10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

/x/	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2001
/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from                to

Commission File Number 0-20124

NETWORK COMPUTING DEVICES, INC.
(Exact name of registrant as specified in its charter)

Delaware	77-0177255
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
301 Ravendale Drive, Mountain View, California	94043
(Address of principal executive offices)	(Zip Code)

(650) 694-0650
(Registrant's telephone number, including area code)

Common Stock, $0.001 par value
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  /x/    No  / /

As of June 30, 2001, 17,613,237 shares of the registrant's Common Stock were outstanding.

NETWORK COMPUTING DEVICES, INC.

INDEX

Description			Page Number
Cover Page			1
Index			2
Part I: Financial Information
	Item 1: Financial Statements
		Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000	3
		Condensed Consolidated Statements of Operations for the Six-Month Periods Ended June 30, 2001 and 2000	4
		Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2001 and 2000	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2: Management's Discussion and Analysis of Financial Condition And Results of Operations		9
	Item 3: Quantitative and Qualitative Disclosure About Market Risk		18
Part II: Other Information
	Item 3: Defaults Upon Senior Securities		19
	Item 4: Submission of Matters to a Vote of Security Holders		19
	Item 6: Exhibits and Reports on Form 8-K		19
Signature			20

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NETWORK COMPUTING DEVICES, INC.

Part I: Financial Information

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

		June 30, 2001			December 31, 2000
ASSETS
Current assets:
	Cash and cash equivalents	$	1,517		$	1,419
	Short-term investments		—			339
	Accounts receivable, net of allowances of $2,516 and $5,629 as of June 30, 2001 and December 31, 2000, respectively		8,399			9,160
	Inventories		6,866			7,635
	Prepaid assets		1,169			2,667
	Other current assets		—			1,500
Total current assets			17,951			22,720
Property and equipment, net			963			1,530
Other assets			2,164			2,602
Total assets		$	21,078		$	26,852
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable	$	6,057		$	5,545
	Accrued expenses		3,339			4,047
	Deferred revenue		506			1,297
	Notes payable		6,632			7,947
	Other current liabilities		93			243
Total current liabilities			16,627			19,079
Shareholders' equity:
	Preferred stock		1,500			1,500
	Common stock		18			18
	Capital in excess of par		62,380			62,380
	Accumulated deficit		(59,447	)		(56,125	)
Total shareholders' equity			4,451			7,773
Total liabilities and shareholders' equity		$	21,078		$	26,852

See accompanying notes.

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NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2001			2000			2001			2000
Net revenues:
	Hardware products and services	$	10,456		$	12,036		$	20,029		$	24,856
	Software licenses and services		790			1,117			1,696			2,044
Total net revenues			11,246			13,153			21,725			26,900
Cost of revenues:
	Hardware products and services		7,054			9,546			13,916			21,885
	Software licenses and services		271			315			544			555
Total cost of revenues			7,325			9,861			14,460			22,440
Gross Margin			3,921			3,292			7,265			4,460
Operating expenses:
	Research and development		764			2,866			1,376			6,115
	Marketing and selling		3,294			5,892			6,591			13,869
	General and administrative		1,129			1,913			2,241			4,454
	Business restructuring		—			—			—			2,561
	Acquired in-process research and development		—			—			—			1,800
Total operating expenses			5,187			10,671			10,208			28,799
Operating loss			(1,266	)		(7,379	)		(2,943	)		(24,339	)
Interest (expense), net			(181	)		(132	)		(325	)		(123	)
Loss before income taxes			(1,447	)		(7,511	)		(3,268	)		(24,462	)
Provision for income taxes			47			108			54			351
Net loss		$	(1,494	)	$	(7,619	)	$	(3,322	)	$	(24,813	)
Net loss per share
	Basic and diluted	$	(0.08	)	$	(0.46	)	$	(0.19	)	$	(1.50	)
Shares used in per share computations
	Basic and diluted		17,613			16,667			17,613			16,586

See accompanying notes.

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NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

				Six Months Ended June 30,
				2001			2000
Cash flow from operations:
	Net loss			$	(3,322	)	$	(24,813	)
	Reconciliation of net loss to cash used in operations:
		In process research and development charge			—			1,800
		Depreciation			599			1,239
		Amortization of goodwill			202			272
		Changes in:
			Accounts receivable, net		761			9,353
			Inventories		769			3,428
			Other current assets		1,498			358
			Accounts payable		512			(1,806	)
			Accrued expenses		(708	)		999
			Deferred revenue		(791	)		(643	)
			Other current liabilities		(150	)		119
		Cash used in operations			(630	)		(9,694	)
		Cash flows from investing activities:
			Acquisition of business		—			(2,224	)
			Purchases of short-term investments		—			(665	)
			Sales and maturities of short-term investments		339			3,889
			Changes in other assets		236			440
			Property and equipment purchases		(32	)		(443	)
		Cash provided by investing activities			543			997
		Cash flows from financing activities:
			Principal payments on capital lease obligations		—			(46	)
			Proceeds from short-term debt		20,687			12,250
			Principal payments on short-term debt		(22,002	)		(7,158	)
			Proceeds from issuance of stock, net		1,500			798
		Cash provided by financing activities			185			5,844
		Increase (decrease) in cash and equivalents			98			(2,853	)
		Cash and equivalents:
			Beginning of period		1,419			4,781
			End of period	$	1,517		$	1,928

See accompanying notes.

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NETWORK COMPUTING DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

    The unaudited condensed consolidated financial information of Network Computing Devices, Inc. and its wholly-owned subsidiaries (the "Company") furnished herein reflects all adjustments, consisting only of normal recurring entries, which in the opinion of management are necessary to fairly state our consolidated financial position, results of operations and cash flows for the periods presented. The functional currency for the Company is the U.S. dollar. All significant inter company balances and transactions have been eliminated in consolidation. This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in our 2000 Annual Report on Form 10-K. The consolidated results of operations for the three- and six-month periods ended June 30, 2001 are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2001. Certain reclassifications have been made to prior period amounts to conform to current presentation. No changes adjusted net income or equity.

Going Concern Uncertainty

    The Company has incurred losses from continuing operations for the year ended December 31, 2000 of approximately $32.7 million and for the three- and six-month periods ended June 30, 2001 of approximately $1.5 million and $3.3 million, respectively. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing or refinancing as may be required and ultimately to attain profitability. The Company is actively marketing its existing and new products, which it believes will ultimately lead to profitable operations. However, no assurance can be given that these available funds will meet the Company's cash requirements in the future. The financial statements do not include any adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Net Loss Per Share

    Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and potential common shares from stock options and warrants outstanding, when dilutive, using the treasury stock method. At June 30, 2001 and 2000 there were 4,619,808 and 4,108,648 options and warrants outstanding, respectively. There were also 220,000 shares of convertible preferred stock (convertible into 2,200,000 shares of common stock) outstanding at June 30, 2001. Such options, warrants and convertible preferred shares could potentially dilute earnings per share ("EPS") in the future, but they were not included in the computation of diluted EPS because to do so would have been antidilutive for those periods.

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Inventories

    Inventories stated at the lower of standard costs, which approximates actual cost on a first-in, first-out basis, or market, consisted of (in thousands):

	June 30, 2001			December 31, 2000
Purchased components and sub-assemblies	$	5,894		$	10,367
Work in process		335			776
Finished goods		5,766			4,363
Total inventories		11,995			15,506
Less reserves		(5,129	)		(7,871	)
Net inventories	$	6,866		$	7,635

Interest and tax payments

    Interest payments, primarily interest on notes payable, were $119,800 and $139,800 for the three months ended June 30, 2001 and 2000, respectively and $238,700 and $147,800 for the first six months of 2001 and 2000, respectively. Income tax payments, primarily foreign, were $37,800 and $114,800 for the three months ended June 30, 2001 and 2000, respectively, and $73,400 and $182,400 for the first six months of 2001 and 2000, respectively.

Operating Segments and Major Customers

    The company has one operating segment, sales of thin client hardware and software.

    The percentages of total net revenues represented by sales to major customers are as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2001		2000		2001		2000
Adtcom (Europe)	15	%	27	%	17	%	21	%
Tech Data (U.S. & Europe)	6	%	18	%	13	%	19	%

Business Acquisition

    On January 7, 2000, we acquired the net assets of Multiplicity LLC ("Multiplicity") in a purchase business combination with a total purchase price of $2.2 million. Subsequent to this acquisition, a substantial portion of the acquired assets and goodwill were written off in a restructuring. The purchase price was allocated as follows:

In-process research and development	$	1,800
Other intangible assets		200
Goodwill		160
Tangible assets		40

Restructuring Charges

    On March 31, 2000 we announced a restructuring plan involving a general reduction in workforce affecting all classes of employees and exiting certain leased facilities. In connection with the plan, we recorded a restructuring charge of $2.6 million consisting of $2.4 million for employee separation costs and $0.2 million for facility exit costs.

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    During the third quarter of 2000 we undertook additional restructuring actions involving a general reduction in workforce affecting all classes of employees, exiting certain leased facilities and discontinuing development activities related to several product lines. In connection with these actions, we recorded a restructuring charge of $1.6 million consisting of cash charges of $1.0 million for employee separation costs and $0.2 million for facility exit costs, and non-cash charges of $0.4 million related to the discontinued product lines, including the recognition of an impairment loss of $0.3 million on the intangibles attributable to our purchase of Multiplicity. Approximately $0.3 million remains unpaid and is included in accrued liabilities as of June 30, 2001. The restructuing plan is expected to be completed by the fourth quarter of 2001.

Notes Payable

    In August 2000, we concluded an agreement with SCI Technology, Inc. ("SCI"), a subsidiary of SCI Systems, Inc., to convert $3.3 million of our accounts payable to them into a thirteen-month note. The note was issued in September 2000. This note bears interest at 6.5% per annum and the outstanding principal can be converted into shares of our Common Stock at the option of SCI anytime during the note period. The conversion price is $1.00 per share.

    On March 30, 2000, we secured a working capital line of credit with Wells Fargo Bank's Foothill Capital subsidiary ("Foothill Capital"). Our line of credit is secured by substantially all of our assets. Under the terms of the agreement borrowings bear interest at a rate of prime plus 0.75% (8.00% at June 30, 2001). The amount that can be borrowed at any given time is determined by the balance of our accounts receivable as well as our compliance with specified financial covenants. Accordingly, this line of credit may not be sufficient to enable us to continue as a going concern. As of June 30, 2001, the total amount outstanding to Foothill Capital was approximately $3.3 million.

    In May 2001, the line of credit with Foothill Capital was amended to establish new financial covenants and eliminate the maximum ratio of borrowings against foreign accounts receivable. Additionally, in May 2001, the line of credit with Foothill Capital was amended to modify the maturity date of the loan from March 30, 2003 to August 15, 2001, raise the interest rate from prime plus 0.75% to prime plus 2.75% and waive the early termination fee. As of June 30, 2001, we were in default of the minimum EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) covenant of $38,000 for the three month period ended June 30, 2001. In July 2001, the line of credit with Foothill Capital was further amended to reduce the maximum amount of the credit line from $15.0 million to $3.5 million. In August 2001, the maximum amount of the credit line was reduced to $3.25 million from $3.5 million and the maturity date of the line of credit with Foothill Capital was extended to September 15, 2001 to provide additional time for another lender to complete its due diligence work and make a final determination regarding its preliminary proposal to extend a new revolving credit facility to us.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

This discussion includes forward-looking statements, including but not limited to statements with respect to our future financial performance, operating results, plans and objectives. Actual results may differ materially from those currently anticipated depending upon a variety of factors, including those described below under the sub-heading, "Future Performance and Risk Factors."

The following discussion should be read in conjunction with the unaudited condensed consolidated interim financial statements and notes thereto included in Part I—Item 1 of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2000, contained in our 2000 Annual Report on Form 10-K.

    Network Computing Devices, Inc. provides thin client hardware and software that delivers simultaneous, high-performance, easy-to-manage and cost effective access to all of the information on enterprise intranets and the Internet from thin client, UNIX and PC desktops. Our product line includes the NCD ThinSTAR line of Windows-based terminals, the NCD Explora network terminals and NCD NC900 network computers. On the software side, our products are the NCD ThinPATH family of client and server software, developed to enhance the connectivity, management and features of the NCD thin clients as well as PCs in accessing information and applications on Windows servers. These products are sold through OEMs, system integrators and distributor/VAR channels worldwide.

Recent Developments

    At June 30, 2001, we had cash and short-term investments of approximately $1,517,000. During the year ended December 31, 2000 and the quarter ended June 30, 2001, we incurred losses of $32.7 million and $1.5 million, respectively, and during those periods our cash and cash equivalents decreased by approximately $6.6 million and $0.2 million, respectively. Based on these factors, among others, there is doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital or obtain financing and ultimately to achieve profitability and positive cash flow.

    In May 2001, our working capital line of credit with Wells Fargo Bank's Foothill Capital subsidiary ("Foothill Capital") was amended to establish new financial covenants and eliminate the maximum ratio of borrowings against foreign accounts receivable. Additionally, in May 2001, the line of credit with Foothill Capital was amended to modify the maturity date of the loan from March 30, 2003 to August 15, 2001, raise the interest rate from prime plus 0.75% to prime plus 2.75% and waive the early termination fee. As of June 30, 2001, we were in default of the minimum EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) covenant of $38,000 for the three month period ended June 30, 2001. In July 2001, the line of credit with Foothill Capital was further amended to reduce the maximum amount of the credit line from $15.0 million to $3.5 million. In August 2001, the maximum credit line was reduced to $3.25 million from $3.5 million and the maturity date of the line of credit with Foothill Capital was extended to September 15, 2001 to provide additional time for another lender to complete its due diligence work and make a final determination regarding its preliminary proposal to extend a new revolving credit facility to us.

    On March 20, 2001, our Common Stock was delisted from the Nasdaq National Market due to the failure to maintain a minimum bid price of $1.00 per share. Our Common Stock is now trading on the OTC Bulletin Board, which is considered to be less liquid and more volatile than the Nasdaq National Market.

    In December 2000, we raised $1,500,000 in capital through a private placement of 220,000 shares of Series B Convertible Preferred Stock with an investor who was elected a member of the Company's

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board of directors on January 11, 2001. The Preferred shares are entitled to dividends of $.41 per annum, which accrue semi-annually if not paid. Each share of Preferred Stock is convertible into ten shares of Common Stock at the election of the holder. In connection with this private placement, the purchaser also received warrants to purchase 600,000 shares of Common Stock at $.75 per share. The warrants expire on December 28, 2005.

    In December 2000, we entered into a mutual settlement of all claims with Tektronix. The claims represented unpaid commitments for both parties. As part of the settlement, we issued 750,000 shares of Common Stock to Tektronix (as a vendor). A gain on the settlement of $821,000 was recorded in December 2000.

    On March 31, 2000 we announced a restructuring plan involving a general reduction in workforce affecting all classes of employees and exiting certain leased facilities. In connection with the plan, we recorded a restructuring charge of $2.6 million consisting of $2.4 million for employee separation costs and $0.2 million for facility exit costs.

    During the third quarter of 2000 we undertook additional restructuring actions involving a general reduction in workforce affecting all classes of employees, exiting certain leased facilities and discontinuing development activities related to several product lines. In connection with these actions, we recorded a restructuring charge of $1.6 million consisting of cash charges of $1.0 million for employee separation costs and $0.2 million for facility exit costs, and non cash charges of $0.4 million related to the discontinued product lines, including the recognition of an impairment loss of $0.3 million on the intangibles attributable to our purchase of Multiplicity LLC ("Multiplicity"). Approximately $0.3 million remains unpaid and is included in accrued liabilities as of June 30, 2001. The restructuring plan is expected to be completed by the fourth quarter of 2001.

Results of Operations

Total Net Revenues

    Total net revenues for the second quarters of 2001 and 2000 were $11.2 million and $13.2 million, respectively, representing a decrease of 15%, and $21.7 million and $26.9 million for first six months of 2001 and 2000, respectively, representing a decrease of 19%. Sales to Adtcom and Tech Data accounted for 15% and 6%, respectively, of net revenues in the second quarter of 2001 and 21% and 19%, respectively, of net revenues in the second quarter of 2000. Sales to Adtcom and Tech Data accounted for 17% and 13%, respectively, of net revenues for the first six months of 2001 and 21% and 19%, respectively, of net revenues for the first six months of 2000.

Hardware Revenues

    Hardware revenues consist primarily of revenues from the sale of thin client products, related hardware, and to a lesser extent, fees for related hardware service activities. Hardware revenues were $10.5 million and $12 million for the second quarters of 2001 and 2000, respectively, representing a decrease of 17%, and $20 million and $24.9 million for the first six months of 2001 and 2000, respectively, representing a decrease of 20%. The decrease in hardware revenues is due to fewer thin client unit sales, a decline in service revenue, and the loss of sales to IBM, whose agreement with us terminated on December 31, 2000.

Software Revenues

    Software revenues consist primarily of revenues from the licensing of software products and related support services. Software products that are included in revenue for the periods presented are (i) NCD ThinPATH, (ii) NCD Wincenter, our multi-user Windows NT application server software, (iii) NCD PC-Xware, our thin client software for PCs, and (iv) NCDware, our proprietary thin client software.

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Revenues from software and related services were $0.8 million and $1.1 million for the second quarters of 2001 and 2000, respectively, representing a decrease of 27% and $1.7 million and $2.0 million for the first six months of 2001 and 2000, respectively, representing a decrease of 15%. The decrease in software revenues was in line with the decrease in related hardware revenues resulting from reduced thin client unit sales.

Gross Margin on Hardware Revenues

    Our gross margins on hardware revenues were $3.4 million and $2.3 million for the second quarters of 2001 and 2000, respectively, and $6.1 million and $3.0 million for the first six months of 2001 and 2000, respectively. Our gross margin percentages on hardware revenues were 32% and 21% for the second quarters of 2001 and 2000, respectively, and 31% and 12% for the first six months of 2001 and 2000, respectively. The increase in gross margins was attributable primarily to a significant write off of certain inventory during the first six months of 2000.

Gross Margin on Software Revenues

    Our gross margins on software revenues were $0.5 million and $0.8 million for the second quarters of 2001 and 2000, respectively, and $1.2 million and $1.5 million for the first six months of 2001 and 2000, respectively. This modest decrease was across all product lines. Our gross margin percentages on software revenues were 66% and 72% for the second quarters of 2001 and 2000, respectively, and 68% and 73% for the first six months of 2001 and 2000, respectively. The reduction on gross margin percentages resulted from higher discounts to customers during 2001.

Research and Development Expenses

    Research and development ("R&D") expenses were $0.8 million and $2.9 million for the second quarters of 2001 and 2000, respectively, and $1.4 million and $6.1 million for the first six months of 2001 and 2000, respectively. The decrease in R&D spending was the result of reduced salary and employee benefit expenses associated with the reduction in our R&D personnel as part of our restructuring.

Marketing and Selling Expenses

    Marketing and selling expenses were $3.3 million and $5.9 million for the second quarters of 2001 and 2000, respectively, and $5.9 million and $13.9 million for the first six months of 2001 and 2000, respectively. The decrease in 2001 resulted from the implementation of our cost reduction plans, including the closure of a number of our U.S. and foreign sales offices and a significant reduction in our marketing programs.

General and Administrative Expenses

    General and administrative expenses were $1.1 million and $1.9 million for the second quarters of 2001 and 2000, respectively, and $2.2 million and $4.5 million for the first six months of 2001 and 2000, respectively. The decrease of $0.8 million between the second quarter of 2001 and the second quarter of 2000 as well as the decrease of $2.3 million between the first six months of 2001 and the first six months of 2000, is due primarily to a reduction in our workforce, cost reduction programs and a reduction in foreign currency translation losses.

Charge For Acquired In-Process Research and Development

    During the first quarter of 2000, we incurred a charge of $1.8 million of in-process research and development associated with the acquisition of Multiplicity in January 2000. The amount allocated to

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in-process research and development was determined by a third party assessment using established techniques for the high-technology industry.

Interest (Expense), Net

    Interest (expense), net, was $181,000 and $132,000 for the second quarters of 2001 and 2000, respectively, and $325,000 and $123,000 for the first six months of 2001 and 2000, respectively. The change reflects a $17,000 decrease in interest income, due primarily to decreased average balances in interest- earning accounts, and a $32,000 increase in interest expense due to the line of credit we secured on March 30, 2000, our issuance of a $3.3 million convertible note payable in September 2000 and dividends accrued on our Series B Convertible Preferred Stock.

Income Taxes

    The provision for income taxes for the first six months of 2001 is for foreign income taxes. We continue to generate tax net operating loss carryforwards for the United States federal and state jurisdictions. However, no deferred tax assets have been recognized in respect of these carryforwards because continued losses create uncertainty about our ability to generate sufficient taxable income to realize the related benefits.

Financial Condition

    At June 30, 2001, we had total assets of $21.1 million, representing a decrease from $26.9 million at December 31, 2000. The change in total assets reflects decreases in cash and equivalents of $0.6 million, short-term investments of $0.3 million, inventory of $1.3 million, prepaid assets of $1.1 million, and accounts receivable and property and equipment of $0.3 million. In the second quarter of 2001, accounts receivable increased by $0.1 million while accounts payable, accrued expenses and deferred revenue decreased by $1.0 million, $0.6 million and $0.7 million, respectively.

Capital Requirements

    Capital spending requirements for the remainder of 2001 are estimated at approximately $0.3 million.

Liquidity

    As of June 30, 2001, we had combined cash and equivalents and short-term investments totaling $1.5 million, and $6.6 million in notes payable, consisting of $3.3 million in bank indebtedness and $3.3 million outstanding on SCI's convertible note. Cash used in operations was $0.6 million in the first six months of 2001 compared to cash used in operations of $9.7 million for the first six months of 2000. In the first six months of 2001, a net loss of $3.3 million was offset by a decrease in inventories of $1.3 million, prepaid expenses of $1.1 million, accounts payable of $1.0 million, accrued expenses of $0.6 million and deferred revenue of $0.7 million. In the first six months of 2000, a net loss of $24.8 million and a decrease in accounts payable of $1.8 million were only partially offset by a decrease in accounts receivable and inventories of $9.4 million and $3.4 million, respectively, and an increase in accrued expenses of $1.0 million.

    Cash provided by investing activities of $0.5 million in the first six months of 2001 resulted from the maturity of short-term investments of $0.3 million and a reduction in other assets of $0.2 million. Cash provided by investing activities of $1.0 million in the first six months of 2000 is the result of sales and maturities of short-term investments of $3.9 million offset by the cash used to acquire Multiplicity of $2.2 million and purchases of short-term investments of $0.7 million.

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    Cash provided by financing activities of $0.2 million in the first six months of 2001 resulted from the receipt of $1.5 million for the sale of convertible preferred stock offset by the net reduction of the outstanding balance under our line of credit of $1.3 million. Cash provided by financing activities of $5.9 million in the first six months of 2000 reflects the proceeds of $5.1 million from borrowings under the line of credit and proceeds of $0.8 million from the issuance of common stock.

    On March 30, 2000, we secured a working capital line of credit with Wells Fargo Bank's Foothill Capital subsidiary ("Foothill Capital"). Our line of credit is secured by substantially all of our assets. Under the terms of the agreement borrowings bear interest at a rate of prime plus 0.75% (8.00% at June 30, 2001). The amount that can be borrowed at any given time is determined by the balance of our aging, location and other factors of accounts receivable. The outstanding loan was approximately $3.3 million at June 30, 2001.

    In May 2001, the line of credit with Foothill Capital was amended to establish new financial covenants and eliminate the maximum ratio of borrowings against foreign accounts receivable. Additionally, in May 2001, the line of credit with Foothill Capital was amended to modify the maturity date of the loan from March 30, 2003 to August 15, 2001, raise the interest rate from prime plus 0.75% to prime plus 2.75% and waive the early termination fee. As of June 30, 2001, we were in default of the minimum EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) covenant of $38,000 for the three month period ended June 30, 2001. In July 2001, the line of credit with Foothill Capital was further amended to reduce the maximum amount of the credit line from $15.0 million to $3.5 million. In August 2001, the maximum credit line was reduced to $3.25 million from $3.5 million and the maturity date of the line of credit with Foothill Capital was extended to September 15, 2001 to provide additional time for another lender to complete its due diligence work and make a final determination regarding its preliminary proposal to extend a new revolving credit facility to us.

    We have received an indication from SCI that they intend to extend the maturity date on our $3.3 million note payable, which currently matures on September 30, 2001.

Recent Accounting Pronouncements

    In June 2001, the Financial Accounting Standards Board finalized FASB Statement No. 141, "Business Combinations" ("SFAS 141"), and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the Company reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141.

    SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142.

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    The Company's previous business combinations were accounted for using the purchase method. As of June 30, 2001, the net carrying amount of goodwill remaining after the purchase of the Network Displays Business unit of Tektronix in December 1998 is $1.8 million and there are no intangible assets relating to the purchase of Multiplicity in January 2000. Amortization expense during the three- and six-month periods ended June 30, 2001 was $101,000 and $202,000, respectively. At present, the Company is currently assessing, but has not yet determined the impact the adoption of SFAS 141 and SFAS 142 will have on its financial position and results of operations.

Future Performance and Risk Factors

Our future business, operating results and financial condition are subject to various risks and uncertainties, including those described below.

Evolving Thin Client Computing Market

    We derive substantially all of our revenues from the sale of thin client network computing products and related software. Initially, our thin client product offerings primarily focused on the UNIX marketplace using the X.11 display protocol in X-terminal thin client devices and X server software for personal computers. Following our March 1996 OEM agreement with Citrix Systems, Inc. ("Citrix") we were able to offer WinCenter multi-user Windows NT application server software, which provided Windows applications to our own as well as other devices that relied on the X.11 display protocol. We also moved to offer the Citrix ICA protocol on our X-terminal thin clients. Sales of network computers to traditional X.11 customers remains an important part of our business. In June 1998 we entered into a licensing agreement with Microsoft which enabled us to offer new, lower-priced thin client network computing devices known as Windows-based terminals. Recently, we have seen intense competition from alternative desktop systems, particularly personal computers, whose selling prices are at historic lows for relatively high performance configurations, and which can be configured to work in the same manner as Windows-based terminals. Despite the lower total cost of ownership of thin client devices, our future success will depend substantially upon increased acceptance of the thin client computing model and the successful marketing of our new thin client computing hardware and software products into the server and web-based computing markets. There can be no assurance that our new thin client computing products will compete successfully with alternative desktop solutions or that the thin client computing model will be widely adopted in the rapidly evolving desktop computer market. The failure of new markets to develop for our thin client computing products would have a material, adverse effect on our business, operating results and financial condition.

Competition

    The market for thin client products and similar products that facilitate access to data over networks are characterized by rapidly changing technology and evolving industry standards. We experience significant competition from other network computer manufacturers, suppliers of personal computers and workstations and software developers. Competition within the thin client computing market has intensified over the past several quarters, resulting in price reductions and reduced profit margins. We expect this intense competition and pricing pressure to continue, and there can be no assurance that we will be able to continue to compete successfully against current and future competitors as the desktop computer market evolves and competition increases. There is the possibility that competition in the future could come from companies not currently in the market or with greater resources than ours which would adversely affect our operating results.

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Fluctuations in Operating Results

    Our operating results have varied significantly, particularly on a quarterly basis, as a result of a number of factors, including general economic conditions affecting industry demand for computer products, the timing and market acceptance of new product introductions by us and our competitors, the timing of significant orders from and shipments to large customers, periodic changes in product pricing and discounting due to competitive factors. Our operating results may fluctuate in the future as a result of these and other factors, including our success in developing and introducing new products, our product and customer mix, licensing costs, the level of competition which we experience and our ability to develop and maintain strategic business alliances.

    We operate with a relatively small backlog. Revenues and operating results therefore generally depend on the volume and timing of orders received, which are difficult to forecast and which may occur disproportionately during any given quarter or year. Our expense levels are based in part on our forecast of future revenues. If revenues are below expectations, our operating results may be adversely affected. Like others in our industry, we experience a disproportionate amount of shipments occurring in the last month of our fiscal quarters. This increases the risk of material quarter-to-quarter fluctuations in our revenues and operating results.

New Product Development and Timely Introduction of New and Enhanced Products

    The markets for our products are characterized by rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles. Our future results will depend to a considerable extent on our ability to continuously develop, introduce and deliver in quantity new hardware and software products that offer our customers enhanced performance at competitive prices. The development and introduction of new products is a complex and uncertain process requiring substantial financial resources and high levels of innovation, accurate anticipation of technological and market trends and the successful and timely completion of product development. Once a hardware product is developed, we must rapidly bring it into volume production, a process that requires accurate forecasting of customer requirements in order to achieve acceptable manufacturing costs. The introduction of new or enhanced products also requires us to manage the transition from older, displaced products in order to minimize disruption to customer ordering patterns, avoid excessive levels of older product inventories and ensure that adequate supplies of new products can be delivered to meet customer demand. As we are continuously engaged in this product development and transition process, our operating results may be subject to considerable fluctuation, particularly when measured on a quarterly basis. The inability to finance important research and development projects, delays in the introduction of new and enhanced products, the failure of such products to gain market acceptance, or problems associated with new product transitions could adversely affect our operating results.

Reliance on Independent Distributors and Resellers

    We rely significantly on independent distributors and resellers for the distribution of our products. However, there can be no assurance that our distributors and resellers will continue their current relationships with us or that they will not give higher priority to the sale of other products, which could include products of our competitors. A reduction in sales effort or discontinuance of sales of our products by our distributors and resellers could lead to reduced sales and could adversely affect our operating results. In addition, there can be no assurance as to the continued viability or the financial stability of our distributors and resellers, our ability to retain our existing distributors and resellers or our ability to add distributors and resellers in the future.

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Reliance on Independent Contractors

    We rely on independent contractors for virtually all of the manufacture of our thin client computing products and accessories. Our reliance on these independent contractors limits our control over delivery schedules, quality assurance and product costs. In addition, a number of our independent suppliers are located abroad. Our reliance on these foreign suppliers subjects us to risks such as the imposition of unfavorable governmental controls or other trade restrictions, changes in tariffs and political instability. We currently obtain all of our thin client computing products from SCI, which has locations in Thailand as well as various other countries throughout the world. Although we believe that the manufacture of our products could be relocated to one of SCI's other facilities if necessary within a few weeks, any significant interruption in the supply of products from this contractor would have a material, adverse effect on our business and operating results. On July 16, 2001, SCI and Sanmina announced their intention to merge the two companies. As a result of this pending merger, any potential change in strategic direction by the new entity, could have a significant impact on our operations.

    A number of components and parts used in our products, including certain semiconductor components, also are currently available from single or limited sources of supply. We have no long-term purchase agreements or other guaranteed supply arrangements with suppliers of these single or limited source components. We have generally been able to obtain adequate supplies of parts and components in a timely manner from existing sources under purchase orders and endeavor to maintain inventory levels adequate to guard against interruptions in supplies. However, our inability to obtain sufficient supplies of these parts and components from existing suppliers or to develop alternate supply sources would adversely affect our operating results.

International Sales

    International sales and operations may be subject to risks such as the imposition of governmental controls, export license requirements, restrictions on the export of technology, political instability, trade restrictions, changes in tariffs and difficulties in staffing and managing international operations and managing accounts receivable. In addition, the laws of certain countries do not protect our products and intellectual property rights to the same extent as the laws of the United States. There can be no assurance that these factors will not have an adverse effect on our future international sales and, consequently, on our operating results.

Dependence on Key Personnel

    Our success depends to a significant degree upon the continuing contributions of our senior management and other key employees. We believe that our future success will depend in large part on our ability to attract and retain highly-skilled engineering, managerial, sales and marketing personnel. Competition for such personnel is intense, and there can be no assurance that we will be successful in attracting, integrating and retaining such personnel. Failure to attract and retain key personnel could have a material, adverse effect on our business, operating results or financial condition.

Volatility of Stock Price

    On March 20, 2001, our Common Stock was delisted from the Nasdaq National Market due to the failure to maintain a minimum bid price of $1.00 per share. Our Common Stock is now trading on the OTC Bulletin Board, which is considered to be less liquid and more volatile than the Nasdaq National Market.

    The market price of our common stock has fluctuated significantly over the past several years and is subject to material fluctuations in the future in response to announcements concerning us or our competitors or customers, quarterly variations in operating results, announcements of technological innovations, the introduction of new products or changes in product pricing policies by us or our

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competitors, general conditions in the computer industry, developments in the financial markets and other factors. In particular, shortfalls in our quarterly operating results from historical levels or from levels forecast by securities analysts could have an adverse effect on the trading price of the common stock. We may not be able to quantify such a quarterly shortfall until the end of the quarter, which could result in an immediate and adverse effect on the common stock price. In addition, the stock market has, from time to time, experienced extreme price and volume fluctuations that have particularly affected the market prices for technology companies and which have been unrelated to the operating performance of the affected companies. Broad market fluctuations of this type may adversely affect the future market price of our common stock.

Liquidity

    As of June 30, 2001, we had combined cash and equivalents totaling $1.5 million, and $6.6 million in notes payable, consisting of $3.3 million in bank indebtedness and $3.3 million in other debt.

    On March 30, 2000, we secured a working capital line of credit with Wells Fargo Bank's Foothill Capital subsidiary ("Foothill"). Our line of credit is secured by substantially all of our assets. Under the terms of the agreement borrowings bear interest at a rate of prime plus 0.75% (8.00% at June 30, 2001). The amount that can be borrowed at any given time is determined by the balance of our aging, location and other factors of accounts receivable. The outstanding loan was approximately $3.3 million at June 30, 2001.

    In May 2001, the line of credit with Foothill Capital was amended to establish new financial covenants and eliminate the maximum ratio of borrowings against foreign accounts receivable. Additionally, in May 2001, the line of credit with Foothill Capital was amended to modify the maturity date of the loan from March 30, 2003 to August 15, 2001, raise the interest rate from prime plus 0.75% to prime plus 2.75% and waive the early termination fee. As of June 30, 2001, we were in default of the minimum EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) covenant of $38,000 for the three month period ended June 30, 2001. In July 2001, the line of credit with Foothill Capital was further amended to reduce the maximum amount of the credit line from $15.0 million to $3.5 million. In August 2001, the maximum credit line was reduced to $3.25 million from $3.5 million and the maturity date of the line of credit with Foothill Capital, was extended to September 15, 2001 to provide additional time for another lender to complete its due diligence work and make a final determination regarding its preliminary proposal to extend a new revolving credit facility to us.

    We have received an indication from SCI that they intend to extend the maturity date on our $3.3 million note payable, which currently matures on September 30, 2001.

Going Concern Uncertainty

    The Company has incurred losses from continuing operations for the year ended December 31, 2000 of approximately $32.7 million and for the three- and six-month periods ended June 30, 2001 of approximately $1.5 million and $3.3 million, respectively. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing or refinancing as may be required and ultimately to attain profitability. The Company is actively marketing its existing and new products, which it believes will ultimately lead to profitable operations. However, no assurance can be given that these available funds will meet the Company's cash requirements in the future. The financial statements do not include any adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

    All of our international sales are now denominated in U.S. dollars. We still have a few small accounts receivable denominated in Euros as of June 30, 2001, which are subject to exchange rate fluctuations. This will affect our operating results negatively or positively, depending on the value of the U.S. dollar against the Euro, although the effect on our results of operation is not expected to be material.

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NETWORK COMPUTING DEVICES, INC.

PART II—OTHER INFORMATION

Item 3. Defaults Upon Senior Securities

    In May 2001, our working capital line of credit with Wells Fargo Bank's Foothill Capital subsidiary ("Foothill Capital") was amended to establish new financial covenants and eliminate the maximum ratio of borrowings against foreign accounts receivable. Additionally, in May 2001, the line of credit with Foothill Capital was amended to modify the maturity date of the loan from March 30, 2003 to August 15, 2001, raise the interest rate from prime plus 0.75% to prime plus 2.75% and waive the early termination fee. As of June 30, 2001, we were in default of the minimum EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) covenant of $38,000 for the three month period ended June 30, 2001. Such technical default could potentially result in Foothill Capital calling our loan. In July 2001, the line of credit with Foothill Capital was further amended to reduce the maximum amount of the credit line from $15.0 million to $3.5 million. In August 2001, the maximum credit line was reduced to $3.25 million from $3.5 million and the maturity date of the line of credit with Foothill Capital was extended to September 15, 2001 to provide additional time for another lender to complete its due diligence work and make a final determination regarding its preliminary proposal to extend a new revolving credit facility to us.

Item 4. Submission of Matters to a Vote of Security Holders

    The Annual Meeting of Shareholders of the Company was held on May 30, 2001.

(a)

The following four persons nominated by management were elected as directors at the meeting:

Nominee	Shares Voted For	Withheld
Robert G. Gilbertson	13,220,609	974,064
Rudolph G. Morin	13,222,067	972,606
Douglas H. Klein	13,237,576	957,097
Michael Ledbetter	12,826,135	1,368,538

(b)

A proposal to ratify the selection of BDO Seidman, LLP as independent auditors of the Company for the current fiscal year was approved by a vote of 14,149,022 shares for, 25,983 shares against, and 19,668 shares abstaining.

Item 6. Exhibits and Reports on Form 8-K.

(a)

The following exhibits are filed herewith:

Exhibit 10.61	Amendment No. 1 to the Loan and Security Agreement, dated January 2001, by and between Network Computing Devices, Inc. and Foothill Capital Corporation.
Exhibit 10.62	Amendment No. 2 to the Loan and Security Agreement, dated May 2001, by and between Network Computing Devices, Inc. and Foothill Capital Corporation.
Exhibit 10.63	Amendment No. 3 to the Loan and Security Agreement, dated May 31, 2001, by and between Network Computing Devices, Inc. and Foothill Capital Corporation.
Exhibit 10.64	Amendment No. 4 to the Loan and Security Agreement, dated July 2001, by and between Network Computing Devices, Inc. and Foothill Capital Corporation.
Exhibit 10.65	Amendment No. 5 to the Loan and Security Agreement, dated August 9, 2001, by and between Network Computing Devices, Inc. and Foothill Capital Corporation.

(b)

The Company filed no reports on Form 8-K during the three-month period ended June 30, 2001.

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NETWORK COMPUTING DEVICES, INC.

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Network Computing Devices, Inc. (Registrant)
Date: August 14, 2001
	By:	/s/ Michael A. Garner Michael A. Garner Chief Financial Officer and Secretary (Duly Authorized and Principal Financial and Accounting Officer)

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INDEX
Part I: Financial Information Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
NETWORK COMPUTING DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
NETWORK COMPUTING DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
PART II—OTHER INFORMATION
SIGNATURE

EX-10.61

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EXHIBIT 10.61

AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is entered into as of January   , 2001, between FOOTHILL CAPITAL CORPORATION, a California corporation, ("Foothill"), and NETWORK COMPUTING DEVICES, INC., a Delaware corporation ("Borrower"), with reference to the following facts:

WHEREAS, Foothill and Borrower are parties to that certain Loan and Security Agreement, dated as of March 30, 2000 (as amended, restated, or modified from time to time, the "Agreement");

WHEREAS, Borrower has requested that Foothill increase the concentration limit with respect to Accounts owing by Unique Co-op Solutions, Inc.;

WHEREAS, Borrower also has advised Foothill that Borrower has issued that certain Convertible Promissory Note, dated as of August 31, 2000, to the order of SCI Technology, Inc., an Alabama corporation, in the original principal amount of $3,300,000 (the "SCI Indebtedness"), a copy of which is attached hereto as Exhibit A; and

WHEREAS, Foothill is willing to consent to the incurrence of the SCI Indebtedness and to so amend the Agreement, in each case, in accordance with the terms and conditions hereof.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as follows:

1.  Defined Terms.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby.

2.  Amendments to the Agreement.

    (a) Clause (h) of the definition of "Eligible Domestic Accounts" contained in Section 1.1 of the Agreement hereby is amended and restated in its entirety as follows:

    "(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 Ingram Micro and its Affiliates, 20% of the sum of all Eligible Accounts, (d) with respect to Unique Co-op Solutions, Inc., 20% of the sum of all Eligible Accounts, and (e) 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;"

    (b) Clause (g) of the definition of "Eligible Foreign Accounts" contained in Section 1.1 of the Agreement hereby is amended and restated in its entirety as follows:

    "(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 Ingram Micro and its Affiliates, 20% of the sum of all Eligible Accounts, (d) with respect to Unique Co-op Solutions, Inc., 20% of the sum of all Eligible Accounts, and (e) 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;"

3.  Consent to SCI Indebtedness.  Anything in the Agreement or the other Loan Documents to the contrary notwithstanding, Foothill hereby consents to the incurrence by Borrower of the SCI Indebtedness.

4.  Representations and Warranties.  Borrower hereby represents and warrants to Foothill that:

    (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected,

    (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms, and

    (c) this Amendment has been duly executed and delivered by Borrower.

5.  Conditions Precedent to Amendment.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment:

    (a) Foothill shall have received the reaffirmation and consent attached hereto as Exhibit B, duly executed and delivered by an authorized officer of each Guarantor;

    (b) The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

    (c) No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein;

    (d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower or Foothill; and

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

6.  Miscellaneous.

    (a) Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (b) Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California.

    (d) This Amendment 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 Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of

2

a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

[Remainder of page left intentionally blank]

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

NETWORK COMPUTING DEVICES, INC.,
a Delaware corporation

By:

Name:

Title:

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:

Name:

Title:

4

Exhibit A

SCI PROMISSORY NOTE

5

Exhibit B

REAFFIRMATION AND CONSENT

    All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Amendment Number One to Loan and Security Agreement, dated as of January  , 2001 (the "Amendment"). The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment and to the transactions described therein; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is a party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligations to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

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

By:

Name:

Title:

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

By:

Name:

Title:

6

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

By:

Name:

Title:

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

By:

Name:

Title:

NCD GRAPHIC SOFTWARE CORPORATION, an Oregon corporation

By:

Name:

Title:

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

By:

Name:

Title:

NCD ACQUISITION CORP., an Indiana corporation

By:

Name:

Title:

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

By:

Name:

Title:

7

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

By:

Name:

Title:

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AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT
Exhibit A
Exhibit B

EX-10.62

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EXHIBIT 10.62

AMENDMENT NUMBER TWO TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is entered into as of May   , 2001, between FOOTHILL CAPITAL CORPORATION, a California corporation, ("Foothill"), and NETWORK COMPUTING DEVICES, INC., a Delaware corporation ("Borrower"), with reference to the following facts:

WHEREAS, Foothill and Borrower are parties to that certain Loan and Security Agreement, dated as of March 30, 2000 (as amended, restated, or modified from time to time, the "Agreement");

WHEREAS, Borrower has requested that Foothill, among other things, remove the domestic availability limit from the calculation of the Borrowing Base in order to increase Availability; and

WHEREAS, Foothill is willing to consent to the removal of the domestic availability limit and to make certain amendments and take other actions with respect to the Agreement, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as follows:

    1.  Defined Terms.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby.

    2.  Amendments to the Agreement.

    (a) Clause (a) of the definition of "Eligible Foreign Accounts" contained in Section 1.1 of the Agreement hereby is amended and restated in its entirety as follows:

    (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; provided, however, that with respect to Foreign Accounts as to which Adtcom is the Account Debtor, such Foreign Accounts shall not be deemed Eligible Foreign Accounts in the event Adtcom has failed to pay such Foreign Accounts within 60 days of original invoice date or such Foreign Accounts are more than 30 days past due, such revised dating terms with respect to Foreign Accounts as to which Adtcom is the Account Debtor to be effective on and after May 31, 2001 unless such revised dating terms are applied prior to such date in the sole discretion of Foothill;

    (b) Section 1.1 of the Agreement hereby is amended by adding or amending and restating, as applicable, the following defined terms in the proper alphabetical order:

"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, 1.0% 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, .667% times the Maximum Amount, and (c) during the period of time from and including the second anniversary of the Closing Date and thereafter, .334% 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 Wells 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, .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, .334% times the Maximum

Amount, and (c) during the period of time from and including the second anniversary of the Closing Date and thereafter, 0.167% times the Maximum Amount.

"EBITDA" means, for any period, determined on a consolidated basis, the sum of (a) net income (or net loss) exclusive of any reduction in the bad debt reserves to the extent any such reduction results in an increase in net income, (b) interest expense, (c) income tax expense, (d) depreciation expense, (e) amortization expense, and (f) non-cash charges relating to non-recurring write downs of goodwill, furniture, fixtures and equipment, in each case determined in accordance with GAAP for such period.

    (c) Clause (z) of Section 2.1(a) of the Agreement hereby is amended and restated in its entirety as follows:

    (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

    (C) the aggregate amount of Foreign Exchange Reserves;

(ii)

$7,500,000;



(iii)

the amount of Availability created pursuant to clause (y) above;



(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; and



(v)

an amount not to exceed 70% of total Availability as of any date of determination.

    (d) Section 7.20 of the Agreement hereby is amended and restated in its entirety as follows:

    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, 2001	$	(103,000	)
September 30, 2001	$	3,374,000
December 31, 2001	$	4,387,000

    On or before September 30, 2001, Borrower shall deliver to Foothill revised Projections, in form and substance satisfactory to Foothill, covering the period from January 1, 2002, through December 31, 2002. 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's 2002 fiscal year commencing with the fiscal quarter ending March 31, 2002. Additionally, on or before September 30, 2002, Borrower shall deliver to Foothill, revised Projections, in form and substance satisfactory to Foothill, covering the period from January 1, 2003 through December 31, 2003. 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's 2003 fiscal year commencing with the fiscal quarter ending

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March 31, 2003. The failure to so deliver such revised Projections constitutes an Event of Default.

    (b) Minimum EBITDA. EBITDA, measured on a fiscal quarter-end basis, in an amount at least equal to the required amount set forth in the following table for the applicable period set forth opposite thereto:

Required Amount		Applicable Period
$	38,000	For the 3 month period ending June 30, 2001
$	1,009,000	For the 3 month period ending September 30, 2001
$	1,710,000	For the 3 month period ending December 31, 2001

    Notwithstanding anything to the contrary in Section 6.3, Borrower shall provide to Foothill as soon as available, but in any event within 30 days after the end of the above referenced fiscal quarters, its financial statements for the previous fiscal quarter. On or before September 30, 2001, Borrower shall deliver to Foothill revised Projections, in form and substance satisfactory to Foothill, covering the period from January 1, 2002, through December 31, 2002. Upon receipt of such revised Projections, Foothill shall establish, in its Permitted Discretion, minimum EBITDA amounts to be measured as of the last day of each fiscal quarter of Borrower's 2002 fiscal year commencing with the fiscal quarter ending March 31, 2002. Additionally, on or before September 30, 2002, Borrower shall deliver to Foothill, revised Projections, in form and substance satisfactory to Foothill, covering the period from January 1, 2003 through December 31, 2003. Upon receipt of such revised Projections, Foothill shall establish, in its Permitted Discretion, minimum EBITDA amounts to be measured as of the last day of each fiscal quarter of Borrower's 2003 fiscal year commencing with the fiscal quarter ending March 31, 2003. The failure to so deliver such revised Projections constitutes an Event of Default.

    3.  Removal of Foreign Availability Cap.  Foothill hereby agrees, from and after the effectiveness of this Amendment, and until such time as Foothill in its sole and absolute discretion determines to reapply such limitation; and from time to time thereafter, again subject to Foothill discretion, not to limit Availability provided by Eligible Foreign Accounts through the application of subclause (iii) of clause (z) of Section 2.1(a), but to permit Availability provided by Eligible Foreign Accounts to exceed Availability provided by Domestic Eligible Accounts, subject to the other requirements of Section 2.1(a)(z).

    4.  Representations and Warranties.  Borrower hereby represents and warrants to Foothill that:

    (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected,

    (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms, and

    (c) this Amendment has been duly executed and delivered by Borrower.

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    5.  Amendment Fee.  Borrower shall pay to Foothill an amendment fee of $150,000, which fee shall be fully earned as of the effectiveness of this Amendment, but which fee shall be payable in twelve equal installments of $12,500, such installments payable on the first day of May, 2001 and continuing monthly until and including the first day of April, 2002.

    6.  Conditions Precedent to Amendment.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment:

    (a) Foothill shall have received the reaffirmation and consent attached hereto as Exhibit A, duly executed and delivered by an authorized officer of each Guarantor;

    (b) The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

    (c) No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein;

    (d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower or Foothill; and

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

    7.  Notice.  Notwithstanding previous practice under the Agreement, Foothill hereby notifies Borrower that as of May 15, 2001 Foothill shall strictly adhere to Section 2.8 of the Agreement.

    8.  Miscellaneous.

    (a) Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (b) Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California.

    (d) This Amendment 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 Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

    [Remainder of page left intentionally blank]

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

NETWORK COMPUTING DEVICES, INC.,
a Delaware corporation

By:

Name:

Title:

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:

Name:

Title:

5

Exhibit A

REAFFIRMATION AND CONSENT

    All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Amendment Number Two to Loan and Security Agreement, dated as of May  , 2001 (the "Amendment"). The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment and to the transactions described therein; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is a party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligations to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

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

By:

Name:

Title:

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

By:

Name:

Title:

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

By:

Name:

Title:

6

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

By:

Name:

Title:

NCD GRAPHIC SOFTWARE
CORPORATION, an Oregon corporation

By:

Name:

Title:

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

By:

Name:

Title:

NCD ACQUISITION CORP., an Indiana corporation

By:

Name:

Title:

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

By:

Name:

Title:

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

By:

Name:

Title:

7

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AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT
Exhibit A REAFFIRMATION AND CONSENT

EX-10.63

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EXHIBIT 10.63

AMENDMENT NUMBER THREE TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is entered into as of May  , 2001, between FOOTHILL CAPITAL CORPORATION, a California corporation, ("Foothill"), and NETWORK COMPUTING DEVICES, INC., a Delaware corporation ("Borrower"), with reference to the following facts:

WHEREAS, Foothill and Borrower are parties to that certain Loan and Security Agreement, dated as of March 30, 2000 (as amended, restated, or modified from time to time, the "Agreement");

WHEREAS, Borrower has requested that Foothill, make certain changes to the Agreement; and

WHEREAS, Foothill is willing to consent to these certain changes and take other actions with respect to the Agreement, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as follows:

1.  Defined Terms.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby.

2.  Amendments to the Agreement.

    (a)  Section 1.1  of the Agreement hereby is amended by adding or amending and restating, as applicable, the following defined terms in the proper alphabetical order:

    "Maturity Date" has the meaning set forth in Section 3.4.

    "Obligations" means all loans, Advances, debts, principal, interest (including any interest that, but for the provisions of the Bankruptcy Code, would have accrued), premiums, liabilities (including all amounts charged to Borrower's Loan Account pursuant hereto), obligations, the Second Amendment Fee, the Third Amendment Fee, any other 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.

    "Second Amendment" means that certain Amendment Number Two to Loan and Security Agreement, dated as of May 14, 2001 between Borrower and Foothill.

    "Second Amendment Fee" means an amendment fee of $150,000 in consideration for Foothill entering into the Second Amendment, which fee shall be fully earned as of the effectiveness of the Second Amendment, but which fee shall be payable in cash in installments of (i) $12,500 on the first day of May, 2001, June, 2001, July, 2001 and August, 2001 and (ii) $100,000 on the earlier to occur of (i) August 15, 2001 or (ii) the date on which the Agreement is terminated by the provisions of either Section 3.6 or Section 3.7 of the Agreement. This definition amends Section 5 of the Second Amendment.

    "Third Amendment" means that certain Amendment Number Three to Loan and Security Agreement, dated as of May  , 2001, between Borrower and Foothill.

    "Third Amendment Closing Date" means the date that all conditions set forth in Section 5 of the Third Amendment have been satisfied.

    "Third Amendment Fee" has the meaning ascribed thereto in Section 4 of the Third Amendment.

    (b)  Section 1.1  of the Agreement hereby is amended by deleting the following defined terms:

    The defined terms "Applicable Prepayment Premium" and "Early Termination Premium" are hereby deleted from the Agreement. All references to "Applicable Prepayment Premium" and "Early Termination Premium" throughout the Agreement hereby shall be deleted.

    (c)  Section 2.6(a)  of the Agreement hereby is amended and restated in its entirety as follows:

    (a) Interest Rate. Except as provided in clause (c) below, (i) all Obligations shall bear interest at a per annum rate of 2.75 percentage points above the Base Rate.

    (d)  Section 3.4  of the Agreement is amended and restated in its entirety as follows:

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 August 15, 2001 (the "Maturity 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.

    (e)  Section 3.6  of the Agreement is amended and restated in its entirety as follows:

3.6  Early Termination by Borrower.  The provisions of Section 3.4 to the contrary notwithstanding, Borrower has the option, at any time upon 5 days prior written notice to Foothill, to terminate this Agreement by paying to Foothill, in cash, the Obligations (except for the Third Amendment Fee).

    (f)  Section 3.7  of the Agreement is amended and restated in its entirety as follows:

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 Third Amendment Fee. The Third Amendment Fee 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.

3.  Representations and Warranties.  Borrower hereby represents and warrants to Foothill that:

    (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected,

    (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms, and

    (c) this Amendment has been duly executed and delivered by Borrower.

4.  Amendment Fee.  Borrower shall pay to Foothill an amendment fee of $100,000 (the "Third Amendment Fee"), which fee shall be fully earned as of the effectiveness of this Amendment; provided, however, that if the Borrower shall fully pay in cash all of the Obligations (except for the Third Amendment Fee) no later than August 15, 2001, then the Third Amendment Fee shall be waived by Foothill. If all of the Obligations (except for the Third Amendment Fee) are not fully paid in cash by

2

August 15, 2001, then Borrower shall pay Foothill in cash the Third Amendment Fee as of August 16, 2001. Notwithstanding the foregoing, if Foothill shall exercise the termination provisions in Section 3.7 of the Agreement, then Borrower shall pay Foothill the Third Amendment Fee on the date that Foothill exercises its rights under Section 3.7 of the Agreement.

5.  Conditions Precedent to Amendment.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment:

    (a) Foothill shall have received the reaffirmation and consent attached hereto as Exhibit A, duly executed and delivered by an authorized officer of each Guarantor;

    (b) The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

    (c) No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein;

    (d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower or Foothill; and

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

6.  Waiver.  Foothill shall waive all of the Events of Default existing as of the date hereof and listed on Exhibit B hereto.

7.  Miscellaneous.

    (a) Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (b) Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California.

    (d) This Amendment 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 Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

[Remainder of page left intentionally blank]

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

NETWORK COMPUTING DEVICES, INC.,
a Delaware corporation

By:

Name:

Title:

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:

Name:

Title:

4

Exhibit A

REAFFIRMATION AND CONSENT

    All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Amendment Number Three to Loan and Security Agreement, dated as of May  , 2001 (the "Amendment"). The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment and to the transactions described therein; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is a party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligations to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

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

By:

Name:

Title:

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

By:

Name:

Title:

5

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

By:

Name:

Title:

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

By:

Name:

Title:

NCD GRAPHIC SOFTWARE CORPORATION, an Oregon corporation

By:

Name:

Title:

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

By:

Name:

Title:

NCD ACQUISITION CORP., an Indiana corporation

By:

Name:

Title:

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

By:

Name:

Title:

6

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

By:

Name:

Title:

7

EXHIBIT B

Waivers

    Foothill waives the following Events of Default:

    (1)  Section 8.1:  Borrower has failed to remit Collections in the amount of $127,640 in February 2001 and $220,455 in March 2001 in violation of Section 2.7 of the Agreement. Borrower has failed to remit Collections in the months of April and May 2001 as well, however these amounts have not yet been quantified. This failure is also in violation of Section 2.7 of the Agreement.

    The item identified in paragraph (1) above also constitutes an Event of Default under Section 8.3 of the Agreement.

8

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AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT
Exhibit A
EXHIBIT B

EX-10.64

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Exhibit 10.64

AMENDMENT NUMBER FOUR TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is entered into as of July   , 2001, between FOOTHILL CAPITAL CORPORATION, a California corporation, ("Foothill"), and NETWORK COMPUTING DEVICES, INC., a Delaware corporation ("Borrower"), with reference to the following facts:

WHEREAS, Foothill and Borrower are parties to that certain Loan and Security Agreement, dated as of March 30, 2000 (as amended, restated, or modified from time to time, the "Agreement");

WHEREAS, Borrower has requested that Foothill, make certain changes to the Agreement; and

WHEREAS, Foothill is willing to consent to these certain changes and take other actions with respect to the Agreement, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as follows:

1.  Defined Terms.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby.

2.  Amendments to the Agreement.

    Section 1.1 of the Agreement hereby is amended by adding or amending and restating, as applicable, the following defined terms in the proper alphabetical order:

    "Fourth Amendment" means that certain Amendment Number Four to Loan and Security Agreement, dated as of July  , 2001, between Borrower and Foothill.

    "Fourth Amendment Closing Date" means the date that all conditions set forth in Section 5 of the Fourth Amendment have been satisfied.

    "Fourth Amendment Fee" has the meaning ascribed thereto in Section 4 of the Fourth Amendment.

    "Maximum Amount" means $3,500,000.

3.  Representations and Warranties.  Borrower hereby represents and warrants to Foothill that:

    (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected,

    (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms, and

    (c) this Amendment has been duly executed and delivered by Borrower.

4.  Amendment Fee.  Borrower shall pay to Foothill an amendment fee of $25,000 (the "Fourth Amendment Fee"), which fee shall be fully earned as of the effectiveness of this Amendment.

5.  Conditions Precedent to Amendment.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment:

    (a) Foothill shall have received the reaffirmation and consent attached hereto as Exhibit A, duly executed and delivered by an authorized officer of each Guarantor;

    (b) The representations and warranties in this Amendment, the Agreement as amended by this Amendment and any other amendments thereto, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

    (c) No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein;

    (d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower or Foothill; and

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

6.  Waiver and Notice.

    (a) For the period beginning on the date hereof and ending on July 27, 2001, Foothill shall waive the Event of Default existing as of July 20, 2001 and listed on Exhibit B hereto.

    (b) Notwithstanding previous practice under the Agreement, Foothill hereby notifies Borrower that after July 27, 2001, Foothill shall strictly adhere to Section 2.5 of the Agreement and shall, in accordance with the terms of the Agreement, exercise any rights and remedies arising in connection therewith. It hereby is understood and agreed that any failure by Foothill prior to such date to strictly adhere to Section 2.5 of the Agreement or to exercise its rights or remedies in connection therewith, including but not limited to any rights or remedies available to Foothill pursuant to Section 9 of the Agreement, shall not be construed as a waiver or forbearance of any of Lender's rights, remedies, and powers against Borrower or the Collateral or a waiver of any Default or Events of Default after such date.

7.  Miscellaneous.

    (a) Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (b) Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California.

    (d) This Amendment 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 Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

[Remainder of page left intentionally blank]

2

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

NETWORK COMPUTING DEVICES, INC.,
a Delaware corporation

By:

Name:

Title:

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:

Name:

Title:

3

Exhibit A

REAFFIRMATION AND CONSENT

All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Amendment Number Four to Loan and Security Agreement, dated as of July   , 2001 (the "Amendment"). The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment and to the transactions described therein; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is a party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligations to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

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

By:

Name:

Title:

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

By:

Name:

Title:

4

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

By:

Name:

Title:

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

By:

Name:

Title:

NCD GRAPHIC SOFTWARE CORPORATION,
an Oregon corporation

By:

Name:

Title:

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

By:

Name:

Title:

NCD ACQUISITION CORP., an Indiana corporation

By:

Name:

Title:

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

By:

Name:

Title:

5

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

By:

Name:

Title:

6

EXHIBIT B

Waiver

    The amount of Obligations owed by Borrower to Foothill pursuant to Section 2.1 is greater than the limitations set forth in Section 2.1 and, pursuant to Section 2.5, constitutes an Overadvance as of July 20, 2001. Borrower has failed to immediately pay to Foothill, in cash, the amount of the excess constituting an Overadvance. This failure is in violation of Section 2.5 of the Agreement and constitutes an Event of Default under Section 8.3 of the Agreement.

7

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AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT
Exhibit A
EXHIBIT B

EX-10.65

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EXHIBIT 10.65

AMENDMENT NUMBER FIVE TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is entered into as of August   , 2001, between FOOTHILL CAPITAL CORPORATION, a California corporation, ("Foothill"), and NETWORK COMPUTING DEVICES, INC., a Delaware corporation ("Borrower"), with reference to the following facts:

WHEREAS, Foothill and Borrower are parties to that certain Loan and Security Agreement, dated as of March 30, 2000 (as amended, restated, or modified from time to time, the "Agreement");

WHEREAS, Borrower has requested that Foothill make certain changes to the Agreement; and

WHEREAS, Foothill is willing to consent to these certain changes and take other actions with respect to the Agreement, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as follows:

1.  Defined Terms.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby.

2.  Amendments to the Agreement.

a.  Section 1.1  of the Agreement hereby is amended by adding or amending and restating, as applicable, the following defined terms in the proper alphabetical order:

    "Fifth Amendment" means that certain Amendment Number Five to Loan and Security Agreement, dated as of August   , 2001, between Borrower and Foothill.

    "Fifth Amendment Closing Date" means the date that all conditions set forth in Section 5 of the Fifth Amendment have been satisfied.

    "Maximum Amount" means $3,250,000.

b.  Section 3.4  of the Agreement is hereby amended by deleting the first sentence thereof and inserting the following in place thereof:

    "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 September 15, 2001 (the "Maturity Date")."

3.  Representations and Warranties.  Borrower hereby represents and warrants to Foothill that:

    (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected,

    (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms, and

    (c) this Amendment has been duly executed and delivered by Borrower.

4.  Conditions Precedent to Amendment.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment:

    (a) Borrower shall have retained the services of a crisis management consultant (a "Crisis Management Consultant"), satisfactory to Foothill in its sole discretion. Such Crisis Management Consultant may be chosen from the list of consultants included on Exhibit A hereto. Borrower shall cause the Crisis Management Consultant to communicate directly with Foothill regarding the status of such Crisis Management Consultant's review of Borrower's current financial position and prospects and such other matters as Foothill shall request, with such regularity as Foothill shall request.

    (b) Foothill shall have received the reaffirmation and consent attached hereto as Exhibit B, duly executed and delivered by an authorized officer of each Guarantor;

    (c) The representations and warranties in this Amendment, the Agreement as amended by this Amendment and any other amendments thereto, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

    (d) No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein;

    (e) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower or Foothill; and

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

5.  Miscellaneous.

    (a) Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (b) Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment.

    (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California.

    (d) This Amendment 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 Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

[Remainder of page left intentionally blank]

2

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

NETWORK COMPUTING DEVICES, INC.,
a Delaware corporation

By:

Name:

Title:

FOOTHILL CAPITAL CORPORATION,
a California corporation

By:

Name:

Title:

3

Exhibit A

Mr. Andrew Hinkelman
Pricewaterhouse Coopers LLP
Telephone: (415) 498-6526

Mr. Dave Prolman
Prolman Associates
Telephone: (800) 300-1887

Mr. John L. Davidson
Inverness Partners, Inc.
Telephone: (503) 638-8848

A–1

Exhibit B

REAFFIRMATION AND CONSENT

All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Amendment Number Five to Loan and Security Agreement, dated as of August   , 2001 (the "Amendment"). The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment and to the transactions described therein; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is a party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligations to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

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

By:

Name:

Title:

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

By:

Name:

Title:

A–2

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

By:

Name:

Title:

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

By:

Name:

Title:

NCD GRAPHIC SOFTWARE CORPORATION,
an Oregon corporation

By:

Name:

Title:

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

By:

Name:

Title:

NCD ACQUISITION CORP., an Indiana corporation

By:

Name:

Title:

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

By:

Name:

Title:

A–3

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

By:

Name:

Title:

A–4

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AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT
Exhibit A
Exhibit B