{"id":41322,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/starter-kit-loan-and-security-agreement-encoding-com-inc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"starter-kit-loan-and-security-agreement-encoding-com-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/starter-kit-loan-and-security-agreement-encoding-com-inc-and.html","title":{"rendered":"Starter Kit Loan and Security Agreement &#8211; Encoding.com Inc. and Imperial Bank"},"content":{"rendered":"<pre>\nSTARTER KIT LOAN AND SECURITY AGREEMENT\n\nBorrower: Encoding.com, Inc.      Address: 1725 Westlake Avenue N., Suite 102\nDate: August 4, 1998                       Seattle, WA  98109\n \n\nTHIS LOAN AND SECURITY AGREEMENT (\"Agreement\") is made and entered into on the\nabove date between IMPERIAL BANK (\"Bank\"), whose address is 226 Airport Parkway,\nSan Jose, California 95110 with a loan production office located at 777 108th\nAvenue NE, Suite 1670, Bellevue, Washington 98004 and the party(ies) named above\n(jointly and severally, \"Borrower\"), whose chief executive office is located at\nthe above address (\"Borrower's Address\").\n\n1.   Loans.  Bank will make loans to Borrower (the \"Loans\") in amounts\ndetermined by Bank in its reasonable business judgment up to the amount (the\n\"Credit Limit\") shown on the Schedule to this Agreement (the \"Schedule\"),\nprovided no Event of Default and no event which, with notice or passage of time\nor both, would constitute an Event of Default is occurring or has occurred.  All\nLoans and other monetary Obligations will bear interest at the rate shown on the\nSchedule.  Interest will be payable monthly, on the date shown on the monthly\nbilling from Bank.  Bank may, in its discretion, charge Borrower's deposit\naccounts maintained with Bank for any amounts coming due under this Agreement.\n\n2.  Security Interest.  As security for all present and future indebtedness,\nguarantees, liabilities, and other obligations, of Borrower to Bank\n(collectively, the \"Obligations\"), Borrower hereby grants Bank a continuing\nsecurity interest in all of Borrower's right title and interest in and to any\nproperty now or hereafter described in an security agreement executed by\nBorrower to Bank as well as the following types of property, whether now owned\nor hereafter acquired, and wherever located (collectively, the \"Collateral\"):\nAll \"accounts\", \"general intangibles,\" \"chattel paper,\" \"documents,\" \"letters of\ncredit,\" \"instruments,\" \" deposit accounts,\" \"inventory,\" \"farm products,\"\n\"fixtures\" and \"equipment,\" as such terms are defined in Division 9 of the\nCalifornia Uniform Commercial Code in effect on the date hereof,  and all\nproducts, proceeds and insurance proceeds of the foregoing.\n\n3.  Representations And Agreements of Borrower.  Borrower represents to Bank as\nfollows, and Borrower agrees that the following representations will continue to\nbe true, and that Borrower will comply with all of the following agreements\nthroughout the term of this Agreement:\n\n3.1  Corporate Existence and Authority.  Borrower, if a corporation, is and will\ncontinue to be, duly authorized, validly existing and in good standing under the\nlaws of the jurisdiction of its incorporation.  The execution, delivery and\nperformance by Borrower of this Agreement, and all other documents contemplated\nhereby have been duly and validly authorized, and do not violate any law or any\nprovision of and are not grounds for acceleration under, any agreement or\ninstrument which is binding upon Borrower.\n\n3.2  Name: Places of Business.  The name of Borrower set forth in this Agreement\nis its correct name.  Borrower shall give Bank 15 days' prior written notice\nbefore changing its name.  The address set forth in the heading to this\nAgreement is Borrower's chief executive office.  In addition, Borrower has\nplaces of business and Collateral is located only at the locations set forth on\nthe Schedule.  Borrower will give Bank at least 15 days prior written notice\nbefore changing its chief executive office or locating the Collateral at any\nother location.\n\n3.3  Collateral.  Bank has and will at all times continue to have a first-\npriority perfected security interest in all of the Collateral other than\nspecific equipment identified in existing filed or to be filed Financing\nStatements and other than purchase money security interests consented to by\nBank.  Borrower will immediately advise Bank in writing of any material loss or\ndamage to the Collateral.\n\n3.4  Financial Condition and Statements.  All financial statements now or in the\nfuture delivered to Bank have been, and will be prepared in conformity with\ngenerally accepted accounting principles.  Since the last date\n\n\n \ncovered by any such statement, there has been no material adverse change in the\nfinancial condition or business of Borrower. Borrower will provide Bank: (i)\nwithin 30 days after the end of each month, a monthly financial statement\nprepared by Borrower, and such other information as Bank shall reasonably\nrequest: (ii) within 120 days following the end of Borrower's fiscal year,\nbeginning with the fiscal year ending 12\/31\/98, complete annual financial\nstatements, certified by independent certified public accountants acceptable to\nBank and accompanied by the unqualified report thereon by said independent\ncertified public accountants: and (iii) other financial information reasonably\nrequested by Bank from time to time.\n\n3.5  Taxes: Compliance with Law.  Borrower has filed, and will file, when due,\nall tax returns and reports required by applicable law, and Borrower has paid,\nand will pay, when due, all taxes, assessments, deposits and contributions now\nor in the future owed by Borrower.  Borrower has complied, and will comply, in\nall material respects, with all applicable laws, rules and regulations.\n\n3.6  Insurance.  Borrower will at all times adequately insure all of the\ntangible personal property Collateral and carry such other business insurance as\nis customary in Borrower's industry.  Bank will be designated as Loss Payee on\nall such insurance.\n\n3.7  Access to Collateral and Books and Records.  At reasonable times, on one\nbusiness day's notice, Bank, or its agents, shall have the right to inspect the\nCollateral, and the right to audit and copy Borrower's books and records.\n\n3.8  Banking Relationship and Operating Accounts.  Borrower shall maintain its\nprimary operating deposit accounts with Bank.  Borrower shall at all times\nmaintain its primary banking relationship with Bank.\n\n3.9  Additional Agreements.  Borrower shall not, without Bank's prior written\nconsent, do any of the following:  (i) enter into any transaction outside the\nordinary course of business except for the sale of capital stock to venture\ninvestors or other strategic investors not resulting in change in control,\nprovided that Borrower promptly delivers written notification to Bank of any\nsuch stock sale; (ii) sell or transfer any Collateral, except in the ordinary\ncourse of business; (iii) pay or declare any dividends on Borrower's stock\n(except for dividends payable solely in stock of Borrower); or (iv) redeem,\nretire, purchase or otherwise acquire, directly or indirectly, any of Borrower's\nstock other than the repurchase of up to five percent (5%) of Borrower's then\nissued stock in any fiscal year from Borrower's employees or directors pursuant\nto written agreements with Borrower.\n\n4.  Term.  This Agreement shall continue in effect until the maturity date set\nforth on the Schedule (the \"Maturity Date\").  This Agreement may be terminated,\nwithout penalty, prior to the Maturity Date as follows: (i) by Borrower,\neffective three business days after written notice of termination is given to\nBank; or (ii) by Bank at any time after the occurrence of an Event of Default,\nwithout notice, effective immediately.  On the Maturity Date or on any earlier\neffective date of termination, Borrower shall pay all Obligations in full,\nwhether or not such Obligations are otherwise then due and payable.  No\ntermination shall in any way affect or impair any security interest or other\nright or remedy of Bank, nor shall any such termination relieve Borrower of any\nObligation to Bank, until all of the Obligations have been paid and performed in\nfull.\n\n5.  Events of Default and Remedies.  The occurrence of any of the following\nevents shall constitute an \"Event of Default\" under this Agreement: (a) Any\nmaterial representation, statement, report or certificate given to Bank by\nBorrower or any of its officers, employees or agents, now or in the future, is\nuntrue or misleading in a material respect; or (b) Borrower fails to pay when\ndue any Loan or any interest thereon or any other monetary Obligation: or (c)\nthe total Obligations outstanding at any time exceed the Credit Limit for a\nperiod of five (5) days: or (d) Borrower fails to perform any other non-monetary\nObligation, which failure is not cured within 5 business days after the date\ndue; or (e) Dissolution, termination of existence, insolvency or business\nfailure of Borrower or appointment of a receiver, trustee or custodian, for all\nor any part of the property of, assignment for the benefit of creditors by, or\nthe commencement of any proceeding by or against Borrower under any\nreorganization, bankruptcy, insolvency, arrangement, readjustment of debt,\ndissolution or liquidation law or statute of any jurisdiction, now or in the\nfuture in effect; or (f) a material adverse change in the business, operations,\nor financial or other condition of Borrower.  If an Event of Default occurs,\nBank, shall have the right to accelerate and declare all of the Obligations to\nbe immediately due and payable, increase the interest rate by an additional five\npercent per annum, and exercise all rights and remedies recorded by applicable\nlaw. If any interest payment, principal payment or principal balance payment due\nfrom Borrower is delinquent ten or more days, Borrower agrees to pay Bank a late\ncharge in the amount of 5% of the payment so due and unpaid, in addition to the\npayment; but nothing in this provision is to be construed as any obligation on\nthe part of Bank to accept payment of any payment past due or\n\n\n \nless than the total unpaid principal balance after maturity. All payments shall\nbe applied first to any late charges owing, then to interest and the remainder,\nif any, to principal.\n\n6.  General.  If any provision of this Agreement is held to be unenforceable,\nthe remainder of this Agreement shall still continue in full force and effect.\nThis Agreement and any other written agreements, documents and instruments\nexecuted in connection herewith are the complete agreement between Borrower and\nBank and supersede all prior and contemporaneous negotiations and oral\nrepresentations and agreements, all of which are merged and integrated in this\nAgreement.  There are no oral understandings, representations or agreements\nbetween the parties which are not in this Agreement or in other written\nagreements signed by the parties in connection this Agreement.  The failure of\nBank at any time to require Borrower to comply strictly with any of the\nprovisions of this Agreement shall not waive Bank's right later to demand and\nreceive strict compliance.  Any waiver of a default shall not waive any other\ndefault.  None of the provisions of this Agreement may be waived except by a\nspecific written waiver signed by an officer of Bank and delivered to Borrower.\nThe provisions of this Agreement may not be amended, except in a writing signed\nby Borrower and Bank.  Borrower shall reimburse Bank for all reasonable\nattorney's fees and all other reasonable costs incurred by Bank, in connection\nwith this Agreement (whether or not a lawsuit is filed) including any post\npetition bankruptcy activities.  If Bank or Borrower files any lawsuit against\nthe other predicated on a breach of this Agreement, the prevailing party shall\nbe entitled to recover its reasonable costs and attorney's fees from the non-\nprevailing party.  Borrower may not assign any rights under this Agreement\nwithout Bank's prior written consent.  This Agreement shall be governed by the\nlaws of the State of California to the jurisdiction of whose courts Borrower\nhereby agrees to submit.\n\n7.  Mutual Waiver of Jury Trial.  BORROWER AND BANK EACH HEREBY WAIVE THE RIGHT\nTO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN\nANY WAY RELATING TO, THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF BANK OR\nBORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR\nAFFILIATES.\n\n8.  Reference Proceedings.   a.  Each controversy, dispute or claim (\"Claim\")\nbetween the parties arising out of or relating to this Agreement, which is not\nsettled in writing within ten days after the \"Claim Date\" (defined as the date\non which a party gives written notice to all other parties that a controversy,\ndispute or claim exists), will be settled by a reference proceeding in Los\nAngeles, California in accordance with the provisions of Section 638 et seq. of\n                                                                     -- ---    \nthe California Code of Civil Procedure, or their successor section (\"CCP\"),\nwhich shall constitute the exclusive remedy for the settlement of any Claim,\nincluding whether such Claim is subject to the reference proceeding and the\nparties waive their rights to initiate any legal proceedings against each other\nin any court or jurisdiction other than the Superior Court of Los Angeles (the\n\"Court\").  The referee shall be a retired Judge selected by mutual agreement of\nthe parties, and if they cannot so agree within thirty days after the Claim\nDate, the referee shall be selected by the Presiding Judge of the Court.  The\nreferee shall be appointed to sit as a temporary judge, as authorized by law.\nThe referee shall (a) be requested to set the matter for hearing within sixty\n(60) days after the Claim Date and (b) try any and all issues of law or fact and\nreport a statement of decision upon them, if possible, within ninety (90) days\nof the Claim Date.  Any decision rendered by the referee will be final, binding\nand conclusive and judgment shall entered pursuant to CCP 644 in the Court.  All\ndiscovery permitted by this Agreement shall be completed no later than fifteen\n(15) days before the first hearing date established by the referee.  The referee\nmay extend such period in the event of a party's refusal to provide requested\ndiscovery for any reason whatsoever, including, without limitation, legal\nobjections raised to such discovery or unavailability of a witness due to\nabsence or illness.  No party shall be entitled to \"priority\" in conducting\ndiscovery.  Depositions may be taken by either party upon seven (7) days written\nnotice, and, request for production or inspection of documents shall be\nresponded to within ten (10) days after service.  All disputes relating to\ndiscovery which cannot be resolved by the parties shall be submitted to the\nreferee whose decision shall be final and binding upon the parties.\n\n\n \n  b.  The referee shall be required to determine all issues in accordance with\nexisting case law and the statutory laws of the State of California.  The rules\nof evidence applicable to proceedings at law in the State of California will be\napplicable to the reference proceeding.  The referee shall be empowered to enter\nequitable as well as legal relief, to provide all temporary and\/or provisional\nremedies and to enter equitable orders that will be binding upon the parties.\nThe referee shall issue a single judgment at the close of the reference\nproceeding which shall dispose of all of the claims of the parties that are the\nsubject of the reference.  The parties hereto expressly reserve the right to\ncontest or appeal from the final judgment or any appealable order or appealable\njudgment entered by the referee.  The parties expressly reserve the right to\nfindings of fact, conclusions of law, a written statement of decision, and the\nright to move for a new trial or a different judgment, which new trial, if\ngranted, is also to be a reference proceeding under this provision.\n\n\n          Borrower:\n\n          ENCODING.COM, INC.\n\n                    \/s\/ Martin Tobias\n          By: _________________________________________________________\n                    President or Vice President\n\n          By: _________________________________________________________\n                    (Assistant) Secretary or Chief Financial Officer\n\n\n          Bank:\n\n          IMPERIAL BANK\n\n          By:_________________________________________________________\n\n          Title:______________________________________________________\n\n\n \n[LOGO]\n\n\nSchedule to\nStarter Kit Loan and Security Agreement (Equipment Advances)\n\nBORROWER:  Encoding.com, Inc.\n\nDATE:      August 4, 1998\n\n\n     This Schedule is an integral part of the Loan and Security Agreement\nbetween Imperial Bank (\"Bank\") and the above-named Borrower of even date.\n\nCredit Limit (Equipment)\n(Section 1):        $1,000,000.00 (such amount to be funded under the aggregate\n                    Credit Limit). Equipment Advances will be made only on or\n                    prior to July 31, 1999 (the \"Last Advance Date\") and only\n                    for the purpose of purchasing equipment reasonably\n                    acceptable to Bank. Borrower must provide invoices for the\n                    equipment to Bank on or before the Last Advance Date.\n\nInterest Rate\n(Section 1):        The rate equal to Bank's Prime Rate in effect from time to\n                    time. Interest shall be calculated on the basis of a 360 day\n                    year for the actual number of days elapsed. The Prime Rate\n                    shall be the rate announced from time to time by Bank as its\n                    \"Prime Rate;\" as a base rate upon which other rates charged\n                    by Bank are based, and it is not necessarily the best rate\n                    available at Bank. The interest rate applicable to the\n                    Obligations shall change on each date there is a change in\n                    the Prime Rate.\n\nMaturity Date\n(Section 4):        After the Last Advance Date, the unpaid principal balance of\n                    the Equipment Advances shall be repaid in 36 equal monthly\n                    installments of principal, plus interest, commencing on\n                    August 30, 1999 and continuing on the same day of each month\n                    thereafter until the entire unpaid principal balance of the\n                    Equipment Advances and all accrued unpaid interest have been\n                    paid (subject to Bank's right to accelerate the Equipment\n                    Advances on an Event of Default).\n\n\n           Borrower:\n\n           ENCODING.COM, INC.\n\n               \/s\/ Martin Tobias\n           By: ________________________________________________\n               President or Vice President\n\n           By: ________________________________________________\n               (Assistant) Secretary or Chief Financial Officer\n\n\n           Bank:\n\n           IMPERIAL BANK\n\n           By:_________________________________________________\n \n           Title:______________________________________________\n\n\n\n\n[LOGO]\n\n\nResolution Authorizing Credit\n\nBorrower:  Encoding.com, Inc., a corporation\n\norganized under the laws of the State of Delaware\n\nDate: August 4, 1998\n\n     I, the undersigned, officer of the above-named borrower, a corporation\norganized under the laws of the state set forth above, do hereby certify that\nthe following is a full, true and correct copy of resolutions duly and regularly\nadopted by the Board of Directors of said corporation as required by law, and by\nthe by-laws, of said corporation, and that said resolutions are still in full\nforce and effect and have not been in any way modified, repealed, rescinded,\namended or revoked.\n\n     RESOLVED, that this corporation borrow from Imperial Bank (\"Bank\"), from\n     time to time, such sum or sums of money as, in the judgment of the officer\n     or officers authorized hereby, this corporation may require.\n\n     RESOLVED FURTHER, that any officer of this corporation be, and he or she is\n     hereby authorized, in the name of this corporation, to execute and deliver\n     to Bank the loan agreements, security agreements, notes financing\n     statements, and other documents and instruments providing for such loans\n     and evidencing or securing such loans and said authorized officers are\n     authorized from time to time to execute renewals, extensions and\/or\n     amendments of said loan agreements, security agreements, and other\n     documents and instruments.\n\n     RESOLVED FURTHER, that said authorized officers be and they are hereby\n     authorized, as security for any and all indebtedness of this corporation to\n     Bank, whether arising pursuant to this resolution or otherwise, to grant to\n     but not limited to, any and all real property, accounts, inventory,\n     equipment, general intangibles, instruments documents, chattel paper,\n     notes, money, deposit accounts, furniture, fixtures, goods and other\n     property of every kind, and to execute and deliver to Bank any and all\n     pledge agreements mortgages, deeds of trust, financing statements, security\n     agreements and other agreements, which said instruments and the note or\n     notes and other instruments referred to in the proceeding paragraph may\n     contain such provisions, covenants, recitals and agreements as Bank may\n     require, and said authorized officers may approve, and the execution\n     thereof by said authorized officers shall be conclusive evidence of such\n     approval.\n\n     RESOLVED FURTHER, that Bank may conclusively rely on a certified copy of\n     these resolutions and a certificate of an officer of this corporation as to\n     the officers of this corporation and their offices and signatures, and\n     continue to conclusively rely on such certified copy of these resolutions\n     and said certificate for all past, present and future transactions until\n     written notice of any change hereto or thereto is given to Bank by this\n     corporation by certified mail, return receipt requested.\n\nThe undersigned further hereby certifies that the following persons are the\nfully elected and acting officers of the corporation named above as borrower and\nthat the following are their actual signatures:\n\nNAMES                    OFFICE(S)            ACTUAL SIGNATURES\n-----                    ---------            -----------------\n\n\n_____________________    _________________    _______________________________\n\nMartin Tobias            CEO, CFO, Pres.      \/s\/ Martin Tobias\n_____________________    _________________    _______________________________\n\nWilliam W. Ericson       Secretary            \/s\/ William W. Ericson\n_____________________    _________________    _______________________________\n\nIN WITNESS WHEREOF, I have hereunto set my hand as such corporate officer on the\ndate set forth above.\n\n                                         X \/s\/ Martin Tobias\n                                          ____________________________________\n \n                                     Its:_____________________________________\n\n\n\n[LOGO]\n\n\nMaster Schedule to Starter Kit Loan and Security Agreement\n\nBORROWER:  Encoding.com, Inc.\n\nDATE:      August 4, 1998\n\n\n     This Schedule is incorporated into and an integral part of the Starter Kit\nLoan and Security Agreement between Imperial Bank (\"Bank\") and the above-named\nBorrower of even date.\n\nCredit Limit (Aggregate)\n(Section 1):                  $1,000,000.00 (includes, without limitation,\n                              Equipment Advances and the Merchant Services and\n                              Business Bancard Reserve, if any)\n\nInterest Rate (Section 1):    The rate equal to Bank's Prime Rate in effect from\n                              time to time. Interest shall be calculated on the\n                              basis of a 360 day year for the actual number of\n                              days elapsed. The Prime Rate shall be the rate\n                              announced from time to time by Bank as its \"Prime\n                              Rate;\" as a base rate upon which other rates\n                              charged by Bank are based, and it is not\n                              necessarily the best rate available at Bank. The\n                              interest rate applicable to the Obligations shall\n                              change on each date there is a change in the Prime\n                              Rate\n\nMaturity Date (Section 4):    January  31, 2000\n\nOther Locations and Addresses\n(Section 3.2):                __________________________________________________\n                              __________________________________________________\n\nOther Agreements:             1.  Loan Fee.  None.\n\n                              2.  ______________________________________________\n                              __________________________________________________\n\n\n          Borrower:\n\n          ENCODING.COM, INC.\n\n                      \/s\/ Martin Tobias\n          By: ___________________________________________________________\n                      President or Vice President\n\n          By: ___________________________________________________________\n                     (Assistant) Secretary or Chief Financial Officer\n\n          Bank:\n\n          IMPERIAL BANK\n \n          By:_________________________________________________\n\n          Title:______________________________________________\n\n\n\n\n<type>EX-10.25\n\n<sequence>26\n\n<description>LOAN &amp; SECURITY AGR. WITH DOMINION VENTURE FINANCE\n\n\n\n\n                                                                   EXHIBIT 10.25\n\n                          LOAN AND SECURITY AGREEMENT\n\n     This LOAN AND SECURITY AGREEMENT, dated as of June, 15 1999 is entered by\nand between:\n\n(1) ENCODING.COM, a Delaware corporation (\"Borrower\"); and\n\n(2) DOMINION VENTURE FINANCE L.L.C. (\"Lender\").\n\n                                    RECITALS\n                                    --------\n\n     A.        Borrower desires to obtain a loan upon the security of certain\n          equipment owned or to be acquired by Borrower.\n\n     B.        Lender is willing to make a loan upon the terms and subject to\n          the conditions set forth herein.\n\n                                   AGREEMENT\n                                   ---------\n\n     NOW, THEREFORE, in consideration of the foregoing and of the covenants,\nconditions and agreements set forth herein, the parties agree as follows:\n\nARTICLE 1.  DEFINITIONS.\n\n     For purposes of this Loan Agreement the following capitalized terms shall\nhave the meanings set forth below:\n\n     1.1  \"Business Day\" shall mean any day on which commercial banks are not\n           ------------                                                      \nauthorized or required to close in San Francisco, California.\n\n     1.2  \"Closing\" shall mean the date, time and place as the parties may agree\n           -------                                                              \nfor the consummation of the loan contemplated hereby.\n\n     1.3  \"Collateral\" shall have the meaning set forth in Section 3.1 of this\n           ----------                                                         \nLoan Agreement.\n\n     1.4  \"Commitment\" shall have the meaning set forth in Section 2.1 of this\n           ----------                                                         \nLoan Agreement.\n\n     1.5  \"Commitment Termination Date\" shall have the meaning set forth in\n           ---------------------------                                     \nSection 2.1 of this Loan Agreement.\n\n\n \n     1.6  \"Contractual Obligation\" of any Person shall mean, any indenture,\n           ----------------------                                          \nnote, security, deed of trust, mortgage, security agreement, lease, guaranty,\ninstrument, contract, agreement or other form of obligation or undertaking to\nwhich such Person is a party or by which such Person or any of its property is\nbound.\n\n     1.7  \"Default\" shall mean any event or circumstance not yet constituting an\n           -------                                                              \nEvent of Default but which, with the giving of any notice or the lapse of any\nperiod of time or both, would become an Event of Default.\n\n     1.8  \"Default Rate\" shall mean, as of any date of determination, an\n           ------------                                                 \ninterest rate per annum equal to five percent (5%) in excess of the rate per\nannum otherwise applicable on such date.\n\n     1.9  \"Disclosure Schedule\" shall have the meaning set forth in Article 5 of\n           -------------------                                                  \nthis Loan Agreement.\n\n     1.10 \"Eligible Equipment\" shall mean computers, furniture, software and\n           ------------------                                               \noffice equipment, to the extent acceptable to Lender; provided that the\naggregate value of all software may not exceed ten percent (10%) of the\nCommitment.  The Aggregate value of Softcosts, defined as software and leasehold\nimprovements shall not exceed twenty percent (20%) of the total equipment loan.\nAll New Equipment to be purchased by Borrower and intended to constitute\nCollateral must be approved by Lender and shall be valued at cost (net of\nfreight, taxes, installation and similar costs).  All Used Equipment owned by\nBorrower as of the date of this Loan Agreement, or acquired by Borrower after\nthe date of this Loan Agreement in one or more transactions, and which Borrower\nintends to constitute Collateral must be approved by Lender and shall be valued\nusing straight line depreciation from the original cost (net of freight, taxes,\ninstallation and similar costs) over thirty-six (36) months.  All appraisal\ncosts shall be borne by Borrower.\n\n     1.11 \"Environmental Laws\" means all Requirements of Law relating to the\n           ------------------                                               \nprotection of human health or the environment, including, without limitation,\n(a) all Requirements of Law, pertaining to reporting, licensing, permitting,\ninvestigation, and remediation of emissions, discharges, releases, or threatened\nreleases of hazardous materials, chemical substances, pollutants, contaminants,\nor hazardous or toxic substances, materials or wastes whether solid, liquid, or\ngaseous in nature, into the air, surface water, groundwater, or land, or\nrelating to the manufacture, processing, distribution, use, treatment, storage,\ndisposal, transport, or handling of chemical substances, pollutants,\ncontaminants, or hazardous or toxic substances, materials, or wastes, whether\nsolid, liquid, or gaseous in nature; and (b) all Requirements of Law pertaining\nto the protection of the health and safety of employees or the public.\n\n     1.12 \"Equipment\" shall have the meaning set forth in Section 3.1 of this\n           ---------                                                         \nLoan Agreement.\n\n     1.13 \"Event of Default\" shall have the meaning set forth in Section 10.1\n           ----------------                                                  \nof this Loan Agreement.\n\n                                      -2-\n\n\n \n     1.14  \"Financial Statements\" shall mean, with respect to any accounting\n            --------------------                                            \nperiod for any Person, statements of operations, retained earnings and cash flow\nof such Person for such period, and balance sheets of such Person as of the end\nof such period, setting forth in each case in comparative form figures for the\ncorresponding period in the preceding fiscal year if such period is less than a\nfull fiscal year or, if such period is a full fiscal year, corresponding figures\nfrom the preceding fiscal year, all prepared in reasonable detail and in\naccordance with generally accepted accounting principles.  Unless otherwise\nindicated, each reference to Financial Statements of any Person shall be deemed\nto refer to Financial Statements prepared on a consolidated basis.\n\n     1.15  \"Governmental Authority\" shall mean any domestic or foreign national,\n            ----------------------                                              \nstate or local government, any political subdivision thereof, any department,\nagency, authority or bureau of any of the foregoing, or any other entity\nexercising executive, legislative, judicial, regulatory or administrative\nfunctions of or pertaining to government.\n\n     1.16  \"Governmental Rule\" shall mean any law, rule, regulation, ordinance,\n            -----------------                                                  \norder, code interpretation, judgment, decree, directive, guidelines, policy or\nsimilar form of decision of any Governmental Authority.\n\n     1.17  \"Indebtedness\" of any Person shall mean and include the aggregate\n            ------------                                                    \namount of, without duplication (a) all obligations of such Person for borrowed\nmoney, (b) all obligations of such Person evidenced by bonds, debentures, notes\nor other similar instruments, (c) all obligations of such Person to pay the\ndeferred purchase price of property or services (other than accounts payable\nincurred in the ordinary course of business determined in accordance with\ngenerally accepted accounting principles), (d) all obligations under capital\nleases of such Person, (e) all obligations or liabilities of others secured by a\nlien on any asset of such Person, whether or not such obligation or liability is\nassumed, (f) all guaranties of such Person of the obligations of another Person;\n(g) all obligations created or arising under any conditional sale or other title\nretention agreement with respect to property acquired by such Person (even if\nthe rights and remedies of the seller or lender under such agreement upon an\nevent of default are limited to repossession or sale of such property), (h) net\nexposure under any interest rate swap, currency swap, forward, cap, floor or\nother similar contract that is not entered to in connection with a bona fide\nhedging operation that provides offsetting benefits to such Person, which\nagreements shall be marked to market on a current basis, (i) all reimbursement\nand other payment obligations, contingent or otherwise, in respect of letters of\ncredit.\n\n     1.18  \"Lien\" shall mean, with respect to any property, any security\n            ----                                                        \ninterest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or\non such property or the income therefrom, including, without limitation, the\ninterest of a vendor or lessor under a conditional sale agreement, capital lease\nor other title retention agreement, or any agreement to provide any of the\nforegoing, and the filing of any financing statement or similar instrument under\nthe Uniform Commercial Code or comparable law of any jurisdiction.\n\n     1.19  \"Loan\" shall have the meaning set forth in Section 2.1 of this Loan\n            ----                                                              \nAgreement.\n\n                                      -3-\n\n\n \n     1.20  \"Loan Agreement\" shall mean this Loan and Security Agreement.\n            --------------                                              \n\n     1.21  [Intentionally Deleted]\n\n     1.22  \"Material Adverse Effect\" shall mean a material adverse effect on (a)\n            -----------------------                                             \nthe business, assets, operations, prospects or financial or other condition of\nBorrower and its Subsidiaries, taken as a whole; (b) the ability of Borrower and\nits Subsidiaries to pay or perform the Obligations in accordance with the terms\nof this Loan Agreement and the other Operative Documents and to avoid an Event\nof Default under any Operative Document; or (c) the rights and remedies of\nLender under this Loan Agreement, the other Operative Documents or any related\ndocument, instrument or agreement.\n\n     1.23  \"New Equipment\" shall mean Eligible Equipment purchased with the\n            -------------                                                  \nproceeds of a Loan or placed in service not more than ninety (90) days prior to\nthe date of funding of the applicable Loan.\n\n     1.24  \"Note\" shall mean a promissory note or notes of Borrower\n            ----                                                   \nsubstantially in the form attached as Exhibit A hereto.\n\n     1.25  \"Obligations\" shall mean and include all loans, advances, debts,\n            -----------                                                    \nliabilities, and obligations, including, without limitation, the noncancelable\nobligation to make each payment scheduled to be made under Sections 2.2.2, 2.2.3\nand 2.2.4, howsoever arising, owed by Borrower to Lender of every kind and\ndescription (whether or not evidenced by any note or instrument and whether or\nnot for the payment of money), now existing or hereafter arising under or\npursuant to the terms of this Loan Agreement or the other Operative Documents,\nincluding, without limitation, all interest, , fees, charges, expenses,\nattorneys' fees and costs and accountants' fees and costs chargeable to and\npayable by Debtor hereunder and thereunder, in each case, whether direct or\nindirect, absolute or contingent, due or to become due, and whether or not\narising after the commencement of a proceeding under Title 11 of the United\nStates Code (11 U.S.C. Section 101 et seq.), as amended from time to time\n(including post-petition interest) and whether or not allowed or allowable as a\nclaim in any such proceeding.\n\n     1.26  \"Operative Documents\" shall mean, collectively, the Loan Agreement,\n            -------------------                                               \nthe Notes and the other documents executed in connection herewith.\n\n     1.27  \"Permitted Liens\" shall mean and include:  (a) Liens for taxes or\n            ---------------                                                 \nother Governmental Charges not at the time delinquent or thereafter payable\nwithout penalty or being contested in good faith, provided provision is made to\nthe reasonable satisfaction of Lender for the eventual payment thereof if\nsubsequently found payable; (b) Liens of carriers, warehousemen, mechanics,\nmaterialmen, vendors, and landlords incurred in the ordinary course of business\nfor sums not overdue or being contested in good faith, provided provision is\nmade to the reasonable satisfaction of Lender for the eventual payment thereof\nif subsequently found payable; and (c) Liens in favor of Lender.\n\n                                      -4-\n\n\n \n     1.28  \"Person\" shall mean and include an individual, a partnership, a\n            ------                                                        \ncorporation (including a business trust), a joint stock company, a limited\nliability company, an unincorporated association, a joint venture or other\nentity or a Governmental Authority.\n\n     1.29  \"Requirement of Law\" applicable to any Person shall mean (a) the\n            ------------------                                             \narticles or certificate of incorporation, bylaws or other governing documents of\nsuch Person, (b) any Governmental Rule applicable to such Person, (c) any\nlicense, permit, approval or other authorization granted by any Governmental\nAuthority to or for the benefit of such Person and (d) any judgment, decision or\ndetermination of any Governmental Authority or arbitrator, in each case\napplicable to or binding upon such Person or any of its property or to which\nsuch Person or any of its property is subject.\n\n     1.30  \"Subsidiary\" of any Person shall mean (a) any corporation of which\n            ----------                                                       \nmore than fifty percent (50%) of the issued and outstanding equity securities\nhaving ordinary voting power to elect a majority of the Board of Directors of\nsuch corporation (irrespective of whether at the time capital stock of any other\nclass or classes of such corporation shall or might have voting power upon the\noccurrence of any contingency) is at the time directly or indirectly owned or\ncontrolled by such Person, by such Person and one or more of its other\nSubsidiaries or by one or more of such Person's other Subsidiaries, (b) any\npartnership, joint venture, or other association of which more than fifty\npercent (50%) of the equity interest having the power to vote, direct or control\nthe management of such partnership, joint venture or other association is at the\ntime owned and controlled by such Person, by such Person and one or more of the\nother Subsidiaries or by one or more of such Person's other subsidiaries and (c)\nany other Person included in the financial statements of such Person on a\nconsolidated basis.  Any reference to a Subsidiary without designation of the\nownership of such Subsidiary shall be deemed to refer to a Subsidiary of\nBorrower.\n\n     1.31  \"Used Equipment\" shall mean Eligible Equipment which is not New\n            --------------                                                \nEquipment.\n\nARTICLE 2.  THE LOANS.\n\n     2.1   Commitment.  Subject to the terms and conditions of this Loan\n           ----------                                                   \nAgreement, from time to time on or prior to June 15, 2000 (the \"Commitment\nTermination Date), Lender agrees to advance to Borrower term loans (the \"Loans\")\nin an aggregate principal amount of up to Two Million, Six Hundred Thousand\nDollars ($2,600,000) (the \"Commitment\").  Loans shall be made not more often\nthan monthly.  Borrower may not prepay any amount due with respect to the Loans\n\n     2.2   Loan Payments.\n           ------------- \n\n           2.2.1  Loan Interest.  Borrower shall pay interest in advance on the\n                  -------------                                                \nunpaid principal amount of each Loan from the date of such Loan until such Loan\nis paid in full, at a rate of interest equal to eight percent (8%) per annum,\nbased upon a year of 360 days and actual days elapsed.  If Borrower pays\ninterest on such Loan which is determined to be in excess of the then legal\nmaximum \n\n                                      -5-\n\n\n \nrate, then that portion of each interest payment representing an amount in\nexcess of the then legal maximum rate shall be deemed a payment of principal and\napplied against the principal of the Loan.\n\n          2.2.2  Payments of Principal and Interest.  Borrower shall make\n                 ----------------------------------                      \nthirty-six (36) equal payments of principal and interest (payable in advance),\nwhich payments shall fully amortize the principal and interest due on the Loan\nover such thirty-six (36) month period, on the first Business Day of each month\nuntil the Loan is paid in full.\n\n          2.2.3  Interim Interest Payment.  Concurrently, with the funding of\n                 ------------------------                                    \neach Loan, Borrower shall make an advance payment of interest for the period\nfrom the date of funding to the first Business Day of the month after the\nfunding of such Loan.\n\n          2.2.4  Final Payment.  On the date on which the last payment is due\n                 -------------                                               \nunder Section 2.2.2 with respect to each Loan, Borrower shall pay to Lender, in\naddition to any remaining unpaid principal and accrued interest and all other\namounts previously due with respect to such Loan, an amount equal to fifteen\npercent (15 %) of the original principal amount of such Loan.\n\n          2.2.5  [Intentionally Deleted.]\n\n     2.3  Use of Proceeds; the Loan and the Note; Disbursement.\n          ---------------------------------------------------- \n\n          2.3.1  Use of Proceeds.  The proceeds of the Loan shall be used solely\n                 ---------------                                                \nfor purchasing Eligible Equipment.\n\n          2.3.2  The Loan and the Notes.  The obligation of Borrower to repay\n                 ----------------------                                      \nthe aggregate unpaid principal amount of and interest on each Loan shall be\nevidenced by a Note setting forth the principal amount of such Loan and the\npayments due with respect thereto.  Any failure by Lender to obtain or retain\nsuch a Note shall not limit or otherwise affect the obligations of Borrower to\npay amounts due hereunder with respect to a Loan.\n\n          2.3.3  Disbursement.  Subject to the satisfaction of the conditions\n                 ------------                                                \nset forth in this Agreement, Lender shall disburse each Loan to Borrower as\ndirected in writing by Borrower.\n\n     2.4  Other Payment Terms.\n          ------------------- \n\n          2.4.1  Place and Manner.  Borrower shall make all payments due to\n                 ----------------                                          \nLender in lawful money of the United States, in immediately available funds, at\nthe address for payments specified in Section 11.5.\n\n          2.4.2  Date.  Whenever any payment due hereunder shall fall due on a\n                 ----                                                         \nday other than a Business Day, such payment shall be made on the next succeeding\nBusiness Day, and such extension of time shall be included in the computation of\ninterest or fees, as the case may be.\n\n                                      -6-\n\n\n \n          2.4.3  Default Rate.  If any amounts required to be paid by Borrower\n                 ------------                                                 \nunder this Agreement or the other Operative Documents (including principal or\ninterest payable on the Loan, any fees or other amounts) remain unpaid after\nsuch amounts are due, Borrower shall pay interest on the aggregate, outstanding\nprincipal balance hereunder from the date due until such past due amounts are\npaid in full, at a per annum rate equal to the Default Rate.  All computations\nof such interest shall be based on a year of 360 days and actual days elapsed.\n\n          2.4.4  Commitment Fee.  Lender has received a commitment fee from\n                 --------------                                            \nBorrower in the amount of $4,000 (the \"Commitment Fee\").   The Commitment Fee\nshall be applied towards last month's rent under this Agreement.\n\nARTICLE 3.  CREATION OF SECURITY INTEREST.\n\n     3.1  Grant of Security Interest.  As collateral security for the\n          --------------------------                                 \nObligations, Borrower hereby grants to Lender a continuing security interest in\nand to the following property and interests in property of Borrower (the\n\"Collateral\"):\n\n          All right, title, interest, claims and demands of Borrower in and to\n     each and every item of equipment, fixtures or personal property now or\n     hereafter listed on Schedule I hereto, whether now owned or hereafter\n     acquired, together with all substitutions, renewals or replacements of and\n     additions, improvements, accessions, replacement parts and accumulations to\n     any and all of such equipment, fixtures or personal property (collectively,\n     the \"Equipment\"), together with all proceeds thereof, including, without\n     limitation, insurance, condemnation, requisition or similar payments, and\n     all proceeds from sales, renewals, releases or other dispositions thereof,\n     and together with all money delivered to Lender as additional security or\n     collateral.\n\nSchedule I and Schedule III shall be deemed amended upon the execution of each\n----------     ------------                                                   \nNote to identify (i) the items of Equipment financed with the Loan evidenced by\nsuch Note and in which a security interest is granted hereunder and (ii) the\nlocations of such items of Equipment, and such amendment shall be effective\nwhether or not a listing of such items or locations is actually appended\nthereto.\n\n     3.2  Security Deposit. As additional security for the Obligations, Borrower\n          ----------------                                                      \nshall deposit with Lender upon the Closing an amount equal to the last month's\npayment on the amount of the Commitment (the \"Security Deposit\") which shall be\n                                              ----------------                 \nheld by Lender (without payment of interest thereon).  A pro rata portion of the\nSecurity Deposit shall be deemed to prepay as of the date of this Loan Agreement\nthe last payment due on each Loan.  If the Commitment is not fully utilized by\nthe Commitment Termination Date, Lender shall retain the unutilized portion of\nthe Security Deposit as compensation for expenses.  Borrower hereby grants to\nLender a security interest in such Security Deposit.  Lender shall be under no\nobligation to segregate the Security Deposit from its other funds.\n\n                                      -7-\n\n\n \n     3.3  Liabilities Unconditional.  Borrower is and shall remain absolutely\n          -------------------------                                          \nand unconditionally liable for the performance of its obligations under the\nOperative Documents, including without limitation any deficiency by reason of\nthe failure of the Collateral to satisfy all amounts due Lender under the Note\nor pursuant to any other Operative Document.\n\nARTICLE 4.  CLOSING.\n\n     4.1  Conditions to Closing.  The obligation of Lender to fund a Loan shall\n          ---------------------                                                \nbe subject to the following conditions precedent:\n\n          4.1.1  Conditions to Closing.  Lender shall have received in\n                 ---------------------                                \nconnection with the Closing in form and substance satisfactory to Lender:\n\n                 (a)  This Loan Agreement, duly executed by Borrower;\n\n                 (b)  Copies, certified by the Secretary or Assistant Secretary\n                      of Borrower, of: (A) the Certificate of Incorporation and\n                      Bylaws of Borrower (as amended to the date of this Loan\n                      Agreement), (B) the resolutions adopted by Borrower's\n                      board of directors authorizing the transaction and the\n                      documents being executed in connection therewith, and (C)\n                      the incumbency of the officers executing this Loan\n                      Agreement and the other Operative Documents on behalf of\n                      Borrower.\n\n                 (c)  Subject to the restrictions set forth in the definition of\n                      Eligible Equipment, if a Loan includes software which is\n                      intended to become Collateral under such Loan and the\n                      aggregate cost of such software exceeds Thirty Thousand\n                      Dollars ($30,000), then Lender may request that assignment\n                      or sublicensing documentation in form and substance\n                      satisfactory to Lender be executed prior to the inclusion\n                      of the software as Collateral under such Loan and Borrower\n                      shall use its reasonable best efforts to accommodate said\n                      request with the vendor of such software.\n\n                 (d)  Good Standing Certificate(s) (including tax status if\n                      available) with respect to Borrower from Borrower's state\n                      of incorporation and principal place of business, if\n                      different, (each) dated a date reasonably close to the\n                      date of this Loan Agreement.\n\n                 (e)  Evidence of the insurance coverage required by Section 6.6\n                      of this Loan Agreement.\n\n                 (f)  All necessary consents of shareholders and other third\n                      parties with respect to the subject matter of the Loan\n                      Agreement and the other documents being executed in\n                      connection therewith.\n\n                                      -8-\n\n\n \n                 (h)  All other documents as Lender shall have reasonably\n                      requested.\n\n          4.1.2  Conditions to Funding of Each Loan.  Prior to the funding of\n                 ----------------------------------                          \neach Loan, the following conditions with respect to such Loan shall have been\nsatisfied or waived by Lender:\n\n                 (a)  Borrower shall have executed and delivered a Note prepared\n                      by Lender setting forth the terms of the Loan.\n\n                 (b)  Borrower shall have provided to Lender, with respect to\n                      the Equipment constituting Collateral, such invoices,\n                      bills of sale, receipts, agreements, canceled checks, and\n                      other documents as Lender shall reasonably request to\n                      evidence the ownership by Borrower of, and the payment in\n                      full of the purchase price of such Equipment, each in form\n                      and substance reasonably satisfactory to Lender; and,\n                      except with the prior written consent of Lender which\n                      shall not be unreasonably withheld, all such Equipment\n                      shall be Eligible Equipment and acceptable to Lender as to\n                      value and type.\n\n                 (c)  Borrower shall have taken such actions, if any, as Lender\n                      shall reasonably determine are necessary or desirable to\n                      perfect and protect its security interest in the\n                      Collateral and the priority thereof.\n\n                 (d)  No Event of Default or Default shall have occurred and be\n                      continuing.\n\n                 (e)  In Lender's sole discretion, there shall not have occurred\n                      any Material Adverse Effect.\n\n                 (f)  The representations and warranties contained in this\n                      Agreement and the other Operative Documents to which\n                      Borrower is a party, as modified by any Disclosure\n                      Schedule, shall be true and correct in all material\n                      respects as if made on the date of funding of the Loan and\n                      the items listed on such Disclosure Schedule shall be\n                      reasonably acceptable to Lender.\n\n                 (g)  Each of the Operative Documents remains in full force and\n                      effect.\n\n                 (h)  The requested date of funding the Loan shall not be later\n                      than June 15, 2000.\n\n                                      -9-\n\n\n \n                 (i)  Borrower shall have provided to Lender a Landlord Waiver\n                      in the form of Exhibit B hereto or otherwise in form and\n                      substance satisfactory to Lender, from each owner of\n                      record of real property at which items of Collateral will\n                      be located, setting forth the rights of Lender with\n                      respect to such items of Collateral.\n\n                 (j)  Borrower shall have provided to Lender  a UCC-1 financing\n                      statement duly executed by Borrower for each state (and\n                      county, if applicable) in which Equipment financed by the\n                      Loan is or will be located.\n\nARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF BORROWER.\n\n     Except as set forth on Schedule II hereto (the \"Disclosure Schedule\"),\n                            -----------              -------------------   \nBorrower represents and warrants to Lender:\n\n     5.1  Due Incorporation, Qualification, etc.  Each of Borrower and its\n          --------------------------------------                          \nSubsidiaries (i) is a corporation duly organized, validly existing and in good\nstanding under the laws of its state of incorporation; (ii) has the power and\nauthority to own, lease and operate its properties and carry on its business as\nnow conducted; and (iii) is duly qualified, licensed to do business and in good\nstanding as a foreign corporation in each jurisdiction where the failure to be\nso qualified or licensed could reasonably be expected to have a Material Adverse\nEffect.\n\n     5.2  Authority.  The execution, delivery and performance by Borrower of\n          ---------                                                         \neach Operative Document to be executed by Borrower and the consummation of the\ntransactions contemplated thereby (i) are within the power of Borrower and (ii)\nhave been duly authorized by all necessary actions on the part of Borrower.\n\n     5.3  Enforceability.  Each Operative Document executed, or to be executed,\n          --------------                                                       \nby Borrower has been, or will be, duly executed and delivered by Borrower and\nconstitutes, or will constitute, a legal, valid and binding obligation of\nBorrower, enforceable against Borrower in accordance with its terms, except as\nlimited by bankruptcy, insolvency or other similar laws of general application\nrelating to or affecting the enforcement of creditors' rights generally and\ngeneral principles of equity.\n\n     5.4  Non-Contravention.  The execution and delivery by Borrower of the\n          -----------------                                                \nOperative Documents executed by Borrower and the performance and consummation of\nthe transactions contemplated thereby do not and will not (i) violate any\nRequirement of Law applicable to Borrower; (ii) violate any provision of, or\nresult in the breach or the acceleration of, or entitle any other Person to\naccelerate (whether after the giving of notice or lapse of time or both), any\nContractual Obligation of Borrower; or (iii) result in the creation or\nimposition of any Lien upon any property, asset or revenue of Borrower (except\nsuch Liens as may be created in favor of Lender pursuant to this Loan Agreement\nor the other Operative Documents).\n\n                                      -10-\n\n\n \n     5.5  Approvals.  No consent, approval, order or authorization of, or\n          ---------                                                      \nregistration, declaration or filing with, any Governmental Authority or other\nPerson (including, without limitation, the shareholders of any Person) is\nrequired in connection with the execution and delivery of the Operative\nDocuments executed by Borrower and the performance and consummation of the\ntransactions contemplated thereby.\n\n     5.6  No Violation or Default.  None of Borrower or Borrower's Subsidiaries\n          -----------------------                                              \nis in violation of or in default with respect to (i) any Requirement of Law;\n(ii) any Contractual Obligation (nor is there any waiver in effect which, if not\nin effect, would result in such a violation or default), where, in each case,\nsuch violation or default, individually, or together with all such violations or\ndefaults, could reasonably be expected to have a Material Adverse Effect.\nWithout limiting the generality of the foregoing, none of Borrower or Borrower's\nSubsidiaries (A) has violated any Environmental Laws, (B) has any liability\nunder any Environmental Laws or (C) has received notice or other communication\nof an investigation or is under investigation by any Governmental Authority\nhaving authority to enforce Environmental Laws, where such violation, liability\nor investigation could reasonably be expected to have a Material Adverse Effect.\nNo Event of Default or Default has occurred and is continuing.\n\n     5.7  Litigation.  No actions (including, without limitation, derivative\n          ----------                                                        \nactions), suits, proceedings or investigations are pending or, to the knowledge\nof Borrower, threatened against Borrower or Borrower's Subsidiaries at law or in\nequity in any court or before any other Governmental Authority which if\nadversely determined (i) could reasonably be expected (alone or in the\naggregate) to have a Material Adverse Effect or (ii) seeks to enjoin, either\ndirectly or indirectly, the execution, delivery or performance by Borrower of\nthe Operative Documents or the transactions contemplated thereby.\n\n     5.8  Title.  Borrower has good and marketable title to all Collateral, free\n          -----                                                                 \nand clear of all Liens, other than Permitted Liens.  Each item of Collateral\nconstitutes personal property.\n\n     5.9  Financial Statements.  The Financial Statements of Borrower which have\n          --------------------                                                  \nbeen delivered to Lender (i) are in accordance with the books and records of\nBorrower and its Subsidiaries, which have been maintained in accordance with\ngood business practice; (ii) have been prepared in conformity with generally\naccepted accounting principles; and (iii) fairly present the consolidated\nfinancial position of Borrower as of the dates presented therein and the results\nof operations, changes in financial positions or cash flows, as the case may be,\nfor the periods presented therein.  As of the date hereof, none of Borrower or\nany of Borrower's Subsidiaries has any contingent obligations, liability for\ntaxes or other outstanding obligations which are material in the aggregate,\nexcept as disclosed in the most recent audited Financial Statements furnished by\nBorrower to Lender prior to the date hereof.\n\n     5.10 Governmental Charges. Each of Borrower and its Subsidiaries has filed\n          --------------------                                            \nor caused to be filed all tax returns which are required to be filed by it.\nBorrower and Borrower's Subsidiaries have paid, or made provision for the\npayment of, all taxes and other Governmental Charges which \n\n                                      -11-\n\n\n \nhave or may have become due pursuant to said returns or otherwise, except such\nGovernmental Charges, if any, which are being contested in good faith and as to\nwhich adequate reserves (determined in accordance with generally accepted\naccounting principals) have been provided or which could not reasonably be\nexpected to have a Material Adverse Effect if unpaid.\n\n     5.11 Catastrophic Events; Labor Disputes.  None of Borrower or Borrower's\n          -----------------------------------                                 \nSubsidiaries and none of their properties is or has been affected by any fire,\nexplosion, accident, strike, lockout or other labor dispute, drought, storm,\nhail, earthquake, embargo, act of God or other casualty that could reasonably be\nexpected to have a Material Adverse Effect.  There are no disputes presently\nsubject to grievance procedure, arbitration or litigation under any of the\ncollective bargaining agreements, employment contracts or employee welfare or\nincentive plans to which Borrower or Borrower's Subsidiaries is a party, and\nthere are no strikes, lockouts, work stoppages or slowdowns, or, to the best\nknowledge of Borrower, jurisdictional disputes or organizing activity occurring\nor threatened which could reasonably be expected to have a Material Adverse\nEffect.\n\n     5.12 No Material Adverse Effect.  No event has occurred and no condition\n          --------------------------                                         \nexists which could reasonably be expected to have a Material Adverse Effect.\n\n     5.13 Accuracy of Information Furnished.  None of the Operative Documents\n          ---------------------------------                                  \nand none of the other certificates, statements or information furnished to\nLender by or on behalf of Borrower or Borrower's Subsidiaries in connection with\nthe Operative Documents or the transactions contemplated thereby contains or\nwill contain any untrue statement of a material fact or omits or will omit to\nstate a material fact necessary to make the statements therein, in light of the\ncircumstances under which they were made, not misleading.\n\n     5.14 First Priority.  Assuming the timely filing of financing statements\n          --------------                                                     \ncovering the Collateral, the security interest granted hereby constitutes a\nfirst priority security interest in and Lien on all of the Collateral, subject\nonly to Permitted Liens.\n\n     5.15 Principal Place of Business.  The principal place of business and\n          ---------------------------                                      \nchief executive office of Borrower, and the office where Borrower will keep all\nrecords and files regarding the Collateral is set forth in Section 11.5.\n\nARTICLE 6. COVENANTS OF BORROWER.\n\n     While any Obligations remain outstanding:\n\n     6.1  Financial Statements; Other Information.  Borrower shall provide to\n          ---------------------------------------                            \nLender the financial statements specified in this Section 6.1, prepared in\naccordance with generally accepted accounting principles, consistently applied\n(except, in the case of unaudited financial statements, for the absence of\nfootnotes and normal year-end adjustments); provided, however, that after the\neffective date of the initial registration statement covering a public offering\nof Borrower's securities, Borrower shall only be required to deliver those\nfinancial statements required to be filed by the \n\n                                      -12-\n\n\n \nSecurities and Exchange Commission, to be provided as soon as practicable and no\nless frequently than quarterly.\n\n          6.1.1  As soon as practicable (and in any event within thirty (30)\ndays after the end of each month), a reasonably detailed balance sheet as of the\nend of such month and the related statements of income or loss, cash flow and\ncapital structure of the Borrower during such month (including notification of\nthe commencement of any material litigation by or against Borrower), certified\nby Borrower's Chief Executive Officer or Chief Financial Officer fairly to\npresent the data reflected therein.\n\n          6.1.2  As soon as practicable (and in any event within ninety (90)\ndays after the end of each fiscal year), audited balance sheets as of the end of\nsuch year (consolidated if applicable), and related statements of income or\nloss, retained earnings or deficit, cash flows and capital structure of Borrower\nfor such year, setting forth in comparative form the corresponding figures for\nthe preceding fiscal year, and accompanied by an audit report and opinion of the\nindependent certified public accountants of recognized national standing\nselected by Borrower.\n\n     6.2  Other Information.  Borrower shall promptly furnish to Lender any\n          -----------------                                                  \nadditional information (including but not limited to annual and\/or quarterly\nreports to shareholders,  tax returns, income statements, balance sheets, and\nnames of principal creditors) as Lender shall reasonably request which is\nnecessary to evaluate Borrower's continuing financial obligations.\n\n     6.3  Suits.  Borrower shall deliver to Lender, promptly after the\n          -----                                                       \ncommencement thereof, notice of all actions, suits and proceedings before any\ncourt or governmental department, commission, board, bureau, agency or\ninstrumentality, domestic or foreign, which suits or proceedings if decided\nadversely to Borrower could reasonably be expected to have a Material Adverse\nEffect.\n\n     6.4  Financing Statements and Other Actions Regarding Collateral.  At the\n          -----------------------------------------------------------         \nrequest of Lender, Borrower shall join Lender in executing and delivering one or\nmore financing statements or other documents or instruments in form and\nsubstance satisfactory to Lender for filing or recording in any state, county or\nother jurisdiction Lender or its legal counsel reasonably deems advisable to\nperfect the security interests granted hereunder.  Borrower agrees that Lender\nmay file this Loan Agreement as a Financing Statement in any such jurisdiction.\n\n     6.5  Corporate Identity.  Borrower shall notify Lender in writing prior to\n          ------------------                                                   \nany change in Borrower's principal place of business or chief executive office\nand any proposed or actual change of Borrower's name, identity or corporate\nstructure.\n\n                                      -13-\n\n\n \n     6.6  Insurance. Borrower shall, at its own expense, maintain the following\n          ---------     \ntypes of insurance, with companies with an A-5 Best rating or better, acceptable\nto Lender:\n\n          6.6.1  Personal property insurance on all property owned by Borrower\n(including without limitation all of the Equipment) in an agreed amount based\nupon the following:\n\n                 (a)  Standard \"all risk\" property insurance, including boiler\n                      and machinery insurance, earthquake insurance, if\n                      applicable, and flood insurance if any Equipment is\n                      located in an identified \"flood hazard area,\" in which\n                      flood insurance has been made available pursuant to the\n                      National Flood Insurance Act of 1968;\n\n                 (b)  The amount of such insurance covering the Equipment shall\n                      be not less than the greater of the fair market value or\n                      the full undepreciated replacement value of the Equipment.\n                      The amount of such insurance allocable to loss or damage\n                      or personal property shall not have a deductible in excess\n                      of One Thousand Dollars ($1,000) per occurrence.\n\n                 (c)  Such insurance shall contain an endorsement issued by the\n                      insurer (as opposed to a certificate issued by an agent of\n                      the insurer) in which Lender is named as loss payee with\n                      respect to the Equipment, and shall set aside the amount\n                      stated in Section 6.6.1(b) for the sole benefit of, and\n                      payable directly to, Lender.\n\n          6.6.2  Employee dishonesty insurance payable to Lender with respect to\nthe theft of the Equipment.\n\n          6.6.3  Business interruption insurance in an amount at all times equal\nto the total payments of principal and interest to become due during the six (6)\nmonths following the date of calculation. In the event of any interruption of\nBorrower's business, the amount payable to Lender shall be equal to the actual\nloss of payments of principal and interest suffered by Lender as the result of\nsuch interruption, and shall be payable to Lender within thirty (30) days from\nthe date of loss, and on a month-to-month basis thereafter, until Borrower's\nbusiness is returned to a fully operational state, plus ninety (90) days.\n\n          6.6.4  Commercial general liability insurance covering bodily injury\n(including death) and property damage, naming Lender, its directors, officers,\nagents and employees as an Additional Insureds on all policies (evidenced by an\nendorsement issued by the insurer (as opposed to a certificate issued by an\nagent of the insurer)), and providing total limits in amounts as are at the time\ncarried by entities engaged in the same or similar business and which are\nsimilarly situated, but in no event less than Two Million Dollars ($2,000,000)\nfor combined single limit occurrence. All such policies shall cover any injury\nor damage occasioned by, or occurring upon, Borrower's premises, products,\noperations and, at Lender's option, explosion, collapse and underground hazards.\n\n                                      -14-\n\n\n \nAll such policies shall contain contractual liability coverage including all\nliability assumed under this agreement, and a cross liability clause providing\nthat such insurance shall, except with respect to the limits of liability, apply\nseparately to each insured.\n\n          6.6.5  Workers compensation insurance.\n\n          6.6.6  All insurance specified in this Section 6.6 shall be primary\nover, and in no event shall, any insurance carried by Lender be called upon to\ncontribute to any loss relating to or arising out of this Loan Agreement. All\ninsurance shall be in effect, and shall be evidenced by policies and\/or\nendorsements delivered to Lender no later than twenty (20) days after the date\nupon which Borrower executes this Loan Agreement. Notwithstanding anything to\nthe contrary contained in this Loan Agreement, Lender shall have no obligation\nto purchase any Equipment until all policies are in place. All such policies\nshall provide for at least thirty (30) days' prior written notice to Lender in\nthe event of any cancellation, non-renewal or material change in coverage, and\nLender shall receive a copy of any and all endorsements or other documentation\nrelating to such policies.\n\n     6.7  Title. Borrower shall promptly notify Lender in writing of any event\n          -----\nwhich materially affects the value of the Collateral, the ability of Borrower or\nLender to dispose of the Collateral, or the rights or remedies of Lender in\nrelation thereto, including, but not limited to, the levy of any legal process\nagainst the Collateral. Borrower shall deliver to Lender any and all evidence of\nownership of, and certificates of title to, any and all of the Equipment.\nBorrower shall not grant to any Person (other than Lender or the holder of a\nPermitted Lien) a Lien in the Collateral.\n\n     6.8  Further Identification of Collateral. Borrower shall furnish to Lender\n          ------------------------------------\nfrom time to time such statements and schedules further identifying and\ndescribing the Collateral and such other reports in connection with the\nCollateral as Lender may reasonably request, all in reasonable detail.\n\n     6.9  Good Repair. Borrower shall keep and maintain all Collateral in good\n          -----------\noperating condition and repair, subject to ordinary wear and tear, make all\nnecessary repairs thereto and replacement of parts thereof so that the value and\noperating efficiency thereof shall at all times be maintained and preserved; and\nBorrower shall keep complete and accurate books and records with respect to the\nCollateral, including maintenance records.\n\n     6.10 Loss; Damage; Destruction and Seizure.\n          -------------------------------------\n\n          6.10.1  If while payment Obligations are outstanding any item of\nEquipment is lost, stolen, destroyed, damaged or seized by a Governmental\nAuthority (an \"Event of Loss\"), then, at Borrower's option, either (i) Lender\nshall receive from the proceeds of insurance maintained pursuant to Section 6.6,\nfrom any award paid by the seizing Governmental Authority or, to the extent not\nreceived from the proceeds of insurance or award or both, from Borrower, on or\nbefore the next scheduled payment date succeeding such Event of Loss, an amount\nequal to the replacement value of the item of Equipment subject to the Event of\nLoss which shall be held as additional Collateral for the Loan, or (ii) if no\nEvent of Default has occurred and is continuing, Borrower may use any such\n\n                                      -15-\n\n\n \nproceeds to purchase an item of Equipment to replace the item of Equipment which\nwas subject to the Event of Loss and such replacement Equipment shall become\npart of the Collateral. On the date of receipt by Lender of the amount specified\nhereinabove with respect to each such item of Collateral subject to an Event of\nLoss, the provisions of this Agreement shall terminate as to such Collateral.\nAny proceeds of insurance maintained by Borrower with respect to the Collateral\npursuant to Section 6.6 and received by Borrower shall be paid to Lender\npromptly upon their receipt by Borrower. If any proceeds of insurance or awards\nreceived from Governmental Authorities are in excess of the amount owed under\nthis Section 6.10.1, Lender shall promptly remit to Borrower the amount in\nexcess of the amount to be held by Lender.\n\n           6.10.2  So long as no Event of Default has occurred and is\ncontinuing, any proceeds of insurance maintained pursuant to Section 6.6\nreceived by Lender or Borrower with respect to an item of Collateral the repair\nof which is practicable shall, at the election of Borrower, be applied either to\nthe repair or replacement of such Collateral or, upon Lender's receipt of\nevidence of the repair or replacement of the Collateral reasonably satisfactory\nto Lender, to the reimbursement of Borrower for the cost of such repair or\nreplacement. All replacement parts and equipment acquired by Borrower in\nreplacement of Collateral pursuant to this Section 6.10 shall immediately become\npart of the Collateral upon acquisition by Borrower. Borrower shall take such\nactions and provide such documentation as may be reasonably requested by Lender\nto protect and preserve Lender's first priority security interest and otherwise\nto avoid any impairment of Lender's rights under the Operative Documents, in\nconnection with such repair or replacement.\n\nARTICLE 7. CONFIDENTIALITY.\n\n     Lender agrees to hold non-public information received by it in confidence\nand shall not disclose or use such information to third parties except to its\npartners or the partners of its affiliated investment funds and as Lender may\ndeem necessary in its reasonable judgment to satisfy its legal obligations or to\nenforce Lender's rights under any Operative Document.\n\nARTICLE 8. PRESERVATION OF COLLATERAL BY LENDER.\n\n     Should Borrower fail or refuse to make any payment, perform or observe any\nother covenant, condition or obligation, or take any other action which Borrower\nis obligated under any Operative Document to make, perform, observe, take or do\nat the time or in the manner provided in any Operative Document, then at\nLender's sole and absolute discretion, without notice to or demand upon Borrower\nand without releasing Borrower from any obligation, covenant or condition in any\nOperative Document, Lender may make, perform, observe, take or do the same in\nsuch manner and to such extent as Lender may deem necessary to protect its\nsecurity interest in or the value of the Collateral, and Borrower shall be\nliable to Lender for all costs and expenses incurred by Lender in connection\ntherewith.\n\nARTICLE 9. INSPECTION RIGHTS; LOCATION.\n\n                                      -16-\n\n\n \n     9.1  Inspection.  Borrower hereby grants Lender or its agents, from time\n          ----------\nto time upon not less than forty-eight (48) hours' notice to Borrower during\nBorrower's normal business hours, the right to enter Borrower's premises for the\npurposes of inspecting all items of Collateral and ascertaining their location\nand condition. Borrower shall make available to Lender or its representative its\npersonnel knowledgeable in the location, function and condition of such\nCollateral and shall reasonably assist Lender and its representatives in their\ninspection of such Collateral.\n\n     9.2  Location. Borrower shall keep the Collateral at the location\n          --------\nspecified in Section 11.5, the locations specified in Schedule III hereto as it\nmay be amended from time to time and such other locations as Lender shall\nconsent to in writing, all of which locations shall be in the state of\nWashington. Borrower shall not permit any Collateral to be moved to a new\nlocation without the prior written consent of Lender.\n\nARTICLE 10. EVENTS OF DEFAULT.\n\n     10.1 Events of Default. The occurrence of any of the following shall\n          -----------------\nconstitute an \"Event of Default\" under this Loan Agreement and the Notes:\n\n          10.1.1 Failure to Pay. Borrower shall fail to pay when due any\n                 --------------   \nprincipal, interest or other payment required under the terms of this Loan\nAgreement or any other Operative Document on the date due and such payment shall\nnot have been made within five (5) Business Days of the due date; or\n\n          10.1.2 Insurance.  Borrower or any of its Subsidiaries  shall\n                 ---------   \nfail to observe or perform any covenant set forth in Section 6.6 and such\nfailure shall continue for a period of five (5) Business Days after notice\nthereof is given to Borrower by Lender; or\n\n          10.1.3 Breaches of Other Covenants.  Borrower or any of its\n                 -----------------------------\nSubsidiaries shall fail to observe or perform any other covenant, obligation,\ncondition or agreement contained in this Loan Agreement or the other Operative\nDocuments (other than those specified in Sections 10.1.1 and 10.1.2) and such\nfailure shall continue for ten (10) Business Days; or\n\n          10.1.4 Representations and Warranties.  Any  representation,\n                 ------------------------------  \nwarranty, certificate, or other statement (financial or otherwise) made or\nfurnished by or on behalf of Borrower to Lender in writing in connection with\nthis Loan Agreement or any of the other Operative Documents, or as an inducement\nto Lender to enter into this Loan Agreement, shall be false, incorrect,\nincomplete or misleading in any material respect when made or furnished; or\n\n          10.1.5 Other Payment Obligations. Borrower or any of its Subsidiaries\n                 -------------------------\nshall fail to make any payment when due under the terms of any Indebtedness to\nbe paid by such Person (excluding this Loan Agreement and the other Operative\nDocuments but including any other Indebtedness of Borrower or any of its\nSubsidiaries to Lender) and such failure shall continue beyond any period of\ngrace provided with respect thereto, or shall default in the observance or\n\n                                      -17-\n\n\n \nperformance of any other agreement, term or condition contained in any such\nIndebtedness, and the effect of such failure or default is to cause, or permit\nthe holder or holders thereof to cause Indebtedness in an aggregate amount of\nFifty Thousand Dollars ($50,000) or more to become due prior to its stated date\nof maturity; or\n\n          10.1.6   Voluntary Bankruptcy or Insolvency Proceedings. Borrower\n                   ---------------------------------------------- \nor any of its Subsidiaries shall (i) apply for or consent to the appointment of\na receiver, trustee, liquidator or custodian of itself or of all or a\nsubstantial part of its property, (ii) be unable, or admit in writing its\ninability, to pay its debts generally as they mature, (iii) make a general\nassignment for the benefit of its or any of its creditors, (iv) be dissolved or\nliquidated in full or in part, (v) become insolvent (as such term may be defined\nor interpreted under any applicable statute), (vi) commence a voluntary case or\nother proceeding seeking liquidation, reorganization or other relief with\nrespect to itself or its debts under any bankruptcy, insolvency or other similar\nlaw now or hereafter in effect or consent to any such relief or to the\nappointment of or taking possession of its property by any official in an\ninvoluntary case or other proceeding commenced against it, or (vii) take any\naction for the purpose of affecting any of the foregoing; or\n\n          10.1.7   Involuntary Bankruptcy or Insolvency Proceedings.\n                   ------------------------------------------------  \nProceedings for the appointment of a receiver, trustee, liquidator or custodian\nof Borrower or any of its Subsidiaries or of all or a substantial part of the\nproperty thereof, or an involuntary case or other proceedings seeking\nliquidation, reorganization or other relief with respect to Borrower or any of\nits Subsidiaries or the debts thereof under any bankruptcy, insolvency or other\nsimilar law now or hereafter in effect shall be commenced and an order for\nrelief entered or such proceeding shall not be dismissed or discharged within\nthirty (30) days of commencement; or\n\n          10.1.8   Judgments. A final judgment or order for the payment of\n                   --------- \nmoney in excess of Fifty Thousand Dollars ($50,000) shall be rendered against\nBorrower or any of its Subsidiaries and the same shall remain undischarged for a\nperiod of thirty (30) days during which execution shall not be effectively\nstayed, or any judgment, writ, assessment, warrant of attachment, or execution\nor similar process shall be issued or levied against a substantial part of the\nproperty of Borrower or any of its Subsidiaries and such judgment, writ, or\nsimilar process shall not be released, stayed, vacated or otherwise dismissed\nwithin thirty (30) days after issue or levy; or\n\n          10.1.9   Operative Documents. Any Operative Document or any material\n                   -------------------\nterm thereof shall cease to be, or be asserted by Borrower not to be, a legal,\nvalid and binding obligation of Borrower enforceable in accordance with its\nterms or if the Liens of Lender in the Collateral shall cease to be or shall not\nbe valid, first priority perfected Liens or Borrower shall assert that such\nLiens are not valid, first priority and perfected Liens; or\n\n          10.1.10  Material Adverse Effect.  One or more conditions exist or\n                   ----------------------- \nevents have occurred which could reasonably be expected to result in a Material\nAdverse Effect.\n\n                                      -18-\n\n\n \n         10.2  Rights of Lender upon Default. Upon the occurrence or existence\n               -----------------------------\nof any Event of Default (other than an Event of Default referred to in Sections\n10.1.6 and 10.1.7) and at any time thereafter during the continuance of such\nEvent of Default, Lender may, by written notice to Borrower, declare all\noutstanding Obligations payable by Borrower hereunder to be immediately due and\npayable without presentment, demand, protest or any other notice of any kind,\nall of which are hereby expressly waived, anything contained herein or in the\nNotes to the contrary notwithstanding. Upon the occurrence or existence of any\nEvent of Default described in Sections 10.1.6 and 10.1.7, immediately and\nwithout notice, all outstanding Obligations payable by Borrower hereunder shall\nautomatically become immediately due and payable, without presentment, demand,\nprotest or any other notice of any kind, all of which are hereby expressly\nwaived, anything contained herein or in the Notes to the contrary\nnotwithstanding .\n\n         10.3  Rights Regarding Collateral. Borrower agrees that when any Event\n               ---------------------------\nof Default has occurred and is continuing, Lender shall have the rights,\noptions, duties and remedies of a secured party as permitted by law and, in\naddition to and without limiting the foregoing, Lender may exercise any one or\nmore or all, and in any order, of the remedies herein set forth, including the\nfollowing: (a) Lender, personally or by agents or attorneys, shall have the\nright (subject to compliance with any applicable mandatory legal requirements)\nto require Borrower to assemble the Collateral and make it available to Lender\nat a place to be designated by Lender located within the State of Washington ,or\nto take immediate possession of the Collateral, or any portion thereof, and for\nthat purpose may pursue the same wherever it may be found, and may enter any\npremises of Borrower, with or without notice, demand, process of law or legal\nprocedure, to the extent permitted by applicable law, and search for, take\npossession of, remove, keep and store the same, or use and operate or lease the\nsame until sold; (b) Lender may, if at the time such action may be lawful and\nalways subject to compliance with any mandatory legal requirements, either with\nor without taking possession and either before or after taking possession,\nwithout instituting any legal proceedings whatsoever, having first given notice\nof such sale by registered or certified mail to Borrower once at least ten (10)\ndays prior to the date of such sale, and having first given any other notice\nwhich may be required by law, sell and dispose of the Collateral, or any part\nthereof, at a private sale or at public auction, to the highest bidder, in one\nlot as an entirety or in separate lots, and either for cash or on credit and on\nsuch terms as Lender may determine, and at any place (whether or not it be the\nlocation of the Collateral or any part thereof) designated in the notice\nreferred to above. To the extent permitted by applicable law, any such sale or\nsales may be adjourned from time to time by announcement at the time and place\nappointed for such sale or sales, or for any such adjourned sale or sales,\nwithout further published notice, and Borrower, Lender or the holder or holders\nof the Note, or of any interest therein, may bid and become the purchaser at any\nsuch sale; and (c) Lender may proceed to protect and enforce this Agreement and\nthe other Operative Documents by suit or suits or proceedings in equity, at law\nor in bankruptcy, and whether for the specific performance of any covenant or\nagreement herein contained or in execution or aid of any power herein granted;\nor for foreclosure hereunder, or for the appointment of a receiver or receivers\nfor any real property security or any part thereof, or for the recovery of\njudgment for the Obligations or for the enforcement of any other proper, legal\nor equitable remedy available under applicable law.\n\n                                      -19-\n\n\n \n     10.4  Waiver by Borrower. Upon the occurrence of an Event of Default, to\n           ------------------\nthe extent permitted by law, Borrower covenants that it will not at any time\ninsist upon or plead, or in any manner whatsoever claim or take any benefit or\nadvantage of, any stay or extension law now or at any time hereafter in force,\nnor claim, take nor insist upon any benefit or advantage of or from any law now\nor hereafter in force providing for the valuation or appraisement of the\nCollateral or any part thereof prior to any sale or sales thereof to be made\npursuant to any provision herein contained, or to the decree, judgment or order\nof any court of competent jurisdiction; nor, after such sale or sales, claim or\nexercise any right under any statute now or hereafter made or enacted by any\nstate or otherwise to redeem the property so sold or any part thereof, and, to\nthe full extent legally permitted, except as to rights expressly provided\nherein, hereby expressly waives for itself and on behalf of each and every\nPerson, except decree or judgment creditors of Borrower, acquiring any interest\nin or title to the Collateral or any part thereof subsequent to the date of this\nAgreement, all benefit and advantage of any such law or laws, and covenants that\nit will not invoke or utilize any such law or laws or otherwise hinder, delay or\nimpede the execution of any power herein granted and delegated to Lender, but\nwill suffer and permit the execution of every such power as though no such\npower, law or laws had been made or enacted.\n\n     10.5  Effect of Sale. Any sale, whether under any power of sale available\n           --------------\nto Lender or by virtue of judicial proceedings, shall operate to divest all\nright, title, interest, claim and demand whatsoever, either at law or in equity,\nof Borrower in and to the property sold, and shall be a perpetual bar, both at\nlaw and in equity, against Borrower, its successors and assigns, and against any\nand all persons claiming the property sold or any part thereof under, by or\nthrough Borrower, its successors or assigns.\n\n     10.6  Application of Collateral Proceeds. The proceeds and\/or avails of the\n           ----------------------------------\nCollateral, or any part thereof, and the proceeds and the avails of any remedy\nhereunder (as well as any other amounts of any kind held by Lender at the time\nof, or received by Lender after, the occurrence of an Event of Default\nhereunder) shall be paid to and applied as follows: (a) First, to the payment of\nreasonable costs and expenses, including all amounts expended to preserve the\nvalue of the Collateral, of foreclosure or suit, if any, and of such sale and\nthe exercise of any other rights or remedies, and of all proper fees, expenses,\nliability and advances, including reasonable legal expenses and attorneys' fees,\nincurred or made hereunder by Lender; (b) Second, to the payment to Lender of\nthe amount then owing or unpaid on the Note, and in case such proceeds shall be\ninsufficient to pay in full the whole amount so due, owing or unpaid upon the\nNote, then first, to the unpaid interest thereon, and second, to unpaid\nprincipal thereof; such application to be made upon presentation of the Note,\nand the notation thereon of the payment, if partially paid, or the surrender and\ncancellation thereof, if fully paid; (c) Third, to the payment of other amounts\nthen payable to Lender under any of the Operative Documents; and (d) Fourth, to\nthe payment of the surplus, if any, to Borrower, it successors and assigns, or\nto whomsoever may be lawfully entitled to receive the same.\n\n     10.7  Reinstatement of Rights. If Lender shall have proceeded to enforce\n           -----------------------\nany right under this Agreement or any other  Operative  Document by foreclosure,\nsale, entry or otherwise, and such \n\n                                      -20-\n\n\n \nproceedings shall have been discontinued or abandoned for any reason or shall\nhave been determined adversely, then and in every such case (unless otherwise\nordered by a court of competent jurisdiction), Lender shall be restored to its\nformer position and rights hereunder with respect to the property subject to the\nsecurity interest created under this Agreement.\n\nARTICLE 11.   MISCELLANEOUS.\n\n     11.1  Modifications, Amendments or Waivers. The provisions of any\n           -------------------------------------\nOperative Document may be modified, amended or waived only by a written\ninstrument signed by the parties thereto.\n\n     11.2  No Implied Waivers; Cumulative Remedies; Writing Required. No delay\n           ---------------------------------------------------------\nor failure of Lender in exercising any right, power or remedy hereunder shall\naffect or operate as a waiver thereof; nor shall any single or partial exercise\nthereof or any abandonment or discontinuance of steps to enforce such a right,\npower or remedy preclude any further exercise thereof or of any other right,\npower or remedy. The rights and remedies hereunder of Lender are cumulative and\nnot exclusive of any rights or remedies which it would otherwise have. Any\nwaiver, permit, consent or approval of any kind or character on the part of\nLender of any breach or default under this Agreement or any such waiver of any\nprovision or condition of this Agreement must be in writing and shall be\neffective only in the specified instance and to the extent specifically set\nforth in such writing.\n\n     11.3  Expenses; Indemnification.  Borrower agrees upon demand to pay or\n           -------------------------\nreimburse Lender for all liabilities, obligations and out-of-pocket expenses,\nincluding reasonable fees and expenses of counsel for Lender, from time to time\narising in connection with the enforcement or collection of sums due under the\nOperative Documents. Borrower shall indemnify, reimburse and hold Lender and its\npermitted assigns, each of Lender's or its permitted assigns' partners, and each\nof their respective successors, assigns, agents, officers, directors,\nshareholders, servants, agents and employees harmless from and against all\nliabilities, losses, damages, actions, suits, demands, claims of any kind and\nnature (including claims relating to environmental discharge, cleanup or\ncompliance), all costs and expenses whatsoever to the extent they may be\nincurred or suffered by such indemnified party in connection therewith\n(including reasonable attorneys' fees and expenses), fines, penalties (and other\ncharges of applicable governmental authorities), licensing fees relating to any\nitem of Collateral, damage to or loss of use of property (including\nconsequential or special damages to third parties or damages to Borrower's\nproperty), or bodily injury to or death of any person (including any agent or\nemployee of Borrower) (each, a \"Claim\"), directly or indirectly relating to or\narising out of the use of the proceeds of the Loan, including acquisition, use,\nownership, operation, possession, control, storage, return or condition of any\nitem of Equipment constituting Collateral (regardless of whether such item of\nEquipment is at the time in the possession of Borrower), the falsity of any\nrepresentation or warranty of Borrower or Borrower's failure to comply with the\nterms of this Agreement or any other Operative Document during the Term. The\nforegoing indemnity shall cover, without limitation, (i) any Claim in connection\nwith a design or other defect (latent or patent) in any item of Equipment\nconstituting Collateral, (ii) any Claim for infringement of any patent,\ncopyright, trademark or other intellectual property right, (iii) any Claim\n\n                                      -21-\n\n\n \nresulting from the presence on or under or the escape, seepage, leakage,\nspillage, discharge, emission or release of any Hazardous Materials from any\nitem of Equipment financed by a Loan or constituting Collateral, including any\nClaims asserted or arising under any Environmental Law, or (iv) any Claim for\nnegligence or strict or absolute liability in tort; provided, however, that\nBorrower shall not indemnify Lender for any liability incurred by Lender as a\ndirect and sole result of Lender's gross negligence or willful misconduct. Such\nindemnities shall continue in full force and effect, notwithstanding the\nexpiration or termination of this Agreement. Upon Lender's written demand,\nBorrower shall assume and diligently conduct, at its sole cost and expense, the\nentire defense of Lender and its permitted assigns, each of Lender's or its\npermitted assigns' partners, and each of their respective successors, assigns,\nagents, officers, directors, shareholders, servants, agents and employees\nagainst any indemnified Claim described in this Section 11.3. Borrower shall not\nsettle or compromise any Claim against or involving Lender without first\nobtaining Lender's written consent thereto, which consent shall not be\nunreasonably withheld.\n\n     11.4  Waivers; Limitation on Damages. (a) Borrower or Lender shall give the\n           ------------------------------\nother party written notice within three hundred sixty-five (365) days of\nobtaining knowledge of the occurrence of any claim or cause of action it\nbelieves it has, or may seek to assert to allege against the other party,\nwhether such claim is based in law or equity, arising under or related to this\nAgreement or any of the other Operative Documents or to the transactions\ncontemplated hereby or thereby, or any act or omission to act with respect\nhereto or thereto, and that if it shall fail to give such notice with regard to\nany such claim or cause of action, the party asserting the claim or cause of\naction shall be deemed to have waived, and shall be forever barred from bringing\nor asserting such claim or cause of action in any suit, action or proceeding in\nany court or before any governmental agency or authority or any arbitrator. (b)\nNOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE\nELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY THEORY OF\nLIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL\nOR PUNITIVE DAMAGES.\n\n     11.5  Notices; Payments. All notices and other communications given to or\n           -----------------\nmade upon any party hereto in connection with this Agreement shall be in writing\n(including telexed, telecopied or telegraphic communication) and mailed (by\ncertified or registered mail), telexed, telegraphed, telecopied or delivered to\nthe respective parties, as follows:\n\n              Borrower:    ENCODING.COM\n                           3406 East Union \n                           Seattle, WA 98122\n                           Telephone: (206) 568-2800          \n                           Telecopier: (206) 329-3278         \n                           Attention: Jerry Goade CFO         \n\n              Lender:      DOMINION VENTURE FINANCE L.L.C.\n                           44 Montgomery Street, Suite 4200\n                           San Francisco, CA 94104\n\n                                      -22-\n\n\n \n                           Telephone: (415) 362-4890\n                           Telecopier: (415) 394-9245\n                           Attention: Chief Financial Officer\n\nor in accordance with any subsequent written direction from either party to the\nother. All such notices and other communications shall, except as otherwise\nexpressly herein provided, be effective when received; or in the case of\ndelivery by messenger or overnight delivery service, when left at the\nappropriate address.\n\n         11.6  Severability.  If any provision of any Operative Document is held\n               ------------\ninvalid or unenforceable to any extent or in any application, the remainder of\nsuch Operative Document and all other Operative Documents, or the application of\nsuch provision to different Persons or circumstances or in different\njurisdictions, shall not be affected thereby.\n\n         11.7  Survival.  All representations, warranties, covenants and\n               --------\nagreements of Borrower contained herein or made in writing in connection\nherewith shall survive the execution and delivery of the Operative Documents,\nthe making of Loan hereunder, the granting of security and the issuance of the\nNote.\n\n         11.8  Governing Law.  This Agreement, the other Operative Documents and\n               -------------\nthe rights and obligations of the parties hereto and thereto together with\nmatters arising in connection therewith, shall be governed by and construed and\nenforced in accordance with the laws of the State of California. Any action to\nenforce this Agreement against Borrower may be brought in California or, with\nregard to Collateral, may also be brought wherever such Collateral is located.\n\n         11.9  Successors and Assigns. This Agreement and the other Operative\n               ----------------------\nDocuments shall be binding upon and inure to the benefit of Lender, all future\nholders of the Note, Borrower and their respective successors and permitted\nassigns, except that Borrower may not assign or transfer its rights hereunder or\nthereunder or any interest herein or therein without the prior written consent\nof Lender. Lender may assign all or any portion of its rights hereunder and\nunder one or more Notes to any of its affiliated investment funds or to any one\nor more banks or an agent or trustee for such bank(s) (an \"Assignee\") and may\nsell such rights to any other financial entity (a \"Participant\") participation\ninterests in Lender's rights under this Agreement and the other Operative\nDocuments. Lender may disclose the Operative Documents and any other financial\nor other information relating to Borrower or any Subsidiary to any potential\nAssignee or Participant, provided that such Participant agrees to protect the\nconfidentiality of such documents and information using the same measures that\nit uses to protect its own confidential information. Notwithstanding anything\ncontained in this Paragraph 11.9, a Transfer shall not include a merger or\nconsolidation where (i) Borrower is the surviving entity, (ii) such merger or\nconsolidation will not result in an Event of Default and (iii) the Borrower will\nhave a net worth after giving effect to the merger or consolidation at least as\ngreat as the net worth of the Borrower prior to such merger or consolidation.\n\n                                      -23-\n\n\n \n     11.10  Counterparts.  This Agreement may be executed in any number of\n            ------------\ncounterparts and by different parties hereto on separate counterparts, each of\nwhich, when so executed and delivered, shall be an original, but all such\ncounterparts shall together constitute one and the same instrument.\n\n     11.11  Further Assurances. Borrower will, at its own expense, from time to\n            ------------------\ntime do, execute, acknowledge and deliver all and every further acts, deeds,\nconveyances, transfers and assurances, and all financing and continuation\nstatements and similar notices, reasonably necessary or proper for the\nperfection of the security interest being herein provided for in the Collateral,\nwhether now owned or hereafter acquired.\n\n     11.12  Right of First Offer. So long as any Obligations are outstanding\n            --------------------   \nhereunder, Borrower shall provide Lender with all requests for additional debt\nor lease financing prior to the time that such requests are provided to other\nfinancing sources. Should Borrower and Lender fail to agree on the terms and\nconditions of such financing within ten (3) Business Days of receipt of a\nrequest from Borrower, then Borrower may accept a funding source other than\nLender.\n\n     11.13  Power of Attorney in Respect of the Collateral. Borrower does hereby\n            ----------------------------------------------\nirrevocably appoint Lender (which appointment is coupled with an interest), the\ntrue and lawful attorney-in-fact of Borrower with full power of substitution,\nfor it and in its name (a) to perform (but Lender shall not be obligated to and\nshall incur no liability to Borrower or any third party for failure to perform)\nany act which Borrower is obligated by this Agreement to perform, (b) to ask,\ndemand, collect, receive, receipt for, sue for, compound and give acquittance\nfor any and all rents, issues, profits, avails, distributions, income, payment\ndraws and other sums in which a security interest is granted under Section 3.1\nwith full power to settle, adjust or compromise any claim thereunder as fully as\nif Lender were Borrower itself, (c) to receive payment of and to endorse the\nname of Borrower to any items of Collateral (including checks, drafts and other\norders for the payment of money) that come into Lender's possession or under\nLender's control, (d) to make all demands, consents and waivers, or take any\nother action with respect to, the Collateral, (e) in Lender's discretion, to\nfile any claim or take any other action or institute proceedings, either in its\nown name or in the name of Borrower or otherwise, which Lender may reasonably\ndeem necessary or appropriate to protect and preserve the right, title and\ninterest of Lender in and to the Collateral, and (f) to otherwise act with\nrespect thereto as though Lender were the outright owner of the Collateral;\nprovided, however, that the power of attorney herein granted shall be\nexercisable only upon the occurrence and during the continuation of an Event of\nDefault unless in Lender's reasonable opinion immediate action is necessary to\npreserve or protect the Collateral. Borrower agrees to reimburse Lender upon\ndemand for all reasonable costs and expenses, including attorneys' fees and\nexpenses, which Lender may incur while acting as Borrower's attorney in fact\nhereunder, all of which costs and expenses are included within the Obligations.\n\n     11.14  Entire Agreement. This Loan Agreement and each of the other\n            ----------------\nOperative Documents, taken together, constitute and contain the entire agreement\nof Borrower and Lender and supersede any and all prior agreements, negotiations,\ncorrespondence, understandings and communications among the parties, whether\nwritten or oral, respecting the subject matter hereof.\n\n                                      -24-\n\n\n \n               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]\n\n                                      -25-\n\n\n \n     IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement as\nof the date first written above.\n\nLENDER:                                      BORROWER:\n\nDOMINION VENTURE FINANCE L.L.C.,             ENCODING.COM,\na Delaware limited liability company         a Delaware\ncorporation\n\nBy: DOMINION MANAGEMENT, L.L.C.\n    a Delaware limited liability             By: \/s\/ Martin Tobias\n    company, its General Partner                 _______________________________\n                                 \n                                             Name: Martin Tobias\n                                                   _____________________________\n\nBy: \/s\/ Renee C. Baker                       Title: CEO\n   __________________________________               ____________________________\n\nName: Renee C. Baker\n     ________________________________\n\nTitle: VP\n      _______________________________\n\n                                      -26-\n\n<\/description><\/sequence><\/type><\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7840,8079],"corporate_contracts_industries":[9415,9510],"corporate_contracts_types":[9560,9567],"class_list":["post-41322","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-imperial-bank","corporate_contracts_companies-loudeye-technologies-inc","corporate_contracts_industries-financial__banks","corporate_contracts_industries-technology__programming","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41322"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41322"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41322"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}