SILICON VALLEY BANK

LOAN AND SECURITY AGREEMENT

Borrower: Alibris
Address: 1250 45th Street, Suite 100
Emeryville, California 94608

Date:

June 30, 2003
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is entered into on the
above date between SILICON VALLEY BANK ("Silicon"), whose address is 3003
Tasman Drive, Santa Clara, California 95054 and the borrower(s) named above
(jointly and severally, the "Borrower"), whose chief executive office is located at the
above address ("Borrower's Address"). The Schedule to this Agreement (the
"Schedule") shall for all purposes be deemed to be a part of this Agreement, and
the same is an integral part of this Agreement. (Definitions of certain terms used in
this Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 Loans. Silicon will make loans to Borrower (the "Loans") up to the amounts
(the "Credit Limit") shown on the Schedule, provided no Default or Event of Default
has occurred and is continuing, and subject to deduction of Reserves for accrued
interest and such other Reserves as Silicon deems proper from time to time in its
good faith business judgment.
1.2 Interest. All Loans and all other monetary Obligations shall bear interest at
the rate shown on the Schedule, except where expressly set forth to the contrary in
this Agreement. Interest shall be payable monthly, on the last day of the month.
Interest may, in Silicon's discretion, be charged to Borrower's loan account, and the
same shall thereafter bear interest at the same rate as the other Loans. Silicon may,
in its discretion, charge interest to Borrower's Deposit Accounts maintained with
Silicon.
1.3 Overadvances. If at any time or for any reason the total of all outstanding
Loans and all other monetary Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to repay to
Silicon the amount of any Overadvance, Borrower agrees to pay Silicon interest on
the outstanding amount of any Overadvance, on demand, at the Default Rate.
1.4 Fees. Borrower shall pay Silicon the fees shown on the Schedule, which are in
addition to all interest and other sums payable to Silicon and are not refundable.
1.5 Loan Requests. To obtain a Loan, Borrower shall make a request to Silicon by
facsimile or telephone. Loan requests received after 12:00 Noon will not be
considered by Silicon until the next Business Day. Silicon may rely on any telephone
request for a Loan given by a person whom Silicon believes is an authorized
representative of Borrower, and Borrower will indemnify Silicon for any loss Silicon
suffers as a result of that reliance.
1.6 Letters of Credit. At the request of Borrower, Silicon may, in its good faith
business judgment, issue or arrange for the issuance of. letters of credit for the
account of Borrower, in each case in form and substance satisfactory to Silicon in
its sole discretion (collectively, "Letters of Credit"). The aggregate face amount of
all Letters of Credit from time to time outstanding shall not exceed the amount
shown on the Schedule (the "Letter of Credit Sublimit"), and shall be reserved
against Loans which would otherwise be available hereunder, and in the event at
any time there are insufficient Loans available to Borrower for such reserve,
Borrower shall deposit and maintain with Silicon cash collateral in an amount at all
times equal to such deficiency, which shall be held as Collateral for all purposes of
this Agreement. Borrower shall pay all bank charges (including charges of Silicon)
for the issuance of Letters of Credit, together with such additional fee as Silicon's
letter of credit department shall charge in connection with the issuance of the
Letters of Credit. Any payment by Silicon under or in connection with a Letter of
Credit shall constitute a Loan hereunder on the date such payment is made. Each
Letter of Credit shall have an expiry date no later than thirty days prior to the
Maturity Date. Borrower hereby agrees to indemnify and hold Silicon harmless from
any loss, cost, expense, or liability, including payments made by Silicon, expenses,
and reasonable attorneys' fees incurred by Silicon (collectively, "Damages") arising
out of or in connection with any Letters of Credit, provided that such obligation
shall not apply to the extent that such Damages are the result of Silicon's gross
negligence or willful misconduct. Borrower agrees to be bound by the regulations
and interpretations of the issuer of any Letters of Credit guarantied by Silicon and
opened for Borrower's account or by Silicon's interpretations of any Letter of Credit
issued by Silicon for Borrower's account, and Borrower understands and agrees that
Silicon shall not be liable for any error, negligence, or mistake, whether of omission
or commission, in following Borrower's instructions or those contained in the Letters
of Credit or any modifications, amendments, or supplements thereto, except to the
extent that they result from Silicon's gross negligence or willful misconduct.
Borrower understands that Letters of Credit may require Silicon to indemnify the
issuing bank for certain costs or liabilities arising out of claims by Borrower against
such issuing bank; provided that such obligation shall not apply to the extent that
such Damages are the result of Silicon's gross negligence or willful misconduct.
Borrower hereby agrees to indemnify and hold Silicon harmless with respect to any
Damages incurred by Silicon under any Letter of Credit as a result of Silicon's
indemnification of any such issuing bank. The provisions of this Loan Agreement, as
it pertains to Letters of Credit, and any other Loan Documents relating to Letters of
Credit are cumulative.
2. SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when due, Borrower
hereby grants to Silicon a security interest in all of the following (collectively, the
"Collateral"): all right, title and interest of Borrower in and to all of the following,
whether now owned or hereafter arising or acquired and wherever located: all
Accounts; all Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment Property; all
Other Property; and any and all claims, rights and interests in any of the above, and
all guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and improvements
to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds
and claims against third parties) of, any and all of the above, and all Borrower's books
relating to any and all of the above. Silicon's security interest in the Collateral shall
terminate upon repayment and performance of all Obligations hereunder and
termination of this Agreement in accordance with its terms.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower will at
all times comply with all of the following covenants, throughout the term of this
Agreement and until all Obligations have been paid and performed in full:
3.1 Corporate Existence and Authority. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Borrower is and will continue to be qualified and licensed to do business
in all jurisdictions in which any failure to do so would result in a Material Adverse
Change. The execution, delivery and performance by Borrower of this Agreement, and
all other documents contemplated hereby (i)have been duly and validly authorized,
(ii)are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to creditors' rights generally), and
(iii)do not violate Borrower's articles or certificate of incorporation, or Borrower's by-
laws, or any law or any material agreement or instrument which is binding upon
Borrower or its property, and (iv)do not constitute grounds for acceleration of any
material indebtedness or obligation under any agreement or instrument which is
binding upon Borrower or its property.
3.2 Name; Trade Names and Styles. The name of Borrower set forth in the heading
to this Agreement is its correct name. Listed in the Representations are all prior names
of Borrower and all of Borrower's present and prior trade names. Borrower shall give
Silicon 30 days' prior written notice before changing its name or doing business under
any other name. Borrower has complied, and will in the future comply, in all material
respects, with all laws relating to the conduct of business under a fictitious business
name, except where the failure to so comply would not reasonably be expected to result
in a Material Adverse Change.
3.3 Place of Business; Location of Collateral. The address set forth in the heading to
this Agreement is Borrower's chief executive office. In addition, Borrower has places of
business and Collateral is located only at the locations set forth in the Representations.
Borrower will give Silicon at least 30 days prior written notice before opening any
additional place of business, changing its chief executive office, or moving any of the
Collateral to a location other than Borrower's Address or one of the locations set forth in
the Representations, except that Borrower may maintain (i) sales offices in the ordinary
course of business at which not more than a total of $10,000 fair market value of
Equipment is located, and (ii) move, sell and transfer Inventory in the ordinary course of
business, and (iii) grant non-exclusive licenses in the ordinary course of business.
3.4 Title to Collateral; Perfection; Permitted Liens.
(a) Borrower is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of which are leased or licensed to Borrower. The Collateral
now is and will remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Silicon now has, and will
continue to have, a first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times defend
Silicon and the Collateral against all claims of others.

(b) Borrower has set forth in the Representations all of Borrower's Deposit Accounts,
and Borrower will give Silicon five Business Days advance written notice before
establishing any new Deposit Accounts and will cause the institution where any such
new Deposit Account is maintained to execute and deliver to Silicon a control
agreement in form sufficient to perfect Silicon's security interest in the Deposit
Account and otherwise satisfactory to Silicon in its good faith business judgment.
Nothing herein limits any requirements which may be set forth in the Schedule as to
where Deposit Accounts will be maintained.

(c) In the event that Borrower shall at any time after the date hereof have any
commercial tort claims against others, which it is asserting or intends to assert, and in
which the potential recovery exceeds $100,000, Borrower shall promptly notify Silicon
thereof in writing and provide Silicon with such information regarding the same as
Silicon shall request (unless providing such information would waive the Borrower's
attorney-client privilege). Such notification to Silicon shall constitute a grant of a
security interest in the commercial tort claim and all proceeds thereof to Silicon, and
Borrower shall execute and deliver all such documents and take all such actions as
Silicon shall request in connection therewith.

(d) None of the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture. Borrower is not and will not become a lessee
under any real property lease pursuant to which the lessor may obtain any rights in any
of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit,
restrain or impair Borrower's right to remove any Collateral from the leased premises.
Whenever any Collateral is located upon premises in which any third party has an
interest, Borrower shall, whenever requested by Silicon, use its best efforts to cause
such third party to execute and deliver to Silicon, in form acceptable to Silicon, such
waivers and subordinations as Silicon shall specify in its good faith business judgment.
Borrower will keep in full force and effect, and will comply with all material terms of, any
lease of real property where any of the Collateral now or in the future may be located.
3.5 Maintenance of Collateral. Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use the
Collateral for any unlawful purpose. Borrower will immediately advise Silicon in writing
of any material loss or damage to the Collateral.
3.6 Books and Records. Borrower has maintained and will maintain at Borrower's
Address complete and accurate books and records, comprising an accounting system
in accordance with GAAP.
3.7 Financial Condition, Statements and Reports. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in conformity with
GAAP and now and in the future will fairly present the results of operations and
financial condition of Borrower, in accordance with GAAP, at the times and for the
periods therein stated. Between the last date covered by any such statement provided
to Silicon and the date hereof, there has been no Material Adverse Change.
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed,
and will timely file, all required material tax returns and reports, and Borrower has
timely paid, and will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by Borrower. Borrower may,
however, defer payment of any contested taxes, provided that Borrower (i) in good
faith contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in writing of the
commencement of, and any material development in, the proceedings, and (iii) posts
bonds or takes any other steps required to keep the contested taxes from becoming a
lien upon any of the Collateral. Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could result in additional taxes of
$25,000 or more becoming due and payable by Borrower. Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension, profit
sharing and deferred compensation plans in accordance with their terms, and Borrower
has not and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any such
plan which could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.
3.9 Compliance with Law. Borrower has, to the best of its knowledge, complied, and
will comply, in all material respects, with all provisions of all foreign, federal, state and
local laws and regulations applicable to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and licensing
of Borrower's business, and all environmental matters.
3.10 Litigation. There is no claim, suit, litigation, proceeding or investigation pending
or (to best of Borrower's knowledge) threatened against or affecting Borrower in any
court or before any governmental agency (or any basis therefor known to Borrower)
which could reasonably be expected to result, either separately or in the aggregate, in
any Material Adverse Change. Borrower will promptly inform Silicon in writing of any
claim, proceeding, litigation or investigation in the future threatened or instituted against
Borrower involving any single claim of $50,000 or more, or involving $100,000 or more
in the aggregate.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful business
purposes. Borrower is not purchasing or carrying any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) and no part of
the proceeds of any Loan will be used to purchase or carry any "margin stock" or to
extend credit to others for the purpose of purchasing or carrying any "margin stock."
4. ACCOUNTS.
4.1 Representations Relating to Accounts. Borrower represents and warrants to
Silicon as follows: Each Account with respect to which Loans are requested by Borrower
shall, on the date each Loan is requested and made, (i) represent an undisputed bona
fide existing unconditional obligation of the Account Debtor created by the sale, delivery,
and acceptance of goods or the rendition of services, or the non-exclusive licensing of
Intellectual Property, in the ordinary course of Borrower's business, and (ii) meet the
Minimum Eligibility Requirements set forth in Section 8 below.
4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Silicon as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing the
Accounts are and shall be true and correct and all such invoices, instruments and
other documents and all of Borrower's books and records are and shall be genuine and
in all respects what they purport to be. All sales and other transactions underlying or
giving rise to each Account shall comply in all material respects with all applicable
laws and governmental rules and regulations. To the best of Borrower's knowledge, all
signatures and endorsements on all documents, instruments, and agreements relating
to all Accounts are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
4.3 Schedules and Documents relating to Accounts. Borrower shall deliver to
Silicon transaction reports and schedules of collections, as provided in the Schedule, on
Silicon's standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Silicon's security interest and other rights in all
of Borrower's Accounts, nor shall Silicon's failure to advance or lend against a specific
Account affect or limit Silicon's security interest and other rights therein. If requested
by Silicon, Borrower shall furnish Silicon with copies (or, at Silicon's request, originals)
of all contracts, orders, invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other evidence of delivery, for any
goods the sale or disposition of which gave rise to such Accounts, and Borrower
warrants the genuineness of all of the foregoing. Borrower shall also furnish to Silicon
an aged accounts receivable trial balance as provided in the Schedule. In addition,
Borrower shall deliver to Silicon, on its request, the originals of all instruments, chattel
paper, security agreements, guarantees and other documents and property evidencing
or securing any Accounts, in the same form as received, with all necessary
endorsements, and copies of all credit memos.
4.4 Collection of Accounts. Borrower shall have the right to collect all Accounts, unless
and until a Default or an Event of Default has occurred and is continuing. Whether or not
an Event of Default has occurred and is continuing, Borrower shall hold all payments on,
and proceeds of, Accounts in trust for Silicon, and Borrower shall immediately deliver all
such payments and proceeds to Silicon in their original form, duly endorsed, to be
applied to the Obligations in such order as Silicon shall determine, and after all
Obligations have been paid and performed in full, promptly after receipt of such
payments and proceeds in immediately available funds, Silicon shall deposit the
remainder into a Deposit Account of Borrower maintained at Silicon. Silicon may, in its
good faith business judgment, require that all proceeds of Collateral be deposited by
Borrower into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify in its good
faith business judgment.
4.5 Remittance of Proceeds. All proceeds arising from the disposition of any Collateral
shall be delivered, in kind, by Borrower to Silicon in the original form in which received
by Borrower not later than the following Business Day after receipt by Borrower, to be
applied to the Obligations in such order as Silicon shall determine; provided that, if no
Default or Event of Default has occurred and is continuing, Borrower shall not be
obligated to remit to Silicon the proceeds of the sale of worn out or obsolete Equipment
disposed of by Borrower in good faith in an arm's length transaction for an aggregate
purchase price of $25,000 or less (for all such transactions in any fiscal year). Borrower
agrees that it will not commingle proceeds of Collateral with any of Borrower's other
funds or property, but will hold such proceeds separate and apart from such other funds
and property and in an express trust for Silicon. Nothing in this Section limits the
restrictions on disposition of Collateral set forth elsewhere in this Agreement.
4.6 Disputes. Borrower shall notify Silicon promptly of all disputes or claims relating to
Accounts, in excess of $5,000 for each such dispute or claim in any one calendar month
or $25,000 in the aggregate for all such disputes and claims in any one calendar
month. Borrower shall not forgive (completely or partially), compromise or settle any
Account for less than payment in full, or agree to do any of the foregoing, except that
Borrower may do so, provided that: (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, and in arm's
length transactions, which are reported to Silicon on the regular reports provided to
Silicon; (ii) no Default or Event of Default has occurred and is continuing; and
(iii) taking into account all such discounts, settlements and forgiveness, the total
outstanding Loans will not exceed the Credit Limit.
4.7 Returns.Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly determine
the reason for such return and promptly issue a credit memorandum to the Account
Debtor in the appropriate amount. In the event any attempted return occurs after the
occurrence and during the continuance of any Event of Default, Borrower shall hold
the returned Inventory in trust for Silicon, and immediately notify Silicon of the return
of the Inventory.
4.8 Verification. Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to the
Accounts, by means of mail, telephone or otherwise, either in the name of Borrower
or Silicon or such other name as Silicon may choose.
4.9 No Liability. Silicon shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or other
disposition of which gives rise to an Account, or for any error, act, omission, or
delay of any kind occurring in the settlement, failure to settle, collection or failure
to collect any Account, or for settling any Account in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of Borrower's
obligations under any contract or agreement giving rise to an Account. Nothing
herein shall, however, relieve Silicon from liability for its own gross negligence or
willful misconduct.
5. ADDITIONAL DUTIES OF BORROWER.
5.1 Financial and Other Covenants. Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.
5.2 Insurance. Borrower shall, at all times insure all of the tangible personal
property Collateral and carry such other business insurance, with insurers reasonably
acceptable to Silicon, in such form and amounts as Silicon may reasonably require
and that are customary and in accordance with standard practices for Borrower's
industry and locations, and Borrower shall provide evidence of such insurance to
Silicon. All such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply such
proceeds in reduction of the Obligations as Silicon shall determine in its good faith
business judgment, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance proceeds with
respect to Collateral (including Inventory and Equipment) totaling less than
$100,000, which shall be utilized by Borrower for the replacement of the Collateral
with respect to which the insurance proceeds were paid. Silicon may require
reasonable assurance that the insurance proceeds so released will be so used. If
Borrower fails to provide or pay for any insurance, Silicon may, but is not obligated
to, obtain the same at Borrower's expense. Borrower shall promptly deliver to Silicon
copies of all material reports made to insurance companies.
5.3 Reports. Borrower, at its expense, shall provide Silicon with the written
reports set forth in the Schedule, and such other written reports with respect to
Borrower (including budgets, sales projections, operating plans and other financial
documentation), as Silicon shall from time to time specify in its good faith business
judgment.
5.4 Access to Collateral, Books and Records. At reasonable times, and on one
Business Day's notice, Silicon, or its agents, shall have the right to inspect the
Collateral, and the right to audit and copy Borrower's books and records. Silicon
shall take reasonable steps to keep confidential all information obtained in any such
inspection or audit, but Silicon shall have the right to disclose any such information
to its auditors, regulatory agencies, and attorneys, and pursuant to any subpoena
or other legal process. The foregoing inspections and audits shall be at Borrower's
expense and the charge therefor shall be $750 per person per day (or such higher
amount as shall represent Silicon's then current standard charge for the same),
plus reasonable out-of-pocket expenses. In the event Borrower and Silicon schedule
an audit more than 10 days in advance, and Borrower seeks to reschedules the
audit with less than 10 days written notice to Silicon, then (without limiting any of
Silicon's rights or remedies), Borrower shall pay Silicon a cancellation fee of $1,000
plus any out-of-pocket expenses incurred by Silicon, to compensate Silicon for the
anticipated costs and expenses of the cancellation.
5.5 Negative Covenants. Except as may be permitted in the Schedule, Borrower
shall not, without Silicon's prior written consent (which shall be a matter of its good
faith business judgment), do any of the following: (i) merge or consolidate with
another corporation or entity; (ii) acquire any assets, except in the ordinary course
of business; (iii) enter into any other transaction outside the ordinary course of
business; (iv) sell or transfer any Collateral, except for the sale of Inventory in the
ordinary course of Borrower's business and the non-exclusive licensing of Intellectual
Property in the ordinary course of business, and except for the sale of obsolete or
unneeded Equipment in the ordinary course of business; (v) store any Inventory or
other Collateral with any warehouseman or other third party; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vii) make any loans of any money or other assets (other than loans outstanding on
the date hereof to current and former employees, in an aggregate amount not to
exceed $600,000, and all extensions and renewals of the same); (viii) incur any
debts, outside the ordinary course of business, which would result in a Material
Adverse Change; (ix) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (x) pay or declare any dividends on Borrower's
stock (except for dividends payable solely in stock of Borrower); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's stock;
(xii) make any change in Borrower's capital structure which would result in a Material
Adverse Change; or (xiii) engage, directly or indirectly, in any business other than
the businesses currently engaged in by Borrower or reasonably related thereto; or
(xiv) dissolve or elect to dissolve. Transactions permitted by the foregoing provisions
of this Section are only permitted if no Default or Event of Default would occur as a
result of such transaction.
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Silicon, make available Borrower and
its officers, employees and agents and Borrower's books and records, to the extent
that Silicon may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding.
5.7 Further Assurances. Borrower agrees, at its expense, on request by Silicon,
to execute all documents and take all actions, as Silicon, may, in its good faith
business judgment, deem necessary or useful in order to perfect and maintain
Silicon's perfected first-priority security interest in the Collateral (subject to
Permitted Liens), and in order to fully consummate the transactions contemplated
by this Agreement.
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the maturity date
set forth on the Schedule (the "Maturity Date"), unless terminated earlier pursuant
to Section 6.3 below.
6.2 Early Termination. This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three Business Days after written notice
of termination is given to Silicon; or (ii) by Silicon at any time after the occurrence
and during the continuance of an Event of Default, without notice, effective
immediately. If this Agreement is terminated by Borrower or by Silicon under this
Section 6.2, Borrower shall pay to Silicon a termination fee in an amount equal to
one percent (1.0%) of the Maximum Credit Limit, provided that no termination fee
shall be charged if the credit facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations.
6.3 Payment of Obligations. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations, whether
evidenced by installment notes or otherwise, and whether or not all or any part of
such Obligations are otherwise then due and payable. Without limiting the
generality of the foregoing, if on the Maturity Date, or on any earlier effective date
of termination, there are any outstanding Letters of Credit issued by Silicon or
issued by another institution based upon an application, guarantee, indemnity or
similar agreement on the part of Silicon, then on such date Borrower shall provide
to Silicon cash collateral in an amount equal to 105% of the face amount of all such
Letters of Credit plus all interest, fees and cost due or to become due in connection
therewith (as estimated by Silicon in its good faith business judgment), to secure
all of the Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all of the
terms and provisions of this Agreement shall continue in full force and effect until
all Obligations have been paid and performed in full; provided that Silicon may, in
its sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of Silicon, nor
shall any such termination relieve Borrower of any Obligation to Silicon, until all of
the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations and termination of this Agreement, Silicon
shall promptly terminate its financing statements with respect to the Borrower and
deliver to Borrower such other documents as may be required to fully terminate
Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any of
Borrower's officers, employees or agents, now or in the future, shall be untrue or
misleading in a material respect when made or deemed to be made; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations outstanding
at any time shall exceed the Credit Limit; or (d) Borrower shall fail to comply with
any of the financial covenants set forth in the Schedule, or shall fail to perform any
other non-monetary Obligation which by its nature cannot be cured, or shall fail to
permit Silicon to conduct an inspection or audit as specified in Section 5.4 hereof;
or (e) Borrower shall fail to perform any other non-monetary Obligation, which
failure is not cured within five Business Days after the date due; or (f) any levy,
assessment, attachment, seizure, lien or encumbrance (other than a Permitted
Lien) is made on all or any part of the Collateral which is not cured within 10 days
after the occurrence of the same; or (g) any default or event of default occurs
under any obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted Lien; or
(h) Borrower breaches any material contract or obligation, which has resulted or
may reasonably be expected to result in a Material Adverse Change; or
(i) Dissolution, termination of existence, insolvency or business failure of Borrower;
or appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the future in
effect, which is not cured by the dismissal thereof within 30 days after the date
commenced; or (k) revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations or any attempt to do any of the foregoing, or
commencement of proceedings by any guarantor of any of the Obligations under
any bankruptcy or insolvency law; or (1) revocation or termination of, or limitation
or denial of liability upon, any pledge of any certificate of deposit, securities or
other property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or insolvency
law; or (m) Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other than as permitted
in the applicable subordination agreement, or if any Person who has subordinated
such indebtedness or obligations terminates or in any way limits his subordination
agreement; or (n) there shall be a change in the record or beneficial ownership of
an aggregate of more than 20% of the outstanding shares of stock of Borrower, in
one or more transactions, compared to the ownership of outstanding shares of
stock of Borrower in effect on the date hereof, without the prior written consent of
Silicon; or (o) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (p) a Material Adverse Change shall occur. Silicon may cease making
any Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred and is continuing.
7.2 Remedies. Upon the occurrence and during the continuance of any Event of
Default, and at any time thereafter, Silicon, at its option, and without notice or
demand of any kind (all of which are hereby expressly waived by Borrower), may
do any one or more of the following: (a) Cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan Document;
(b) Accelerate and declare all or any part of the Obligations to be immediately due,
payable, and performable, notwithstanding any deferred or installment payments
allowed by any instrument evidencing or relating to any Obligation; (c) Take
possession of any or all of the Collateral wherever it may be found, and for that
purpose Borrower hereby authorizes Silicon without judicial process to enter onto
any of Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or cause
a custodian to remain on the premises in exclusive control thereof, without charge
for so long as Silicon deems it necessary, in its good faith business judgment, in
order to complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by court process, Borrower hereby irrevocably waives: (i) any bond
and any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such possession; (ii) any demand for possession prior to
the commencement of any suit or action to recover possession thereof; and
(iii) any requirement that Silicon retain possession of, and not dispose of, any such
Collateral until after trial or final judgment; (d) Require Borrower to assemble any
or all of the Collateral and make it available to Silicon at places designated by
Silicon which are reasonably convenient to Silicon and Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable; (e) Complete the
processing, manufacturing or repair of any Collateral prior to a disposition thereof
and, for such purpose and for the purpose of removal, Silicon shall have the right to
use Borrower's premises, vehicles, hoists, lifts, cranes, and other Equipment and all
other property without charge; (f) Sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales, in
lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn
any such sale from time to time without notice other than oral announcement at
the time scheduled for sale. Silicon shall have the right to conduct such disposition
on Borrower's premises without charge, for such time or times as Silicon deems
reasonable, or on Silicon's premises, or elsewhere and the Collateral need not be
located at the place of disposition. Silicon may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition, and if
permissible under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower may
have if any Collateral is defective as to title or physical condition or otherwise at the
time of sale; (g) Demand payment of, and collect any Accounts and General
Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in Silicon's good faith business judgment, to
grant extensions of time to pay, compromise claims and settle Accounts and the
like for less than face value; (h) Offset against any sums in any of Borrower's
general, special or other Deposit Accounts with Silicon against any or all of the
Obligations; and (i) Demand and receive possession of any of Borrower's federal
and state income tax returns and the books and records utilized in the preparation
thereof or referring thereto. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon with respect to the foregoing shall be
added to and become part of the Obligations, shall be due on demand, and shall
bear interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and after
the occurrence and during the continuance of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional four percent per
annum (the "Default Rate"). Without limiting any of the other provisions of this
Agreement, Silicon may, in its sole and absolute discretion, defer taking any
enforcement action hereunder with respect to an Event of Default, if Borrower
provides evidence to Silicon, satisfactory to it in its sole discretion, establishing that
it has a binding written agreement with investors acceptable to Silicon in its sole
discretion, and that, pursuant to said agreement, such Event of Default will be
cured by the investment of funds from such investors within two weeks after the
Event of Default has occurred.
7.3 Standards for Determining Commercial Reasonableness. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least ten
days prior to the sale, and, in the case of a public sale, notice of the sale is
published at least five days before the sale in a newspaper of general circulation in
the county where the sale is to be conducted; (ii) Notice of the sale describes the
collateral in general, non-specific terms; (iii) The sale is conducted at a place
designated by Silicon, with or without the Collateral being present; (iv) The sale
commences at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the
purchase price in cash or by cashier's check or wire transfer is required; (vi) With
respect to any sale of any of the Collateral, Silicon may (but is not obligated to)
direct any prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods of
noticing and selling the Collateral, in its discretion, if they are commercially
reasonable.
7.4 Power of Attorney. Upon the occurrence and during the. continuance of any
Event of Default, without limiting Silicon's other rights and remedies, Borrower
grants to Silicon an irrevocable power of attorney coupled with an interest,
authorizing and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in Borrower's
name or otherwise, but Silicon agrees that if it exercises any right hereunder, it will
do so in good faith and in a commercially reasonable manner: (a) Execute on behalf
of Borrower any documents that Silicon may, in its good faith business judgment,
deem advisable in order to perfect and maintain Silicon's security interest in the
Collateral, or in order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
Loan Documents; (b) Execute on behalf of Borrower, any invoices relating to any
Account, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic's,
materialman's or other lien, or assignment or satisfaction of mechanic's,
materialman's or other lien; (c) Take control in any manner of any cash or non-cash
items of payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Silicon's possession; (d) Endorse all checks and other forms of remittances received
by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance, security interest
and adverse claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (f) Grant extensions
of time to pay, compromise claims and settle Accounts and General Intangibles for
less than face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Borrower's taxes or to secure
the release of any liens therefor, or both; (h) Settle and adjust, and give releases of,
any insurance claim that relates to any of the Collateral and obtain payment
therefor; (i) Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Silicon the same rights of
access and other rights with respect thereto as Silicon has under this Agreement;
and (j) Take any action or pay any sum required of Borrower pursuant to this
Agreement and any other Loan Documents. Any and all reasonable sums paid and
any and all reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become part
of the Obligations, shall be payable on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's other
rights under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of Borrower.
7.5 Application of Proceeds. All proceeds realized as the result of any sale of the
Collateral shall be applied by Silicon first to the reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the exercise of its
rights under this Agreement, second to the interest due upon any of the Obligations,
and third to the principal of the Obligations, in such order as Silicon shall determine
in its sole discretion. Any surplus shall be paid to Borrower or other persons legally
entitled thereto; Borrower shall remain liable to Silicon for any deficiency. If, Silicon,
in its good faith business judgment, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any sale of Collateral,
Silicon shall have the option, exercisable at any time, in its good faith business
judgment, of either reducing the Obligations by the principal amount of purchase
price or deferring the reduction of the Obligations until the actual receipt by Silicon
of the cash therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the future
entered into between Silicon and Borrower, and all of such rights and remedies are
cumulative and none is exclusive. Exercise or partial exercise by Silicon of one or
more of its rights or remedies shall not be deemed an election, nor bar Silicon from
subsequent exercise or partial exercise of any other rights or remedies. The failure
or delay of Silicon to exercise any rights orremedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.
8. DEFINITIONS.
As used in this Agreement, the following terms have the following meanings:
"Account Debtor" means the obligor on an Account.
"Accounts" means all present and future "accounts" as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Borrower.
"Affiliate" means, with respect to any Person, a relative, partner, shareholder,
director, officer, or employee of such Person, or any parent or subsidiary of such
Person, or any Person controlling, controlled by or under common control with such
Person.
"Business Day" means a day on which Silicon is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in the State
of California from time to time.
"Collateral" has the meaning set forth in Section 2 above.
"continuing" and "during the continuance of" when used with reference to a Default
or Event of Default means that the Default or Event of Default has occurred and has
not been either waived in writing by Silicon or cured within any applicable cure
period.
"Default" means any event which with notice or passage of time or both, would
constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 7.2 above.
"Deposit Accounts" means all present and future "deposit accounts" as defined in the
California Uniform Commercial Code in effect on the date hereof with such additions
to such term as may hereafter be made, and includes without limitation all general
and special bank accounts, demand accounts, checking accounts, savings accounts
and certificates of deposit.
"Eligible Accounts" means Accounts and General Intangibles arising in the ordinary
course of Borrower's business from the sale of goods or the rendition of services, or
the non-exclusive licensing of Intellectual Property, which Silicon, in its good faith
business judgment, shall deem eligible for borrowing. Without limiting the fact that
the determination of which Accounts are eligible for borrowing is a matter of Silicon's
good faith business judgment, the following (the "Minimum Eligibility Requirements")
are the minimum requirements for a Account to be an Eligible Account: (i) the
Account must not be outstanding for more than 90 days from its invoice date (the
"Eligibility Period"), (ii) the Account must not represent progress billings, or be due
under a fulfillment or requirements contract with the Account Debtor, (iii) the Account
must not be subject to any contingencies (including Accounts arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Account must not be owing from an
Account Debtor with whom Borrower has any dispute (whether or not relating to the
particular Account), (v) the Account must not be owing from an Affiliate of Borrower,
(vi) the Account must not be owing from an Account Debtor which is subject to any
insolvency or bankruptcy proceeding, or whose financial condition is not acceptable to
Silicon, or which, fails or goes out of a material portion of its business, (vii) the
Account must not be owing from the United States or any department, agency or
instrumentality thereof (unless there has been compliance, to Silicon's satisfaction,
with the United States Assignment of Claims Act), (viii) the Account must not be
owing from an Account Debtor located outside the United States or Canada (unless
pre-approved by Silicon in its discretion in writing, or backed by a letter of credit
satisfactory to Silicon, or FCIA insured satisfactory to Silicon), (ix) the Account must
not be owing from an Account Debtor to whom Borrower is or may be liable for goods
purchased from such Account Debtor or otherwise (but, in such case, the Account will
be deemed not eligible only to the extent of any amounts owed by Borrower to such
Account Debtor), (x) the Account must not constitute a credit card receivable, (xi) the
Account must not represent a credit balance outstanding more than 90 days, and
(xii) the Account must not be subject to any potential offset for deferred revenue (but,
in such case, the Account will be deemed not eligible only to the extent of the amount
of any such deferred revenue). Accounts owing from one Account Debtor will not be
deemed Eligible Accounts to the extent they exceed 30% of the total Accounts
outstanding. In addition, if more than 50% of the Accounts owing from an Account
Debtor are outstanding for a period longer than their Eligibility Period (without regard
to unapplied credits) or are otherwise not eligible Accounts, then all Accounts owing
from that Account Debtor will be deemed ineligible for borrowing. Silicon may, from
time to time, in its good faith business judgment, revise the Minimum Eligibility
Requirements, upon written notice to Borrower.
"Equipment" means all present and future "equipment" as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all machinery,
fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.
"Event of Default" means any of the events set forth in Section 7.1 of this Agreement.
"GAAP" means generally accepted accounting principles consistently applied.
"General Intangibles means all present and future "general intangibles" as defined
in the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all Intellectual Property, payment intangibles, royalties, contract rights,, goodwill,
franchise agreements, purchase orders, customer lists, route lists, telephone
numbers, domain names, claims, income tax refunds, security and other deposits,
options to purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance policies
(including without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind.
"good faith business iudgment" means honesty in fact and good faith (as defined in
Section 1201 of the Code) in the exercise of Silicon's business judgment.
"including" means including (but not limited to).
"Intellectual Property" means all present and future (a) copyrights, copyright rights,
copyright applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished, (b) trade
secret rights, including all rights to unpatented inventions and know-how, and
confidential information; (c) mask work or similar rights available for the protection
of semiconductor chips; (d) patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same; (e) trademarks,
servicemarks, trade styles, and trade names, whether or not any of the foregoing
are registered, and all applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with and
symbolized by any such trademarks; (f) computer software and computer software
products; (g) designs and design rights; (h) technology; (i) all claims for damages
by way of past, present and future infringement of any of the rights included above;
0) all licenses or other rights to use any property or rights of a type described above.
Inventory" means all present and future "inventory" as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process and
finished products, including without limitation such inventory as is temporarily out
of Borrower's custody or possession or in transit and including any returned goods
and any documents of title representing any of the above.
"Investment Property" means all present and future investment property, securities,
stocks, bonds, debentures, debt securities, partnership interests, limited liability
company interests, options, security entitlements, securities accounts, commodity
contracts, commodity accounts, and all financial assets held in any securities account
or otherwise, and all options and warrants to purchase any of the foregoing, wherever
located, and all other securities of every kind, whether certificated or uncertificated.
"Loan Documents" means, collectively, this Agreement, the Representations, and all
other present and future documents, instruments and agreements between Silicon
and Borrower, including, but not limited to those relating to this Agreement, and all
amendments and modifications thereto and replacements therefor.
"Material Adverse Change" means any of the following: (i) a material adverse change
in the business, operations, or financial or other condition of the Borrower, or (ii) a
material impairment of the prospect of repayment of any portion of the Obligations;
or (iii) a material impairment of the value or priority of Silicon's security interests in
the Collateral.
"Obligations" means all present and future Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by
Borrower to Silicon, whether evidenced by this Agreement or any note or other
instrument or document, or otherwise, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those acquired by
assignment and any participation by Silicon in Borrower's debts owing to others),
absolute or contingent, due or to become due, including, without limitation, all
interest, charges, expenses, fees, attorney's fees, expert witness fees, audit fees,
letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination
fees, minimum interest charges and any other sums chargeable to Borrower under
this Agreement or under any other Loan Documents.
"Other Property" means the following as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and all rights relating thereto: all present and future
"commercial tort claims" (including without limitation any commercial tort claims
identified in the Representations), "documents", "instruments", "promissory notes",
"chattel paper", "letters of credit", "letter-of-credit rights", "fixtures", "farm
products" and "money"; and all other goods and personal property of every kind,
tangible and intangible, whether or not governed by the California Uniform
Commercial Code.
"Permitted Liens" means the following: (i) purchase money security interests in
specific items of Equipment; (ii) leases of specific items of Equipment; (iii) liens for
taxes not yet payable; (iv) additional security interests and liens consented to in
writing by Silicon, which consent may be withheld in its good faith business judgment;
(v) security interests being terminated substantially concurrently with this Agreement;
(vi) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens
arising in the ordinary course of business and securing obligations which are not
delinquent; (vii) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above in
clauses (i) or (ii) above, provided that any extension, renewal or replacement lien is
limited to the property encumbered by the existing lien and the principal amount of
the indebtedness being extended, renewed or refinanced does not increase;
(viii) Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods; and (ix) Liens securing up
to an aggregate of $1,000,000 which are subject to a written subordination
agreement between the holder of the Lien and Silicon in the form previously delivered
by Silicon to Borrower. Silicon will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of the additional security
interest or lien sign an inter-creditor agreement on Silicon's then standard form,
acknowledge that the security interest is subordinate to the security interest in favor
of Silicon, and agree not to take any action to enforce its subordinate security interest
so long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest, which
has not been waived in writing by the holder of the additional security interest, shall
also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, government, or any
agency or political division thereof, or any other entity.
"Representations" means the written Representations and Warranties provided by
Borrower to Silicon referred to in the Schedule.
"Reserves" means, as of any date of determination, such amounts as Silicon may
from time to time establish and revise in its good faith business judgment, reducing
the amount of Loans, Letters of Credit and other financial accommodations which
would otherwise be available to Borrower under the lending formula(s) provided in
the Schedule: (a) to reflect events, conditions, contingencies or risks which, as
determined by Silicon in its good faith business judgment, do or may adversely
affect (i) the Collateral or any other property which is security for the Obligations or
its value (including without limitation any increase in delinquencies of Accounts),
(ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's good faith
belief that any collateral report or financial information furnished by or on behalf of
Borrower or any Guarantor to Silicon is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts which
Silicon determines in good faith constitutes an Event of Default or may, with notice
or passage of time or both, constitute an Event of Default.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP,
consistently applied. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such terms
are defined therein.
9. GENERAL PROVISIONS.
9.1 Interest Computation. In computing interest on the Obligations, all checks,
and other items of payment received by Silicon (including proceeds of Accounts and
payment of the Obligations in full, but not including wire transfers) shall be deemed
applied by Silicon on account of the Obligations three Business Days after receipt by
Silicon of immediately available funds, and, for purposes of the foregoing, any such
funds received after 12:00 Noon on any day shall be deemed received on the next
Business Day. Silicon shall not, however, be required to credit Borrower's account for
the amount of any item of payment which is unsatisfactory to Silicon in its good faith
business judgment, and Silicon may charge Borrower's loan account for the amount
of any item of payment which is returned to Silicon unpaid.
9.2 Application of Payments. All payments with respect to the Obligations may
be applied, and in Silicon's good faith business judgment reversed and re-applied,
to the Obligations, in such order and manner as Silicon shall determine in its good
faith business judgment.
9.3 Charges to Accounts. Silicon may, in its discretion, require that Borrower
pay monetary Obligations in cash to Silicon, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to the
Loans. Silicon may also, in its discretion, charge any monetary Obligations to
Borrower's Deposit Accounts maintained with Silicon.
9.4 Monthly Accountings. Silicon shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Silicon), unless Borrower notifies Silicon in writing
to the contrary within 60 days after such account is rendered, describing the nature of
any alleged errors or omissions.
9.5 Notices. All notices to be given under this Agreement shall be in writing and
shall be given either personally or by reputable private delivery service or by
regular first-class mail, or certified mail return receipt requested, addressed to
Silicon or Borrower at the addresses shown in the heading to this Agreement, or at
any other address designated in writing by one party to the other party. Notices to
Silicon shall be directed to the Commercial Finance Division, to the attention of the
Division Manager or the Division Credit Manager. All notices shall be deemed to
have been given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery service, or
two Business Days following the deposit thereof in the United States mail, with
postage prepaid.
9.6 Severability. Should any provision of this Agreement be held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.
9.7 Integration. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire and
complete agreement between Borrower and Silicon and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of which
are merged and integrated in this Agreement. There are no oral understandings,
representations or agreements between the parties which are not set forth in this
Agreement or in other written agreements signed by the parties in connection
herewith.
9.8 Waivers; Indemnity. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any other
Loan Document shall not waive or diminish any right of Silicon later to demand and
receive strict compliance therewith. Any waiver of any default shall not waive or
affect any other default, whether prior or subsequent, and whether or not similar.
None of the provisions of this Agreement or any other Loan Document shall be
deemed to have been waived by any act or knowledge of Silicon or its agents or
employees, but only by a specific written waiver signed by an authorized officer of
Silicon and delivered to Borrower. Borrower waives the benefit of all statutes of
limitations relating to any of the Obligations or this Agreement or any other Loan
Document, and Borrower waives demand, protest, notice of protest and notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Silicon on which
Borrower is or may in any way be liable, and notice of any action taken by Silicon,
unless expressly required by this Agreement. Borrower hereby agrees to indemnify
Silicon and its affiliates, subsidiaries, parent, directors, officers, employees, agents,
and attorneys, and to hold them harmless from and against any and all claims,
debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and
expenses (including reasonable attorneys' fees), of every kind, which they may
sustain or incur based upon or arising out of any of the Obligations, or any
relationship or agreement between Silicon and Borrower, or any other matter,
relating to Borrower or the Obligations; provided that this indemnity shall not extend
to damages proximately caused by the indemnitee's own gross negligence or willful
misconduct. Notwithstanding any provision in this Agreement to the contrary, the
indemnity agreement set forth in this Section shall survive any termination of this
Agreement and shall for all purposes continue in full force and effect.
9.9 No Liability for Ordinary Negligence. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated with
or representing Silicon shall be liable for any claims, demands, losses or damages, of
any kind whatsoever, made, claimed, incurred or suffered by Borrower or any other
party through the ordinary negligence of Silicon, or any of its directors, officers,
employees, agents, attorneys or any other Person affiliated with or representing
Silicon, but nothing herein shall relieve Silicon from liability for its own gross
negligence or willful misconduct.
9.10 Amendment. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.
9.11 Time of Essence. Time is of the essence in the performance by Borrower of
each and every obligation under this Agreement.
9.12 Attorneys Fees and Costs. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance, appraisal,
audit, and other reasonable costs incurred by Silicon, pursuant to, or in connection
with, or relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys' fees and costs Silicon incurs in order to do
the following: prepare and negotiate this Agreement and all present and future
documents relating to this Agreement; obtain legal advice in connection with this
Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute
actions against, or defend actions by, Account Debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of the
Collateral or any of Borrower's books and records; protect, obtain possession of,
lease, dispose of, or otherwise enforce Silicon's security interest in, the Collateral;
and otherwise represent Silicon in any litigation relating to Borrower. In satisfying
Borrower's obligation hereunder to reimburse Silicon for attorneys fees, Borrower
may, for convenience, issue checks directly to Silicon's attorneys, Levy, Small &
Lallas, but Borrower acknowledges and agrees that Levy, Small & Lallas is
representing only Silicon and not Borrower in connection with this Agreement. If
either Silicon or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party in such action shall be entitled to recover its
reasonable costs and attorneys' fees, including (but not limited to) reasonable
attorneys' fees and costs incurred in the enforcement of, execution upon or defense
of any order, decree, award or judgment. All attorneys' fees and costs to which
Silicon may be entitled pursuant to this Paragraph shall immediately become part of
Borrower's Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
9.13 Benefit of Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and Silicon; provided, however, that
Borrower may not assign or transfer any of its rights under this Agreement without
the prior written consent of Silicon, and any prohibited assignment shall be void. No
consent by Silicon to any assignment shall release Borrower from its liability for the
Obligations.
9.14 Joint and Several Liability. If Borrower consists of more than one Person,
their liability shall be joint and several, and the compromise of any claim with, or
the release of, any Borrower shall not constitute a compromise with, or a release
of, any other Borrower.
9.15 Limitation of Actions. Any claim or cause of action by Borrower against
Silicon, its directors, officers, employees, agents, accountants or attorneys, based
upon, arising from, or relating to this Loan Agreement, or any other Loan
Document, or any other transaction contemplated hereby or thereby or relating
hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done,
omitted or suffered to be done by Silicon, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
the filing of a complaint within one year after the first act, occurrence or omission
upon which such claim or cause of action, or any part thereof, is based, and the
service of a summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days thereafter.
Borrower agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action. The one-
year period provided herein shall not be waived, tolled, or extended except by the
written consent of Silicon in its sole discretion. This provision shall survive any
termination of this Loan Agreement or any other Loan Document.
9.16 Paragraph Headings; Construction. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Silicon or Borrower under any rule of construction or otherwise.
9.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower shall be
governed by the laws of the State of California. As a material part of the
consideration to Silicon to enter into this Agreement, Borrower (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall, at
Silicon's option, be litigated in courts located within California, and that the exclusive
venue therefor shall be Santa Clara County; (ii) consents to the jurisdiction and
venue of any such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and
(iii) waives any and all rights Borrower may have to object to the jurisdiction of any
such court, or to transfer or change the venue of any such action or proceeding.
9.18 Mutual Waiver of Jury Trial. BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY
OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON
AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER,
IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE
BORROWER: SILICON:

ALIBRIS



SILICON VALLEY BANK

By:



/s/ STEVEN GILLAN



By:



/s/ KEVIN J. GILLIS




Title: Vice President, CFO Title: Vice President

By:










Secretary or Ass't Secretary