FIFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT

FIFTH AMENDMENT AND MODIFICATION
TO LOAN AND SECURITY AGREEMENT
       THIS FIFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT
        (the "Amendment") is made effective as of January 22, 2009 by and
        among BANK OF AMERICA, N.A., a national banking association, as
        successor-by-merger to LaSalle Business Credit, LLC ("Lender") and
        ZANETT, INC., a Delaware corporation ("Zanett") and ZANETT COMMERCIAL
        SOLUTIONS, INC., a Delaware corporation ("ZCS"; Zanett and ZCS are
        each individually, a "Borrower" and collectively, the "Borrowers").
      
BACKGROUND
       A. Borrowers and Lender have previously entered into a certain Loan
 and Security Agreement dated December 21, 2006, as amended by (i) that
certain First Amendment and Modification to Loan and \Security Agreement and
Other Loan Documents dated May 31, 2007, (ii) that certain Second Amendment
and Modification to Loan and Security Agreement dated November 14, 2007,
(iii) that certain Third Amendment and Modification to Loan and Security
Agreement dated March 17, 2008 and (iv) that certain Fourth Amendment and
Modification to Loan and Security Agreement dated September 2008 (as
amended, the "Loan Agreement"), pursuant to which, inter alia, Lender agreed
to extend to Borrowers certain credit facilities subject to the terms and
conditions set forth therein.
       B. Borrowers and Lender are entering into this Amendment to amend
certain terms and conditions of the Loan Agreement.
       C. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth for such terms in the Loan Agreement.
       NOW, THEREFORE, in consideration of  the foregoing premises and
       intending to be legally bound hereby, the parties hereto agree as
       follows:
          1. Definitions.   The definition of "Maximum Revolving Loan
Limit" set forth in Section 1(a) of the Loan Agreement shall be and is hereby
amended to read, in its entirety, as follows:
""Maximum Revolving Loan Limit" shall mean
$6,000,000."
Even though the Revolving Loan Note made by Borrowers to Lender is for the
face amount of $10,000,000, the Revolving Loan Limit and Maximum Revolving
Loan Limit shall not exceed $6,000,000.

          2. Advance Rate.  Section 2(a)(i) of the Loan Agreement shall
be and is hereby amended to read, in its entirety, as follows:
"(i)  Eighty percent (80%) of the face amount of
Borrowers' then existing Eligible Accounts; minus"
          3. Fixed Charge Coverage Ratio.  Section 14(a) of the Loan
Agreement shall be and is hereby amended to read, in its entirety, as
follows:
"(a)  Fixed Charge Coverage Ratio.  Borrowers shall
maintain a Fixed Charge Coverage Ratio of not less
than the ratio set forth for the corresponding period
set forth below:

Period                           Ratio
For the 3 month period ending    1.0 to 1.0
on December 31, 2006

For the 6 month period ending    0.77 to 1.0

on March 31, 2007

For the 9 month period ending    0.76 to 1.0
on June 30, 2007


For the 12 month period ending   1.10 to 1.0
on September 30, 2007



For the 12 month period ending   0.35 to 1.0
on December 31, 2007


 
For the 3 month period ending    1.10 to 1.0
on March 31, 2008


For the 6 month period ending    1.10 to 1.0
on June 30, 2008


For the 9 month period ending    1.10 to 1.0
on September 30, 2008


For the 12 month period ending   1.25 to 1.0

on December 31, 2008 and each
12 month period ending on the
last day of each fiscal quarter
thereafter"
             

           4. Waiver of EBITDA Covenant.  Borrowers have requested
and Lender has agreed to waive as an Event of Default the
failure of Borrowers to comply with the "EBITDA" covenant
set forth in Section 14(c) of the Loan Agreement for the
November, 2008 calendar month.  Such waiver shall be
limited to Borrowers' compliance with Section 14(c) of the
Loan Agreement solely for such calendar month and for no
other calendar months and such waiver shall not be
construed to constitute a waiver of Borrowers' compliance
with any other terms of the Loan Agreement or an agreement to enter into any
future waivers with Borrowers.

           5. Termination of EBITDA Covenant.  As of the date hereof, the
"EBITDA" covenant set forth in Section 14(c) of the Loan Agreement shall be
terminated and is hereby deleted in its entirety.

           6. Confirmation of Collateral.  Nothing contained herein shall
be deemed to be a compromise, satisfaction, accord and satisfaction,
novation, release or waiver of any of the Loan Documents or Other Agreements,
or any rights or obligations thereunder by Lender of any of its rights under
the Loan Documents or Other Agreements or at law or in equity.  All liens,
security interests, rights and remedies granted to Lender in Loan Documents
and Other Agreements are hereby ratified, confirmed and continued.  Borrowers
acknowledge and agree that the term "Loan Documents" as used in the Loan
Agreement and any other documents executed in connection therewith shall
include, without limitation, this Amendment and any and all other documents
executed in connection herewith.

           7. Challenge to Enforcement.  Borrowers acknowledge and agree
that they do not have any defense, set-off, counterclaim or challenge against
the payment of any sums owing under the Loan Documents and Other Agreements,
or the enforcement of any of the terms or conditions thereof.

           8. Representation and Warranties.  Borrowers hereby, jointly
and severally, represent and warrant, which representations and warranties
shall survive until all Liabilities are paid and satisfied in full, as
follows:
                      8.1 All representations and warranties of Borrowers set
forth in the Loan Documents and Other Agreements are true and complete in all
material respects as of the date hereof.

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