{"id":41010,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/export-import-bank-loan-and-security-agreement-silicon-valley.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"export-import-bank-loan-and-security-agreement-silicon-valley","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/export-import-bank-loan-and-security-agreement-silicon-valley.html","title":{"rendered":"Export-Import Bank Loan and Security Agreement – Silicon Valley Bank and InVision Technologies Inc."},"content":{"rendered":"\n--------------------------------------------------------------------------------\n\n INVISION TECHNOLOGIES, INC.\n\n EXPORT-IMPORT BANK\n\n LOAN AND SECURITY AGREEMENT\n\n--------------------------------------------------------------------------------\n\n\n\n\n\n\n\n THIS EXPORT-IMPORT BANK LOAN AND SECURITY AGREEMENT (the \"Exim \nAgreement\") is entered into as of February 20, 1997, by and between SILICON \nVALLEY BANK (\"Bank\") and INVISION TECHNOLOGIES, INC. (\"Borrower\").\n\n RECITALS\n\n A. Borrower wishes to obtain credit from Bank, and Bank wishes to \n extend credit to Borrower.\n\n B. Borrower and Bank desire in this Exim Agreement to set forth their \nagreement with respect to a working capital facility to be guaranteed by \nExport-Import Bank of the United States.\n\n AGREEMENT\n\n The parties agree as follows:\n\n 1. DEFINITIONS AND CONSTRUCTION\n\n 1.1 DEFINITIONS. As used in this Exim Agreement, the following \nterms shall have the following definitions:\n\n \"ACCOUNTS\" means all presently existing and hereafter arising \naccounts, contract rights, and all other forms of obligations owing to \nBorrower arising out of the sale or lease of goods (including, without \nlimitation, the licensing of software and other technology) or the rendering \nof services by Borrower, whether or not earned by performance, and any and \nall credit insurance, guaranties, and other security therefor, as well as all \nmerchandise returned to or reclaimed by Borrower and Borrower's Books \nrelating to any of the foregoing.\n\n \"ADVANCE\" or \"ADVANCES\" means a cash advance under this Exim \nAgreement.\n\n \"AFFILIATE\" means, with respect to any Person, any Person that \nowns or controls directly or indirectly such Person, any Person that controls \nor is controlled by or is under common control with such Person, and each of \nsuch Person's senior executive officers, directors, and partners.\n\n \"BORROWER AGREEMENT\" means the Export-Import Bank of the \nUnited States Working Capital Guarantee Program Borrower Agreement between \nBorrower and Bank.\n\n \"BORROWER'S BOOKS\" means all of Borrower's books and records \nincluding: ledgers; records concerning Borrower's assets or liabilities, the \nCollateral, business operations or financial condition; and all computer \nprograms, or tape files, and the equipment, containing such information.\n\n\n \"BORROWING BASE\" has the meaning set forth in Section 2.1 hereof.\n\n 1.\n\n\n\n \"BUSINESS DAY\" means any day that is not a Saturday, Sunday, \nor other day on which banks in the State of California are authorized or \nrequired to close.\n\n \"CLOSING DATE\" means the date of this Agreement.\n\n \"CODE\" means the California Uniform Commercial Code.\n\n \"COLLATERAL\" means the property described on Exhibit A \nattached hereto.\n\n \"CONTINGENT OBLIGATION\" means, as applied to any Person, any \ndirect or indirect liability, contingent or otherwise, of that Person with \nrespect to (i) any indebtedness, lease, dividend, letter of credit or other \nobligation of another, including, without limitation, any such obligation \ndirectly or indirectly guaranteed, endorsed, co-made or discounted or sold \nwith recourse by that Person, or in respect of which that Person is otherwise \ndirectly or indirectly liable; (ii) any obligations with respect to undrawn \nletters of credit issued for the account of that Person; and (iii) all \nobligations arising under any interest rate, currency or commodity swap \nagreement, interest rate cap agreement, interest rate collar agreement, or \nother agreement or arrangement designated to protect a Person against \nfluctuation in interest rates, currency exchange rates or commodity prices; \nprovided, however, that the term \"Contingent Obligation\" shall not include \nendorsements for collection or deposit in the ordinary course of business. \nThe amount of any Contingent Obligation shall be deemed to be an amount equal \nto the stated or determined amount of the primary obligation in respect of \nwhich such Contingent Obligation is made or, if not stated or determinable, \nthe maximum reasonably anticipated liability in respect thereof as determined \nby such Person in good faith; provided, however, that such amount shall not \nin any event exceed the maximum amount of the obligations under the guarantee \nor other support arrangement.\n\n \"COPYRIGHTS\" means any and all copyright rights, copyright \napplications, copyright registrations and like protections in each work or \nauthorship and derivative work thereof, whether published or unpublished and \nwhether or not the same also constitutes a trade secret, now or hereafter \nexisting, created, acquired or held.\n\n \"CURRENT LIABILITIES\" means, as of any applicable date, all \namounts that should, in accordance with GAAP, be included as current \nliabilities on the consolidated balance sheet of Borrower and its \nSubsidiaries, as at such date, plus, to the extent not already included \ntherein, all outstanding Advances made under this Agreement, including all \nIndebtedness that is payable upon demand or within one year from the date of \ndetermination thereof unless such Indebtedness is renewable or extendable at \nthe option of Borrower or any Subsidiary to a date more than one year from \nthe date of determination.\n\n \"DAILY BALANCE\" means the amount of the Obligations owed at \nthe end of a given day.\n\n \"DOMESTIC AGREEMENT\" means that certain Loan and Security \nAgreement by and between Borrower and Bank dated as of even date herewith.\n\n 2.\n\n\n\n \"DOMESTIC LOAN DOCUMENTS\" means the Domestic Agreement and the \ninstruments and documents executed in connection with that Agreement.\n\n \"ELIGIBLE FOREIGN INVENTORY\" means Inventory purchased or \nmanufactured by Borrower for resale located in the United States, other than \nInventory that is excluded under the Borrower Agreement and this Exim \nAgreement. Eligible Foreign Inventory shall not include the following:\n\n (a) any Inventory which is not located in the United States;\n\n (b) any demonstration Inventory or Inventory sold on \nconsignment;\n\n (c) any Inventory consisting of proprietary software;\n\n (d) any Inventory which is damaged, obsolete, returned, \ndefective, recalled or unfit for further processing;\n\n (e) any Inventory which has been previously exported from the \nUnited States;\n\n (f) any Inventory which constitutes defense articles or \ndefense services;\n\n (g) any Inventory which is to be incorporated into items \ndestined for shipment to a country in which Exim Bank is legally prohibited \nfrom doing business;\n\n (h) any Inventory which is to be incorporated into items \ndestined for shipment to a country in which Exim Bank coverage is not \navailable for commercial reasons, except to the extent such items are sold to \nsuch country on terms of a letter of credit confirmed by a bank acceptable to \nExim Bank; and\n\n (i) any Inventory which is to be incorporated into items \nwhose sale would result in an Account that is not an Exim Eligible Foreign \nAccount.\n\n \"EQUIPMENT\" means all present and future machinery, equipment, \ntenant improvements, furniture, fixtures, vehicles, tools, parts and \nattachments in which Borrower has any interest.\n\n \"ERISA\" means the Employment Retirement Income Security Act of\n1974,\nas amended, and the regulations thereunder.\n\n \"EXIM BANK\" means Export-Import Bank of the United States.\n\n \"EXIM BANK EXPENSES\" means all: reasonable costs or expenses \n(including reasonable attorneys' fees and expenses) incurred in connection \nwith the preparation, negotiation, administration, and enforcement of the \nLoan Documents, including any costs incurred in relation\n\n 3.\n\n\n\n\nto opposing or seeking' to obtain relief from any stay or restructuring order \nprohibiting Bank from exercising its rights as a secured creditor, \nforeclosing upon or disposing of Collateral, or such related matters; fees \nthat Bank pays to Exim Bank in consideration Of the issuance of the Exim \nGuarantee; and Bank's reasonable attorneys' fees and expenses incurred in \namending, enforcing or defending the Loan Documents, whether or not suit is \nbrought.\n\n \"EXIM COMMITTED LINE\" means Four Million Five Hundred Thousand \nDollars ($4,500,000).\n\n \"EXIM ELIGIBLE FOREIGN ACCOUNTS\" means those Accounts payable \nin United States Dollars that arise in the ordinary course of Borrower's \nbusiness from Borrower's sale of Eligible Foreign Inventory (i) with respect \nto which the account debtor is not a resident of the United States; (ii) that \nhave been validly assigned and comply with all of Borrower's representations \nand warranties to Bank; and (iii) (A) that are supported by one or more \nletters of credit issued by a financial institution acceptable to Bank on \nterms acceptable to Bank and Exim Bank or (B) are Accounts on open account \nterms approved by Bank in its sole discretion on a case by case basis; \nprovided, that standards of eligibility may be fixed and revised from time to \ntime by Bank in Bank's reasonable judgment and upon notification thereof to \nthe Borrower in accordance with the provisions hereof. Exim Eligible Foreign \nAccounts shall not include the following:\n\n (a) Accounts with a term in excess of ninety (90) days;\n\n (b) Unless pre-approved by Bank in its sole discretion, \nAccounts that the account debtor has failed to pay within sixty (60) calendar \ndays of the original due date of the invoice unless such Accounts are insured \nthrough Exim Bank export credit insurance for comprehensive commercial and \npolitical risk, or through Exim Bank approved private insurers for comparable \ncoverage, in which case ninety, (90) calendar days shall apply;\n\n (c) Accounts with respect to an account debtor, fifty percent \n(50%) of whose Accounts the account debtor has failed to pay within ninety \n(90) days of the original date of invoice;\n\n (d) Accounts evidenced by a letter of credit until the date \nof shipment of the items covered by the subject letter of credit;\n\n (e) Accounts with respect to which the account debtor is an \nAffiliate of Borrower;\n\n (f) Accounts with respect to which the account debtor is \nlocated in a country in which Exim Bank is legally prohibited from doing \nbusiness;\n\n (g) Accounts with respect to which the account debtor is \nlocated in a country in which Exim Bank coverage is not available for \ncommercial reasons;\n\n 4.\n\n\n\n (h) Accounts with respect to which Borrower is liable to the \naccount debtor for goods sold or services rendered by the account debtor to \nBorrower, but only to the extent of Borrower's liability to such account \ndebtor;\n\n (i) Accounts with respect to which the account debtor \ndisputes liability or makes any claim with respect thereto (but only to the \nextent of the amount subject to such dispute or claim), or is subject to any \nInsolvency Proceeding, or becomes insolvent, or goes out of business;\n\n (j) Accounts generated by the sale of products purchased for \nmilitary purposes;\n\n (k) Accounts generated by sales of Inventory which \nconstitutes defense articles or defense services;\n\n (i) Accounts payable in currency other than Dollars;\n\n (m) Accounts which are due and owing and the collection of \nwhich must be made outside the United States;\n\n (n) Accounts generated by the rendering of maintenance \nservices;\n\n (o) Advance deposits or payments made by account debtors;\n\n (p) Accounts the collection of which Bank or Exim Bank \ndetermines in its reasonable judgment to be doubtful; and\n\n (p) Accounts that are excluded from the Borrowing Base under \nthe Borrower Agreement.\n\n \"EXIM GUARANTEE\" means that certain Master Guarantee Agreement \nor other agreement, as amended from time to time, the terms of which are \nincorporated by reference into this Exim Agreement, pursuant to which Exim \nBank guarantees Borrower's obligations under this Exim Agreement.\n\n \"EXIM LOAN DOCUMENTS\" means, collectively, this Exim \nAgreement, the Borrower Agreement, any note or notes executed by Borrower, \nand any other agreement entered into between Borrower and Bank in connection \nwith this Exim Agreement, all as amended or extended from time to time.\n\n \"GAAP\" means generally accepted accounting principles as in \neffect from time to time.\n\n \"INDEBTEDNESS\" means (a) all indebtedness for borrowed money \nor the deferred purchase price of property or services, including without \nlimitation reimbursement and\n\n 5.\n\n\n\nother obligations with respect to surety bonds and letters of credit, (b) all \nobligations evidenced by notes, bonds, debentures or similar instruments, (c) \nall capital lease obligations and (d) all Contingent Obligations.\n\n \"INSOLVENCY PROCEEDING\" means any proceeding commenced by or \nagainst any person or entity under any provision of the United States \nBankruptcy Code, as amended, or under any other bankruptcy or insolvency law, \nincluding assignments for the benefit of creditors, formal or informal \nmoratoria, compositions, extension generally with its creditors, or \nproceedings seeking reorganization, arrangement, or other relief.\n\n \"INTELLECTUAL PROPERTY COLLATERAL\" means\n\n (a) Copyrights, Trademarks and Patents;\n\n (b) Any and all trade secrets, and any and all intellectual \nproperty rights in computer software and computer software products now or \nhereafter existing, created, acquired or held;\n\n (c) Any and all design rights which may be available to \nBorrower now or hereafter existing, created, acquired or held;\n\n (d) Any and all claims for damages by way of past, present \nand future infringement of any of the rights included above, with the right, \nbut not the obligation, to sue for and collect such damages for said use or \ninfringement of the intellectual property rights identified above;\n\n (e) All licenses or other rights to use any of the \nCopyrights, Patents or Trademarks, and all license fees and royalties arising \nfrom such use to the extent permitted by such license or rights;\n\n (f) All amendments, renewals and extensions of any of the \nCopyrights, Trademarks or Patents; and\n\n (g) All proceeds and products of the foregoing, including \nwithout limitation all payments under insurance or any indemnity or warranty \npayable in respect of any of the foregoing.\n\n \"INVENTORY\" means all present and future inventory in which \nBorrower has any interest, including merchandise, raw materials, parts, \nsupplies, packing and shipping materials, work in process and finished \nproducts intended for sale or lease or to be furnished under a contract of \nservice, of every kind and description now or at any time hereafter owned by \nor in the custody or possession, actual or constructive, of Borrower, \nincluding such inventory as is temporarily out of its custody or possession \nor in transit and including any returns upon any accounts or other proceeds, \nincluding insurance proceeds, resulting from the sale or\n\n 6.\n\n\n\ndisposition of any of the foregoing and any documents of title representing \nany of the above, and Borrower's Books relating to any of the foregoing,.\n\n \"INVESTMENT\" means any beneficial ownership of (including \nstock, partnership interest or other securities) any Person, or any loan, \nadvance or capital contribution to any Person.\n\n \"IRC\" means the Internal Revenue Code of 1986, as amended, and \nthe regulations thereunder.\n\n \"LETTERS OF CREDIT\" means letters of credit issued pursuant to \nSection 2.1.1.\n\n \"LIEN\" means any mortgage, lien, deed of trust, charge, \npledge, security interest or other encumbrance.\n\n \"LOAN DOCUMENTS\" means, collectively, this Agreement, any note \nor notes executed by Borrower, and any other agreement entered into between \nBorrower and Bank in connection with this Agreement, all as amended or \nextended from time to time.\n\n \"MATERIAL ADVERSE EFFECT\" means a material adverse effect on \n(i) the business operations or condition (financial or otherwise) of Borrower \nand its Subsidiaries taken as a whole or (ii) the ability of Borrower to \nrepay the Obligations or otherwise perform its obligations under the Loan \nDocuments.\n\n \"MATURITY DATE\" means the day before the first anniversary of \nthe Closing Date.\n\n \"NEGOTIABLE COLLATERAL\" means all of Borrower's present and \nfuture letters of credit of which it is 'a beneficiary, notes, drafts, \ninstruments, securities, documents of title, and chattel paper, and \nBorrower's Books relating to any of the foregoing.\n\n \"OBLIGATIONS\" means all debt, principal, interest, Bank \nExpenses and other amounts owed to Bank by Borrower pursuant to this \nAgreement or any other agreement, whether absolute or contingent, due or to \nbecome due, now existing or hereafter arising, including any interest that \naccrues after the commencement of an Insolvency Proceeding and including any \ndebt, liability, or obligation owing from Borrower to others that Bank may \nhave obtained by assignment or otherwise.\n\n \"PATENTS\" means all patents, patent applications and like \nprotections including without limitation improvements, divisions, \ncontinuations, renewals, reissues, extensions and continuations-in-part of \nthe same.\n\n \"PERIODIC PAYMENTS\" means all installments or similar \nrecurring payments that Borrower may now or hereafter become obligated to pay \nto Bank pursuant to the terms and\n\n 7.\n\n\n\nprovisions of any instrument, or agreement now or hereafter in existence \nbetween Borrower and Bank.\n\n \"PERMITTED INDEBTEDNESS\" MEANS:\n\n (a) Indebtedness of Borrower in favor of Bank arising under \nthis Agreement or any other Loan Document;\n\n (b) Indebtedness existing on the Closing Date and disclosed \nin the Schedule;\n\n (c) Subordinated Debt;\n\n (d) Indebtedness to trade creditors incurred in the ordinary \ncourse of business;\n\n (e) Leases of Equipment pursuant to sale-leaseback \ntransactions, provided that sales of such leased-back equipment shall not \nexceed, in the aggregate, Two Million Dollars ($2,000,000)in any fiscal year;\n\n (f) Indebtedness secured by Permitted Liens;\n\n (g) Capital leases or indebtedness incurred solely to \npurchase equipment which is secured in accordance with clause (c) of \n\"Permitted Liens\" below and is not in excess of the lesser of the purchase \nprice of such equipment or the fair market value of such equipment on the \ndate of acquisition;\n\n (h) Extensions, refinancings, modifications, amendments and \nrestatements of any of items of Permitted Indebtedness (a) through (g) above, \nprovided that the principal amount thereof is not increased or the terms \nthereof are not modified to impose more burdensome terms upon Borrower or its \nSubsidiary, as the case may be.\n\n \"PERMITTED INVESTMENT\" means:\n\n (a) Investments existing on the Closing Date disclosed in the \nSchedule; and\n\n (b) (i) marketable direct obligations issued or \nunconditionally guaranteed by the United States of America or any agency or \nany State thereof maturing within one (1) year from tile date of acquisition \nthereof, (ii) commercial paper maturing no more than one (1) year from the \ndate of creation thereof and currently having the highest rating obtainable \nfrom either Standard & Poor's Corporation or Moody's Investors Service, Inc., \nand (iii) certificates of deposit maturing no more than one (1) year from the \ndate of investment therein issued by Bank;\n\n 8.\n\n\n\n (c) Investments consisting of notes receivable of, or prepaid \nroyalties and other credit extensions to, customers and suppliers who are not \nAffiliates, in the ordinary course of business; provided that this paragraph \n(c) shall not apply to Investments by Borrower in any Subsidiary;\n\n (d) Investments consisting of the endorsement of negotiable \ninstruments for deposit or collection or similar transaction in the ordinary \ncourse of business;\n\n (e) Investments (including debt obligations) received in \nconnection with the bankruptcy or reorganization of customers or suppliers \nand in settlement of delinquent obligations of, and other disputes with, \ncustomers or suppliers arising in the ordinary course of business; and\n\n (f) Investments consisting of (i) compensation of employees, \nofficers and directors of Borrower or its Subsidiaries so long as the Board \nof Directors of Borrower determines that such compensation is in the best \ninterests of Borrower, (ii) travel advances, employee relocation loans and \nother employee loans and advances in the ordinary course of business, (iii) \nloans to employees, officers or directors relating to the purchase of equity \nsecurities of Borrower or its Subsidiaries pursuant to employee stock \npurchase plans or agreements approved by Borrower's Board of Directors in an \naggregate amount not in excess of Two Hundred Fifty Thousand Dollars \n($250,000) outstanding at any time; (iv) other loans to officers and \nemployees approved by the Board of Directors in an aggregate amount not in \nexcess of Two Hundred Fifty Thor, sand Dollars ($250,000) outstanding at any \ntime; and\n\n (g) Other Investments (including the creation of any \nSubsidiary) aggregating not in excess of Two Hundred Fifty Thousand Dollars \n($250,000) at any time.\n\n \"PERMITTED LIENS\" means the following:\n\n (a) Any Liens existing on the Closing Date and disclosed in \nthe Schedule or arising under this Agreement or the other Loan Documents;\n\n (b) Liens for taxes, fees, assessments or other governmental \ncharges or levies, either not delinquent or being contested in good faith by \nappropriate proceedings, PROVIDED the same have no priority over any of \nBank's security interests;\n\n (c) Liens (i) upon or in any equipment acquired or held by \nBorrower or any of its Subsidiaries to secure the purchase price of such \nequipment or indebtedness incurred solely for the purpose of financing the \nacquisition of such equipment, or (ii) existing on such equipment at the time \nof its acquisition, PROVIDED that the Lien is confined solely to the property \nso acquired and improvements thereon, and the proceeds of such equipment;\n\n (d) Liens on Equipment leased by Borrower or any Subsidiary \npursuant to an operating or capital lease in the ordinary course of business \n(including proceeds thereof and accessions thereto) incurred solely for the \npurpose of financing the lease of such Equipment\n\n 9.\n\n\n\n(including Liens pursuant to leases permitted pursuant to Section 7.1 and \nLiens arising from UCC financing statements regarding leases permitted by \nthis Agreement);\n\n (e) Leases or subleases and licenses or sublicenses granted \nto others in the ordinary course of Borrower's business not interfering in \nany material respect with the business of Borrower and its Subsidiaries taken \nas a whole, and any interest or title of a lessor, licensor or under any \nlease or license provided that such leases, subleases, licenses and \nsublicenses do not prohibit the grant of the security interest granted \nhereunder;\n\n (f) Liens arising from judgments, decrees or attachments in \ncircumstances not constituting an Event of Default under Section 8.8;\n\n (g) Easements, reservations, rights-of-way, restrictions, \nminor defects or irregularities in title and other similar charges or \nencumbrances affecting real property not constituting a Material Adverse \nEffect;\n\n (h) Liens in favor of customs and revenue authorities arising \nas a matter of law to secure payments of customs duties in connection with \nthe importation of goods;\n\n (i) Liens that are not prior to the Lien of Bank which \nconstitute rights of set-off of a customary nature or banker's Liens with \nrespect to amounts on deposit, whether arising by operation of law or by \ncontract, in connection with arrangement entered in to with banks in the \nordinary course of business; and\n\n (j) Liens incurred in connection with the extension, renewal \nor refinancing of the indebtedness secured by Liens of the type described in \nclauses (a) through (c) above, PROVIDED that any extension, renewal or \nreplacement Lien shall be limited to the property encumbered by the existing \nLien and the principal amount of the indebtedness being extended, renewed or \nrefinanced does not increase.\n\n \"PERSON\" means any individual, sole proprietorship, \npartnership, limited liability company, joint venture, trust, unincorporated \norganization, association, corporation, institution, public benefit \ncorporation, firm, joint stock company, estate, entity or governmental agency.\n\n \"PRIME RATE\" means the variable rate of interest, per annum, \nmost recently announced by Bank, as its \"prime rate,\" whether or not such \nannounced rate is the lowest rate available from Bank.\n\n \"QUICK ASSETS\" means, at any date as of which the amount \nthereof shall be determined, the consolidated cash, cash-equivalents, \naccounts receivable and investments, with maturities not to exceed 90 days, \nof Borrower determined in accordance with GAAP.\n\n \"RESPONSIBLE OFFICER\" means each of the Chief Executive \nOfficer, the Chief Financial Officer and the Controller of Borrower.\n\n 10.\n\n\n\n \"REVOLVING FACILITY\" means the facility under which Borrower \nmay request Bank to issue cash advances and letters of credit, as specified \nin Sections 2.1 and 2.1.1 hereof.\n\n \"SCHEDULE\" means the schedule of exceptions attached hereto, \nif any.\n\n \"SUBORDINATED DEBT\" means any debt incurred by Borrower that \nis subordinated to the debt owing by Borrower to Bank on terms acceptable to \nBank (and identified as being such by Borrower and Bank).\n\n \"SUBSIDIARY\" means any corporation or partnership in which (i) \nany general partnership interest or (ii) more than 50% of the stock of which \nby the terms thereof ordinary voting power to elect the Board of Directors, \nmanagers or trustees of the entity shall, at the time as of which any \ndetermination is being made, be owned by Borrower, either directly or through \nan Affiliate.\n\n \"TANGIBLE NET WORTH\" means at any date as of which the amount \nthereof shall be determined, the consolidated total assets of Borrower and \nits Subsidiaries MINUS, without duplication, (i) the sum of any amounts \nattributable to (a) goodwill, (b) intangible items such as unamortized debt \ndiscount and expense, patents, trade and service marks and names, copyrights \nand research and development expenses except prepaid expenses, and (c) all \nreserves not already deducted from assets, and (ii) Total Liabilities.\n\n \"TOTAL LIABILITIES\" means at any date as of which the amount \nthereof shall be determined, all obligations that should, in accordance with \nGAAP be classified as liabilities on the consolidated balance sheet of \nBorrower, including in any event all Indebtedness, but specifically excluding \nSubordinated Debt.\n\n \"TRADEMARKS\" means any trademark and servicemark rights, \nwhether registered or not, applications to register and registrations of the \nsame and like protections, and the entire goodwill of the business of \nAssignor connected with and symbolized by such trademarks.\n\n 1.2 ACCOUNTING TERMS. All accounting terms not specifically \ndefined herein shall be construed in accordance with GAAP and all \ncalculations made hereunder shall be made in accordance with GAAP. When used \nherein, the terms \"financial statements\" shall include the notes and \nschedules thereto.\n\n 2. LOAN AND TERMS OF PAYMENT\n\n 2.1 REVOLVING ADVANCES. Subject to the terms and conditions o f \nthis Exim Agreement, Bank agrees to make Advances to Borrower in an amount \nnot to exceed the lowest of (i) the Exim Committed Line minus the face amount \nof any issued and outstanding Letters of Credit (including drawn but \nunreimbursed Letters of Credit), (ii) the Borrowing Base minus the face \namount of any issued and outstanding Letters of Credit (including drawn but \nunreimbursed Letters of Credit) or (iii) Three Million Dollars ($3,000,000). \nFor purposes of\n\n 11.\n\n\n\nthis Exim Agreement \"Borrowing Base\" shall mean an amount equal to (i) ninety \npercent (90%) of the Exim Eligible Foreign Accounts and (ii) seventy percent \n(70%) of Eligible Foreign Inventory, minus the amount of any advance payments \nor deposits made by Borrower's account debtors.\n\n To evidence the Advances, Borrower shall execute and deliver to Bank on \nthe date hereof a promissory note (the \"Note\") in substantially the form \nattached hereto as Exhibit B.\n\n Whenever Borrower desires an Advance, Borrower will notify Bank by \nfacsimile transmission or telephone no later than 3:00 p.m. California time, \non the Business Day that the Advance is to be made. Each such notification \nshall be promptly confirmed by a Payment\/Advance Form in substantially the \nform of Exhibit C hereto. In addition to the procedure set forth in the \npreceding sentence, Bank is authorized to make Advances under this Exim \nAgreement, based upon written instructions received from a Responsible \nOfficer or without instructions if in Bank's discretion such Advances are \nnecessary to meet Obligations which have become due and remain unpaid. Bank \nwill credit the amount of Advances made under this Section 2.1 to Borrower's \ndeposit account. Amounts borrowed pursuant to this Section 2.1 may be repaid \nand re-borrowed at any time during the term of this Exim Agreement so long as \nno Event of Default has occurred and is continuing.\n\n 2.1.1 LETTERS OF CREDIT.\n\n (a) Subject to the terms and conditions of this Exim \nAgreement, Bank agrees to issue or cause to be issued standby Letters of \nCredit for the account of Borrower in an aggregate face amount not to exceed \n(i) the lesser of the Exim Committed Line or the Borrowing Base minus (ii) \nthe then outstanding principal balance of the Advances. Each Letter of \nCredit shall have an expiry date no later than the Maturity Date. All \nLetters of Credit shall be, in form and substance, acceptable to Bank in its \nsole discretion and shall be subject to the terms and conditions of Bank's \nform of application:and letter of credit agreement. All amounts actually \npaid by Bank in respect of a Letter of Credit shall, when paid, constitute an \nAdvance under this Exim Agreement.\n\n (b) The obligation of Borrower to immediately reimburse \nBank for drawings made under Letters of Credit shall be absolute, \nunconditional and irrevocable, and shall be performed strictly in accordance \nwith the terms of this Exim Agreement and such Letters of Credit, under all \ncircumstances whatsoever. Borrower shall indemnify, defend and hold Bank \nharmless from any loss, cost, expense or liability, including, without \nlimitation, reasonable attorneys' fees, arising out of or in connection with \nany letters of credit issued for the account of Borrower.\n\n 2.1.2 LETTER OF CREDIT REIMBURSEMENT; RESERVE.\n\n (a) Borrower may request that Bank issue a Letter of \nCredit payable in a currency other than United States Dollars. If a demand \nfor payment is made under any such letter of credit, Bank shall treat such \ndemand as an advance to Borrower of the \n\n 12.\n\n\n\n\nequivalent of the amount thereof (plus cable charges) in United States \ncurrency at the then prevailing rate of exchange in San Francisco, \nCalifornia, for sales of that other currency for cable transfer to the \ncountry of which it is the currency.\n\n (b) Upon the issuance of any Letter of Credit payable in \na currency other than United States Dollars, Bank shall create a reserve \nunder the Exim Committed Line for Letters of Credit against fluctuations in \ncurrency exchange rates, in an amount equal to twenty percent (20%)of the \nface amount of such Letter of Credit. The amount of such reserve may be \namended by Bank from time to time to account for fluctuations in the exchange \nrate. The availability of funds under the Exim Committed Line shall be \nreduced by the amount of such reserve for so long as such Letter of Credit \nremains outstanding.\n\n 2.2 OVERADVANCES. If, at any time or for any reason, the amount \nof Obligations owed by Borrower to Bank pursuant to Section 2.1 of this Exim \nAgreement is greater than the lesser of (i) the Exim Committed Line, or (ii) \nthe Borrowing Base, Borrower shall immediately pay to Bank, in cash, the \namount of such excess.\n\n 2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.\n\n (A) INTEREST RATE. Except as provided in Section 2.3(b), any \nAdvances under this Exim Agreement shall bear interest, on the average Daily \nBalance, at a rate equal to three quarters of a percentage point (0.75%) \nabove the Prime Rate.\n\n (B) DEFAULT RATE. All Obligations shall bear interest, from \nand after the occurrence and during the continuance of an Event of Default, \nat a rate equal to five (5) percentage points above the rate that applied \nimmediately prior to the occurrence of the Event of Default.\n\n (C) PAYMENTS. Interest hereunder shall be due and payable in \narrears on the nineteenth calendar day of each month during the term hereof. \nBank shall, at its option, charge such interest, all Exim Bank Expenses, and \nall Periodic Payments against Borrower's deposit account or against the Exim \nCommitted Line, in which case those amounts shall thereafter accrue interest \nat the rate then applicable hereunder. Any interest not paid when due shall \nbe compounded by becoming a part of the Obligations, and such interest shall \nthereafter accrue interest at the rate then applicable hereunder.\n\n (D) COMPUTATION. In the event the Prime Rate is changed from \ntime to time hereafter, the applicable rate of interest hereunder shall be \nincreased or decreased contemporaneously with such change by an amount equal \nto such change in the Prime Rate. All interest chargeable under the Exim \nLoan Documents shall be computed on the basis of a three hundred sixty (360) \nday year for the actual number of days elapsed.\n\n 2.4 CREDITING PAYMENTS. The receipt by Bank of any wire transfer \nof funds, check, or other item of payment shall be immediately applied to \nconditionally reduce Obligations, but shall not be considered a payment on \naccount unless such wire transfer is of\n\n 13.\n\n\n\nimmediately available federal funds and is made to the appropriate deposit \naccount of Bank or unless and until such check or other item of payment is \nhonored when presented for payment. Notwithstanding anything to the contrary \ncontained herein, any payment (other than a wire transfer of immediately \navailable funds) received by Bank after 12:00 noon California time shall be \ndeemed to have been received by Bank as of the opening of business on the \nimmediately following Business Day.\n\n 2.5 FEES. Borrower shall pay to bank the following fees:\n\n (A) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's \ncustomary fees and out-of-pocket expenses for Bank's initial audit of \nBorrower's Accounts and Inventory, and for each subsequent appraisal of \nCollateral and financial analysis and examination of Borrower performed from \ntime to time by Bank or its agents;\n\n (B) EXIM FEE. A facility fee equal to one and one-half \npercent (1.5%) per annum of the Exim Committed Line, which fee shall be due \nand fully earned upon Bank's receipt of the Exim Guarantee.\n\n (C) EXIM BANK EXPENSES. On the Closing Date, Exim Bank \nExpenses incurred through the Closing Date and, after the Closing Date, all \nExim Bank Expenses as they become due.\n\n 2.6 INCREASED COSTS. In case any law, regulation, treaty or \nofficial directive or the interpretation or application thereof by any court \nor any governmental authority charged with the administration thereof or the \ncompliance with any guideline or request of any central bank or other \ngovernmental authority (whether or not having the force of law):\n\n (a) subjects Bank to any tax with respect to payments of \nprincipal or interest or any other amounts payable hereunder by Borrower or \notherwise with respect to the transactions contemplated hereby (except for \ntaxes on the overall net income of Bank imposed by the United States of \nAmerica or any political subdivision thereof); or\n\n (b) imposes, modifies or deems applicable any deposit \ninsurance, reserve, special deposit or similar requirement against assets \nheld by, or deposits in or for the account of, or loans by, Bank; or\n\n (c) imposes upon Bank any other condition with respect to \ntheir performance under this Exim Agreement,\n\nand the result of any of the foregoing is to increase the cost to Bank, \nreduce the income receivable by Bank or impose any expense upon Bank with \nrespect to any loans, Bank shall notify Borrower thereof. Borrower agrees to \npay to Bank the amount of such increase in cost, reduction in income or \nadditional expense as and when such cost, reduction or expense is incurred or \ndetermined, upon presentation all in reasonable detail by Bank of a statement \nin the amount and setting forth Bank's calculation thereof, which statement \nshall be deemed true and\n\n 14.\n\n\n\ncorrect absent manifest error; provided, however, that Borrower shall not be \nliable for any such amount attributable to any period prior to the date of \nhundred eighty (180) days prior to the date of such statement.\n\n 2.7 TERM. Subject to Section 13.6, this Exim Agreement shall \nbecome effective once duly executed and authorized by Borrower and Bank and \nshall continue in full force and effect for a term ending on the Maturity \nDate, on which date all Obligations shall become immediately due and payable. \n Notwithstanding the foregoing, Bank shall have the right to terminate this \nExim Agreement immediately and without notice upon the occurrence of an Event \nof Default and Borrower shall have the right to terminate this Exim Agreement \nimmediately upon payment in full of its Obligations then outstanding \nhereunder. Notwithstanding any termination of this Exim Agreement, all of \nBank's security interest in all of the Collateral and all of the terms and \nprovisions of this Exim Agreement shall continue in full force and effect \nuntil all Obligations have been paid and performed in full, and no \ntermination shall impair any right or remedy of Bank, nor shall any such \ntermination relieve Borrower of any Obligation to Bank until all of the \nObligations have been paid and performed in full.\n\n 2.8 USE OF PROCEEDS. Borrower will use the proceeds of Advances \nonly for the purposes specified in the Borrower Agreement. Borrower shall \nnot use the proceeds of the Advances for any purpose prohibited by the \nBorrower Agreement.\n\n 3. CONDITIONS OF LOANS\n\n 3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of \nBank to make the initial Advance or issue the initial Letter of Credit is \nsubject to the condition precedent that Bank shall have received, in form and \nsubstance satisfactory to Bank, the following:\n\n (a) this Exim Agreement, the Borrower Agreement and the Note, \neach duly executed by Borrower;\n\n (b) a certificate of the secretary of Borrower with respect \nto incumbency and resolutions authorizing the execution and delivery of this \nExim Agreement;\n\n (c) an Intellectual Property Security Agreement;\n\n (d) the Exim Guarantee;\n\n (e) a financing statement;\n\n (f) payment of the fees and Exim Bank Expenses then due and \nspecified in Section 2.5 hereof;\n\n (g) insurance certificate;\n\n 15.\n\n\n\n (h) documents and agreements as specified in Section 3.1 of \nthe Domestic Agreement; and\n\n (i) such other documents, and completion of such other \nmatters, as Bank may deem reasonably necessary or appropriate.\n\n 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Bank \nto make each Advance, including the initial Advance, and to issue each Letter \nof Credit is further subject to the following conditions:\n\n (a) timely receipt by Bank of the Payment\/Advance Form as \nprovided in Section 2.1;\n\n (b) timely receipt by Bank of a copy of the executed firm \nwritten export purchase order relating to the requested Advance, the payment \nterms of which shall be acceptable to Bank;\n\n (c) timely receipt by Bank of an Export Order as defined in \nthe Borrower Agreement and Borrowing Base Certificate current within five (5) \nBusiness Days;\n\n (d) the Exim Guarantee shall be in full force and effect; and\n\n (e) the representations and warranties contained in Section 5 \nhereof shall be true and accurate in all material respects on and as of the \ndate of such Payment\/Advance Form and on the effective date of each Advance \nas though made at and as of each such date (except to the extent they relate \nspecifically to an earlier date, in which case such representations and \nwarranties shall continue to have been true and accurate as of such date), \nand no Event of Default shall have occurred and be continuing, or would \nresult from such Advance.\n\n The making of each Advance and issuance of each Letter of Credit shall \nbe deemed to be a representation and warranty by Borrower on the date of such \nAdvance as to the accuracy of the facts referred to in subsection (e) of this \nSection 3.2.\n\n 4. CREATION OF SECURITY INTEREST\n\n 4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Bank a \ncontinuing security interest in all presently existing and hereafter acquired \nor arising Collateral in order to secure prompt repayment of any and all \nObligations and in order to secure prompt performance by Borrower of each of \nits covenants and duties under the Exim Loan Documents. As long as an Event \nof Default has not occurred and is continuing, upon (i) Borrower's \nachievement of three (3) consecutive quarters of minimum net profit of at \nleast $1, and (ii) Borrower's receipt of cash proceeds of at least \n$16,000,000 from the issuance of its equity securities after the date hereof, \nBank shall release its security interest in Intellectual Property Collateral, \nand from and after such release, the Intellectual Property Collateral shall \nnot constitute \"Collateral\" for purposes of the Exim Loan Documents.\n\n 16.\n\n\n\n 4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall \nfrom time to time execute and deliver to Bank, at the request of Bank, all \nfinancing statements and other documents that Bank may reasonably request, in \nform satisfactory to Bank, to perfect and continue perfected Bank's security \ninterests in the Collateral and in order to fully consummate all of the \ntransactions contemplated under the Exim Loan Documents.\n\n 4.3 RIGHT TO INSPECT. Each of Bank and Exim Bank (through any of \ntheir respective officers, employees, or agents) shall have the right, upon \nreasonable prior notice, from time to time during Borrower's usual business \nhours, to inspect Borrower's Books, facilities and activities, and to check, \ntest, and appraise the Collateral in order to verify Borrower's financial \ncondition or the amount, condition of, or any other matter relating to, the \nCollateral. Bank shall conduct semi-annual accounts receivable audits and \nphysical inspections of the Inventory, the results of which audits shall be \nsatisfactory to Bank. Borrower will cause its officers and employees to give \ntheir full cooperation and assistance in connection therewith.\n\n 5. REPRESENTATIONS AND WARRANTIES\n\n Borrower represents, warrants and covenants as follows:\n\n 5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each \nSubsidiary is a corporation duly existing and in good standing under the laws \nof its state of incorporation and qualified and licensed to do business in, \nand is in good standing in, any state in which the conduct of its business or \nits ownership of property requires that it be so qualified, except for states \nas to which any failure to so qualify would not have a Material Adverse \nEffect.\n\n 5.2 DUE AUTHORIZATION: NO CONFLICT. The execution, delivery, and \nperformance of the Exim Loan Documents are within Borrower's powers, have \nbeen duly authorized, and are not in conflict with nor constitute a breach of \nany provision contained in Borrower's Articles of Incorporation or Bylaws, \nnor will .they constitute an event of default under any material agreement to \nwhich Borrower is a party or by which Borrower is bound. Borrower is not in \ndefault under any material agreement to which it is a party or by which it is \nbound, which default could have a Material Adverse Effect.\n\n 5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible \ntitle to the Collateral, free and clear of Liens, except for Permitted Liens.\n\n 5.4 BONA FIDE ELIGIBLE-ACCOUNTS. The Exim Eligible Foreign \nAccounts are bona fide existing obligations. The property giving rise to \nsuch accounts has been delivered to the account debtor or to the account \ndebtor's agent for immediate shipment to and unconditional acceptance by the \naccount debtor. Borrower has not received notice of actual or imminent \nInsolvency Proceeding of any account debtor that is included in any Borrowing \nBase Certificate as an Exim Eligible Foreign Account.\n\n 5.5 MERCHANTABLE INVENTORY. All Inventory is in all material \nrespects of good and marketable quality, free from all material defects.\n\n 17.\n\n\n\n 5.6 INTELLECTUAL PROPERTY. Borrower is the sole owner of the \npresently registered Intellectual Property Collateral, except for \nnon-exclusive licenses granted by Borrower to its customers in the ordinary \ncourse of business. Each of the registered Patents is valid and enforceable, \nand no part of the Intellectual Property Collateral has been judged invalid \nor unenforceable, in whole or in part, and no claim has been made that any \npart of the intellectual Property Collateral violates the rights of any third \nparty. Except for and upon the filing with the United States Patent and \nTrademark Office with respect to the Patents and Trademarks and the Register \nof Copyrights with respect to the Copyrights necessary to perfect the \nsecurity interests created hereunder, and except as has been already made or \nobtained, no authorization, approval or other action by, and no notice to or \nfiling with, any United States governmental authority or United States \nregulatory body is required either (i) for the grant by Borrower of the \nsecurity interest granted hereby or for the execution, delivery or \nperformance of Loan Documents by Borrower in the United States or (ii) for \nthe perfection in the United States or the exercise by Bank of its rights and \nremedies hereunder.\n\n 5.7 NAME: LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed \nin the Schedule, Borrower has not done business under any name other than \nthat specified on the signature page hereof. The chief executive office of \nBorrower is located at the address indicated in Section 11 hereof.\n\n 5.8 LITIGATION. Except as set forth in the Schedule, there are no \nactions or proceedings pending by or against Borrower or any Subsidiary \nbefore any court or administrative agency in which an adverse decision could \nhave a Material Adverse Effect or a material adverse effect on Borrower's \ninterest or Bank's security interest in the Collateral. Borrower does not \nhave knowledge of any such pending or threatened actions or proceedings.\n\n 5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All \nconsolidated financial statements related to Borrower and any Subsidiary that \nhave been delivered by Borrower to Bank fairly present in all material \nrespects Borrower's consolidated financial condition as of the date thereof \nand Borrower's consolidated results of operations for the period then ended. \nThere has not been a material adverse change in the consolidated financial \ncondition of Borrower since the date of the most recent of such financial \nstatements submitted to Bank.\n\n 5.10 SOLVENCY. Borrower is solvent and able to pay its debts \n(including trade debts) as they mature.\n\n 5.11 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met \nthe minimum funding requirements of ERISA with respect to any employee \nbenefit plans subject to ERISA. No event has occurred resulting from \nBorrower's failure to comply with ERISA that is reasonably likely to result \nin Borrower's incurring any liability that could have a Material Adverse \nEffect. Borrower is not an \"investment company\" or a company \"controlled\" by \nan \"investment company\" within the meaning of the Investment Company Act of \n1940. Borrower is not engaged principally, or as one of the important \nactivities, in the business of extending credit for the purpose of purchasing \nor carrying margin stock (within the meaning of Regulations G, T and U of the \nBoard of Governors of the Federal Borrower has complied with all the\n\n 18.\n\n\n\nprovisions of the Federal Fair Labor Standards Reserve System). Borrower has \ncomplied with all the provisions of the Federal Fair Labor Borrower has not \nviolated any statutes, laws, ordinances or rules applicable to it, violation \nof which could have a Material Adverse Effect.\n\n 5.12 ENVIRONMENTAL CONDITION. None of Borrower's or any \nSubsidiary's properties or assets has ever been used by Borrower or any \nSubsidiary or, to the best of Borrower's knowledge, by previous owners or \noperators, in the disposal of, or to produce, store, handle, treat, release, \nor transport, any hazardous waste or hazardous substance other than in \naccordance with applicable law; to the best of Borrower's knowledge, none of \nBorrower's properties or assets has ever been designated or identified in any \nmanner pursuant to any environmental protection statute as a hazardous waste \nor hazardous substance disposal site, or a candidate for closure pursuant to \nany environmental protection statute; no lien arising under any environmental \nprotection statute has attached to any revenues or to any real or personal \nproperty owned by Borrower or any Subsidiary; and neither Borrower nor any \nSubsidiary has received a summons, citation, notice, or directive from the \nEnvironmental Protection Agency or any other federal, state or other \ngovernmental agency concerning any action or omission by Borrower or any \nSubsidiary resulting in the releasing, or otherwise disposing of hazardous \nwaste or hazardous substances into the environment.\n\n 5.13 TAXES. Borrower and each Subsidiary has filed or caused to be \nfiled all tax returns required to be filed, and has paid, or has made \nadequate provision for the payment of, all taxes reflected therein.\n\n 5.14 SUBSIDIARIES. Borrower does not own any stock, partnership \ninterest or other equity securities of any Person, except for Permitted \nInvestments.\n\n 5.15 GOVERNMENT CONSENTS. Borrower and each Subsidiary has \nobtained all consents, approvals and authorizations of, made all declarations \nor filings with, and given all notices to, all governmental authorities that \nare necessary for the continued operation of Borrower's business as currently \nconducted.\n\n 5.16 FRILL DISCLOSURE. No representation, warranty or other \nstatement made by Borrower in any certificate or written statement furnished \nto Bank contains any untrue statement of a material fact or omits to state a \nmaterial fact necessary in order to make the statements contained in such \ncertificates or statements not misleading.\n\n 6. AFFIRMATIVE COVENANTS\n\n Borrower covenants and agrees that, until payment in full of the \nObligations, Borrower shall do all of the following:\n\n 6.1 GOOD STANDING. Borrower shall maintain its and each of its \nSubsidiaries' corporate existence 'and good standing in its jurisdiction of \nincorporation and maintain qualification in each jurisdiction in which the \nfailure to so qualify could reasonably be expected to have a Material Adverse \nEffect. Borrower shall maintain, and shall cause each of its\n\n 19.\n\n\n\nSubsidiaries to maintain, to the extent consistent with prudent management of \nBorrower's business, in force all licenses, approvals and agreements, the \nloss of which could have a Material Adverse Effect.\n\n 6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause \neach Subsidiary to meet, the minimum funding requirements of ERISA with \nrespect to any employee benefit plans subject to ERISA. Borrower shall \ncomply, and shall cause each Subsidiary to comply, with all statutes, laws, \nordinances and government rules and regulations to which it is subject, \nnoncompliance with which could reasonably be expected to have a Material \nAdverse Effect or a material adverse effect on the Collateral or the priority \nof Bank's Lien on the Collateral.\n\n 6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall \ndeliver to Bank: (a) as soon as avail.able, but in any event within thirty \n(30) days after the end of each fiscal quarter, a company prepared \nconsolidated balance sheet and income statement covering Borrower's \nconsolidated operations during such period, certified by a Responsible \nOfficer; (b) as soon as available, but in any event within ninety (90) days \nafter the end of Borrower's fiscal year, audited consolidated financial \nstatements of Borrower prepared in accordance with GAAP, consistently \napplied, together with an unqualified opinion on such financial statements of \nan independent certified public accounting firm reasonably acceptable to Bank \nand any accompanying management reports; (c) prompt notice of any material \nchange in the composition of the Intellectual Property Collateral, including, \nbut not limited to, any subsequent ownership right of the Borrower in or to \nany Copyright, Patent or Trademark not specified in any intellectual property \nsecurity agreement between Borrower and Bank or knowledge of an event that \nmaterially adversely effects the value of the Intellectual Property \nCollateral; (d) within five (5) days upon becoming available, copies of all \nstatements, reports and notices sent or made available generally by Borrower \nto its security holders or to any holders of Subordinated Debt and all \nreports on Form 10-K and 10-Q filed with the Securities and Exchange \nCommission; (e) promptly upon receipt of notice thereof, a report of any \nlegal actions pending or threatened against Borrower or any Subsidiary that \ncould result in damages or costs to Borrower or any Subsidiary of One Hundred \nThousand Dollars ($100,000) or more; and (f) such budgets, sales projections, \noperating plans or other financial information as Bank may reasonably request \nfrom time to time.\n\n Within twenty (20) days after the last day of each month in which an \nAdvance is outstanding (and as a condition to Borrower requesting an \nAdvance), Borrower shall deliver to Bank Borrowing Base Certificates signed \nby a Responsible Officer in substantially the form of Exhibit D hereto, \ntogether with aged listings of accounts receivable and accounts payable and a \nschedule of Inventory.\n\n Borrower shall deliver to Bank with the quarterly financial statements a \nCompliance Certificate signed by a Responsible Officer in substantially the \nform of Exhibit E hereto.\n\n 20.\n\n\n\n Bank shall have a right from time to time hereafter to audit Borrower's \nAccounts at Borrower's expense, provided that such audits will be conducted \nno more often than every six (6) months unless an Event of Default has \noccurred and is continuing.\n\n 6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in good \nand marketable condition, free from. all material defects. Returns and \nallowances, if any, as between Borrower and its account debtors shall be on \nthe same basis and in accordance with the usual customary practices of \nBorrower, as they exist at the time of the execution and delivery of this \nAgreement. Borrower shall promptly notify Bank of all returns and recoveries \nand of all disputes and claims, where the return, recovery, dispute or claim \ninvolves more than Fifty Thousand Dollars ($50,000).\n\n 6.5 TAXES. Borrower shall make, and shall cause each Subsidiary \nto make, due and timely payment or deposit of all material federal, state, \nand local taxes, assessments, or contributions required of it by law, and \nwill execute and deliver to Bank, on demand, appropriate certificates \nattesting to the payment or deposit thereof; and Borrower will make, and will \ncause each Subsidiary to make, timely payment or deposit of all material tax \npayments and withholding taxes required of it by applicable laws, including, \nbut not limited to, those laws concerning F.I.C.A., F.U.T.A., state \ndisability, and local, state, and federal income taxes, and will, upon \nrequest, furnish Bank with proof satisfactory to Bank. indicating that \nBorrower or a Subsidiary has made such payments or deposits; provided that \nBorrower or a Subsidiary need not make any payment if the amount or validity \nof such payment is contested in good faith by appropriate proceedings and is \nreserved against (to the extent required by GAAP) by Borrower.\n\n 6.6 INSURANCE.\n\n (a) Borrower, at its expense, shall keep the Collateral \ninsured against loss or damage by fire, theft, explosion, sprinklers, and all \nother hazards and risks, and in such amounts, as ordinarily insured against \nby other owners in similar businesses conducted in the locations where \nBorrower's business is conducted on the date hereof. Borrower shall also \nmaintain insurance relating to Borrower's ownership and use of the Collateral \nin amounts and of a type that are customary to businesses similar to \nBorrower's.\n\n (b) All such policies of insurance shall be in such form, \nwith such companies, and in such amounts as reasonably satisfactory to Bank. \nAll such policies of property insurance shall contain a lender's loss payable \nendorsement, in a form satisfactory to Bank, showing Bank as an additional \nloss payee thereof and all liability insurance policies shall show the Bank \nas an additional insured, and shall specify that the insurer must give at \nleast twenty (20) days notice to Bank before canceling its policy for any \nreason. Upon Bank's request, Borrower shall deliver to Bank certified copies \nof such policies of insurance and evidence of the payments of all premiums \ntherefor. All proceeds payable under any such policy shall, at the option of \nBank, be payable to Bank to be applied on account of the Obligations.\n\n 6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal \ndepository and operating accounts with Bank.\n\n 21.\n\n\n\n 6.8 ADJUSTED QUICK RATIO. Borrower shall maintain, as of the last \nday of each fiscal quarter, a ratio of Quick Assets to Current Liabilities, \nexcluding deferred revenue and customer deposits, of at least 1.25 to 1.0. \nFor purposes of this Section, Quick Assets shall be deemed to include cash, \ncash-equivalents, and investments with maturities not exceeding 90 days held \nin deposit accounts in which Bank has a Lien prior to any other Lien.\n\n 6.9 DEBT-NET WORTH RATIO. Borrower shall maintain, as of the last \nday of each fiscal quarter, a ratio of Total Liabilities, excluding deferred \nrevenue and customer deposits, less Subordinated Debt to Tangible Net Worth \nplus Subordinated Debt of not more than 1.0 to 1.0.\n\n 6.10 TANGIBLE NET WORTH. Borrower shall maintain, as of the last \nday of each fiscal quarter, a Tangible Net Worth of not less than Eight \nMillion Dollars ($8,000,000) plus seventy-five percent of the net proceeds \nfrom the sale of Borrower's equity securities after the Closing Date.\n\n 6.11 PROFITABILITY. Borrower shall be profitable for each fiscal \nquarter, except Borrower may suffer a loss not to exceed $600,000 for one \nfiscal quarter in any fiscal year.\n\n 6.12 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.\n\n (a) Borrower shall register or cause to be registered (to the \nextent not already registered) with the United States Patent and Trademark \nOffice or the United States Copyright Office, as applicable, those \nintellectual property rights listed on Exhibits A, B and C to the \nIntellectual Property Security Agreement delivered to Bank by Borrower in \nconnection with this Agreement within thirty (30) days of the date of this \nAgreement. Borrower shall have no duty to register or cause to be registered \nwith the United States Patent and Trademark Office or the United States \nCopyright Office, as applicable, those additional intellectual property \nrights developed or acquired by Borrower from time to time in connection with \nany product prior to the sale or licensing of such product to any third \nparty, including without limitation revisions or additions to the \nintellectual property rights listed on such Exhibits A, B and C.\n\n (b) Borrower shall execute and deliver such additional \ninstruments and documents from time to time as Bank shall reasonably request \nto perfect Bank's security interest in the Intellectual Property Collateral.\n\n (c) Borrower shall (i) protect, defend and maintain the \nvalidity and enforceability of the Trademarks, Patents and Copyrights, (ii) \nuse its best efforts to detect infringements of the Trademarks, Patents and \nCopyrights and promptly advise Bank in writing of material infringements \ndetected and (iii) not allow any Trademarks, Patents or Copyrights to be \nabandoned, forfeited or dedicated to the public without the written consent \nof Bank, which shall not be unreasonably withheld, unless Bank determines \nthat reasonable business practices suggest that abandonment is appropriate.\n\n 22.\n\n\n\n (d) Bank shall have the right, but not the obligation, to \ntake, at Borrower's sole expense, any actions that Borrower is required under \nthis Section 6.12 to take but which Borrower fails to take, after fifteen \n(15) days' notice to Borrower. Borrower shall reimburse and indemnify Bank \nfor all reasonable costs and reasonable expenses incurred in the reasonable \nexercise of its rights under this Section 6.12.\n\n 6.13 TERMS OF SALE. Borrower shall cause all sales of products \nupon which Advances are based either to be (i) supported by one or more \nirrevocable letters of credit in an amount and of a tenor, naming a \nbeneficiary and issued by a financial institution acceptable to Bank or (ii) \non open account to creditworthy buyers that have been preapproved in writing \nby Bank and Exim Bank.\n\n 6.14 BORROWER AGREEMENT. Borrower shall comply with all of the \nterms of the Borrower Agreement. In the event of any conflict or \ninconsistency between any provision contained in the Borrower Agreement with \nany provision contained in this Exim Agreement, the more strict provision, \nwith respect to Borrower, shall control.\n\n 6.15 NOTICE IN EVENT OF FILING OF ACTION FOR DEBTOR'S RELIEF. \nBorrower shall notify Bank in writing within five (5) days of the occurrence \nof any of the following: (1) Borrower begins or consents in any manner to any \nproceeding or arrangement for its liquidation in whole or in part or to any \nother proceeding or arrangement whereby any of its assets are subject \ngenerally to the payment of its liabilities or whereby any receiver, trustee, \nliquidator or the like is appointed for it or any substantial part of its \nassets (including without limitation the filing by Borrower of a petition for \nappointment as a debtor-in-possession under Title 11 of the U.S. Code); (2) \nBorrower fails to obtain the dismissal or stay on appeal within thirty (30) \ncalendar days of the commencement of any proceeding arrangement referred to \nin (1) above; (3) Borrower begins any other procedure for the relief of \nfinancially distressed or insolvent debtors, or such procedure has been \ncommenced against it, whether voluntarily or involuntarily, and such \nprocedure has not been effectively terminated, dismissed or stayed within \n.thirty (30) calendar days after the commencement thereof, or (4) Borrower \nbegins any procedure for its dissolution, or a procedure therefor has been \ncommenced against it.\n\n 6.16 PAYMENT IN DOLLARS. Borrower shall require payment in United \nStates Dollars for the products, unless Exim Bank otherwise agrees in writing.\n\n 6.17 FURTHER ASSURANCES. At any time and from time to time \nBorrower shall execute and deliver such further instruments and take such \nfurther action as may reasonably be requested by Bank to effect the purposes \nof this Exim Agreement.\n\n 7. NEGATIVE COVENANTS\n\n Borrower covenants and agrees that so long as any credit hereunder \nshall be available and until payment in full of the Obligations, Borrower \nwill not do any of the following, or enter into any agreement to do any of \nthe following:\n\n 23.\n\n\n\n 7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise \ndispose of (collectively, a \"Transfer\"), or permit any of its Subsidiaries to \nTransfer, all or any part of its business or property, other than: (i) \nTransfers of Inventory in the ordinary course of business; (ii) Transfers of \nnon-exclusive licenses and similar arrangements for the use of the property \nof Borrower or its Subsidiaries; (iii) Transfers of worn-out or obsolete \nEquipment; or (iv) sale-leaseback transactions of Equipment as described in \nclause; (e) of the defined term-\"Permitted Indebtedness.\"\n\n 7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of \nits Subsidiaries to engage in any business, other than the businesses \ncurrently engaged in by Borrower and any business substantially similar or \nrelated thereto (or incidental thereto), or suffer a material change in \nBorrower's ownership of greater than forty percent (40%). Borrower will not, \nwithout thirty (30) days prior written notification to Bank, relocate its \nchief executive office.\n\n 7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any \nof its Subsidiaries to merge or consolidate, with or into any other business \norganization, or acquire, or permit any of its Subsidiaries to acquire, all \nor substantially all of the capital stock or property of another Person, \nexcept such transactions that do not result in a change of more than 25% of \nBorrower's Net Worth PROVIDED that immediately after giving effect to such \nmerger or consolidation, no Event of Default, or event which with the lapse \nof time or giving of notice or both, would result in an Event of Default \nshall have occurred and be continuing.\n\n 7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable \nwith respect to any Indebtedness, or permit any Subsidiary so to do, other \nthan Permitted Indebtedness.\n\n 7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any \nLien with respect to any of its property, or assign or otherwise convey any \nright to receive income, including the sale of any Accounts, or permit any of \nits Subsidiaries so to do, except for Permitted Liens.\n\n 7.6 DISTRIBUTIONS. Pay any dividends or make any other \ndistribution or payment on account of or in redemption, retirement or \npurchase of any capital stock. Notwithstanding the foregoing, Borrower may \nredeem or repurchase its common stock and pay dividends on its preferred \nstock, provided the sum of (i) the purchase price of any stock so redeemed or \nrepurchased and (ii) any such dividends paid on preferred stock does not \nexceed, in the aggregate, $250,000 in any fiscal year.\n\n 7.7 INVESTMENTS. Directly or indirectly acquire or own, or make \nany Investment in or to any Person, or permit any of its Subsidiaries so to \ndo, other than Permitted Investments.\n\n 7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter \ninto or permit to exist any material transaction with any Affiliate of \nBorrower except for transactions that are in the ordinary course of \nBorrower':s business, upon fair and reasonable terms that are no less\n\n 24.\n\n\n\nfavorable to Borrower than would be obtained in an arm's length transaction \nwith a nonaffiliated Person.\n\n 7.9 INTELLECTUAL PROPERTY AGREEMENTS. Borrower shall not permit \nthe inclusion in any material contract to which it becomes a party of any \nprovisions that could or might in any way prevent the creation of a security \ninterest in Borrower's rights and interests in any property included within \nthe definition of the Intellectual Property Collateral acquired under such \ncontracts.\n\n 7.10 SUBORDINATED DEBT. Make any payment in respect of any \nSubordinated Debt, or permit any of its Subsidiaries to make any such \npayment, except in compliance with the terms of such Subordinated Debt, or \namend any provision contained in any documentation relating to the \nSubordinated Debt without Bank's prior written consent.\n\n 7.11 INVENTORY. Store the Inventory with a bailee, warehouseman, \nor similar party unless Bank has received a pledge of the warehouse receipt \ncovering such Inventory. Except for Inventory sold in the ordinary course of \nbusiness and except for such other locations as Bank may approve in writing, \nBorrower shall keep the Inventory only at the location set forth in Section \n11 hereof and such other locations of which Borrower gives Bank prior written \nnotice and as to which Borrower signs and files a financing statement where \nneeded to perfect Bank's security interest.\n\n 7.12 COMPLIANCE. Become an \"investment company\" controlled by an \n\"investment company,\" within the meaning of the Investment Company Act of \n1940, or become principally engaged in, or undertake as one of its important \nactivities, the business of extending credit for the purpose of purchasing or \ncarrying margin stock, or use the proceeds' of any Advance for such purpose. \nFail to meet the minimum funding requirements of ERISA, permit a Reportable \nEvent or Prohibited Transaction, as defined in ERISA, to occur, fail to \ncomply with the Federal Fair Labor Standards Act or violate any law or \nregulation, which violation could have a Material Adverse Effect or a \nmaterial adverse effect on the Collateral or the priority of Bank's Lien on \nthe Collateral, or permit any of its Subsidiaries to do any of the foregoing.\n\n 7.13 LOANS TO SHAREHOLDERS OR AFFILIATES. Without Exim Bank's \nprior written consent, make any loans to any shareholder or entity affiliated \nwith Borrower. As used in this Section, the term \"loan\" does' not include \nsalary, rent paid to an affiliated entity owned by the shareholders, or to \nother expenses incurred in the ordinary course of Borrower's business.\n\n 7.14 BORROWER AGREEMENT. Violate or otherwise fail to comply with \nany provision of the Borrower Agreement.\n\n 7.15 EXIM GUARANTEE. Take any action, or permit any action to be \ntaken, that causes or, with the passage of time, could reasonably be expected \nto cause, the Exim Guarantee to cease to be in full force and effect.\n\n 25.\n\n\n\n 8. EVENTS OF DEFAULT\n\n Any one or more of the following events shall constitute an Event \nof Default by Borrower under this Exim Agreement:\n\n 8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of, \nor any interest on, any Advances when due and payable; or fails to pay any \nportion of any other Obligations not constituting such principal or interest, \nincluding without limitation Bank Expenses, within thirty (30) days of \nreceipt by Borrower of an invoice for such other Obligations;\n\n 8.2 COVENANT DEFAULT; CROSS DEFAULT. If Borrower fails or \nneglects to perform, keep, or observe any material term, provision, \ncondition, covenant, or agreement contained in this Agreement, in any of the \nExim Loan Documents, the Domestic Loan Documents, the Borrower Agreement or \nin any other present or future agreement between Borrower and Bank, or an \nEvent of Default occurs under any of the Domestic Loan Documents or the \nBorrower Agreement;\n\n 8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse \nchange in Borrower's business or financial condition or a material impairment \nof the value or priority of Bank's security interests in the Collateral;\n\n 8.4 ATTACHMENT. If any material portion of Borrower's assets is \nattached, seized, subjected to a writ or distress warrant, or is levied upon, \nor comes into the possession of any trustee, receiver or person acting in a \nsimilar capacity and such attachment, seizure, writ or distress warrant or \nlevy has not been removed, discharged or rescinded within thirty (30) days, \nor if Borrower is enjoined, restrained, or in any way prevented by court \norder from continuing to conduct all or any material part of its business \naffairs, or if a judgment or other claim becomes a lien or encumbrance upon \nany material portion of Borrower's assets, or if a notice of lien, levy, or \nassessment is filed of record with respect to any of Borrower's assets by the \nUnited States Government, or any department, agency, or instrumentality \nthereof, or by any state, county, municipal, or governmental agency, and the \nsame is not paid within thirty (30) days after Borrower receives notice \nthereof, provided that none of the foregoing shall constitute an Event of \nDefault where such action or event is stayed or an adequate bond has been \nposted pending a good faith contest by Borrower (provided that no Advances \nwill be required to be made during such cure period);\n\n 8.5 INSOLVENCY. If Borrower becomes insolvent, or if an \nInsolvency Proceeding is commenced by Borrower, or if an Insolvency \nProceeding is commenced against Borrower and is not dismissed or stayed' \nwithin thirty (30) days (provided that no Advances will be made prior to the \ndismissal of such Insolvency Proceeding);\n\n 8.6 OTHER AGREEMENTS. If there is a default in any agreement to \nwhich Borrower is a party with a third party, or parties resulting in the \nexercise of a right by such third party or parties to accelerate the maturity \nof any Indebtedness in an amount in excess of Two Hundred Fifty Thousand \nDollars ($250,000) or that could have a Material Adverse Effect.\n\n 26.\n\n\n\n 8.7 SUBORDINATED DEBT. If Borrower makes any payment on account \nof Subordinated Debt, except to the extent such payment is allowed under any \nsubordination agreement entered into with Bank;\n\n 8.8 JUDGMENTS. If a judgment or judgments for the payment of \nmoney in an amount, individually or in the aggregate, of at least One Hundred \nFifty Thousand Dollars ($150,000) shall be rendered against Borrower and \nshall remain unsatisfied and unstayed for a period of thirty (30) days \n(provided that no Advances will be made prior to the satisfaction or stay of \nsuch judgment);\n\n 8.9 MISREPRESENTATIONS. If any material misrepresentation or \nmaterial misstatement exists now or as of any date made or deemed made or \nhereafter in any warranty or representation set forth herein or in any \ncertificate delivered to Bank by any Responsible Officer pursuant to this \nAgreement or to induce Bank to enter into this Agreement or any other Loan \nDocument; or\n\n 8.10 EXIM GUARANTEE. If the Exim Guarantee ceases for any reason \nto be in full force and effect, or if the Exim Bank declares the Exim \nGuarantee void or revokes or purports to revoke any obligations under the \nExim Guarantee.\n\n 9. BANK'S RIGHTS AND REMEDIES\n\n 9.1 RIGHTS AND REMEDIES. Upon the occurrence of an Event of \nDefault, Bank may, at is election, without notice and without demand, do any \none or more of the following:\n\n (a) Declare all Obligations, whether evidenced by this Exim \nAgreement, by any of the other Exim Loan Documents, or otherwise, immediately \ndue and payable;\n\n (b) Cease advancing money or extending credit to or for the \nbenefit of Borrower under this Exim Agreement or under any other agreement \nbetween Borrower and Bank;\n\n (c) Settle or adjust disputes and claims directly with \naccount debtors for amounts, upon terms and in whatever order that Bank \nreasonably considers advisable;\n\n (d) Demand that Borrower (i) deposit cash with Bank in an \namount equal to the amount of any Letters of Credit remaining undrawn, as \ncollateral security for the repayment of any future drawings; under such \nLetters of Credit, and Borrower shall forthwith deposit and pay such amounts, \nand (ii) pay in advance all Letters of Credit fees scheduled to be paid or \npayable over the remaining term of the Letters of Credit;\n\n (e) Notify customers of Borrower or other third parties to \npay any amounts owing to Borrower directly to Bank;\n\n 27.\n\n\n\n (f) Without notice to or demand upon Borrower, make such \npayments and do such acts as Bank considers necessary or reasonable to \nprotect its security interest in the Collateral. Borrower agrees to assemble \nthe Collateral if Bank so requires, and to make the Collateral available to \nBank as Bank may designate. Borrower authorizes Bank to enter the premises \nwhere the Collateral is located,, to take and maintain possession of the \nCollateral, or any part of it, and to pay, purchase, contest, or compromise \nany encumbrance, charge, or lien which in Bank's determination appears to be \nprior or superior to its security interest and to pay all expenses incurred \nin connection therewith. With respect to any of Borrower's owned premises, \nBorrower hereby grants Bank a license to enter into possession of such \npremises and to occupy the same, without charge, in order to exercise any of \nBank's rights or remedies provided herein, at law, in equity, or otherwise;\n\n (g) Set off and apply to the Obligations any and all (i) \nbalances and deposits of Borrower held by Bank, or (ii) indebtedness at any \ntime owing to or for the credit or the account of Borrower held by Bank;\n\n (h) Ship, reclaim, recover, store, finish, maintain, repair, \nprepare for sale, advertise for sale, and sell (in the manner provided for \nherein) the Collateral. Bank is hereby granted a license or other right, \nsolely pursuant to the provisions of this section 9.1, to use, without \ncharge, Borrower's labels, patents, copyrights, rights of use of any name, \ntrade secrets, trade names, trademarks, service marks, and advertising \nmatter, or any property of a similar nature, as it pertains to the \nCollateral, in completing production of, advertising for sale, and selling \nany Collateral and, in connection with Bank's exercise of its rights under \nthis section 9.1, Borrower's rights under all licenses and all franchise \nagreements shall inure to Bank's benefit;\n\n (i) Sell the Collateral at either a public or private sale, \nor both, by way of one or more contra**s or transactions, for cash or on \nterms, in such manner and at such places (including Borrower's premises) as \nBank determines is commercially reasonable;\n\n (j) Bank may credit bid and purchase at any public sale; and\n\n (k) Any deficiency that exists after disposition of the \nCollateral as provided above will be paid immediately by Borrower.\n\n 9.2 EXIM DIRECTION. Upon the occurrence of an Event of Default, \nExim Bank shall have a right to: (i).direct Bank to exercise the remedies \nspecified in section 9.1 and (ii) request that Bank accelerate the maturity \nof any other loans to Borrower as to which Bank has a right to accelerate.\n\n 9.3 EXIM NOTIFICATION. Bank shall have the right to immediately \nnotify Exim Bank in writing if it has knowledge of the occurrence of any of \nthe following events: (1) any failure to pay any amount due under this Loan \nExim Agreement or the Note; (2) the Borrowing Base is less than the sum of \noutstanding Advances hereunder; (3) any failure to pay when due any amount \npayable to Bank by the Borrower under any loan(s) extended by Bank to \nBorrower;\n\n 28.\n\n\n\n(4) the filing of an action for debtor's relief by, against, or on behalf of \nBorrower; or (5) any threatened or pending material litigation against \nBorrower, or any material dispute involving Borrower.\n\n In the event that it sends such a notification to Exim Bank, Bank \nshall have the right thereafter to send Exim Bank a written report on the \nstatus of the events covered by said notification on each Business Day which \noccurs every thirty (30) calendar days after the date of said notification, \nuntil such time as Bank files a claim with Exim Bank or said default or other \nevents have been cured. Bank shall not have any obligation to make any \nAdvances or to issue any Letters of Credit following said notification to \nExim Bank, unless Exim Bank gives its written approval thereto. If directed \nto do so by Exim Bank, Bank shall have a right promptly to exercise any \nrights it may have against Borrower to demand the immediate repayment of all \namounts outstanding under the Exim Loan Documents.\n\n 9.4 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank \n(and any of Bank's designated officers, or employees) as Borrower's true and \nlawful attorney to: (a) send requests for verification of Accounts or notify \naccount debtors of Bank's security interest in the Accounts; (b) endorse \nBorrower's name on any checks or other forms of payment or security that may \ncome into Bank's possession; (c) sign Borrower's name on any invoice or bill \nof lading relating to any Account, drafts against account debtors, schedules \nand assignments of Accounts, verifications of Accounts, and notices to \naccount debtors; (d) make, settle, and adjust all claims under and decisions \nwith respect to Borrower's policies of insurance; (e) settle and adjust \ndisputes and claims respecting the accounts directly with account debtors, \nfor amounts and upon terms which Bank determines to be reasonable; (f) to \nmodify, in its sole discretion, any intellectual property security agreement \nentered into between Borrower and Bank without first obtaining Borrower's \napproval of or signature to such modification by amending Exhibit A, Exhibit \nB and Exhibit C, thereof, as appropriate, to include reference to any right, \ntitle or interest in any Copyrights, Patents or Trademarks acquired by \nBorrower after the execution hereof or to delete any reference to any right, \ntitle or interest in any Copyrights, Patents or Trademarks in which Borrower \nno longer has or claims any right, title or interest; (g) to file, in its \nsole discretion, one or more financing or continuation statements and \namendments thereto, relative to any of the Collateral without the signature \nof Borrower where permitted by law; and (h) to transfer the Intellectual \nProperty Collateral into the name of Bank or a third party to the extent \npermitted under the California Uniform Commercial Code provided Bank may \nexercise such power of attorney to sign the name of Borrower on any of the \ndocuments described in Section 4.2 regardless of whether an Event of Default \nhas occurred. The appointment of Bank as Borrower's attorney in fact, and \neach and every one of Bank's rights and powers, being coupled with an \ninterest, is irrevocable until all of the Obligations have been fully repaid \nand performed and Bank's obligation to provide advances hereunder is \nterminated.\n\n 9.5 ACCOUNTS COLLECTION. At any time from the date of this \nAgreement, Bank may notify any Person owing funds to Borrower of Bank's \nsecurity interest in such funds and verify the amount of such Account. Upon \nthe occurrence and during the continuance of an Event of Default, Borrower \nshall collect all amounts owing to Borrower for Bank, receive in\n\n 29\n\n\n\ntrust all payments as Bank's trustee, and immediately deliver such payments \nto Bank in their original form as received from the account debtor, with \nproper endorsements for deposit.\n\n 9.6 BANK EXPENSES. If Borrower fails to pay any amounts or \nfurnish any required proof of payment due to third persons or entities, as \nrequired under the terms of this Agreement, then Bank may do any of all of \nthe following: (a) make payment of the same or any part thereof; (b) set up \nsuch reserves under the Revolving Facility as Bank deems necessary to protect \nBank from the exposure created by such failure; or (c) obtain and maintain \ninsurance policies of the type discussed in Section 6.6 of this Agreement, \nand take any action with respect to such policies as Bank deems prudent. Any \namounts so paid or deposited by Bank shall constitute Bank Expenses, shall be \nimmediately due and payable, and shall bear interest at the then applicable \nrate hereinabove provided, ' and shall be secured by the Collateral. Any \npayments made by Bank shall not constitute an agreement by Bank to make \nsimilar payments in the future or a waiver by Bank of any Event of Default \nunder this Agreement. Bank shall have a non-exclusive, royalty-free license \nto use the Intellectual Property Collateral to the extent reasonably \nnecessary to permit Bank to exercise its rights and remedies upon the \noccurrence of an Event of Default.\n\n 9.7 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies \nwith reasonable banking practices, Bank shall not in any way or manner be \nliable or responsible for: (a) the safekeeping of the Collateral; (b) any \nloss or damage thereto occurring or arising in any manner or fashion from any \nca.use; (c) any diminution in the value thereof; or (d) any act or default of \nany carrier, warehouseman, bailee, forwarding agency, or other person \nwhomsoever. All risk of loss, damage or destruction of the Collateral shall \nbe borne by Borrower, except for any loss, damage or destruction caused by \nBank's gross negligence or wilful misconduct.\n\n 9.8 REMEDIES CUMULATIVE. Bank's rights and remedies under this \nAgreement, the Loan Documents, and all other agreements shall be cumulative. \nBank shall have all other rights and remedies not inconsistent herewith as \nprovided under the Code, by law, or in equity. No exercise by Bank of one \nright or remedy shall be deemed an election, and no waiver by Bank of any \nEvent of Default on Borrower's part shall be deemed a continuing waiver. No \ndelay by Bank shall constitute a waiver, election, or acquiescence by it. No \nwaiver by Bank shall be effective unless made in a written document signed on \nbehalf of Bank and then shall be effective only in the specific instance and \nfor the specific purpose for which it was given.\n\n 9.9 DEMAND; PROTEST. Borrower waives demand, protest, notice of \nprotest, notice of default or dishonor, notice of payment and nonpayment, \nnotice of any default, nonpayment at maturity, release, compromise, \nsettlement, extension, or renewal of accounts, documents, instruments, \nchattel paper, and guarantees at any time held by Bank on which Borrower may \nin any way be liable.\n\n 10. WAIVERS: INDEMNIFICATION\n\n 10.1 DEMAND: PROTEST. Borrower waives demand, protest, notice of \nprotest, notice of dishonor, notice of payment and nonpayment, notice of any \ndefault, nonpayment at\n\n 30\n\n\n\nmaturity, release, compromise, settlement, extension, or renewal of accounts, \ndocuments, instruments, chattel paper, and guarantees at any time held by \nBank on which Borrower may in any way be liable.\n\n 10.2 BANK'S LIABILITY FOR COLLATERAL. Bank shall not in any way or \nmanner be liable or responsible for: (a) the safekeeping of tile Collateral; \n(b) any loss or damage thereto occurring or arising in any manner or fashion \nfrom any cause; (c) any diminution in the value thereof; or (d) any act or \ndefault of any carrier, warehouseman, bailee, forwarding agency, or other \nperson whomsoever. All risk of loss, damage or destruction of the Collateral \nshall be borne by Borrower.\n\n 10.3 INDEMNIFICATION. Borrower shall defend, indemnify and hold \nharmless Bank and its officers, employees, and agents against: (a) all \nobligations, demands, claims, and liabilities claimed or asserted by any \nother party in connection with the transactions contemplated by this Exim \nAgreement, and (b) all losses or Exim Bank Expenses in any way suffered, \nincurred, or paid by. Bank as a result of or in any way arising out of, \nfollowing, or consequential to transactions between Bank and Borrower whether \nunder this Exim Agreement, or otherwise (including without limitation \nreasonable attorneys fees and expenses), except for losses caused by Bank's \ngross negligence or willful misconduct.\n\n 11. NOTICES\n\n Unless otherwise provided in this Exim Agreement, al notices or \ndemands by any party relating to this Exim Agreement or any other agreement \nentered into in connection herewith shall be in writing and (except for \nfinancial statements and other informational documents which may be sent by \nfirst-class mail, postage prepaid) shall be personally delivered or sent by \ncertified mail, postage prepaid, return receipt requested, or by \ntelefacsimile to Borrower or to Bank, as tile case may be, at the address set \nforth below:\n\nIf to Bank: Silicon Valley Bank\n 3003 Tasman Drive \n Santa Clara, CA 95054\n Attn: Patrick McCarthy\n FAX: (408) 748-9478\n\n\nIf to Borrower: InVision Technologies, Inc.\n 3420 E. Third Ave.\n Foster City, CA 94404\n Attn: Curt DiSibio\n FAX: (415) 578-1931\n\n The parties hereto may change tile address at which they are to receive \nnotices hereunder, by notice in writing in the foregoing manner given to tile \nother.\n\n 31.\n\n\n\n 12. CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER\n\n This Exim Agreement shall be government by, and construed in accordance \nwith, the internal laws of the State of California, without regard to \nprinciples of conflicts of law. Each of Borrower and Bank.hereby submits to \ntile exclusive jurisdiction of the state and Federal courts located in the \nCounty of Santa Clara, State of California. BORROWER AND BANK HEREBY WAIVE \nTHEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED \nUPON OR ARISING OUT OF ANY OF THE EXIM LOAN DOCUMENTS OR ANY OF THE \nTRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, \nBREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.\n\n 13. GENERAL PROVISIONS\n\n 13.1 SUCCESSORS AND ASSIGNS. This Exim Agreement shall bind and \ninure to the benefit of the respective successors and permitted assigns of \neach of the parties; provided, however, that neither this Exim Agreement nor \nany rights hereunder may be assigned by Borrower without Bank's prior written \nconsent, which consent may be granted or withheld in Bank's sole discretion. \nBank shall have the right without the consent of or notice to Borrower to \nsell, transfer, negotiate, or grant participation in all or any part of, or \nany interest in Bank's rights and benefits hereunder.\n\n 13.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold \nharmless Bank and its officers, employees, and agents against: (a) all \nobligations, demands, claims, and liabilities claimed or asserted by any \nother party in connection with the transactions contemplated by the Loan \nDocuments; and (b) all losses or Bank Expenses in any way suffered, incurred, \nor paid by Bank as a result of or in any way arising out of, following, or \nconsequential to transactions between Bank and Borrower whether under the \nLoan Documents, or otherwise (including without limitation reasonable \nattorneys fees and expenses), except for losses caused by Bank's gross \nnegligence or willful misconduct.\n\n 13.3 TIME OF ESSENCE. Time is of the essence for the performance \nof all obligations set forth in this Exim Agreement.\n\n 13.4 SEVERABILITY OF PROVISIONS. Each provision of this Exim \nAgreement shall be severable from every other provision of this Exim \nAgreement for the purpose of determining the legal enforceability, of any \nspecific provision.\n\n 13.5 AMENDMENTS IN WRITING. This Exim Agreement cannot be changed \nor terminated orally. Without the prior written consent of Exim Bank, no \nmaterial amendment of or deviation from the terms of this Exim Agreement or \nthe Note shall be made that would adversely affect the interests of Exim \nBank under the Exim Guarantee, including without limitation the rescheduling \nof any payment terms provided for in this Exim Agreement. All prior \nagreements, understandings, representations, warranties, and negotiations \nbetween the\n\n 32.\n\n\n\nparties hereto with respect to the subject matter of this Exim Agreement, if \nany, are merged into this Exim Agreement.\n\n 13.6 COUNTERPARTS. This Exim Agreement may be executed in any \nnumber of counterparts and by different parties on separate counterparts, \neach of which, when executed and delivered, shall be deemed to be an \noriginal, and all of which, when taken together, shall constitute but one and \nthe same Exim Agreement.\n\n 13.7 SURVIVAL. All covenants, representations and warranties made \nin this Exim Agreement shall continue in full force and effect so long as any \nObligations (excluding Obligations under Sections 2.6 and 10.3 to the extent \nthey remain inchoate at the time that outstanding payment Obligations are \npaid in full) remain outstanding. The obligations of Borrower to indemnify \nBank with respect to the expenses, damages, losses, costs and liabilities \ndescribed in Section 10.3 shall survive until all applicable statute of \nlimitations periods with respect to actions that may be brought against Bank \nhave run.\n\n 13.8 CONFIDENTIALITY. In handling any confidential information \nBank shall exercise the same degree of care that it exercises with respect to \nits own proprietary information of the same types to maintain the \nconfidentiality of any non-public information thereby received or received \npursuant to this Agreement except that disclosure of such information may be \nmade (i) to the subsidiaries or affiliates of Bank in connection with their \npresent or prospective business relations with Borrower, (ii) to prospective \ntransferees or purchasers of any interest in the Loans, provided that they \nhave entered into a Comparable confidentiality agreement in favor of Borrower \nand have delivered a copy to Borrower, (iii) as required by law, regulations, \nrule or order, subpoena, judicial order or similar order, (iv) as'. may be \nrequired in connection with the examination, audit or similar investigation \nof Bank and (v) as Bank may determine in connection with the enforcement of \nany remedies hereunder. Confidential information hereunder shall not include \ninformation that either: (a) is in the public domain or in the knowledge or \npossession of Bank when disclosed to Bank, or becomes part of the public \ndomain after disclosure to Bank through no fault of Bank; or (b) is disclosed \nto Bank by a third party, provided Bank does not have actual knowledge that \nsuch third party is prohibited from disclosing such information.\n\n 33.\n\n\n\n IN WITNESS WHEREOF, the parties hereto have caused this Exim Agreement \nto be executed as of the date first above written.\n\n INVISION TECHNOLOGIES, INC.\n\n By:\n -------------------------------------\n Title:\n ----------------------------------\n\n SILICON VALLEY BANK\n\n By:\n -------------------------------------\n Title:\n ----------------------------------\n\n 34\n\n\n\n EXHIBIT A\n\n The Collateral shall consist of all right, title and interest of \nBorrower in and to the following:\n\n (a) All goods and equipment now owned or hereafter acquired, including, \nwithout limitation, all machinery, fixtures, vehicles (including motor \nvehicles and trailers), and any interest in any of the foregoing, and all \nattachments, accessories, accessions, replacements, substitutions, additions, \nand improvements to any of the foregoing, wherever located;\n\n (b) All inventory, now owned or hereafter acquired, including, without \nlimitation, all merchandise, raw materials, parts, supplies, packing and \nshipping materials, work in process and finished products including such \ninventory as is temporarily out of Borrower's custody or possession or in \ntransit and including any returns upon any accounts or other proceeds, \nincluding insurance proceeds, resulting from the sale or disposition of any \nof the foregoing and any documents of title representing any of he above, and \nBorrower's Books relating to any of the foregoing;\n\n (c) All contract rights and general intangibles now owned or hereafter \nacquired, including, without limitation, goodwill, trademarks, service marks, \ntrade styles, trade names, patents, patent applications, leases, license \nagreements, franchise agreements, blueprints, drawings, purchase orders, \ncustomer lists, route lists, infringements, claims, computer programs, \ncomputer discs, computer tapes, literature, reports, catalogs, design rights, \nincome tax refunds, payments of insurance and rights to payment of any kind;\n\n (d) All now existing and hereafter arising accounts, contract rights, \nroyalties, license rights and all other forms of obligations owing to \nBorrower arising out of the sale or lease of goods, the licensing of \ntechnology or the rendering of services by Borrower, whether or not earned by \nperformance, and any and all credit insurance, guaranties, and other security \ntherefor, as well as all \"merchandise returned to or reclaimed by Borrower \nand Borrower's Books relating to any of the foregoing;\n\n (e) All documents, cash, deposit accounts, securities (other than \nsecurities of foreign Subsidiaries), letters of credit, certificates of \ndeposit, instruments and chattel paper now owned or hereafter acquired and \nBorrower's Books relating to the foregoing;\n\n (f) All copyright rights, copyright applications, copyright \nregistrations and like protections in each work of authorship and derivative \nwork thereof, whether published or unpublished, now owned or hereafter \nacquired; all trade secret rights, including all rights to unpatented \ninventions, know-how, operating manuals, license rights and agreements and \nconfidential information, now owned or hereafter acquired; all mask work or \nsimilar rights available for the protection of semiconductor chips, now owned \nor hereafter acquired; all claims for damages by way of any past, present and \nfuture infringement of any of the foregoing; and\n\n 35\n\n\n\n (g) Any and all claims, rights and interests in any of the above and \nall substitutions for, additions and accessions to and proceeds thereof.\n\n 36.\n\n\n\n EXHIBIT B\n\n REVOLVING PROMISSORY NOTE \n (EXPORT-IMPORT LINE)\n\n4,500,000 Santa Clara, California\n February 20, 1997\n\n FOR VALUE RECEIVED, the undersigned, InVision Technologies, Inc. (the \n\"Borrower\"), promises to pay to the order of Silicon Valley Bank (\"Bank\"), at \nsuch place as the holder hereof may designate, in lawful money of the United \nStates of America, the aggregate unpaid principal amount of all advances \n(\"Advances\") made by Bank to Borrower under the terms of this Note, up to a \nmaximum principal amount of Four Million Five Hundred Thousand Dollars \n($4,500,000). Borrower shall also pay interest on the aggregate unpaid \nprincipal amount of such Advances at the rates and in accordance with the \nterms of the Export-Import Bank Loan and Security Agreement between Borrower \nand Bank of even date herewith, as amended from time to time (the \"Loan \nAgreement\") on the nineteenth day of each month after an Advance has been \nmade. The entire principal amount and all accrued interest shall be due and \npayable on February 19, 1998, or on such earlier date, as provided for in the \nLoan Agreement.\n\n Borrower irrevocably waives the right to direct the application of any \nand all payments at any time hereafter received by Bank from or on behalf of \nBorrower, and Borrower irrevocably agrees that Bank shall have the \ncontinuing exclusive right to apply any and all such payments against the \nthen due and owing obligations of Borrower as Bank may deem advisable. In the \nabsence of a specific determination by Bank with respect thereto, all \npayments shall be applied in the following order: (a) then due and payable \nfees and expenses; (b) then due and payable interest payments and mandatory \nprepayments; and (c) then due and payable principal payments and optional \nprepayments.\n\n Bank is hereby authorized by borrower to endorse on Bank's books and \nrecords each Advance made by Bank under this Note and the amount of each \npayment or prepayment of principal of each such Advance received by Bank; it \nbeing understood, however, that failure to make any such endorsement (or any \nerrors in notation) shall not affect the obligations of Borrower with respect \nto Advances made hereunder, and payments of principal by Borrower shall be \ncredited to Borrower notwithstanding the; failure to make a notation (or any \nerrors in notation) thereof on such books and records.\n\n Borrower promises to pay Bank all reasonable costs and reasonable \nexpenses of collection of this Note and to pay all reasonable attorneys' fees \nincurred in such collection or in any suit or action to collect this Note or \nin any appeal thereof. Borrower waives presentment, demand, protest, notice \nof protest, notice of dishonor, notice of nonpayment, and any and all other \nnotices and demands in connection with the delivery, acceptance, performance, \ndefault or enforcement of this Note, as well as any applicable statute of \nlimitations. No delay by Bank in exercising any power or right hereunder \nshall operate as a waiver of any power or right. Time is of the essence as to \nall obligations hereunder.\n\n 37.\n\n\n\n This Note is issued pursuant to the Loan Agreement, which shall govern \nthe rights and obligations of Borrower with respect to all obligations \nhereunder.\n\n This Note shall be deemed to be made under, and shall be construed in \naccordance with and governed by, the laws of the State of California, \nexcluding conflicts of laws principles.\n\n\n 38.\n\n\n\n EXHIBIT C\n\n LOAN PAYMENT\/ADVANCE TELEPHONE REQUEST FORM\n DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., CALIFORNIA TIME\n\nTO: CENTRAL CLIENT SERVICE DIVISION DATE:\n -----------------------------------\n\nFAX#: (408) 432-3249] TIME:\n -----------------------------------\n\n--------------------------------------------------------------------------------\n\nFROM:\n ---------------------------------------------------------------------------\n CLIENT NAME (BORROWER)\n\nREQUESTED BY:\n -------------------------------------------------------------------\n AUTHORIZED SIGNER'S NAME\n\nAUTHORIZED SIGNATURE:\n -----------------------------------------------------------\n\nPHONE NUMBER:\n -------------------------------------------------------------------\n\nFROM ACCOUNT # TO ACCOUNT #\n -------------------- ---------------------------------\n\nREQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT\n\nPRINCIPAL INCREASE (ADVANCE) $\n --------------------------------------------\nPRINCIPAL PAYMENT (ONLY) $\n -----------------------------------\nINTEREST PAYMENT (ONLY) $\n --------------------------------------------\nPRINCIPAL AND INTEREST (PAYMENT) $\n --------------------------------------------\n\nOTHER INSTRUCTIONS:\n -------------------------------------------------------------\n\n--------------------------------------------------------------------------------\n\n\n All representations and warranties of Borrower stated in the Loan \nAgreement are true, correct and complete in all material respects as of the \ndate of the telephone request for and Advance confirmed by this Borrowing \ncertificate; provided, however, that those representations and warranties \nexpressly referring to another date shall be true, correct and complete in \nall material respects as of such date.\n\n--------------------------------------------------------------------------------\n\n--------------------------------------------------------------------------------\n\n BANK USE ONLY\n\nTELEPHONE REQUEST:\n\nThe following person is authorized to request the loan payment transfer\/loan\nadvance on the advance designated account and is\nknow to me.\n\n----------------------------------- ----------------------------------------\n Authorized Requester Phone #\n\n----------------------------------- ----------------------------------------\n Received By (Bank) Phone #\n\n ----------------------------------\n Authorized Signature (Bank)\n\n--------------------------------------------------------------------------------\n\n 39.\n\n\n EXHIBIT D\n\n BORROWING BASE CERTIFICATE\n\n\n--------------------------------------------------------------------------------\n\nBorrower: InVision Technologies, Inc. Lender: Silicon Valley Bank\n\nCommitment Amount: $4,500,000\n\n--------------------------------------------------------------------------------\n \n<\/pre>\n
\n\nFOREIGN ACCOUNTS RECEIVABLE FROM EXPORT ACTIVITIES
\n
\n 1. Foreign Accounts Receivable Book Value as of_____ $
\n ————————
\n 2. Additions (please explain on reverse) $
\n ————————
\n 3. TOTAL FOREIGN ACCOUNTS RECEIVABLE $
\n ————————<\/p>\nACCOUNTS RECEIVABLE DEDUCTIONS<\/p>\n
4. Term in excess of 90 days $
\n ————————
\n 5. Amounts over 90 days (unless insured, then 90 days) $
\n ————————
\n 6. Balance of 50% over 90 day accounts $
\n ————————
\n 7. Credit Balances over 120 days
\n 8. Accounts not payable in the U.S. Dollars or
\n payable in other than U.S. Dollars $
\n ————————
\n 9. Non-approved Government and Military Accounts $
\n ————————
\n 10. Contra Accounts $
\n ————————
\n 11. Promotion, Demo or Consignment Accounts $
\n ————————
\n 12. Intercompany\/Employee and Affiliate Accounts $
\n ————————
\n 13. Accounts in the form of L\/Cs, if subject items
\n have not yet been shipped by Borrower $
\n ————————
\n 14. Accounts arising from Inventory not originally
\n located in and shipped from the U.S. $
\n ————————
\n 15. Accounts arising from the sale of defense articles or items $
\n ————————
\n 16. Accounts of buyers located in or from countries
\n in which shipment is prohibited or no coverage available $
\n ————————
\n 17. Amounts due and collectable outside U.S. $
\n ————————
\n 18. Other exclusions $
\n ————————
\n 19. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
\n ————————
\n 20. Eligible Accounts (No. 3 minus No. 19)
\n 21. Loan Value of Accounts (90% of No. 20) $
\n ————————<\/p>\n
FOREIGN INVENTORY<\/p>\n
22. Foreign Inventory Value as of ________ $
\n ————————
\n 23. Additions (please explain on reverse) $
\n ————————
\n 24. TOTAL FOREIGN INVENTORY $
\n ————————
\n 40.<\/p>\n
FOREIGN INVENTORY DEDUCTIONS<\/p>\n
25. Outside U.S. $
\n ————————
\n 26. Consignment $
\n ————————
\n 27. Proprietary Software $
\n ————————
\n 28. Damaged\/Defective $
\n ————————
\n 29. Previously Exported $
\n ————————
\n 30. Defense Articles\/Services $
\n ————————
\n 31. Prohibited County $
\n ————————
\n 32. No Coverage County $
\n ————————
\n 33. Ineligible A\/R $
\n ————————
\n 34. Advance Payments\/Deposits $
\n ————————
\n 35. TOTAL DEDUCTIONS $
\n ————————
\n 36. Eligible Inventory (No. 23 minus No. 35) $
\n ————————
\n 37. Loan Value of Inventory (70% of No. 36) $
\n ————————<\/p>\n
BALANCES
\n 38. Maximum Loan Amount $
\n ————————
\n 39. Total Available [Lesser of (No. 21 plus No. 37) or No. 38] $
\n ————————
\n 40. Present balance owing on Line of Credit $
\n ————————
\n 41. Outstanding under Sublimits $
\n ————————
\n 42. RESERVE POSITION (No. 39 – (No. 40 + No. 41)) $
\n ————————<\/p>\n
<\/c><\/c><\/s><\/caption>\n<\/table>\n
The undersigned represents, and warrants that the foregoing is true, complete
\nand correct, and that the information reflected in this Schedule complies
\nwith the representations and warranties set forth in the Borrower Agreement,
\nexecuted by Borrower and acknowledged by Lender, and the Export-Import Bank
\nLoan and Security Agreement, executed by Borrower and acknowledged by Lender
\ndated February 20, 1997, as may be amended from time to time, as if all
\nrepresentations and warranties were made as of the date hereof, and that
\nBorrower is, and shall remain, in full compliance with its agreements,
\ncovenants, and obligations under such agreement. Such representations and
\nwarranties include, without limitation, the following: Borrower is using
\ndisbursements only for the purpose of enabling Borrower to finance the cost
\nof manufacturing, producing, purchasing or selling items intended for export.
\n Borrower is not using disbursements for the purpose of: (a) servicing any of
\nBorrower’s unrelated pre-existing or future indebtedness; (b) acquiring fixed
\nassets or capital goods for the use of Borrower’s business; (c) acquiring,
\nequipping, equipping or renting commercial space outside the United States;
\n(d) supporting research and development, (e) paying salaries of non-U.S.
\ncitizens or non-U.S. permanent residents who are located in the offices of
\nthe United States, or (f)serving as a retainage or warranty bond.
\nAdditionally, disbursements are not being used to finance the manufacture,
\npurchase or sale of any of the following: (a) Items to be sold to a buyer
\nlocated in a country in which the Export Import Bank of the United States is
\nlegally prohibited from doing business; (b) that part of the cost of the
\nitems which is not U.S. Content unless such<\/p>\n
41.<\/p>\n
part is not greater than fifty percent (50%) of the cost of the items and is
\nincorporated into the items in the United States; (c) defense articles or
\ndefense services or items directly or indirectly destined for use by military
\norganizations designed primarily for military use (regardless of the nature
\nor actual use of the items); or (d) any items to be used in the construction,
\nalteration, operation or maintenance of nuclear power, enrichment,
\nreprocessing, research or heavy water production facilities.<\/p>\n
Sincerely,<\/p>\n
InVision Technologies, Inc.<\/p>\n
By:
\n ——————————
\nName:
\n —————————-
\nTitle:
\n —————————
\nDate:
\n —————————-<\/p>\n
BANK USE ONLY<\/p>\n
Received by:
\n —————————-
\n Date:
\n ———————————–
\n Verified By:
\n —————————-<\/p>\n
42.<\/p>\n
EXHIBIT E<\/p>\n
COMPLIANCE CERTIFICATE<\/p>\n
TO: SILICON VALLEY BANK<\/p>\n
FROM: INVISION TECHNOLOGIES, INC.<\/p>\n
The undersigned authorized officer of InVision Technologies, Inc. hereby
\ncertifies that in accordance with the terms and conditions of the Loan and
\nSecurity Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
\nis in complete compliance for the period ending with all required covenants
\nexcept as noted below and (ii) all representations and warranties of Borrower
\nstated in the Agreement are true and correct in all material respects as of
\nthe date hereof. Attached herewith are the required documents supporting the
\nabove certification. The Officer further certifies that these are prepared
\nin accordance with Generally Accepted Accounting Principles (GAAP) and are
\nconsistently applied from one period to the next except as explained in an
\naccompanying letter or footnotes.<\/p>\n
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES\/NO UNDER “COMPLIES” COLUMN.<\/p>\n
\n\nREPORTING COVENANT REQUIRED COMPLIES
\n <\/p>\nQuarterly financial statements Quarterly within 30 days Yes No
\nAnnual (CPA Audited) FYE within 90 days Yes No
\nA\/R & A\/P Agings Monthly within 20 days Yes No
\nA\/R Audit Initial and Semi-Annual Yes No <\/p>\n
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES<\/p>\n
Maintain on a Quarterly Basis:
\n Minimum Adj. Quick Ratio 1.25:1.0 _______:1.0(1) Yes No
\n Minimum Tangible Net Worth $8,000,000 $ (2) Yes No
\n Maximum Debt\/Tangible Net Worth 1.0:1.0 _______:1.0(1) Yes No <\/p>\n
Profitability: Quarterly(3) $1 $ Yes No <\/p>\n
<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
1 excluding deferred revenue and customer deposits
\n2 plus 75% of new equity proceeds
\n3 May incur one quarterly loss per year not to exceed
\n $600,000<\/p>\n
Comments Regarding Exceptions: See Attached.
\n BANK USE ONLY <\/p>\n
Sincerely, Received by:
\n ————————-
\n Authorized Signer
\n——————————–
\nSignature Date:
\n ——————————–
\n——————————–
\nTitle Verified:
\n —————————-
\n——————————– Authorized Signer
\nDate
\n Date:
\n ——————————– <\/p>\n
Compliance Status: Yes No <\/p>\n
43.<\/p>\n
DISCLOSURE SCHEDULE TO LOAN AND SECURITY AGREEMENT BETWEEN
\n INVISION TECHNOLOGIES, INC. AND SILICON VALLEY BANK<\/p>\n
LIENS
\n —–<\/p>\n
Secured Party UCC File No. Date
\n————- ———– —–<\/p>\n
Telogy, Inc. 9435460289 Dec. 2, 1994<\/p>\n
Yale-Northern California, Inc. 9504860580 Feb. 10, 1995
\nCiticorp Dealer Finance<\/p>\n
Instituto Bancario San Paolo di
\n Torino, SpA 9600260210 Dec. 28, 1995
\n(To be terminated on or prior to Closing Date)<\/p>\n
Anaconda Partners, L.P. 9600260218 Dec. 28, 1995
\n(To be terminated on or prior to Closing Date)<\/p>\n
Leasing Technologies
\n International, Inc. 9613560835 May 13, 1996<\/p>\n
Leasing Technologies
\n International, Inc. 9633160900 Nov. 25, 1996<\/p>\n
European American Bank 9626960074 Sep. 20, 1996<\/p>\n
INVESTMENTS
\n ———–<\/p>\n
Investments in subsidiaries: Imatron Federal Systems, Inc. and Invision
\nInternational, Inc.<\/p>\n
INDEBTEDNESS
\n ————
\nLender
\n——-
\nTelogy, Inc.<\/p>\n
Yale-Northern California, Inc.
\n Citicorp Dealer Finance<\/p>\n
Leasing Technologies
\n International, Inc.<\/p>\n
Equipment purchased from Hyster to be financed.<\/p>\n
OTHER
\n —–<\/p>\n
Invision’s Intellectual Property rights are subject to FAA contracts.<\/p>\n
1.<\/p>\n
Revolving Promissory Note
\n (Export-Import Line)<\/p>\n
$4,500,000 Santa Clara, California
\n February 20, 1997<\/p>\n
FOR VALUE RECEIVED, the undersigned, InVision Technologies, Inc. (the
\n“Borrower”), promises to pay to the order of Silicon Valley Bank (“Bank”), at
\nsuch place as the holder hereof may designate, in lawful! money of the United
\nStates of America, the aggregate unpaid principal amount of all advances
\n(“Advances”) made by Bank to Borrower under the terms of this Note, up to a
\nmaximum principal amount of Four Million Five Hundred Thousand Dollars
\n($4,500,000). Borrower shall also pay interest on the aggregate unpaid
\nprincipal amount of such Advances at the rates and in accordance with the
\nterms of the Export-Import Bank Loan and Security Agreement between Borrower
\nand Bank of even date herewith, as amended from time to time (the “Loan
\nAgreement”) on the nineteenth day of each month after an Advance has been
\nmade. The entire principal amount and all accrued interest shall be due and
\npayable on February 19, 1998, or on such earlier date, as provided for in the
\nLoan Agreement.<\/p>\n
Borrower irrevocably waives the right to direct the application of any and
\nall payments at any time hereafter received by Bank from or on behalf of
\nBorrower, and Borrower irrevocably agrees that Bank shall have the continuing
\nexclusive right to apply any and all such payments against the then due and
\nowing obligations of Borrower as Bank may deem advisable. In the absence of
\na specific determination by Bank with respect thereto, all payments shall be
\napplied in the following order: (a) then due and payable fees and expenses;
\n(b) then due and payable interest payments and mandatory prepayments; and (c)
\nthen due and payable principal payments and optional prepayments.<\/p>\n
Bank is hereby authorized by Borrower to endorse on Bank’s books and
\nrecords each Advance made by Bank under this Note and the amount of each
\npayment or prepayment of principal of each such Advance received by Bank; it
\nbeing understood, however, that failure to make any such endorsement (or any
\nerrors in notation) shall not affect the obligations of Borrower with respect
\nto Advances made hereunder, and payments of principal by Borrower shall be
\ncredited to Borrower notwithstanding the failure to make a notation (or any
\nerrors in notation) thereof on such books and records.<\/p>\n
Borrower promises to pay Bank all reasonable costs and reasonable expenses
\nof collection of this Note and to pay all reasonable attorneys’ fees incurred
\nin such collection or in any suit or action to collect this Note or in any
\nappeal thereof. Borrower waives presentment, demand, protest, notice of
\nprotest, notice of dishonor, notice of nonpayment, and any and all other
\nnotices and demands in connection with the, delivery, acceptance,
\nperformance, default or enforcement of this Note, as well as any applicable
\nstatute of limitations. No delay by Bank in exercising any power or right
\nhereunder shall operate as a waiver of any power or right. Time is of the
\nessence as to all obligations hereunder.<\/p>\n
This Note is issued pursuant to the .Loan Agreement, which shall govern the
\nrights and obligations of Borrower with respect to all obligations hereunder.<\/p>\n
This Note shall be deemed to be made under, and shall be construed in
\naccordance with and governed by, the laws of the State of California,
\nexcluding conflicts of laws principles.<\/p>\n
INVISION TECHNOLOGIES, INC.<\/p>\n
By: \/s\/
\n ———————————-
\n Title:
\n ———————————-<\/p>\n
TABLE OF CONTENTS<\/p>\n
PAGE<\/p>\n
1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . 1
\n 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
\n 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . 11<\/p>\n
2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . 11
\n 2.1 Revolving Advances . . . . . . . . . . . . . . . . . . . 11
\n 2.2 Overadvances . . . . . . . . . . . . . . . . . . . . . . 13
\n 2.3 Interest Rates, Payments, and Calculations . . . . . . . 13
\n 2.4 Crediting Payments . . . . . . . . . . . . . . . . . . . 13
\n 2.5 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 14
\n 2.6 Increased Costs. . . . . . . . . . . . . . . . . . . . . 14
\n 2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 15
\n 2.8 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 15<\/p>\n
3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . 15
\n 3.1 Conditions Precedent to Initial Advance. . . . . . . . . 15
\n 3.2 Conditions Precedent to all Advances . . . . . . . . . . 16<\/p>\n
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . 16
\n 4.1 Grant of Security Interest . . . . . . . . . . . . . . . 16
\n 4.2 Delivery of Additional Documentation Required. . . . . . 17
\n 4.3 Right to Inspect . . . . . . . . . . . . . . . . . . . . 17<\/p>\n
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 17
\n 5.1 Due Organization and Qualification . . . . . . . . . . . 17
\n 5.2 Due Authorization: No Conflict . . . . . . . . . . . . . 17
\n 5.3 No Prior Encumbrances. . . . . . . . . . . . . . . . . . 17
\n 5.4 Bona Fide Eligible-Accounts. . . . . . . . . . . . . . . 17
\n 5.5 Merchantable Inventory . . . . . . . . . . . . . . . . . 17
\n 5.6 Intellectual Property. . . . . . . . . . . . . . . . . . 18
\n 5.7 Name: Location of Chief Executive Office . . . . . . . . 18
\n 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . 18
\n 5.9 No Material Adverse Change in Financial Statements . . . 18
\n 5.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . 18
\n 5.11 Regulatory Compliance. . . . . . . . . . . . . . . . . . 18
\n 5.12 Environmental Condition. . . . . . . . . . . . . . . . . 19
\n 5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 19
\n 5.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 19
\n 5.15 Government Consents. . . . . . . . . . . . . . . . . . . 19
\n 5.16 Frill Disclosure . . . . . . . . . . . . . . . . . . . . 19<\/p>\n
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 19
\n 6.1 Good Standing. . . . . . . . . . . . . . . . . . . . . . 19
\n 6.2 Government Compliance. . . . . . . . . . . . . . . . . . 20
\n 6.3 Financial Statements, Reports, Certificates. . . . . . . 20
\n 6.4 Inventory; Returns . . . . . . . . . . . . . . . . . . . 21
\n 6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 21
\n 6.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 21
\n 6.7 Principal Depository . . . . . . . . . . . . . . . . . . 21
\n 6.8 Adjusted Quick Ratio . . . . . . . . . . . . . . . . . . 22
\n 6.9 Debt-Net Worth Ratio . . . . . . . . . . . . . . . . . . 22
\n 6.10 Tangible Net Worth . . . . . . . . . . . . . . . . . . . 22<\/p>\n
i.<\/p>\n
TABLE OF CONTENTS
\n (CONTINUED)
\n PAGE<\/p>\n
6.11 Profitability. . . . . . . . . . . . . . . . . . . . . . 22
\n 6.12 Registration of Intellectual Property Rights . . . . . . 22
\n 6.13 Terms of Sale. . . . . . . . . . . . . . . . . . . . . . 23
\n 6.14 Borrower Agreement . . . . . . . . . . . . . . . . . . . 23
\n 6.15 Notice in Event of Filing of Action for Debtor’s Relief. 23
\n 6.16 Payment in Dollars . . . . . . . . . . . . . . . . . . . 23
\n 6.17 Further Assurances . . . . . . . . . . . . . . . . . . . 23<\/p>\n
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 23
\n 7.1 Dispositions . . . . . . . . . . . . . . . . . . . . . . 24
\n 7.2 Change in Business . . . . . . . . . . . . . . . . . . . 24
\n 7.3 Mergers or Acquisitions. . . . . . . . . . . . . . . . . 24
\n 7.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 24
\n 7.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . 24
\n 7.6 Distributions. . . . . . . . . . . . . . . . . . . . . . 24
\n 7.7 Investments. . . . . . . . . . . . . . . . . . . . . . . 24
\n 7.8 Transactions with Affiliates . . . . . . . . . . . . . . 24
\n 7.9 Intellectual Property Agreements . . . . . . . . . . . . 25
\n 7.10 Subordinated Debt. . . . . . . . . . . . . . . . . . . . 25
\n 7.11 Inventory. . . . . . . . . . . . . . . . . . . . . . . . 25
\n 7.12 Compliance . . . . . . . . . . . . . . . . . . . . . . . 25
\n 7.13 Loans to Shareholders or Affiliates. . . . . . . . . . . 25
\n 7.14 Borrower Agreement . . . . . . . . . . . . . . . . . . . 25
\n 7.15 Exim Guarantee . . . . . . . . . . . . . . . . . . . . . 25<\/p>\n
8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 26
\n 8.1 Payment Default. . . . . . . . . . . . . . . . . . . . . 26
\n 8.2 Covenant Default; Cross Default. . . . . . . . . . . . . 26
\n 8.3 Material Adverse Change. . . . . . . . . . . . . . . . . 26
\n 8.4 Attachment . . . . . . . . . . . . . . . . . . . . . . . 26
\n 8.5 Insolvency . . . . . . . . . . . . . . . . . . . . . . . 26
\n 8.6 Other Agreements . . . . . . . . . . . . . . . . . . . . 26
\n 8.7 Subordinated Debt. . . . . . . . . . . . . . . . . . . . 27
\n 8.8 Judgments. . . . . . . . . . . . . . . . . . . . . . . . 27
\n 8.9 Misrepresentations . . . . . . . . . . . . . . . . . . . 27
\n 8.10 Exim Guarantee . . . . . . . . . . . . . . . . . . . . . 27<\/p>\n
9. BANK’S RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . 27
\n 9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . 27
\n 9.2 Exim Direction . . . . . . . . . . . . . . . . . . . . . 28
\n 9.3 Exim Notification. . . . . . . . . . . . . . . . . . . . 28
\n 9.4 Power of Attorney. . . . . . . . . . . . . . . . . . . . 29
\n 9.5 Accounts Collection. . . . . . . . . . . . . . . . . . . 29
\n 9.6 Bank Expenses. . . . . . . . . . . . . . . . . . . . . . 30
\n 9.7 Bank’s Liability for Collateral. . . . . . . . . . . . . 30
\n 9.8 Remedies Cumulative. . . . . . . . . . . . . . . . . . . 30
\n 9.9 Demand; Protest. . . . . . . . . . . . . . . . . . . . . 30<\/p>\n
10. WAIVERS: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 30
\n 10.1 Demand: Protest. . . . . . . . . . . . . . . . . . . . . 30<\/p>\n
ii.<\/p>\n
TABLE OF CONTENTS
\n (CONTINUED)
\n PAGE<\/p>\n
10.2 Bank’s Liability for Collateral. . . . . . . . . . . . . 31
\n 10.3 Indemnification. . . . . . . . . . . . . . . . . . . . . 31<\/p>\n
11. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31<\/p>\n
12. CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER . . . . . . . . . . . 32<\/p>\n
13. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 32
\n 13.1 Successors and Assigns . . . . . . . . . . . . . . . . . 32
\n 13.2 Indemnification. . . . . . . . . . . . . . . . . . . . . 32
\n 13.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . 32
\n 13.4 Severability of Provisions . . . . . . . . . . . . . . . 32
\n 13.5 Amendments in Writing. . . . . . . . . . . . . . . . . . 32
\n 13.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 33
\n 13.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . 33
\n 13.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . 33<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7912,8832],"corporate_contracts_industries":[9415,9454],"corporate_contracts_types":[9560,9567],"class_list":["post-41010","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-invision-technologies-inc","corporate_contracts_companies-silicon-valley-bancshares","corporate_contracts_industries-financial__banks","corporate_contracts_industries-manufacturing__industrial","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41010"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41010"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41010"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}