,
partnership or other ownership interests or any other class of stock or equity
interests, participations or other equivalents in such Person (however
designated, whether voting 

 

2

 

or
non-voting, general or limited) of such Person’s capital, whether now
outstanding or issued after the Closing Date.

 

“Cash” means all cash, cash
equivalents and liquid funds.

 

“Change in Control” means
any (i) reorganization, recapitalization, consolidation or merger (or
similar transaction or series of related transactions) of Parent Borrower, (ii) any
sale, lease, license or transfer of any substantial part of the assets of the
Borrowers and Subsidiaries, taken as a whole, (iii) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), becomes the “beneficial owner” (as defined in Rules 13d-3
and 13-d5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that
such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an “option
right”)), directly or indirectly, of 25% or more of the equity securities of
Parent Borrower entitled to vote for members of the board of directors or
equivalent governing body of Parent Borrower on a fully-diluted basis (and
taking into account all such securities that such “person” or “group” has the
right to acquire pursuant to any option right), (iv) during any period of
12 consecutive months, a majority of the members of the board of directors or
other equivalent governing body of Parent Borrower cease to be composed of
individuals (a) who were members of that board or equivalent governing
body on the first day of such period,  or
(b) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (a) above
constituting at the time of the election or nomination at least a majority of
that board or equivalent governing body, or (v) Parent Borrower ceases to
own 100% of the Capital Stock of DDMS and ISC and ISC ceases to own 100% of the
Capital Stock of Embedded and Opt.

 

“Claims” has the meaning
given to it in Section 11.10.

 

“Closing Date” means the
date of this Agreement.

 

“Collateral” means the
property described in Section 3.

 

“Collateral Assignments of
Acquisition Documents” means those certain Collateral Assignments of
Acquisition Documents dated as of the closing date of any Permitted
Acquisition, among the applicable Borrowers and the Lender, providing for
collateral assignment of the applicable Borrower’s or Borrower’s respective
rights and interests, but not obligations, under the applicable Acquisition
Documents to Lender, a form of which document is attached hereto as Exhibit J.

 

“Confidential Information”
has the meaning given to it in Section 11.12.

 

“Consolidated Adjusted
EBITDA” means, at any date of determination, an amount equal to consolidated
net income of Parent Borrower and its Subsidiaries on a consolidated basis for
the most recently completed applicable Measurement Period, plus (a) the
following to the extent deducted in calculating such consolidated net
income:  (i) Consolidated Interest
Expenses paid or accrued in such applicable Measurement Period, (ii) the
provision for Federal, state, local and foreign income taxes payable, (iii) depreciation
and amortization expense, (iv) other non-recurring expenses reducing such
consolidated net income which do not represent a cash item in

 

3

 

such
period or any future period, in each case of or by Parent Borrower and its
Subsidiaries for such applicable Measurement Period, (v) non-cash charges
for stock based compensation, (vi) non-recurring cash fees, costs, charges
and expenses paid during such period incurred in connection with the a
Permitted Acquisition or the transactions contemplated by this Agreement, (vii) non-recurring
non-cash write-offs or write-downs of demo Equipment not to exceed $750,000 in
the aggregate (in each case of or by the Parent Borrower and its Subsidiaries
for such applicable Measurement Period), and minus (b) the
following, to the extent included in calculating such consolidated net
income:  (i) Federal, state, local
and foreign income tax credits and (ii) all non-cash items increasing
consolidated net income (in each case of or by Parent Borrower and its
Subsidiaries for such applicable Measurement Period).  For purposes of this calculation and without
duplication, with respect to any period of determination, the consolidated
adjusted EBITDA of a wholly-owned acquired Subsidiary acquired as a result of a
Permitted Acquisition, which shall be calculated in a manner consistent with
the methodology set forth for Consolidated Adjusted EBITDA herein, may be
included in the calculation of Consolidated Adjusted EBITDA as though such
Permitted Acquisition was consummated on the first day of the applicable
Measurement Period (the “Acquired Entity EBITDA”).  The Acquired Entity EBITDA shall be
calculated by reference to the audited financial results of the acquired
entity, if available for such applicable Measurement Period, or if such audited
financial results are not available for such Measurement Period, any unaudited
financial results or management-prepared results as are approved by Lender in
respect of such acquired entity.  Further
for the purposes of this calculation and without duplication, with respect to
any Measurement Period during which the fee contemplated by Section 2.7(b) is
paid to Lender, in respect of such payment, the Consolidated Adjusted EBITDA
for such period(s) shall be reduced by the amount by which such payment
exceeds the aggregate of all accruals for non-cash items that reduced
Consolidated Adjusted EBITDA in prior Measurement Periods.

 

“Consolidated EBITDA” means,
at any date of determination, an amount equal to consolidated net income of
Parent Borrower and its Subsidiaries on a consolidated basis for the most recently
completed applicable Measurement Period plus (a) the following to
the extent deducted in calculating such consolidated net income:  (i) Consolidated Interest Expenses paid
or accrued in such applicable Measurement Period, (ii) the provision for
Federal, state, local and foreign income taxes payable, (iii) depreciation
and amortization expense, and (iv) other non-recurring expenses reducing
such consolidated net income which do not represent a cash item in such period
or any future period, in each case of or by Parent Borrower and its
Subsidiaries for such applicable Measurement Period, and minus (b) the
following, to the extent included in calculating such consolidated net
income:  (i) Federal, state, local
and foreign income tax credits and (ii) all non-cash items increasing
consolidated net income (in each case of or by Parent Borrower and its
Subsidiaries for such applicable Measurement Period).

 

“Consolidated Excess Cash
Flow” means, as any date of determination, an amount equal to Consolidated EBITDA
of Parent Borrower and its Subsidiaries on a consolidated basis for the most
recently completed Twelve Month Measurement Period, minus
the sum (without duplication) of (i) capital expenditures made in cash and
not financed (other than from the proceeds of the Revolving Loans) during such
period, (ii) Consolidated Interest Expense paid in cash during such
period, (iii) the aggregate amount of Federal, state, local and foreign
income taxes paid in cash during such period, (iv) scheduled repayments
and/or voluntary or mandatory prepayments of the Term Loan made in cash during
such period.

 

4

 

“Consolidated Funded
Indebtedness” means, as of the date of determination, for Parent Borrower and
its Subsidiaries on a consolidated basis, the sum (without duplication) of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Secured Obligations hereunder) and all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all
direct obligations arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments, (d) all obligations in respect of the deferred purchase price
of property or services (other than trade accounts payable in the ordinary
course of business), (e) in respect of any capitalized lease of any
Person, the capitalized amount thereof that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP, (f) all
guarantees with respect to outstanding Indebtedness of the types specified in clauses
(a) through (e) above of Persons other than Parent
Borrower or any Subsidiary, and (g) all Indebtedness of the types referred
to in clauses (a) through (f) above of any partnership
or joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which Parent Borrower or a Subsidiary is a
general partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to Parent Borrower or such Subsidiary, provided that Consolidated
Funded Indebtedness shall not include interest rate protection agreements
except to the extent such amount is then due and payable thereunder.

 

“Consolidated Interest
Expense” means, for any Measurement Period, the sum of (a) all interest,
premium payments, fees, charges and related expenses in connection with
borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (b) the portion of rent expense
under capitalized leases that is treated as interest in accordance with GAAP,
in each case, of or by Parent Borrower and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period.

 

“Consolidated Total Adjusted
Leverage Ratio” means, as of the date of determination, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) Consolidated Adjusted EBITDA on
a consolidated basis for the most recently completed Twelve Month Measurement
Period.

 

“Consolidated Total Leverage
Ratio” means, as of the date of determination, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) Consolidated EBITDA on a
consolidated basis for the most recently completed Measurement Period.

 

“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to (i) any indebtedness, letter of
credit or other obligation of another, including any such obligation directly
or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse
by that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit, corporate credit cards or merchant services issued for the account of
that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest
rate collar agreement, or other agreement or arrangement designated to protect
a Person against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not include 

 

5

 

endorsements
for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determined amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith; provided, however,
that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.

 

“Copyright License” means
any written agreement granting any right to use any Copyright or Copyright
registration, now owned or hereafter acquired by any Borrower or in which any
Borrower now holds or hereafter acquires any interest.

 

“Copyrights” means all
copyrights, whether registered or unregistered, held pursuant to the laws of
the United States, any State thereof, or of any other country.

 

“Copyright Security
Agreement” means a collateral grant of security interest in copyrights executed
and delivered by the Borrowers and Lender, as such may be amended, restated or
otherwise modified from time to time.

 

“Delta Acquisition Documents”
means that certain Acquisition Agreement and each other agreement, instrument,
side letter or other document executed and delivered in connection with the
Permitted Acquisition of the assets of Delta Health Systems, Inc.

 

“Domestic Subsidiary” means
any Subsidiary that is organized under the laws of any political subdivision of
the United States.

 

“Eligible Accounts” means
accounts receivable arising in the ordinary course of a Borrower’s
business.  Lender reserves the right at
any time and from time to time after the Closing Date, to adjust any of the
criteria set forth below and to establish new criteria in its good faith credit
judgment based on a change in circumstances, events or conditions occurring
following the Closing Date with 3 Business Days prior notice to Parent
Borrower.  Eligible Accounts shall not
include the following;

 

(a)           Accounts that the account debtor has
failed to pay in full within 90 days of invoice date;

 

(b)           Accounts owing by an account debtor,
whose total obligations to all Borrowers, when aggregated with those of such
account debtor’s Affiliates, exceed 50% of all accounts, to the extent those
obligations exceed that percentage, except as approved by Lender;

 

(c)           Accounts owing by an account debtor,
including its Affiliates, 35% of whose accounts the account debtor has failed
to pay within 90 days of invoice date;

 

(d)           Accounts owing by an account debtor
that does not have its principal place of business in the United States unless (i) such
account is billed to an office in the United States, (ii) such account is
supported by a letter of credit satisfactory to Lender and with respect to
which the Lender is named as the beneficiary of such letter of credit, and
provided further that nothing contained in Section 3.2(e) of this
Agreement shall require 

 

6

 

or permit the inclusion of any accounts owing by an
account debtor that does not have its principal place of business in the United
States as Eligible Accounts under this clause (ii) unless such account is
supported by a letter of credit naming Lender as a beneficiary, or (iii) Lender
consents in writing to such account debtor in its good faith business judgment;

 

(e)           Accounts owing by an account debtor
that any Borrower owes money, goods and/or services or is otherwise obligated
to, but only to the extent of the potential amount owed;

 

(f)            Accounts arising out of deferred
revenue;

 

(g)           Accounts owing by an Affiliate of a
Borrower;

 

(h)           Accounts that are the obligation of
an account debtor that is the United States government or a political
subdivision thereof, or any state, county or municipality or department, agency
or instrumentality thereof unless the applicable Borrower, if necessary, has
complied with respect to such obligation with the Federal Assignment of Claims
Act of 1940, or any applicable state, county or municipal law restricting
assignment thereof;

 

(i)            Accounts that arise with respect to
goods that are delivered on a bill-and-hold, cash-on-delivery basis or placed
on consignment, guaranteed sale or other terms by reason of which the payment
by the account debtor is or may be conditional;

 

(j)            Accounts upon which the respective
Borrower’s right to receive payment is not absolute or is contingent;

 

(k)           Accounts owing from any Person that (i) has
disputed liability for any account owing from such Person, or (ii) has
otherwise asserted any claim, demand or liability against the Parent Borrower
or any of its Subsidiaries, whether by action, suit, counterclaim or otherwise;
provided, however that for purposes of this clause (k), such accounts shall be
excluded only to the extent of the amounts being disputed by such Person at any
date of determination;

 

(l)            Accounts that do not arise out of
the sales of goods or rendering of services in the ordinary course of the
applicable Borrower’s business;

 

(m)          Accounts payable other than in U.S.
Dollars or that are otherwise on terms other than those normal or customary in
the applicable Borrower’s business;

 

(n)           Accounts owing from any Person that
shall take or be the subject of any action or proceeding of a type described in
Section 9.6 of this Agreement;

 

(o)           Accounts as to which a consent has
not been obtained or maintained as required by Lender; and

 

7

 

(p)           Accounts the collection of which
Lender determines in its good faith credit judgment to be doubtful.

 

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

 

“Event of Default” has the
meaning given to it in Section 9.

 

“Facility Charge” means the
sum of (i) one and one-half percent (1.5%) of the Term Loan Commitment and
(ii) one percent (1.0%) of the Revolving Loan Commitment.

 

“Financial Statements” has
the meaning given to it in Section 7.1.

 

“GAAP” means generally
accepted accounting principles in the United States of America, as in effect
from time to time.

 

“HIA Indebtedness” means the
obligations of ISC to Healthcare Informatics Associates, Inc. pursuant to
the Subordinated Note and the Earn Out Agreement, each as defined in the HIA
Subordination Agreement.

 

“HIA Subordination Agreement”
means the subordination agreement executed and delivered by and among Lender,
ISC and Healthcare Informatics Associates, Inc. dated as of the date
hereof.

 

“Indebtedness” means
indebtedness of any kind, including (a) all indebtedness for borrowed
money or the deferred purchase price of property or services (excluding trade
credit entered into in the ordinary course of business), including
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations, and (d) all
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, or proceedings seeking reorganization,
arrangement, or other similar relief.

 

“Intellectual Property”
means all of Borrowers’ Copyrights; Trademarks; Patents; Licenses; trade
secrets and inventions; mask works; Borrowers’ applications therefor and
reissues, extensions, or renewals thereof; and Borrowers’ goodwill associated
with any of the foregoing, together with Borrowers’ rights to sue for past,
present and future infringement of Intellectual Property and the goodwill
associated therewith.

 

“Investment” means any beneficial
ownership (including stock, partnership or limited liability company interests)
of or in any Person, or any loan, advance or capital contribution to any Person
or the acquisition of all, or substantially all, of the assets of another
Person.

 

“Joinder Agreements” means
for each Subsidiary not then a Borrower, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit G.

 

8

 

“Lender” has the meaning
given to it in the preamble to this Agreement.

 

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

 

“License” means any
Copyright License, Patent License, Trademark License or other license of rights
or interests.

 

“Lien” means any mortgage,
deed of trust, pledge, hypothecation, assignment for security, security
interest, encumbrance, levy, lien or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, against any property, any
conditional sale or other title retention agreement, and any lease in the
nature of a security interest, and any filing of any financing statement (other
than a precautionary financing statement with respect to a lease that is not in
the nature of a security interest) under the UCC or comparable law of any
jurisdiction.

 

“Loan” or “Loans” means,
collectively, the Advances made under this Agreement.

 

“Loan Documents” means this
Agreement, the Notes, the ACH Authorization, the Account Control Agreements,
the Collateral Assignments of Acquisition Documents, the Joinder Agreements,
all UCC Financing Statements, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement, the Pledge Agreements,
the HIA Subordination Agreement, and any other documents executed or to be
executed in connection with the Secured Obligations or the transactions
contemplated hereby, as the same may from time to time be amended, modified,
supplemented or restated.

 

“Material Adverse Effect”
means a material adverse effect upon: (i) the business, operations,
properties, assets, or financial condition of Parent Borrower and its
Subsidiaries taken as a whole; or (ii) the ability of any Borrower to
perform the Secured Obligations in accordance with the terms of the Loan
Documents, or the ability of Lender to enforce any of its rights or remedies
with respect to the Secured Obligations; or (iii) the Collateral or Lender’s
Liens on the Collateral or the priority of such Liens.

 

“Material Agreements” means
the Acquisition Documents, the charter documents (including, as applicable and
without limitation, articles of formation and by-laws) of each of the Parent
Borrower and its Subsidiaries, and the Subordinated Indebtedness Documents.

 

“Maximum Revolving Loan
Amount” means, (i) at all times from the Closing Date to the date on which
Borrowers’ Compliance Certificate evidences that the Borrowers’ Consolidated
EBITDA for the most recently completed Three Month Measurement Period is less
than or equal to $1,500,000, Ten Million and No/100 Dollars ($10,000,000.00),
and (ii) at all times that the Borrowers’ Consolidated EBITDA for the most
recently completed Three Month Measurement Period exceeds $1,500,000, Twelve Million
Five Hundred Thousand and No/100 Dollars ($12,500,000.00).

 

9

 

“Maximum Term Loan Amount”
means Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00).

 

“Maximum Rate” shall have
the meaning assigned to such term in Section 2.3.

 

“Measurement Period” means,
at any date of determination, the most recently completed Twelve Month
Measurement Period or Three Month Measurement Period, of Borrowers, as
applicable.

 

“Note(s)” means a Revolving
Note and/or Term Note.

 

“Patent License” means any
written agreement granting any right with respect to any invention on which a
Patent is in existence or a Patent application is pending, in which agreement
Parent Borrower or a Subsidiary now holds or hereafter acquires any interest.

 

“Patent Security Agreement”
means a patent security agreement executed and delivered by the Borrowers and
the Lender, as such may be amended, restated or otherwise modified from time to
time.

 

“Patents” means all letters
patent of, or rights corresponding thereto, in the United States or in any
other country, all registrations and recordings thereof, and all applications
for letters patent of, or rights corresponding thereto, in the United States or
any other country.

 

“Permitted Acquisition”
means the purchase or the acquisition in a single transaction or a series of
related transactions of (i) all or substantially all (but in any event no
less than 80%) of the equity interests in any Person that, upon the
consummation thereof, will be a Domestic Subsidiary wholly-owned directly by
the Parent Borrower or one or more of its wholly-owned Domestic Subsidiaries
(including as a result of a merger or consolidation), (ii) all or
substantially all of the assets of a Person (in each case, the “Acquired Assets”),
provided that, in each case the following conditions are met:

 

(i)            no fact or condition exists, or would result from
such acquisition, that would (or would, with the passage of time or the giving
of notice, or both) constitute an Event of Default;

 

(ii)           the Parent Borrower shall have delivered evidence
reasonably satisfactory to the Lender that EBITDA of the Person or assets of
the Person so acquired, calculated in accordance with GAAP (without taking into
account the Consolidated EBITDA of the Parent Borrower and its Subsidiaries but
calculated in a manner consistent with that set forth in the definitions of
Consolidated EBITDA), for the twelve month period most recently completed shall
be greater than zero;

 

(iii)          the Parent Borrower shall have delivered to the
Lender at least one (1) Business Day prior to the date on which the
purchase or acquisition of the Acquired Assets is to be consummated a
certificate of such Borrower signed by an authorized officer of such Borrower,
in form and substance reasonably satisfactory to the Lender, certifying that
all of the requirements set forth herein have been satisfied or will be
satisfied on the consummation of such purchase or acquisition;

 

10

 

(iv)          the Parent Borrower shall have delivered to the
Lender at least three (3) Business Days prior to the date on which the
purchase or acquisition of the Acquired Assets is to be consummated a draft of
the Approved Projections in form and substance satisfactory to the Lender in
its reasonable discretion;

 

(v)           the Parent Borrower shall have delivered to the
Lender evidence reasonably satisfactory to the Lender that all liens and
encumbrances with respect to the Acquired Assets, other than Permitted Liens,
have been discharged in full or arrangements therefor satisfactory to the
Lender have been made;

 

(vi)          the Parent Borrower shall have delivered to the
Lender, not less than three (3) Business Days prior to the consummation of
each proposed acquisition, a duly executed Compliance Certificate,
demonstrating that, after giving effect to such acquisition, all covenants
contained in Section 7.20 will be satisfied on a pro forma basis
calculated such that the Acquired Entity EBITDA shall be included in the
calculation of Consolidated Adjusted EBITDA pursuant to the methodology set
forth in the definition of Consolidated Adjusted EBITDA;

 

(vii)         any such newly-created or acquired Subsidiary shall
engage in a line of business substantially similar from the lines of business
conducted by the Borrower and its Subsidiaries as of the Closing Date or any
business substantially related, complementary or incidental thereto;

 

(viii)        any such newly-created or acquired Subsidiary shall
be a Domestic Subsidiary and shall comply with the requirements of Section 7.15,
and/or, with respect to any newly-acquired assets, of such assets shall be
located in the United States and owned by the Parent Borrower or any Domestic
Subsidiary and the Borrower or the applicable Domestic Subsidiary shall comply
with the requirements of the Security Documents;

 

(ix)           the Parent Borrower shall have delivered
on the closing date of each respective acquisition, as required by Lender, an
original executed Collateral Assignment of Acquisition Documents and an officer’s
certificate duly executed by Parent Borrower’s Chief Executive Officer, Chief
Financial Officer or President certifying and attaching true, correct and
complete copies of the applicable Acquisition Documents, which Acquisition
Documents shall contain a provision that such Acquisition Documents are
assignable to Lender, and shall not contain any anti-assignment or third party
beneficiary provisions that could adversely affect the Lender’s ability to
enforce its rights as assignee of the applicable Borrower’s rights under such
Acquisition Documents.

 

(x)            the boards of directors and (if required by applicable
law) the shareholders, or the equivalent thereof, of the Parent Borrower (or
applicable Subsidiary) and the business to be acquired have approved such
acquisition; and

 

(xi)           the aggregate cash consideration paid for all
Acquired Assets, on an individual basis, shall not exceed $1,500,000.

 

11

 

“Permitted Indebtedness”
means: (i) Indebtedness of Borrowers in favor of Lender arising under this
Agreement or any other Loan Document; (ii) Indebtedness existing on the
Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness
of up to $750,000 outstanding at any time secured by a lien described in clause
(vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or
fair market value of the Equipment financed with such Indebtedness; (iv) Indebtedness
incurred in the ordinary course of business with corporate credit cards, that
also constitutes a Permitted Investment; (v) Subordinated Indebtedness; (vi) reimbursement
obligations in connection with letters of credit that are secured by cash or
cash equivalents and issued on behalf of the Parent Borrower or a Subsidiary
thereof in an amount not to exceed $350,000 at any time outstanding, (vii) other
Indebtedness in an amount not to exceed $250,000 at any time outstanding, and (viii) extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not
increased or the terms modified to impose materially more burdensome terms upon
Parent Borrower or its Subsidiary, as the case may be.

 

“Permitted Investment”
means: (i) Investments existing on the Closing Date which are disclosed in
Schedule 1B; (ii) (a) Marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one year from the
date of acquisition thereof, (b) commercial paper maturing no more than
one year from the date of creation thereof and currently having a rating of at
least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (c) certificates of deposit issued by any bank with
assets of at least $500,000,000 maturing no more than one year from the date of
investment therein, and (d) money market accounts; (iii) repurchases
of stock from former employees, directors, or consultants of Parent Borrower
under the terms of applicable repurchase agreements at the original issuance
price of such securities in an aggregate amount not to exceed $250,000 in any
fiscal year, provided that no Event of
Default has occurred, is continuing or would exist after giving effect to the
repurchases; (iv) Investments accepted in connection with Permitted
Transfers; (v) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of each respective Borrower’s
business; (vi) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business, provided
that this subparagraph (vii) shall not apply to Investments of any
Borrower in any Subsidiary; (viii) Investments consisting of loans not
involving the net transfer on a substantially contemporaneous basis of cash
proceeds to employees, officers or directors relating to the purchase of
Capital Stock of Parent Borrower pursuant to employee stock purchase plans or
other similar agreements approved by Parent Borrower’s Board of Directors, and
loans to any employees, officers or directors of any Borrower, or the guarantee
by any Borrower of any such loans made by a third party permitted pursuant to Section 7.9(c);
(ix) Investments consisting of travel advances in the ordinary course of
business; (x) Investments in newly-formed Subsidiaries organized in the
United States, provided that such
Subsidiaries enter into a Joinder Agreement promptly after their formation by
Parent Borrower (or applicable Subsidiary) and execute such other documents as
shall be reasonably requested by Lender; (xi) Investments in subsidiaries
organized outside of the United States approved in advance in writing by
Lender; (xii) joint ventures or strategic alliances in the ordinary course of
each respective Borrower’s business consisting of the nonexclusive licensing of
technology, the development of technology or the providing of technical
support, provided  

 

12

 

that
any cash Investments by Borrowers do not exceed $250,000 in the aggregate in
any fiscal year; and (xiii) additional Investments that do not exceed $250,000
in the aggregate; (xiii) Investments that result in or that constitute
Permitted Acquisitions.

 

“Permitted Liens” means any
and all of the following: (i) Liens in favor of Lender; (ii) Liens
existing on the Closing Date which are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or
other governmental charges or levies, either not delinquent or being contested
in good faith by appropriate proceedings; provided,
that Borrowers maintain adequate reserves therefor in accordance with GAAP; (iv) Liens
securing claims or demands of materialmen, artisans, mechanics, carriers,
warehousemen, landlords and other like Persons arising in the ordinary course
of each respective Borrower’s business and imposed without action of such
parties; provided, that the payment thereof
is not yet required; (v) Liens arising from judgments, decrees or
attachments in circumstances which do not constitute an Event of Default
hereunder; (vi) the following deposits, to the extent made in the ordinary
course of business:  deposits under
worker’s compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance
or other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations
(other than liens arising under ERISA or environmental liens) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds; (vii) Liens
on equipment or software or other intellectual property constituting purchase
money liens and liens in connection with capital leases securing Indebtedness
permitted in clause (iii) of “Permitted Indebtedness”; (viii) Liens
incurred in connection with Subordinated Indebtedness; (ix) leasehold
interests in leases or subleases and licenses granted in the ordinary course of
business and not interfering in any material respect with the business of the
licensor; (x) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of custom duties that are promptly paid on or
before the date they become due; (xi) Liens on insurance proceeds securing the
payment of financed insurance premiums that are promptly paid on or before the
date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (xii) statutory and common law rights of set-off and other similar
rights as to deposits of cash and securities in favor of banks, other
depository institutions and brokerage firms; (xiii) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed
by law or arising in the ordinary course of business so long as they do not
materially impair the value or marketability of the related property; (xiv)
Liens on cash or cash equivalents securing obligations permitted under clause (vii) of
the definition of Permitted Indebtedness; and (xv) Liens incurred in connection
with the extension, renewal or refinancing of the indebtedness secured by Liens
of the type described in clauses (i) through (xi) above; provided, that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced (as may have been reduced by any payment thereon) does not increase.

 

“Permitted Transfers” means (i) sales
of inventory in the ordinary course of business, (ii)  non-exclusive
licenses and similar arrangements for the use of Intellectual Property in the
ordinary course of business and licenses that could not result in a legal
transfer of title of the licensed property but that may be exclusive in
respects other than territory and that may be exclusive as to territory only as
to discreet geographical areas outside of the United States in the ordinary
course of business, or (iii) dispositions of worn-out, obsolete or surplus
Equipment at 

 

13

 

fair
market value in the ordinary course of business, and (iv) other Transfers
of assets having a fair market value of not more than $500,000 in the aggregate
in any fiscal year; provided, however, Borrowers shall be required to
make mandatory prepayments of the Term Loan, in accordance with the provisions
of Section 2.6(a)(ii) herein, in the amounts by which the fair market
value of any Transfers of assets contemplated by clause (iv) herein exceed
$250,000 in the aggregate in any fiscal year.

 

“Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

 

“Pledge Agreements” means,
collectively, (a) that certain Pledge Agreement, dated as of the Closing
Date, executed and delivered by each Borrower pledging its respective interest
as applicable, in DDMS, ISC, Embedded and Opt and (b) any other pledge
agreement executed and delivered pursuant to the terms hereof, as each such
agreement may be amended, restated or otherwise modified from time to time.

 

“Preferred Stock” means at
any given time any equity security issued by Parent Borrower that has any
rights, preferences or privileges senior to Parent Borrower’s common stock.

 

“Refinancing
Event” means the closing of a loan with a lender other than the Lender, the
proceeds of which are applied to payoff the Term Loan in full.

 

“Revolving Interest Rate”
means, for any day and at any time that the Consolidated Total Leverage Ratio
is equal to or greater than 3.00 to 1.00, the greater of (i) eight and
one-half percent (8.50%), and (ii) the prime rate as reported in The Wall
Street Journal plus 2.50%; provided, however, that two (2) Business Days
following delivery of a Compliance Certificate demonstrating that the
Consolidated Total Leverage Ratio for the most recently ended Twelve Month
Measurement Period is less than 3.00 to 1.00, the “Revolving Interest Rate”
shall be reduced to the greater of (i) seven and one-half percent (7.5%)
per annum, and the prime rate as reported in The Wall Street Journal plus
1.50%.

 

“Revolving Loan Advance”
means any Revolving Loan funds advanced under this Agreement.

 

“Revolving Loan Maturity
Date” means November 1, 2009.

 

“Revolving Note” means a
Promissory Note in substantially the form of Exhibit B-2.

 

“Secured
Obligations” means each Borrower’s obligations under this
Agreement and any Loan Document, including any obligation to pay any amount now
owing or later arising to the Lender.

 

“Subordinated Indebtedness”
means Indebtedness subordinated to the Secured Obligations in amounts and on
terms and conditions satisfactory to Lender in its discretion and subject to
subordination provisions satisfactory to Lender in its discretion, including without
limitation, the HIA Indebtedness.

 

14

 

“Subordinated Indebtedness
Documents” means any and all documents executed by Parent Borrower or any of
its Subsidiaries giving rise to or otherwise executed in connection with the
Subordinated Indebtedness, including without limitation, any and all promissory
notes, loan agreements, security agreements, and any and all collateral and
ancillary documents.

 

“Subsidiary” means an
entity, whether corporate, partnership, limited liability company, joint
venture or otherwise, in which Parent Borrower owns or controls, directly or
indirectly, 50% or more of the outstanding voting securities, including each
entity listed on Schedule 1 hereto.

 

“Term Loan Advance” means
any Term Loan funds advanced under this Agreement.

 

“Term Loan Determination
Date” means January 1, 2009.

 

“Term Loan Interest Rate”
means for any day, the greater of (i) ten and one-half percent (10.50%)
and (ii) the prime rate as reported in The Wall Street Journal plus 4.50%.

 

“Term Loan Maturity Date”
means May 1, 2012.

 

“Term Loan Prepayment Charge”
shall have the meaning assigned to such term in Section 2.6(c).

 

“Term Note” means a
Promissory Note in substantially the form of Exhibit B-1.

 

“Three Month Measurement
Period” means, at any date of determination, the most recently completed three
fiscal months of Borrowers.

 

“Trademark License” means
any written agreement granting any right to use any Trademark or Trademark
registration, now owned or hereafter acquired by any Borrower or in which
Borrower now holds or hereafter acquires any interest.

 

“Trademark Security
Agreement” means a trademark security agreement executed and delivered by the
Borrowers and Lender as such may be amended, restated or otherwise modified
from time to time.

 

“Trademarks” means all
trademarks (registered, common law or otherwise) and any applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof.

 

“Twelve Month Measurement
Period” means, at any date of determination, the most recently completed twelve
consecutive calendar months of Borrowers.

 

“UCC” means the Uniform
Commercial Code as the same is, from time to time, in effect in the State of
California; provided, 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, Lender’s Lien on any
Collateral is governed by the Uniform Commercial Code as the same is, from time
to time, in effect in a jurisdiction other than the State of California, then
the term “UCC” shall

 

15

 

mean
the Uniform Commercial Code as in effect, from time to time, in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.

 

Unless otherwise specified,
all references in this Agreement or any Annex or Schedule hereto to a “Section,”
“subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the
corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this
Agreement.  Unless otherwise specifically
provided herein, any accounting term used in this Agreement or the other Loan
Documents shall have the meaning customarily given such term in accordance with
GAAP, and all financial computations hereunder shall be computed in accordance
with GAAP, consistently applied. Unless
otherwise defined herein or in the other Loan Documents, terms that are used
herein or in the other Loan Documents and defined in the UCC shall have the
meanings given to them in the UCC.

 

SECTION 2.         THE
LOANS

 

2.1.          Revolving Loan.

 

(a)           Advances.  Subject to
the terms and conditions of this Agreement, Borrowers may, jointly and
severally, draw Revolving Loan Advances on or before the Revolving Loan Maturity
Date in an aggregate principal amount of up to the lesser of the Borrowing Base
or the Maximum Revolving Loan Amount, provided
Borrowers shall request only one (1) such Revolving Loan Advance per week,
and each Revolving Loan Advance shall be in a minimum amount of $100,000.00 or
if the amount available to be borrowed under the Maximum Revolving Loan Amount
is less than $100,000.00, then such lesser amount.  Revolving Loan Advances may be repaid and
reborrowed at any time, without premium or penalty.  If the aggregate Revolving Loan Advances at
any time exceed the lesser of the Borrowing Base or the Maximum Revolving Loan
Amount, Borrowers shall repay the amount of that excess to Lender within three (3) business
days.

 

(b)           Advance Request.  To obtain a Revolving
Loan Advance, Parent Borrower, on its own behalf and on behalf of each
Borrower, shall complete, sign and deliver an Advance Request, Borrowing Base
Certificate (with such Borrowing Base Certificate reflecting any adjustments in
eligibility criteria requested by Lender whether or not any notice period in
respect of such adjustment shall have then elapsed) and Revolving Note to
Lender, provided, however that if Borrowers have submitted a Borrowing Base
Certificate dated as of a date not more than 3 Business Days prior to the
submission of the Advance Request, then the Parent Borrower shall not be
required to submit a new Borrowing Base Certificate in connection with such
Advance Request unless adjustments are required pursuant to the parenthetical in
the foregoing clause.  Lender shall fund
the Revolving Advance in the manner requested by the Advance Request, provided that each of the conditions precedent
to such Revolving Advance is satisfied as of the requested Advance Date.

 

(c)           Interest.  Subject to
the provisions of Section 2.3, the principal balance of the
Revolving Loan shall bear interest thereon from the initial Revolving Loan
Advance 

 

16

 

Date, calculated at the floating Revolving Interest
Rate per annum based upon a year consisting of 360 days, as applicable, and
payable for the actual number of days elapsed.

 

2.2.          Term Loan.

 

(a)           Advances.  Subject to
the terms and conditions of this Agreement, Lender will make, and Borrowers
agree to draw, on a joint and several basis, a Term Loan Advance of
$9,000,000.00 on the Closing Date. Beginning on the Closing Date, and
continuing until January 1, 2009, Borrowers may request additional Term
Loan Advances in an aggregate amount up to $3,500,000.00 in minimum increments
of $100,000.00, provided, however, that the making of such additional Term Loan
Advance(s) shall be subject to Borrowers delivering a Compliance
Certificate demonstrating Borrowers’ pro forma compliance with the financial
covenants set forth in Section 7.20 after giving effect to the making of
such proposed additional Term Loan Advance. 
The aggregate outstanding Term Loan Advances may be up to the Maximum
Term Loan Amount.

 

(b)           Advance Request.  To obtain a
Term Loan Advance, Parent Borrower, on its own behalf and on behalf of each
Borrower, shall complete, sign and deliver an Advance Request and Term Note to
Lender.  Lender shall fund the Term Loan
Advance in the manner requested by the Advance Request, provided that each of the conditions precedent to such Term Loan
Advance is satisfied as of the requested Advance Date.

 

(c)           Interest.  Subject to
the provisions of Section 2.3, the principal balance of each Term
Loan Advance shall bear interest thereon from such Advance Date at the Term
Loan Interest Rate per annum based on a year consisting of 360 days, as
applicable, with interest computed daily based on the actual number of days
elapsed.

 

2.3.          Maximum Interest. 
Notwithstanding any provision in this Agreement, the Notes, or any other
Loan Document, it is the parties’ intent not to contract for, charge or receive
interest at a rate that is greater than the maximum rate permissible by law
that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”).  If a court of competent
jurisdiction shall finally determine that Borrowers have actually paid to
Lender an amount of interest in excess of the amount that would have been
payable if all of the Secured Obligations had at all times borne interest at
the Maximum Rate, then such excess interest actually paid by Borrowers shall be
applied as follows:  first, to the
payment of principal outstanding on the Notes; second, after all principal is
repaid, to the payment of Lender’s accrued interest, costs, expenses,
professional fees and any other Secured Obligations; and third, after all
Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrowers.

 

2.4.          Default Interest.  In the event
any payment is not paid on the scheduled payment date, an amount equal to five
percent (5%) of the past due amount shall be payable on demand.  In addition, upon the occurrence and during
the continuation of an Event of Default hereunder, all Secured Obligations,
including principal, interest, compounded interest, and professional fees,
shall bear interest at a rate per annum equal to the rate set forth in Section 2.1(c) or
2.2(c), as applicable, plus three percent (3%) per annum. In the event any
interest is not paid when due 

 

17

 

hereunder, delinquent
interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in Section 2.1(c), 2.2(c) or Section 2.4,
as applicable.

 

2.5.          Payments.

 

(a)           Payments Generally.

 

i.              The Borrowers will pay interest on the Loans on the
first Business Day of each month, commencing June 1, 2008.

 

ii.             Borrowers shall make all payments under this Agreement
without setoff, recoupment or deduction and regardless of any counterclaim or
defense.  Lender will initiate debit
entries to the relevant Borrower’s account as authorized on the ACH
Authorization on each payment date of all scheduled obligations payable to
Lender under the Revolving Loan and under the Term Loan.

 

(b)           Revolving Loan Repayment. 
Interest payments shall be due on the first day of each month,
commencing June 1, 2008.  The entire
principal balance of the Revolving Loan and all accrued interest and fees on or
relating to the Revolving Loan shall be repaid in full on the Revolving Loan
Maturity Date.

 

(c)           Term Loan Repayment.  Borrowers
shall repay the outstanding principal under the Term Loan on the first Business
Day of each calendar month, commencing February 1, 2009, as follows: (i) for
the period commencing February 1, 2009 and continuing through and
including May 1, 2009, in monthly installments each equal to an amount
that is five percent (5.0%) of the outstanding principal balance of the Term
Loan as of the Term Loan Determination Date divided by 4; (ii) for the
period commencing June 1, 2009 and continuing through and including May 1,
2010, in monthly installments each equal to an amount that is fifteen percent
(15.0%) of the outstanding principal balance of the Term Loan as of the Term
Loan Determination Date, divided by 12; (iii) for the period commencing June 1,
2010 and continuing through and including May 1, 2011, in monthly
installments each equal to an amount that is twenty-five percent (25.0%) of the
outstanding principal balance of the Term Loan as of the Term Loan
Determination Date, divided by 12; (iv) for the period commencing June 1,
2011 and continuing through and including the Term Loan Maturity Date, in
monthly installments each equal to an amount that is fifty-five percent (55.0%)
of the outstanding principal balance of the Term Loan on the Term Loan
Determination Date, divided by 12.  The
Term Loan entire principal balance and all accrued but unpaid interest
hereunder, shall be due and payable on the Term Loan Maturity Date.

 

2.6.          Prepayments.

 

(a)           Mandatory Prepayments.

 

i.              On or prior to the one hundred and-fifth (105th) day
of each fiscal year, commencing with the fiscal year ending December 31,
2008, the Borrowers shall prepay the principal amount of the Term Loan and
accrued and unpaid interest thereon in an amount equal to 25% of Consolidated
Excess Cash Flow. 

 

18

 

Such prepayments to be applied as follows: first,
to the payment of principal outstanding on the Term Loan Advances to be applied
pro rata to installments of the Term Loan, second, to the payment of
accrued interest on the Term Loan Advances, third, to the payment of
principal outstanding on the Revolving Loan Advances, fourth, to the
payment of accrued interest on the Revolving Loan Advances, fifth, to
the payment of Lender’s accrued costs, expenses, professional fees and any
other Secured Obligations; and sixth, after all Secured Obligations are
repaid, the excess (if any) shall be refunded to the Borrowers.  Notwithstanding Section 2.6(c) and
except as otherwise provided in the immediately preceding sentence, no Term
Loan Prepayment Charge shall be required for any prepayment of the Term Loan
under this Section 2.6(a).

 

ii.             On the date of any Permitted Transfer that results in
a required prepayment pursuant to clause (iv) of the definition of “Permitted
Transfer”, Borrowers shall prepay the principal amount of the Term Loan and accrued
and unpaid interest thereon in accordance with the provisions of such clause (iv) of
the definition of Permitted Transfer.

 

(b)           Voluntary Prepayments.

 

i.              Borrowers may prepay the Revolving Loan
from time to time without premium or penalty, in whole or in part from time to
time.

 

ii.             Borrowers may prepay, in whole (or in part with the
prior consent of the Lender in its sole and absolute discretion), the Term Loan
at Borrowers’ option upon at least five (5) Business Days prior notice to
Lender, together with all accrued unpaid interest thereon and the Term Loan
Prepayment Charge on the amount so prepaid.

 

(c)           Term Loan Prepayment Charge.

 

i.              Upon any prepayment of the Term Loan
pursuant to Section 2.6(b) and Section 10.1,
Borrowers shall pay a prepayment charge equal to the following percentage of
the Term Loan being prepaid; if such payment is made or required to be made in
any of the first twelve (12) months following the Closing Date, 3.0%; if such
payment is made or required to be made in after the first twelve (12) months
following the Closing Date but prior to twenty-four (24) months following the
Closing Date, 2.0%; and thereafter, 1.0% (each, a “Term Loan Prepayment
Charge”).

 

ii.             Borrowers agree that the Term Loan Prepayment Charge
is a reasonable calculation of Lender’s lost profits in view of the
difficulties and impracticality of determining actual damages resulting from an
early repayment of the applicable Term Loan.

 

19

 

2.7.          Fees.

 

(a)           Borrowers shall pay to Lender for the period
commencing on the Closing Date and continuing through the Revolving Loan
Maturity Date in respect of Revolving Loan Facility, a commitment fee in an
amount equal to one half of one percent (0.50%) per annum, on the sum of the
average daily unused portion of the Revolving Loan Commitment.  All commitment fees payable pursuant to this Section 2.7
shall be payable by the Borrowers in arrears on the first Business Day of each
fiscal quarter, commencing on July 1, 2008 and on the Revolving Loan
Maturity Date.

 

(b)           Upon the earliest to occur of (i) demand from the
Lender at any time between November 1, 2009 to April 30, 2012, (ii) the
acceleration of the Secured Obligations, (iii) the Term Loan Maturity
Date, and (iv) a prepayment in full of Secured Obligations, Borrowers
shall pay to Lender an amount equal to the greater, as of such date of
determination, of (x) $625,000, and (y) an amount equal to three
percent (3.0%) of the Average Total Enterprise Value Differential of Parent
Borrower.  Notwithstanding anything
herein to the contrary, so long as no other Event of Default has occurred and
is continuing, the failure of Borrowers to pay the fee required by clause (i) of
this Section 2.7(b) upon demand thereunder, shall not be deemed an
Event of Default under this Agreement, if and only if, the payment of such fees
at the time of demand could reasonably be expected to result in the occurrence
of an event that, with the passage of time or giving of notice, or both, would
constitute an Event of Default under Section 7.20 (a “Liquidity Event”); provided,
however, that the Borrowers shall pay such fee immediately after the
passage of such Liquidity Event and that the foregoing grace period shall in no
way be deemed a waiver of the payment of such fee, and in any event such
required payments under this Section 2.7 shall continue to be deemed a
component of Secured Obligations hereunder.

 

2.8.          Joint and Several Liability
of Borrowers.  Each
Borrower is accepting joint and several liability hereunder and under the other
Loan Documents in consideration of the financial accommodations to be provided
by Lender under this Agreement, for the mutual benefit, directly and
indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Secured
Obligations.  Each Borrower, jointly and
severally, hereby irrevocably, absolutely and unconditionally accepts, not merely
as a surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the Secured
Obligations (including, without limitation, any Secured Obligations arising
under this Section 2.8), it being the intention of Borrowers that
all the Secured Obligations shall be the joint and several obligations of
Borrowers without preferences or distinction among them.  If and to the extent that any of Borrowers
shall fail to make any payment with respect to any of the Secured Obligations
as and when due or to perform any of the Secured Obligations in accordance with
the terms thereof, then in each such event, the other Persons composing
Borrowers will make such payment with respect to, or perform, such Secured
Obligation.  Each Borrower hereby agrees
that it will not enforce any of its rights of contribution or subrogation
against Borrowers with respect to any liability incurred by it hereunder or
under any of the other Loan Documents, any payments made by it to Lender with
respect to any of the Secured Obligations or any collateral security therefor
until such time as all of the Secured Obligations have been paid in full in
cash.  Any claim which any Borrower may
have against any other Borrower with respect to any payments to Lender hereunder
or under any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, 

 

20

 

without
limitation as to any increases in the Secured Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Secured Obligations
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Borrower, its debts or its assets, whether voluntary or
involuntary, all such Secured Obligations shall be paid in full in cash before
any payment or distribution of any character, whether in cash, securities or
other property, shall be made to any other Borrower therefor.

 

SECTION 3.         SECURITY INTEREST

 

As security for the prompt,
complete and indefeasible payment when due (whether on the payment dates or
otherwise) of all the Secured Obligations, each Borrower grants to Lender a
security interest in all of such Borrower’s personal property, wherever
located, now owned or hereafter acquired, including the following, and all
proceeds and products thereof (collectively, the “Collateral”):  (a) accounts (including health-care
insurance receivables); (b) chattel paper (whether tangible or
electronic); (c) fixtures; (d) general intangibles (including without
limitation all Intellectual Property and payment intangibles); (e) instruments
(including promissory notes); (f) documents (including, if applicable,
electronic documents); (g) securities and all other investment property
(but excluding thirty-five percent (35%) of the Capital Stock of any foreign
Subsidiary); (h) deposit accounts excluding payroll and trust accounts; (i) Cash;
(j) commercial tort claims; (k) goods (including inventory, equipment
and any accessions thereto); (l) letter-of-credit rights (whether or not
the letter of credit is evidenced by a writing); (m) supporting
obligations; and (n) any other contract rights or rights to the payment of
money, insurance claims and proceeds. 
Notwithstanding the foregoing, it is the intention of the parties to the
Agreement that the term “Collateral” shall exclude (1) “intent-to-use”
trademarks until such time as a Borrower begins to use such trademarks; and (2) any
item of general intangibles that is now or hereafter held by a Borrower, solely
in the event and to the extent that: (i) the grant of such security
interest shall constitute or result in (A) the abandonment, invalidation
or unenforceability of any right, title or interest of any Borrower therein or
result in any Borrower’s loss of use of such asset or (B) a breach or
termination pursuant to the terms of, or a default under, any such investment
property or general intangible, in each case other than (i) to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable Law (including the Bankruptcy
Code) or principles of equity or (ii) with respect to payment intangibles;
provided, however, that the grant of the security interests
contained in this Section 3 shall extend to, and the term “Collateral”
shall include, (i) any and all proceeds of such directly held general
intangibles, provided that the proceeds are not themselves directly held
general intangibles subject to subsection (2) above, and (ii) at such
time that the grant of such security interest shall no longer constitute or
result in (A) the abandonment, invalidation or unenforceability of any
right, title or interest of any Borrower therein or result in any Borrower’s
loss of use of such asset or (B) a breach or termination pursuant to the
terms of, or a default under, any such general intangible, thereafter such
directly held general intangible.

 

3.1.          Authorization
to File Financing Statements.  Each Borrower hereby irrevocably authorizes
the Lender at any time and from time to time to file in any filing office in
any UCC jurisdiction any initial financing statements and amendments thereto
that (a) indicate the Collateral (i) as all assets of such Borrower
or words of similar effect, regardless of whether any 

 

21

 

particular
asset comprised in the Collateral falls within the scope of Article 9 of
the UCC, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9
of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment.  Each Borrower
agrees to furnish any such information to the Lender promptly upon
request.  Each Borrower also ratifies its
authorization for the Lender to have filed in any UCC jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.

 

3.2.          Other Actions.  Further to insure the attachment, perfection
and first priority (subject to Permitted Liens) of, and the ability of the
Lender to enforce the Lender’s Liens, each Borrower agrees, in each case at
Borrowers’ expense, to take the following actions with respect to the following
Collateral and without limitation on such Borrower’s other obligations
contained in this Agreement:

 

(a)           Promissory Notes and
Tangible Chattel Paper.  If a
Borrower shall, now or at any time hereafter, hold or acquire any promissory
notes or tangible chattel paper, such Borrower shall, at Lender’s request,
forthwith endorse, assign and deliver the same to the Lender, accompanied by such instruments of
transfer or assignment duly executed in blank as the Lender may from time to
time specify.

 

(b)           Deposit Accounts.  For each
deposit account that a Borrower, now or at any time hereafter, opens or
maintains, such Borrower shall, prior to or concurrently with the opening of
such deposit account, pursuant to an agreement in form and substance reasonably
satisfactory to the Lender, cause the depositary bank to agree to comply,
without further consent of such Borrower, at any time during the continuance of
an Event of Default with instructions from the Lender to such depositary bank
directing the disposition of funds from time to time credited to such deposit
account.  The provisions of this
paragraph shall not apply to (x) any deposit account for which a Borrower,
the depositary bank and the Lender have entered into a cash collateral
agreement specially negotiated among such Borrower, the depositary bank and the
Lender for the specific purpose set forth therein, (y) a deposit account
for which the Lender is the depositary bank and is in automatic control, and (z) any
deposit accounts specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrower’s
salaried employees.

 

(c)           Investment Property.  If a Borrower
shall, now or at any time hereafter, hold or acquire any certificated
securities, such Borrower shall forthwith endorse, assign and deliver the same
to the Lender, accompanied by such instruments of transfer or assignment duly
executed in blank as the Lender may from time to time specify.  If any securities now or hereafter acquired
by a Borrower are uncertificated and are issued to such Borrower or its nominee
directly by the issuer thereof, such Borrower shall immediately notify the
Lender thereof and, at the Lender’s request and option, either (i) cause
the issuer to enter into an agreement under Section 8-106 of the UCC
whereby the issuer agrees with instructions originated by Lender without
further consent by any Borrower, or (ii) pursuant to an agreement in form
and substance satisfactory to the Lender, arrange for the Lender to become the
registered owner of the securities.  If
any securities, whether certificated or uncertificated, or other investment
property now or 

 

22

 

hereafter acquired by a Borrower are held by such
Borrower or its nominee through a securities intermediary or commodity
intermediary, such Borrower shall immediately notify the Lender thereof and, at
the Lender’s request and option, either (x) cause such securities
intermediary or (as the case may be) commodity intermediary to enter into an
Account Control Agreement, or (y) pursuant to an agreement in form and
substance satisfactory to the Lender, in the case of financial assets or other
investment property held through a securities intermediary, arrange for the
Lender to become the entitlement holder with respect to such investment
property, with such Borrower being permitted, only with the consent of the
Lender, to exercise rights to withdraw or otherwise deal with such investment
property.  The provisions of this
paragraph shall not apply to any financial assets credited to a securities
account for which the Lender is the securities intermediary.

 

(d)           Collateral in the Possession of a Bailee. 
If any Collateral in excess of $100,000 is, now or at any time
hereafter, in the possession of a bailee, the applicable Borrower shall
promptly notify the Lender thereof and, at the Lender’s request and option,
shall promptly obtain a bailee acknowledgment and access agreement in form and
substance reasonably satisfactory to the Lender.

 

(e)           Letter-of-credit Rights.  If any
Borrower is, now or at any time hereafter, a beneficiary under a letter of
credit in excess of $100,000, such Borrower shall promptly notify the Lender
thereof and, at the request and option of the Lender, such Borrower shall,
pursuant to an agreement in form and substance reasonably satisfactory to the
Lender, either (i) arrange for the issuer and any confirmer of such letter
of credit to consent to an assignment to the Lender of the proceeds of the
letter of credit or (ii) arrange for the Lender to become the transferee
beneficiary of the letter of credit.

 

(f)            Commercial Tort Claims.  If a Borrower
shall, now or at any time hereafter, hold or acquire a commercial tort claim in
an amount greater than $100,000, such Borrower shall promptly (but in any event
with two Business Days thereof) notify the Lender in a writing signed by such
Borrower of the particulars thereof and grant to the Lender in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Lender.

 

(g)           Other Actions as to any and all Collateral. 
Each Borrower further agrees, upon the request of the Lender and at the
Lender’s option, to take any and all other actions as the Lender may reasonably
determine to be necessary or useful for the attachment, perfection and first
priority (subject to Permitted Liens) of, and the ability of the Lender to
enforce, the Lender’s Lien in any and all of the Collateral, including (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC, to the extent, if any, that the applicable
Borrower’s signature thereon is required therefor, (ii) causing the Lender’s
name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection or priority of, or
ability of the Lender to enforce, the Lender’s security interest in such
Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with 

 

23

 

such provision is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the Lender’s
security interest in such Collateral, (iv) making commercially reasonable
efforts to obtain governmental and other third party waivers, consents and
approvals, in form and substance reasonably satisfactory to the Lender,
including any consent of any licensor, lessor or other person obligated on
Collateral, (v) obtaining waivers from mortgagees and landlords in form
and substance reasonably satisfactory to the Lender, (vi) creating and
perfecting Liens in favor of the Lender in any real property acquired after the
Closing Date, and (vii) taking all actions under any earlier versions of
the UCC or under any other law, as reasonably determined by the Lender to be
applicable in any relevant UCC or other jurisdiction, including any foreign
jurisdiction.  In addition to the
foregoing, Borrowers shall on such periodic basis as the Lender shall require, (w) provide
the Lender with a report of all new material patentable, copyrightable or
trademarkable materials acquired or generated by each Borrower during the prior
period which the Borrowers intend to register with the United States Patent and
Trademark Office or the Library of Congress, as applicable, (x) cause all
Patents and Trademarks, and cause all Copyrights that are material to each
Borrower’s business, in each case, acquired or generated by such Borrower, that
are not already the subject of a registration with the appropriate filing
office (or an application therefor diligently prosecuted) to be registered with
such appropriate filing office in a manner sufficient to impart constructive
notice of such Borrower’s ownership thereof, (y) cause to be prepared,
executed, and delivered to the Lender supplemental schedules to the applicable
Loan Documents to identify such Patents, Copyrights and Trademarks as being
subject to the security interests created thereunder, and (z) execute and
deliver to the Lender at the Lender’s request Patent, Trademark or Copyright
Security Agreements with respect to such patents, trademarks or copyrights for
filing with the appropriate filing office.

 

3.3.          Relation to
Other Security Documents. 
Concurrently herewith each Borrower is executing and delivering to the
Lender a Pledge Agreement, a Copyright Security Agreement, a Patent Security
Agreement, a Trademark Security Agreement, and a Collateral Assignment of
Acquisition Documents, pursuant to which each Borrower is assigning to the
Lender certain Collateral as set forth in such agreements.  The provisions of such agreements are
supplemental to the provisions of this Agreement, and nothing contained in such
agreements shall derogate from any of the rights or remedies of the Lender.  Neither the delivery of, nor anything
contained in, such agreements shall be deemed to prevent or postpone the time
of attachment or perfection of any security interest in such Collateral created
hereby.

 

3.4.          Power of
Attorney.  Each
Borrower hereby irrevocably makes, constitutes, and appoints the Lender (and
any of the Lender’s officers, employees, or agents designated by the Lender) as
such Borrower’s true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 3.1, sign the name of Borrower on
any of the documents described in Section 3.1, (b) at any time
that an Event of Default has occurred and is continuing, sign any Borrower’s
name on any invoice or bill of lading relating to the Collateral, drafts
against account debtors, or notices to account debtors, (c) at any time
that an Event of Default has occurred and is continuing, send requests for
verification of accounts, instruments, documents, chattel paper, supporting
obligations, letters of credit and proceeds of letters of credit,
letter-of-credit rights, customer lists, software, and business records related
thereto, (d) at any time that an Event of Default has occurred and is 

 

24

 

continuing,
endorse each Borrower’s name on any collection item that may come into the
Lender’s possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under each Borrower’s
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default
has occurred and is continuing, settle and adjust disputes and claims
respecting the accounts, instruments, documents, chattel paper, supporting
obligations, letters of credit and proceeds of letters of credit,
letter-of-credit rights, customer lists, software, and business records related
thereto, or general intangibles directly with account debtors, for amounts and
upon terms that the Lender determines to be reasonable, and the Lender may
cause to be executed and delivered any documents and releases that the Lender
determines to be necessary.  The
appointment of the Lender as each Borrower’s attorney, and each and every one
of its rights and powers, being coupled with an interest, is irrevocable until
all of the Secured Obligations (other than inchoate indemnification
obligations) have been fully and finally repaid in cash and performed and the Lender’s
obligations to extend credit hereunder are terminated.

 

SECTION 4.         CONDITIONS PRECEDENT TO
LOAN

 

The obligations of Lender to
make the Loan hereunder are subject to the satisfaction by Borrowers of the
following conditions:

 

4.1.          Initial Advance.  On or prior to the Closing Date, Borrowers
shall have delivered to Lender the following:

 

(a)           executed originals of the Loan Documents, Account
Control Agreements, a legal opinion of Borrowers’ counsel, and all other
documents and instruments reasonably required by Lender to effectuate the
transactions contemplated hereby or to create and perfect the Liens of Lender
with respect to all Collateral, in all cases in form and substance reasonably
acceptable to Lender;

 

(b)           certified copy of resolutions of each Borrower’s board
of directors or members or managers as applicable evidencing approval of the
Loans and other transactions evidenced by the Loan Documents;

 

(c)           certified copies of the Certificate of Incorporation
and the Bylaws, or Certificate of Formation and Operating Agreement, as
applicable, each as amended through the Closing Date, of each Borrower;

 

(d)           a certificate of good standing for each Borrower from
its state of incorporation or formation and similar certificates from all other
jurisdictions in which it does business and where the failure to be qualified
would have a Material Adverse Effect;

 

(e)           payment of the Facility Charge and reimbursement of
Lender’s current expenses reimbursable pursuant to this Agreement, which
amounts may be deducted from the initial Advance;

 

(f)            evidence of insurance, together with endorsements
identifying Lender as additional insured on all liability policies and lender
loss payee on all property policies;

 

25

 

(g)           results of UCC and intellectual property searches and
with respect to the Collateral indicating no Liens other than Permitted Liens
and otherwise in form and substance satisfactory to the Lender;

 

(h)           an Advance Request in respect of the Term Loan duly
executed by each Borrower’s Chief Executive Officer, Chief Financial Officer or
President or equivalent position;

 

(i)            a certificate, duly executed and certified by Parent
Borrower’s Chief Executive Officer, Chief Financial Officer or President,
evidencing and certifying to Lender, as of the Closing Date, that Parent
Borrowers’ Consolidated Adjusted EBITDA for Three Month Measurement Period
ending March 31, 2008 is no less than negative $85,000 dollars 

(-$85,000);

 

(j)            a payoff letter from Sovereign Bank reasonably
satisfactory to Lender together with all termination statements and such other
documents as may be necessary to discharge all liens and security interest
granted by each Borrower, as applicable, in favor of Sovereign Bank;

 

(k)           a Borrowing Base Certificate in respect of the
Revolving Loan, duly executed by each Borrower’s Chief Executive Officer, Chief
Financial Officer or President or equivalent position, dated as of the Closing
Date; and

 

(l)            such other documents as Lender may reasonably request.

 

4.2.          All Advances.  On each Advance Date:

 

(a)           Lender shall have received an Advance Request and a
Note for the relevant Advance as required by Section 2.1(b) or
2.2(b), as applicable, each duly executed by each Borrower’s Chief Executive
Officer, Chief Financial Officer or equivalent position.

 

(b)           The representations and warranties set forth in this
Agreement and in Section 5 shall be true and correct in all material
respects on and as of the Advance Date with the same effect as though made on
and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.

 

(c)           Each Borrower and the Borrowers, collectively shall be
in compliance in all material respects with all the terms and provisions set
forth herein and in each other Loan Document on its part to be observed or
performed, and at the time of and immediately after such Advance no Event of
Default shall have occurred and be continuing.

 

(d)           Each Advance Request shall be deemed to constitute a
representation and warranty by each Borrower on the relevant Advance Date as to
the matters specified in paragraphs (b) and (c) of this Section 4.2
and as to the matters set forth in the Advance Request.

 

26

 

(e)           In connection with any Advance Request for a Revolving
Loan Advance, the documents required pursuant to Section 2.1(b) hereof.

 

4.3.          No Default.  As of the Closing Date and each Advance Date,
(i) no fact or condition exists that would (or would, with the passage of
time, the giving of notice, or both) constitute an Event of Default and (ii) no
event that has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing.

 

 

SECTION 5.         REPRESENTATIONS AND
WARRANTIES OF BORROWER

 

Each Borrower represents and warrants that:

 

5.1.          Corporate
Status.  Such Borrower is a corporation
or limited liability company duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified in all
jurisdictions in which the nature of its business or location of its properties
require such qualifications and where the failure to be qualified could
reasonably be expected to have a Material Adverse Effect.  Such Borrower’s present name, former names
(if any), locations, place of formation, tax identification number,
organizational identification number and other information are correctly set
forth in Exhibit C, as may be updated by Borrowers in a
written notice (including any Compliance Certificate) provided to Lender after
the Closing Date.

 

5.2.          Collateral.  Such Borrower owns the Collateral, free of
all Liens, except for Permitted Liens. 
Such Borrower has the power and authority to grant to Lender a Lien in
the Collateral as security for the Secured Obligations.

 

5.3.          Consents.  Such Borrower’s execution, delivery and
performance of the Notes, this Agreement and all other Loan Documents, (i) have
been duly authorized by all necessary corporate or limited liability company
action, as applicable, of such Borrower, (ii) will not result in the
creation or imposition of any Lien upon the Collateral, other than Permitted
Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do
not violate any provisions of such Borrower’s articles of incorporation or
formation, as applicable, bylaws or operating agreement, as applicable, or any,
law, regulation, order, injunction, judgment, decree or writ to which such
Borrower is subject and (iv) except as described on Schedule 5.3,
do not violate any contract or agreement or require the consent or approval of
any other Person.  The individual or
individuals executing the Loan Documents are duly authorized to do so.

 

5.4.          Material
Adverse Effect.  No event
that has had or could reasonably be expected to have a Material Adverse Effect
has occurred and is continuing. Such Borrower is not aware of any event likely
to occur that is reasonably expected to result in a Material Adverse Effect.

 

5.5.          Actions Before
Governmental Authorities. 
Except as described on Schedule  5.5, there are no actions,
suits or proceedings at law or in equity or by or before any governmental
authority now pending or, to the knowledge of such Borrower, threatened against
or affecting such Borrower or its property.

 

5.6.          Laws.  Such Borrower is not in violation of any law,
rule or regulation, or in default with respect to any judgment, writ,
injunction or decree of any governmental authority, 

 

27

 

where
such violation or default could reasonably be expected to result in a Material
Adverse Effect.  Such Borrower is not in
default in any manner under any provision of any agreement or instrument
evidencing indebtedness, or any other material agreement to which it is a party
or by which it is bound where such default could reasonably be expected to
result in a Material Adverse Effect.

 

5.7.          Information
Correct and Current.  No
information, report, Advance Request, financial statement, exhibit or schedule
furnished, by or on behalf of such Borrower to Lender in connection with any
Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading at the time such statement was made or deemed made.
Additionally, any and all financial or business projections provided by such
Borrower to Lender shall be provided in good faith and based on reasonable
assumptions at the time made.

 

5.8.          Tax Matters.  Except as described on Schedule  5.8,
(a) such Borrower has filed all federal, state and local tax returns that
it is required to file, (b) such Borrower has duly paid or fully reserved
for all taxes or installments thereof (including any interest or penalties) as
and when due, which have or may become due pursuant to such returns, and (c) such
Borrower has paid or fully reserved for any tax assessment received by such
Borrower for the three (3) years preceding the Closing Date, if any
(including any taxes being contested in good faith and by appropriate
proceedings).

 

5.9.          Intellectual
Property Claims.  Such
Borrower is the sole owner of, or otherwise has the right to use, its
Intellectual Property.  Except as
described on Schedule  5.9, (i) each of the material
Copyrights, Trademarks and Patents is valid and enforceable, (ii) no
material part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and (iii) no claim has been made to
such Borrower that any material part of the Intellectual Property violates the
rights of any third party.  Exhibit D
contains a true, correct and complete list of each of such Borrower’s Patents,
registered Trademarks, registered Copyrights, and material agreements under
which such Borrower licenses Intellectual Property from third parties (other
than shrink-wrap software licenses), together with application or registration
numbers, as applicable, owned by Parent Borrower or any Subsidiary, in each
case as of the Closing Date.  Such
Borrower is not in material breach of, nor has such Borrower failed to perform
any material obligations under, any of the contracts, licenses or agreements
related to material Intellectual Property and, to such Borrower’s knowledge, no
third party to any such contract, license or agreement is in material breach
thereof or has failed to perform any material obligations thereunder.

 

5.10.        Intellectual
Property.  Except as
described on Schedule  5.10, such Borrower has, or in the case of
any proposed business, will have, all material rights with respect to
Intellectual Property necessary in the operation or conduct of such Borrower’s
business as currently conducted and proposed to be conducted by such
Borrower.  Without limiting the
generality of the foregoing, and in the case of Licenses, except for
restrictions that are unenforceable under Division 9 of the UCC, such Borrower
has the right, to the extent required to operate such Borrower’s business, to
freely transfer, license or assign Intellectual Property without condition, 

 

28

 

restriction
or payment of any kind (other than license payments in the ordinary course of
business) to any third party, and such Borrower owns or has the right to use,
pursuant to valid licenses, all material software development tools, library
functions, compilers and all other third-party software and other items that
are used in the design, development, promotion, sale, license, manufacture,
import, export, use or distribution of Borrower Products.

 

5.11.        Borrower
Products.  Except as
described on Schedule 5.11, no material Intellectual
Property owned by such Borrower or Borrower Product has been or is subject to
any actual or, to the knowledge of such Borrower, threatened litigation,
proceeding (including any proceeding in the United States Patent and Trademark
Office or any corresponding foreign office or agency) or outstanding decree,
order, judgment, settlement agreement or stipulation that restricts in any
manner such Borrower’s use, transfer or licensing thereof or that may affect in
a material respect the validity, use or enforceability thereof.  There is no decree, order, judgment,
agreement, stipulation, arbitral award or other provision entered into in
connection with any litigation or proceeding that obligates such Borrower to
grant licenses or ownership interest in any future material Intellectual
Property related to the operation or conduct of the business of such Borrower
or Borrower Products.  Such Borrower has
not received any written notice or claim challenging or questioning such
Borrower’s ownership in any material Intellectual Property (or written notice
of any claim challenging or questioning the ownership in any licensed material
Intellectual Property of the owner thereof) or suggesting that any third party
has any claim of legal or beneficial ownership with respect thereto nor, to
such Borrower’s knowledge, is there a reasonable basis for any such claim.  Neither such Borrower’s use of its material
Intellectual Property nor the production and sale of Borrower Products
infringes the Intellectual Property or other rights of others.

 

5.12.        Financial
Accounts.  Exhibit E,
as may be updated by the Borrowers in a written notice provided to Lender after
the Closing Date, is a true, correct and complete list of (a) all banks
and other financial institutions at which Parent Borrower or any Subsidiary
maintains Deposit Accounts and (b) all institutions at which Parent
Borrower or any Subsidiary maintains an account holding Investment Property,
and such exhibit correctly identifies the name, address and telephone number of
each bank or other institution, the name in which the account is held, a
description of the purpose of the account, and the complete account number
therefor.

 

5.13.        Intentionally
Deleted.

 

5.14.        Capitalization
and Subsidiaries.  Such
Borrower’s capitalization as of the Closing Date is set forth on Schedule
5.14 annexed hereto.  Such
Borrower does not own any stock, partnership interest or other equity
securities of any Person, except for Permitted Investments.  Attached as Schedule  5.14, as
may be updated by Borrowers in a written notice provided after the Closing
Date, is a true, correct and complete list of each Subsidiary.

 

5.15.        Eligible
Accounts.  For any
Eligible Account in any Borrowing Base Certificate, all statements made and all
unpaid balances appearing in all Borrowing Base Certificates,  invoices, instruments and other documents
evidencing such Eligible Accounts are and shall be true and correct (except for
any good faith immaterial errors promptly corrected when discovered) and all
such Borrowing Base Certificates, invoices, instruments and other documents,
and all of each Borrower’s books are genuine and in all respects what they
purport to 

 

29

 

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.  Such 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 such 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.

 

SECTION
6.         INSURANCE;
INDEMNIFICATION

 

6.1.          Coverage.  Each Borrower shall cause to be carried and
maintained commercial general liability insurance, on an occurrence form,
against risks customarily insured against in each Borrower’s line of business.  Such risks shall include the risks of bodily
injury, including death, property damage, personal injury, advertising injury,
and contractual liability.  Each Borrower
must maintain a minimum of $2,000,000 of commercial general liability insurance
for each occurrence.  Each Borrower has
and agrees to maintain a minimum of $2,000,000 of directors and officers’
insurance for each occurrence and $5,000,000 in the aggregate.  So long as there are any Secured Obligations
outstanding, each Borrower shall also cause to be carried and maintained
insurance upon the Collateral, insuring against all risks of physical loss or
damage howsoever caused, in an amount not less than the full replacement cost
of the Collateral, provided that such insurance may be subject to
standard exceptions and deductibles. 
Each Borrower shall also carry and maintain a fidelity insurance policy
in an amount not less than $100,000.

 

6.2.          Certificates.  Each Borrower shall deliver to Lender
certificates of insurance that evidence such Borrower’s compliance with its
insurance obligations in Section 6.1 and the obligations contained in this
Section 6.2.  Each Borrower’s
insurance certificate shall state Lender is an additional insured for
commercial general liability, an additional insured and a loss payee for all
risk property damage insurance, subject to the insurer’s approval, a loss payee
for fidelity insurance, and a loss payee for property insurance and additional
insured for liability insurance for any future insurance that such Borrower may
acquire from such insurer.  Attached to
the certificates of insurance will be additional insured endorsements for
liability and lender’s loss payable endorsements for all risk property damage
insurance and fidelity.  All certificates
of insurance will provide for a minimum of thirty (30) days advance written
notice to Lender of cancellation or any other change adverse to Lender’s
interests.  Any failure of Lender to
scrutinize such insurance certificates for compliance is not a waiver of any of
Lender’s rights, all of which are reserved.

 

6.3.          Indemnity.  Each Borrower agrees to indemnify and hold
Lender and its officers, directors, employees, agents, attorneys,
representatives and shareholders harmless from and against any and all claims,
costs, expenses, damages and liabilities (including such claims, costs,
expenses, damages and liabilities based on liability in tort, including strict
liability in tort), including reasonable attorneys’ fees and disbursements and
other costs of investigation or defense (including those incurred upon any
appeal), that may be instituted or asserted against or incurred by Lender or
any such Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents or the
administration of such credit, or in connection with or arising out of the
transactions contemplated hereunder and 

 

30

 

thereunder,
or any actions or failures to act in connection therewith, or arising out of
the disposition or utilization of the Collateral, excluding in all cases claims
resulting solely from Lender’s gross negligence or willful misconduct. Each
Borrower agrees to pay, and to save Lender harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
excise, sales or other similar taxes (excluding taxes imposed on or measured by
the net income of Lender) that may be payable or determined to be payable with
respect to any of the Collateral or this Agreement.

 

SECTION 7.         COVENANTS
OF BORROWER

 

Each Borrower agrees as follows:

 

7.1.          Financial Reports.  Borrowers shall furnish to Lender the
Compliance Certificate in the form of Exhibit F quarterly
within 45 days after the end of each fiscal quarter and the financial
statements listed hereinafter (the “Financial Statements”):

 

(a)           as soon as practicable (and in any event within 30
days) after the end of each month, unaudited interim financial statements as of
the end of such month (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows, all certified by Parent Borrower’s Chief Executive Officer or Chief
Financial Officer to the effect that they have been prepared in accordance with
GAAP, except (i) for the absence of footnotes, (ii) that they are
subject to normal quarter end and year end adjustments, and (iii) they do
not contain certain non-cash items that are customarily included in quarterly
and annual financial statements;

 

(b)           as soon as practicable (and in any event within 45
days) after the end of each fiscal quarter, unaudited interim financial
statements as of the end of such fiscal quarter (prepared on a consolidated and
consolidating basis, if applicable), including balance sheet and related
statements of income and cash flows, all certified by Parent Borrower’s Chief
Executive Officer or Chief Financial Officer to the effect that they have been
prepared in accordance with GAAP, except (i) for the absence of footnotes,
and (ii) that they are subject to normal year end adjustments;

 

(c)           as soon as practicable (and in any event within ninety
(90) days) after the end of each fiscal year, (i) unqualified audited
consolidated financial statements as of the end of such year, including balance
sheet and related statements of income and cash flows, and setting forth in
comparative form the corresponding figures for the preceding fiscal year,
certified by a firm of independent certified public accountants selected by
Parent Borrower and reasonably acceptable to Lender, accompanied by any
management report from such accountants;

 

(d)           so long as the Revolving Loan is outstanding, as soon
as practicable (and in any event within five (5) days after the end of
each calendar week (each calendar week deemed, for purposes hereof, to end on a
Friday), a Borrowing Base Certificate and agings of accounts receivable and
accounts payable;

 

(e)           promptly after the sending
or filing thereof, as the case may be, copies of any proxy statements, financial
statements or reports that any Borrower has made 

 

31

 

available to holders of its
Preferred Stock and copies of any regular, periodic and special reports or
registration statements that any Borrower files with the Securities and
Exchange Commission or any Governmental Authority that may be substituted
therefor, or any national securities exchange;

 

(f)            promptly after the sending
or filing thereof, as the case may be, copies of any proxy statements, financial
statements or reports that any Borrower has made available to holders of its
Capital Stock and copies of any regular, periodic and special reports or
registration statements that any Borrower files with the Securities and
Exchange Commission or any governmental authority that may be substituted
therefor, or any national securities exchange; and

 

(g)           budgets, operating plans and other financial
information reasonably requested by Lender.

 

The executed Compliance
Certificate may be sent via facsimile to Lender at (650) 473-9194 or via e-mail
to rliu@herculestech.com.  All Financial
Statements required to be delivered pursuant to clauses (a), (b) and (c) shall
be sent via e-mail to financialstatements@herculestech.com with a copy to
rliu@herculestech.com, provided, that if e-mail is not available or
sending such Financial Statements via e-mail is not possible, they shall be
sent via facsimile to Lender at: (866) 468-8916, attention Chief Credit
Officer.

 

7.2.          Other Notices.  Parent Borrower shall deliver to Lender, in
form and detail reasonably satisfactory to the Lender:

 

(a)           promptly (but in any event within two (2) Business
Days after receipt or delivery thereof) all material notices and instructions
made under any Acquisition Documents;

 

(b)           promptly (but in any event within two (2) Business
Days after receipt or delivery thereof or knowledge thereof) copies of all
written notices or claims challenging or questioning any Borrower’s
ownership in any material Intellectual Property (or written notice of any claim
challenging or questioning the ownership in any material licensed Intellectual
Property of the owner thereof) or suggesting that any third party has any claim
of legal or beneficial ownership with respect thereto; and

 

(c)           promptly the reports specified in Section 3.2(g).

 

7.3.          Management Rights.  (a)    Each Borrower shall permit any representative that
Lender authorizes, including without limitation its attorneys, financial
advisors and accountants, to inspect the Collateral and examine and make copies
and abstracts of the books of account and records of such Borrower at
reasonable times and upon reasonable notice during normal business hours.  In addition, any such representative shall
have the right to meet with management and officers of such Borrower to discuss
such books of account and records.  In
addition, Lender shall be entitled at reasonable times and intervals to consult
with and advise the management and officers of each Borrower concerning
significant business issues affecting such Borrower.  Such consultations shall not unreasonably
interfere with Borrower’s business operations. 
The parties intend that the rights granted Lender shall constitute “management
rights” within the meaning of 

 

32

 

29 C.F.R.
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Lender with respect to any business issues shall not be deemed
to give Lender, nor be deemed an exercise by Lender of, control over any
Borrower’s management or policies.

 

(b)           No more frequently than once
during each calendar year, or more frequently as determined by the Lender if an
Event of Default shall have occurred and be continuing, upon the request of the
Lender, the Borrowers will obtain and deliver to the Lender, or, if the Lender
so elects, will cooperate with the Lender in the Lender’s obtaining, a report
of an independent collateral auditor satisfactory to the Lender with respect to
the Accounts included in the Borrowing Base, which report shall indicate
whether or not the information set forth in the Borrowing Base Certificate most
recently delivered is accurate and complete in all material respects based upon
a review by such auditors (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the billing
practices of the Borrower or its applicable Subsidiary).  All such collateral value reports shall be
conducted and made at the expense of the Borrowers.

 

7.4.          Further
Assurances.  Each Borrower
shall from time to time execute, deliver and file, alone or with Lender, any
financing statements, security agreements, collateral assignments, notices,
control agreements, or other documents to perfect or give the highest priority
to Lender’s Lien on the Collateral, subject to Permitted Liens which were as of
the Closing Date unavoidable and senior under applicable law to the Lender’s
liens and security interest (other than Liens under clause (vii) of the
definition of Permitted Liens which may be permitted to remain senior to the
Lender’s Liens).  Each Borrower shall
from time to time procure any instruments or documents as may be requested by
Lender, and take all further action that may be necessary or desirable, or that
Lender may reasonably request, to perfect and protect the Liens granted hereby
and thereby.  In addition, and for such
purposes only, each Borrower hereby authorizes Lender to execute and deliver on
behalf of such Borrower and to file such financing statements, collateral
assignments, notices, control agreements, security agreements and other
documents without the signature of such Borrower either in Lender’s name or in
the name of Lender as agent and attorney-in-fact for such Borrower.  Borrowers shall protect and defend each
Borrower’s title to the Collateral and Lender’s Lien thereon against all
Persons claiming any interest adverse to each Borrower or Lender other than
Permitted Liens.

 

7.5.          Compromise of
Agreements.  With
respect to Accounts with a combined value in excess of ten percent (10%) of all
of Borrowers’ Accounts then outstanding, no Borrower shall (a) grant any
material extension of the time of payment thereof, (b) to any material
extent, compromise, compound or settle the same for less than the full amount
thereof, (c) release, wholly or partly, any Person liable for the payment
thereof, or (d) allow any credit or discount whatsoever thereon other than
trade discounts granted by such Borrower in the ordinary course of business of
such Borrower.

 

7.6.          Indebtedness.  Parent Borrower shall not create, incur,
assume, guarantee or be or remain liable with respect to any Indebtedness, or
permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay
any Indebtedness or take any actions which impose on any Borrower an obligation
to prepay any Indebtedness, except for (a) the conversion of Indebtedness
into equity securities and the payment of cash in lieu of fractional shares in
connection with such conversion and (b) the Permitted Subordinated Debt
Payments under the 

 

33

 

HIA
Indebtedness in accordance with the HIA Subordination Agreement, so long as no
Event of Default shall have occurred or would result therefrom, or any event
that, with the passage of time or giving of notice, or both, would constitute
an Event of Default or would result therefrom.

 

7.7.          Collateral.  Each Borrower shall at all times keep the
Collateral and all other property and assets used in such Borrower’s business
or in which such Borrower now or hereafter holds any interest free and clear
from any legal process or Liens whatsoever (except for Permitted Liens), and
shall give Lender prompt written notice of any legal process affecting the
Collateral or any Liens thereon.  Parent
Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s
title to its assets from and against all Persons claiming any interest adverse
to such Subsidiary, and Parent Borrower shall cause its Subsidiaries at all
times to keep such Subsidiary’s property and assets free and clear from any
legal process or Liens whatsoever (except for Permitted Liens), and shall give
Lender prompt written notice of any legal process affecting such Subsidiary’s
assets. Parent Borrower shall not, nor shall it permit any of its Subsidiaries
to enter into or permit to exist any arrangement or agreement (excluding this
Agreement and the other Loan Documents) which directly or indirectly prohibits
the Parent Borrower or any of its Subsidiaries from creating, assuming or
incurring any Lien upon its properties, revenues or assets or those of any of
its Subsidiaries whether now owned or hereafter acquired or to make transfers
or distributions of all of any part of its assets to the Parent Borrower; in
each case other than (i) restrictions on specific assets which assets are
the subject of purchase money security interests to the extent included as a
Permitted Lien, and (ii) customary anti-assignment provisions contained in
leases and licensing agreements entered into by the Parent Borrower or such
Subsidiary in the ordinary course of business.

 

7.8.          Investments.  Parent Borrower shall not directly or
indirectly acquire or own, or make any Investment in or to any Person, or
permit any of its Subsidiaries so to do, other than Permitted Investments.

 

7.9.          Distributions.  Parent Borrower shall not, and shall not
allow any Subsidiary to, (a) repurchase or redeem any class of stock or
other equity interest other than pursuant to employee, director or consultant
repurchase plans or other similar agreements, provided, however,
in each case the repurchase or redemption price does not exceed the original
consideration paid for such stock or equity interest, or (b) declare or
pay any cash dividend or make a cash distribution on any class of stock or other
equity interest, except that a Subsidiary may pay dividends or make
distributions to Parent Borrower or (c) lend money to any employees,
officers or directors or guarantee the payment of any such loans granted by a
third party in excess of $100,000 in the aggregate or (d) waive, release
or forgive any indebtedness owed by any employees, officers or directors in
excess of $100,000 in the aggregate.

 

7.10.        Transfers.  Except for Permitted Transfers, no Borrower
shall voluntarily or involuntarily transfer, sell, lease, license, lend or in
any other manner convey any equitable, beneficial or legal interest in any
material portion of their assets, and, except for Permitted Transfers, no
Borrower shall voluntarily or involuntarily transfer, sell, lease, license, or
lend in any manner, or convey any equitable or legal interest in any Account.

 

7.11.        Mergers or
Acquisitions. 
Except with respect to Permitted Acquisitions, Parent Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or 

 

34

 

consolidate, with or into any other business organization
(other than mergers or consolidations of a Subsidiary into another Subsidiary
or into Parent Borrower), or acquire, or permit
any of its Subsidiaries to acquire, all or substantially all of the Capital
Stock or property of another Person.

 

7.12.        Taxes.  Any Borrower and its Subsidiaries shall pay
when due all taxes, fees or other charges of any nature whatsoever (together
with any related interest or penalties) now or hereafter imposed or assessed
against any Borrower or the Collateral or upon any Borrower’s ownership,
possession, use, operation or disposition thereof or upon any Borrower’s rents,
receipts or earnings arising therefrom. 
Parent Borrower shall file on or before the due date therefor all
personal property tax returns in respect of the Collateral.  Notwithstanding the foregoing, any Borrower
may contest, in good faith and by appropriate proceedings, taxes for which such
Borrower maintains adequate reserves therefor in accordance with GAAP.

 

7.13.        Corporate
Changes.  Neither Parent Borrower nor
any Subsidiary shall change its corporate name, legal form or jurisdiction of
formation without twenty (20) days’ prior written notice to Lender.  Neither Parent Borrower nor any Subsidiary
shall suffer a Change in Control. Neither Parent Borrower nor any Subsidiary
shall relocate its chief executive office or its principal place of business
unless: (i) it has provided written notice to Lender; and (ii) such
relocation shall be within the continental United States.  Neither Parent Borrower nor any Subsidiary
shall relocate any item of Collateral (other than (x) sales of Inventory
in the ordinary course of business, (y) relocations of equipment having an
aggregate value of up to $150,000 in any fiscal year, and (z) relocations
of Collateral from a location described on Exhibit C to
another location described on Exhibit C) unless (i) it
has provided prompt written notice to Lender, (ii) such relocation is
within the continental United States and, (iii) if such relocation is to a
third party bailee, it has delivered a bailee agreement in form and substance
reasonably acceptable to Lender.  Except
as may be required for Parent Borrower and the Subsidiaries to comply with the
provisions of GAAP, neither Parent Borrower nor any Subsidiary shall change its
fiscal year end from December 31st of each year and its fiscal quarter
ends from March 31st, June 30th, September 30th and December 31st
of each year; provided that if such change is required by GAAP, Parent Borrower
will notify Lender of the same and Borrowers agree to modify the provisions of
this Agreement to reflect such changes, as may be reasonably requested by
Lender,

 

7.14.        Deposit
Accounts.  Except to
the extent expressly permitted under Schedule 7.14, neither Parent
Borrower nor any Subsidiary shall maintain any deposit accounts, or accounts
holding investment property, except with respect to which Lender has an Account
Control Agreement.

 

7.15.        New
Subsidiaries. Parent Borrower shall notify Lender of each
Subsidiary formed subsequent to the Closing Date and, within 15 days of
formation, shall cause any such Subsidiary organized under the laws of any
State within the United States to execute and deliver to Lender a Joinder
Agreement.

 

7.16.        Modification of
Material Agreements.  Parent
Borrower will not, and will not permit any of its respective Subsidiaries to,
consent to any amendment, supplement, waiver or other modification of, any
Material Agreements (unless such change is of an immaterial or ministerial
nature) without the prior written consent of the Lender.

 

35

 

7.17.        Account Eligibility.
 Parent Borrower shall notify Lender
promptly of any event or circumstance which to any Borrower’s knowledge would
cause Lender to consider then existing accounts of more than $100,000 as no
longer constituting Eligible Accounts.

 

7.18.        Compliance with Laws.  Parent Borrower shall and shall cause each of
its respective Subsidiaries to, comply with (a) the applicable laws and
regulations wherever its business is conducted to the extent to which the
non-compliance of such laws and regulations could not reasonably be expected to
result in a Material Adverse Effect, (b) the provisions of its Governing
Documents, (c) all agreements and instruments by which it and any of its
properties may be bound to the extent to which the non-compliance of such laws
and regulations could not reasonably be expected to result in a Material
Adverse Effect and (d) all applicable decrees, orders and judgments.

 

7.19.        Intentionally
Deleted.

 

7.20.        Financial
Covenants.

 

(a)           Consolidated
Adjusted EBITDA.

 

(i)            The
Borrowers shall not permit the Consolidated Adjusted EBITDA for any Twelve
Month Measurement Period ending during any fiscal month, commencing with the
month ending May 31, 2008 and ending with the month ending December 31,
2008, to be less than the amount set forth below opposite such Twelve Month
Measurement Period ending date:

 

	
  Measurement Period Ending

  	
   

  	
  Consolidated

  Adjusted EBITDA

  	
   

  
	
  May 31, 2008

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  July 31, 2008

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  August 31, 2008

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  October 31, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  November 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  5,900,000

  	
   

  

 

(ii)  The Borrowers shall not permit the
Consolidated Adjusted EBITDA for any Twelve Month Measurement Period ending
during any fiscal quarter, commencing with the fiscal quarter ending March 31,
2009 and ending with the fiscal quarter ending March 31, 2012, to be less
than the amount set forth below opposite such Twelve Month Measurement Period
ending date:

 

36

 

	
  Measurement Period Ending

  	
   

  	
  Consolidated

  Adjusted EBITDA

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  8,250,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  9,250,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  9,500,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  10,250,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  11,000,000

  	
   

  

 

(b)           Consolidated Total
Adjusted Leverage Ratio.

 

(i)            The
Borrowers shall not permit the Consolidated Total Adjusted Leverage Ratio for
any Twelve Month Measurement Period ending during any fiscal quarter commencing
with the quarter ending December 31, 2008, to be greater than the amount
set forth below opposite such Measurement Period ending date:

 

	
  Measurement Period Ending

  	
   

  	
  Consolidated Total

  Adjusted Leverage

  Ratio

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.0 to 1

  	
   

  
	
  March 31, 2009

  	
   

  	
  2.5 to 1

  	
   

  
	
  June 30, 2009

  	
   

  	
  2.5 to 1

  	
   

  
	
  September 30, 2009

  	
   

  	
  2.5 to 1

  	
   

  
	
  December 31, 2009

  	
   

  	
  2.5 to 1

  	
   

  
	
  March 31, 2010

  	
   

  	
  2.25 to 1

  	
   

  
	
  June 30, 2010

  	
   

  	
  2.25 to 1

  	
   

  
	
  September 30, 2010

  	
   

  	
  2.0 to 1

  	
   

  
	
  December 31, 2010

  	
   

  	
  2.0 to 1

  	
   

  
	
  March 31, 2011

  	
   

  	
  2.0 to 1

  	
   

  
	
  June 30, 2011

  	
   

  	
  1.5 to 1

  	
   

  
	
  September 30, 2011

  	
   

  	
  1.5 to 1

  	
   

  
	
  December 31, 2011

  	
   

  	
  1.5 to 1

  	
   

  
	
  March 31, 2012

  	
   

  	
  1.5 to 1

  	
   

  

 

(c)           Minimum Availability.  Until such time as the date that is two (2) Business
Days following delivery of a Compliance Certificate demonstrating that the
Parent Borrower’s Consolidated EBITDA as of the most recently ended fiscal
month for the most recently ended Three Month Measurement Period is greater
than $1,500,000, the 

 

37

 

Borrowers shall not permit the result of (i) the
Borrowing Base minus (ii) outstanding Revolving Loan Advances to be
less than $2,500,000.

 

7.21.        Use of Proceeds.  Borrowers will use the proceeds from each of
the Term Loan and the Revolving Loan (i) to refinance existing debt of the
Parent Borrower on the Closing Date, (ii) to fund Permitted Acquisitions,
and (iii) for general corporate and working capital purposes.

 

7.22.        Post
Closing Requirements.

 

(a)           Intellectual
Property.  On or before the sixtieth
(60th) day after the Closing Date, Borrowers shall take all actions reasonably
necessary to provide Lender with a first priority security interest in the
Intellectual Property, free and clear of all liens and defects, and Borrowers
shall provide to Lender a lien report obtained by Borrowers and Borrowers’
expense, of the Intellectual Property registered at the United States Patent
and Trademark Office, United States Copyright Office and Library of Congress,
as applicable, which lien report shall reflect the Lender’s first priority
security interest in such Collateral, free and clear of all liens and defects.

 

(b)           Operating Agreements.  On or before the thirtieth (30th) day after
the Closing Date, Borrowers shall deliver restated Operating Agreements for Opt
and Embedded, in form and substance reasonably satisfactory to Lender.

 

(c)           Deposit Account
Control Agreements.  On or before the
ninetieth (90th) day after the Closing Date, Borrowers shall deliver to Lender
Account Control Agreements with respect to the deposit accounts, other than
payroll and trust accounts, in form and substance reasonably satisfactory to
the Lender.

 

(d)           Investment Accounts.  On or before the ninetieth (90th) day after
the Closing Date, Borrowers shall deliver to Lender Account Control Agreements
with respect to each of its accounts holding Investment Property, in form and
substance reasonably satisfactory to the Lender.  Until such time as such Account Control
Agreements are executed and delivered, Borrowers shall not make any withdrawals
(including without limitation in the form of securities or funds) from such
accounts without the prior consent of the Lender, which may be withheld in the
Lender’s sole discretion; provided, however, that such consent shall not be
withheld if and to the extent the proceeds of any such withdrawal will be used
solely to repay Revolving Loan Advances.

 

(e)           Delta Health Systems, Inc.  On or about the Closing Date, Borrowers
delivered to Lender all Delta Acquisition Documents for review by Lender, and
it is anticipated that the transaction contemplated by the Delta Acquisition
Documents will be consummated prior to the Lender’s ability to fully review
such documents.  In order to accommodate
such review and entice the Lender to enter into this Agreement prior to such
review, Borrowers shall, in addition to delivering such items as may be
required for the transaction contemplated by the Delta Acquisition Documents to
constitute a “Permitted Acquisition” hereunder, take all actions reasonably
required by Lender within such period of time as the Lender may reasonably
determine, including without limitation in order to convey to Lender a first
priority perfected 

 

38

 

security interest in the
assets conveyed pursuant to the Delta Acquisition Documents and to update such
schedules and certificates as may be required by Lender.

 

(f)            Stock Certificates.  On or before the fifteenth (15th) day after
the Closing Date, Borrowers shall deliver to Lender stock certificates or
membership interest certificates, as applicable, for each of DDMS and Opt.

 

(g)           Revised Liability
Insurance Certificate.  On or before
the fifteenth (15th) day after the Closing Date, Borrowers shall deliver to
Lender a binding certificate of liability insurance in form and substance
reasonably acceptable to Lender.

 

SECTION 8.         INTENTIONALLY DELETED.

 

SECTION 9.         EVENTS OF DEFAULT

 

The occurrence of any one or more of the
following events shall be an Event of Default:

 

9.1.          Payments.  Any Borrower fails to pay any amount due
under this Agreement, the Notes or any of the other Loan Documents on the due
date; or

 

9.2.          Covenants.  Any Borrower breaches or defaults in the
performance of any covenant or Secured Obligation under this Agreement, the
Notes, or any of the other Loan Documents, and (a) with respect to a
default under any covenant under this Agreement (other than under Sections 6,
7.5, 7.6, 7.7, 7.8, 7.9, 7.20, or 7.22) such default continues for more than
fifteen (15) days after the earlier of the date on which (i) Lender has
given notice of such default to Parent Borrower and (ii) Parent Borrower
has actual knowledge of such default or (b) with respect to a default
under any of Sections 6, 7.5, 7.6, 7.7, 7.8, 7.9, 7.20 or 7.22, the occurrence
of such default; or

 

9.3.          Material Adverse
Effect.  A circumstance has occurred
that has had a Material Adverse Effect; or

 

9.4.          Other Loan Documents.  The occurrence of any default under any Loan
Document or any other agreement between any Borrower and Lender and such
default continues for more than fifteen (15) days after the earlier of (a) Lender
has given notice of such default to Parent Borrower, or (b) Parent
Borrower has actual knowledge of such default; or

 

9.5.          Representations.  Any representation or warranty made by any
Borrower in any Loan Document shall have been false or misleading in any
material respect; or

 

9.6.          Insolvency.  Any Borrower (A) (i) shall make an
assignment for the benefit of creditors; or (ii) shall be unable to pay
its debts as they become due, or be unable to pay or perform under the Loan
Documents; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall
file any petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation pertinent to such
circumstances; or (v) shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, or liquidator of such Borrower or of all
or any substantial part of the assets or property of such Borrower; or (vi) cease
operations of its 

 

39

 

business, or shall
terminate substantially all of its employees; or (vii) any Borrower or its
directors or majority shareholders shall or majority members or equivalent
position, take any action initiating any of the foregoing actions described in
clauses (i) through (vi); or (B) either (i) sixty (60) days
shall have expired after the commencement of an involuntary action against such
Borrower seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, without such action being dismissed or all orders or
proceedings thereunder affecting the operations or the business of such
Borrower being stayed; or (ii) a stay of any such order or proceedings
shall thereafter be set aside and the action setting it aside shall not be
timely appealed; or (iii) any Borrower shall file any answer admitting or
not contesting the material allegations of a petition filed against such
Borrower in any such proceedings; or (iv) the court in which such
proceedings are pending shall enter a decree or order granting the relief
sought in any such proceedings; or (v) thirty (30) days shall have expired
after the appointment, without the consent or acquiescence of Borrower, of any
trustee, receiver or liquidator of Borrower or of all or any substantial part
of the properties of Borrower without such appointment being vacated; or

 

9.7.          Attachments;
Judgments.  Any portion of any
Borrower’s assets is attached or seized, or a levy is filed against any such
assets, or a judgment or judgments is/are entered for the payment of money,
individually or in the aggregate, of at least $100,000 which judgment is not
covered by insurance and such judgment is not bonded, appealed or otherwise
stayed for 30 consecutive days, or any Borrower is enjoined or in any way
prevented by court order from conducting any material part of its business;
provided, however, that any such attachment, seizure, levy or judgment in
excess of $750,000, individually or in the aggregate, shall constitute an Event
of Default hereunder not withstanding such insurance coverage, bonding, appeals
or stay; or

 

9.8.          Other Obligations.  The occurrence of any default under any
agreement or obligation of any Borrower involving any Indebtedness in excess of
$100,000; or

 

9.9.          Change in Control.
A Change in Control shall occur.

 

SECTION 10.       REMEDIES

 

10.1.        General.  Upon and during the continuance of any one or
more Events of Default, (i) Lender may, at its option, accelerate and
demand payment of all or any part of the Secured Obligations together with a
Term Loan Prepayment Charge and declare them to be immediately due and payable
(provided, that upon the occurrence of an
Event of Default of the type described in Section 9.6 and Section 9.9,
the Notes and all of the Secured Obligations shall automatically be accelerated
and made due and payable, in each case without any further notice or act), and (ii) Lender
may notify any of Borrower’s account debtors or any Borrower to make payment
directly to Lender, compromise the amount of any such account on such Borrower’s
behalf and endorse Lender’s name without recourse on any such payment for deposit
directly to Lender’s account.  Lender may
exercise all rights and remedies with respect to the Collateral under the Loan
Documents or otherwise available to it under the UCC and other applicable law,
including the right to release, hold, sell, lease, liquidate, collect, realize
upon, or otherwise dispose of all or any part of the Collateral and the right
to occupy, utilize, process and commingle the Collateral.  All Lender’s rights and remedies shall be
cumulative and not exclusive.

 

40

 

10.2.        Collection; Foreclosure.  Upon the occurrence and during the
continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise
dispose of, any or all of the Collateral, in its then condition or following
any commercially reasonable preparation or processing, in such order as Lender
may elect.  Any such sale may be made
either at public or private sale at its place of business or elsewhere.  Each Borrower agrees that any such public or
private sale may occur upon ten (10) calendar days’ prior written notice
to such Borrower.  Lender may require any
Borrower or Borrowers to assemble the Collateral and make it available to
Lender at a place designated by Lender that is reasonably convenient to Lender
and such Borrower.  The proceeds of any
sale, disposition or other realization upon all or any part of the Collateral
shall be applied by Lender in the following order of priorities:

 

First, to
Lender in an amount sufficient to pay in full Lender’s costs and professionals’
and advisors’ fees and expenses as described in Section 11.11;

 

Second, to
Lender in an amount equal to the then unpaid amount of the Secured Obligations
(including principal, interest, and the Default Rate interest), in such order
and priority as Lender may choose in its sole discretion; and

 

Finally, after
the full and final payment in Cash of all of the Secured Obligations, to any
creditor holding a junior Lien on the Collateral, or to Borrowers or their
representatives or as a court of competent jurisdiction may direct.

 

Lender shall
be deemed to have acted reasonably in the custody, preservation and disposition
of any of the Collateral if it complies with the obligations of a secured party
under the UCC.

 

10.3.        No Waiver.  Lender shall be under no obligation to
marshal any of the Collateral for the benefit of any Borrower or any other
Person, and each Borrower expressly waives all rights, if any, to require
Lender to marshal any Collateral.

 

10.4.        Cumulative Remedies.  The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. 
The exercise of any one or more of the rights, powers and remedies
provided herein shall not be construed as a waiver of or election of remedies
with respect to any other rights, powers and remedies of Lender.

 

SECTION 11.       MISCELLANEOUS

 

11.1.        Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective
only to the extent and duration of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

11.2.        Notice.  Except as otherwise provided herein, any
notice, demand, request, consent, approval, declaration, service of process or
other communication (including the delivery of Financial Statements) that is
required, contemplated, or permitted under the Loan Documents or with respect
to the subject matter hereof shall be in writing, and shall be deemed to have
been 

 

41

 

validly served, given,
delivered, and received upon the earlier of: (i) the day of transmission
by facsimile or hand delivery or delivery by an overnight express service or
overnight mail delivery service; or (ii) the third calendar day after
deposit in the United States mails, with proper first class postage prepaid, in
each case addressed to the party to be notified as follows:

 

	
  (a)

  	
   

  	
  If to Lender:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

  
	
   

  	
   

  	
  Legal Department

  
	
   

  	
   

  	
  Attention: Chief Legal Officer and Roy Liu, Managing Director

  
	
   

  	
   

  	
  400 Hamilton Avenue, Suite 310

  
	
   

  	
   

  	
  Palo Alto, CA 94301

  
	
   

  	
   

  	
  Facsimile: 650-473-9194

  
	
   

  	
   

  	
  Telephone: 650-289-3068

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to any Borrower:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  	
  Attention: John A. Roberts, Chief Financial Officer

  
	
   

  	
   

  	
  101 East County Line Road

  
	
   

  	
   

  	
  Suite 210

  
	
   

  	
   

  	
  Hatboro, PA 19040

  
	
   

  	
   

  	
  Facsimile: 267-681-0682

  
	
   

  	
   

  	
  Telephone: 215-604-0691

  

 

or to such
other address as each party may designate for itself by like notice.

 

11.3.        Entire Agreement;
Amendments.  This Agreement, the
Notes, and the other Loan Documents constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and
thereof, and supersede and replace in their entirety any prior proposals, term
sheets, letters, negotiations or other documents or agreements, whether written
or oral, with respect to the subject matter hereof or thereof (including Lender’s
revised proposal letter dated February 22, 2008).  None of the terms of this Agreement, the
Notes or any of the other Loan Documents may be amended except by an instrument
executed by each of the parties hereto.

 

11.4.        No Strict Construction.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.

 

11.5.        No Waiver.  The powers conferred upon Lender by this
Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon
Lender to exercise any such powers.  No
omission or delay by Lender at any time to enforce any right or remedy reserved
to it, or to require performance of any of the terms, covenants or provisions
hereof by any Borrower at any time designated, shall 

 

42

 

be a waiver of any such
right or remedy to which Lender is entitled, nor shall it in any way affect the
right of Lender to enforce such provisions thereafter.

 

11.6.        Survival.  All agreements, representations and
warranties contained in this Agreement, the Notes and the other Loan Documents
or in any document delivered pursuant hereto or thereto shall be for the
benefit of Lender and shall survive the execution and delivery of this
Agreement and the expiration or other termination of this Agreement.

 

11.7.        Successors and Assigns.  The provisions of this Agreement and the
other Loan Documents shall inure to the benefit of and be binding on any
Borrower and its permitted assigns (if any). 
No Borrower shall assign its obligations under this Agreement, the Notes
or any of the other Loan Documents without Lender’s express prior written
consent, and any such attempted assignment shall be void and of no effect.  Lender may assign, transfer, or endorse its
rights hereunder and under the other Loan Documents without prior notice to
Borrowers, and all of such rights shall inure to the benefit of Lender’s
successors and assigns.

 

11.8.        Governing Law.  This Agreement, the Notes and the other Loan
Documents have been negotiated and delivered to Lender in the State of
California, and shall have been accepted by Lender in the State of
California.  Payment to Lender by
Borrowers of the Secured Obligations is due in the State of California.  This Agreement, the Notes and the other Loan
Documents shall be governed by, and construed and enforced in accordance with,
the laws of the State of California, excluding conflict of laws principles that
would cause the application of laws of any other jurisdiction.

 

11.9.        Consent to Jurisdiction
and Venue.  All judicial proceedings
(to the extent that the reference requirement of Section 11.10 is not
applicable) arising in or under or related to this Agreement, the Notes or any
of the other Loan Documents may be brought in any state or federal court
located in the State of California.  By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in
Santa Clara County, State of California; (b) waives any objection as to
jurisdiction or venue in Santa Clara County, State of California; (c) agrees
not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (d) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement, the Notes or the other Loan
Documents.  Service of process on any
party hereto in any action arising out of or relating to this Agreement shall
be effective if given in accordance with the requirements for notice set forth
in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2.  Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of either party to bring proceedings in the courts of any
other jurisdiction.

 

11.10.      Mutual
Waiver of Jury Trial / Judicial Reference.

 

(a)           Because disputes
arising in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws.  EACH OF BORROWER AND
LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY
CAUSE OF ACTION, CLAIM, 

 

43

 

CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY
OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS
ASSIGNEE OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Claims,
including Claims that involve Persons other than Borrowers and Lender; Claims
that arise out of or are in any way connected to the relationship between any
Borrower and Lender; and any Claims for damages, breach of contract, tort,
specific performance, or any equitable or legal relief of any kind, arising out
of this Agreement, any other Loan Document.

 

(b)           If the waiver of jury
trial set forth in Section 11.10(a) is ineffective or unenforceable,
the parties agree that all Claims shall be resolved by reference to a private
judge sitting without a jury, pursuant to Code of Civil Procedure Section 638,
before a mutually acceptable referee or, if the parties cannot agree, a referee
selected by the Presiding Judge of the Santa Clara County, California.  Such proceeding shall be conducted in Santa
Clara County, California, with California rules of evidence and discovery
applicable to such proceeding.

 

(c)           In the event Claims are
to be resolved by judicial reference, either party may seek from a court
identified in Section 11.9, any prejudgment order, writ or other relief
and have such prejudgment order, writ or other relief enforced to the fullest
extent permitted by law notwithstanding that all Claims are otherwise subject
to resolution by judicial reference.

 

11.11.      Professional Fees.  Each Borrower promises to pay Lender’s fees
and expenses necessary to finalize the loan documentation, including but not
limited to reasonable attorneys fees, UCC searches, filing costs, and other
miscellaneous expenses. In addition, each Borrower promises to pay any and all
reasonable attorneys’ and other professionals’ fees and expenses (including
without limitation, accountants’ fees and financial advisors’ fees in
connection with fees and services described in clauses (b), (c), (d), (e), (f) and
(g)) incurred by Lender after the Closing Date in connection with or related
to:  (a) the Loan; (b) the
administration, collection, or enforcement of the Loan; (c) the amendment
or modification of the Loan Documents; (d) any waiver, consent, release,
or termination under the Loan Documents; (e) the protection, preservation,
sale, lease, liquidation, or disposition of Collateral or the exercise of
remedies with respect to the Collateral; (f) any legal, litigation,
administrative, arbitration, or out of court proceeding in connection with or
related to any Borrower or the Collateral, and any appeal or review thereof;
and (g) any bankruptcy, restructuring, reorganization, assignment for the
benefit of creditors, workout, foreclosure, or other action related to any
Borrower, the Collateral, the Loan Documents, including representing Lender in
any adversary proceeding or contested matter commenced or continued by or on behalf
of any Borrower’s estate, and any appeal or review thereof.  Absent an Event of Default, such fees and
expenses shall be due thirty (30) calendar days after written demand therefor.

 

11.12.      Confidentiality.  Lender acknowledges that certain items of Collateral
and information provided to Lender by Borrowers are confidential and
proprietary information of such Borrowers, if and to the extent such
information either (x) is marked as confidential by Borrowers at the time
of disclosure, or (y) should reasonably be understood to be confidential
(the “Confidential Information”). 
Accordingly, Lender agrees that any Confidential Information 

 

44

 

it may obtain in the
course of acquiring, administering, or perfecting Lender’s security interest in
the Collateral shall not be disclosed to any other person or entity in any
manner whatsoever, in whole or in part, without the prior written consent of
such Borrower, except that Lender may disclose any such information:  (a) to its own directors, officers,
employees, accountants, counsel and other professional advisors and to its
affiliates if Lender in its sole discretion determines that any such party
should have access to such information in connection with such party’s
responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such
Confidential Information either (i) agrees to be bound by the
confidentiality provisions of this paragraph or (ii) is otherwise subject
to confidentiality restrictions that reasonably protect against the disclosure
of Confidential Information; (b) if such information is generally
available to the public; (c) if required in any report, statement or
testimony submitted to any governmental authority having or claiming to have
jurisdiction over Lender; (d) if required in response to any summons or
subpoena or in connection with any litigation, to the extent permitted or
deemed advisable by Lender’s counsel; (e) to comply with any legal
requirement or law applicable to Lender; (f) to the extent reasonably
necessary in connection with the exercise of any right or remedy under any Loan
Document, including Lender’s sale, lease, or other disposition of Collateral
after default; (g) to any participant or assignee of Lender or any
prospective participant or assignee; provided,
that such participant or assignee or prospective participant or assignee agrees
in writing to be bound by this Section prior to disclosure; or (h) otherwise
with the prior consent of the applicable Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of Borrowers or any of their affiliates or any
guarantor under this Agreement or the other Loan Documents.

 

11.13.      Assignment of Rights.  Each Borrower acknowledges and understands
that Lender may sell and assign all or part of its interest hereunder and under
the Note(s) and Loan Documents to any Person or entity (an “Assignee”)
provided that prior to an Event of Default, Lender shall not make such an
assignment unless it has obtained the prior consent of the Parent Borrower,
which consent shall not be unreasonably withheld,
conditioned or delayed.  Notwithstanding
the foregoing, in connection with assignments by a Lender due to a forced
divestiture at the request of any regulatory agency or a sale by Lender of a
material amount of its assets, the restrictions set forth herein shall not
apply and Assignee shall mean any Person or party.  After
such assignment the term “Lender” as used in the Loan Documents shall mean and
include such Assignee, and such Assignee shall be vested with all rights,
powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, Lender
shall retain all rights, powers and remedies hereby given.  No such assignment by Lender shall relieve
any Borrower of any of its obligations hereunder.  Lender agrees that in the event of any
transfer by it of the Note(s), it will endorse thereon a notation as to
the portion of the principal of the Note(s), which shall have been paid at the
time of such transfer and as to the date to which interest shall have been last
paid thereon.

 

11.14.      Revival of Secured
Obligations.  This Agreement and the
Loan Documents shall remain in full force and effect and continue to be
effective if any petition is filed by or against any Borrower for liquidation
or reorganization, if such Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or
any significant part of such Borrower’s assets, or if any payment or transfer
of Collateral is recovered from Lender. 
The Loan Documents and the Secured Obligations and Collateral security
shall continue to be effective, or shall be revived or reinstated, as the case
may be, if at any time 

 

45

 

payment and performance
of the Secured Obligations or any transfer of Collateral to Lender, or any part
thereof is rescinded, avoided or avoidable, reduced in amount, or must
otherwise be restored or returned by, or is recovered from, Lender or by any
obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made.  In the
event that any payment, or any part thereof, is rescinded, reduced, avoided,
avoidable, restored, returned, or recovered, the Loan Documents and the Secured
Obligations shall be deemed, without any further action or documentation, to
have been revived and reinstated except to the extent of the full and final
payment to Lender in Cash.

 

11.15.      Counterparts.  This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

 

11.16.      No Third Party
Beneficiaries.  No provisions of the
Loan Documents are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any person
other than Lender and Borrowers unless specifically provided otherwise herein,
and, except as otherwise so provided, all provisions of the Loan Documents will
be personal and solely among the Lender and the Borrowers.

 

11.17.      Publicity.  With Parent Borrower’s prior consent, which
shall not be unreasonably withheld or delayed, Lender may use any Borrower’s
name and logo, and include a brief description of the relationship between any
Borrower and Lender, in Lender’s marketing materials.

 

 (SIGNATURES TO FOLLOW)

 

46

 

IN WITNESS
WHEREOF, Borrowers and Lender have duly executed and delivered this Loan and
Security Agreement as of the day and year first above written.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  By:

  	
  INFO LOGIX INC., its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX – DDMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David T. Gulian

  
	
   

  	
   

  	
  David
  Gulian, President

  
	
   

  	
   

  	
   

  
	
  Accepted in Palo Alto,
  California:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  HERCULES TECHNOLOGY GROWTH

  CAPITAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature: 

  	
  /s/ K. Nicholas Martitsch

  
	
   

  	
  Name: K. Nicholas Martitsch

  
	
   

  	
  Its: Associate General Counsel

  
					

 

 

Table
of Exhibits and Schedules

 

 

	
  Exhibit A:

  	
   

  	
  Advance
  Request

  
	
   

  	
   

  	
  Attachment
  to Advance Request

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1:

  	
   

  	
  Term
  Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2:

  	
   

  	
  Revolving
  Note

  
	
   

  	
   

  	
   

  
	
  Exhibit C:

  	
   

  	
  Name,
  Locations, and Other Information for Borrowers

  
	
   

  	
   

  	
   

  
	
  Exhibit D:

  	
   

  	
  Borrowers’
  Patents, Trademarks, Copyrights and Licenses

  
	
   

  	
   

  	
   

  
	
  Exhibit E:

  	
   

  	
  Borrowers’
  Deposit Accounts and Investment Accounts

  
	
   

  	
   

  	
   

  
	
  Exhibit F:

  	
   

  	
  Compliance
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit G:

  	
   

  	
  Joinder
  Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit H:

  	
   

  	
  Borrowing
  Base Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit I:

  	
   

  	
  ACH
  Debit Authorization Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit J:

  	
   

  	
  Form of
  Collateral Assignment of Acquisition Documents

  
	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
   

  	
  Subsidiaries

  
	
  Schedule
  1A

  	
   

  	
  Existing
  Permitted Indebtedness

  
	
  Schedule
  1B

  	
   

  	
  Existing
  Permitted Investments

  
	
  Schedule
  1C

  	
   

  	
  Existing
  Permitted Liens

  
	
  Schedule
  5.3

  	
   

  	
  Consents,
  Etc.

  
	
  Schedule
  5.5

  	
   

  	
  Actions
  Before Governmental Authorities

  
	
  Schedule
  5.8

  	
   

  	
  Tax
  Matters

  
	
  Schedule
  5.9

  	
   

  	
  Intellectual
  Property Claims

  
	
  Schedule
  5.10

  	
   

  	
  Intellectual
  Property

  
	
  Schedule
  5.11

  	
   

  	
  Borrower
  Products

  
	
  Schedule
  5.14

  	
   

  	
  Capitalization

  
	
  Schedule
  7.14

  	
   

  	
  Deposit
  Accounts

  

 

 

EXHIBIT A

 

ADVANCE REQUEST

 

	
  To:

  	
   

  	
  Lender:

  	
   

  	
  Date:
                      ,
  20    

  

 

Hercules
Technology Growth Capital, Inc.

400
Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile:  650-473-9194

Attn:

 

Infologix, Inc., on
behalf of itself and InfoLogix Systems Corporation, Embedded Technologies, LLC,
Opt Acquisition LLC and InfoLogix-DDMS, Inc. (collectively, the “Borrowers”)
hereby request from Hercules Technology Growth Capital, Inc. (“Lender”) a
[Revolving Loan Advance / Term Loan Advance] in the amount of
                                          
Dollars
($                                )
on
                            ,
20     (the “Advance Date”) pursuant to the Loan and
Security Agreement among Borrowers and Lender (the “Agreement”). Capitalized
words and other terms used but not otherwise defined herein are used with the
same meanings as defined in the Agreement.

 

Please:

 

(a)           Issue a check payable to Parent
Borrower
                           

 

or

 

(b)           Wire Funds to Parent Borrower’s
account
                              

 

	
  Bank:

  	
                                                                

  
	
  Address:

  	
                                                                

  
	
   

  	
                                                                

  
	
  ABA Number:

  	
                                                                

  
	
  Account Number:

  	
                                                                

  
	
  Account Name:

  	
                                                                

  

 

Each Borrower represents
that the conditions precedent to the Advance set forth in the Agreement are
satisfied and shall be satisfied upon the making of such Advance, including but
not limited to:  (i) that no event
that has had a Material Adverse Effect has occurred and is continuing; (ii) that
the representations and warranties set forth in the Agreement are and shall be
true and correct in all material respects on and as of the Advance Date with
the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date; (iii) that
each Borrower is in compliance in all material respects with all the terms and
provisions set forth in each Loan Document on its part to be observed or
performed; and (iv) that as of the Advance Date, no fact or condition
exists that would (or would, with the passage of time, the giving of notice, or
both) constitute an Event of Default under the Loan Documents.  Each Borrower understands and acknowledges
that Lender has the right to review the financial information supporting this
representation and, based upon such review in its reasonable discretion, Lender
may decline to fund the requested Advance.

 

Each Borrower hereby
represents that no Borrower’s corporate and limited liability company status
and locations have changed since the date of this Agreement or, if the
Attachment to this Advance Request is completed, are as set forth in the
Attachment to this Advance Request 
Borrower agrees to

 

 

notify
Lender promptly before the funding of the Loan if any of the matters which have
been represented above shall not be true and correct on the Borrowing Date and
if Lender has received no such notice before the Advance Date then the
statements set forth above shall be deemed to have been made and shall be
deemed to be true and correct as of the Advance Date.

 

Executed as of
[                                                        ],
20[    ].

 

	
  BORROWERS:

  	
  INFOLOGIX,
  INC., ON BEHALF OF ITSELF AND

  
	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  INFOLOGIX – DDMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

50

 

ATTACHMENT TO ADVANCE REQUEST

 

Dated:                                   

 

Each Borrower hereby
represents and warrants to Lender that such Borrower’s current name and
organizational status is as follows:

 

	
  Name:

  	
   

  	
  [                                                                            ]

  
	
   

  	
   

  	
   

  
	
  Type of organization:

  	
   

  	
  [                                                                            ]

  
	
   

  	
   

  	
   

  
	
  State of organization:

  	
   

  	
  [                                                                            ]

  
	
   

  	
   

  	
   

  
	
  Organization file number:

  	
   

  	
  [                                                                            ]

  
	
   

  	
   

  	
   

  

 

Each Borrower hereby
represents and warrants to Lender that the street addresses, cities, states and
postal codes of its current locations are as follows:

 

51

 

EXHIBIT B-1

 

SECURED TERM PROMISSORY NOTE

 

	
  $[    ],000,000

  	
   

  	
  Advance Date:
                      
      , 20[    ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maturity Date:
  April       , 2012

  

 

FOR VALUE RECEIVED, each of
InfoLogix, Inc., a Delaware corporation, InfoLogix System Corporation, a Delaware
Corporation, Embedded Technologies, LLC a Delaware Limited Liability Company,
Opt Acquisition LLC a Pennsylvania Limited Liability Company, and
InfoLogix-DDMS, Inc, a Delaware Corporation, jointly and severally (each a “Borrower”
and collectively, the “Borrowers”) hereby promises to pay to the order of
Hercules Technology Growth Capital, Inc., a Maryland corporation or the
holder of this Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo
Alto, CA 94301 or such other place of payment as the holder of this Secured
Term Promissory Note (this “Promissory Note”) may specify from time to time in
writing, in lawful money of the United States of America, the principal amount
of
[                                                        ]
Million Dollars ($[    ],000,000) or such other principal
amount as Lender has advanced to Borrowers, together with interest thereon, all
as provided in the Loan Agreement referred to below.

 

This Promissory Note is a
Term Note referred to in, and is executed and delivered in connection with,
that certain Loan and Security Agreement dated May 1, 2008, by and among
Borrowers and Lender (as the same may from time to time be amended, modified or
supplemented in accordance with its terms, the “Loan Agreement”), and is entitled
to the benefit and security of the Loan Agreement and the other Loan Documents
(as defined in the Loan Agreement), to which reference is made for a statement
of all of the terms and conditions thereof. 
All payments shall be made in accordance with the Loan Agreement.  All terms defined in the Loan Agreement shall
have the same definitions when used herein, unless otherwise defined
herein.  An Event of Default under the
Loan Agreement shall constitute a default under this Promissory Note.

 

Each Borrower waives
presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law. 
Each Borrower agrees to make all payments under this Promissory Note
without setoff, recoupment or deduction and regardless of any counterclaim or
defense.  This Promissory Note has been
negotiated and delivered to Lender and is payable in the State of
California.  This Promissory Note shall
be governed by and construed and enforced in accordance with, the laws of the
State of California, excluding any conflicts of law rules or principles
that would cause the application of the laws of any other jurisdiction.

 

	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  By: INFO LOGIX INC., its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFOLOGIX – DDMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  

 

53

 

EXHIBIT B-2

 

SECURED REVOLVING PROMISSORY NOTE

 

	
  $[    ],000,000

  	
   

  	
  Advance Date:
                      
      , 20[    ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maturity Date:
  November       , 2009

  

 

FOR VALUE RECEIVED, each of
InfoLogix, Inc., a Delaware corporation, InfoLogix System Corporation, a
Delaware Corporation, Embedded Technologies, LLC a Delaware Limited Liability
Company, Opt Acquisition LLC a Pennsylvania Limited Liability Company, and
InfoLogix-DDMS, Inc, a Delaware Corporation, jointly and severally (each a “Borrower”
and collectively, the “Borrowers”) hereby promises to pay to the order of
Hercules Technology Growth Capital, Inc., a Maryland corporation or the
holder of this Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo
Alto, CA 94301 or such other place of payment as the holder of this Secured
Revolving Promissory Note (this “Promissory Note”) may specify from time to
time in writing, in lawful money of the United States of America, the principal
amount of
[                                                        ]
Dollars ($[    ],000,000) or such other principal amount as
Lender has advanced to Borrowers, together with interest thereon, all as
provided in the Loan Agreement referred to below.

 

This Promissory Note is a
Revolving Note referred to in, and is executed and delivered in connection
with, that certain Loan and Security Agreement dated May 1, 2008, by and
among Borrowers and Lender (as the same may from time to time be amended,
modified or supplemented in accordance with its terms, the “Loan Agreement”),
and is entitled to the benefit and security of the Loan Agreement and the other
Loan Documents (as defined in the Loan Agreement), to which reference is made
for a statement of all of the terms and conditions thereof.  All payments shall be made in accordance with
the Loan Agreement.  All terms defined in
the Loan Agreement shall have the same definitions when used herein, unless
otherwise defined herein.  An Event of
Default under the Loan Agreement shall constitute a default under this
Promissory Note.

 

Each Borrower waives
presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law. 
Each Borrower agrees to make all payments under this Promissory Note
without setoff, recoupment or deduction and regardless of any counterclaim or
defense.  This Promissory Note has been
negotiated and delivered to Lender and is payable in the State of
California.  This Promissory Note shall
be governed by and construed and enforced in accordance with, the laws of the
State of California, excluding any conflicts of law rules or principles
that would cause the application of the laws of any other jurisdiction.

 

	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  

 

 

	
   

  	
  INFOLOGIX BORROWER SYSTEMS

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
  By: INFO LOGIX INC., its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX – DDMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  David Gulian, President

  

 

55

 

EXHIBIT C

 

NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER

 

1.             Borrowers represent and warrant to
Lender that the current name and organizational status of each Borrower as of
the Closing Date is as follows:

 

	
  (a)

  	
   

  	
  Name:

  	
   

  	
  InfoLogix, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  4256230

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Name:

  	
   

  	
  InfoLogix
  Systems Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3424027

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Name:

  	
   

  	
  Embedded
  Technologies, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Limited Liability Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3758331

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Name:

  	
   

  	
  Opt
  Acquisition LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Limited Liability Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Pennsylvania

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3065065

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Name:

  	
   

  	
  InfoLogix-DDMS, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  4329544

  

 

 

2.             Borrowers represent and warrant to
Lender that for five (5) years prior to the Closing Date, no Borrower did
business under any other name or organization or form except the following:

 

	
  (a)

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  (1)

  	
  New Age Translation, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  (2)

  	
  New Age Translation, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Used during dates of:

  	
   

  	
  November 22, 2004 to November 29, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  (1)

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  (2)

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  (1)

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
  (2)

  	
  Nevada

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  (2)

  	
  C31464-2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s fiscal year ends on December 31.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s federal employer tax identification number
  is:20-1983837

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  InfoLogix, Systems Corporation

  	
   

  	
  InfoLogix, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Used during dates of:

  	
   

  	
  Prior to Nov. 29, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3424027

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s fiscal year ends on December 31.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s federal employer tax identification number
  is:23-3090097

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Embedded Technologies, LLC

  	
   

  	
  Imbedded Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Used during dates of:

  	
   

  	
  February 11, 2004 to May 24, 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Limited Liability Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3758331

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s fiscal year ends on December 31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s federal employer tax identification number
  is:                              

  

 

 

	
  (d)

  	
   

  	
  Opt Acquisition LLC

  	
   

  	
  Optasia, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Used during dates of:

  	
   

  	
  through April 19, 2002

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Limited Liability Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Pennsylvania

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  3065065

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s fiscal year ends on December 31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s federal employer tax identification number
  is:                                      

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  InfoLogix-DDMS, Inc..

  	
   

  	
  DDMS Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Used during dates of:

  	
   

  	
  Prior to April 9, 2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of organization:

  	
   

  	
  Limited Liability Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of organization:

  	
   

  	
  Florida

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organization file number:

  	
   

  	
  L00000013871

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s fiscal year ends on December 31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s federal employer tax identification number
  is:                                       

  

 

	
  3.

  	
   

  	
  Borrowers represent and warrant to Lender that the
  chief executive office of each Borrower is located at:

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  InfoLogix, Inc. - 101 East County Line Road,
  Suite 210, Hatboro, PA 19040.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  InfoLogix Systems Corporation - same

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Embedded Technologies, LLC - same

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Opt Acquisition LLC - same

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  InfoLogix-DDMS, Inc. - same

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Borrowers
  represent and warrant to Lender that other locations of the Borrowers
  include:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  16306
  Agate Point Road, Bainbridge Island, WA 98110

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  220
  Realty Drive, Cheshire, CT 06410

  

 

 

EXHIBIT D

 

BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

	
  United States Trademarks

  	
   

  
	
  Registration

  No.

  	
   

  	
  Record Owner

  	
   

  	
  Mark

  	
   

  	
  Type

  	
   

  
	
  2702443

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  InfoLogix

  	
   

  	
  Service
  Mark

  	
   

  
	
  2923756

  	
   

  	
  InfoLogix,
  LLC

  	
   

  	
  InfoLogix

  	
   

  	
  Service
  Mark

  	
   

  
	
  3006179

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  Care
  Station

  	
   

  	
  Trademark

  	
   

  
	
  3006180

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  Mobile
  Care Station

  	
   

  	
  Trademark

  	
   

  
	
  2483149

  	
   

  	
  Opt
  Acquisition LLC

  	
   

  	
  OPTASIA

  	
   

  	
  Trademark

  	
   

  
									

 

	
  Pending United States Trademark Applications

  	
   

  
	
  Application

  Serial No.

  	
   

  	
  Record Owner

  	
   

  	
  Mark

  	
   

  	
  Type

  	
   

  
	
  78923846

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  HealthTrax

  	
   

  	
  Trademark

  	
   

  
	
  78775350

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  Health
  Trax

  	
   

  	
  Trademark

  	
   

  
	
  78775339

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  HealthTrax

  	
   

  	
  Trademark

  	
   

  
	
  77-298483

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  Intuitive
  Mobile Software

  	
   

  	
  Trademark

  	
   

  
	
  77-300530

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  InfoTablet

  	
   

  	
  Trademark

  	
   

  
									

 

	
  United States Patents

  	
   

  
	
  Patent No.

  	
   

  	
  Record Owner

  	
   

  	
  Issue Date

  	
   

  	
  Title

  	
   

  	
  Expiration

  Date

  	
   

  
	
  5,285,398

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  08-Feb-94

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  05/15/2012

  	
   

  
	
  5,491,651

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  13-Feb-96

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  05/15/2012

  	
   

  

 

 

	
  5,555,490

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  10-Sep-96

  	
   

  	
  Wearable
  Personal Computer System

  	
   

  	
  12/13/2013

  	
   

  
	
  5,572,401

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  05-Nov-96

  	
   

  	
  Wearable
  Personal Computer System Having Flexible Battery Forming Casing of the System

  	
   

  	
  12/13/2013

  	
   

  
	
  5,581,492

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  03-Dec-96

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  05/15/2012

  	
   

  
	
  5,798,907

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  25-Aug-98

  	
   

  	
  Wearable
  Computing Device With Module Protrusion Passing Into Flexible Circuitry

  	
   

  	
  05/15/2012

  	
   

  
	
  5,991,086

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  23-Nov-99

  	
   

  	
  Inflatable
  Optical Housing

  	
   

  	
  06/25/2018

  	
   

  
	
  6,057,966

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  02-May-00

  	
   

  	
  Body-Carryable
  Display Devices and Systems Using E.G. Coherent Fiber Optic Conduit

  	
   

  	
  05/09/2017

  	
   

  
	
  6,097,607

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  01-Aug-00

  	
   

  	
  Flexible
  Computer System

  	
   

  	
  11/01/2017

  	
   

  
	
  6,108,197

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  22-Aug-00

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  05/15/2012

  	
   

  
	
  6,121,960

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  19-Sep-00

  	
   

  	
  Touch
  Screen Systems and Methods

  	
   

  	
  08/28/2017

  	
   

  
	
  6,249,427

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  19-Jun-01

  	
   

  	
  Wearable
  Computer Packaging Configurations

  	
   

  	
  03/26/2018

  	
   

  
	
  6,271,477

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  07-Aug-01

  	
   

  	
  Long-Lasting
  Flexible Circuitry

  	
   

  	
  06/19/2018

  	
   

  
	
  6,285,757

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  04-Sep-01

  	
   

  	
  Interactive
  Devices and Methods

  	
   

  	
  11/06/2018

  	
   

  

 

 

	
  6,288,753

  	
   

  	
  Opt
  Acquisition LLC

  	
   

  	
  11-Sep-01

  	
   

  	
  System and Method for Live Interactive Distance
  Learning

  	
   

  	
  07/07/2019

  	
   

  
	
  Des. 414,928

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  12-Oct-99

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
   

  	
   

  
	
  6,574,166

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  3-June-03

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  
	
  6,411,567

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  25-June-02

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  
	
  6,839,304

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  4-Jan-05

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  
	
  7,035,168

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  25-Apr-06

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  
	
  6,961,285

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  1-Nov-05

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  
	
  7,304,913

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  4-Dec-07

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
   

  	
   

  

 

	
  Foreign Patents

  	
   

  
	
  Intl. Pub. No.

  	
   

  	
  Record

  Owner

  	
   

  	
  Intl. Pub.

  Date

  	
   

  	
  Title

  	
   

  	
  Country

  	
   

  	
  Expiration

  Date

  	
   

  
	
  WO 93/23801

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  25-Nov-93

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 95/21408

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  10-August-95

  	
   

  	
  Flexible
  Wearable Computer

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 95/16948

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  22-Jun-95

  	
   

  	
  Wearable
  Personal Computer System

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 99/00699

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  7-Jan-99

  	
   

  	
  Inflatable
  Optical Housing

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 98/20403

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  14-May-98

  	
   

  	
  Flexible
  Computer System

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 98/9270

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  4-Mar-98

  	
   

  	
  Touch
  Screen Systems and Methods

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 98/59286

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  30-Dec-98

  	
   

  	
  Long-Lasting
  Flexible Circuitry

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 99/25152

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  20-May-99

  	
   

  	
  Interactive
  Devices and Methods

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  

 

 

	
  WO 04/23245

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  18-Mar-04

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 04/21965

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  18-Mar-04

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 02/05039

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  17-Jan-02

  	
   

  	
  Drug
  Delivery Management System

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 04/66595

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  5-Aug-04

  	
   

  	
  Mobile
  Wireless Computer System Including Devices and Methods Related Thereto

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 06/83690

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  10-Aug-06

  	
   

  	
  Language
  Engine Coordination and Switching

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 00/25193

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  4-May-00

  	
   

  	
  Flex-to-Fix
  User Interface Devices and Methods

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  10-0697729 (South Korea)

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  30-Mar-07

  	
   

  	
  Flex-to-Fix
  User Interface Devices and Methods

  	
   

  	
  South
  Korea

  	
   

  	
   

  	
   

  
	
  10-2006-7016497 (South Korea)

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  28-Oct-99

  	
   

  	
  Flex-to-Fix
  User Interface Devices and Methods

  	
   

  	
  South
  Korea

  	
   

  	
   

  	
   

  
	
  PCT/US07/84317

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  9-Nov-07

  	
   

  	
  Method
  System and Apparatus for Dwell Monitoring in a Retail Establishment

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  

 

 

	
  PCT/US07/84340

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  9-Nov-07

  	
   

  	
  Method
  and Apparatus for Managing and Locating Hospital Assets, Patients and
  Personnel

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  
	
  WO 00/10073

  	
   

  	
  Embedded
  Technologies, LLC

  	
   

  	
  24-Feb-00

  	
   

  	
  Mobile
  Robotic Snake

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  

 

	
  Pending Patent Applications

  	
   

  
	
  Serial No.

  	
   

  	
  Record

  Owner

  	
   

  	
  Filing

  Date

  	
   

  	
  Country

  	
   

  	
  Title

  	
   

  
	
  10/601,039

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  20-Jun-03

  	
   

  	
  USA

  	
   

  	
  Mobile
  Cart for a Laptop Computer

  	
   

  
	
  10/763,411

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  23-Jan-04

  	
   

  	
  USA

  	
   

  	
  Mobile
  Wireless Computer System Including Devices and Methods Related Thereto

  	
   

  
	
  PCT/US2004/001902

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  23-Jan-04

  	
   

  	
  USA

  	
   

  	
  Mobile
  Wireless Computer System Including Devices and Methods Related Thereto

  	
   

  
	
  60/858,669

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  Nov
  11, 2006

  	
   

  	
  USA

  	
   

  	
  Method,
  System and Apparatus for Dwell Monitoring in a retail establishment

  	
   

  
	
  11/931,863

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  1-Oct-07

  	
   

  	
  USA

  	
   

  	
  Drug
  Delivery Management System

  	
   

  
	
  11/948,478

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  USA

  	
   

  	
  Drug
  Delivery Management System

  	
   

  
	
  11/948,523

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  USA

  	
   

  	
  Drug
  Delivery Management System

  	
   

  
	
  11/948,572

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  USA

  	
   

  	
  Drug
  Delivery Management System

  	
   

  
	
  11/948,646

  	
   

  	
  Info-Logix
  – DDMS, Inc.

  	
   

  	
  30-Nov-07

  	
   

  	
  USA

  	
   

  	
  Drug
  Delivery Management System

  	
   

  
	
  11/885,296

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  29-Aug-07

  	
   

  	
  USA

  	
   

  	
  Language
  Engine Coordination and Switching

  	
   

  

 

 

	
  11/937,932

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  9-Nov-07

  	
   

  	
  USA

  	
   

  	
  Method
  System and Apparatus for Dwell Monitoring in a Retail Establishment

  	
   

  
	
  11/938,089

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  9-Nov-07

  	
   

  	
  USA

  	
   

  	
  Method
  and Apparatus for Managing and Locating Hospital Assets, Patients and
  Personnel

  	
   

  

 

	
  Registration

  No.

  	
   

  	
  Record

  Owner

  	
   

  	
  Registration Date

  	
   

  	
  Title

  	
   

  
	
  TXu-1-280-597

  	
   

  	
  InfoLogix,
  Inc

  	
   

  	
  23-Dec-05

  	
   

  	
  Wireless
  healthcare technology and patient care

  	
   

  

 

 

EXHIBIT E

 

BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

	
  Depository Bank

  	
   

  	
  Bank
  Address

  	
   

  	
  Type of
  Account

  	
   

  	
  Acct.
  No.

  
	
  Sovereign Bank

  	
   

  	
  Philadelphia, PA

  	
   

  	
  Investment

  	
   

  	
  INFO5268

  
	
  Sovereign Bank

  	
   

  	
  Philadelphia, PA

  	
   

  	
  Investment

  	
   

  	
  INFO5478

  
	
  Sovereign Bank

  	
   

  	
  Philadelphia, PA

  	
   

  	
  Disbursement

  	
   

  	
  120160097

  
	
  Sovereign Bank

  	
   

  	
  Philadelphia, PA

  	
   

  	
  Operating

  	
   

  	
  321113837

  
	
  Sovereign Bank

  	
   

  	
  Philadelphia, PA

  	
   

  	
  Collateral

  	
   

  	
  1200409027

  

 

 

EXHIBIT F

 

COMPLIANCE CERTIFICATE

 

Hercules
Technology Growth Capital, Inc.

400
Hamilton Avenue, Suite 310

Palo Alto, CA 94301

 

Reference is made to that
certain Loan and Security Agreement dated May 1, 2008 and all ancillary
documents entered into in connection with such Loan and Security Agreement all
as may be amended from time to time, (hereinafter referred to collectively as
the “Loan Agreement”) between Hercules Technology Growth Capital, Inc. (“Hercules”)
as Lender and Parent Borrower, Inc. (the “Parent Borrower”), Infologix, Inc.,
Infologix Systems Corporation, Opt Acquisition LLC, Embedded Technologies, LLC,
Infologix-DDMS, Inc. as Borrowers. All capitalized terms not defined
herein shall have the same meaning as defined in the Loan Agreement.

 

The undersigned is an
Officer of the Parent Borrower, knowledgeable of financial matters regarding
Parent Borrower and each Borrower, and is authorized to provide certification
of information regarding the Borrower; hereby certifies that in accordance with
the terms and conditions of the Loan Agreement, to my knowledge, the Borrowers
are in compliance for the period ending
                      
of all covenants, conditions and terms and hereby reaffirms that all
representations and warranties contained therein are true and correct on and as
of the date of this Compliance Certificate with the same effect as though made
on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date, after giving effect in all
cases to any standard(s) of materiality contained in the Loan Agreement as
to such representations and warranties. 
Attached are the required documents supporting the above
certification.  The undersigned further
certifies that these are prepared in accordance with GAAP (except for the
absence of footnotes with respect to unaudited financial statement and subject
to normal year end adjustments) and are consistent from one period to the next
except as explained below.

 

	
  REPORTING REQUIREMENT

  	
   

  	
  REQUIRED

  	
   

  	
  CHECK IF ATTACHED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interim Financial Statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interim Financial Statements

  	
   

  	
  Quarterly within 45 days

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audited Financial Statements

  	
   

  	
  FYE within 90 days

  	
   

  	
   

  

 

	
   

  	
  Very Truly Yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
					

 

 

EXHIBIT G

 

FORM OF JOINDER AGREEMENT

 

This Joinder Agreement (the “Joinder
Agreement”) is made and dated as of
[                                                        ],
20[    ], and is entered into by and between
                                    ,
a
                      
corporation (“Subsidiary”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a
Maryland corporation, as Lender.

 

RECITALS

 

A.            Subsidiary’s Affiliates, InfoLogix, Inc.
(“Parent Borrower”), InfoLogix, Inc., InfoLogix Systems Corporation, Opt
Acquisition LLC, Embedded Technologies, LLC, InfoLogix-DDMS, Inc. (each a “Borrower”
and collectively the “Borrowers”) have entered into that certain Loan and
Security Agreement dated May 1, 2008, with Lender, as such agreement may
be amended (the “Loan Agreement”), together with the other agreements executed
and delivered in connection therewith;

 

B.            Subsidiary acknowledges and agrees
that it will benefit both directly and indirectly from each Borrower’s
execution of the Loan Agreement and the other agreements executed and delivered
in connection therewith;

 

AGREEMENT

 

NOW THEREFORE, Subsidiary
and Lender agree as follows:

 

1.             The recitals set forth above are
incorporated into and made part of this Joinder Agreement.  Capitalized terms not defined herein shall
have the meaning provided in the Loan Agreement.

 

2.             By signing this Joinder Agreement,
Subsidiary shall be bound by the terms and conditions of the Loan Agreement the
same as if it were a Borrower (as defined in the Loan Agreement) under the Loan
Agreement, mutatis mutandis, provided, however, that Lender shall have no duties,
responsibilities or obligations to Subsidiary arising under or related to the
Loan Agreement or the other agreements executed and delivered in connection
therewith.  Rather, to the extent that
Lender has any duties, responsibilities or obligations arising under or related
to the Loan Agreement or the other agreements executed and delivered in
connection therewith, those duties, responsibilities or obligations shall flow
only to the Borrowers and not to Subsidiary or any other person or entity.  By way of example (and not an exclusive
list): (a) Lender’s providing notice to any Borrower in accordance with
the Loan Agreement or as otherwise agreed between Borrowers and Lender shall be
deemed provided to Subsidiary; (b) a Lender’s providing an Advance to any
Borrower shall be deemed an Advance to Subsidiary; and (c) Subsidiary
shall have no right to request an Advance or make any other demand on Lender.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

	
  [SIGNATURE PAGE TO JOINDER AGREEMENT]

  

 

	
   

  	
  SUBSIDIARY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  
	
   

  	
  HERCULES TECHNOLOGY GROWTH CAPITAL,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  400 Hamilton Avenue, Suite 310

  
	
   

  	
  Palo Alto, CA 94301

  
	
   

  	
  Facsimile: 650-473-9194

  
	
   

  	
  Telephone: 650-289-3060

  
								

 

 

EXHIBIT H

 

BORROWING BASE CERTIFICATE

 

Borrower:
InfoLogix, Inc.

Revolving
Loan Commitment Amount:  $12,500,000.00

	
  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 25% over 90 day accounts

  	
  $

  	
   

  
	
   

  	
  6.

  	
  Concentration
  Limits

  	
  $

  	
   

  
	
   

  	
  7.

  	
  Foreign
  Accounts

  	
  $

  	
   

  
	
   

  	
  8.

  	
  Deferred
  Revenue

  	
  $

  	
   

  
	
   

  	
  9.

  	
  Contra
  Accounts

  	
  $

  	
   

  
	
   

  	
  10.

  	
  Affiliate
  Accounts

  	
  $

  	
   

  
	
   

  	
  11.

  	
  Governmental
  Accounts

  	
  $

  	
   

  
	
   

  	
  12.

  	
  Conditional
  Payment

  	
  $

  	
   

  
	
   

  	
  13.

  	
  Disputed
  Accounts

  	
  $

  	
   

  
	
   

  	
  14.

  	
  Other
  (please explain on reverse)

  	
  $

  	
   

  
	
   

  	
  15.

  	
  TOTAL
  ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  
	
   

  	
  16.

  	
  Eligible
  Accounts (#3 minus #15)

  	
   

  	
  $

  
	
   

  	
  17.

  	
  LOAN
  VALUE OF ACCOUNTS (85% of #16)

  	
   

  	
  $

  
	
  BALANCES

  	
   

  	
   

  
	
   

  	
  18.

  	
  Maximum
  Revolving Loan Amount (either $10,000,000 or $12,500,000, as determined in
  accordance with the definition of Maximum Revolving Loan Amount in the Loan
  and Security Agreement)

  	
   

  	
  $

  
	
   

  	
  19.

  	
  Total
  Funds Available (Lesser of #18 or #17)

  	
   

  	
  $

  
	
   

  	
  20.

  	
  Present
  balance owing on Line of Credit

  	
   

  	
  $

  
	
   

  	
  21.

  	
  RESERVE
  POSITION (#19 minus #20)

  	
   

  	
  $

  

 

The undersigned represents
and warrants that the foregoing is true, complete and correct, and that the
information reflected in this Borrowing Base Certificate complies with the
representations and warranties set forth in the Loan and Security Agreement
between the undersigned and Hercules Technology Growth Capital, Inc.

 

INFOLOGIX,
INC.

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  

 

 

EXHIBIT I

 

ACH DEBIT AUTHORIZATION AGREEMENT

 

Hercules
Technology Growth Capital, Inc. 

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

 

Re:                               Loan and Security Agreement
dated May 1, 2008 among InfoLogix, Inc., InfoLogix Systems
Corporation, Opt Acquisition LLC, Embedded Technologies, LLC, InfoLogix-DDMS, Inc.
(each a “Borrower” and collectively the “Borrowers”) and Hercules Technology
Growth Capital, Inc. (“Company”) (the “Agreement”)

 

In connection with the above
referenced Agreement,
[                    ]
hereby authorizes the Company to initiate debit entries for the periodic
payments due under the Agreement to such Borrower’s account indicated
below. 
[                    ]
authorizes the depository institution named below to debit to such account.

 

	
  DEPOSITORY NAME

  	
   

  	
  BRANCH

  
	
   

  	
   

  	
   

  
	
  CITY

  	
   

  	
  STATE AND ZIP CODE

  
	
   

  	
   

  	
   

  
	
  TRANSIT/ABA NUMBER

  	
   

  	
  ACCOUNT NUMBER

  

 

 

This authority will remain
in full force and effect so long as any amounts are due under the Agreement.

 

	
   

  	
   

  
	
  (Borrower)
  (Please Print)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
					

 

 

EXHIBIT I

 

FORM OF COLLATERAL ASSIGNMENT OF ACQUISITION DOCUMENTS

 

 

SCHEDULE 1 - SUBSIDIARIES

 

InfoLogix, Inc.

InfoLogix Systems Corporation, a
Delaware corporation

InfoLogix – DDMS, Inc., a
Delaware corporation

 

InfoLogix Systems Corporation

Embedded Technologies, LLC, a
Delaware limited liability company

OPT Acquisition LLC, a
Pennsylvania limited liability company

 

 

SCHEDULE 1A - EXISTING PERMITTED INDEBTEDNESS

 

	
  PAYEE

  	
   

  	
  AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Kamich Investments (Lease)

  	
   

  	
  $

  	
  139,000.00

  	
   

  
	
  Cal First Leasing (Lease)

  	
   

  	
  $

  	
  125,000.00

  	
   

  
	
  AMT Systems, Inc. - Notes Payable

  	
   

  	
  $

  	
  480,050.50

  	
   

  
	
  Healthcare Informatics Associates, Inc. - Notes Payable

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  
	
  Letter of Credit – AV Partners (due on April 26, 2009)

  	
   

  	
  $

  	
  350,000.00

  	
   

  
						

 

 

SCHEDULE 1B - EXISTING PERMITTED INVESTMENTS

 

NOTES:

 

1.             Secured Promissory Note issued by
Aware Interwave, Inc. in the amount of $150,000

2.             Secured Promissory Note issued by
HealthCast, Inc. in the amount of $50,000

 

INVESTMENT
ACCOUNTS

 

1.             Sovereign Bank Investment Account No. IFO5268

2.             Sovereign Bank Investment Account No. IFO5478

 

STOCK
AND OTHER EQUITY INTERESTS

 

	
  Company

  	
   

  	
  Owner

  	
   

  	
  Ownership
  %

  	
   

  	
  Description

  	
   

  
	
  InfoLogix
  Systems Corp.

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  100

  	
  %

  	
  Common
  Stock

  	
   

  
	
  InfoLogix
  – DDMS, Inc.

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  100

  	
  %

  	
  Common
  Stock

  	
   

  
	
  Embedded
  Technologies, LLC

  	
   

  	
  InfoLogix
  Systems Corp.

  	
   

  	
  100

  	
  %

  	
  LLC
  Interests

  	
   

  
	
  OPT
  Acquisition LLC

  	
   

  	
  InfoLogix
  Systems Corp.

  	
   

  	
  100

  	
  %

  	
  LLC
  Interests

  	
   

  

 

 

SCHEDULE 1C - EXISTING PERMITTED LIENS

 

Liens
in favor of Fujitsu Computer Systems as set forth on UCC-1 financing statement No. 4013771
3 and filed with the Secretary of State of the State of Delaware.

 

Liens
in favor of California First Leasing Corporation as set forth on UCC-1
financing statement No. 2007 3428314, as amended by UCC Financing
Statement No. 2007 3878765 and 
filed with the Secretary of State of the State of Delaware.

 

Liens
in favor of interstate Net Bank as set forth on UCC-1 Financing Statement Nos.
2006 3075983 and 2006 4239331 and filed with the Secretary of State of the
State of Delaware.

 

 

SCHEDULE 5.3 - CONSENTS, ETC.

 

NONE

 

 

SCHEDULE 5.5 - ACTIONS BEFORE GOVERNMENTAL AUTHORITIES

 

NONE

 

 

SCHEDULE 5.8 - TAX MATTERS

 

NONE

 

 

SCHEDULE 5.9 - INTELLECTUAL PROPERTY CLAIMS

 

NONE

 

 

SCHEDULE 5.10 - INTELLECTUAL PROPERTY

 

NONE

 

 

SCHEDULE 5.11 - BORROWER PRODUCTS

 

NONE

 

 

SCHEDULE 5.14 – CAPITALIZATION

 

	
  Borrower

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Owner

  	
   

  	
  Number of

  Shares

  Authorized

  	
   

  	
  Number of

  Shares

  Issued

  	
   

  	
  Number of

  Shares

  Outstanding

  	
   

  	
  Number of

  Shares

  Owned by

  Owner

  	
   

  	
  % of

  Outstanding

  Shares Owned

  	
   

  
	
  InfoLogix, Inc.

  	
   

  	
  Delaware

  	
   

  	
  Various

  	
   

  	
  100,000,000 Common,
  10,000,000 Preferred

  	
   

  	
  24,941,256

  	
   

  	
  24,941,256

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Infologix Systems
  Corporation

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix, Inc.

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Embedded
  Technologies, LLC

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix Systems
  Corporation

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Opt Acquisition
  LLC

  	
   

  	
  Pennsylvania

  	
   

  	
  InfoLogix Systems
  Corporation

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InfoLogix-DDMS, Inc.

  	
   

  	
  Delaware

  	
   

  	
  InfoLogix, Inc..

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  1,000

  	
   

  	
  100

  	
  %

  

 

 

SCHEDULE 7.14 - DEPOSIT ACCOUNTS

 

NONE

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