EXHIBIT 10.53 LOAN AND SECURITY AGREEMENT

EXHIBIT 10.53

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LOAN AND SECURITY AGREEMENT

by and between

NETWORK COMPUTING DEVICES, INC.

and

FOOTHILL CAPITAL CORPORATION

Dated as of March 30, 2000

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TABLE OF CONTENTS

1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Accounting Terms.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.3 Code.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4 Construction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.5 Schedules and Exhibits.. . . . . . . . . . . . . . . . . . . . . . . . . 21
2. LOAN AND TERMS OF PAYMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1 Revolving Advances.. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 23
2.5 Overadvances.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Interest: Rates, Payments, and Calculations.. . . . . . . . . . . . . . 23
2.7 Collection of Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . 24
2.8 Crediting Payments; Application of Collections.. . . . . . . . . . . . . 26
2.9 Designated Account.. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.10 Maintenance of Loan Account; Statements of Obligations.. . . . . . . . . 27
2.11 Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3. CONDITIONS; TERM OF AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . 28
3.1 Conditions Precedent to the Initial Advance. . . . . . . . . . . . . . . 28
3.2 Conditions Precedent to all Advances.. . . . . . . . . . . . . . . . . . 31
3.3 Condition Subsequent.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6 Early Termination by Borrower. . . . . . . . . . . . . . . . . . . . . . 32
3.7 Termination Upon Event of Default. . . . . . . . . . . . . . . . . . . . 32
4. CREATION OF SECURITY INTEREST.. . . . . . . . . . . . . . . . . . . . . . . . 33
4.1 Grant of Security Interest.. . . . . . . . . . . . . . . . . . . . . . . 33
4.2 Negotiable Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.4 Delivery of Additional Documentation Required. . . . . . . . . . . . . . 33
4.5 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.6 Right to Inspect.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 No Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.2 Eligible Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.3 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 35
5.4 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.5 Location of Inventory and Equipment. . . . . . . . . . . . . . . . . . . 35
5.6 Inventory Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.7 Location of Chief Executive Office; FEIN.. . . . . . . . . . . . . . . . 35
5.8 Due Organization and Qualification; Subsidiaries.. . . . . . . . . . . . 36

5.9 Due Authorization; No Conflict.. . . . . . . . . . . . . . . . . . . . . 36
5.10 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.11 No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . . . 37
5.12 Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.13 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.14 Environmental Condition. . . . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Brokerage Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.16 Permits and other Intellectual Property. . . . . . . . . . . . . . . . . 38
6. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Accounting System. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2 Collateral Reporting.. . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.3 Financial Statements, Reports, Certificates. . . . . . . . . . . . . . . 40
6.4 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.5 Guarantor Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6 Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7 Title to Equipment.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 Maintenance of Equipment.. . . . . . . . . . . . . . . . . . . . . . . . 42
6.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.10 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.11 No Setoffs or Counterclaims. . . . . . . . . . . . . . . . . . . . . . . 44
6.12 Location of Inventory and Equipment. . . . . . . . . . . . . . . . . . . 44
6.13 Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.14 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 45
6.15 Leases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.16 Brokerage Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.17 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . . . . . . . 45
6.18 Disclosure Updates.. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.19 Copyright Registrations. . . . . . . . . . . . . . . . . . . . . . . . . 46
6.20 Patent Filings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.1 Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.2 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.3 Restrictions on Fundamental Changes. . . . . . . . . . . . . . . . . . . 48
7.4 Disposal of Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.5 Change Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.6 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7 Nature of Business.. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Prepayments and Amendments.. . . . . . . . . . . . . . . . . . . . . . . 48
7.9 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.10 Consignments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.11 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.12 Accounting Methods.. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.13 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.14 Transactions with Affiliates.. . . . . . . . . . . . . . . . . . . . . . 49
7.15 Suspension.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

7.16 Compensation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.17 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees.. . . . . . . . . . . . . . . . . . . . . . . . . 50
7.19 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 50
7.20 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.21 Capital Expenditures.. . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.22 Sales Agency Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 51
8. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9. FOOTHILL'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10. TAXES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11. WAIVERS; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.1 Demand; Protest; etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.2 Foothill's Liability for Collateral. . . . . . . . . . . . . . . . . . . 56
11.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . . . . . . 58
14. DESTRUCTION OF BORROWER'S DOCUMENTS.. . . . . . . . . . . . . . . . . . . . . 59
15. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.1 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.2 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . . . . . 59
15.3 Section Headings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.4 Interpretation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.5 Severability of Provisions.. . . . . . . . . . . . . . . . . . . . . . . 60
15.6 Amendments in Writing. . . . . . . . . . . . . . . . . . . . . . . . . . 60
15.7 Counterparts; Telefacsimile Execution. . . . . . . . . . . . . . . . . . 60
15.8 Revival and Reinstatement of Obligations.. . . . . . . . . . . . . . . . 60
15.9 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

iii

SCHEDULES AND EXHIBITS

Schedule F-1 Foreign Currency Accounts; Foreign Subsidiary Operating Amounts
Schedule P-1 Permitted Liens
Schedule 5.8 Direct and Indirect Subsidiaries
Schedule 5.10 Litigation
Schedule 6.12 Location of Inventory and Equipment
Schedule 7.1 Permitted Indebtedness

Exhibit C-1 Form of Compliance Certificate

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (THIS "AGREEMENT"), is entered into
as of March 30, 2000, between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and NETWORK COMPUTING
DEVICES, INC., a Delaware corporation ("Borrower"), with its chief executive
office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:

"ACCOUNT DEBTOR" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, a General Intangible, or
any Negotiable Collateral.

"ACCOUNTS" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale, license, or lease of goods or General Intangibles, or
the rendition of services by Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security therefor.

"ADTCOM" means Adtcom Network Computing AG, a company organized under
the laws of Sweden.

"ADVANCES" has the meaning set forth in SECTION 2.1(a).

"AFFILIATE" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, is under common control
with, or is a director or officer of such Person. For purposes of this
definition, "control" means the possession, directly or indirectly, of the power
to vote 5% or more of the Stock having ordinary voting power for the election of
directors (or comparable managers) or the direct or indirect power to direct the
management and policies of a Person.

"AGGREGATE FOREIGN SUBSIDIARY OPERATING AMOUNT" means, as of any date
of determination thereof, the aggregate amount of Foreign Subsidiary Operating
Amounts for all Foreign Subsidiaries.

"AGREED CURRENCY" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, the lawful currency of each Specified State and the
Euro, and (iii) any other Eligible Currency which the Borrower requests Foothill
to include as an Agreed Currency hereunder and which is acceptable to Foothill.
If, after the designation by Foothill

of any currency as an Agreed Currency, (a) currency control or other exchange
regulations are imposed in the country in which such currency is issued with the
result that different types of such currency are introduced, (b) such currency
is, in the determination of the Foothill, no longer readily available or freely
traded or (c) in the determination of the Foothill, an equivalent amount of such
currency valued in Dollars at the applicable Exchange Rate is not readily
calculable, Foothill shall promptly notify Borrower, and such currency shall no
longer be an Agreed Currency until such time as Foothill agrees to reinstate
such currency as an Agreed Currency.

"AGREEMENT" has the meaning set forth in the preamble hereto.

"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time from and
including the date of the execution and delivery of this Agreement up to the
first anniversary of the Closing Date, 3.0% TIMES the Maximum Amount, (b) during
the period of time from and including the first anniversary of the Closing Date
up to the second anniversary of the Closing Date, 2.0% TIMES the Maximum Amount,
and (c) during the period of time from and including the second anniversary of
the Closing Date and thereafter, 1.0% TIMES the Maximum Amount; PROVIDED,
HOWEVER, that if the Obligations are repaid in full in cash and this Agreement
is terminated concurrent with a secondary public offering by Borrower of its
common Stock, a private placement by Borrower of its Stock, the issuance of
subordinated debt by Borrower, the sale of all or substantially all of
Borrower's Stock or Assets, or a refinancing of the Obligations by a commercial
banking unit of ▇▇▇▇▇ Fargo, then, in any such case, the Applicable Prepayment
Premium shall be an amount equal to (a) during the period of time from and
including the date of the execution and delivery of this Agreement up to the
first anniversary of the Closing Date, 1.5% TIMES the Maximum Amount, (b) during
the period of time from and including the first anniversary of the Closing Date
up to the second anniversary of the Closing Date, 1.0% TIMES the Maximum Amount,
and (c) during the period of time from and including the second anniversary of
the Closing Date and thereafter, 0.5% TIMES the Maximum Amount.

"AUTHORIZED PERSON" means any officer or other employee of Borrower.

"AVAILABILITY" means, as of any date of determination, determined at
the close of business on such date, if such date is a Business Day, and
determined at the close of business on the immediately preceding Business Day,
if such date of determination is not a Business Day, the amount that Borrower is
entitled to borrow as Advances under SECTION 2.1 (after giving effect to all
previously outstanding Obligations and all sublimits and Reserves applicable
hereunder).

"AVERAGE UNUSED PORTION OF MAXIMUM AMOUNT" means, as of any date of
determination, (a) the Maximum Amount, LESS (b) the average Daily Balance of
Advances that were outstanding during the immediately preceding month.

"BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C.
Section 101 ET SEQ.), as amended, and any successor statute.

"BASE RATE" means, the rate of interest announced within ▇▇▇▇▇ Fargo
Bank, N.A. at its principal office in San Francisco as its "prime rate", with
the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.

"BENEFIT PLAN" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.

"BORROWER" has the meaning set forth in the preamble to this
Agreement.

"BORROWER FOREIGN CURRENCY ACCOUNT" means, the Foreign Currency
Account of Borrower set forth on SCHEDULE F-1.

"BORROWER'S BOOKS" means all of Borrower's books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower's
properties or assets (including the Collateral) or liabilities; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.

"BORROWING BASE" has the meaning set forth in SECTION 2.1(a).

"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close.

"CASH EQUIVALENTS" means and refers to: (a) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one (1) year from the date of
acquisition thereof; (b) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one (1) year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or ▇▇▇▇▇'▇; (c) commercial paper maturing no more
than one (1) year from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-2 or P-2, or better, from S&P or ▇▇▇▇▇'▇;
(d) certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of acquisition thereof either (i) issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.

"CHANGE OF CONTROL" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the

Securities Exchange Act of 1934), directly or indirectly, of more than 35% of
the total voting power of all classes of Stock then outstanding of Borrower
entitled to vote in the election of directors.

"CLOSING DATE" means the date of the first to occur of the making of
the initial Advance.

"CODE" means the California Uniform Commercial Code.

"COLLATERAL" means all of Borrower's right, title, and interest in and
to each of the following:

(a) the Accounts,

(b) Borrower's Books,

(d) the General Intangibles,

(e) the Inventory,

(f) the Negotiable Collateral

(g) the Investment Property,

(h) any money, or other assets of Borrower that now or hereafter come
into the possession, custody, or control of Foothill, and

(j) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Borrower's Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.

The foregoing notwithstanding, "Collateral" shall not include any General
Intangibles that are now or hereafter held by Borrower as licensee, solely in
the event and to the extent that: (a) as the proximate result of the grant of a
security interest, Borrower's rights in or with respect to such item of General
Intangibles would be forfeited or would become terminable, or if Borrower would
be deemed to have breached the underlying license or other agreement that
governs such item of General Intangibles; (b) any such restriction is effective
and enforceable under applicable law, including Section 9318(4) of the Code; and
(c) any such forfeiture, terminability, or breach cannot be either prevented or
promptly remedied by Borrower using its commercially reasonable efforts (but
without any obligation to make any material expenditures of money or to commence
legal proceedings); PROVIDED, HOWEVER, that the grant of security interest
hereunder shall extend to, and the term "Collateral" shall

include, (1) any and all proceeds of such item of General Intangibles, (2) upon
any such licensor's consent with respect to any otherwise excluded item of
General Intangibles being obtained, such item of General Intangibles, and (3)
any such General Intangible with respect to which any such restriction ceases to
be effective or enforceable.

"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, mortgagee
waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, consignee, or other Person in possession of, having a Lien
upon, or having rights or interests in the Collateral, in each case, in form and
substance satisfactory to Foothill.

"COLLATERAL ASSIGNMENT OF RIGHTS" means that certain Collateral
Assignment of Rights, dated as of the date hereof, between Borrower and
Foothill.

"COLLECTIONS" means all cash, checks, notes, instruments, and other
items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).

"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C-1 and delivered by the chief accounting officer of Borrower to
Foothill.

"COPYRIGHT SECURITY AGREEMENT" means that certain Copyright Security
Agreement, dated as of the date hereof, among Borrower, NCD Acquisition, NCD
Graphic Software, and Foothill.

"DAILY BALANCE" means the amount of an Obligation owed at the end of a
given day.

"DEEMS ITSELF INSECURE" means that the Person deems itself insecure in
accordance with the provisions of Section 1208 of the Code.

"DEFAULT" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.

"DESIGNATED ACCOUNT" means account number 6488903649 of Borrower
maintained with Borrower's Designated Account Bank, or such other deposit
account of Borrower (located within the United States) that has been designated,
in writing and from time to time, by Borrower to Foothill.

"DESIGNATED ACCOUNT BANK" means Union Bank of California, N.A., whose
office is located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, and whose ABA number is 121 000 496.

"DILUTION" means, in each case based upon the experience of the
immediately prior 6 months, the result of dividing the Dollar amount (or the
Dollar equivalent amount at the then applicable Exchange Rate with respect to
any other currency) of (a) bad debt write-downs, discounts, advertising,
returns, promotions, credits, or other dilution with respect to

the Accounts, by (b) the Dollar amount (or the Dollar equivalent amount at the
then applicable Exchange Rate with respect to any Collections received in any
other currency) of Borrower's Collections (excluding extraordinary items) plus
the Dollar amount of CLAUSE (a).

"DILUTION RESERVE" means, as of any date of determination, an amount
sufficient to reduce Foothill's advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%

"DISBURSEMENT LETTER" means an instructional letter executed and
delivered by Borrower to Foothill regarding the extensions of credit to be made
on the Closing Date, the form and substance of which shall be satisfactory to
Foothill.

"DOLLARS OR $" means United States dollars.

"DOMESTIC ACCOUNTS" means Accounts of Borrower with respect to which
the Account Debtor: (a) maintains its chief executive office in the United
States and is organized under the laws of the United States or any State
thereof, (b) is the United States or any department, agency, or instrumentality
of the United States, or (c) is any State of the United States.

"DOMESTIC COLLECTIONS" means all Collections of Borrower other than
Foreign Collections.

"DOMESTIC SUBSIDIARIES" means NCD Graphic Software, NCD Guam, NCD
Acquisition, and any other Subsidiary of Borrower organized under the laws of
the United States or any State, territory or possession thereof.

"EARLY TERMINATION PREMIUM" has the meaning set forth in SECTION 3.6.

"ELIGIBLE ACCOUNTS" means Eligible Domestic Accounts or Eligible
Foreign Accounts.

"ELIGIBLE CURRENCY" means any currency other than Dollars (i) that is
readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in the London interbank market, (iv) that is
convertible into Dollars in the London interbank market, (v) as to which an
equivalent amount valued in Dollars at the applicable Exchange Rate may be
readily calculated, and (vi) that is otherwise acceptable to Foothill in its
Permitted Discretion.

"ELIGIBLE DOMESTIC ACCOUNTS" means those Domestic Accounts created by
Borrower in the ordinary course of business, that arise out of Borrower's sale
of goods or rendition of services, that strictly comply with each and all of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of the one or more
of the criteria set forth below; PROVIDED, HOWEVER, that such criteria may be
fixed and revised from time to time by Foothill in Foothill's Permitted
Discretion. Eligible Domestic Accounts shall not include the following:

(a) Domestic Accounts that the Account Debtor has failed to pay
within 90 days of original invoice date or Domestic Accounts that are more than
60 days past due;

(b) Domestic Accounts owed by an Account Debtor or its Affiliates
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under CLAUSE (a) above or under CLAUSE (a) of
the definition of Eligible Foreign Accounts;

(d) Domestic Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold,
or other terms by reason of which the payment by the Account Debtor may be
conditional;

(e) Domestic Accounts that are not payable in Dollars;

(f) Domestic Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the satisfaction of Foothill, with the Assignment of
Claims Act, 31 U.S.C. Section 3727), or (ii) any State of the United States
(exclusive, however, of Accounts owed by any State that does not have a
statutory counterpart to the Assignment of Claims Act);

(g) Domestic Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to the Account;

(h) Domestic Accounts with respect to an Account Debtor whose total
obligations, together with those of its Affiliates, owing to Borrower exceed (a)
with respect to Adtcom and its Affiliates, 35% of the sum of all Eligible
Accounts, (b) with respect to Tech Data and its Affiliates, 25% of the sum of
all Eligible Accounts, (c) with respect to ▇▇▇▇▇▇ Micro and its Affiliates, 20%
of the sum of all Eligible Accounts, and (d) with respect to any other Account
Debtor and its Affiliates, 10% of the sum of all Eligible Accounts, in each
case, to the extent of the obligations owing by such Account Debtor in excess of
such percentage, PROVIDED, HOWEVER, that Foothill shall have the right, at any
time and from time to time to change the foregoing percentages in its Permitted
Discretion;

(i) Domestic Accounts with respect to which the Account Debtor is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business;

(j) Domestic Accounts the collection of which Foothill, in its
reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;

(k) Domestic Accounts with respect to which the goods giving rise to
such Domestic Account have not been shipped and billed to the Account Debtor,
the services giving rise to such Domestic Account have not been performed and
accepted by the Account Debtor, or the Domestic Account otherwise does not
represent a final sale;

(l) Domestic Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, Indiana, or West Virginia (or
any other state that requires a creditor to file a Business Activity Report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower has qualified to do business in New Jersey,
Minnesota, Indiana, West Virginia, or such other states, or has filed a Notice
of Business Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the
then-current year, or is exempt from such filing requirement;

(m) Domestic Accounts that represent progress payments or other
advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by Borrower
of the subject contract for goods or services; and

(n) Domestic Accounts constituting (i) proceeds of copyrightable
material unless such copyrightable material shall have been registered with the
United States Copyright Office, or (ii) proceeds of patentable inventions unless
such patentable inventions have been registered with the United States Patent
and Trademark Office.

"ELIGIBLE EXTENDED TERM DOMESTIC ACCOUNTS" means Domestic Accounts
owing by Tech Data, ▇▇▇▇▇▇ Micro, or their respective Affiliates that do not
qualify as Eligible Domestic Accounts solely because the Account Debtor has
failed to pay such Domestic Account within 90 days of original invoice date or
because such Domestic Accounts are more than 60 days past due, PROVIDED,
HOWEVER, that Eligible Extended Term Domestic Accounts shall not include
Domestic Accounts of Tech Data, ▇▇▇▇▇▇ Micro, or their respective Affiliates,
that the Account Debtor has failed to pay within 120 days of original invoice
date or Domestic Accounts that are more than 90 days past due.

"ELIGIBLE EXTENDED TERM FOREIGN ACCOUNTS" means Foreign Accounts owing
by Tech Data, ▇▇▇▇▇▇ Micro, or their respective Affiliates that do not qualify
as Eligible Foreign Accounts solely because the Account Debtors has failed to
pay such Foreign Accounts within 90 days of original invoice date or because
such Foreign Accounts are more than 60 days past due, PROVIDED, HOWEVER, that
Eligible Extended Term Foreign Accounts shall not include Foreign Accounts of
Tech Data, ▇▇▇▇▇▇ Micro, or their respective Affiliates that the Account Debtor
has failed to pay within 120 days of original invoice date or Foreign Accounts
that are more than 90 days past due.

"ELIGIBLE FOREIGN ACCOUNTS" means those Foreign Accounts created by
Borrower in the ordinary course of business, that arise out of Borrower's sale
of goods or rendition of services, that strictly comply with each and all of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not

excluded as ineligible by virtue of the one or more of the criteria set forth
below; PROVIDED, HOWEVER, that such criteria may be fixed and revised from time
to time by Foothill in Foothill's Permitted Discretion. Eligible Foreign
Accounts shall not include the following:

(a) Foreign Accounts that the Account Debtor has failed to pay within
90 days of original invoice date or Foreign Accounts that are more than 60 days
past due;

(b) Foreign Accounts owed by an Account Debtor or its Affiliates
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under CLAUSE (a) above or under CLAUSE (a) of
the definition of Eligible Domestic Accounts;

(d) Foreign Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold,
or other terms by reason of which the payment by the Account Debtor may be
conditional;

(e) Foreign Accounts that are not payable in Dollars or an Agreed
Currency or with respect to which the Account Debtor: (i) does not maintain its
chief executive office in a Specified State, or (ii) is not organized under the
laws of a Specified State, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof;

(f) Foreign Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to such Foreign Account;

(g) Foreign Accounts with respect to an Account Debtor whose total
obligations, together with those of its Affiliates, owing to Borrower (net of
the amount of the obligations of such Account Debtor or its Affiliates deemed
ineligible under CLAUSE (h) of the definition of Eligible Domestic Accounts)
exceed (a) with respect to Adtcom and its Affiliates, 35% of the sum of all
Eligible Accounts, (b) with respect to Tech Data and its Affiliates, 25% of the
sum of all Eligible Accounts, (c) with respect to ▇▇▇▇▇▇ Micro and its
Affiliates, 20% of the sum of all Eligible Accounts, and (d) with respect to any
other Account Debtor and its Affiliates, 10% of the sum of all Eligible
Accounts, in each case, to the extent of the obligations owing by such Account
Debtor in excess of such percentage, PROVIDED, HOWEVER, that Foothill shall have
the right, at any time and from time to time to change the foregoing percentages
in its Permitted Discretion;

(h) Foreign Accounts with respect to which the Account Debtor is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business;

(i) Foreign Accounts the collection of which Foothill, in its
reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;

(j) Foreign Accounts with respect to which the goods giving rise to
such Foreign Account have not been shipped and billed to the Account Debtor, the
services giving rise to such Foreign Account have not been performed and
accepted by the Account Debtor, or the Foreign Account otherwise does not
represent a final sale;

(k) Foreign Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, Indiana, or West Virginia (or
any other state that requires a creditor to file a Business Activity Report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower has qualified to do business in New Jersey,
Minnesota, Indiana, West Virginia, or such other states, or has filed a Notice
of Business Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the
then-current year, or is exempt from such filing requirement;

(l) Foreign Accounts that represent progress payments or other
advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by Borrower
of the subject contract for goods or services; and

(m) Foreign Accounts constituting (i) proceeds of copyrightable
material unless such copyrightable material shall have been registered with the
United States Copyright Office, or (ii) proceeds of patentable inventions unless
such patentable inventions have been registered with the United States Patent
and Trademark Office.

"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including,
(a) any interest of Borrower in any of the foregoing, and (b) all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.

"ERISA AFFILIATE" means (a) any corporation subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302

of ERISA and Section 412 of the IRC, any party subject to ERISA that is a party
to an arrangement with Borrower and whose employees are aggregated with the
employees of Borrower under IRC Section 414(o).

"EURO" means the euro referred to in Council Regulation (EC) No.
1103/97 dated dune 17, 1997, passed by the Council of the European Union, or, if
different, the then lawful currency of the member states of the European Union
that participate in the third stage of Economic and Monetary Union.

"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.

"EXCESS AVAILABILITY" means the amount, as of the date any
determination thereof is to be made, equal to the result of (a) Availability
PLUS (b) Borrower's unrestricted cash and cash equivalents MINUS (c) the
aggregate amount, if any, of all trade payables of Borrower aged in excess of
their historical levels with respect thereto and all book overdrafts in excess
of their historical practices with respect thereto, in each case as determined
by Foothill.

"EXCHANGE RATE" means, as of any date of determination thereof, the
nominal rate of exchange (vis-a-vis Dollars) for a currency other than Dollars
published in the Wall Street Journal (Western Edition) on such date of
determination (which shall be a Business Day on which the Wall Street Journal
(Western Edition) is published), expressed as the number of units of such other
currency per one Dollar.

"EXEMPT COPYRIGHT" means any Incipient Copyright or any Obsolete
Copyright.

"EXEMPT PATENT" means any Incipient Patent or any Obsolete Patent.

"FEIN" means Federal Employer Identification Number.

"FOOTHILL" has the meaning set forth in the preamble to this
Agreement.

"FOOTHILL ACCOUNT" has the meaning set forth in SECTION 2.7.

"FOOTHILL EXPENSES" means all: costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower under any of the Loan
Documents that are paid or incurred by Foothill; reasonable fees or charges paid
or incurred by Foothill in connection with Foothill's transactions with
Borrower, including, fees or charges for photocopying, notarization, couriers
and messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC and comparable foreign searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals); costs and expenses incurred by Foothill in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Foothill resulting from the dishonor of checks; costs and
expenses paid or incurred by Foothill to correct any

default or enforce any provision of the Loan Documents, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated; reasonable costs and expenses
paid or incurred by Foothill in examining Borrower's Books; costs and expenses
of third party claims or any other suit paid or incurred by Foothill in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or Foothill's relationship with Borrower or
any guarantor; and Foothill's reasonable attorneys fees and expenses incurred in
advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or any guarantor of the Obligations), defending, or
concerning the Loan Documents, irrespective of whether suit is brought.

"FOREIGN ACCOUNTS" means any Accounts of Borrower other than Domestic
Accounts.

"FOREIGN COLLECTIONS" means all Collections of Borrower paid by any
Person that (i) does not maintain its chief executive office in the United
States, (ii) is not organized under the laws of the United States or any State
thereof, or (iii) is the government of any foreign country or sovereign state,
or of any state, province, municipality, or other political subdivision thereof,
or of any department, agency, public corporation, or other instrumentality
thereof.

"FOREIGN CURRENCY ACCOUNT" means, with respect to Borrower and each of
the Foreign Subsidiaries, the non-Dollar denominated bank account of Borrower or
such Foreign Subsidiary, as the case may be, maintained with a Foreign Currency
Account Bank and having the account number set forth on SCHEDULE F-1.

"FOREIGN CURRENCY ACCOUNT BANKS" means Barclays Bank, whose office is
located at ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, Royal Bank of
Canada, whose office is located at Royal Bank Plaza, Business Banking Centre,
200 Bay Street, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, and,
solely with respect to each of the Foreign Subsidiaries of Borrower, the other
bank or financial institutions set forth next to such Foreign Subsidiaries name
on SCHEDULE F-1.

"FOREIGN EXCHANGE RESERVE" means, as of any date of determination
thereof, a reserve for foreign currency exchange rate risk with respect to the
Foreign Accounts in such amount as shall be determined by Foothill in its
Permitted Discretion from time to time, which amount shall initially be
established at an amount equal to 5% of the amount of Borrower's Foreign
Accounts outstanding at any time.

"FOREIGN SUBSIDIARIES means NCD Australia, NCD Benelux, NCD Canada,
NCD UK, NCD France, NCD Germany, NCD Sweden, and any other Subsidiary of
Borrower duly organized and validly existing under the laws of a jurisdiction
outside of the United States and its territories and possessions.

"FOREIGN SUBSIDIARY OPERATING AMOUNT" means, with respect to each
Foreign Subsidiary as of any date of determination thereof, an amount, in
Dollars, equal to such Foreign Subsidiary's average monthly disbursements
incurred in the ordinary course of business and consistent with such Foreign
Subsidiary's historical practices for the 3 month period ending as of such date
of determination, which amount, as of the Closing Date, is set forth on SCHEDULE
F-1.

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

"GENERAL INTANGIBLES" means all of Borrower's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.

"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.

"GOVERNING DOCUMENTS" means the certificate or articles of
incorporation, by-laws, or other organizational or governing documents of any
Person.

"GUARANTORS" means, individually and collectively, jointly and
severally, each of Borrower's Subsidiaries.

"GUARANTOR SECURITY AGREEMENT" means that certain Security Agreement,
dated as of the date hereof, among the Guarantors and Foothill.

"GUARANTY" means that certain General Continuing Guaranty, dated as of
the date hereof, executed by each Guarantor in favor of Foothill.

"HAZARDOUS MATERIALS" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in

any form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.

"INCIPIENT COPYRIGHT" means any copyright that: (a) relates to
copyrightable material of a Person (i) under development (whether in the form of
a new product, a new version of a pre-existing product, an upgrade, add-on, or
modification to a pre-existing product, or otherwise) that has not yet become a
completed product, version, upgrade, add-on, or modification that is ready to be
marketed by or on behalf of such Person, or (ii) has never been marketed by or
on behalf of such Person; and (b) is not the subject of licenses thereof or
other dispositions by such Person giving rise to accounts, contract rights, or
other form of obligation.

"INCIPIENT PATENT" means any patent that: (a) relates to a patentable
invention of a Person (i) under development (whether in the form of a new
invention, a new version of a pre-existing invention, an upgrade, add-on, or
modification to a pre-existing invention, or otherwise) that has not yet become
a completed invention, upgrade, improvement, add-on, or modification which is
ready to be marketed by or on behalf of such Person, or (ii) has never been
marketed by or on behalf of such Person; and (b) is not the subject of licenses
thereof or other dispositions by such Person giving rise to accounts, contract
rights, or other form of obligation.

"INDEBTEDNESS" means: (a) all obligations of Borrower for borrowed
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of Borrower
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations of Borrower under capital leases,
(d) all obligations or liabilities of others secured by a Lien on any property
or asset of Borrower, irrespective of whether such obligation or liability is
assumed, and (e) any obligation of Borrower guaranteeing or intended to
guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with
recourse to Borrower) any indebtedness, lease, dividend, letter of credit, or
other obligation of any other Person.

"▇▇▇▇▇▇ MICRO" means ▇▇▇▇▇▇ Micro, Inc., a Delaware corporation.

"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law of any applicable jurisdiction, assignments for the
benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement,
liquidation or other similar relief.

"INTANGIBLE ASSETS" means, with respect to any Person, that portion of
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.

"INTELLECTUAL PROPERTY" has the meaning set forth in SECTION 5.16

"INVENTORY" means all present and future inventory in which Borrower
has any interest, including goods held for sale or lease or to be furnished
under a contract of service

and all of Borrower's present and future raw materials, work in process,
finished goods, and packing and shipping materials, wherever located.

"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) BONA FIDE accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

"INTERCOMPANY SUBORDINATION AGREEMENT" means that certain
Subordination Agreement, dated as of the date hereof, among Foothill, Borrower,
and each of Borrower's Subsidiaries.

"INVESTMENT PROPERTY" means "investment property" as that term is
defined in the Code.

"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

"LIEN" means any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.

"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.

"LOAN DOCUMENTS" means this Agreement, the Copyright Security
Agreement, the Patent Security Agreement, the Trademark Security Agreement, the
Stock Pledge Agreement, the Collateral Assignment of Rights, the Guaranty, the
Guarantor Security Agreement, the Intercompany Subordination Agreement, the
Disbursement Letter, the Lockbox Agreements, and any other agreement entered
into, now or in the future, in connection with this Agreement.

"LOCKBOX ACCOUNT" shall mean a depositary account established pursuant
to one of the Lockbox Agreements.

"LOCKBOX AGREEMENTS" means those certain Lockbox Operating Procedural
Agreements and those certain Depository Account Agreements, in form and
substance satisfactory to Foothill, each of which is among Borrower, Foothill,
and one of the Lockbox Banks.

"LOCKBOX BANKS" means Union Bank of California, N.A.

"LOCKBOXES" has the meaning set forth in SECTION 2.7.

"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower or Borrower and its Subsidiaries
as a whole, (b) the material impairment of Borrower's ability to perform its
obligations under the Loan Documents to which it is a party or of Foothill to
enforce the Obligations or realize upon the Collateral, (c) a material adverse
effect on the value of the Collateral or the amount that Foothill would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (d) a material impairment
of the priority of Foothill's Liens with respect to the Collateral.

"MATURITY DATE" has the meaning set forth in SECTION 3.5.

"MAXIMUM AMOUNT" means $15,000,000.

"NCD AUSTRALIA" means Network Computing Devices Australia Pty Ltd, a
company organized under the laws of Australia.

"NCD BENELUX" means Network Computing Devices (Benelux) B.V., a
company organized under the laws of The Netherlands, having its corporate seat
in Hoofddorp.

"NCD CANADA" means Network Computing Devices (Canada), Inc., a
corporation organized under the laws of Canada

"NCD FRANCE" means Network Computing Devices (France) S.A.R.L., a
company organized under the laws of France.

"NCD GERMANY" means Network Computing Devices, GmbH, a company
organized under the laws of Germany.

"NCD GRAPHIC SOFTWARE" means NCD Graphic Software Corporation, an
Oregon corporation.

"NCD GUAM" means Network Computing Devices (FSC), Inc., a Guam
corporation.

"NCD ACQUISITION" means NCD Acquisition Corp., an Indiana corporation.

"NCD UK" means Network Computing Devices (UK), Ltd., a company
organized under the laws of England.

"NCD SWEDEN" means Network Computing Devices Scandinavia AB, a company
organized under the laws of Sweden.

"NEGOTIABLE COLLATERAL" means all of Borrower's present and future
letters of credit, notes, drafts, instruments, Investment Property, documents,
personal property leases (wherein such Person is the lessor), chattel paper, and
Books relating to any of the foregoing.

"OBLIGATIONS" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), premiums (including Applicable Prepayment Premiums),
liabilities (including all amounts charged to Borrower's Loan Account pursuant
hereto), obligations, fees, charges, costs, or Foothill Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by Borrower to
Foothill of any kind and description (whether pursuant to or evidenced by the
Loan Documents or pursuant to any other agreement between Foothill and Borrower,
and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by assignment or otherwise,
and further including all interest not paid when due and all Foothill Expenses
that Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise.

"OBSOLETE COPYRIGHT" means any copyright that relates to copyrightable
material of a Person that, in such Person's good faith determination: (a) is no
longer sold or marketed by such Person; (b) is not generating any material
amount of Accounts or revenues of such Person; and (c) does not have a material
fair market value.

"OBSOLETE PATENT" means any patent that relates to an invention of a
Person that, in such Person's good faith determination: (a) is no longer sold
or marketed by such Person; (b) is not generating any material amount of
Accounts or revenues of such Person; and (c) does not have a material fair
market value.

"OVERADVANCE" has the meaning set forth in SECTION 2.5.

"PARTICIPANT" means any Person to which Foothill has sold a
participation interest in its rights under the Loan Documents.

"PATENT SECURITY AGREEMENT" means that certain Patent Security
Agreement, dated as of the date hereof, among Borrower, NCD Acquisition, NCD
Graphic Software, and Foothill.

"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.

"PERMITTED DISCRETION", with respect to any determination by Foothill,
means a determination made in good faith and in the exercise of reasonable (from
the perspective of a secured asset-based lender) business judgment.

"PERMITTED DISPOSITIONS" means the sale by Borrower of Inventory in
the ordinary course of Business.

"PERMITTED INVESTMENTS" means (a) Investments in Cash Equivalents,
(b) advances made in connection with purchases of goods or services in the
ordinary course of business, (c) to the extent constituting Investments, the
provision of funds by Borrower to the Foreign Subsidiaries for working capital
purposes in accordance with SECTION 2.7(c), and (d) Investments made prior to
the Closing Date by Borrower in New Century Hospitality Network, in an aggregate
amount of $1,000,000, as evidenced by that certain Convertible Promissory Note,
dated July 30, 1999, in the original principal amount of $1,000,000 (of which
only $800,000 was advanced), and by that certain Promissory Note, dated July 30,
1999, in the original principal amount of $200,000.

"PERMITTED LIENS" means (a) Liens held by Foothill, (b) Liens for
unpaid taxes that either (i) are not yet due and payable or (ii) are the subject
of Permitted Protests, (c) Liens set forth on SCHEDULE P-1, (d) (i) the
interests of lessors under operating leases, and (ii) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Purchase Money Indebtedness permitted under SECTION 7.1 hereof
and so long as the Lien attaches only to the asset purchased or acquired and the
proceeds thereof, purchase money Liens and the interests of lessors under
capital leases to the extent that the acquisition or lease of the underlying
asset is permitted under SECTION 7.21 and so long as the Lien only attaches to
the asset purchased or acquired and only secures the purchase price of the
asset, (e) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business of Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted Protests, (f) Liens arising from
deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (g) Liens or deposits to secure performance of bids,
tenders, or leases (to the extent permitted under this Agreement), incurred in
the ordinary course of business of Borrower and not in connection with the
borrowing of money, (h) Liens arising by reason of security for surety or appeal
bonds in the ordinary course of business of Borrower, (i) Liens of or resulting
from any judgment or award that reasonably could not be expected to result in a
Material Adverse Change and as to which the time for the appeal or petition for
rehearing of which has not yet expired, or in respect of which Borrower is in
good faith prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review has been
secured, and (j) with respect to any Real Property, easements, rights of way,
zoning and similar covenants and restrictions, and similar encumbrances that
customarily exist on properties of Persons engaged in similar activities and
similarly situated and that in any event do not materially interfere with or
impair the use or operation of the Collateral by Borrower

or the value of Foothill's Lien thereon or therein, or materially interfere with
the ordinary conduct of the business of Borrower.

"PERMITTED PROTEST" means the right of Borrower to protest any Lien
other than any such Lien that secures the Obligations, tax (other than payroll
taxes or taxes that are the subject of a United States federal tax lien or other
tax lien that has priority to the Liens granted herein), or rental payment,
provided that (a) a Reserve with respect to such obligation is established on
the books of Borrower in an amount that is reasonably satisfactory to Foothill,
(b) any such protest is instituted and diligently prosecuted by Borrower in good
faith, and (c) Foothill is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Liens of Foothill in and to the Collateral.

"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.

"PROJECTIONS" means, with respect to any Person, such Person's
forecasted consolidated (a) balance sheets, (b) statements of income, and (c)
cash flow statements, all prepared on a basis consistent with its historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

"REAL PROPERTY'' means any estates or interests in real property now
owned or hereafter acquired by Borrower.

"REPORTABLE EVENT" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.

"RESERVES" means all Foreign Exchange Reserves, Dilution Reserves (if
any), and any other reserves that may be established under this Agreement
(including pursuant to SECTION 2.1).

"SALES AGENCY AGREEMENTS" means, collectively, all of the sales agency
agreements, commission agreements, or other agreements between Borrower and each
Foreign Subsidiary pursuant to which each Foreign Subsidiary is appointed as a
sales agent for Borrower.

"SOLVENT" means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal

course of business, (d) such Person does not intend to, and does not believe
that it will, incur debts beyond such Person's ability to pay as such debts
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
properties and assets would constitute unreasonably small capital after giving
due consideration to the prevailing practices in the industry in which such
Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount that,
in light of all the facts and circumstances existing at such time, represents
the amount that reasonably can be expected to become an actual or matured
liability.

"SPECIFIED STATE" means, England, Scotland, Wales, Ireland, Australia,
France, Germany, Italy, New Zealand, Canada, Norway, Finland, Switzerland,
Sweden, Belgium, Japan, Singapore, the Netherlands, or any other country
approved by Foothill in its sole discretion.

"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).

"STOCK PLEDGE AGREEMENT" means that certain Stock Pledge Agreement,
dated as of the date hereof, between Borrower and Foothill.

"SUBSIDIARY" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

"SUBSIDIARY FOREIGN CURRENCY OPERATING ACCOUNT" means, with respect to
any Foreign Subsidiary, the Foreign Currency Account of such Foreign Subsidiary
set forth on SCHEDULE F-1.

"TANGIBLE NET WORTH" means, as of any date of determination, the
difference of (a) Borrower's total stockholder's equity, MINUS (b) the sum of:
(i) all Intangible Assets of Borrower, (ii) all of Borrower's prepaid expenses,
and (iii) all amounts due to Borrower from Affiliates.

"TECH DATA" means Tech Data Corporation, a Florida corporation.

"TRADEMARK SECURITY AGREEMENT" means that certain Trademark Security
Agreement, dated as of the date hereof, among Borrower, NCD Acquisition, NCD
Graphic Software, and Foothill.

"VOIDABLE TRANSFER" has the meaning set forth in SECTION 15.8.

1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower on a consolidated basis
unless the context clearly requires otherwise.

1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.

1.4 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall "continue" or be "continuing" until such Event of Default has been waived
in writing by Foothill. Section, subsection, clause, schedule, and exhibit
references are to this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable.

1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.

2. LOAN AND TERMS OF PAYMENT.

2.1 REVOLVING ADVANCES.

(a) Subject to the terms and conditions of this Agreement,
Foothill agrees to make advances ("Advances") to Borrower in an amount
outstanding not to exceed at any one time the lesser of (i) the Maximum Amount,
or (ii) the result of (A) the Borrowing Base LESS (B) the aggregate amount of
the Reserves (other than Foreign Exchange Reserves). For purposes of this
Agreement, "Borrowing Base," as of any date of determination, shall mean, THE
SUM OF:

(y) the lesser of:

(i) the sum of

(A) 85% of Eligible Domestic Accounts, PLUS

(B) the lesser of (1) the sum of 85% of Eligible
Extended Term Domestic Accounts and (2) $1,000,000;
and

(ii) an amount equal to 66 2/3% of Borrower's Collections
with respect to Domestic Accounts for the immediately preceding
90 day period

PLUS

(z) the least of

(i) the result of:

(A) the lesser of 75% of Eligible Foreign
Accounts, PLUS

(B) the lesser of (1) 75% of Eligible Extended
Term Foreign Accounts, and (2) the result of
$1,000,000 MINUS the amount of Availability created
pursuant to CLAUSE (y)(i)(B) above, MINUS

(ii) $7,500,000;

(iii) the amount of Availability created pursuant to
CLAUSE (y) above; and

(iv) an amount equal to a percentage (to be determined by
Foothill from time to time in its Permitted Discretion) of
Borrower's Collections with respect to Foreign Accounts for a
period of time (to be determined by Foothill from time to time
in its Permitted Discretion) preceding any date of determination
of the Borrowing Base.

(b) Anything to the contrary in this SECTION 2.1
notwithstanding, Foothill shall have the right to establish reserves in such
amounts, and with respect to such matters as Foothill in its Permitted
Discretion shall deem necessary or appropriate, against the Borrowing Base,
including reserves with respect to (i) sums that the Borrower is required to pay
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and have failed to pay
under any Section of this Agreement or any other Loan Document, and (ii) amounts
owing by Borrower to the extent secured by a Lien (other than any existing
Permitted Lien set forth on SCHEDULE P-1 that specifically is identified thereon
as entitled to have priority over Foothill's Liens) on, or trust over, any of
the Collateral, which Lien or trust, in the Permitted Discretion of Foothill,
would be likely to have a priority superior to the Liens of Foothill (such as
landlord liens, ad valorem taxes, property taxes, or sales taxes where given
priority under applicable law) in and to such item of the collateral.

(c) Foothill shall have no obligation to make Advances hereunder
to the extent they would cause the outstanding Obligations to exceed the Maximum
Amount.

(d) Amounts borrowed pursuant to this SECTION 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.

2.2 [INTENTIONALLY OMITTED].

2.3 [INTENTIONALLY OMITTED].

2.4 [INTENTIONALLY OMITTED].

2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Foothill pursuant to SECTIONS 2.1 is greater
than either the Dollar or percentage limitations set forth in SECTIONS 2.1 (an
"Overadvance"), Borrower immediately shall pay to Foothill, in cash, the amount
of such excess to be used by Foothill first, to repay Advances outstanding under
SECTION 2.1 and, thereafter, to repay any other outstanding Obligations.

2.6 INTEREST: RATES, PAYMENTS, AND CALCULATIONS.

(a) Interest Rate. Except as provided in CLAUSE (c) below, (i)
all Obligations shall bear interest at a per annum rate of 0.75 percentage
points above the Base Rate.

(b) [Intentionally omitted].

(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default, (i) all Obligations that have been charged
to the Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to 4.0 percentage points above
the per annum rate otherwise applicable hereunder.

(d) Minimum Interest. In no event shall the rate of interest
chargeable hereunder for any day be less than 8.0% per annum. To the extent
that interest accrued hereunder at the rate set forth herein would be less than
the foregoing minimum daily rate, the interest rate chargeable hereunder for
such day automatically shall be deemed increased to the minimum rate.

(e) Payments. Interest payable hereunder shall be due and
payable, in arrears, on the first day of each month during the term hereof.
Borrower hereby authorizes Foothill, at its option, without prior notice to
Borrower, to charge such interest, all Foothill Expenses (as and when incurred),
the fees and charges provided for in SECTION 2.11 (as and when accrued or
incurred), and all installments or other payments due under any Loan Document to
Borrower's Loan Account, which amounts thereafter shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be

compounded and shall thereafter accrue interest at the rate then applicable to
Advances hereunder.

(f) Computation. In the event the Base Rate is changed from
time to time hereafter, the applicable rate of interest hereunder automatically
and immediately shall be increased or decreased by an amount equal to such
change in the Base Rate. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.

(g) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and Foothill, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

2.7 COLLECTION OF ACCOUNTS.

(a) Borrower shall at all times maintain lockboxes (the
"Lockboxes") and, immediately after the Closing Date, shall instruct all Account
Debtors with respect to the Accounts, General Intangibles, and Negotiable
Collateral of Borrower to remit all Domestic Collections and all Foreign
Collections payable in Dollars in respect thereof to such Lockboxes or to a
Lockbox Account. Borrower, Foothill, and the Lockbox Banks shall enter into the
Lockbox Agreements, which among other things shall provide for the opening of a
Lockbox Account for the deposit of Domestic Collections at a Lockbox Bank.
Borrower agrees that all Domestic Collections and other amounts received by
Borrower from any Account Debtor or any other source immediately upon receipt
shall be deposited into a Lockbox Account. No Lockbox Agreement or arrangement
contemplated thereby shall be modified by Borrower without the prior written
consent of Foothill. Upon the terms and subject to the conditions set forth in
the Lockbox Agreements, all amounts received in each Lockbox Account shall be
wired each Business Day into an account (the "Foothill Account") maintained by
Foothill at a depositary selected by Foothill.

(b) Borrower may maintain one or more Borrower Foreign Currency
Accounts with the Foreign Currency Account Banks. Borrower and each of its
Subsidiaries at all times promptly shall deposit all Foreign Collections and
other amounts payable in any currency other than Dollars and received by
Borrower or any of its Subsidiaries from any source, to the extent such Foreign
Collections and other amounts are not deposited in a Lockbox Account,
immediately upon receipt thereof into the applicable Borrower Foreign

Currency Account. Each of the Foreign Subsidiaries may maintain with a Foreign
Currency Account Bank one or more Subsidiary Foreign Currency Operating
Accounts, but shall not maintain on deposit in any Subsidiary Foreign Currency
Operating Account any Collections from any source other than Borrower. Subject
to the immediately following sentence, Borrower from time to time may provide
each of the Foreign Subsidiaries with funds for working capital purposes out of
non-Dollar denominated amounts in the Borrower Foreign Currency Account, and
each of the Foreign Subsidiaries shall maintain on deposit in the Subsidiary
Foreign Currency Operating Accounts such funds until used by such Foreign
Subsidiary for working capital purposes. On the last Business Day of each week,
(i) to the extent that the aggregate Dollar amount (Based upon the applicable
Exchange Rate as of such Business Day) of balances in any Foreign Currency
Account of any Foreign Subsidiary exceeds an amount equal to 75% of such Foreign
Subsidiary's Foreign Subsidiary Operating Amount, such excess shall be wired
into a Foreign Currency Account of Borrower or converted into Dollars (at
Borrower's expense) and wired into the Foothill Account, and (ii) to the extent
that the aggregate Dollar amount (based upon the applicable Exchange Rate as of
such Business Day) of balances in all Foreign Currency Accounts (after giving
effect to any wire transfer made pursuant to the foregoing CLAUSE (i)) exceeds
the Aggregate Foreign Subsidiary Operating Amount, such excess shall be
converted into Dollars (at Borrower's sole expense) and wired into the Foothill
Account.

(c) Each Lockbox Bank shall establish and maintain tri-party
blocked account agreements with Foothill and Borrower, in form and substance
reasonably acceptable to Foothill. Each such blocked account agreement shall
provide, among other things, that (i) all items of payment deposited in such
accounts and proceeds thereof are held by such banks as agent or
bailee-in-possession for Foothill, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fee and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) the bank executing the agreement agrees
immediately to forward by daily sweep all amounts received in the applicable
account to the Foothill Account.

(d) Each Foreign Currency Bank shall establish and maintain
tri-party blocked-on-demand account agreements with Foothill and Borrower or its
Subsidiaries, as applicable, in form and substance reasonably acceptable to
Foothill, it being expressly understood that the establishment of such tri-party
blocked-on-demand account agreements shall not be a condition precedent to the
effectiveness hereof; PROVIDED, HOWEVER, that until all such tri-party
blocked-on-demand account agreements shall be established, all Foreign Accounts
shall be deemed to not be Eligible Foreign Accounts.

(e) Borrower shall not, and shall cause each of its Subsidiaries
to not, accumulate or maintain cash in disbursement or payroll accounts (not
including any Foreign Currency Account) as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements. Borrower and the Foreign
Subsidiaries shall close any of their accounts (and establish replacement
accounts in accordance with the foregoing sentence) promptly and in any event

within 30 days of notice from Foothill that the creditworthiness of any bank
holding an account is no longer acceptable in Foothill's reasonable judgment, or
as promptly as practicable and in any event within 60 days of notice from
Foothill that the operating performance, funds transfer or availability
procedures or performance with respect to accounts or Lockboxes of the bank
holding such accounts or Foothill's liability under any tri-party blocked
account agreement or tri-party blocked-on-demand account agreement, as
applicable, with such bank is no longer acceptable in Foothill's reasonable
judgment.

(f) The arrangements contemplated in this SECTION 2.7 shall not
be modified by Borrower or any of the Foreign Subsidiaries without the prior
written consent of Foothill.

2.8 CREDITING PAYMENTS; APPLICATION OF COLLECTIONS. The receipt of
any Collections by Foothill (whether from transfers to Foothill by the Lockbox
Banks, the Foreign Currency Accounts Banks, or otherwise) immediately shall be
applied provisionally to reduce the Obligations outstanding under SECTION 2.1,
but shall not be considered a payment on account unless such Collection item is
a wire transfer of immediately available federal funds and is made to the
Foothill Account or unless and until such Collection item is honored when
presented for payment. From and after the Closing Date, Foothill shall be
entitled to charge Borrower for 1 Business Day of 'clearance' or 'float' at the
rate set forth in SECTION 2.6(a)(i) or SECTION 2.6(c)(i), as applicable, on all
Collections that are received by Borrower (regardless of whether forwarded by
the Lockbox Banks or Foreign Currency Account Banks to Foothill, whether
provisionally applied to reduce the Obligations under SECTION 2.1, or
otherwise). This across-the-board 1 Business Day clearance or float charge on
all Collections is acknowledged by the parties to constitute an integral aspect
of the pricing of Foothill's financing of Borrower, and shall apply irrespective
of the characterization of whether receipts are owned by Borrower or Foothill,
and whether or not there are any outstanding Advances, the effect of such
clearance or float charge being the equivalent of charging 1 Business Day of
interest on such Collections. Should any Collection item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment, and interest shall be recalculated accordingly. Anything to the
contrary contained herein notwithstanding, any Collection item shall be deemed
received by Foothill only if it is received into the Foothill Account on a
Business Day on or before 11:00 a.m. California time. If any Collection item is
received into the Foothill Account on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have been received by
Foothill as of the opening of business on the immediately following Business
Day.

2.9 DESIGNATED ACCOUNT. Foothill is authorized to make the Advances
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to SECTION 2.6(e). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Foothill
hereunder. Unless otherwise agreed by Foothill and Borrower, any Advance
requested by Borrower and made by Foothill hereunder shall be made to the
Designated Account.

2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS.
Foothill shall maintain an account on its books in the name of Borrower
(the "Loan Account") on which Borrower will be charged with all Advances made by
Foothill to Borrower or for Borrower's account, including, accrued interest,
Foothill Expenses, and any other payment Obligations of Borrower. In accordance
with SECTION 2.8, the Loan Account will be credited with all payments received
by Foothill from Borrower or for Borrower's account, including all amounts
received in the Foothill Account from any Lockbox Bank. Foothill shall render
monthly statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Foothill Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrower and Foothill unless, within 30 days after receipt thereof by Borrower,
Borrower shall deliver to Foothill written objection thereto describing the
error or errors contained in any such statements.

2.11 FEES. Borrower shall pay to Foothill the following fees:

(a) Origination Fee. On the Closing Date, an origination fee of
$112,500;

(b) Unused Line Fee. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.50% per annum
times the Average Unused Portion of the Maximum Amount;

(c) Collateral Management Fee. On the first day of each month
during the term of this Agreement, a collateral management fee of $2,500 per
month; and

(d) Financial Examination, Documentation, and Appraisal Fees.
Foothill's customary fee of $750 per day per examiner, plus out-of-pocket
expenses for each financial analysis and examination (i.e., audits) of Borrower
performed by personnel employed by Foothill; Foothill's out-of-pocket expenses
for each appraisal of the Collateral performed by personnel employed by
Foothill; and, the actual charges paid or incurred by Foothill if it elects to
employ the services of one or more third Persons to perform such financial
analyses and examinations (i.e., audits) of Borrower or to appraise the
Collateral; and, at the Borrowers' election, a one time charge of $3,000 plus
out-of-pocket expenses for the establishment of electronic collateral reporting
systems.

3. CONDITIONS; TERM OF AGREEMENT.

3.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE.

The obligation of Foothill to make the initial Advance is subject to
the fulfillment, to the satisfaction of Foothill and its counsel, of each of the
following conditions on or before the Closing Date:

(a) The Closing Date shall occur on or before March 31, 2000;

(b) Foothill shall have received searches reflecting the filing
of its financing statements and fixture filings;

(c) Foothill shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:

(i) the Lockbox Agreements;

(ii) the Disbursement Letter;

(iii) UCC termination statements and other documentation
evidencing the termination of all Liens in and to the properties
and assets of Borrower other than Permitted Liens;

(iv) the Copyright Security Agreement;

(v) the Patent Security Agreement;

(vi) the Trademark Security Agreement;

(vii) the Stock Pledge Agreement, together with the
original shares of Stock that are the subject of the Liens
created thereunder and stock powers, executed in blank, with
respect thereto;

(viii) the Collateral Assignment of Rights, together with
the original promissory notes that are the subject thereof;

(ix) the Guaranty;

(x) the Guarantor Security Agreement; and

(xi) the Intercompany Subordination Agreement;

(d) Foothill shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;

(e) Foothill shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;

(f) Foothill shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;

(g) Foothill shall have received certificates of status with
respect to Borrower, each dated within 15 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;

(h) Foothill shall have received a certificate from the
Secretary of each Subsidiary of Borrower attesting to the resolutions of such
Subsidiary's Board of Directors authorizing its execution, delivery, and
performance of each Loan Document to which such Subsidiary is a party and
authorizing specific officers of such Subsidiary to execute the same;

(i) Foothill shall have received copies of each of Borrower's
Subsidiary's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Subsidiary;

(j) Foothill shall have received a certificate of status (or the
applicable foreign equivalent, if any) with respect to each Subsidiary of
Borrower, in each case, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Subsidiary, which certificate shall indicate that such
Subsidiary is in good standing in such jurisdiction;

(k) Foothill shall have received certificates of status (or the
applicable foreign equivalent, if any) with respect to each Subsidiary of
Borrower, each dated within 15 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions in which the failure of
such Subsidiary to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Subsidiary is in
good standing in such jurisdictions;

(l) Foothill shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.10, the
form and substance of which shall be satisfactory to Foothill and its counsel;

(m) Foothill shall have received Collateral Access Agreements
relative to Borrower's facilities located in Mountain View, California, and
Beaverton, Oregon;

(n) Foothill shall have received an opinion of Borrower's
counsel in form and substance satisfactory to Foothill in its sole discretion;

(o) Foothill shall have received a certificate from the chief
financial officer of Borrower that all tax returns required to be filed by
Borrower have been timely filed and all taxes upon Borrower or its properties,
assets, income, and franchises (including real property taxes and payroll taxes)
have been paid prior to delinquency, except such taxes that are the subject of a
Permitted Protest;

(p) Foothill shall have received a copy of Borrower's 10-K for
its fiscal year ending December 31, 1999, certified as being true, correct, and
complete, by the Secretary of Borrower, and the same shall be satisfactory to
Foothill in its sole discretion;

(q) Foothill shall have received Borrower's Projections for its
fiscal year ending December 31, 2000, on a month-by-month basis,

(r) Foothill shall have received copies of all of the Sales
Agency Agreements, certified as being true, correct, and complete by the
Secretary of Borrower, and the same shall be satisfactory to Foothill in its
sole discretion;

(s) Foothill shall have received copies of each of Borrower's
material license agreements (whether Borrower is the licsenor or licensee under
such license agreement) certified as being true, correct, and complete by the
Secretary of Borrower, and the same shall be satisfactory to Foothill in its
sole discretion;

(t) Foothill shall have received a copy of that certain
Investment Agreement between Borrower and New Century Hospitality Network, Inc.,
dated as of July 30, 1999, certified as being true, correct, and complete by the
Secretary of Borrower, and the same shall be satisfactory to Foothill in its
sole discretion;

(u) Borrower shall have Excess Availability of not less than
$10,000,000; and

(v) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Foothill and its
counsel.

3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.

The following shall be conditions precedent to all Advances hereunder:

(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);

(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof, and

(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Foothill, or any of their Affiliates.

3.3 CONDITION SUBSEQUENT. As conditions subsequent to initial
closing hereunder, Borrower shall perform or cause to be performed the following
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default):

(a) within 30 days of the Closing Date, deliver to Foothill the
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by SECTION 6.10, the form and substance of which shall
be satisfactory to Foothill and its counsel;

(b) within 30 days of the Closing Date, Foothill shall have
received satisfactory evidence that all Intellectual Property of any of
Borrower's Subsidiaries shall have been assigned to Borrower;

(c) within 30 days of the Closing Date, Foothill shall have
received satisfactory evidence that all of Borrower's copyrightable material
(other than Exempt Copyrights), including copyrightable material assigned to
Borrower pursuant to SECTION 3.3(b), shall have been registered with the United
States Copyright Office, and that all such copyrightable material and any
proceeds thereof are specifically encumbered by the Copyright Security
Agreement;

(d) within 30 days of the Closing Date, Foothill shall have
received satisfactory evidence that all of Borrower's patentable inventions
(other than Exempt Patents), including patentable inventions assigned to
Borrower pursuant to SECTION 3.3(b), shall have been registered with the United
States Patent and Trademark Office, and that all such patentable inventions and
any proceeds thereof are specifically encumbered by the Patent Security
Agreement;

(e) within 30 days of the Closing Date, each Foreign Currency
Bank shall establish and maintain tri-party blocked-on-demand account agreements
with Foothill and Borrower or its Subsidiaries in accordance with SECTION
2.7(d);

(f) within 90 days of the Closing Date, deliver or cause to be
delivered such agreements, instruments, or other documents, including an opinion
of counsel in form and substance satisfactory to Foothill, as Foothill shall
request in order to perfect its security interest in Borrower's Inventory and
other property located in The Netherlands; and

(g) upon Foothill's request, within 90 days of the Closing Date,
deliver or cause to be delivered such agreements, instruments, or other
documents, including an opinion of counsel in form and substance satisfactory to
Foothill, as Foothill shall request in order to perfect its security interest in
Borrower's Inventory and other property located in Thailand; and

3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and Foothill and shall continue in full force
and effect for a term ending on the date (the "Maturity Date") that is 3 years
from the Closing Date. The foregoing notwithstanding, Foothill shall have the
right to terminate its obligations under this

Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.

3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of Borrower's duties, Obligations, or covenants hereunder,
and Foothill's continuing security interests in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and
Foothill's obligation to provide additional credit hereunder is terminated.

3.6 EARLY TERMINATION BY BORROWER. The provisions of SECTION 3.4
to the contrary notwithstanding, Borrower has the option, at any time upon 90
days prior written notice to Foothill, to terminate this Agreement by paying to
Foothill, in cash, the Obligations, in full, together with the Applicable
Prepayment Premium.

3.7 TERMINATION UPON EVENT OF DEFAULT. If Foothill terminates this
Agreement upon the occurrence of an Event of Default, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Foothill's
lost profits as a result thereof, Borrower shall pay to Foothill upon the
effective date of such termination, a premium in an amount equal to the
Applicable Prepayment Premium. The Applicable Prepayment Premium shall be
presumed to be the amount of damages sustained by Foothill as the result of the
early termination and Borrower agrees that it is reasonable under the
circumstances currently existing. The Applicable Prepayment Premium provided for
in this SECTION 3.7 shall be deemed included in the Obligations.

4. CREATION OF SECURITY INTEREST.

4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Foothill
a continuing security interest in all currently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Foothill's security interests in
the Collateral shall attach to all Collateral without further act on the part of
Foothill or Borrower. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, except for Permitted Dispositions,
Borrower has no authority, express or implied, to dispose of any of its property
or assets.

4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower, immediately shall endorse and deliver physical possession of such
Negotiable Collateral to Foothill.

4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL.

At any time, Foothill or Foothill's designee may (a) notify Account
Debtors of Borrower that the Accounts, General Intangibles, or Negotiable
Collateral have been assigned to Foothill or that Foothill has a security
interest therein, and (b) upon the occurrence and during the continuance of an
Event of Default, collect the Accounts, General Intangibles, and Negotiable
Collateral directly and charge the collection costs and expenses to the Loan
Account. Borrower agrees that it will hold in trust for Foothill, as Foothill's
trustee, any Collections that it receives and immediately will deliver said
Collections to Foothill in their original form as received by Borrower.

4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time
upon the request of Foothill, Borrower shall execute and deliver to Foothill all
financing statements, continuation financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, applications for title, affidavits, reports, notices, schedules of
accounts, letters of authority, and all other documents that Foothill reasonably
may request, in form satisfactory to Foothill, to perfect and continue perfected
Foothill's security interests in the Collateral, and in order to fully
consummate all of the transactions contemplated hereby and under the other the
Loan Documents.

4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents designated by Foothill) as Borrower's true and lawful attorney, with
power to (a) if Borrower refuses to, or fails timely to execute and deliver any
of the documents described in SECTION 4.4, sign the name of Borrower on any of
the documents described in SECTION 4.4, (b) at any time that an Event of Default
has occurred and is continuing or Foothill deems itself insecure, sign
Borrower's name on any invoice or ▇▇▇▇ of lading relating to any Account, drafts
against Account Debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to Account Debtors, (c) send requests for verification of
Accounts, (d) endorse Borrower's name on any Collection item that may come into
Foothill's possession, (e) at any time that an Event of Default has occurred and
is continuing or Foothill deems itself insecure, notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Foothill, to receive and open all mail addressed to Borrower, and
to retain all mail relating to the Collateral and forward all other mail to
Borrower, (f) at any time that an Event of Default has occurred and is
continuing or Foothill deems itself insecure, make, settle, and adjust all
claims under Borrower's policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (g) at any time that
an Event of Default has occurred and is continuing or Foothill deems itself
insecure, settle and adjust disputes and claims respecting the Accounts directly
with Account Debtors, for amounts and upon terms that Foothill determines to be
reasonable, and Foothill may cause to be executed and delivered any documents
and releases that Foothill determines to be necessary. The appointment of
Foothill as Borrower's attorney, and each and every one of Foothill's rights and
powers, being coupled with an interest, is

irrevocable until all of the Obligations have been fully and finally repaid and
performed and Foothill's obligation to extend credit hereunder is terminated.

4.6 RIGHT TO INSPECT. Foothill (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter and, so
long as no Event of Default shall have occurred and be continuing during normal
business hours, to inspect Borrower's book and records and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral.

5. REPRESENTATIONS AND WARRANTIES.

In order to induce Foothill to enter into this Agreement, Borrower
makes the following representations and warranties which shall be true, correct,
and complete in all respects as of the date hereof, and shall be true, correct,
and complete in all respects as of the Closing Date, and at and as of the date
of the making of each Advance made thereafter, as though made on and as of the
date of such Advance (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title to
the Collateral, free and clear of Liens except for Permitted Liens.

5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing obligations created by the sale and delivery of Inventory or the
rendition of services by Borrower to Account Debtors in the ordinary course of
Borrower's business, unconditionally owed to Borrower without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. The
property giving rise to such Eligible Accounts has been delivered to the Account
Debtor, or to the Account Debtor's agent for immediate shipment to and
unconditional acceptance by the Account Debtor and any services giving rise to
such Eligible Accounts have been fully performed. Neither Borrower nor any of
its Subsidiaries has received notice of actual or imminent bankruptcy,
insolvency, or material impairment of the financial condition of any Account
Debtor regarding any Eligible Account.

5.3 [INTENTIONALLY OMITTED].

5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.

5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are (a) except as set forth on SCHEDULE 6.12, not stored with a
bailee, warehouseman, or similar party (without Foothill's prior written
consent, which consent shall not unreasonably be withheld), and (b) are located
only at the locations identified on SCHEDULE 6.12 or otherwise permitted by
SECTION 6.12.

5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the kind, type, quality, and quantity of the Inventory,
and Borrower's cost therefor.

5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in the preamble to this
Agreement and Borrower's FEIN is ▇▇-▇▇▇▇▇▇▇.

5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified reasonably could be expected to have a Material
Adverse Change.

(b) Set forth on SCHEDULE 5.8, is a complete and accurate list
of Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding Stock of each such Subsidiary
has been validly issued and is fully paid and nonassessable.

(c) Except as set forth on SCHEDULE 5.8, no Stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Stock) of any direct or indirect Subsidiary of Borrower is
subject to the issuance of any security, instrument, warrant, option, purchase
right, conversion or exchange right, call, commitment or claim of any right,
title, or interest therein or thereto.

5.9 DUE AUTHORIZATION; NO CONFLICT.

(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.

(b) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation (including
Regulations T, U, and X of the Federal Reserve Board) applicable to Borrower,
the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on Borrower, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation or material lease of
Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv)

require any approval of stockholders or any approval or consent of any Person
under any material contractual obligation of Borrower.

(c) Other than the filing of appropriate financing statements,
fixture filings, and mortgages, the execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which Borrower is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any federal, state, foreign, or other
Governmental Authority or other Person.

(d) This Agreement and the Loan Documents to which Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.

(e) The Liens granted by Borrower to Foothill in and to its
properties and assets pursuant to this Agreement and the other Loan Documents
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.

5.10 LITIGATION. There are no actions or proceedings pending by or
against Borrower or any of its Subsidiaries before any court or administrative
agency and neither Borrower nor any of its Subsidiaries has knowledge or belief
of any pending, threatened, or imminent litigation, governmental investigations,
or claims, complaints, actions, or prosecutions involving Borrower, any of its
Subsidiaries, or any other guarantor of the Obligations, except for: (a) ongoing
collection matters in which Borrower is the plaintiff; (b) matters disclosed on
SCHEDULE 5.10; and (c) matters arising after the date hereof that, if decided
adversely to Borrower, any such Subsidiary, or any such guarantor, as the case
may be, reasonably could not be expected to result in a Material Adverse Change.

5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Borrower, any of its Subsidiaries, or any other guarantor of the Obligations
that have been delivered by Borrower or its Subsidiaries to Foothill have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present Borrower's (or such Subsidiary's or guarantor's,
as applicable) financial condition as of the date thereof and Borrower's results
of operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower (or such Subsidiary or guarantor, as applicable)
since the date of the latest financial statements submitted to Foothill on or
before the Closing Date.

5.12 SOLVENCY. Borrower and each of its Subsidiaries is Solvent.
No transfer of property is being made by Borrower or any of its Subsidiaries and
no obligation is being incurred by Borrower or any of its Subsidiaries in
connection with the transactions

contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower or any
of its Subsidiaries.

5.13 EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

5.14 ENVIRONMENTAL CONDITION. None of Borrower's properties or
assets has ever been used by Borrower or, to the best of Borrower's knowledge,
by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release, or transport, any Hazardous Materials. None of
Borrower's properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, or a candidate for closure pursuant to any environmental
protection statute. No Lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned or
operated by Borrower. Borrower has not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower resulting in
the releasing or disposing of Hazardous Materials into the environment.

5.15 BROKERAGE FEES. No brokerage commission or finders fees has or
shall be incurred or payable in connection with or as a result of Borrower's
obtaining financing from Foothill under this Agreement, and Borrower has not
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from Foothill under this Agreement.

5.16 PERMITS AND OTHER INTELLECTUAL PROPERTY. Borrower owns or
possesses adequate licenses or other rights to use all Permits, patents, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, copyrights, trade secrets, source code, and know-how
(collectively, the "Intellectual Property") that are necessary for the operation
of its business as currently conducted. Except as set forth on SCHEDULE 5.10,
no claim is pending or threatened to the effect that Borrower infringes upon, or
conflicts with, the asserted rights of any other Person under any Intellectual
Property, and there is no basis for any such claim (whether pending or
threatened). No claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by Borrower, or in which Borrower
otherwise has the right to use is invalid or unenforceable by Borrower, and
there is no basis for any such claim (whether or not pending or threatened). No
Subsidiary of Borrower holds of record or beneficially, or has filed an
application for, any copyright, patent, or trademark.

6. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, and
unless Foothill shall otherwise consent in writing, Borrower shall do, and cause
each of its Subsidiaries to do, all of the following:

6.1 ACCOUNTING SYSTEM. Maintain a standard and modern system of
accounting that enables Borrower to produce financial statements in accordance
with GAAP, and maintain records pertaining to the Collateral that contain
information as from time to time may be requested by Foothill. Borrower and its
Subsidiaries also shall keep a modern inventory reporting system that shows all
additions, sales, claims, returns, and allowances with respect to the Inventory.

6.2 COLLATERAL REPORTING. Provide Foothill with the following
documents at the following times in form satisfactory to Foothill:

(a) on each Business Day, a sales journal, collection journal,
and credit register since the last such schedule and a calculation of the
Borrowing Base as of such date;

(b) on each Business Day, notice of all returns, disputes, or
claims;

(d) on a monthly basis and, in any event, by no later than the
10th day of each month during the term of this Agreement, (i) a detailed
calculation of the Borrowing Base, (ii) a detailed aging, by total, of the
Accounts, together with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Foothill, and (iii) copies of bank account
statements evidencing the running daily balance over the previous month for each
of the Foreign Currency Accounts;

(e) on a monthly basis and, in any event, by no later than the
10th day of each month during the term of this Agreement, a summary aging, by
vendor, of Borrower's accounts payable and any book overdraft;

(f) on a monthly basis, a calculation of the Dilution for the
prior month;

(g) on a monthly basis and, in any event, by no later than the
10th day of each month during the term of this Agreement:

(i) a report of all new copyrightable materials generated by
Borrower during the prior month identifying all such
copyrightable materials that are required to be registered
pursuant to SECTION 6.19, and

(ii) a detailed listing of all copyright applications filed
and all copyrights granted since the date of the last report
provided in compliance with this subsection.

(h) on a quarterly basis, and in any event, by no later than the
10th day of the month immediately following the last day of each fiscal quarter,
a detailed list of Borrower's customers;

(i) on a quarterly basis and, in any event, by no later than the
10th day of the month immediately following the last day of each fiscal quarter
during the term of this Agreement:

(i) a report of all new patentable inventions generated by
Borrower during the prior month identifying all such patentable
inventions with respect to which applications are required to be
filed pursuant to SECTION 6.20; and

(ii) a detailed listing of all patent applications filed and
all patents granted since the date of the last report provided in
compliance with this subsection.

(j) upon request:

(i) copies of invoices in connection with the Accounts,
customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents in
connection with the Accounts and for Inventory and Equipment
acquired by Borrower, purchase orders and invoices;

(ii) Inventory reports specifying Borrower's cost and the
wholesale market value of its Inventory by category, with
additional detail showing additions to and deletions from the
Inventory;

(iii) such other reports as to the Collateral or the
financial condition of Borrower as Foothill may request from time
to time; and

(iv) such information as Foothill shall request to implement
and continue its electronic collateral reporting system.

Original sales invoices evidencing daily sales shall be mailed by Borrower to
each Account Debtor and, at Foothill's direction, the invoices shall indicate on
their face that all payments are to be made directly to a Lockbox Account.

6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Foothill:

(a) as soon as available, but in any event within 30 days after
the end of each month during each of Borrower's fiscal years, a company prepared
balance sheet, income statement, and statement of cash flow covering Borrower's
operations during such period;

(b) as soon as available, but in any event within 90 days after
the end of each of Borrower's fiscal years, financial statements of Borrower for
each such fiscal year, audited by independent certified public accountants
reasonably acceptable to Foothill and certified, without any qualifications, by
such accountants to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Foothill stating that such
accountants do not have knowledge of the existence of any Default or Event of
Default. Such audited financial statements shall include a balance sheet, profit
and loss statement, and statement of cash flow and, if prepared, such
accountants' letter to management. If Borrower is a parent company of one or
more Subsidiaries, or Affiliates, or is a Subsidiary or Affiliate of another
company, then, in addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on a consolidating
basis so as to present Borrower and each such related entity separately, and on
a consolidated basis; and

(c) as soon as available, but in any event not less than 30 days
prior to the first day of each of Borrower's fiscal years, Borrower's
Projections on a month-by-month basis.

Together with the above, Borrower also shall deliver to Foothill
Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K
Current Reports, and any other filings made by Borrower with the Securities and
Exchange Commission, if any, as soon as the same are filed, or any other
information that is provided by Borrower to its shareholders, and any other
report reasonably requested by Foothill relating to the financial condition of
Borrower.

Each month, together with the financial statements provided pursuant
to SECTION 6.3(a), Borrower shall deliver to Foothill a certificate signed by
its chief financial officer to the effect that: (i) all financial statements
delivered or caused to be delivered to Foothill hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date), (iii) for
each month that also is the date on which a financial covenant in SECTION 7.20
is to be tested, a Compliance Certificate demonstrating in reasonable detail
compliance at the end of such period with the applicable financial covenants
contained in SECTION 7.20, and (iv) on the date of delivery of such certificate
to Foothill there does not exist any condition or event that constitutes a
Default or Event of Default (or, in the case of clauses (i), (ii), or (iii), to
the extent of any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrower has taken, is taking, or
proposes to take with respect thereto).

Borrower shall have issued written instructions to its independent
certified public accountants authorizing them to communicate with Foothill and
to release to Foothill

whatever financial information concerning Borrower that Foothill may request.
Borrower hereby irrevocably authorizes and directs all auditors, accountants, or
other third parties to deliver to Foothill, at Borrower's expense, copies of
Borrower's financial statements, papers related thereto, and other accounting
records of any nature in their possession, and to disclose to Foothill any
information they may have regarding Borrower's business affairs and financial
conditions.

6.4 TAX RETURNS. Deliver to Foothill copies of each of Borrower's
future federal income tax returns, and any amendments thereto, within 30 days of
the filing thereof with the Internal Revenue Service.

6.5 GUARANTOR REPORTS. Cause any guarantor of any of the
Obligations to deliver its annual financial statements at the time when Borrower
provides its audited financial statements to Foothill and copies of all federal
income tax returns of such guarantor as soon as the same are available and in
any event no later than 30 days after the same are required to be filed by law.

6.6 RETURNS. Cause returns and allowances, if any, as between
Borrower and its Account Debtors to be on the same basis and in accordance with
the usual customary practices of Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to
Borrower, Borrower promptly shall determine the reason for such return and, if
Borrower accepts such return, issue a credit memorandum (with a copy to be sent
to Foothill) in the appropriate amount to such Account Debtor. If, at a time
when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to Borrower, Borrower promptly shall determine the reason
for such return and, if Foothill consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Foothill) in the appropriate amount to such Account Debtor.

6.7 TITLE TO EQUIPMENT. Upon Foothill's request, Borrower
immediately shall deliver to Foothill, properly endorsed, any and all evidences
of ownership of, certificates of title, or applications for title to any items
of Equipment.

6.8 MAINTENANCE OF EQUIPMENT. Maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Other than those items
of Equipment that constitute fixtures on the Closing Date, Borrower shall not
permit any item of Equipment to become a fixture to real estate or an accession
to other property, and such Equipment shall at all times remain personal
property.

6.9 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrower or any of its property to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of

a Permitted Protest. Borrower shall make due and timely payment or deposit of
all such federal, state, and local taxes, assessments, or contributions required
of it by law, and will execute and deliver to Foothill, on demand, appropriate
certificates attesting to the payment thereof or deposit with respect thereto.
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, federal, and foreign
income taxes, and will, upon request, furnish Foothill with proof satisfactory
to Foothill indicating that Borrower has made such payments or deposits.

6.10 INSURANCE.

(a) At its expense maintain insurance respecting the Collateral
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain business
interruption, public liability, product liability, and property damage insurance
relating to Borrower's ownership and use of the Collateral, as well as insurance
against larceny, embezzlement, and criminal misappropriation.

(b) At its expense, obtain and maintain (i) insurance of the
type necessary to insure the Collateral for the full replacement cost thereof,
against any loss by fire, lightning, windstorm, hail, explosion, aircraft, smoke
damage, vehicle damage, earthquakes, elevator collision, and other risks from
time to time included under "extended coverage" policies, in such amounts as
Foothill may require, but in any event in amounts sufficient to prevent Borrower
from becoming a co-insurer under such policies, (ii) combined single limit
bodily injury and property damages insurance against any loss, liability, or
damages on, about, or relating to each parcel of Real Property, in an amount of
not less than $2,000,000; and (iii) insurance for such other risks as Foothill
may require.

(c) All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Foothill. The
Borrower shall deliver the originals of all such policies to Foothill with 438
BFU lender's loss payable endorsements or other satisfactory lender's loss
payable endorsements, naming Foothill as sole loss payee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Foothill and that any loss payable thereunder shall be payable notwithstanding
any act or negligence of Borrower or Foothill which might, absent such
agreement, result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) occupancy or use of the Real Property for purposes more
hazardous than permitted by the terms of such policy, or (ii) any change in
title or ownership of the Real Property. Borrower shall deliver to Foothill
certified copies of such policies of insurance and evidence of the payment of
all premiums therefor. If Borrower fails to provide and pay for such insurance,
Foothill may, at its option, but shall not be required to, procure the same and
charge Borrower's Loan Account therefor.

(d) Original policies or certificates thereof satisfactory to
Foothill evidencing such insurance shall be delivered to Foothill at least 30
days prior to the expiration of the existing or preceding policies. Borrower
shall give Foothill prompt notice of any loss covered by such insurance, and
Foothill shall have the right to adjust any loss. Foothill shall have the
exclusive right to adjust any losses payable under any such insurance policies
in excess of $100,000 without any liability to Borrower whatsoever in respect of
such adjustments. Any monies received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Foothill to be applied at the option of Foothill
either to the prepayment of the Obligations without premium, in such order or
manner as Foothill may elect, or shall be disbursed to Borrower under stage
payment terms reasonably satisfactory to Foothill for application to the cost of
repairs, replacements, or restorations. All repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction. Upon the occurrence of an Event of Default, Foothill
shall have the right to apply all prepaid premiums to the payment of the
Obligations in such order or form as Foothill shall determine.

(e) Borrower shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this SECTION 6.10, unless Foothill is included thereon as named insured
with the loss payable to Foothill under a standard California 438BFU (NS)
Mortgagee endorsement, or its local equivalent. Borrower immediately shall
notify Foothill whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and originals of such policies immediately shall be provided to Foothill.

6.11 NO SETOFFS OR COUNTERCLAIMS. Make payments hereunder and under
the other Loan Documents by or on behalf of Borrower without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, or local taxes.

6.12 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on SCHEDULE 6.12; PROVIDED, HOWEVER,
that Borrower may amend SCHEDULE 6.12 so long as such amendment occurs by
written notice to Foothill not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, Thailand, or the Netherlands,
and so long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests in such assets and also provides to
Foothill a Collateral Access Agreement. The foregoing to the contrary
notwithstanding, the aggregate value of Inventory located in Thailand shall not,
at any time, exceed $1,750,000, the aggregate value of Inventory located in the
Netherlands shall not, at any time, exceed $4,500,000, and the aggregate value
of Inventory located in all other locations outside the continental United
States shall not exceed $500,000.

6.13 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any governmental authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.

6.14 [INTENTIONALLY OMITTED].

6.15 LEASES. Pay when due all rents and other amounts payable under
any leases to which Borrower is a party or by which Borrower's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
To the extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases, Foothill shall be entitled, in its
discretion, to reserve an amount equal to such unpaid amounts against the
Borrowing Base.

6.16 BROKERAGE COMMISSIONS. Pay any and all brokerage
commission or finders fees incurred by in connection with or as a result of
Borrower's obtaining financing from Foothill under this Agreement.

6.17 CORPORATE EXISTENCE, ETC. At all time preserve and keep in
full force and effect Borrower's valid corporate existence and good standing and
any rights and franchises material to the Borrower's businesses.

6.18 DISCLOSURE UPDATES. Promptly and in no event later than
5 Business Days after obtaining knowledge thereof, (i) notify Foothill if any
written information, exhibit, or report furnished to Foothill contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (ii) correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.

6.19 COPYRIGHT REGISTRATIONS. No less frequently than monthly,
unless Foothill shall otherwise agree in writing, Borrower shall (a) cause all
copyrightable materials generated by Borrower (other than Exempt Copyrights)
that are, in any way, related to goods or services giving rise to Eligible
Accounts and that are not already the subject of a registration with the United
States Copyright Office (or an application therefor diligently prosecuted) to be
registered with the United States Copyright Office in a manner sufficient to
impart constructive notice of Borrower's ownership thereof, and (b) cause to be
prepared, executed, and delivered to Foothill, with sufficient time to permit
Foothill to record no later than the last Business Day within 10 days following
the date that such copyrightable materials have been registered or an
application for registration has been filed, a Copyright Security Agreement or
supplemental schedules to the Copyright Security Agreement reflecting the
security interest of Foothill in such new copyrightable material (other than
Exempt Copyrights, which, although subject to the security interest of Foothill,
shall not be

required to be registered until 60 days after such time, if any, as they cease
to be Incipient Copyrights), which supplemental schedules shall be in form and
content suitable for registration with the United States Copyright Office so as
to give constructive notice, when so registered, of the transfer by Borrower to
Foothill of a security interest in such copyrightable materials. Borrower shall
also maintain copies of all source and object code for all software utilized in
their business operations at safe and secure offsite locations reasonably
acceptable to Foothill, and shall, at the request of Foothill, advise the
operators of such locations of Foothill's security interest in such software,
shall keep Foothill fully informed of each such location, and shall maintain the
currency of all such software stored offsite.

6.20 PATENT FILINGS. No less frequently than quarterly, unless
Foothill shall otherwise agree in writing, Borrower shall (a) cause, with
respect to all patentable inventions generated by Borrower (other than Exempt
Patents) that are, in any way, related to goods or services giving rise to
Eligible Accounts and that are not already the subject of a registration with
the United States Patent and Trademark Office (or an application therefor
diligently prosecuted), an application to be filed with the United States Patent
and Trademark Office in a manner sufficient to impart constructive notice of
Borrower's ownership thereof, and (b) cause to be prepared, executed, and
delivered to Foothill, with sufficient time to permit Foothill to record no
later than the last Business Day within 10 days following the date that such
patent applications have been filed, a Patent Security Agreement or supplemental
schedules to the Patent Security Agreement reflecting the security interest of
Foothill in such new patentable inventions, which supplemental schedules shall
be in form and content suitable for registration with the United States Patent
and Trademark Office so as to give constructive notice, when so registered, of
the transfer by Borrower to Foothill of a security interest in such patentable
inventions.

7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
will not do, and will cause each of its Subsidiaries to not do, any of the
following without Foothill's prior written consent:

7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

(a) Indebtedness evidenced by this Agreement;

(b) Indebtedness set forth in SCHEDULE 7.1;

(c) Purchase Money Indebtedness incurred after the Closing Date
in an aggregate amount outstanding at any one time not to exceed $500,000;

(d) Unsecured Indebtedness of Borrower in an aggregate amount
outstanding at any one time not to exceed $10,000,000, that is subordinated in
right of

payment to the Obligations on terms and conditions satisfactory to Foothill in
its sole discretion;

(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), or (d) of this SECTION 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Borrower, (ii) the net
cash proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that
Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness.

7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
SECTION 7.1(e) and so long as the replacement Liens only encumber those assets
or property that secured the original Indebtedness).

7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation, reorganization, or recapitalization, or reclassify its Stock, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its property or assets.

7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, sell,
lease, assign, transfer, or otherwise dispose of any of their or assets.

7.5 CHANGE NAME. Change Borrower's name, FEIN, corporate structure
(within the meaning of Section 9402(7) of the Code), or identity, or add any new
fictitious name.

7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except by, endorsement of
instruments or items of payment in the ordinary course of business.

7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Borrower's business.

7.8 PREPAYMENTS AND AMENDMENTS.

(a) Except in connection with a refinancing permitted by SECTION
7.1(e), prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in accordance
with this Agreement, and

(b) Directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(b), (d), OR (e).

7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.

7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale.

7.11 DISTRIBUTIONS. Except for distributions or dividends by
Borrower's Subsidiaries to Borrower, make any distribution or declare or pay any
dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding.

7.12 ACCOUNTING METHODS. Modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Foothill information
regarding the Collateral or Borrower's financial condition. Borrower waives the
right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Foothill pursuant to or in accordance with this Agreement, and agrees that
Foothill may contact directly any such accounting firm or service bureau in
order to obtain such information.

7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly make, acquire, or incur any liabilities (including contingent
obligations) for or in connection with any Investment.

7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms, that are fully disclosed to Foothill, and that
are no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-Affiliate.

7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.

7.16 COMPENSATION. Increase the annual fee or per-meeting fees paid
to directors during any year by more than 15% over the prior year; pay or accrue
total cash compensation, during any year, to officers and senior management
employees in an aggregate amount in excess of 115% of that paid or accrued in
the prior year (exclusive of bonuses paid pursuant to a plan authorized by
Borrower's Board of Directors).

7.17 USE OF PROCEEDS. Use (a) the proceeds of the Advances made
hereunder for any purpose other than (i) on the Closing Date to pay
transactional costs and expenses incurred in connection with this Agreement, and
(ii) thereafter, consistent with the terms and conditions hereof, for its lawful
and permitted corporate purposes.

7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Foothill and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests and also provides to Foothill a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Foothill's prior written consent.

7.19 [INTENTIONALLY OMITTED].

7.20 FINANCIAL COVENANTS. Fail to maintain:

(a) Tangible Net Worth. Tangible Net Worth as of each date set
forth below of at least the amount corresponding thereto:

Date Amount
-----------------------------------------------------------------

June 30, 2000 $21,550,000
-----------------------------------------------------------------
September 30, 2000 and the last
day of each fiscal quarter of In accordance with the
Borrower thereafter procedures set forth below
-----------------------------------------------------------------

On or before July 31, 2000, Borrower shall deliver to Foothill revised
Projections, in form and substance satisfactory to Foothill, covering the period
from July 1, 2000, through December 31, 2001, on a month by month basis (the
failure to so deliver such revised Projections constituting an Event of
Default). Upon receipt of such revised Projections, Foothill shall establish,
in its Permitted Discretion, minimum Tangible Net Worth amounts to be measured
as of the last day of each fiscal quarter of Borrower

commencing with the fiscal quarter ending September 30, 2000, and thereafter
during the term of this Agreement.

(b) Excess Availability. Excess Availability of not less than
$5,000,000, at any time during the period from the Closing Date through the
later of June 30, 2000, and the date on which Borrower shall deliver the revised
Projections pursuant to SECTION 7.20(a).

7.21 CAPITAL EXPENDITURES. Make capital expenditures in any fiscal
year in excess of the amount set forth below:

Fiscal Year Ending Amount
-----------------------------------------------------

December 31, 2000 $2,500,000
-----------------------------------------------------

December 31, 2001 $3,000,000
-----------------------------------------------------

December 31, 2002 $3,500,000
-----------------------------------------------------
December 31, 2003 and each $3,500,000
fiscal year thereafter
-----------------------------------------------------

7.22 SALES AGENCY AGREEMENTS. Amend or terminate any of the Sales
Agency Agreements.

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

8.1 If Borrower fails to pay when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);

8.2 (a) If Borrower fails or neglects to perform, keep, or observe
any covenant or other provision contained in SECTIONS 6.2 or 6.3 hereof and such
failure or neglect continues for a period of 5 days after the date on which such
failure or neglect first occurs, or (b) If Borrower fails or neglects to
perform, keep, or observe any covenant or other provision contained in SECTIONS
6.1, 6.4, 6.5, 6.6, 6.9, or 6.15 hereof and such failure or neglect is not cured
within 15 days after the date on which such failure or neglect first occurs, or
(c) If Borrower or any guarantor fails or neglects to perform, keep, or observe
any other covenant

or other provision contained in any Section of this Agreement (other than a
Section that is expressly dealt with elsewhere in this SECTION 8) or the other
Loan Documents (other than a Section of such other Loan Document dealt with
elsewhere in this SECTION 8); PROVIDED that, during any period of time that any
such failure or neglect of Borrower or any such guarantor referred to in this
paragraph exists, even if such failure or neglect is not yet an Event of Default
by virtue of the existence of a grace or cure period or the pre-condition of the
giving of a notice, Foothill shall be relieved of its obligation to extend
credit hereunder;

8.3 If Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement, in any
of the Loan Documents, or in any other present or future agreement between
Borrower and Foothill, or if any party to any Loan Document (other than
Foothill) fails to perform, keep, or observe any term, provision, condition,
covenant, or agreement contained in such Loan Document;

8.4 If there is a Material Adverse Change;

8.5 If any material portion of Borrower's or any of its Subsidiaries'
properties or assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person;

8.6 If an Insolvency Proceeding is commenced by Borrower or any of
its Subsidiaries;

8.7 If an Insolvency Proceeding is commenced against Borrower, any of
its Subsidiaries, or any other guarantor of the Obligations and any of the
following events occur: (a) Borrower, such Subsidiary, or such guarantor, as
applicable, consents to the institution of the Insolvency Proceeding against it;
(b) the petition commencing the Insolvency Proceeding is not timely
controverted; (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; PROVIDED,
HOWEVER, that, during the pendency of such period, Foothill shall be relieved of
its obligation to extend credit hereunder; (d) an interim trustee is appointed
to take possession of all or a substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Borrower or
such Subsidiary, as applicable; or (e) an order for relief shall have been
issued or entered therein;

8.8 If Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;

8.9 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' properties or assets by
the United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or Governmental Authority, or if
any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's or
any of its Subsidiaries' properties or assets and the same is not paid on the
payment date thereof;

8.10 If a judgment or other claim becomes a Lien or encumbrance upon
any material portion of Borrower's or any of its Subsidiaries' properties or
assets;

8.11 If there is a default in any material agreement to which Borrower
or any of its Subsidiaries is a party with one or more third Persons and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by such third Person(s), irrespective of whether exercised,
to accelerate the maturity of Borrower's or such Subsidiary's, as applicable,
obligations thereunder;

8.12 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;

8.13 If any misstatement or misrepresentation exists now or hereafter
in any warranty, representation, statement, or report made to Foothill by
Borrower or any of its Subsidiaries or any officer, employee, agent, or director
of Borrower or any of its Subsidiaries, or if any such warranty or
representation is withdrawn; or

8.14 If the obligation of any of Borrower's Subsidiaries, any other
guarantor, or other third Person under any Loan Document is limited or
terminated by operation of law or by such Subsidiary, guarantor, or other third
Person.

9. FOOTHILL'S RIGHTS AND REMEDIES.

9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default Foothill may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:

(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;

(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and Foothill;

(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of Foothill, but without affecting
Foothill's rights and security interests in the Collateral and without affecting
the Obligations;

(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Foothill considers advisable, and in
such cases, Foothill will credit Borrower's Loan Account with only the net
amounts received by Foothill in payment of such disputed Accounts after
deducting all Foothill Expenses incurred or expended in connection therewith;

(e) Cause Borrower to hold all returned Inventory in trust for
Foothill, segregate all returned Inventory from all other property of Borrower
or in Borrower's possession and conspicuously label said returned Inventory as
the property of Foothill;

(f) Without notice to or demand upon Borrower, any of its
Subsidiaries, or any other guarantor, make such payments and do such acts as
Foothill considers necessary or reasonable to protect its security interests in
the Collateral. Borrower agrees to assemble the Collateral if Foothill so
requires, and to make the Collateral available to Foothill as Foothill may
designate. Borrower authorizes Foothill to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or Lien that in Foothill's determination appears to conflict with its
security interests and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned or leased premises, Borrower hereby
grants Foothill a license to enter into possession of such premises and to
occupy the same, without charge, for up to 120 days in order to exercise any of
Foothill's rights or remedies provided herein, at law, in equity, or otherwise;

(g) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9505 of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by Foothill (including any amounts received in the Lockbox Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by Foothill;

(h) Hold, as cash collateral, any and all balances and deposits
of Borrower held by Foothill, and any amounts received in the Lockbox Accounts,
to secure the full and final repayment of all of the Obligations;

(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Foothill is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Borrower's rights under all licenses and all franchise agreements shall
inure to Foothill's benefit;

(j) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Foothill
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;

(k) Foothill shall give notice of the disposition of the
Collateral as follows:

(1) Foothill shall give Borrower and each holder of a
security interest in the Collateral who has filed with Foothill a
written request for

notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other
than a public sale is to be made of the Collateral, then the time
on or after which the private sale or other disposition is to be
made;

(2) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in SECTION 12, at least
5 days before the date fixed for the sale, or at least 5 days
before the date on or after which the private sale or other
disposition is to be made; no notice needs to be given prior to
the disposition of any portion of the Collateral that is
perishable or threatens to decline speedily in value or that is
of a type customarily sold on a recognized market. Notice to
Persons other than Borrower claiming an interest in the
Collateral shall be sent to such addresses as they have furnished
to Foothill;

(3) If the sale is to be a public sale, Foothill also shall
give notice of the time and place by publishing a notice one time
at least 5 days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be
held;

(l) Foothill may credit bid and purchase at any public
sale; and

(m) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Foothill to Borrower.

9.2 REMEDIES CUMULATIVE. Foothill's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Foothill shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Foothill of one
right or remedy shall be deemed an election, and no waiver by Foothill of any
Event of Default shall be deemed a continuing waiver. No delay by Foothill shall
constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Foothill
determines that such failure by Borrower could result in a Material Adverse
Change, in its discretion and without prior notice to Borrower, Foothill may do
any or all of the following: (a) make payment of the same or any part thereof;
(b) set up such reserves in Borrower's Loan Account as Foothill deems necessary
to protect Foothill from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type described in SECTION 6.10, and take any
action with respect to such policies as Foothill deems prudent. Any such amounts
paid by Foothill shall constitute Foothill Expenses. Any such payments

made by Foothill shall not constitute an agreement by Foothill to make similar
payments in the future or a waiver by Foothill of any Event of Default under
this Agreement. Foothill need not inquire as to, or contest the validity of, any
such expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.

11. WAIVERS; INDEMNIFICATION.

11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Foothill on which Borrower may in any way be liable.

11.2 FOOTHILL'S LIABILITY FOR COLLATERAL. So long as Foothill
complies with its obligations, if any, under Section 9207 of the Code, Foothill
shall not in any way or manner be liable or responsible for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person. All risk of loss, damage, or destruction of the Collateral
shall be borne by Borrower.

11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and
hold Foothill, each Participant, and each of their respective officers,
directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them in connection with or
as a result of or related to the execution, delivery, enforcement, performance,
and administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). Borrower shall have no obligation to any
Indemnified Person under this SECTION 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations.

12. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, or telefacsimile to Borrower or to
Foothill, as the case may be, at its address set forth below:

If to Borrower: NETWORK COMPUTING DEVICES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

With copies to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & FREIDENRICH LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇

With copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇

The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this SECTION 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3 days
after the deposit thereof in the mail. Borrower acknowledges and agrees that
notices sent by Foothill in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or personally delivered, or,
where permitted by law, transmitted telefacsimile or other similar method set
forth above.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT IN WHICH
FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF BORROWER AND
FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF BORROWER AND FOOTHILL REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

14. DESTRUCTION OF BORROWER'S DOCUMENTS.

All documents, schedules, invoices, agings, or other papers delivered
to Foothill may be destroyed or otherwise disposed of by Foothill 4 months after
they are delivered to or received by Foothill, unless Borrower requests, in
writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.

15. GENERAL PROVISIONS.

15.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Foothill.

15.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
PROVIDED, HOWEVER, that Borrower may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Foothill
shall release Borrower from its Obligations. Foothill may assign this Agreement
and its rights and duties hereunder and no consent or approval by Borrower is
required in connection with any such assignment. Foothill reserves the right to
sell, assign, transfer, negotiate, or grant participations in all or any part
of, or any interest in Foothill's rights and benefits hereunder. In connection
with any such assignment or participation, Foothill may disclose all documents
and information which Foothill now or hereafter may have relating to Borrower or
Borrower's business. To the extent that Foothill assigns its rights and
obligations hereunder to a third Person, Foothill thereafter shall be released
from such assigned obligations to Borrower and such assignment shall effect a
novation between Borrower and such third Person.

15.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.

15.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.

15.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

15.6 AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed by both Foothill and Borrower.

15.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement (and any
amendment hereto or waiver with respect hereto) may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this

Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.

15.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or any guarantor of the Obligations or
the transfer by either or both of such parties to Foothill of any property of
either or both of such parties should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if Foothill is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that Foothill is required or
elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of Foothill related thereto, the liability of Borrower or such
guarantor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.

15.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

[Remainder of page left intentionally blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in Los Angeles, California.

NETWORK COMPUTING DEVICES, INC.
a Delaware corporation

By
-----------------------------------
Title:
------------------------------

FOOTHILL CAPITAL CORPORATION,
a California corporation

By
-----------------------------------
Title:
------------------------------

S-1

This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
March [], 2000, is made by NETWORK COMPUTING DEVICES, INC., a Delaware
corporation ("Debtor"), in favor of FOOTHILL CAPITAL CORPORATION, a
California corporation ("Secured Party"), with reference to the following:

WHEREAS, Debtor and Secured Party have entered into that certain
Loan and Security Agreement, dated as of even date herewith (as amended and
as otherwise amended, restated, modified, supplemented, refinanced, renewed,
or extended from time to time, the "Loan Agreement"), pursuant to which
Secured Party has agreed to make certain financial accommodations to Debtor,
and pursuant to which Debtor has granted to Secured Party a security interest
in (among other things) all general intangibles of Debtor.

WHEREAS, Pursuant to the Loan Agreement and as one of the
conditions to the obligations of Secured Party under the Loan Agreement,
Debtor has agreed to execute and deliver this Agreement to Secured Party for
filing with the United States Copyright Office and with any other relevant
recording systems in any domestic jurisdiction, and as further evidence of
and to effectuate Secured Party's existing security interests in the
copyrights and other general intangibles described herein.

NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtor hereby agrees in favor of
Secured Party as follows:

1. DEFINITIONS; INTERPRETATION.

(a) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:

"BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. Section 101 ET SEQ.), as amended, and any successor statute.

"COPYRIGHT COLLATERAL" has the meaning set forth in SECTION 2.

"COPYRIGHTS" has the meaning set forth in SECTION 2.

"DEBTOR" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.

"EVENT OF DEFAULT" shall have the meaning ascribed thereto in the
Loan Agreement.

perfected, and whether such interest shall be contingent upon the occurrence
of some future event or events or the existence of some future circumstance
or circumstances.

"OBLIGATIONS" shall have the meaning ascribed thereto in the Loan
Agreement.

"PROCEEDS" means whatever is receivable or received from or upon
the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Copyright Collateral, including
"proceeds" as defined at UCC Section 9306, and all proceeds of proceeds.
Proceeds shall include (i) any and all accounts, chattel paper, instruments,
general intangibles, cash and other proceeds, payable to or for the account
of Debtor, from time to time in respect of any of the Copyright Collateral,
(ii) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to or for the account of Debtor from time to time with respect to any
of the Copyright Collateral, (iii) any and all claims and payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Copyright Collateral by any Person
acting under color of governmental authority, and (iv) any and all other
amounts from time to time paid or payable under or in connection with any of
the Copyright Collateral or for or on account of any damage or injury to or
conversion of any Copyright Collateral by any Person.

"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of California.

"UNITED STATES" and "U.S." each mean the United States of America,
including all territories thereof and all protectorates thereof.

(b) TERMS DEFINED IN UCC. Where applicable and except as
otherwise defined herein, terms used in this Agreement shall have the
meanings ascribed to them in the UCC.

(i) Any reference to a Section or a Schedule is a
reference to a section hereof, or a schedule hereto, respectively, and to
a subsection or a clause is, unless otherwise stated, a reference to a
subsection or a clause of the Section or subsection in which the reference
appears.

(ii) The words "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole and
not merely to the specific Section, subsection, paragraph or clause in
which the respective word appears.

(iii) The meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined.

(iv) The words "including," "includes" and "include"
shall be deemed to be followed by the words "without limitation."

(v) References to agreements and other contractual
instruments shall be deemed to include all subsequent amendments,
restatements, supplements, refinancings, renewals, extensions, and other
modifications thereto and thereof.

(vi) References to statutes or regulations are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation referred to.

(vii) Any captions and headings are for convenience of
reference only and shall not affect the construction of this Agreement.

(viii) Capitalized words not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement.

(ix) In the event of a direct conflict between the
terms and provisions of this Agreement and the Loan Agreement, it is the
intention of the parties hereto that both such documents shall be read
together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of the Loan
Agreement shall control and govern; PROVIDED, HOWEVER, that the inclusion
herein of additional obligations on the part of Debtor and supplemental
rights and remedies in favor of Secured Party (whether under California law
or applicable federal law), in each case in respect of the Copyright
Collateral, shall not be deemed a conflict with the Loan Agreement.

2. SECURITY INTEREST.

(a) ASSIGNMENT AND GRANT OF SECURITY. Debtor, as security
for the payment and performance of the Obligations, hereby grants, assigns,
transfers and conveys to Secured Party a continuing security interest in all
of Debtor's right, title and interest in, to and under the following
property, whether now existing or hereafter acquired or arising or in which
Debtor now has or hereafter acquires or develops an interest and wherever the
same may be located (the "Copyright Collateral"):

(i) all copyrights, rights, titles and interests in
and to published and unpublished works of authorship that Debtor owns or
uses in its business or will in the future adopt and so use, and all
copyrights in any original or derivative works of authorship and all works
protectable by copyright that are presently, or in the future may be,
owned, created, authored (excluding all works for hire created by Debtor
for any other Person), acquired or used (whether pursuant to a license or
otherwise) by Debtor, in whole or in part (collectively, the "Copyrights"),
all copyright registrations and applications for copyright registration
that have

heretofore been or may hereafter be issued thereon or applied for
in the United States, including registrations, recordings, supplemental
registrations and pending applications for registration in the United
States Copyright Office (the "Registrations"), all common law and other
rights in and to the Copyrights throughout the world, including all
copyright licenses (collectively, the "Copyright Rights"), and all renewals
and extensions thereof, throughout the world, the right (but not the
obligation) to renew and extend such Copyrights, Registrations and
Copyright Rights and to register works protectable by copyright and the
right (but not the obligation) to ▇▇▇ or bring proceedings in the name of
Debtor or in the name of Secured Party for past, present and future
infringements or violations of the Copyrights, Registrations and Copyright
Rights, and recover damages for past, present and future infringements or
violations thereof, and all rights corresponding thereto throughout the
world, including:

(A) all of Debtor's right, title and interest in and to all
copyrights or rights or interests in copyrights registered or recorded in
the United States Copyright Office, including the Registrations listed on
SCHEDULE A attached hereto, as the same may be amended or supplemented
pursuant hereto from time to time;

(B) all of Debtor's right, title and interest in and to all
renewals and extensions of any such copyrights, including renewals or
extensions of the Registrations listed on SCHEDULE A attached hereto, that
may be secured under the law now or hereafter in force and effect;

(C) all of Debtor's right, title and interest to make and
exploit all derivative works based on or adopted from all works covered by
any of the Copyright Collateral; and

(D) all of Debtor's right, title and interest pursuant to or
under licensing or other contracts in favor of Debtor pertaining to
copyrights and works protectable by copyright presently or in the future
owned or used by third parties;

(ii) all inventions, designs, registrations, trade
secrets, proprietary rights, corporate or other business records, computer
programs, source codes, object codes, data bases and all other intangible
personal property at any time used in connection with the businesses of
Debtor (referred to herein as "Proprietary Rights");

(iii) all general intangibles (as defined in the UCC)
and all intangible intellectual or other similar property of Debtor of any
kind or nature, whether now owned or hereafter acquired or developed,
associated with or arising out of any of the Copyrights, Registrations,
Copyright Rights or Proprietary Rights and not otherwise described above;
and

(iv) all Proceeds of any and all of the foregoing
Copyright Collateral (including license royalties, rights to payment,
accounts receivable and proceeds of infringement suits) and, to the extent
not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof) or any indemnity, warranty or
guaranty payable by reason of loss or damage to or otherwise with respect
to the foregoing Copyright Collateral.

(b) CONTINUING SECURITY INTEREST. Debtor agrees that this
Agreement shall create a continuing security interest in the Copyright
Collateral which shall remain in effect until terminated in accordance with
SECTION 16.

(c) INCORPORATION INTO LOAN AGREEMENT. This Agreement
shall be fully incorporated into the Loan Agreement and all understandings,
agreements and provisions contained in the Loan Agreement shall be fully
incorporated into this Agreement. Without limiting the foregoing, the
Copyright Collateral described in this Agreement shall constitute part of the
Collateral in the Loan Agreement.

(d) PERMITTED LICENSING. Anything in the Loan Agreement or
this Agreement to the contrary notwithstanding, Debtor may license to any
other Person the Copyright Collateral on a non-exclusive basis, free and
clear of Secured Party's security interest (other than its security interest
in the proceeds of such license).

3. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party, the following:

(a) TRUE AND COMPLETE LIST. Set forth in SCHEDULE A is a
true and complete list of all Copyrights, Registrations, and Copyright Rights
owned, held, or used (whether pursuant to a license or otherwise) by Debtor,
in whole or in part;

(b) VALIDITY. Each of the Registrations of Debtor referred
to in SCHEDULE A is valid, subsisting and enforceable, and Debtor has
properly complied in all material respects with all applicable statutory and
regulatory requirements, including all notice requirements, in connection
with each of such Registrations, and, no claim has been made that the use of
any of such Copyrights does or may infringe or otherwise violate the rights
of any third Person;

(c) TITLE. (i) Debtor has rights in and good and
defensible title to the Copyright Collateral, (ii) with respect to the
Copyright Collateral shown on SCHEDULE A as being owned by it, is the sole
and exclusive owner of the entire and unencumbered right, title and interest
in and to such Copyright Collateral, free and clear of any Liens (other than
Liens in favor of Secured Party), and (iii) with respect to any Copyright
Collateral for which Debtor is either a licensor or a licensee pursuant to a
license or licensing agreement regarding such Copyright Collateral, each such
license or licensing agreement is in full force and effect, Debtor is not in
material default of any of its obligations thereunder and, other than (A) the
parties to such licenses or licensing agreements, or (B) in the case of any
non-exclusive license or license agreement entered into by Debtor or any such
licensor regarding

such Copyright Collateral, the parties to any other such non-exclusive
licenses or license agreements entered into by Debtor or any such licensor
with any other Person, no other Person has any rights in or to any of such
Copyright Collateral;

(d) NO VIOLATION. The execution, delivery and performance
by Debtor of this Agreement do not violate any provision of law or the
articles of incorporation or by-laws of Debtor or result in a breach of or
constitute a default under any contract, obligation, indenture or other
instrument to which Debtor is a party or by which Debtor may be bound;

(e) POWERS. Debtor has full power, authority and legal
right to pledge and to grant to Secured Party a security interest in all
right, title, and interest of Debtor in and to the Copyright Collateral
pursuant to this Agreement, and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the
consent or approval of any other Person except as already obtained; and

(f) SECRECY. Debtor has taken and will continue to take
all reasonable steps to protect the secrecy of all trade secrets relating to
any of its unpublished Copyright Collateral and its Proprietary Rights.

4. COVENANTS. Debtor covenants that so long as this Agreement
shall be in effect, Debtor shall:

(a) FURTHER ACTS. On a continuing basis, make, execute,
acknowledge and deliver, and file and record in the proper filing and
recording places, all such instruments and documents, including appropriate
financing and continuation statements and security agreements, and take all
such action as may be necessary or advisable or may be requested by Secured
Party to carry out the intent and purposes of this Agreement, or for
assuring, confirming or protecting the grant or perfection of the security
interest granted or purported to be granted hereby, to ensure Debtor's
compliance with this Agreement or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to the Copyright
Collateral. Without limiting the generality of the foregoing sentence,
Debtor:

(i) hereby authorizes Secured Party in its sole
discretion if Debtor refuses to execute and deliver, or fails timely to
execute and deliver, any of the documents it is requested to execute and
deliver by Secured Party, to modify this Agreement without first obtaining
Debtor's approval of or signature to such modification by amending
SCHEDULE A hereof to include a reference to any right, title or interest in
any existing Copyright, Registration or Copyright Right or any Copyright,
Registration or Copyright Right acquired or developed by Debtor after the
execution hereof, or to delete any reference to any right, title or
interest in any Copyright, Registration or Copyright Right in which Debtor
no longer has or claims any right, title or interest; and

(ii) hereby authorizes Secured Party, in its sole
discretion, to file one or more financing or continuation statements, if
Debtor refuses to execute and deliver, or fails timely to execute and
deliver, any such amendment thereto it is requested to execute and deliver
by Secured Party, any amendments thereto, relative to all or any portion of
the Copyright Collateral, without the signature of Debtor where permitted
by law;

(b) COMPLIANCE WITH LAW. Comply, in all material respects,
with all applicable statutory and regulatory requirements in connection with
any and all of the Copyright Collateral that is the subject of the
Registrations and give such notice of copyright, prosecute such material
claims, and do all other acts and take all other measures which, in Debtor's
reasonable business judgment, may be necessary or desirable to preserve,
protect and maintain such Copyright Collateral and all of Debtor's rights
therein, including diligently prosecute any material copyright application
pending as of the date of this Agreement or thereafter;

(c) COMPLIANCE WITH AGREEMENT. Comply with each of the
terms and provisions of this Agreement, and not enter into any agreement (for
example, a license agreement) which is inconsistent with the obligations of
Debtor under this Agreement without Secured Party's prior written consent; and

(d) LIEN PROTECTION. Not permit the inclusion in any
contract to which Debtor becomes a party of any provision that could or might
impair or prevent the creation of a security interest in favor of Secured
Party in Debtor's rights and interest in any property included within the
definitions of the Copyrights, Registrations and Copyright Rights acquired
under such contracts.

5. FUTURE RIGHTS. If Debtor shall obtain rights to or develop
any new works protectable by copyright, or become entitled to the benefit of
any Copyright Rights, Registration or application for Registration not
described on the schedules hereto, or any renewals or extension of any
Copyright, Copyright Rights or Registration, the provisions of this Agreement
shall automatically apply thereto. Debtor shall give Secured Party written
notice (a) of any such work or such rights of material value to Debtor or the
operation of its businesses and (b) any such Registration, applications for
Registration or renewal or extension of any Copyright. Concurrently with its
filing of an application for any Registration for any Copyright, Debtor shall
execute and deliver a supplement to this Agreement in form and substance
satisfactory to the Secured Party (or, at the election of Secured Party, a
new Copyright Security Agreement substantially in the form of this Agreement
and otherwise in form and substance satisfactory to the Secured Party),
pursuant to which Debtor shall grant and reaffirm its grant of a security
interest to the extent of its interest in such Registration as provided
herein to Secured Party, and Debtor shall cause such agreement to be recorded
in the offices and jurisdictions indicated by Secured Party.

6. COPYRIGHT REGISTRATION, RENEWAL AND LITIGATION.

(a) REGISTRATION. Except to the extent otherwise permitted
under the Loan Agreement, Debtor shall have the duty diligently to make any
application for Registration on any existing or future unregistered but
copyrightable works that are material to Debtor's business or operations and
to do any and all acts which are reasonably necessary or desirable to
preserve, renew and maintain all rights in all Copyrights, Registrations and
Copyright Rights. Any expenses incurred in connection therewith shall be
borne solely by Debtor. Except as otherwise permitted in the Loan Agreement
or this SECTION 6(a), Debtor shall not do any act or omit to do any act
whereby any of the Copyright Collateral may become abandoned or fall into the
public domain or fail to renew any Copyright, Registration or Copyright Right
owned by Debtor without the prior written consent of Secured Party.

(b) PROTECTION. Except as provided in ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇
shall have the right and obligation to commence and diligently prosecute in
its own name, as real party in interest, for its own benefit and at its own
expense, such suits, proceedings or other actions for infringement or other
damage as are in its reasonable business judgment necessary to protect the
Copyright Collateral or any of Debtor's rights therein. Debtor shall provide
to Secured Party any information with respect thereto requested by Secured
Party. Secured Party shall provide at Debtor's expense all necessary
cooperation in connection with any such suit, proceeding or action including
joining as a nominal party if Secured Party shall have been satisfied that it
is not incurring any risk of liability because of such joinder. Debtor shall
provide at its expense representation acceptable to Secured Party for the
common interest of Debtor and Secured Party with respect to such proceedings.

(c) NOTICE. Debtor shall, promptly upon its becoming aware
thereof, notify Secured Party in writing of the institution of, or any
adverse determination in, any proceeding, application, suit or action of any
kind described in SECTION 6(a) OR 6(b), or regarding Debtor's claim of
ownership in any of the Copyrights, Registrations or Copyright Rights, its
right to register the same, or its right to keep and maintain such
registration, whether before the United States Copyright Office or any United
States court or governmental agency. Debtor shall provide promptly to
Secured Party any information with respect thereto requested from time to
time by Secured Party.

7. REMEDIES. Following the occurrence and during the
continuation of an Event of Default, Secured Party shall have all rights and
remedies available to it under the Loan Agreement and the other Loan
Documents and applicable law (which rights and remedies are cumulative) with
respect to its security interests in any of the Copyright Collateral or any
other Collateral. Debtor agrees that such rights and remedies include the
right of Secured Party as a secured party to sell or otherwise dispose of its
Collateral after default, pursuant to UCC Section 9504. Debtor agrees that
Secured Party shall at all times have such royalty free licenses, to the
extent permitted by law, for any Copyright, Copyright Rights, Proprietary
Right and any other Copyright Collateral that is reasonably necessary to
permit the exercise of any of Secured Party's rights or remedies upon the
occurrence and during the continuation of an Event of Default with respect to
(among other things) any asset of Debtor in which Secured Party has a
security interest, including Secured Party's rights to sell or license
general intangibles, inventory, tooling or packaging which is acquired by

Debtor (or its successors, permitted assignees, or trustee in bankruptcy).
In addition to and without limiting any of the foregoing, upon the occurrence
and during the continuance of an Event of Default, Secured Party shall have
the right but shall in no way be obligated to bring suit, or to take such
other action as Secured Party deems necessary or advisable, in the name of
Debtor or Secured Party, to enforce or protect any Copyright, Registration,
Copyright Right or Proprietary Right, and any license thereunder, in which
event Debtor shall, at the request of Secured Party, do any and all lawful
acts and execute any and all documents required by Secured Party in aid of
such enforcement. To the extent that Secured Party shall elect not to bring
suit to enforce any Copyright, Registration, Copyright Rights, Proprietary
Right, or any license thereunder, Debtor, in the exercise of its reasonable
business judgment, agrees to use all reasonable measures and its diligent
efforts, whether by action, suit, proceeding or otherwise, to prevent the
infringement, misappropriation or violation thereof by others and for that
purpose agrees diligently to maintain any action, suit or proceeding against
any Person necessary to prevent such infringement, misappropriation or
violation.

8. AUTHORIZATION. If Debtor fails to comply with any of its
obligations hereunder, Secured Party may do so in Debtor's name or in Secured
Party's name, but at Debtor's expense, and Debtor hereby agrees to reimburse
Secured Party in full upon demand for all reasonable expenses, including
reasonable attorneys fees, incurred by Secured Party in protecting, defending
and maintaining any of the Copyright Collateral or any right, title or
interest of Debtor or Secured Party therein. Debtor hereby appoints Secured
Party, and authorizes, directs and empowers Secured Party to make, constitute
and appoint any officer or agent of Secured Party as Secured Party may
select, in its exclusive discretion, as the true and lawful attorney-in-fact
of Debtor, with the power, (a) if Debtor refuses or fails to do so timely, to
execute in the name of Debtor any financing statement or other instrument and
any modification, supplement or amendment to this Agreement or any
supplemental Copyright Security Agreement described in SECTIONS 4(a) OR 5
hereof, and do such other acts on Debtor's behalf, that Secured Party may
deem necessary or advisable to accomplish the purposes hereof, and (b) upon
the occurrence and during continuation of any Event of Default, (i) to
endorse Debtor's name on all applications, documents, papers and instruments
necessary for Secured Party to use any of the Copyright Collateral, (ii) to
assert or retain any rights under any license agreement for any of the
Copyright Collateral, including any rights of Debtor arising under Section
365(n) of the Bankruptcy Code, and (iii) to grant or issue any exclusive or
nonexclusive license under any of the Copyright Collateral to anyone else, or
as may be necessary for Secured Party to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Copyright Collateral or any other
collateral to anyone else. Debtor hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and is irrevocable until termination of
this Agreement.

9. NOTICES. All notices and other communications hereunder to
or from Secured Party and Debtor shall be in writing and shall be mailed,
sent or delivered in accordance with the Loan Agreement.

10. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
California, except to the extent that the validity or perfection of the
security interests hereunder in respect of any Copyright Collateral are
governed by federal law, in which case such choice of California law shall
not be deemed to deprive Secured Party of such rights and remedies as may be
available under federal law.

11. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Loan
Agreement, together with the Schedules and Exhibits hereto and thereto, which
are incorporated herein by this reference, contains the entire agreement of
the parties with respect to the subject matter hereof and supersede all prior
drafts and communications relating to such subject matter. Neither this
Agreement nor any provision hereof may be modified, amended or waived except
by the written agreement of the parties, as provided in the Loan Agreement.
Notwithstanding the foregoing, Secured Party may re-execute this Agreement,
modify, amend or supplement the Schedules hereto or execute a supplemental
Copyright Security Agreement, as provided herein, and the terms of any such
modification, amendment, supplement or supplemental Copyright Security
Agreement shall be deemed to be incorporated herein by this reference.

12. SEVERABILITY. If one or more provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render
illegal or unenforceable any such provision in any other jurisdiction or with
respect to any other party, or any other provisions of this Agreement.

13. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement

14. LOAN AGREEMENT. Debtor acknowledges that the rights and
remedies of Secured Party with respect to the security interest in the
Copyright Collateral granted hereby are more fully set forth in the Loan
Agreement and the other Loan Documents and all such rights and remedies are
cumulative.

such covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms.

16. TERMINATION. Upon the final payment in full in cash of the
Obligations and the full and final termination of any commitment to extend
any financial accommodations under the Loan Agreement, this Agreement shall
terminate, and Secured Party shall execute and deliver such documents and
instruments and take such further action reasonably requested by Debtor, at
Debtor's expense, as shall be necessary to evidence termination of the
security interests granted by Debtor to Secured Party hereunder.

[Remainder of page intentionally left blank]

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

NETWORK COMPUTING DEVICES, INC.,

a Delaware corporation

By:_________________________________
Name:_______________________________
Title:______________________________

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:_________________________________
Name________________________________
Title:______________________________

S-1

STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )

On ________________, before me, __________________________________,
Notary Public, personally appeared _________________________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.

WITNESS my hand and official seal.

_____________________________________
Signature

[SEAL]

S-2

STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )

On ________________, before me, _________________________________,
Notary Public, personally appeared ________________________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.

WITNESS my hand and official seal.

______________________________________
Signature

[SEAL]

S-3

SCHEDULE A

--------------------------------------------------------------------------------------------------------------------------------
Debtor Country of Registered Registration Registration
Registration Copyright Date Number
--------------------------------------------------------------------------------------------------------------------------------

Network Computing Devices, Inc. U.S.A NCDWare Version 3.0 3/17/93 TX 3516376

Network Computing Devices, Inc. U.S.A PC-Xware Version 1.0 11/2/93 TX 3677658

NCD Graphic Software Corporation U.S.A GSS-Drivers (software) 9/24/84 TXU 184-300

NCD Graphic Software Corporation U.S.A. GSS-CGI V. 2.15 (Software) 7/20/89 TX 2 709 076

NCD Graphic Software Corporation U.S.A GSS-Programmer's Guide for PC- 10/10/89 TX 2 696 181
DOS and OS/2 (manual)

NCD Graphic Software Corporation U.S.A. GSS* CGI ANSI-C Programmer's 3/28/90 TX 2 809 076
Guide for PC/MS and OS/2

NCD Graphic Software Corporation U.S.A. GSS* CGI Device Drivers Test 3/23/90 TX 2 809 205
Suites for DOS

NCD Graphic Software Corporation U.S.A. DGIS Development Toolkit for MS- 3/23/89 TX 2 787 067
DOS

NCD Graphic Software Corporation U.S.A. DGIS Test Suites V.S. 00 2/21/90 TX 2 761 956

NCD Graphic Software Corporation U.S.A. DGIS Architecture and Porting 1/31/90 TX 2 763 300
Guide for MS-DOS Personal
Computers (manual)

NCD Graphic Software Corporation U.S.A. GSS AT1000 High-Resolution Video 2/5/90 TX 2 752 331
Display Controller, User's
Manual

NCD Graphic Software Corporation U.S.A. GSS MC1000 High-Resolution Video 2/5/90 TX 2 776 143
Display Controller, User's
Manual

NCD Graphic Software Corporation U.S.A. GSS 1000 Presentation Driver 2/5/90 TX 2 776 142
(manual)

NCD Graphic Software Corporation U.S.A. Running DOS Programs in High- 2/5/90 TX 2 775 795
Resolution (manual)

NCD Graphic Software Corporation U.S.A. PC-Xview Release Notes (manual) 3/28/90 TX 2 790 639

NCD Graphic Software Corporation U.S.A. PC-Xview User's Guide 3/28/90 TX 2 833 112
--------------------------------------------------------------------------------------------------------------------------------

A-1

--------------------------------------------------------------------------------------------
Debtor Country of Application Application Application
Application for Copyright Date Number
--------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------

*Note: Reference Attached Form TX Applications, application number to be
provided upon receipt from Copyright Office.

A-2

GENERAL CONTINUING GUARANTY

THIS GENERAL CONTINUING GUARANTY ("Guaranty"), dated as of
March 30, 2000, is executed and delivered by NETWORK COMPUTING DEVICES
AUSTRALIA PTY. LTD, a company organized under the laws of Australia, NETWORK
COMPUTING DEVICES (BENELUX) B.V., a company organized under the laws of The
Netherlands, NETWORK COMPUTING DEVICES (CANADA), INC., a corporation
organized under the laws of Canada, NETWORK COMPUTING DEVICES (FRANCE)
S.A.R.L., a company organized under the laws of France, NETWORK COMPUTING
DEVICES, GMBH, a company organized under the laws of Germany, NCD GRAPHIC
SOFTWARE CORPORATION, an Oregon corporation, NETWORK COMPUTING DEVICES (FSC),
INC., a Guam corporation, NCD ACQUISITION CORP., an Indiana corporation,
NETWORK COMPUTING DEVICES (UK), LTD., a company organized under the laws of
England, NETWORK COMPUTING DEVICES SCANDINAVIA AB, a company organized under
the laws of Sweden, (individually and collectively, jointly and severally,
"Guarantor"), in favor of FOOTHILL CAPITAL CORPORATION, a California
corporation, ("Guarantied Party"), in light of the following:

WHEREAS, Borrower and Guarantied Party are, contemporaneously
herewith, entering into the Loan Agreement; and

WHEREAS, in order to induce Guarantied Party to extend
financial accommodations to Borrower pursuant to the Loan Agreement, and in
consideration thereof, and in consideration of any loans or other financial
accommodations heretofore or hereafter extended by Guarantied Party to
Borrower, whether pursuant to the Loan Agreement or otherwise, each Guarantor
has agreed to guaranty the Guarantied Obligations.

NOW, THEREFORE, in consideration of the foregoing, each
Guarantor hereby agrees, in favor of Guarantied Party, as follows:

1. Definitions and Construction.

(a) DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement. The following terms, as used in this Guaranty, shall have the
following meanings:

"BORROWER" shall mean Network Computing Devices, Inc., a
Delaware corporation.

"GUARANTIED OBLIGATIONS" shall mean, with respect to each
Guarantor: (a) the due and punctual payment of the principal of, and
interest (including, any and all interest which, but for the application
of the provisions of the Bankruptcy Code, would have accrued on such
amounts) on, any and all premium on, and any and all fees, costs, and
expenses incurred in connection with or on the Indebtedness owed by
Borrower to Guarantied Party pursuant to the terms of the Loan Documents;
and

(b) the due and punctual payment of all other present or future
Indebtedness owing by Borrower to Guarantied Party. The foregoing to the
contrary notwithstanding, the amount of the Guarantied Obligations with
respect to each Guarantor hereunder shall at all times not exceed the
maximum amount permissible under the laws of any jurisdiction that are
applicable to such Guarantor (the "Maximum Lawful Amount"), nor shall
this Guaranty be deemed to extend or impose any duty, obligation, or
liability on any Guarantor that would be illegal for such Guarantor to
undertake, accept, or assume. If, for any reason, the amount of the
Guarantied Obligations which, but for the preceding sentence, otherwise
would be due from any Guarantor hereunder would exceed the Maximum Lawful
Amount, each of the Guarantors and the Guarantied Party agree that, IPSO
FACTO, as of the date of this Guaranty, such Guarantor's obligations
under this Guaranty shall be limited to, and such Guarantor shall be
liable only for, the payment of the Maximum Lawful Amount applicable to
such Guarantor. The limitation set forth in the immediately preceding
two sentences shall inure to the benefit of each Guarantor, and to each
Guarantor's officers, directors, and shareholders, as applicable.

"GUARANTIED PARTY" shall have the meaning set forth in the
preamble to this Guaranty.

"GUARANTOR" shall have the meaning set forth in the
preamble to this Guaranty.

"GUARANTY" shall have the meaning set forth in the preamble
to this Guaranty.

"INDEBTEDNESS" shall mean any and all obligations,
indebtedness, or liabilities of any kind or character owed by Borrower to
Guarantied Party and arising directly or indirectly out of or in
connection with the Loan Agreement or the other Loan Documents, including
all such obligations, indebtedness, or liabilities, whether for
principal, interest (including any and all interest which, but for the
application of the provisions of the Bankruptcy Code, would have accrued
on such amounts), premium, reimbursement obligations, fees, costs,
expenses (including attorneys fees), or indemnity obligations, whether
heretofore, now, or hereafter made, incurred, or created, whether
voluntarily or involuntarily made, incurred, or created, whether secured
or unsecured (and if secured, regardless of the nature or extent of the
security), whether absolute or contingent, liquidated or unliquidated, or
determined or indeterminate, whether Borrower is liable individually or
jointly with others, and whether recovery is or hereafter becomes barred
by any statute of limitations or otherwise becomes unenforceable for any
reason whatsoever, including any act or failure to act by Guarantied
Party.

"LOAN AGREEMENT" shall mean that certain Loan and Security
Agreement, dated as of even date herewith, entered into between Borrower
and Guarantied Party.

(b) CONSTRUCTION. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, the terms
"include" and "including" are not limiting, and the term "or" has the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms refer to this Guaranty as a whole
and not to any particular provision of this Guaranty. Any reference in this
Guaranty to any of the following documents includes any and all alterations,
amendments, restatements, extensions, modifications, renewals, or supplements
thereto or thereof, as applicable: the Loan Agreement; this Guaranty; and the
other Loan Documents. Neither this Guaranty nor any uncertainty or ambiguity
herein shall be construed or resolved against Guarantied Party or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Guaranty has been reviewed by Guarantor, Guarantied Party, and their respective
counsel, and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of Guarantied Party and Guarantor.

2. GUARANTIED OBLIGATIONS. Each Guarantor hereby irrevocably and
unconditionally guaranties to Guarantied Party, as and for its own debt,
until final and indefeasible payment thereof has been made, (a) the payment
of the Guarantied Obligations, in each case when and as the same shall become
due and payable, whether at maturity, pursuant to a mandatory prepayment
requirement, by acceleration, or otherwise; it being the intent of each
Guarantor that the guaranty set forth herein shall be a guaranty of payment
and not a guaranty of collection; and (b) the punctual and faithful
performance, keeping, observance, and fulfillment by Borrower of all of the
agreements, conditions, covenants, and obligations of Borrower contained in
the Loan Agreement, and under each of the other Loan Documents.

3. CONTINUING GUARANTY. This Guaranty includes Guarantied
Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Guarantied
Obligations, changing the interest rate, payment terms, or other terms and
conditions thereof, or creating new or additional Guarantied Obligations
after prior Guarantied Obligations have been satisfied in whole or in part.
To the maximum extent permitted by law, Guarantor hereby waives any right to
revoke this Guaranty as to future Indebtedness. If such a revocation is
effective notwithstanding the foregoing waiver, Guarantor acknowledges and
agrees that (a) no such revocation shall be effective until written notice
thereof has been received by Guarantied Party, (b) no such revocation shall
apply to any Guarantied Obligations in existence on such date (including any
subsequent continuation, extension, or renewal thereof, or change in the
interest rate, payment terms, or other terms and conditions thereof), (c) no
such revocation shall apply to any Guarantied Obligations made or created
after such date to the extent made or created pursuant to a legally binding
commitment of Guarantied Party in existence on the date of such revocation,
(d) no payment by Guarantor, Borrower, or from any other source, prior to the
date of such revocation shall reduce the maximum obligation of Guarantor
hereunder, and (e) any payment by Borrower or from any source other than
Guarantor subsequent to the date of such revocation shall first be applied to
that portion of the Guarantied Obligations as to

which the revocation is effective and which are not, therefore, guarantied
hereunder, and to the extent so applied shall not reduce the maximum
obligation of Guarantor hereunder.

4. PERFORMANCE UNDER THIS GUARANTY. In the event that Borrower
fails to make any payment of any Guarantied Obligations, on or before the due
date thereof, or if Borrower shall fail to perform, keep, observe, or fulfill
any other obligation referred to in CLAUSE (B) OF SECTION 2 hereof in the
manner provided in the Loan Agreement or the other Loan Documents, as
applicable, Guarantor immediately shall cause such payment to be made or each
of such obligations to be performed, kept, observed, or fulfilled.

5. PRIMARY OBLIGATIONS. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions. Guarantor agrees that it is directly, jointly
and severally with any other guarantor of the Guarantied Obligations, liable
to Guarantied Party, that the obligations of Guarantor hereunder are
independent of the obligations of Borrower or any other guarantor, and that a
separate action may be brought against Guarantor, whether such action is
brought against Borrower or any other guarantor or whether Borrower or any
other guarantor is joined in such action. Guarantor agrees that its
liability hereunder shall be immediate and shall not be contingent upon the
exercise or enforcement by Guarantied Party of whatever remedies it may have
against Borrower or any other guarantor, or the enforcement of any lien or
realization upon any security Guarantied Party may at any time possess.
Guarantor agrees that any release which may be given by Guarantied Party to
Borrower or any other guarantor shall not release Guarantor. Guarantor
consents and agrees that Guarantied Party shall be under no obligation to
marshal any property or assets of Borrower or any other guarantor in favor of
Guarantor, or against or in payment of any or all of the Guarantied
Obligations.

6. WAIVERS.

(a) To the fullest extent permitted by applicable law,
Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any
loans or other financial accommodations made or extended under the Loan
Agreement, or the creation or existence of any Guarantied Obligations; (iii)
notice of the amount of the Guarantied Obligations, subject, however, to
Guarantor's right to make inquiry of Guarantied Party to ascertain the amount
of the Guarantied Obligations at any reasonable time; (iv) notice of any
adverse change in the financial condition of Borrower or of any other fact
that might increase Guarantor's risk hereunder; (v) notice of presentment for
payment, demand, protest, and notice thereof as to any instrument among the
Loan Documents; (vi) notice of any unmatured Event of Default or Event of
Default under the Loan Agreement; and (vii) all other notices (except if such
notice is specifically required to be given to Guarantor under this Guaranty
or any other Loan Documents to which Guarantor is a party) and demands to
which Guarantor might otherwise be entitled.

(b) To the fullest extent permitted by applicable law,
Guarantor hereby waives the right by statute or otherwise to require
Guarantied Party to institute suit against Borrower or to exhaust any rights
and remedies which Guarantied Party has or may have against Borrower. In
this regard, Guarantor agrees that it is bound to the payment of each and all
Guarantied Obligations, whether now existing or hereafter arising, as fully
as if such Guarantied Obligations were directly owing to Guarantied Party by
Guarantor. Guarantor further waives any defense arising by reason of any
disability or other defense (other than the defense that the Guarantied
Obligations shall have been fully and finally performed and indefeasibly
paid) of Borrower or by reason of the cessation from any cause whatsoever of
the liability of Borrower in respect thereof.

(c) To the fullest extent permitted by applicable law,
Guarantor hereby waives: (i) any rights to assert against Guarantied Party
any defense (legal or equitable), set-off, counterclaim, or claim which
Guarantor may now or at any time hereafter have against Borrower or any other
party liable to Guarantied Party; (ii) any defense, set-off, counterclaim, or
claim, of any kind or nature, arising directly or indirectly from the present
or future lack of perfection, sufficiency, validity, or enforceability of
Guarantied Obligations or any security therefor; (iii) any defense arising by
reason of any claim or defense based upon an election of remedies by
Guarantied Party including any defense based upon an election of remedies by
Guarantied Party under the provisions of Sections 580d and 726 of the
California Code of Civil Procedure, or any similar law of California or any
other jurisdiction; (iv) the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable
to the Guarantied Obligations shall similarly operate to defer or delay the
operation of such statute of limitations applicable to Guarantor's liability
hereunder.

(d) Until such time as all of the Guarantied Obligations
have been fully, finally, and indefeasibly paid in full in cash: (i)
Guarantor hereby waives and postpones any right of subrogation Guarantor has
or may have as against Borrower with respect to the Guarantied Obligations;
(ii) in addition, Guarantor hereby waives and postpones any right to proceed
against Borrower or any other Person, now or hereafter, for contribution,
indemnity, reimbursement, or any other suretyship rights and claims
(irrespective of whether direct or indirect, liquidated or contingent), with
respect to the Guarantied Obligations; and (iii) in addition, Guarantor also
hereby waives and postpones any right to proceed or to seek recourse against
or with respect to any property or asset of Borrower. Guarantor hereby
agrees that, in light of the waivers contained in this Section, Guarantor
shall not be deemed to be a "creditor" (as that term is defined in the
Bankruptcy Code or otherwise) of Borrower, whether for purposes of the
application of Sections 547 or 550 of the Bankruptcy Code or otherwise.

(e) If any of the Guarantied Obligations at any time are
secured by a mortgage or deed of trust upon real property, Guarantied Party
may elect, in its sole discretion, upon a default with respect to the
Guarantied Obligations, to foreclose such mortgage or deed of trust
judicially or nonjudicially in any manner permitted by law, before or after
enforcing this Guaranty, without diminishing or affecting the liability of
Guarantor

hereunder. Guarantor understands that (a) by virtue of the operation of
California's antideficiency law applicable to nonjudicial foreclosures or any
similar laws of any other jurisdiction, an election by Guarantied Party
nonjudicially to foreclose such a mortgage or deed of trust probably would
have the effect of impairing or destroying rights of subrogation,
reimbursement, contribution, or indemnity of Guarantor against Borrower or
other guarantors or sureties, and (b) absent the waiver given by Guarantor
herein, such an election would estop Guarantied Party from enforcing this
Guaranty against Guarantor. Understanding the foregoing, and understanding
that Guarantor is hereby relinquishing a defense to the enforceability of
this Guaranty, Guarantor hereby waives any right to assert against Guarantied
Party any defense to the enforcement of this Guaranty, whether denominated
"estoppel" or otherwise, based on or arising from an election by Guarantied
Party nonjudicially to foreclose any such mortgage or deed of trust.
Guarantor understands that the effect of the foregoing waiver may be that
Guarantor may have liability hereunder for amounts with respect to which
Guarantor may be left without rights of subrogation, reimbursement,
contribution, or indemnity against Borrower or other guarantors or sureties.
Guarantor also agrees that the "fair market value" provisions of Section 580a
of the California Code of Civil Procedure or any similar laws of any other
jurisdiction shall have no applicability with respect to the determination of
Guarantor's liability under this Guaranty.

(f) Without limiting the generality of any other waiver or
other provision set forth in this Guaranty, Guarantor waives all rights and
defenses that Guarantor may have because Borrower's debt is secured by real
property. This means, among other things:

(i) Guarantied Party may collect from Guarantor
without first foreclosing on any real or personal property collateral pledged
by Borrower.

(ii) If Guarantied Party forecloses on any real
property collateral pledged by the Borrower:

(1) the amount of the debt may be reduced only by
the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price.

(2) Guarantied Party may collect from Guarantor
even if Guarantied Party, by foreclosing on the real property
collateral, has destroyed any right Guarantor my have to collect
from Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have because Borrower's debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure or any similar laws of any other jurisdiction.

(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION
SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH
WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR

INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE Sections 2799,
2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847, 2848,
2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE Sections 580a, 580b,
580c, 580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE
OR ANY SIMILAR LAWS OF ANY OTHER JURISDICTION.

(h) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND
DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY GUARANTIED PARTY, EVEN
THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH
RESPECT TO SECURITY FOR A GUARANTIED OBLIGATION, HAS DESTROYED GUARANTOR'S
RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE BORROWER BY THE OPERATION
OF SECTION 580d OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR ANY SIMILAR LAWS
OF ANY OTHER JURISDICTION OR OTHERWISE.

7. RELEASES. Guarantor consents and agrees that, without notice
to or by Guarantor and without affecting or impairing the obligations of
Guarantor hereunder, Guarantied Party may, by action or inaction, compromise
or settle, extend the period of duration or the time for the payment, or
discharge the performance of, or may refuse to, or otherwise not enforce, or
may, by action or inaction, release all or any one or more parties to, any
one or more of the terms and provisions of the Loan Agreement or any of the
other Loan Documents or may grant other indulgences to Borrower in respect
thereof, or may amend or modify in any manner and at any time (or from time
to time) any one or more of the Loan Agreement or any of the other Loan
Documents, or may, by action or inaction, release or substitute any other
guarantor, if any, of the Guarantied Obligations, or may enforce, exchange,
release, or waive, by action or inaction, any security for the Guarantied
Obligations or any other guaranty of the Guarantied Obligations, or any
portion thereof.

8. NO ELECTION. Guarantied Party shall have the right to seek
recourse against Guarantor to the fullest extent provided for herein and no
election by Guarantied Party to proceed in one form of action or proceeding,
or against any party, or on any obligation, shall constitute a waiver of
Guarantied Party's right to proceed in any other form of action or proceeding
or against other parties unless Guarantied Party has expressly waived such
right in writing. Specifically, but without limiting the generality of the
foregoing, no action or proceeding by Guarantied Party under any document or
instrument evidencing the Guarantied Obligations shall serve to diminish the
liability of Guarantor under this Guaranty except to the extent that
Guarantied Party finally and unconditionally shall have realized indefeasible
payment by such action or proceeding.

9. INDEFEASIBLE PAYMENT. The Guarantied Obligations shall not be
considered indefeasibly paid for purposes of this Guaranty unless and until all
payments to Guarantied Party are no longer subject to any right on the part of
any person whomsoever, including Borrower, Borrower as a debtor in possession,
or any trustee (whether appointed under the

Bankruptcy Code or otherwise) of Borrower's assets to invalidate or set aside
such payments or to seek to recoup the amount of such payments or any portion
thereof, or to declare same to be fraudulent or preferential. In the event
that, for any reason, all or any portion of such payments to Guarantied Party
is set aside or restored, whether voluntarily or involuntarily, after the
making thereof, the obligation or part thereof intended to be satisfied
thereby shall be revived and continued in full force and effect as if said
payment or payments had not been made and Guarantor shall be liable for the
full amount Guarantied Party is required to repay plus any and all costs and
expenses (including attorneys fees) paid by Guarantied Party in connection
therewith.

10. FINANCIAL CONDITION OF BORROWER. Guarantor represents and
warrants to Guarantied Party that it is currently informed of the financial
condition of Borrower and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Guarantied
Obligations. Guarantor further represents and warrants to Guarantied Party
that it has read and understands the terms and conditions of the Loan
Agreement and the other Loan Documents. Guarantor hereby covenants that it
will continue to keep itself informed of Borrower's financial condition, the
financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Guarantied Obligations.

11. SUBORDINATION. Guarantor hereby agrees that any and all
present and future indebtedness of Borrower owing to Guarantor is postponed
in favor of and subordinated to payment, in full, in cash, of the Guarantied
Obligations. In this regard, except to the extent expressly permitted by the
Loan Agreement, no payment of any kind whatsoever shall be made with respect
to such indebtedness until the Guarantied Obligations have been indefeasibly
paid in full.

12. PAYMENTS; APPLICATION. All payments to be made hereunder by
Guarantor shall be made in lawful money of the United States of America at
the time of payment, shall be made in immediately available funds, and shall
be made without deduction (whether for taxes or otherwise) or offset. All
payments made by Guarantor hereunder shall be applied as follows: first, to
all reasonable costs and expenses (including attorneys fees) incurred by
Guarantied Party in enforcing this Guaranty or in collecting the Guarantied
Obligations; second, to all accrued and unpaid interest, premium, if any, and
fees owing to Guarantied Party constituting Guarantied Obligations; and
third, to the balance of the Guarantied Obligations.

13. ATTORNEYS FEES AND COSTS. Guarantor agrees to pay, on demand,
all reasonable attorneys fees and all other reasonable costs and expenses
which may be incurred by Guarantied Party in the enforcement of this Guaranty
or in any way arising out of, or consequential to the protection, assertion,
or enforcement of the Guarantied Obligations (or any security therefor),
irrespective of whether suit is brought.

14. NOTICES. Unless otherwise specifically provided in this Guaranty,
any notice or other communication relating to this Guaranty or any other
agreement entered into in

connection herewith shall be in writing and shall be personally delivered or
sent by registered or certified mail, postage prepaid, return receipt
requested, or by prepaid telex, TWX, telefacsimile, or telegram (with
messenger delivery specified) to Guarantor or to Guarantied Party, as the
case may be, at its addresses set forth below:

If to any Guarantor: c/o Network Computing Devices, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

If to Guarantied Party: Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division
Manager
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇

The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given
to the other. All notices or demands sent in accordance with this SECTION
14, other than notices by Guarantied Party in connection with Sections 9504
or 9505 of the Code, shall be deemed received on the earlier of the date of
actual receipt or three (3) calendar days after the deposit thereof in the
mail. Guarantor acknowledges and agrees that notices sent by Guarantied Party
in connection with Sections 9504 or 9505 of the Code shall be deemed sent
when deposited in the mail or transmitted by telefacsimile or other similar
method set forth above.

15. CUMULATIVE REMEDIES. No remedy under this Guaranty, under the
Loan Agreement, or any other Loan Document is intended to be exclusive of any
other remedy, but each and every remedy shall be cumulative and in addition
to any and every other remedy given under this Guaranty, under the Loan
Agreement, or any other Loan Document, and those provided by law. No delay
or omission by Guarantied Party to exercise any right

under this Guaranty shall impair any such right nor be construed to be a
waiver thereof. No failure on the part of Guarantied Party to exercise, and
no delay in exercising, any right under this Guaranty shall operate as a
waiver thereof; nor shall any single or partial exercise of any right under
this Guaranty preclude any other or further exercise thereof or the exercise
of any other right.

16. SEVERABILITY OF PROVISIONS. Any provision of this Guaranty
which is prohibited or unenforceable under applicable law shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.

17. ENTIRE AGREEMENT; AMENDMENTS. This Guaranty constitutes the
entire agreement between Guarantor and Guarantied Party pertaining to the
subject matter contained herein. This Guaranty may not be altered, amended,
or modified, nor may any provision hereof be waived or noncompliance
therewith consented to, except by means of a writing executed by Guarantor
and Guarantied Party. Any such alteration, amendment, modification, waiver,
or consent shall be effective only to the extent specified therein and for
the specific purpose for which given. No course of dealing and no delay or
waiver of any right or default under this Guaranty shall be deemed a waiver
of any other, similar or dissimilar, right or default or otherwise prejudice
the rights and remedies hereunder.

18. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
Guarantor and its successors and assigns and shall inure to the benefit of
the successors and assigns of Guarantied Party; PROVIDED, HOWEVER, no
Guarantor shall assign this Guaranty or delegate any of its duties hereunder
without Guarantied Party's prior written consent and any unconsented to
assignment shall be absolutely void. In the event of any assignment or other
transfer of rights by Guarantied Party, the rights and benefits herein
conferred upon Guarantied Party shall automatically extend to and be vested
in such assignee or other transferee.

19. NO THIRD PARTY BENEFICIARY. This Guaranty is solely for the
benefit of Guarantied Party and its successors and assigns and may not be
relied on by any other Person.

20. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, OR AT
THE SOLE

OPTION OF GUARANTIED PARTY, IN ANY OTHER COURT IN WHICH GUARANTIED PARTY
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH GUARANTOR AND GUARANTIED
PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 20.

GUARANTOR AND GUARANTIED PARTY HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. GUARANTOR AND GUARANTIED PARTY REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

21. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to
be an original, and all of which, when taken together, shall constitute but
one and the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Agreement.

22. AGREEMENT TO BE BOUND BY LOAN AGREEMENT. By its execution and
delivery of this Guaranty or any joinder hereto, any Guarantor that is not a
party to the Loan Agreement or any joinder thereto nevertheless shall be
deemed to have agreed to be bound by each provision in the Loan Agreement
relating to the Guarantors or Obligors or their assets with the same force
and effect as though such Guarantor were party to the Loan Agreement or any
joinder thereto, MUTATIS MUTANDIS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty as of the date first written above.

NETWORK COMPUTING DEVICES
AUSTRALIA PTY LTD., a company organized
under the laws of Australia

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Secretary
-------------------------------------

NETWORK COMPUTING DEVICES (BENELUX) B.V., a
company organized under the laws of The
Netherlands

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Managing Director
-------------------------------------

NETWORK COMPUTING DEVICES (CANADA), INC., a
corporation organized under the laws of
Canada

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Chief Financial Officer
-------------------------------------

NETWORK COMPUTING DEVICES (FRANCE) S.A.R.L.,
a company organized under the laws of France

By:
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Sole General Manager
-------------------------------------

NETWORK COMPUTING DEVICES GMBH, a company
organized under the laws of Germany

By:
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Managing Director
-------------------------------------

S-1

NCD GRAPHIC SOFTWARE CORPORATION, a
California corporation

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Chief Financial Officer
-------------------------------------

NETWORK COMPUTING DEVICES (FSC), INC., a Guam
corporation

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Chief Financial Officer
-------------------------------------

NCD ACQUISITION CORP., an Indiana corporation

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Chief Financial Officer
-------------------------------------

NETWORK COMPUTING DEVICES (UK), LIMITED., a
company organized under the laws of England

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Director
-------------------------------------

NETWORK COMPUTING DEVICES SCANDINAVIA AB, a
company organized under the laws of Sweden

By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: Director
-------------------------------------

S-2

GUARANTOR SECURITY AGREEMENT

This SECURITY AGREEMENT (this "Agreement"), is entered into as of
March 30, 2000, among FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), with a place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and NETWORK
COMPUTING DEVICES AUSTRALIA PTY. LTD, a company organized under the laws of
Australia, NETWORK COMPUTING DEVICES (BENELUX) B.V., a company organized
under the laws of [], NETWORK COMPUTING DEVICES (CANADA), INC., a corporation
organized under the laws of Canada, NETWORK COMPUTING DEVICES (FRANCE)
S.A.R.L., a company organized under the laws of France, NETWORK COMPUTING
DEVICES, GMBH, a company organized under the laws of Germany, NCD GRAPHIC
SOFTWARE CORPORATION, an Oregon corporation, NETWORK COMPUTING DEVICES (FSC),
INC., a Guam corporation, NCD ACQUISITION CORP., an Indiana corporation,
NETWORK COMPUTING DEVICES (UK), INC., a company organized under the laws of
England, NETWORK COMPUTING DEVICES SCANDINAVIA AB, a company organized under
the laws of Sweden, (each, a "Guarantor:" together, individually and
collectively, jointly and severally, the "Guarantors").

WHEREAS, Borrower and Foothill are, contemporaneously herewith,
entering into the Loan Agreement;

WHEREAS, Borrower owns one hundred percent (100%) of the issued and
outstanding stock of each Guarantor;

WHEREAS, each Guarantor has executed that certain General
Continuing Guaranty, of even date herewith, in favor of Foothill (the
"Guaranty"), respecting certain obligations of Borrower owing to Foothill
under the Loan Agreement;

WHEREAS, each Guarantor desires to collateralize its obligations
under the Guaranty by granting to Foothill a security interest in certain of
its assets; and

WHEREAS, each Guarantor will benefit by virtue of the credit
extended by Foothill to Borrower.

NOW THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and each intending to be bound hereby, Foothill and each Guarantor agrees as
follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 DEFINITIONS. All capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement. As used in this Agreement, the following terms shall have the
following definitions:

"ACCOUNTS" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to any
Guarantor arising out of the sale, license, or lease of goods or General
Intangibles or the rendition of services by any such Guarantor, irrespective
of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.

"AGREEMENT" means this Security Agreement and any extensions,
riders, supplements, notes, amendments, or modifications to or in connection
with this Security Agreement.

"CODE" means the California Uniform Commercial Code.

"BORROWER" means Network Computing Devices, Inc., a Delaware
corporation.

"COLLATERAL" means each of the following: the Accounts; Guarantor's
Books; the Equipment; the General Intangibles; the Inventory; the Investment
Property; the Negotiable Collateral; any money, or other assets of any
Guarantor which now or hereafter come into the possession, custody, or
control of Foothill; and the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, and any and all Accounts, Guarantor's Books,
Equipment, General Intangibles, Inventory, Investment Property, Negotiable
Collateral, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.

"EQUIPMENT" means all of any Guarantor's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts,
dies, jigs, goods (other than consumer goods, farm products, or Inventory),
wherever located, and any interest of any Guarantor in any of the foregoing,
and all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing, wherever located.

"EVENT OF DEFAULT" has the meaning ascribed to it in SECTION 6.

"GENERAL INTANGIBLES" means all of any Guarantor's present and
future general intangibles and other personal property (including contract
rights, rights arising under common law, statues, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, source code, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment and other rights under any royalty or licensing agreements,
infringements, claims,

computer programs, computer discs, computer tapes, literature, reports,
catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax
refund claims), other than goods, Accounts, Investment Property, and
Negotiable Collateral.

"GUARANTIED OBLIGATIONS" shall have the meaning ascribed to it in
the Guaranty.

"GUARANTOR'S BOOKS" means all of any Guarantor's books and records,
including: ledgers; records indicating, summarizing, or evidencing any
Guarantor's properties or assets (including the Collateral) or liabilities;
all information relating to any Guarantor's business operations or financial
condition; and all computer programs, disc or tape files, printouts, runs, or
other computer prepared information in respect of such books and records.

"GUARANTOR" has the meaning ascribed thereto in the preamble to
this Agreement.

"GUARANTY" means the General Continuing Guaranty of each of the
Guarantors, granted in favor of Foothill of even date herewith.

"INVENTORY" means all present and future inventory in which any
Guarantor has any interest, including goods held for sale, license, or lease
or to be furnished under a contract of service and all of any Guarantor's
present and future raw materials, work in process, finished goods, and
packing and shipping materials, wherever located, and any documents of title
representing any of the above.

"INVESTMENT PROPERTY" means all of any Guarantor's present and
future "investment property" as that term is defined in Section 9115 of the
Code.

"LOAN AGREEMENT" means that certain Loan and Security Agreement,
dated as of even date herewith (as amended, restated, modified, renewed or
extended from time to time), between Borrower and Foothill.

"NEGOTIABLE COLLATERAL" means all of any Guarantor's present and
future letters of credit, notes, drafts, instruments, documents, personal
property leases (wherein any Guarantor is the lessor), chattel paper, and any
Guarantor's Books relating to any of the foregoing.

"SECURED OBLIGATIONS" shall mean all liabilities, obligations, or
undertakings owing by each of the Guarantors to Foothill of any kind or
description arising out or outstanding under, advanced or issued pursuant to,
or evidenced by the Guaranty, and any other Loan Document heretofore,
herewith, or hereinafter executed by such Guarantor, or this Agreement,
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or not due, voluntary or involuntary, whether now
existing or hereafter arising, and including all interest (including interest
that accrues after the filing of a case under the Bankruptcy Code) and any an
all costs, fees (including attorney's fees), and

expenses which such Guarantor is required to pay pursuant to any of the
foregoing, by law or otherwise.

1.2 CODE. Any terms used in this Agreement which are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein.

1.3 CONSTRUCTION. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Section, subsection, clause, schedule, and exhibit references are
to this Agreement unless otherwise specified. Any reference in this
Agreement or in any of the other Loan Documents to this Agreement or any of
the other Loan Documents shall include all alterations, amendments,
restatements, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable. In the
event of a direct conflict between the terms and provisions of this Agreement
and the Loan Agreement, it is the intention of the parties hereto that both
such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of the Loan Agreement shall control and govern; provided, however,
that the inclusion herein of additional obligations on the part of each of
the Guarantors and supplemental rights and remedies in favor of Foothill, in
each case in respect of the Collateral, shall not be deemed a conflict with
the Loan Agreement.

1.4 SCHEDULES AND EXHIBITS. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated herein by
reference.

2. CREATION OF SECURITY INTEREST.

2.1 GRANT OF SECURITY INTEREST. Each Guarantor hereby
grants to Foothill a continuing security interest in all of its right, title,
and interest in and to all currently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment and performance of the
Secured Obligations. Foothill's security interests in the Collateral shall
attach to all Collateral without further act on the part of Foothill or any
Guarantor. Anything contained in this Agreement or any other Loan Document to
the contrary notwithstanding, except for [sale of Inventory to buyers in the
ordinary course of business], none of the Guarantors has authority, express
or implied, to dispose of any item or portion of the Collateral.

2.2 NEGOTIABLE COLLATERAL. In the event that any
Collateral, including proceeds, is evidenced by or consists of Negotiable
Collateral, each Guarantor, immediately upon the request of Foothill, shall
endorse and deliver physical possession of such Negotiable Collateral to
Foothill.

2.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, NEGOTIABLE
COLLATERAL. At any time, Foothill or Foothill's designee may (a) notify
customers or Account Debtors of each Guarantor that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to Foothill or that
Foothill has a security interest therein, and (b) collect the Accounts,
General Intangibles, and Negotiable Collateral directly and charge the
collection costs and expenses to the Loan Account. Each Guarantor agrees
that it will hold in trust for Foothill, as Foothill's trustee, any
Collections that it receives and immediately will deliver said Collections to
Foothill in their original form as received by such Guarantor.

2.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Each
Guarantor shall execute and deliver to Foothill, prior to or concurrently
with such Guarantor's execution and delivery of this Agreement and at any
time thereafter at the request of Foothill, all financing statements,
continuation financing statements, fixture filings, security agreements,
chattel mortgages, pledges, mortgages, deeds of trust, assignments,
endorsements of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority, and all other
documents that Foothill may reasonably request, in form satisfactory to
Foothill, to perfect and continue perfected Foothill's security interests in
the Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents.

2.5 POWER OF ATTORNEY. Each Guarantor hereby irrevocably
makes, constitutes, and appoints Foothill (and any of Foothill's officers,
employees, or agents designated by Foothill) as such Guarantor's true and
lawful attorney, with power to (a) if such Guarantor refuses to, or fails
timely to execute and deliver any of the documents described in SECTION 2.4,
sign the name of such Guarantor on any of the documents described in SECTION
2.4, (b) at any time that an Event of Default has occurred and is continuing
or Foothill deems itself insecure (in accordance with Section 1208 of the
Code), sign such Guarantor's name on any invoice or ▇▇▇▇ of lading relating
to any Account, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to Account Debtors, (c) send
requests for verification of Accounts, (d) endorse such Guarantor's name on
any Collection item that may come into Foothill's possession, (e) at any time
that an Event of Default has occurred and is continuing or Foothill deems
itself insecure (in accordance with Section 1208 of the Code), notify the
post office authorities to change the address for delivery of such
Guarantor's mail to an address designated by Foothill, to receive and open
all mail addressed to such Guarantor, and to retain all mail relating to the
Collateral and forward all other mail to such Guarantor, (f) at any time that
an Event of Default has occurred and is continuing or Foothill deems itself
insecure (in accordance with Section 1208 of the Code), make, settle, and
adjust all claims under such Guarantor's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and
(g) at any time that an Event of Default has occurred and is continuing or
Foothill deems itself insecure (in accordance with Section 1208 of the Code),
settle and adjust disputes and claims respecting the Accounts directly with
Account Debtors, for amounts and upon terms that Foothill determines to be
reasonable, and Foothill may cause to be executed and delivered any documents
and releases that Foothill determines to be necessary. The appointment of
Foothill as each Guarantor's attorney, and each and every

one of Foothill's rights and powers, being coupled with an interest, is
irrevocable until all of the Secured Obligations have been fully and finally
repaid and performed and Foothill's obligation to extend credit under the
Loan Agreement is terminated.

2.6 RIGHT TO INSPECT. Foothill (through any of its
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect each Guarantor's Books and to check, test, and appraise
the Collateral in order to verify each Guarantor's financial condition or
the amount, quality, value, condition of, or any other matter relating to,
the Collateral.

3. REPRESENTATIONS AND WARRANTIES.

Each Guarantor represents and warrants as follows:

3.1 NO ENCUMBRANCES. Such Guarantor has good and
indefeasible title to the Collateral of such Guarantor, free and clear of
Liens except for Permitted Liens.

3.2 PLACE OF BUSINESS/CHIEF EXECUTIVE OFFICE; FEIN. The
chief executive office of such Guarantor is at the address set forth opposite
such Guarantor's name on SCHEDULE 3.2, and all other locations at which any
such Guarantor has a place of business are set forth on SCHEDULE 3.2. Such
Guarantor's FEIN (or foreign equivalent, if any) is set forth on SCHEDULE 3.2.

3.3 INVENTORY. All of such Guarantor's Inventory is now and
at all times hereafter shall be of good and serviceable quality, free from
defects.

3.4 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment of such Guarantor are not stored with a bailee, warehouseman, or
similar party (without Foothill's prior written consent) and are located only
at the locations identified on Schedule 6.12 of the Loan Agreement or
otherwise permitted by Section 6.12 of the Loan Agreement.

3.5 INVENTORY RECORDS. Such Guarantor now keeps, and
hereafter at all times shall keep, correct and accurate records itemizing and
describing the kind, type, quality, and quantity of the Inventory, and such
Guarantor's cost therefor.

3.6 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
jurisdiction or country of organization of such Guarantor is set forth
opposite such Guarantor's name on Schedule 3.6 and such Guarantor shall at
all times hereafter be duly organized and existing and in good standing under
the laws of such jurisdiction or and qualified and licensed to do business
in, and in good standing in, any jurisdiction where the failure to be so
licensed or qualified could reasonably be expected to have a material adverse
effect on the business, operations, condition (financial or otherwise),
finances, or prospects of such Guarantor or on the value of the Collateral.

3.7 DUE AUTHORIZATION; NO CONFLICT. The execution,
delivery, and performance of this Agreement, the Guaranty, and any other Loan
Document to which such Guarantor is a party are within such Guarantor's
corporate powers, have been duly authorized, and are not in conflict with
nor, constitute a breach of any provision contained in such Guarantor's
Articles or Certificate of Incorporation, By-laws, or any partnership or
trust agreement pertaining to such Guarantor, nor will they constitute an
event of default under any material agreement to which such Guarantor is now
or may hereafter become a party.

3.8 LITIGATION. There are no actions or proceedings
pending by or against such Guarantor before any court or administrative
agency and such Guarantor does not have knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving such Guarantor, except for:
(a) ongoing collection matters in which such Guarantor is the plaintiff; (b)
matters disclosed on Schedule 5.10 of the Loan Agreement; and (c) matters
arising after the date hereof that, if decided adversely to such Guarantor,
would not materially impair the prospect of repayment of the Guarantied
Obligations or materially impair the value or priority of Foothill's security
interests in the Collateral.

3.9 SOLVENCY. Such Guarantor is Solvent. No transfer of
property is being made by such Guarantor and no obligation is being incurred
by such Guarantor in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of such Guarantor.

3.10 RELIANCE BY FOOTHILL; CUMULATIVE. The warranties,
representations, and agreements set forth herein shall be conclusively
presumed to have been relied upon by Foothill and shall be cumulative and in
addition to any and all other warranties, representations, and agreements
which such Guarantor shall now or hereinafter give, or cause to be given, to
Foothill.

4. AFFIRMATIVE COVENANTS.

Each Guarantor covenants and agrees that, until payment in
full of the Secured Obligations, and unless Foothill shall otherwise consent
in writing, such Guarantor shall do all of the following:

4.1 SCHEDULES OF ACCOUNTS.

With such regularity as Foothill shall require, provide Foothill
with schedules describing all of such Guarantor's Accounts. Foothill's
failure to request such schedules or such Guarantor's failure to execute and
deliver such schedules shall not affect or limit Foothill's security
interests or other rights in and to the Accounts.

4.2 INVENTORY REPORTING. From time to time hereafter, but
not less frequently than monthly, execute and deliver to Foothill a report
regarding such Guarantor's

Inventory specifying such Guarantor's cost therefor and further specifying
such other information as Foothill may reasonably request.

4.3 TITLE TO EQUIPMENT. Upon Foothill's request,
immediately deliver to Foothill, properly endorsed, any and all evidences of
ownership of, certificates of title, or applications for title to any items
of such Guarantor's Equipment.

4.4 MAINTENANCE OF EQUIPMENT. Maintain such Guarantor's
Equipment in good operating condition and repair (ordinary wear and tear
excepted), and make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Such Guarantor shall not permit any item of such Guarantor's Equipment to
become a fixture to real estate or an accession to other property, and such
Equipment is now and shall at all times remain personal property.

4.5 TAXES. All assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against such Guarantor or any of its property have been paid, and shall
hereafter be paid in full, before delinquency or before the expiration of any
extension period. Such Guarantor shall make due and timely payment or deposit
of all taxes, assessments, or contributions required of it by law, and will
execute and deliver to Foothill, on demand, appropriate certificates
attesting to the payment or deposit thereof. Such Guarantor will make timely
payment or deposit of all tax payments and withholding taxes required of it
by applicable laws, and will, upon request, furnish Foothill with proof
satisfactory to Foothill indicating that such Guarantor has made such
payments or deposits, other than assessments or taxes that are the subject of
a Permitted Protest.

4.6 INSURANCE. At its expense, keep such Guarantor's
Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as are
ordinarily insured against by other owners in similar businesses. Such
Guarantor also shall maintain business interruption, public liability,
product liability, and property damage insurance relating to its ownership
and use of the Collateral, as well as insurance against larceny,
embezzlement, and criminal misappropriation.

(b) All such policies of insurance shall be in such
form, with such companies, and in such amounts as may be reasonably
satisfactory to Foothill. All such policies of insurance (except those of
public liability and property damage) shall contain a 438BFU lender's loss
payable endorsement, or an equivalent endorsement in a form satisfactory to
Foothill, showing Foothill as a loss payee thereof as its interest may
appear, shall contain a waiver of warranties, and shall specify that the
insurer must give at least ten (10) days prior written notice to Foothill
before canceling its policy for any reason. Such Guarantor shall deliver to
Foothill certified copies of such policies of insurance and evidence of the
payment of all premiums therefor. All proceeds payable under any such policy
shall be payable to Foothill to be applied on account of the Guarantied
Obligations.

4.7 FOOTHILL EXPENSES. Such Guarantor shall immediately
and without demand reimburse Foothill for all sums expended by Foothill which
constitute Foothill Expenses and such Guarantor hereby authorizes and
approves all advances and payments by Foothill for items constituting
Foothill Expenses.

5. NEGATIVE COVENANTS.

Each Guarantor covenants and agrees that until payment in full of
the Guarantied Obligations, it will not do any of the following without
Foothill's prior written consent:

5.1 LIENS. Create, incur, assume, or permit to exist,
directly or indirectly, any lien on or with respect to any of its property or
assets, of any kind, whether now owned or hereafter acquired, or any income
or profits therefrom, except for Permitted Liens (including liens that are
replacements of Permitted Liens to the extent that the original indebtedness
is refinanced under Section 7.1(d) of the Loan Agreement and so long as the
replacement liens secure only those assets or property that secured the
original indebtedness).

5.2 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any
acquisition, merger, consolidation, reorganization, or recapitalization, or
reclassify its capital stock, or liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, assign, lease,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business, property, or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all of the properties, assets, stock, or other
evidence of beneficial ownership of any Person.

5.3 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS.
Enter into any transaction not in the ordinary and usual course of such
Guarantor's business, including the sale, lease, or other disposition of,
moving, relocation, or transfer, whether by sale or otherwise, of any of such
Guarantor's properties or assets.

5.4 CHANGE NAME. Change such Guarantor's name, FEIN,
business structure, or identity, or add any new fictitious name.

5.5 GUARANTEE. Guarantee or otherwise become in any way
liable with respect to the obligations of any third Person except by
endorsement of instruments or items of payment for deposit to the account of
such Guarantor or which are transmitted or turned over to Foothill and except
for the guarantee of the payment and performance of the Guarantied
Obligations.

5.6 NATURE OF BUSINESS; FISCAL YEAR. (a) Make any change
in the principal nature of such Guarantor's business, or (b) without the
prior written consent of Foothill, which consent shall not unreasonably be
withheld, change the date of its fiscal year.

5.7 TRANSACTIONS WITH AFFILIATES. Such Guarantor will not
directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of such

Guarantor except for transactions which are in the ordinary course of such
Guarantor's business, upon fair and reasonable terms and which are fully
disclosed to Foothill and, no less favorable to such Guarantor than would be
obtained in arm's length transaction with a non-Affiliate.

5.8 SUSPENSION. Suspend or go out of business.

5.9 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY
AND EQUIPMENT WITH BAILEES. Without thirty (30) days prior written
notification to Foothill, relocate its chief executive office to a new
location, unless, at the time of such written notification, such Guarantor
provides any financing statements or fixture filings necessary to perfect and
continue perfected Foothill's security interests and also provides to
Foothill a landlord's waiver in form and substance satisfactory to Foothill.
Such Guarantor's Inventory and Equipment shall not at any time now or
hereafter be stored with a bailee, warehouseman, or similar party without
Foothill's prior written consent.

6. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event
of default (each, an "Event of Default") under this Agreement:

6.1. The occurrence of an Event of Default (as defined in
the Loan Agreement);

6.2. If any Guarantor fails or neglects to perform, keep, or
observe, in any material respect, any term, provision, condition, covenant,
or agreement contained in this Agreement, in the Guaranty, or in any other
Loan Document to which such Guarantor is party or by which such Guarantor or
its assets are bound;

6.3. If there is a material impairment of the prospect of
repayment of any portion of the Guarantied Obligations owing to Foothill or a
material impairment of the value or priority of Foothill's security interests
in the Collateral;

6.4. If a notice of lien, levy, or assessment is filed of
record with respect to any of any Guarantor's properties or assets by the
United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or other governmental agency, or
if any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a lien, whether ▇▇▇▇▇▇ or otherwise, upon any of Guarantor's
properties or assets and the same is not paid on the payment date thereof;

6.5. If a judgment or other claim becomes a lien or
encumbrance upon any material portion of any Guarantor's properties or assets;

6.6. If there is a default in any material agreement to
which any Guarantor is a party with one or more third Persons resulting in a
right by such third Persons,

irrespective of whether exercised, to accelerate the maturity of such
Guarantor's obligations thereunder;

6.7. If any Guarantor makes any payment on account of
indebtedness that has been contractually subordinated in right of payment to
the payment of the Guarantied Obligations, except to the extent such payment
is permitted by the terms hereof and by the subordination provisions
applicable to such indebtedness;

6.8. If any misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to
Foothill by any Guarantor or any officer, employee, agent, or director of
Guarantor, or if any such warranty or representation is withdrawn.

7. FOOTHILL'S RIGHTS AND REMEDIES.

7.1 RIGHTS AND REMEDIES. Upon the occurrence, and during
the continuation, of an Event of Default Foothill may, at its election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by each Guarantor:

(a) Proceed directly and at once, without notice,
against each Guarantor to collect and recover the full amount or any portion
of the Guarantied Obligations, without first proceeding against Borrower, any
other Guarantor, or against any security or collateral for the Guarantied
Obligations.

(b) Without notice to any Guarantor and regardless
of the acceptance of any security or collateral for the payment hereof,
appropriate and apply toward the payment of the Guarantied Obligations (i)
any indebtedness due or to become due from Foothill to any Guarantor and (ii)
any moneys, credits or other property belonging to any Guarantor at any time
held by or coming into the possession of Foothill.

(c) May exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein and the Guaranty or
otherwise available to it, all the rights and remedies available to it at law
(including those of a secured party under the Code) or in equity.

(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Foothill considers
advisable, and in such cases, Foothill will credit Borrower's loan account
with only the net amounts received by Foothill in payment of such disputed
Accounts after deducting all Foothill Expenses incurred or expended in
connection therewith;

(e) Cause each Guarantor to hold all returned
Inventory in trust for Foothill, segregate all returned Inventory from all
other property of such Guarantor or in such Guarantor's possession and
conspicuously label said returned Inventory as the property of Foothill;

(f) Without notice or demand, make such payments
and do such acts as Foothill considers necessary or reasonable to protect its
security interest in the Collateral. Each Guarantor agrees to assemble the
Collateral if Foothill so requires, and to make the Collateral available to
Foothill as Foothill may designate. Each Guarantor authorizes Foothill to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase,
contest, or compromise any encumbrance, charge, or lien which in Foothill's
determination appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith. With respect to any of
any Guarantor's owned premises, such Guarantor hereby grants Foothill a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise
any of Foothill's rights or remedies provided herein, at law, in equity, or
otherwise;

(g) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the
manner provided for herein) the Collateral. Foothill is hereby granted a
license or other right to use, without charge, each Guarantor's labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of
advertising for sale and selling any Collateral, and each Guarantor's rights
under all licenses and all franchise agreements shall inure to Foothill's
benefit;

(h) Sell all or any part of the Collateral at
either a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including on any Guarantor's premises) as Foothill determines is
commercially reasonable. It is not necessary that the Collateral be present
at any such sale. Foothill shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Guarantor, which right or equity is
hereby waived or released to the extent permitted by law;

(i) By an instrument in writing, appoint a receiver
(which term shall include a receiver and manager) of all or any part of the
Collateral and may remove or replace such receiver from time to time or may
institute proceedings in any court of competent jurisdiction for the
appointment of such receiver;

(j) Require each Guarantor to establish a lockbox
or other restricted account satisfactory to Foothill for the collection of
such Guarantor's Accounts, General Intangibles, or Negotiable Collateral;

(k) Notify customers or Account Debtors of each
Guarantor that such Guarantor's Accounts, General Intangibles, or Negotiable
Collateral have been assigned to Foothill or that Foothill has a security
interest therein;

(l) Collect each Guarantor's Accounts, General
Intangibles, and Negotiable Collateral directly, and charge the collection
costs and expenses as Foothill

Expenses; but, unless and until Foothill does so or gives any Guarantor other
written instructions, such Guarantor shall collect all of such Guarantor's
Accounts, General Intangibles, and Negotiable Collateral for Foothill,
receive in trust all payments thereon as Foothill's trustee, and immediately
deliver said payments to Foothill in their original form as received from
such Account Debtor;

(m) Any deficiency which exists after disposition
of the Collateral as provided above will be paid immediately by each
Guarantor up to the maximum amount, if any, of such Guarantor's liability
under the Guaranty. Any excess will be returned to Guarantors, without
interest and subject to the rights of third parties, by Foothill.

Except as required by law, Foothill may take any or all of the foregoing
action without demand, presentment, protest, advertisement or notice of any
kind to or upon any Guarantor or any other person.

7.2 REMEDIES CUMULATIVE. Foothill's rights and remedies
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Foothill shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Foothill of one right or remedy shall be deemed an election, and
no waiver by Foothill of any Event of Default shall be deemed a continuing
waiver. No delay by Foothill shall constitute a waiver, election, or
acquiescence by it.

8. TAXES AND EXPENSES REGARDING THE COLLATERAL.

If any Guarantor fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of licensed or leased
properties or assets, royalties, rents, or other amounts payable under such
licenses or leases) due to third Persons, or fails to make any deposits or
furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, to the extent that Foothill determines that
such failure by any such Guarantor could result in a Material adverse effect
on Foothill's interests in the collateral, in its discretion, without prior
notice to any Guarantor, Foothill may do any or all of the following: (a)
make payment of the same or any part thereof; (b) set up such reserves in
Borrower's Loan Account as Foothill deems necessary to protect Foothill from
the exposure created by such failure; or (c) obtain and maintain insurance
policies insuring Guarantor's ownership and use of the Collateral and take
any action with respect to such policies as Foothill deems prudent. Any such
amounts paid or deposited by Foothill shall constitute Foothill Expenses.
Any such payments made by Foothill shall not constitute an agreement by
Foothill to make similar payments in the future or a waiver by Foothill of
any Event of Default under this Agreement. Foothill need not inquire as to,
or contest the validity of, any such expense, tax, or Lien and the receipt of
the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

9. WAIVERS; INDEMNIFICATION.

9.1 DEMAND; PROTEST; ETC. To the extent permitted by law,
each of the Guarantors waives demand, protest, notice of protest, notice of
default or dishonor, notice

of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by
Foothill on which any Guarantor may in any way be liable.

9.2 FOOTHILL'S LIABILITY FOR COLLATERAL. So long as
Foothill complies with its obligations, if any, under Section 9207 of the
Code, Foothill shall not in any way or manner be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person. All risk of loss,
damage, or destruction of the Collateral shall be borne by the Guarantors.

9.3 INDEMNIFICATION. Each Guarantor agrees to defend,
indemnify, save, and hold Foothill and its officers, employees, and agents
harmless against: (a) all obligations, demands, claims, and liabilities
claimed or asserted by any other Person, and (b) all losses (including
attorneys fees and disbursements) in any way suffered, incurred, or paid by
Foothill as a result of or in any way arising out of, following, or
consequential to transactions with Borrower or any Guarantor, whether under
this Agreement, the other Loan Documents or otherwise. This provision shall
survive the termination of this Agreement.

9.4 WAIVERS.

(a) To the maximum extent permitted by law, each of
the Guarantors hereby waives: (i) notice of acceptance hereof; (ii) notice
of any loans or other financial accommodations made or extended under the
Loan Agreement, or the creation or existence of any Obligations; (iii) notice
of the amount of the Obligations, subject, however, each Guarantor's right to
make inquiry of Foothill to ascertain the amount of the Obligations at any
reasonable time; (iv) notice of any adverse change in the financial condition
of Borrower or of any other fact that might increase such Guarantors' risk
hereunder; (v) notice of presentment for payment, demand, protest, and notice
thereof as to any instrument among the Loan Documents; (vi) notice of any
unmatured Event of Default or Event of Default under the Loan Agreement; and
(vii) all other notices (except if such notice is specifically required to be
given to such Guarantor under this Agreement or the other Loan Documents) and
demands to which such Guarantor might otherwise be entitled.

(b) To the fullest extent permitted by applicable
law, each of the Guarantors hereby waives the right by statute or otherwise
to require Foothill to institute suit against Borrower or to exhaust any
rights and remedies which Foothill has or may have against Borrower. Each of
the Guarantors further waives any defense arising by reason of any disability
or other defense (other than the defense that the Obligations shall have been
fully and finally indefeasibly paid) of Borrower or by reason of the
cessation from any cause (other than that the Obligations shall have been
fully and finally indefeasibly paid) whatsoever of the liability of Borrower
in respect thereof.

(c) To the maximum extent permitted by law, each of
the Guarantors hereby waives: (i) any rights to assert against Foothill any
defense (legal or equitable), set-off, counterclaim, or claim which any
Guarantor may now or at any time hereafter have against Borrower or any other
party liable to Foothill on account of or with respect to the Obligations;
(ii) any defense, set-off, counterclaim, or claim, of any kind or nature,
arising directly or indirectly from the present or future sufficiency,
validity, or enforceability of the Obligations; (iii) any defense arising by
reason of any claim or defense based upon an election of remedies by Foothill
including, to the extent applicable, the provisions of Sections 580d and 726
of the California Code of Civil Procedure, or any similar law of California
or any other jurisdiction; (iv) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement thereof.

(d) To the maximum extent permitted by law each
Guarantor hereby waives any right of subrogation such Guarantor has or may
have as against Borrower with respect to the Obligations. In addition, to
the maximum extent permitted by law, each of the Guarantors hereby waives any
right to proceed against Borrower, now or hereafter, for contribution,
indemnity, reimbursement, or any other suretyship rights and claims
(irrespective of whether direct or indirect, liquidated or contingent), with
respect to the Obligations. To the maximum extent permitted by law, each of
the Guarantors also hereby waives any right to proceed or to seek recourse
against or with respect to any property or asset of Borrower. Each of the
Guarantors hereby agrees that, in light of the waivers contained in this
Section, none of the Guarantors shall be deemed to be a "creditor" (as that
term is defined in the Bankruptcy Code or otherwise) of Borrower, whether for
purposes of the application of Sections 547 or 550 of the United States
Bankruptcy Code or otherwise.

(e) If any of the Secured Obligations at any time
are secured by a mortgage or deed of trust upon real property, Foothill may
elect, in its sole discretion, upon the occurrence and during the continuance
of an Event of Default, to foreclose such mortgage or deed of trust
judicially or nonjudicially in any manner permitted by law, before or after
enforcing this Agreement, without diminishing or affecting the liability of
the Guarantors hereunder. Each of the Guarantors understands that (a) by
virtue of the operation of California's antideficiency law applicable to
nonjudicial foreclosures, an election by Foothill nonjudicially to foreclose
such a mortgage or deed of trust probably would have the effect of impairing
or destroying rights of subrogation, reimbursement, contribution, or
indemnity of each of the Guarantors against Borrower or guarantors or
sureties, and (b) absent the waiver given by the Guarantors herein, such an
election might estop Foothill from enforcing this Agreement against the
Guarantors. Understanding the foregoing, and understanding that each of the
Guarantors is hereby relinquishing a defense to the enforceability of this
Agreement, each of the Guarantors hereby waives any right to assert against
Foothill any defense to the enforcement of this Agreement, whether
denominated "estoppel" or otherwise, based on or arising from an election by
Foothill nonjudicially to foreclose any such mortgage or deed of trust. Each
of the Guarantors understands that the effect of the foregoing waiver may be
that such Guarantors may have liability hereunder for amounts with respect
to which such Guarantor may be left without rights of subrogation,
reimbursement, contribution, or indemnity against Borrower or guarantors or
sureties. Each

of the Guarantors also agrees that the "fair market value" provisions of
Section 580a of the California Code of Civil Procedure shall have no
applicability with respect to the determination of such Guarantor's liability
under this Agreement.

(f) Without limiting the generality of any other
waiver or other provision set forth in this Guaranty, Guarantor waives all
rights and defenses that Guarantor may have because Debtor's debt is secured
by real property. This means, among other things:

(i) Guarantied Party may collect from Guarantor
without first foreclosing on any real or personal property collateral pledged
by Debtor.

(ii) If Guarantied Party forecloses on any real
property collateral pledged by the Debtor:

(1) the amount of the debt may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price.

(2) Guarantied Party may collect from Guarantor
even if Guarantied Party, by foreclosing on the real property collateral, has
destroyed any right Guarantor may have to collect from Debtor.

This is an unconditional and irrevocable waiver of any
rights and defenses Guarantor may have because Debtor's debt is secured by
real property. These rights and defenses based upon Section 580a, 580b,
580d, or 726 of the Code of Civil Procedure.

(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER
WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH OF THE GUARANTORS
HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND
ALL DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA
CIVIL CODE Sections 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845,
2848, 2849, AND 2850, TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL
PROCEDURE Sections 580a, 580b, 580c, 580d, AND 726, AND, TO THE EXTENT
APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.

(h) WITHOUT LIMITING THE GENERALITY OF ANY OTHER
WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH OF THE GUARANTORS
HEREBY WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY
FOOTHILL, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL
FORECLOSURE WITH RESPECT TO SECURITY FOR A SECURED OBLIGATION, HAS DESTROYED
GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST

THE BORROWER BY THE OPERATION OF SECTION 580d OF THE CODE OF CIVIL PROCEDURE
OR OTHERWISE.

10. NOTICES.

All notices and other communications hereunder shall be made
in accordance with the Guaranty.

11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA. THE GUARANTORS AND FOOTHILL AGREE THAT ALL ACTIONS
OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER
COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH
OF THE GUARANTORS AND FOOTHILL EACH WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13. THE GUARANTORS AND FOOTHILL HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF THE GUARANTORS AND
FOOTHILL REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12. DESTRUCTION OF THE GUARANTORS' DOCUMENTS.

All documents, schedules, invoices, agings, or other papers
delivered to Foothill may be destroyed or otherwise disposed of by Foothill 4
months after they are delivered to or received by Foothill, unless any
Guarantor requests, in writing, the return of said documents, schedules, or
other papers and makes arrangements, at such Guarantor's expense, for their
return.

13. GENERAL PROVISIONS.

13.1 EFFECTIVENESS. This Agreement shall be binding and
deemed effective when executed by each of the Guarantors and accepted and
executed by Foothill.

13.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of each of the
parties; provided, however, that the Guarantors may not assign this Agreement
or any rights or duties hereunder without Foothill's prior written consent
and any prohibited assignment shall be absolutely void. No consent to an
assignment by Foothill shall release any of the Guarantors from its
Guarantied Obligations. Foothill may assign this Agreement and its rights and
duties hereunder and no consent or approval by the Guarantors is required in
connection with any such assignment. Foothill reserves the right to sell,
assign, transfer, negotiate, or grant participations in all or any part of,
or any interest in Foothill's rights and benefits hereunder. In connection
with any such assignment or participation, Foothill may disclose all
documents and information which Foothill now or hereafter may have relating
to any of the Guarantors or any of the Guarantors' business. To the extent
that Foothill assigns its rights and obligations hereunder to a third Person,
Foothill thereafter shall be released from such assigned obligations to the
Guarantors and such assignment shall effect a novation among the Guarantors
and such third Person.

13.3 SECTION HEADINGS. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.

13.4 INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against
Foothill or the Guarantors, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties
and shall be construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and intentions of all
parties hereto.

13.5 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

13.6 AMENDMENTS IN WRITING. This Agreement can only be
amended by a writing signed by both Foothill and each of the Guarantors.

13.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective
as delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original

executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.

13.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Secured Obligations by the Guarantors or the
transfer by any Guarantor to Foothill of any property of such Guarantor
should for any reason subsequently be declared to be void or voidable under
any state or federal law relating to creditors' rights, including provisions
of the Bankruptcy Code relating to fraudulent conveyances, preferences, and
other voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Foothill is required to repay
or restore, in whole or in part, any such Voidable Transfer, or elects to do
so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Foothill is required or elects to repay
or restore, and as to all reasonable costs, expenses, and attorneys fees of
Foothill related thereto, the liability of each of the Guarantors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

[SIGNATURE PAGES TO FOLLOW.]

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

FOOTHILL CAPITAL CORPORATION, a California
Corporation

By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------

NETWORK COMPUTING DEVICES AUSTRALIA PTY LTD.,
a company organized under the laws of
Australia

By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Secretary
--------------------------------------

NETWORK COMPUTING DEVICES (BENELUX) B.V., a
company organized under the laws of The
Netherlands

By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Managing Director
--------------------------------------

NETWORK COMPUTING DEVICES (CANADA), INC., a
corporation organized under the laws of
Canada

By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Chief Financial Officer
--------------------------------------

S-1

NETWORK COMPUTING DEVICES (FRANCE) S.A.R.L.,
a company organized under the laws of France

By:
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Title: Sole General Manager
--------------------------------------

NETWORK COMPUTING DEVICES GMBH, a company
organized under the laws of Germany

By:
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Managing Director
--------------------------------------

NCD GRAPHIC SOFTWARE CORPORATION, a
California corporation

NETWORK COMPUTING DEVICES (FSC), INC., a Guam
corporation

NCD ACQUISITION CORP., an Indiana corporation

S-2

NETWORK COMPUTING DEVICES (UK), LIMITED., a
company organized under the laws of England

By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Director
--------------------------------------

NETWORK COMPUTING DEVICES SCANDINAVIA AB, a
company organized under the laws of Sweden

By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Director
--------------------------------------

S-3

SUBORDINATION AGREEMENT
(INTERCOMPANY)

THIS SUBORDINATION AGREEMENT (this "Agreement"), is entered
into as of March [ ], 2000, among Foothill Capital Corporation, a California
corporation ("Foothill") and the undersigned Subsidiaries of Network
Computing Devices, Inc., a Delaware corporation (individually and
collectively, the "Borrower Subsidiaries"), with reference to the following
recitals of fact:

WHEREAS, Network Computing Devices, Inc., a Delaware
corporation ("Borrower") and Foothill have entered into that certain Loan and
Security Agreement dated as of the date hereof (as amended, modified,
renewed, extended, or replaced from time to time, the "Loan Agreement"),
pursuant to which Foothill has agreed to make certain loans to Borrower;

WHEREAS, the Borrower Subsidiaries have made or hereafter may
make loans and other advances to Borrower or Borrower may otherwise incur
indebtedness to the Borrower Subsidiaries; and

WHEREAS, the Borrower Subsidiaries have agreed to the
subordination of such indebtedness to it, upon the terms and subject to the
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises,
covenants, conditions, representations, and warranties set forth herein and
for other good and valuable consideration, the parties hereto agree as
follows:

SECTION 1 DEFINITIONS; INTERPRETATION.

(a) TERMS DEFINED IN LOAN AGREEMENT. All capitalized terms
used in this Agreement and not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.

(b) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:

"Dollars" means and refers to United States of America dollars
or such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts in
the United States of America.

"Insolvency Event" has the meaning set forth in SECTION 3.

"Senior Debt" shall mean all indebtedness and liabilities
(including all principal, interest (including interest accruing after the
commencement of a Proceeding whether or not such interest is allowed as a
claim therein), default interest, fees, charges, and collection expenses) now
or hereafter owed by Borrower under the Loan Agreement or any other Loan
Document.

"Subordinated Debt" means all indebtedness, liabilities and
other monetary obligations of Borrower owing to the Borrower Subsidiaries,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or
undetermined, including all principal, all interest accrued thereon, all
fees, and all other amounts payable by Borrower to the Borrower Subsidiaries.

"Subordinated Debt Documents" means any agreement, note, or
other document evidencing the Subordinated Debt.

"Subordinated Debt Payment" means any payment or distribution
by or on behalf of Borrower, directly or indirectly, of assets of Borrower of
any kind or character, whether in cash, property or securities, including on
account of the purchase, redemption or other acquisition of Subordinated
Debt, as a result of any collection, sale or other disposition of collateral,
or by setoff, exchange or in any other manner, for or on account of the
Subordinated Debt.

(c) INTERPRETATION. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Section, subsection, clause, schedule, and exhibit references are
to this Agreement unless otherwise specified. References to agreements and
other contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto. References to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to. The captions and headings are for convenience of reference only
and shall not affect the construction of this Agreement.

SECTION 2 SUBORDINATION TO PAYMENT OF SENIOR DEBT.

All payments on account of the Subordinated Debt shall be
subject, subordinate and junior, in right of payment and exercise of
remedies, to the extent and in the manner set forth herein, to the prior
payment, in full, in cash (or other consideration acceptable to Foothill in
its sole discretion and agreed to by Foothill) of the Senior Debt.

SECTION 3 SUBORDINATION UPON ANY DISTRIBUTION OF ASSETS OF BORROWER.

In the event of any payment or distribution of assets or
properties of Borrower of any kind or character, whether in cash, property,
or securities, upon the dissolution, winding up, or total or partial
liquidation or reorganization, readjustment, arrangement, or similar
proceeding relating to Borrower or its property, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership, arrangement or
similar proceedings or upon an assignment for the benefit of creditors, or
upon any other marshaling or composition of the assets and liabilities of
Borrower, or otherwise (such events, collectively, the "Insolvency Events"):
(i) all amounts

owing on account of the Senior Debt shall first be paid, in full, in cash, or
payment provided for in cash (or other consideration acceptable to Foothill
in its sole discretion and agreed to by Foothill), before any Subordinated
Debt Payment is made; and (ii) to the extent permitted by applicable law, any
Subordinated Debt Payment to which any Borrower Subsidiary would be entitled
except for the provisions hereof, shall, in the event of any such Insolvency
Event, be paid or delivered by the trustee in bankruptcy, receiver, assignee
for the benefit of creditors, or other liquidating agent making such payment
or distribution directly to Foothill for application to the payment of the
Senior Debt in accordance with clause (i), after giving effect to any
concurrent payment or distribution or provision therefor to Foothill in
respect of such Senior Debt.

SECTION 4 PAYMENTS ON SUBORDINATED DEBT.

(a) PERMITTED PAYMENTS. So long as no Event of Default or
Default shall have occurred and be continuing or would result therefrom,
Borrower may make, and the Borrower Subsidiaries shall be entitled to
receive, Subordinated Debt Payments made in the ordinary course of business
solely to the extent permitted in the Loan Agreement.

(b) PROHIBITION ON PAYMENTS. Notwithstanding the provisions
of SUBSECTION 4(a) above, (i) upon the occurrence and during the continuation
of any Default or Event of Default, or (ii) if a Default or Event of Default
would result therefrom then, in either case, no Subordinated Debt Payment
shall be made or agreed to be made by Borrower or accepted by any Borrower
Subsidiary on account of the principal of, premium or interest on, or any
other amounts in respect of the Subordinated Debt, and Borrower shall not
segregate or hold in trust money for any such payment or distribution.

SECTION 5 SUBORDINATION OF REMEDIES.

As long as any Senior Debt shall remain outstanding and unpaid,
no Borrower Subsidiary shall, without the prior written consent of Foothill:

(i) accelerate, make demand, or otherwise make due and
payable prior to the original stated maturity thereof any Subordinated Debt
or bring suit or institute any other actions or proceedings to enforce its
rights or interests in respect of the obligations of Borrower owing to such
Borrower Subsidiary;

(ii) exercise any rights under or with respect to guaranties
of the Subordinated Debt, if any;

(iii) exercise any rights to setoffs and counterclaims in
respect of any indebtedness, liabilities or obligations of Borrower to
Borrower against any of the Subordinated Debt; or

(iv) commence, or cause to be commenced, or join with any
creditor other than Foothill in commencing, any bankruptcy, insolvency or
receivership proceeding against Borrower.

SECTION 6 PAYMENT OVER TO FOOTHILL.

Notwithstanding the provisions of SECTIONS 3, 4, AND 5, in the
event that any Subordinated Debt Payments shall be received in contravention
of such SECTIONS 3, 4, AND 5 by any Borrower Subsidiary before all Senior
Debt is paid, in full, in cash (or other consideration acceptable to Foothill
in its sole discretion and agreed to by Foothill), such Subordinated Debt
Payments shall be held in trust for the benefit of Foothill and shall be paid
over or delivered to Foothill for application to the payment, in full, in
cash (or other consideration acceptable to Foothill in its sole discretion
and agreed to by Foothill) of all Senior Debt remaining unpaid to the extent
necessary to give effect to such SECTIONS 3, 4, AND 5, after giving effect to
any concurrent payments or distributions to Foothill in respect of the Senior
Debt.

SECTION 7 AUTHORIZATION TO FOOTHILL.

If, while any Subordinated Debt is outstanding, any Insolvency
Event shall occur relating to Borrower or its property: (i) Foothill is
hereby irrevocably authorized and empowered (in the name of any one or more
Borrower Subsidiaries or otherwise), but shall have no obligation, to demand,
▇▇▇ for, collect, and receive every payment or distribution in respect of the
Subordinated Debt and give acquittance therefor and to file claims and proofs
of claim and take such other action (including voting the Subordinated Debt)
as it may deem necessary or advisable for the exercise or enforcement of any
of the rights or interests of Foothill; and (ii) each Borrower Subsidiary
shall promptly take such action as Foothill reasonably may request (A) to
collect the Subordinated Debt for the account of Foothill and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt,
(B) to execute and deliver to Foothill such powers of attorney, assignments,
and other instruments as it may request to enable it to enforce any and all
claims with respect to the Subordinated Debt, and (C) to collect and receive
any and all Subordinated Debt Payments to the extent permitted by applicable
law.

SECTION 8 CERTAIN AGREEMENTS OF BORROWER.

(a) NO BENEFITS. Each Borrower Subsidiary understands that
there may be various agreements among Foothill and Borrower evidencing and
governing the Senior Debt, and such Borrower Subsidiary acknowledges and
agrees that such agreements are not intended to confer any benefits on such
Borrower Subsidiary and that Foothill shall have no obligation to such
Borrower Subsidiary or any other Person to exercise any rights, enforce any
remedies, or take any actions which may be available to them under such
agreements.

(b) NO INTERFERENCE. Each Borrower Subsidiary acknowledges
that Borrower has granted Foothill a security interest in all of Borrower's
assets, and agrees that, so long as such Borrower Subsidiary holds
Subordinated Debt, such Borrower Subsidiary will not interfere with or in any
manner oppose a disposition of any Collateral by Foothill in accordance with
the terms of the agreements governing such grants and applicable law.

(c) RELIANCE BY FOOTHILL. Each Borrower Subsidiary
acknowledges and agrees that Foothill will have relied upon and will continue to
rely upon the subordination provisions

provided for herein and the other provisions hereof in entering into the Loan
Documents and making or making the Advances thereunder.

(d) WAIVERS. Each Borrower Subsidiary waives any and all
notice of the incurrence of the Senior Debt or any part thereof and any right
to require marshaling of assets.

(e) OBLIGATIONS OF BORROWER SUBSIDIARIES NOT AFFECTED. Each
Borrower Subsidiary agrees that at any time and from time to time, without
notice to or the consent of such Borrower Subsidiary, without incurring
responsibility to such Borrower Subsidiary, and without impairing or
releasing the subordination provided for herein or otherwise impairing the
rights of Foothill hereunder: (i) the time for Borrower's performance of or
compliance with any of its agreements contained in the Loan Documents may be
extended or such performance or compliance may be waived by Foothill; (ii)
the agreements of Borrower with respect to the Loan Documents may from time
to time be modified by Borrower and Foothill for the purpose of adding any
requirements thereto or changing in any manner the rights and obligations of
Borrower or Foothill thereunder; (iii) the manner, place or terms for payment
of Senior Debt or any portion thereof may be altered or the terms for payment
extended, or the Senior Debt may be renewed in whole or in part; (iv) the
maturity of the Senior Debt may be accelerated in accordance with the terms
of any present or future agreement by Borrower and Foothill; (v) any
Collateral may be sold, exchanged, released or substituted in accordance with
the Loan Documents and any Lien in favor of Foothill may be terminated,
subordinated, or fail to be perfected or become unperfected; (vi) any Person
liable in any manner for Senior Debt may be discharged, released, or
substituted; and (vii) all other rights against Borrower, any other Person,
or with respect to any Collateral may be exercised (or Foothill may waive or
refrain from exercising such rights) in accordance with the Loan Documents.

(f) RIGHTS OF FOOTHILL NOT TO BE IMPAIRED. No right of
Foothill to enforce the subordination provided for herein or to exercise its
other rights hereunder shall at any time in any way be prejudiced or impaired
by any act or failure to act by Borrower hereunder or under or in connection
with the other Loan Documents or by any noncompliance by Borrower with the
terms and provisions and covenants herein or in any other Loan Document,
regardless of any knowledge thereof Foothill may have or otherwise be charged
with.

(g) FINANCIAL CONDITION OF BORROWER. No Borrower Subsidiary
shall have any right to require Foothill to obtain or disclose any
information with respect to: (i) the financial condition or character of
Borrower or the ability of Borrower to pay and perform the Senior Debt; (ii)
the Senior Debt; (iii) the Collateral or other security for any or all of the
Senior Debt; (iv) the existence or nonexistence of any guarantees of, or any
other subordination agreements with respect to, all or any part of the Senior
Debt; (v) any action or inaction on the part of Foothill or any other Person;
or (vi) any other matter, except as otherwise expressly required by any
provision of any Loan Document or law (except to the extent that any
otherwise applicable requirement of law has been waived by such Borrower
Subsidiary pursuant to a legally enforceable waiver).

(h) ACQUISITION OF LIENS OR GUARANTIES. Unless otherwise
expressly permitted under the Loan Documents, no Borrower Subsidiary shall,
without the prior consent of Foothill, acquire any right or interest in or to
any Collateral or accept any guaranties for the Subordinated Debt.

SECTION 9 SUBROGATION.

(a) SUBROGATION. Until the payment and performance in full
of all Senior Debt, each Borrower Subsidiary shall not have, and shall not
directly or indirectly exercise, any rights that it may acquire by way of
subrogation under this Agreement, by any payment or distribution to Foothill
hereunder or otherwise.

(b) PAYMENTS OVER TO THE BORROWER SUBSIDIARIES. If any
payment or distribution to which the Borrower Subsidiaries would otherwise
have been entitled but for the provisions of SECTION 3, 4, OR 5 shall have
been applied pursuant to the provisions of SECTION 3, 4, OR 5 to the payment
of all amounts payable under the Senior Debt, the Borrower Subsidiaries shall
be entitled to receive from Foothill any payments or distributions received
by Foothill in excess of the amount sufficient to pay in full all amounts
payable under or in respect of the Senior Debt. If any such excess payment
is made to Foothill, Foothill shall promptly remit such excess to the
Borrower Subsidiaries and until so remitted shall hold such excess payment
for the benefit of the Borrower Subsidiaries. Each Borrower Subsidiary
hereby agrees that the remittance by Foothill of such excess to any Borrower
Subsidiary shall be deemed a remittance for the benefit of all the Borrower
Subsidiaries.

SECTION 10 CONTINUING AGREEMENT; REINSTATEMENT.

(a) CONTINUING AGREEMENT. This Agreement is a continuing
agreement of subordination and shall continue in effect and be binding upon
the Borrower Subsidiaries until payment and performance in full of the Senior
Debt. The subordinations, agreements, and priorities set forth herein shall
remain in full force and effect regardless of whether any party hereto in the
future seeks to rescind, amend, terminate, or reform, by litigation or
otherwise, its respective agreements with Borrower.

(b) REINSTATEMENT. This Agreement shall continue to be
effective or shall be reinstated, as the case may be, if, for any reason, any
payment of the Senior Debt by or on behalf of Borrower shall be rescinded or
must otherwise be restored by Foothill, whether as a result of an Insolvency
Event or otherwise.

SECTION 11 TRANSFER OF SUBORDINATED DEBT.

No Borrower Subsidiary may assign or transfer its rights and
obligations in respect of the Subordinated Debt or any interest in the
Subordinated Debt without the prior written consent of Foothill (which
consent shall not be unreasonably withheld), and any such transferee or
assignee, as a condition to acquiring an interest in the Subordinated Debt
shall agree to be bound hereby, in form reasonably satisfactory to Foothill.

SECTION 12 OBLIGATIONS OF BORROWER NOT AFFECTED.

The provisions of this Agreement are intended solely for the
purpose of defining the relative rights against Borrower of the Borrower
Subsidiaries, on the one hand, and Foothill, on the other hand. Nothing
contained in this Agreement shall (i) impair, as between Borrower and the
Borrower Subsidiaries, the obligation of Borrower to pay its obligations with
respect to the Subordinated Debt as and when the same shall become due and
payable in accordance with the terms thereof, or (ii) otherwise affect the
relative rights against Borrower of the Borrower Subsidiaries, on the one
hand, and the creditors of Borrower (other than Foothill), on the other hand.

SECTION 13 FURTHER ASSURANCES AND ADDITIONAL ACTS.

(a) ENDORSEMENT OF SUBORDINATED DEBT DOCUMENTS. At the
request of Foothill, all documents and instruments evidencing any of the
Subordinated Debt shall be endorsed with a legend noting that such documents
and instruments are subject to this Agreement, and the Borrower Subsidiaries
shall promptly deliver to Foothill evidence of the same.

(b) FURTHER ASSURANCES AND ADDITIONAL ACTS. Each of the
Borrower Subsidiaries and Borrower shall execute, acknowledge, deliver, file,
notarize and register at its own reasonable expense all such further
agreements, instruments, certificates, financing statements, termination
statements, documents and assurances, and perform such acts as Foothill
reasonably shall deem necessary or appropriate to effectuate the purposes of
this Agreement, and promptly provide Foothill with evidence of the foregoing
reasonably satisfactory in form and substance to Foothill.

SECTION 14 NOTICES.

All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by facsimile
transmission) and shall be mailed, sent, or delivered at or to the address or
facsimile number of the respective party or parties set forth below:

If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Telecopier: 310.478.9788

With a copy to: ▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Telecopier: 213.239.1324

If to any Borrower C/O NETWORK COMPUTING DEVICES, INC.
Subsidiary: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopies: 650.961.7711

With a copy to:
------------------------------------------------

------------------------------------------------
Attn:
--------------------------------------------
Telecopier:
-------------------------------------

The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given
to the other parties. All notices and communications sent in accordance with
this section shall be effective (i) if delivered by hand, when delivered;
(ii) if sent by mail, upon the earlier of the date of receipt or five (5)
Business Days after deposit in the mail, first class (or air mail, with
respect to communications to be sent to or from the United States), postage
prepaid; and (iii) if sent by facsimile transmission, when sent.

SECTION 15 NO WAIVER; CUMULATIVE REMEDIES.

No failure on the part of Foothill to exercise, and no delay in
exercising, any right, remedy, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power, or privilege preclude any other or further exercise thereof or
the exercise of any other right, remedy, power, or privilege. The rights and
remedies under this Agreement are cumulative and not exclusive of any rights,
remedies, powers, and privileges that may otherwise be available to Foothill.

SECTION 16 COSTS AND EXPENSES.

(a) PAYMENTS BY BORROWER. Borrower agrees to pay to
Foothill on demand the reasonable out-of-pocket costs and expenses of
Foothill, and the reasonable fees and disbursements of counsel to Foothill,
in connection with the negotiation, preparation, execution, and delivery of
this Agreement, and any amendments, modifications, or waivers of the terms
thereof.

(b) PAYMENTS BY BORROWER AND THE BORROWER SUBSIDIARIES.
Each of Borrower and the Borrower Subsidiaries jointly and severally agrees
to pay to Foothill on demand all reasonable out-of-pocket costs and expenses
of Foothill, and the fees and disbursements of counsel, in connection,
following a breach hereof, with the enforcement or attempted enforcement of,
and preservation of rights or interests under, this Agreement, including any
reasonable out-of-pocket losses, costs and expenses sustained by Foothill as
a result of any failure by any of the Borrower Subsidiaries to perform or
observe its obligations contained in this Agreement.

SECTION 17 SURVIVAL.

All covenants, agreements, representations and warranties made
in this Agreement shall, except to the extent otherwise provided herein,
survive the execution and delivery of this Agreement, and shall continue in
full force and effect so long as any Senior Debt remains unpaid. Without
limiting the generality of the foregoing, the obligations of Borrower and the
Borrower Subsidiaries under SECTION 16 shall survive the satisfaction of the
Senior Debt.

SECTION 18 BENEFITS OF AGREEMENT.

This Agreement is entered into for the sole protection and
benefit of the parties hereto and their successors and assigns, and no other
Person shall be a direct or indirect beneficiary of, or shall have any direct
or indirect cause of action or claim in connection with, this Agreement.

SECTION 19 BINDING EFFECT.

This Agreement shall be binding upon, inure to the benefit of
and be enforceable by Borrower, the Borrower Subsidiaries, and Foothill and
their respective successors and assigns.

SECTION 20 GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

SECTION 21 SUBMISSION TO JURISDICTION.

EACH BORROWER SUBSIDIARY HEREBY (i) SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL COURTS
OF THE UNITED STATES SITTING IN THE STATE OF CALIFORNIA FOR THE PURPOSE OF
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii)
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH COURTS, (iii) IRREVOCABLY WAIVES (TO THE EXTENT
PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH THEY NOW OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
OF THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
(iv) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION 22 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.

(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of Borrower, Foothill, and the Borrower Subsidiaries with respect
to the matters set forth herein and supersedes any prior agreements,
commitments, drafts, communications, discussions, and understandings, oral or
written, with respect thereto.

(b) AMENDMENTS AND WAIVERS. No amendment to any provision
of this Agreement shall in any event be effective unless the same shall be in
writing and signed by Borrower, the Borrower Subsidiaries, and Foothill; and
no waiver of any provision of this Agreement, or consent to any departure by
Borrower or the Borrower Subsidiaries therefrom, shall in any event be
effective unless the same shall be in writing and signed by Foothill. Any
such amendment, waiver, or consent shall be effective only in the specific
instance and for the specific purpose for which given.

SECTION 23 CONFLICTS WITH SUBORDINATED DEBT DOCUMENTS.

In case of any conflict or inconsistency between any terms of
this Agreement, on the one hand, and any of the Subordinated Debt Documents,
on the other hand, then the terms of this Agreement shall control.

SECTION 24 SEVERABILITY.

Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Agreement shall be
prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only
to the extent of such prohibition or invalidity without affecting the
remaining provisions of this Agreement or the validity or effectiveness of
such provision in any other jurisdiction.

SECTION 25 INTERPRETATION.

This Agreement is the result of negotiations between, and has
been reviewed by counsel to, Foothill, the Borrower Subsidiaries, and
Borrower and is the product of all parties hereto. Accordingly, this
Agreement shall not be construed against Foothill merely because of
Foothill's involvement in the preparation hereof.

SECTION 26 COUNTERPARTS; TELEFACSIMILE EXECUTION.

This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective
as delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed

counterpart of this Agreement, but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.

SECTION 27 TERMINATION OF AGREEMENT.

Upon payment and performance in full of the Senior Debt, this
Agreement shall terminate and Foothill shall promptly execute and deliver to
Borrower and the Borrower Subsidiaries (in each case, at Borrower's expense)
such documents and instruments as shall be necessary to evidence such
termination; provided, however, that the obligations of Borrower and the
Borrower Subsidiaries under SECTION 16 shall survive such termination.

[Remainder of page left intentionally blank.]

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

FOOTHILL CAPITAL CORPORATION,
a California Corporation