{"id":41134,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/loan-and-security-agreement-silicon-valley-bank-and-com21-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"loan-and-security-agreement-silicon-valley-bank-and-com21-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/loan-and-security-agreement-silicon-valley-bank-and-com21-inc.html","title":{"rendered":"Loan and Security Agreement – Silicon Valley Bank and Com21 Inc."},"content":{"rendered":"
  <\/b>
Silicon Valley \nBank     <\/i><\/p>\n    
Loan and \nSecurity Agreement<\/p>\n    \n    
Borrower:\tCOM21, \nINC.    \t\t<\/p>\n    
Address:\t750 Tasman \nDrive<\/p>\n    
\t\t    Milpitas, California  95035<\/p>\n    \n    
Date:\t\tNovember __, \n2001<\/p>\n    
<\/p>\n    <\/b>
THIS LOAN \nAND SECURITY AGREEMENT is entered into on the above date between SILICON \nVALLEY BANK,  COMMERCIAL FINANCE DIVISION ('Silicon'), whose address \nis 3003 Tasman Drive, Santa Clara, California  95054 and the borrower(s) named \nabove (jointly and severally, the 'Borrower'), whose chief executive \noffice is located at the above address ('Borrower's Address').  The \nSchedule to this Agreement (the 'Schedule') shall for all purposes be \ndeemed to be a part of this Agreement, and the same is an integral part of this \nAgreement.  (Definitions of certain terms used in this Agreement are set forth \nin Section 8 below.)<\/p>\n<\/i><\/b>
1.\tLOANS.<\/p>\n
1.1  Loans.  Silicon will make loans * to Borrower \n(the 'Loans'), in amounts determined by Silicon in its sole \ndiscretion, up to the amounts (the 'Credit Limit') shown on the \nSchedule, provided no Default or Event of Default has occurred and is \ncontinuing, and subject to deduction of any Reserves for accrued interest and \nsuch other Reserves as Silicon deems proper from time to time.    <\/p>\n<\/b>
* and other credit extensions<\/p>\n<\/i>
1.2  Interest.  All Loans and all other monetary \nObligations shall bear interest at the rate shown on the Schedule, except where \nexpressly set forth to the contrary in this Agreement.  Interest shall be \npayable monthly, on the last day of the month.  Interest may, in Silicon's \ndiscretion, be charged to Borrower's loan account, and the same shall thereafter \nbear interest at the same rate as the other Loans.  Silicon may, in its \ndiscretion, charge interest to Borrower's Deposit Accounts maintained with \nSilicon.  Regardless of the amount of Obligations that may be outstanding from \ntime to time, Borrower shall pay Silicon minimum monthly interest during the \nterm of this Agreement in the amount set forth on the Schedule (the \n'Minimum Monthly Interest').<\/p>\n<\/i><\/b>
1.3  Overadvances.  If at any time or for any \nreason * the total of all outstanding Loans and all other Obligations exceeds \nthe Credit Limit (** an 'Overadvance'), Borrower shall \nimmediately<\/strike> *** pay the amount of the excess to Silicon, \nwithout notice or demand.  Without limiting Borrower's obligation to repay to \nSilicon on demand the amount of any Overadvance, Borrower agrees to pay Silicon \ninterest on the outstanding amount of any Overadvance, on demand, at a rate \nequal to the interest rate which would otherwise be applicable to the \nOveradvance , plus an additional 2% per annum<\/strike>.<\/p>\n<\/b>
* either (A) the total of all outstanding Loans and all \nother Obligations (other than the Celestica Letter of Credit) exceeds the amount \nset forth in clause (a) of Section 1 of the Schedule, or (B)<\/p>\n
** in either case, <\/p>\n
*** promptly (and in any event within 3 days)<\/p>\n<\/i>
1.4  Fees.  Borrower shall pay Silicon the fee(s) \nshown on the Schedule, which are in addition to all interest and other sums \npayable to Silicon and are not refundable.<\/p>\n<\/i><\/b>
1.5  Letters of Credit.  At the request of \nBorrower, Silicon may, in its sole discretion, issue or arrange for the issuance \nof letters of credit for the account of Borrower, in each case in form and \nsubstance satisfactory to Silicon in its sole discretion (collectively, \n'Letters of Credit').  The aggregate face amount of all outstanding \nLetters of Credit * from time to time shall not exceed the amount shown on the \nSchedule (the 'Letter of Credit Sublimit'), and shall be reserved \nagainst Loans which would otherwise be available hereunder.  **  Borrower shall \npay all bank charges (including charges of Silicon) for the issuance of Letters \nof Credit, together with such additional fee as Silicon's letter of credit \ndepartment shall charge in connection with the issuance of the Letters of \nCredit.  Any payment by Silicon under or in connection with a Letter of Credit * \nshall constitute a Loan hereunder on the date such payment is made.  Each Letter \nof Credit shall have an expiry date no later than thirty days prior to the \nMaturity Date.  Borrower hereby agrees to indemnify, save, and hold Silicon \nharmless from any loss, cost, expense, or liability, including payments made by \nSilicon, expenses, and reasonable attorneys' fees incurred by Silicon arising \nout of or in connection with any Letters of Credit.  Borrower agrees to be bound \nby the regulations and interpretations of the issuer of any Letters of Credit \nguarantied by Silicon and opened for Borrower's account or by Silicon's \ninterpretations of any Letter of Credit issued by Silicon for Borrower's \naccount, and Borrower understands and agrees that Silicon shall not be liable \nfor any error, negligence, or mistake, whether of omission or commission, in \nfollowing Borrower's instructions or those contained in the Letters of Credit or \nany modifications, amendments, or supplements thereto.  Borrower understands \nthat Letters of Credit may require Silicon to indemnify the issuing bank for \ncertain costs or liabilities arising out of claims by Borrower against such \nissuing bank.  Borrower hereby agrees to indemnify and hold Silicon harmless \nwith respect to any loss, cost, expense, or liability incurred by Silicon under \nany Letter of Credit as a result of Silicon's indemnification of any such \nissuing bank.  The provisions of this Loan Agreement, as it pertains to Letters \nof Credit, and any other present or future documents or agreements between \nBorrower and Silicon relating to Letters of Credit are cumulative.<\/p>\n<\/b>
* (other than the Celestica Letter of Credit)<\/p>\n
** The Celestica Letter of Credit is fully cash-secured by \nthe Celestica LC Cash Collateral, and therefore is not counted against the \nLetter of Credit Sublimit.<\/p>\n<\/i>
2.  SECURITY INTEREST.<\/p>\n
2.1  Security Interest.  To secure the payment and \nperformance of all of the Obligations when due, Borrower hereby grants to \nSilicon a security interest in all of Borrower's interest in the following, \nwhether now owned or hereafter acquired, and wherever located:  All Inventory, \nEquipment, Receivables, and General Intangibles, including, without limitation, \nall of Borrower's Deposit Accounts, and all money, and all property now or at \nany time in the future in Silicon's possession (including claims and credit \nbalances), and all proceeds (including proceeds of any insurance policies, \nproceeds of proceeds and claims against third parties), all products and all \nbooks and records related to any of the foregoing (all of the foregoing, \ntogether with all other property in which Silicon may now or in the future be \ngranted a lien or security interest, is referred to herein, collectively, as the \n\"Collateral\").  *<\/p>\n<\/b>
*  In addition, to secure the payment and performance of \nall of the Obligations arising out of or in connection with the Celestica Letter \nof Credit, Borrower hereby grants to Silicon a security interest in all of \nBorrower's interest in the Celestica LC Cash Collateral.<\/p>\n<\/i>
3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.<\/p>\n
In order to induce Silicon to enter into this \nAgreement and to make Loans, Borrower represents and warrants to Silicon as \nfollows, and Borrower covenants that the following representations * \nwill continue to be true<\/strike>, and that Borrower will at all times \ncomply with all of the following covenants:<\/p>\n<\/b>
* shall be true, correct, and complete in all material \nrespects, as of the date hereof, and shall be true, correct, and complete in all \nmaterial respects at and as of the date of the making of each Loan (or other \nextension of credit) made hereafter, as though made on and as of the date of \nsuch Loan (or other extension of credit) (except to the extent that such \nrepresentations and warranties expressly relate solely to an earlier date), and \nshall be true, correct, and complete in all material respects at and as of the \ndate of delivery of each executed Compliance Certificate required under Section \n6(6) of the Schedule, as though made on and as of the date of such delivery \n(except to the extent that such representations and warranties expressly relate \nsolely to an earlier date)<\/p>\n<\/i>
3.1  Corporate Existence and Authority.  Borrower, \nif a corporation, is and will continue to be, duly organized, validly existing \nand in good standing under the laws of the jurisdiction of its incorporation.  \nBorrower is and will continue to be qualified and licensed to do business in all \njurisdictions in which any failure to do so would have a material adverse effect \non Borrower.  The execution, delivery and performance by Borrower of this \nAgreement, and all other documents contemplated hereby (i) have been duly and \nvalidly authorized, (ii) are enforceable against Borrower in accordance with \ntheir terms (except as enforcement may be limited by equitable principles and by \nbankruptcy, insolvency, reorganization, moratorium or similar laws relating to \ncreditors' rights generally), and (iii) do not violate Borrower's articles or \ncertificate of incorporation, or Borrower's by-laws, or any law or any  material \nagreement or instrument which is binding upon Borrower or its property, and (iv) \ndo not constitute grounds for acceleration of any material indebtedness or \nobligation under any material agreement or instrument which is binding upon \nBorrower or its property.<\/p>\n<\/i><\/b>
3.2  Name; Trade Names and Styles.  The name of \nBorrower set forth in the heading to this Agreement is its correct name.  Listed \non the Schedule are all prior names of Borrower and all of Borrower's present \nand prior trade names.  Borrower shall give Silicon 30 days' prior written \nnotice before changing its name or doing business under any other name.  \nBorrower has complied, and will in the future comply, with all laws relating to \nthe conduct of business under a fictitious business name.<\/p>\n<\/i><\/b>
3.3  Place of Business; Location of Collateral. \n The address set forth in the heading to this Agreement is Borrower's \nchief executive office.  In addition, Borrower has places of business and \nCollateral is located only at the locations set forth on the Schedule.  Borrower \nwill give Silicon at least 30 days prior written notice before opening any \nadditional place of business, changing its chief executive office, or moving any \nof the Collateral to a location other than Borrower's Address or one of the \nlocations set forth on the Schedule.<\/p>\n<\/i><\/b>
3.4  Title to Collateral; Permitted Liens.  \nBorrower is now, and will at all times in the future be, the sole owner of all \nthe Collateral, except for items of Equipment which are leased by Borrower.  The \nCollateral now is and will remain free and clear of any and all liens, charges, \nsecurity interests, encumbrances and adverse claims, except for Permitted Liens.  \nSilicon now has, and will continue to have, a first-priority perfected and \nenforceable security interest in all of the Collateral, subject only to the \nPermitted Liens, and Borrower will at all times defend Silicon and the \nCollateral against all claims of others.  None of the Collateral now is or will \nbe affixed to any real property in such a manner, or with such intent, as to \nbecome a fixture.  Borrower is not and will not become a lessee under any real \nproperty lease pursuant to which the lessor may obtain any rights in any of the \nCollateral and no such lease now prohibits, restrains, impairs or will prohibit, \nrestrain or impair Borrower's right to remove any Collateral from the leased \npremises.  Whenever any Collateral is located upon premises in which any third \nparty has an interest (whether as owner, mortgagee, beneficiary under a deed of \ntrust, lien or otherwise), Borrower shall, whenever requested by Silicon, use \nits best<\/strike> * efforts to cause such third party to execute and \ndeliver to Silicon, in form acceptable to Silicon, such waivers and \nsubordinations as Silicon shall specify, so as to ensure that Silicon's rights \nin the Collateral are, and will continue to be, superior to the rights of any \nsuch third party.  Borrower will keep in full force and effect, and will comply \nwith all the terms of, any lease of real property where any of the Collateral \nnow or in the future may be located.<\/p>\n<\/b>
* commercially reasonable<\/p>\n<\/i>
3.5  Maintenance of Collateral.  Borrower will \nmaintain the Collateral in good working condition, and Borrower will not use the \nCollateral for any unlawful purpose.  Borrower will immediately advise Silicon \nin writing of any material loss or damage to the Collateral.<\/p>\n<\/i><\/b>
3.6  Books and Records.  Borrower has \nmaintained and will maintain at Borrower's Address complete and accurate books \nand records, comprising an accounting system in accordance with generally \naccepted accounting principles.<\/p>\n<\/i><\/b>
3.7  Financial Condition, Statements and \nReports.  All financial statements now or in the future delivered to \nSilicon have been, and will be, prepared in conformity with generally accepted \naccounting principles and now and in the future will completely and accurately \nreflect the financial condition of Borrower, at the times and for the periods \ntherein stated.  Between the last date covered by any such statement provided to \nSilicon and the date hereof, there has been no material adverse change in the \nfinancial condition or business of Borrower.  Borrower is now and will continue \nto be solvent.     <\/p>\n<\/i><\/b>
3.8  Tax Returns and Payments; Pension \nContributions.  Borrower has timely filed, and will timely file, all tax \nreturns and reports required by foreign, federal, state and local law, and \nBorrower has timely paid, and will timely pay, all foreign, federal, state and \nlocal taxes, assessments, deposits and contributions now or in the future owed \nby Borrower.  Borrower may, however, defer payment of any contested taxes, \nprovided that Borrower (i) in good faith contests Borrower's obligation to pay \nthe taxes by appropriate proceedings promptly and diligently instituted and \nconducted, (ii) notifies Silicon in writing of the commencement of, and any \nmaterial development in, the proceedings, and (iii) posts bonds or takes any \nother steps required to keep the contested taxes from becoming a lien upon any \nof the Collateral.  Borrower is unaware of any claims or adjustments proposed \nfor any of Borrower's prior tax years which could result in additional taxes \nbecoming due and payable by Borrower.  Borrower has paid, and shall continue to \npay all amounts necessary to fund all present and future pension, profit sharing \nand deferred compensation plans in accordance with their terms, and Borrower has \nnot and will not withdraw from participation in, permit partial or complete \ntermination of, or permit the occurrence of any other event with respect to, any \nsuch plan which could result in any liability of Borrower, including any \nliability to the Pension Benefit Guaranty Corporation or its successors or any \nother governmental agency.  Borrower shall, at all times, utilize the services \nof an outside payroll service providing for the automatic deposit of all payroll \ntaxes payable by Borrower.  <\/p>\n<\/i><\/b>
3.9  Compliance with Law.  Borrower has \ncomplied, and will comply, in all material respects, with all provisions of all \nforeign,<\/strike> federal, state and local laws and regulations relating \nto Borrower, including, but not limited to, those relating to Borrower's \nownership of real or personal property, the conduct and licensing of Borrower's \nbusiness, and all environmental matters.<\/p>\n<\/i><\/b>
3.10  Litigation.  Except as disclosed in the \nSchedule, there is no claim, suit, litigation, proceeding or investigation \npending or (to best of Borrower's knowledge) threatened by or against or \naffecting Borrower in any court or before any governmental agency (or any basis \ntherefor known to Borrower) which may result, either separately or in the \naggregate, in any material adverse change in the financial condition or business \nof Borrower, or in any material impairment in the ability of Borrower to carry \non its business in substantially the same manner as it is now being conducted.  \nBorrower will promptly inform Silicon in writing of any claim, proceeding, \nlitigation or investigation in the future threatened or instituted by or against \nBorrower involving any single claim of $50,000<\/strike> * or more, or \ninvolving $100,000<\/strike> ** or more in the aggregate.<\/p>\n<\/b>
* $250,000<\/p>\n
** $1,000,000<\/p>\n<\/i>
3.11  Use of Proceeds.  All proceeds of all Loans \nshall be used solely for lawful business purposes.  Borrower is not purchasing \nor carrying any \"margin stock\" (as defined in Regulation U of the Board of \nGovernors of the Federal Reserve System) and no part of the proceeds of any Loan \nwill be used to purchase or carry any \"margin stock\" or to extend credit to \nothers for the purpose of purchasing or carrying any \"margin stock.\" <\/p>\n<\/i><\/b>
4.  Receivables.<\/p>\n
4.1  Representations Relating to Receivables.  \nBorrower represents and warrants to Silicon as follows:  Each Receivable \nwith respect to which Loans are requested by Borrower shall, on the date each \nLoan is requested and made, (i) represent an undisputed bona fide existing \nunconditional obligation of the Account Debtor created by the sale, delivery, \nand acceptance of goods or the rendition of services in the ordinary course of \nBorrower's business, and (ii) meet the Minimum Eligibility Requirements set \nforth in  Section 8 below.<\/p>\n<\/i><\/b>
4.2  Representations Relating to Documents and Legal \nCompliance.  Borrower represents and warrants to Silicon as follows:  \nAll statements made and all unpaid balances appearing in all invoices, \ninstruments and other documents evidencing the Receivables are and shall be true \nand correct and all such invoices, instruments and other documents and all of \nBorrower's books and records are and shall be genuine and in all respects what \nthey purport to be, and all signatories and endorsers have the capacity to \ncontract.  All sales and other transactions underlying or giving rise to each \nReceivable shall fully comply with all applicable laws and governmental rules \nand regulations.  All signatures and endorsements on all documents, instruments, \nand agreements relating to all Receivables are and shall be genuine, and all \nsuch documents, instruments and agreements are and shall be legally enforceable \nin accordance with their terms.<\/p>\n<\/i><\/b>
4.3  Schedules and Documents relating to Receivables. \n Borrower shall deliver to Silicon transaction reports and loan \nrequests, schedules and assignments of all Receivables, and schedules of \ncollections, all on Silicon's standard forms; provided, however, that Borrower's \nfailure to execute and deliver the same shall not affect or limit Silicon's \nsecurity interest and other rights in all of Borrower's Receivables, nor shall \nSilicon's failure to advance or lend against a specific Receivable affect or \nlimit Silicon's security interest and other rights therein.  Loan requests \nreceived after 12:00 Noon will not be considered by Silicon until the next \nBusiness Day.  *  Together with each such schedule and assignment, or later if \nrequested by Silicon, Borrower shall furnish Silicon with copies (or, at \nSilicon's request, originals) of all contracts, orders, invoices, and other \nsimilar documents, and all original shipping instructions, delivery receipts, \nbills of lading, and other evidence of delivery, for any goods the sale or \ndisposition of which gave rise to such Receivables, and Borrower warrants the \ngenuineness of all of the foregoing.  Borrower shall also furnish to Silicon an \naged accounts receivable trial balance in such form and at such intervals as \nSilicon shall  request.  In addition, Borrower shall deliver to Silicon the \noriginals of all instruments, chattel paper, security agreements, guarantees and \nother documents and property evidencing or securing any Receivables, immediately \nupon receipt thereof and in the same form as received, with all necessary \nindorsements, all of which shall be with recourse.  Borrower shall also provide \nSilicon with copies of all credit memos within two days after the date \nissued.<\/p>\n<\/b>
* The following provisions of this Section 4.3 are subject \nto any applicable less stringent reporting or delivery requirements set forth in \nthe Streamline Facility Agreement:<\/p>\n<\/i>
4.4  Collection of Receivables.  Borrower shall \nhave the right to collect all Receivables, unless and until a Default or an \nEvent of Default has occurred *.  Borrower shall hold all payments on, and \nproceeds of, Receivables in trust for Silicon, and ** Borrower shall immediately \ndeliver all such payments and proceeds to Silicon in their original form, duly \nendorsed in blank, to be applied to the Obligations in such order as Silicon \nshall determine.  Silicon may, in its discretion, require that all proceeds of \nCollateral be deposited by Borrower into a lockbox account, or such other \n\"blocked account\" as Silicon may specify, pursuant to a blocked account \nagreement in such form as Silicon may specify.  Silicon or its designee may, at \nany time, notify Account Debtors that the Receivables have been assigned to \nSilicon. <\/p>\n<\/b>
* and is continuing<\/p>\n
** , subject to the Streamline Facility Agreement,<\/p>\n<\/i>
4.5.  Remittance of Proceeds.  All proceeds \narising from the disposition of any Collateral shall be delivered, in kind, by \nBorrower to Silicon in the original form in which received by Borrower not later \nthan the following Business Day after receipt by Borrower, to be applied to the \nObligations in such order as Silicon shall determine; provided that, if no \nDefault or Event of Default has occurred *, Borrower shall not be obligated to \nremit to Silicon the proceeds of the sale of worn out or obsolete equipment \ndisposed of by Borrower in good faith in an arm's length transaction for an \naggregate purchase price of $25,000 or less (for all such transactions in any \nfiscal year).  Borrower agrees that it will not commingle proceeds of Collateral \nwith any of Borrower's other funds or property, but will hold such proceeds \nseparate and apart from such other funds and property and in an express trust \nfor Silicon.  Nothing in this Section limits the restrictions on disposition of \nCollateral set forth elsewhere in this Agreement.<\/p>\n<\/b>
* and is continuing<\/p>\n<\/i>
4.6  Disputes.  Borrower shall notify Silicon \npromptly of all disputes or claims relating to Receivables.  Borrower shall not \nforgive (completely or partially), compromise or settle any Receivable for less \nthan payment in full, or agree to do any of the foregoing, except that Borrower \nmay do so, provided that: (i) Borrower does so in good faith, in a commercially \nreasonable manner, in the ordinary course of business, and in arm's length \ntransactions, which are reported to Silicon on the regular reports provided to \nSilicon; (ii) no Default or Event of Default has occurred and is continuing; and \n(iii) taking into account all such discounts settlements and forgiveness, the \ntotal outstanding Loans will not exceed the Credit Limit.  Silicon may, at any \ntime after the occurrence * of an Event of Default, settle or adjust disputes or \nclaims directly with Account Debtors for amounts and upon terms which Silicon \nconsiders advisable in its reasonable credit judgment and, in all cases, Silicon \nshall credit Borrower's Loan account with only the net amounts received by \nSilicon in payment of any Receivables.<\/p>\n<\/b>
* and during the continuation<\/p>\n<\/i>
4.7  Returns.  Provided no Event of Default has \noccurred and is continuing, if any Account Debtor returns any Inventory to \nBorrower in the ordinary course of its business, Borrower shall promptly \ndetermine the reason for such return and promptly issue a credit memorandum to \nthe Account Debtor in the appropriate amount (sending a copy to Silicon).  In \nthe event any attempted return occurs after the occurrence * of any Event of \nDefault, Borrower shall (i) hold the returned Inventory in trust for \nSilicon, (ii) segregate all returned Inventory from all of Borrower's other \nproperty, (iii) conspicuously label the returned Inventory as Silicon's \nproperty, and (iv) immediately notify Silicon of the return of any \nInventory, specifying the reason for such return, the location and condition of \nthe returned Inventory, and on Silicon's request deliver such returned Inventory \nto Silicon.  <\/p>\n<\/b>
* and during the continuation<\/p>\n<\/i>
4.8  Verification.  Silicon may, from time to \ntime, verify directly with the respective Account Debtors the validity, amount \nand other matters relating to the Receivables, by means of mail, telephone or \notherwise, either in the name of Borrower or Silicon or such other name as \nSilicon may choose. <\/p>\n<\/i><\/b>
4.9  No Liability.  Silicon shall not under any \ncircumstances be responsible or liable for any shortage or discrepancy in, \ndamage to, or loss or destruction of, any goods, the sale or other disposition \nof which gives rise to a Receivable, or for any error, act, omission, or delay \nof any kind occurring in the settlement, failure to settle, collection or \nfailure to collect any Receivable, or for settling any Receivable in good faith \nfor less than the full amount thereof, nor shall Silicon be deemed to be \nresponsible for any of Borrower's obligations under any contract or agreement \ngiving rise to a Receivable.  Nothing herein shall, however, relieve Silicon \nfrom liability for its own gross negligence or willful misconduct.<\/p>\n<\/i><\/b>
5.  ADDITIONAL DUTIES OF BORROWER.<\/p>\n
5.1  Financial and Other Covenants.  Borrower shall \nat all times comply with the financial and other covenants set forth in the \nSchedule.<\/p>\n<\/i><\/b>
5.2  Insurance.  Borrower shall, at all times \ninsure all of the tangible personal property Collateral and carry such other \nbusiness insurance, with insurers reasonably acceptable to Silicon, in such form \nand amounts as Silicon may reasonably require, and Borrower shall provide \nevidence of such insurance to Silicon, so that Silicon is satisfied that such \ninsurance is, at all times, in full force and effect.  All such insurance \npolicies shall name Silicon as an additional insured and loss payee, and shall \ncontain a lenders loss payee endorsement in form reasonably acceptable to \nSilicon.  Upon receipt of the proceeds of any such insurance, Silicon shall \napply such proceeds in reduction of the Obligations as Silicon shall determine \nin its sole discretion, except that, provided no Default or Event of Default has \noccurred and is continuing, Silicon shall release to Borrower insurance proceeds \nwith respect to Equipment totaling less than $100,000, which shall be utilized \nby Borrower for the replacement of the Equipment with respect to which the \ninsurance proceeds were paid.  Silicon may require reasonable assurance that the \ninsurance proceeds so released will be so used.  If Borrower fails to provide or \npay for any insurance, Silicon may, but is not obligated to, obtain the same at \nBorrower's expense.  Borrower shall promptly deliver to Silicon copies of all \nreports made to insurance companies.<\/p>\n<\/i><\/b>
5.3  Reports.  Borrower, at its expense, shall \nprovide Silicon with the written reports set forth in the Schedule, and such \nother written reports with respect to Borrower (including budgets, sales \nprojections, operating plans and other financial documentation), as Silicon \nshall from time to time reasonably specify.<\/p>\n<\/i><\/b>
5.4  Access to Collateral, Books and Records.  \nAt reasonable times, and on * one Business Day's notice, Silicon, or its agents, \nshall have the right to inspect the Collateral, and the right to audit and copy \nBorrower's books and records.  Silicon shall take reasonable steps to keep \nconfidential all information obtained in any such inspection or audit, but \nSilicon shall have the right to disclose any such information to its auditors, \nregulatory agencies, and attorneys, and pursuant to any subpoena or other legal \nprocess.  The foregoing inspections and audits shall be at Borrower's expense \nand the charge therefor shall be $700 per person per day (or such higher amount \nas shall represent Silicon's then current standard charge for the same), plus \nreasonable out of pocket expenses.  Borrower will not enter into any agreement \nwith any accounting firm, service bureau or third party to store Borrower's \nbooks or records at any location other than Borrower's Address, without first \nobtaining Silicon's written consent, which may be conditioned upon such \naccounting firm, service bureau or other third party agreeing to give Silicon \nthe same rights with respect to access to books and records and related rights \nas Silicon has under  this Loan Agreement.  ** Borrower waives the benefit of \nany accountant-client privilege or other evidentiary privilege precluding or \nlimiting the disclosure, divulgence or delivery of any of its books and records \n(except that Borrower does not waive any attorney-client privilege).  <\/p>\n<\/b>
* at least<\/p>\n
** Solely as between Borrower and Silicon, and after the \noccurrence and during the continuation of an Event of Default,<\/p>\n<\/i>
5.5  Negative Covenants.  Except as may be \npermitted in the Schedule, Borrower shall not, without Silicon's prior written \nconsent, do any of the following:  (i) merge or consolidate with another \ncorporation or entity *; (ii) acquire any assets, except in the ordinary course \nof business; (iii) enter into any other transaction outside the ordinary course \nof business; (iv) sell or transfer any Collateral, except for the sale of \nfinished Inventory in the ordinary course of Borrower's business, and except for \nthe sale of obsolete or unneeded Equipment in the ordinary course of business; \n(v) store any Inventory or other Collateral with any warehouseman or other third \nparty; (vi) sell any Inventory on a sale-or-return, guaranteed sale, \nconsignment, or other contingent basis; (vii) make any loans of any money or \nother assets **; (viii) incur any debts, outside the ordinary course of \nbusiness, which would have a material, adverse effect on Borrower or on the \nprospect of repayment of the Obligations; (ix) guarantee or otherwise become \nliable with respect to the obligations of another party or entity; (x) pay or \ndeclare any dividends on Borrower's stock (except for dividends payable solely \nin stock of Borrower); (xi) redeem, retire, purchase or otherwise acquire, \ndirectly or indirectly, any of Borrower's stock ***; (xii) make any change in \nBorrower's capital structure which would have a material adverse effect on \nBorrower or on the prospect of repayment of the Obligations; or (xiii) **** \npay total compensation, including salaries, fees, bonuses, commissions, \nand all other payments, whether directly or indirectly, in money or otherwise, \nto Borrower's executives, officers and directors (or any relative thereof) in an \namount in excess of the amount set forth on the Schedule<\/strike>; or (xiv) \ndissolve or elect to dissolve.  Transactions permitted by the foregoing \nprovisions of this Section are only permitted if no Default or Event of Default \nwould occur as a result of such transaction.  <\/p>\n<\/b>
* ; provided, however, that, so long as no Event of \nDefault has occurred and is continuing or would otherwise result therefrom, a \ndomestic subsidiary of Borrower may merge with or consolidate into Borrower upon \nSilicon's receipt of all applicable lien searches relative to such subsidiary, \nthe results of which shall be satisfactory to Silicon in its good faith business \njudgment<\/p>\n
** , except for loans consisting of travel advances, employee \nrelocation loans, and other employee loans\/advances in the ordinary course of \nbusiness; provided, however, that the aggregate amount of such loans shall not \nexceed $500,000 at any one time outstanding<\/p>\n
*** , except for repurchases of stock (in accordance with \napplicable law) from former employees or directors of Borrower as required under \nthe terms and conditions of Borrower's employee stock ownership plan; provided, \nhowever, that the aggregate amount of such repurchases shall not exceed $100,000 \nwhile this Agreement is in effect and any Obligation remains outstanding<\/p>\n
**** [intentionally omitted]<\/p>\n<\/i>
5.6  Litigation Cooperation.  Should any third-\nparty suit or proceeding be instituted by or against Silicon with respect to any \nCollateral or in any manner relating to Borrower, Borrower shall, without \nexpense to Silicon, make available Borrower and its officers, employees and \nagents and Borrower's books and records, to the extent that Silicon may deem \nthem reasonably necessary in order to prosecute or defend any such suit or \nproceeding.<\/p>\n<\/i><\/b>
5.7  Further Assurances.  Borrower agrees, at \nits expense, on request by Silicon, to execute all documents and take all \nactions, as Silicon, may deem reasonably necessary or useful in order to perfect \nand maintain Silicon's perfected security interest in the Collateral, and in \norder to fully consummate the transactions contemplated by this Agreement.<\/p>\n<\/i><\/b>
6.   TERM.<\/p>\n
6.1  Maturity Date.  This Agreement shall continue in \neffect until the maturity date set forth on the Schedule (the \"Maturity \nDate'), subject to Section 6.3 below.<\/p>\n<\/i><\/b>
6.2  Early Termination.  This Agreement may be \nterminated prior to the Maturity Date as follows:  (i) by Borrower, effective \nthree Business Days after written notice of termination is given to Silicon; or \n(ii) by Silicon at any time after the occurrence * of an Event of Default, \nwithout notice, effective immediately.  If this Agreement is terminated by \nBorrower ** or by Silicon under this Section 6.2, Borrower shall pay to Silicon \na termination fee in an amount equal to *** two percent (2.0%) of the \nMaximum Credit Limit,<\/strike> provided that **** no termination fee shall be \ncharged if the credit facility hereunder is replaced with a new facility from \nanother division of Silicon Valley Bank.  The termination fee shall be due and \npayable on the effective date of termination and thereafter shall bear interest \nat a rate equal to the highest rate applicable to any of the Obligations.<\/p>\n<\/b>
* and during the continuation<\/p>\n
** under this Section 6.2 prior to the 60th day preceding the \nMaturity Date<\/p>\n
*** one percent (1.0%) of the Maximum Revolving Amount; <\/p>\n
**** (y) no termination fee shall be payable if this \nAgreement is terminated by Borrower under this Section 6.2 and all Obligations \nare paid in full in cash at any time during the 60 days immediately preceding \nthe Maturity Date; and (z)<\/p>\n<\/i>
6.3  Payment of Obligations.  On the Maturity Date \nor on any earlier effective date of termination, Borrower shall pay and perform \nin full all Obligations, whether evidenced by installment notes or otherwise, \nand whether or not all or any part of such Obligations are otherwise then due \nand payable.  Without limiting the generality of the foregoing, if on the \nMaturity Date,  or on any earlier effective date of termination, there are any \noutstanding Letters of Credit issued by Silicon or issued by another institution \nbased upon an application, guarantee, indemnity or similar agreement on the part \nof Silicon, then on such date Borrower shall provide to Silicon cash collateral \nin an amount equal to the face amount of all such Letters of Credit plus all \ninterest, fees and cost due or to become due in connection therewith, to secure \nall of the Obligations relating to said Letters of Credit, pursuant to Silicon's \nthen standard form cash pledge agreement.  Notwithstanding any termination of \nthis Agreement, all of Silicon's security interests in all of the Collateral and \nall of the terms and provisions of this Agreement shall continue in full force \nand effect until all Obligations have been paid and performed in full; provided \nthat, without limiting the fact that Loans are subject to the discretion of \nSilicon, Silicon may, in its sole discretion, refuse to make any further Loans \nafter termination.  No termination shall in any way affect or impair any right \nor remedy of Silicon, nor shall any such termination relieve Borrower of any \nObligation to Silicon, until all of the Obligations have been paid and performed \nin full.  Upon payment and performance in full of all the Obligations and \ntermination of this Agreement, Silicon shall promptly deliver to Borrower \ntermination statements, requests for reconveyances and such other documents as \nmay be required to fully terminate Silicon's security interests.<\/p>\n<\/i><\/b>
7.  EVENTS OF DEFAULT AND REMEDIES.<\/p>\n
7.1  Events of Default.  The  occurrence of any of \nthe following events shall constitute an \"Event of Default\" under this \nAgreement, and Borrower shall give Silicon immediate written notice thereof: (a) \nAny warranty, representation, statement, report or certificate made or delivered \nto Silicon by Borrower or any of Borrower's officers, employees or agents, now \nor in the future, shall be untrue or misleading in a material respect; or (b) \nBorrower shall fail to pay when due any Loan or any interest thereon or any \nother monetary Obligation *; or (c) the total Loans and other Obligations \noutstanding at any time shall exceed the Credit Limit **; or (d) Borrower shall \nfail to comply with any of the financial covenants set forth in the Schedule or \nshall fail to perform any other non-monetary Obligation which by its nature \ncannot be cured; or (e) Borrower shall fail to perform any other non-monetary \nObligation, which failure is not cured within 5 Business Days after the date \ndue; or (f) any levy, assessment, attachment, seizure, lien or encumbrance \n(other than a Permitted Lien) is made on all or any part of the Collateral which \nis not cured within 10 + <\/b>days<\/strike> after the occurrence of \nthe same; or (g) any default or event of default occurs under any obligation \nsecured by a Permitted Lien, which is not cured within any applicable cure \nperiod or waived in writing by the holder of the Permitted Lien; or (h) Borrower \nbreaches any material contract or obligation, which has or may reasonably be \nexpected to have a material adverse effect on Borrower's business or financial \ncondition; or (i) Dissolution, termination of existence, insolvency or business \nfailure of Borrower; or appointment of a receiver, trustee or custodian, for all \nor any part of the property of, assignment for the benefit of creditors by, or \nthe commencement of any proceeding by Borrower under any reorganization, \nbankruptcy, insolvency, arrangement, readjustment of debt, dissolution or \nliquidation law or statute of any jurisdiction, now or in the future in effect; \nor (j) the commencement of any proceeding against Borrower or any guarantor of \nany of the Obligations under any reorganization, bankruptcy, insolvency, \narrangement, readjustment of debt, dissolution or liquidation law or statute of \nany jurisdiction, now or in the future in effect, which is not cured by the \ndismissal thereof within 30<\/strike> *** days after the date commenced; \nor (k) revocation or termination of, or limitation or denial of liability upon, \nany guaranty of the Obligations or any attempt to do any of the foregoing, or \ncommencement of proceedings by any guarantor of any of the Obligations under any \nbankruptcy or insolvency law; or (l) revocation or termination of, or limitation \nor denial of liability upon, any pledge of any certificate of deposit, \nsecurities or other property or asset of any kind pledged by any third party to \nsecure any or all of the Obligations, or any attempt to do any of the foregoing, \nor commencement of proceedings by or against any such third party under any \nbankruptcy or insolvency law; or (m) Borrower makes any payment on account of \nany indebtedness or obligation which has been subordinated to the Obligations \nother than as permitted in the applicable subordination agreement, or if any \nPerson who has subordinated such indebtedness or obligations terminates or in \nany way limits his subordination agreement; or (n) there shall be a \nchange in the record or beneficial ownership of an aggregate of more than 20% of \nthe outstanding shares of stock of Borrower, in one or more transactions, \ncompared to the ownership of outstanding shares of stock of Borrower in effect \non the date hereof,<\/strike> without the prior written consent of Silicon ****; \nor (o) Borrower shall generally not pay its debts as they become due, or \nBorrower shall conceal, remove or transfer any part of its property, with intent \nto hinder, delay or defraud its creditors, or make or suffer any transfer of any \nof its property which may be fraudulent under any bankruptcy, fraudulent \nconveyance or similar law; or (p) there shall be a material adverse change in \nBorrower's business or financial condition; or (q) Silicon, acting in \ngood faith and in a commercially reasonable manner, deems itself insecure \nbecause of the occurrence of an event prior to the effective date hereof of \nwhich Silicon had no knowledge on the effective date or because of the \noccurrence of an event on or subsequent to the effective date<\/strike> *****.  \nSilicon may cease making any Loans hereunder during any of the above cure \nperiods, and thereafter if an Event of Default has occurred ******.  <\/p>\n<\/b>
* (and solely with respect to Overadvances, subject to the \ntime period permitted in Section 1.3 within which to pay Silicon the amount of \nthe excess described therein constituting such Overadvance)<\/p>\n
** and Borrower shall fail to pay Silicon the amount of such \nexcess within the time period required by Section 1.3<\/p>\n
+ Business Days<\/p>\n
*** 45<\/p>\n
**** : (1) a \"person\" or \"group\" (within the meaning of \nSections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) \nbecomes, after the date of this Agreement, the \"beneficial owner\" (as defined in \nRule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or \nindirectly, of more than 20% of the total voting power of all classes of capital \nstock then outstanding of Borrower entitled to vote in the election of \ndirectors, or (2) a majority of the members of the Board of Directors of \nBorrower shall not constitute Continuing Directors<\/p>\n
***** [intentionally omitted]<\/p>\n
****** and is continuing<\/p>\n<\/i>
7.2  Remedies.  Upon the occurrence * of any Event \nof Default, and at any time thereafter,<\/strike> Silicon, at its option, \nand without notice or demand of any kind (all of which are hereby expressly \nwaived by Borrower), may do any one or more of the following: (a) Cease making \nLoans or otherwise extending credit to Borrower under this Agreement or any \nother document or agreement; (b) Accelerate and declare all or any part of the \nObligations to be immediately due, payable, and performable, notwithstanding any \ndeferred or installment payments allowed by any instrument evidencing or \nrelating to any Obligation; (c) Take possession of any or all of the Collateral \nwherever it may be found, and for that purpose Borrower hereby authorizes \nSilicon without judicial process to enter onto any of Borrower's premises \nwithout interference to search for, take possession of, keep, store, or remove \nany of the Collateral, and remain on the premises or cause a custodian to remain \non the premises in exclusive control thereof, without charge for so long as \nSilicon deems it reasonably necessary in order to complete the enforcement of \nits rights under this Agreement or any other agreement; provided, however, that \nshould Silicon seek to take possession of any of the Collateral by Court \nprocess, Borrower hereby irrevocably waives: (i) any bond and any surety or \nsecurity relating thereto required by any statute, court rule or otherwise as an \nincident to such possession; (ii) any demand for possession prior to the \ncommencement of any suit or action to recover possession thereof; and (iii) any \nrequirement that Silicon retain possession of, and not dispose of, any such \nCollateral until after trial or final judgment; (d) Require Borrower to assemble \nany or all of the Collateral and make it available to Silicon at places \ndesignated by Silicon which are reasonably convenient to Silicon and Borrower, \nand to remove the Collateral to such locations as Silicon may deem advisable; \n(e) Complete the processing, manufacturing or repair of any Collateral prior to \na disposition thereof and, for such purpose and for the purpose of removal, \nSilicon shall have the right to use Borrower's premises, vehicles, hoists, \nlifts, cranes, equipment and all other property without charge; (f) Sell, lease \nor otherwise dispose of any of the Collateral, in its condition at the time \nSilicon obtains possession of it or after further manufacturing, processing or \nrepair, at one or more public and\/or private sales, in lots or in bulk, for \ncash, exchange or other property, or on credit, and to adjourn any such sale \nfrom time to time without notice other than oral announcement at the time \nscheduled for sale.  Silicon shall have the right to conduct such disposition on \nBorrower's premises without charge, for such time or times as Silicon deems \nreasonable, or on Silicon's premises, or elsewhere and the Collateral need not \nbe located at the place of disposition.  Silicon may directly or through any \naffiliated company purchase or lease any Collateral at any such public \ndisposition, and if permissible under applicable law, at any private \ndisposition.  Any sale or other disposition of Collateral shall not relieve \nBorrower of any liability Borrower may have if any Collateral is defective as to \ntitle or physical condition or otherwise at the time of sale; (g) Demand payment \nof, and collect any Receivables and General Intangibles comprising Collateral \nand, in connection therewith, Borrower irrevocably authorizes Silicon to endorse \nor sign Borrower's name on all collections, receipts, instruments and other \ndocuments, to take possession of and open mail addressed to Borrower and remove \ntherefrom payments made with respect to any item of the Collateral or proceeds \nthereof, and, in Silicon's sole discretion, to grant extensions of time to pay, \ncompromise claims and settle Receivables and the like for less than face value; \n(h) Offset against any sums in any of Borrower's general, special or other \nDeposit Accounts with Silicon; and (i) Demand and receive possession of any of \nBorrower's federal and state income tax returns and the books and records \nutilized in the preparation thereof or referring thereto.  All reasonable \nattorneys' fees, expenses, costs, liabilities and obligations incurred by \nSilicon with respect to the foregoing shall be added to and become part of the \nObligations, shall be due on demand, and shall bear interest at a rate equal to \nthe highest interest rate applicable to any of the Obligations.  Without \nlimiting any of Silicon's rights and remedies, from and after the occurrence * \nof any Event of Default, the interest rate applicable to the Obligations shall \nbe increased by an additional four<\/strike> *** percent per annum.<\/p>\n<\/b>
* and during the continuation<\/p>\n
** three<\/p>\n<\/i>
7.3  Standards for Determining Commercial \nReasonableness.  Borrower and Silicon agree that a sale or other \ndisposition (collectively, 'sale') of any Collateral which complies \nwith the following standards will conclusively be deemed to be commercially \nreasonable:  (i) Notice of the sale is given to Borrower at least \nseven<\/strike> * days prior to the sale, and, in the case of a public \nsale, notice of the sale is published at least seven<\/strike> * days \nbefore the sale in a newspaper of general circulation in the county where the \nsale is to be conducted; (ii) Notice of the sale describes the collateral in \ngeneral, non-specific terms; (iii) The sale is conducted at a place designated \nby Silicon, with or without the Collateral being present; (iv) The sale \ncommences at any time between 8:00 a.m. and 6:00 p.m;  (v) Payment of the \npurchase price in cash or by cashier's check or wire transfer is required; (vi) \nWith respect to any sale of any of the Collateral, Silicon may (but is not \nobligated to) direct any prospective purchaser to ascertain directly from \nBorrower any and all information concerning the same.  Silicon shall be free to \nemploy other methods of noticing and selling the Collateral, in its discretion, \nif they are commercially reasonable.<\/p>\n<\/b>
* ten<\/p>\n<\/i>
7.4  Power of Attorney.  Upon the occurrence * of \nany Event of Default, without limiting Silicon's other rights and remedies, \nBorrower grants to Silicon an irrevocable power of attorney coupled with an \ninterest, authorizing and permitting Silicon (acting through any of its \nemployees, attorneys or agents) at any time, at its option, but without \nobligation, with or without notice to Borrower, and at Borrower's expense, to do \nany or all of the following, in Borrower's name or otherwise, but Silicon agrees \nto exercise the following powers in a commercially reasonable manner:  (a) \nExecute on behalf of Borrower any documents that Silicon may, in its sole \ndiscretion, deem advisable in order to perfect and maintain Silicon's security \ninterest in the Collateral, or in order to exercise a right of Borrower or \nSilicon, or in order to fully consummate all the transactions contemplated under \nthis Agreement, and all other present and future agreements; (b) Execute on \nbehalf of Borrower any document exercising, transferring or assigning any option \nto purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any \nreal or personal property which is part of Silicon's Collateral or in \nwhich Silicon has an interest<\/strike>; (c) Execute on behalf of Borrower, any \ninvoices relating to any Receivable, any draft against any Account Debtor and \nany notice to any Account Debtor, any proof of claim in bankruptcy, any Notice \nof Lien, claim of mechanic's, materialman's or other lien, or assignment or \nsatisfaction of mechanic's, materialman's or other lien; (d) Take control in any \nmanner ** of any cash or non-cash items of payment or proceeds of Collateral; \nendorse the name of Borrower upon any instruments, or documents, evidence of \npayment or Collateral that may come into Silicon's possession; (e) Endorse all \nchecks and other forms of remittances received by Silicon; (f) Pay, contest or \nsettle any lien, charge, encumbrance, security interest and adverse claim in or \nto any of the Collateral, or any judgment based thereon, or otherwise take any \naction to terminate or discharge the same; (g) Grant extensions of time to pay, \ncompromise claims and settle Receivables and General Intangibles for less than \nface value and execute all releases and other documents in connection therewith; \n(h) Pay any sums required on account of Borrower's taxes or to secure the \nrelease of any liens therefor, or both; (i) Settle and adjust, and give releases \nof, any insurance claim that relates to any of the Collateral and obtain payment \ntherefor; (j) Instruct any third party having custody or control of any books or \nrecords belonging to, or relating to, Borrower to give Silicon the same rights \nof access and other rights with respect thereto as Silicon has under this \nAgreement; and (k) Take any action or pay any sum required of Borrower pursuant \nto this Agreement and any other present or future agreements.  Any and all \nreasonable sums paid and any and all reasonable costs, expenses, liabilities, \nobligations and attorneys' fees incurred by Silicon with respect to the \nforegoing shall be added to and become part of the Obligations, shall be payable \non demand, and shall bear interest at a rate equal to the highest interest rate \napplicable to any of the Obligations.  In no event shall Silicon's rights under \nthe foregoing power of attorney or any of Silicon's other rights under this \nAgreement be deemed to indicate that Silicon is in control of the business, \nmanagement or properties of Borrower.<\/p>\n<\/b>
* and during the continuation<\/p>\n
** permitted by applicable law<\/p>\n<\/i>
7.5  Application of Proceeds.  All proceeds \nrealized as the result of any sale of the Collateral shall be applied by Silicon \nfirst to the reasonable costs, expenses, liabilities, obligations and attorneys' \nfees incurred by Silicon in the exercise of its rights under this Agreement, \nsecond to the interest due upon any of the Obligations, and third to the \nprincipal of the Obligations, in such order as Silicon shall determine in its \nsole discretion.  Any surplus shall be paid to Borrower or other persons legally \nentitled thereto; Borrower shall remain liable to Silicon for any deficiency.  \nIf, Silicon, in its sole discretion, directly or indirectly enters into a \ndeferred payment or other credit transaction with any purchaser at any sale of \nCollateral, Silicon shall have the option, exercisable at any time, in its sole \ndiscretion, of either reducing the Obligations by the principal amount of \npurchase price or deferring the reduction of the Obligations until the actual \nreceipt by Silicon of the cash therefor.<\/p>\n<\/i><\/b>
7.6  Remedies Cumulative.  In addition to the \nrights and remedies set forth in this Agreement, Silicon shall have all the \nother rights and remedies accorded a secured party under the California Uniform \nCommercial Code and under all other applicable laws, and under any other \ninstrument or agreement now or in the future entered into between Silicon and \nBorrower, and all of such rights and remedies are cumulative and none is \nexclusive.  Exercise or partial exercise by Silicon of one or more of its rights \nor remedies shall not be deemed an election, nor bar Silicon from subsequent \nexercise or partial exercise of any other rights or remedies.  The failure or \ndelay of Silicon to exercise any rights or remedies shall not operate as a \nwaiver thereof, but all rights and remedies shall continue in full force and \neffect until all of the Obligations have been fully paid and performed.<\/p>\n<\/i><\/b>
8.\tDefinitions.  As used in this Agreement, the following \nterms have the following meanings:<\/p>\n
'Account Debtor<\/u>' means the obligor on a \nReceivable.<\/p>\n
'Affiliate<\/u>' means, with respect to any \nPerson, a relative, partner, shareholder, director, officer, or employee of such \nPerson, or any parent or subsidiary of such Person, or any Person controlling, \ncontrolled by or under common control with such Person.<\/p>\n
\"Business Day<\/u>\" means a day on which Silicon is open \nfor business.<\/p>\n
'Code<\/u>' means the Uniform Commercial Code as \nadopted and in effect in the State of California  from time to time. <\/p>\n
'Collateral<\/u>' has the meaning set forth in \nSection 2.1 above.<\/p>\n<\/b>
'Continuing Director<\/u>' means (a) any \nmember of the Board of Directors who was a director (or comparable manager) of \nBorrower on the date of this Agreement, and (b) any individual who becomes a \nmember of the Board of Directors after the date of this Agreement if such \nindividual was appointed or nominated for election to the Board of Directors by \na majority of the Continuing Directors, but excluding any such individual \noriginally proposed for election in opposition to the Board of Directors in \noffice at the date of this Agreement in an actual or threatened election contest \nrelating to the election of the directors (or comparable managers) of Borrower \n(as such terms are used in Rule 14a-11 under the Securities Exchange Act of \n1934, as amended) and whose initial assumption of office resulted from such \ncontest or the settlement thereof.<\/p>\n
'Default<\/u>' means any event which with \nnotice or passage of time or both, would constitute an Event of Default.<\/p>\n
\"Deposit Account<\/u>\" has the meaning set forth in Section \n9102(a) of the Code.<\/p>\n
\"Eligible Inventory<\/u>\"  [NOT APPLICABLE].<\/p>\n
'Eligible Receivables<\/u>' means Receivables \narising in the ordinary course of Borrower's business from the sale of goods or \nrendition of services, which Silicon, in its sole judgment, shall deem eligible \nfor borrowing, based on such considerations as Silicon may from time to time \ndeem appropriate.  Without limiting the fact that the determination of which \nReceivables are eligible for borrowing is a matter of Silicon's discretion, the \nfollowing (the 'Minimum Eligibility Requirements<\/u>') are the \nminimum requirements for a Receivable to be  an Eligible Receivable:  (i) the \nReceivable must not be outstanding for more than 90 days from its invoice date, \n(ii) the Receivable must not represent progress billings, or be due under a \nfulfillment or requirements contract with the Account Debtor, (iii) the \nReceivable must not be subject to any contingencies (including Receivables \narising from sales on consignment, guaranteed sale or other terms pursuant to \nwhich payment by the Account Debtor may be conditional), (iv) the Receivable \nmust not be owing from an Account Debtor with whom Borrower has any dispute \n(whether or not relating to the particular Receivable), (v) the Receivable must \nnot be owing from an Affiliate of Borrower, (vi) the Receivable must not be \nowing from an Account Debtor which is subject to any insolvency or bankruptcy \nproceeding, or whose financial condition is not acceptable to Silicon, or which, \nfails or goes out of a material portion of its business, (vii) the Receivable \nmust not be owing from the United States or any department, agency or \ninstrumentality thereof (unless there has been compliance, to Silicon's \nsatisfaction, with the United States Assignment of Claims Act), (viii) the \nReceivable must not be owing from an Account Debtor located outside the United \nStates or Canada (unless pre-approved by Silicon in its discretion in writing, \nor backed by a letter of credit satisfactory to Silicon, or FCIA insured \nsatisfactory to Silicon *), and (ix) the Receivable must not be owing from an \nAccount Debtor to whom Borrower is or may be liable for goods purchased from \nsuch Account Debtor or otherwise **. Receivables owing from one Account Debtor \nwill not be deemed Eligible Receivables to the extent they exceed 25% of the \ntotal Receivables outstanding.  In addition, if more than 50% of the Receivables \nowing from an Account Debtor are outstanding more than 90 <\/b>days from their \ninvoice date (without regard to unapplied credits) or are otherwise not eligible \nReceivables, then all Receivables owing from that Account Debtor will be deemed \nineligible for borrowing.  Silicon may, from time to time, in its discretion, \nrevise the Minimum Eligibility Requirements, upon written notice to \nBorrower.<\/p>\n<\/b>
* ; without limiting the generality of the foregoing, as \nto each of the foreign Account Debtors identified in the definition of Permitted \nForeign Eligible Receivables, Receivables owing by such Account Debtor up to the \nrespective maximum amount relating to such Account Debtor as identified in the \ndefinition of Permitted Foreign Eligible Receivables shall be deemed pre-\napproved by Silicon for purposes of this clause (viii) so long as such \nReceivables are backed by a letter of credit satisfactory to Silicon for such \nmaximum amount or FCIA insured satisfactory to Silicon for such maximum \namount<\/p>\n
** ; and (x) (so long as any UCC-1 filings covering any \nproperty of Borrower are of record in favor of NTFC Capital Corporation) the \nReceivable must not constitute proceeds of any property sold, leased, licensed \nor sublicensed, or otherwise supplied by NTFC Capital Corporation to \nBorrower<\/p>\n
\"Equipment<\/u>\" means all of Borrower's present and \nhereafter acquired machinery, molds, machine tools, motors, furniture, \nequipment, furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, \ndyes, jigs, goods and other tangible personal property (other than Inventory) of \nevery kind and description used in Borrower's operations or owned by Borrower \nand any interest in any of the foregoing, and all attachments, accessories, \naccessions, replacements, substitutions, additions or improvements to any of the \nforegoing, wherever located.<\/p>\n
\"Event of Default<\/u>\" means any of the events set forth \nin Section 7.1 of this Agreement.<\/p>\n
\"General Intangibles<\/u>\" means all general intangibles of \nBorrower, whether now owned or hereafter created or acquired by Borrower, \nincluding, without limitation, all choses in action, causes of action, corporate \nor other business records, Deposit Accounts, inventions, designs, drawings, \nblueprints, patents, patent applications, trademarks and the goodwill of the \nbusiness symbolized thereby, names, trade names, trade secrets, goodwill, \ncopyrights, registrations, licenses, franchises, customer lists, security  and \nother deposits, rights in all litigation presently or hereafter pending for any \ncause or claim (whether in contract, tort or otherwise), and all judgments now \nor hereafter arising therefrom, all claims of Borrower against Silicon, rights \nto purchase or sell real or personal property, rights as a licensor or licensee \nof any kind, royalties, telephone numbers, proprietary information, purchase \norders, and all insurance policies and claims (including without limitation life \ninsurance, key man insurance, credit insurance, liability insurance, property \ninsurance and other insurance), tax refunds and claims, computer programs, \ndiscs, tapes and tape files, claims under guaranties, security interests or \nother security held by or granted to Borrower, all rights to indemnification and \nall other intangible property of every kind and nature (other than \nReceivables).<\/p>\n
\"Inventory<\/u>\" means all of Borrower's now owned and \nhereafter acquired goods, merchandise or other personal property, wherever \nlocated, to be furnished under any contract of service or held for sale or lease \n(including without limitation all raw materials, work in process, finished goods \nand goods in transit), and all materials and supplies of every kind, nature and \ndescription which are or might be used or consumed in Borrower's business or \nused in connection with the manufacture, packing, shipping, advertising, selling \nor finishing of such goods, merchandise or other personal property, and all \nwarehouse receipts, documents of title and other documents representing any of \nthe foregoing.<\/p>\n
\"Obligations<\/u>\" means all present and future Loans, \nadvances, debts, liabilities, obligations, guaranties, covenants, duties and \nindebtedness at any time owing by Borrower to Silicon, whether evidenced by this \nAgreement or any note or other instrument or document, whether arising from an \nextension of credit, opening of a letter of credit, banker's acceptance, loan, \nguaranty, indemnification or otherwise, whether direct or indirect (including, \nwithout limitation, those acquired by assignment and any participation by \nSilicon in Borrower's debts owing to others), absolute or contingent, due or to \nbecome due, including, without limitation, all interest, charges, expenses, \nfees, attorney's fees, expert witness fees, audit fees, letter of credit fees, \ncollateral monitoring fees, closing fees, facility fees, termination fees, \nminimum interest charges and any other sums chargeable to Borrower under this \nAgreement or under any other present or future instrument or agreement between \nBorrower and Silicon.<\/p>\n<\/b>
'Permitted Foreign Eligible Receivables<\/u>' \nmeans, collectively: (a) Receivables owing by the foreign Account Debtor known \nas Cablecom AG, in an aggregate amount not to exceed $100,000 at any one time \noutstanding; (b) Receivables owing by the foreign Account Debtor known as France \nTelecom Cable Interactive, in an aggregate amount not to exceed $2,000,000 at \nany one time outstanding; (c) Receivables owing by the foreign Account Debtor \nknown as Fringes Systemns, in an aggregate amount not to exceed $250,000 at any \none time outstanding; (d) Receivables owing by the foreign Account Debtor known \nas Fujikura, in an aggregate amount not to exceed $2,000,000 at any one time \noutstanding; (e) Receivables owing by the foreign Account Debtor known as \nFujikawa Electric Co., in an aggregate amount not to exceed $1,800,000 at any \none time outstanding; (f) Receivables owing by the foreign Account Debtor known \nas Hitachi Cable America, in an aggregate amount not to exceed $1,000,000 at any \none time outstanding; (g) Receivables owing by the foreign Account Debtor known \nas OSI Plus Corp., in an aggregate amount not to exceed $250,000 at any one time \noutstanding; (h) Receivables owing by the foreign Account Debtor known as \nPhilips Iberica, in an aggregate amount not to exceed $1,500,000 at any one time \noutstanding; (i) Receivables owing by the foreign Account Debtor known as \nSiemens Nederland, in an aggregate amount not to exceed $2,000,000 at any one \ntime outstanding; (j) Receivables owing by the foreign Account Debtor known as \nSpie Trindel, in an aggregate amount not to exceed $100,000 at any one time \noutstanding; (k) Receivables owing by the foreign Account Debtor known as Telia \nSofia, in an aggregate amount not to exceed $100,000 at any one time \noutstanding; (l) Receivables owing by the foreign Account Debtor known as \nTelindus BV, in an aggregate amount not to exceed $5,000,000 at any one time \noutstanding; and (m) Receivables owing by the foreign Account Debtor known as \nThalamus Networks, in an aggregate amount not to exceed $100,000 at any one time \noutstanding.<\/p>\n
\"Permitted Liens<\/u>\" means the following:  (i) \npurchase money security interests in specific items of Equipment; (ii) leases of \nspecific items of Equipment; (iii) liens for taxes not yet payable; (iv) \nadditional security interests and liens consented to in writing by Silicon, \nwhich consent shall not be unreasonably withheld; (v) security interests being \nterminated substantially concurrently with this Agreement; (vi) liens of \nmaterialmen, mechanics, warehousemen, carriers, or other similar liens arising \nin the ordinary course of business and securing obligations which are not \ndelinquent; (vii) liens incurred in connection with the extension, renewal \nor refinancing of the indebtedness secured by liens of the type described above \nin clauses (i) or (ii) above, provided that any extension, renewal or \nreplacement lien is limited to the property encumbered by the existing lien and \nthe principal amount of the indebtedness being extended, renewed or refinanced \ndoes not increase; (viii) Liens in favor of customs and revenue authorities \nwhich secure payment of customs duties in connection with the importation of \ngoods.  Silicon will have the right to require, as a condition to its consent \nunder subparagraph (iv) above, that the holder of the additional security \ninterest or lien sign an intercreditor agreement * on Silicon's then \nstandard form<\/strike>, acknowledge that the security interest is subordinate to \nthe security interest in favor of Silicon, and agree not to take any action to \nenforce its subordinate security interest so long as any Obligations remain \noutstanding, and that Borrower agree that any uncured default in any obligation \nsecured by the subordinate security interest shall also constitute an Event of \nDefault under this Agreement.  <\/p>\n<\/b>
* , in form and substance satisfactory to Silicon in its \ngood faith business judgment,<\/p>\n
\"Person<\/u>\" means any individual, sole \nproprietorship, partnership, joint venture, trust, unincorporated organization, \nassociation, corporation, government, or any agency or political division \nthereof, or any other entity.<\/p>\n
\"Receivables<\/u>\" means all of Borrower's now owned and \nhereafter acquired accounts (whether or not earned by performance), letters of \ncredit, contract rights, chattel paper, instruments, securities, securities \naccounts, investment property, documents and all other forms of obligations at \nany time owing to Borrower, all guaranties and other security therefor, all \nmerchandise returned to or repossessed by Borrower, and all rights of stoppage \nin transit and all other rights or remedies of an unpaid vendor, lienor or \nsecured party.<\/p>\n
\"Reserves<\/u>\" means, as of any date of determination, \nsuch amounts as Silicon may from time to time establish and revise in good faith \nreducing the amount of Loans, Letters of Credit and other financial \naccommodations which would otherwise be available to Borrower under the lending \nformula(s) provided in the Schedule:  (a) to reflect events, conditions, \ncontingencies or risks which, as determined by Silicon in good faith, do or may \naffect (i) the Collateral or any other property which is security for the \nObligations or its value (including without limitation any increase in \ndelinquencies of Receivables), (ii) the assets, business or prospects of \nBorrower or any Guarantor, or (iii) the security interests and other rights of \nSilicon in the Collateral (including the enforceability, perfection and priority \nthereof); or (b) to reflect Silicon's good faith belief that any collateral \nreport or financial information furnished by or on behalf of Borrower or any \nGuarantor to Silicon is or may have been incomplete, inaccurate or misleading in \nany material respect; or (c) in respect of any state of facts which Silicon \ndetermines in good faith constitutes an Event of Default or may, with notice or \npassage of time or both, constitute an Event of Default.<\/p>\n<\/b>
'Streamline Facility Agreement<\/u>' means \nthat certain Streamline Facility Agreement, dated as of even date herewith, \nentered into by and between Silicon and Bank concurrently herewith.<\/p>\n<\/u>
Other Terms.  All accounting terms used in this \nAgreement, unless otherwise indicated, shall have the meanings given to such \nterms in accordance with generally accepted accounting principles, consistently \napplied.  All other terms contained in this Agreement, unless otherwise \nindicated, shall have the meanings provided by the Code, to the extent such \nterms are defined therein. <\/p>\n<\/i><\/b>
9.\tGENERAL PROVISIONS.<\/p>\n
9.1  Interest Computation.  In computing interest on \nthe Obligations, all checks, wire transfers and other items of payment received \nby Silicon (including proceeds of Receivables and payment of the Obligations in \nfull) shall be deemed applied by Silicon on account of the Obligations three \nBusiness Days after receipt by Silicon of immediately available funds, and, for \npurposes of the foregoing, any such funds received after 12:00 Noon on any day \nshall be deemed received on the next Business Day.  Silicon shall not, however, \nbe required to credit Borrower's account for the amount of any item of payment \nwhich is unsatisfactory to Silicon in its sole discretion, and Silicon may \ncharge Borrower's loan account for the amount of any item of payment which is \nreturned to Silicon unpaid.  <\/p>\n<\/i><\/b>
9.2  Application of Payments.  All payments \nwith respect to the Obligations may be applied, and in Silicon's sole discretion \nreversed and re-applied, to the Obligations, in such order and manner as Silicon \nshall determine in its sole discretion.<\/p>\n<\/i><\/b>
9.3  Charges to Accounts.  Silicon may, in its \ndiscretion, require that Borrower pay monetary Obligations in cash to Silicon, \nor charge them to Borrower's Loan account, in which event they will bear \ninterest at the same rate applicable to the Loans.  Silicon may also, in its \ndiscretion, charge any monetary Obligations to Borrower's Deposit Accounts \nmaintained with Silicon.<\/p>\n<\/i><\/b>
9.4  Monthly Accountings.  Silicon shall \nprovide Borrower monthly with an account of advances, charges, expenses and \npayments made pursuant to this Agreement.  Such account shall be deemed correct, \naccurate and binding on Borrower and an account stated (except for reverses and \nreapplications of payments made and corrections of errors discovered by \nSilicon), unless Borrower notifies Silicon in writing to the contrary within \nthirty days after each account is rendered, describing the nature of any alleged \nerrors or admissions.<\/p>\n<\/i><\/b>
9.5  Notices.  All notices to be given under \nthis Agreement shall be in writing and shall be given either personally or by \nreputable private delivery service or by regular first-class mail, or certified \nmail return receipt requested, addressed to Silicon or Borrower at the addresses \nshown in the heading to this Agreement, or at any other address designated in \nwriting by one party to the other party.  Notices to Silicon shall be directed \nto the Commercial Finance Division, to the attention of the Division Manager or \nthe Division Credit Manager.  All notices shall be deemed to have been given \nupon delivery in the case of notices personally delivered, or at the expiration \nof one Business Day following delivery to the private delivery service, or two \nBusiness Days following the deposit thereof in the United States mail, with \npostage prepaid.  <\/p>\n<\/i><\/b>
9.6  Severability.  Should any provision of \nthis Agreement be held by any court of competent jurisdiction to be void or \nunenforceable, such defect shall not affect the remainder of this Agreement, \nwhich shall continue in full force and effect.<\/p>\n<\/i><\/b>
9.7  Integration.  This Agreement and such \nother written agreements, documents and instruments as may be executed in \nconnection herewith * are the final, entire and complete agreement between \nBorrower and Silicon and supersede all prior and contemporaneous negotiations \nand oral representations and agreements, all of which are merged and integrated \nin this Agreement.  There are no oral understandings, representations or \nagreements between the parties which are not set forth in this Agreement or in \nother written agreements signed by the parties in connection herewith.<\/u><\/p>\n<\/b>
* (including the Streamline Facility Agreement)<\/p>\n<\/i>
9.8  Waivers.  The failure of Silicon at any time \nor times to require Borrower to strictly comply with any of the provisions of \nthis Agreement or any other present or future agreement between Borrower and \nSilicon shall not waive or diminish any right of Silicon later to demand and \nreceive strict compliance therewith.  Any waiver of any default shall not waive \nor affect any other default, whether prior or subsequent, and whether or not \nsimilar.  None of the provisions of this Agreement or any other agreement now or \nin the future executed by Borrower and delivered to Silicon shall be deemed to \nhave been waived by any act or knowledge of Silicon or its agents or employees, \nbut only by a specific written waiver signed by an authorized officer of Silicon \nand delivered to Borrower.  Borrower waives demand, protest, notice of protest \nand notice of default or dishonor, notice of payment and nonpayment, release, \ncompromise, settlement, extension or renewal of any commercial paper, \ninstrument, account, General Intangible, document or guaranty at any time held \nby Silicon on which Borrower is or may in any way be liable, and notice of any \naction taken by Silicon, unless expressly required by this Agreement.  <\/p>\n<\/i><\/b>
9.9  No Liability for Ordinary Negligence.  \nNeither Silicon, nor any of its directors, officers, employees, agents, \nattorneys or any other Person affiliated with or representing Silicon shall be \nliable for any claims, demands, losses or damages, of any kind whatsoever, made, \nclaimed, incurred or suffered by Borrower or any other party through the \nordinary negligence of Silicon, or any of its directors, officers, employees, \nagents, attorneys or any other Person affiliated with or representing Silicon, \nbut nothing herein shall relieve Silicon from liability for its own gross \nnegligence or willful misconduct.<\/p>\n<\/i><\/b>
9.10  Amendment.  The terms and provisions of \nthis Agreement may not be waived or amended, except in a writing executed by \nBorrower and a duly authorized officer of Silicon.<\/p>\n<\/i><\/b>
9.11  Time of Essence.  Time is of the essence \nin the performance by Borrower of each and every obligation under this \nAgreement.<\/p>\n<\/i><\/b>
9.12  Attorneys Fees and Costs.  Borrower shall \nreimburse Silicon for all reasonable attorneys' fees and all filing, recording, \nsearch, title insurance, appraisal, audit, and other reasonable costs incurred \nby Silicon, pursuant to, or in connection with, or relating to this Agreement \n(whether or not a lawsuit is filed), including, but not limited to, any \nreasonable attorneys' fees and costs Silicon incurs in order to do the \nfollowing: prepare and negotiate this Agreement and the documents relating to \nthis Agreement; obtain legal advice in connection with this Agreement or \nBorrower; enforce, or seek to enforce, any of its rights; prosecute actions \nagainst, or defend actions by, Account Debtors; commence, intervene in, or \ndefend any action or proceeding; initiate any complaint to be relieved of the \nautomatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy \nclaim, third-party claim, or other claim; examine, audit, copy, and inspect any \nof the Collateral or any of Borrower's books and records; protect, obtain \npossession of, lease, dispose of, or otherwise enforce Silicon's security \ninterest in, the Collateral; and otherwise represent Silicon in any litigation \nrelating to Borrower.  In satisfying Borrower's obligation hereunder to \nreimburse Silicon for attorneys fees, Borrower may, for convenience, issue \nchecks directly to Silicon's attorneys, Levy, Small & Lallas, but Borrower \nacknowledges and agrees that Levy, Small & Lallas is representing only \nSilicon and not Borrower in connection with this Agreement.<\/u>  If either \nSilicon or Borrower files any lawsuit against the other predicated on a breach \nof this Agreement, the prevailing party in such action shall be entitled to \nrecover its reasonable costs and attorneys' fees, including (but not limited to) \nreasonable attorneys' fees and costs incurred in the enforcement of, execution \nupon or defense of any order, decree, award or judgment.  All attorneys' fees \nand costs to which Silicon may be entitled pursuant to this Paragraph shall \nimmediately become part of Borrower's Obligations, shall be due on demand, and \nshall bear interest at a rate equal to the highest interest rate applicable to \nany of the Obligations.<\/p>\n<\/i><\/b>
9.13  Benefit of Agreement.  The provisions of \nthis Agreement shall be binding upon and inure to the benefit of the respective \nsuccessors, assigns, heirs, beneficiaries and representatives of Borrower and \nSilicon; provided, however, that Borrower may not assign or transfer any of its \nrights under this Agreement without the prior written consent of Silicon, and \nany prohibited assignment shall be void.  No consent by Silicon to any \nassignment shall release Borrower from its liability for the Obligations.<\/p>\n<\/i><\/b>
9.14  Joint and Several Liability.  If Borrower \nconsists of more than one Person, their liability shall be joint and several, \nand the compromise of any claim with, or the release of, any Borrower shall not \nconstitute a compromise with, or a release of, any other Borrower.<\/p>\n<\/i><\/b>
9.15  Limitation of Actions.  Any claim or \ncause of action by Borrower against Silicon, its directors, officers, employees, \nagents, accountants or attorneys, based upon, arising from, or relating to this \nLoan Agreement, or any other present or future document or agreement, or any \nother transaction contemplated hereby or thereby or relating hereto or thereto, \nor any other matter, cause or thing whatsoever, occurred, done, omitted or \nsuffered to be done by Silicon, its directors, officers, employees, agents, \naccountants or attorneys, shall be barred unless asserted by Borrower by the \ncommencement of an action or proceeding in a court of competent jurisdiction by \nthe filing of a complaint within * one year<\/strike> after the first \nact, occurrence or omission upon which such claim or cause of action, or any \npart thereof, is based, and the service of a summons and complaint on an officer \nof Silicon, or on any other person authorized to accept service on behalf of \nSilicon, within thirty (30) days thereafter.  Borrower agrees that such ** \none-year<\/strike> period is a reasonable and sufficient time for \nBorrower to investigate and act upon any such claim or cause of action.  The ** \none-year<\/strike> period provided herein shall not be waived, tolled, or \nextended except by the written consent of Silicon in its sole discretion.  This \nprovision shall survive any termination of this Loan Agreement or any other \npresent or future agreement.<\/p>\n<\/b>
* two years<\/p>\n
** two-year<\/p>\n<\/i>
9.16  Paragraph Headings; Construction.  Paragraph \nheadings are only used in this Agreement for convenience.  Borrower and Silicon \nacknowledge that the headings may not describe completely the subject matter of \nthe applicable paragraph, and the headings shall not be used in any manner to \nconstrue, limit, define or interpret any term or provision of this Agreement.  \nThe term 'including', whenever used in this Agreement, shall mean \n'including (but not limited to)'.  This Agreement has been fully \nreviewed and negotiated between the parties and no uncertainty or ambiguity in \nany term or provision of this Agreement shall be construed strictly against \nSilicon or Borrower under any rule of construction or otherwise.<\/p>\n<\/i><\/b>
9.17  Governing Law; Jurisdiction; Venue.  This \nAgreement and all acts and transactions hereunder and all rights and obligations \nof Silicon and Borrower shall be governed by the laws of the State of \nCalifornia.  As a material part of the consideration to Silicon to enter into \nthis Agreement, Borrower (i) agrees that all actions and proceedings relating \ndirectly or indirectly to this Agreement shall, at Silicon's option, be \nlitigated in courts located within California, and that the exclusive venue \ntherefor shall be Santa Clara County; (ii) consents to the jurisdiction and \nvenue of any such court and consents to service of process in any such action or \nproceeding by personal delivery or any other method permitted by law; and (iii) \nwaives any and all rights Borrower may have to object to the jurisdiction of any \nsuch court, or to transfer or change the venue of any such action or \nproceeding.<\/p>\n<\/i><\/b>
9.18  Mutual Waiver of Jury Trial.  Borrower and \nSilicon each hereby waive the right to trial by jury in any action or proceeding \nbased upon, arising out of, or in any way relating to, this Agreement or any \nother present or future instrument or agreement between Silicon and Borrower, or \nany conduct, acts or omissions of Silicon or Borrower or any of their directors, \nofficers, employees, agents, attorneys or any other persons affiliated with \nSilicon or Borrower, in all of the foregoing cases, whether sounding in contract \nor tort or otherwise.<\/p>\n    
[Signature page immediately follows]<\/p>\n\n    <\/b>
IN WITNESS WHEREOF, \nthe parties hereto have caused this Agreement to be executed and delivered \nas of the date first above written.<\/p>\n    <\/b>
Borrower:<\/p>
\n\n\n
COM21, INC.<\/p>\n
<\/p>\n
 <\/p>\n
By \t\t\t\t\t<\/u><\/p>\n
\tPresident or Vice President<\/p>\n
<\/p>\n
By \t\t\t\t\t<\/u><\/p><\/dir>\n<\/dir>\n\n
\t\tSecretary or Ass't Secretary<\/p>\n
<\/p>\n
Silicon:<\/p>
\n\n\n
SILICON VALLEY BANK<\/p>\n
<\/p>\n
 <\/p>\n
By \t\t\t\t\t<\/u><\/p>\n
Title \t\t\t\t\t<\/u><\/p>\n
<\/p>\n    
 <\/p><\/dir>\n<\/dir>\n\n
Form 3\/24\/99<\/p>\n
Version -0<\/p>\n    <\/b>
<\/p>\n    
 <\/p>\n\n
\n
\n
\n
\n
\n
\n
\n\n    
Silicon Valley \nBank     <\/i><\/p>\n    
Schedule \nto <\/p>\n
Loan and Security Agreement<\/p>\n    \n    
Borrower:\tCOM21, INC.    \t\t<\/p>\n    
Address:\t750 Tasman Drive<\/p>\n    
\t\t           \n  Milpitas, California  95035<\/p>\n    
<\/p>\n    
Date:\t\tNovember __, 2001<\/p>\n  
<\/p>\n  
This Schedule forms an \nintegral part of the Loan and Security Agreement between Silicon Valley Bank and \nthe above-borrower of even date.  <\/p>\n    
 <\/p>\n  <\/b>
 <\/p>\n\n
\n\n\n  
1.  Credit Limit <\/p>\n  
\t  (Section \n1.1):\tAn amount not to exceed the lesser of $20,000,000 (the 'Maximum \nCredit Limit') and the sum of (a) plus (b) below: <\/p>\n
<\/p>\n
\t\t(a)\tRevolving Loans<\/u>: Revolving Loans (the \n'Revolving Loans') in an amount not to exceed the lesser of:  (i) \n$10,000,000<\/b> at any one time outstanding (the 'Maximum Revolving \nAmount'); or (ii) 75%<\/b> of the amount of Borrower's Eligible \nReceivables (as defined in Section 8 above); plus<\/p>\n
<\/p>\n  
\t\t  (b) \nCelestica Letter of Credit<\/u>: one or more special purpose Letters of Credit \nissued for the account of Borrower to Celestica Inc. as beneficiary, in an \naggregate face amount not to exceed $10,000,000 (individually and collectively, \nthe 'Celestica Letter of Credit').  Borrower's Obligations arising out \nof or in connection with the Celestica Letter of Credit shall be fully cash-\nsecured pursuant to Silicon's standard form cash pledge agreement (such cash \nsecurity, the 'Celestica LC Cash Collateral'; it being understood and \nagreed that the Celestica LC Cash Collateral constitutes additional Collateral).  \nBorrower hereby covenants and agrees that the amount of cash collateral pledged \nto Silicon as the Celestica LC Cash Collateral shall at all times be at least \n$10,000,000 plus all interest, fees and costs due or to become due in connection \nwith the Celestica Letter of Credit.<\/p>\n
<\/p>\n
\tLetter of Credit Sublimit<\/b><\/p>\n  
\t  (Section \n1.5):  \t  $2,000,000 in the \naggregate as to all Letters of Credit other than the Celestica Letter of \nCredit<\/b><\/p>\n  
<\/p>\n<\/b>
 <\/p>\n  
2.  Interest.<\/p>\n  
<\/p>\n
\t  Interest Rate \n(Section 1.2):\t<\/p>\n  
\t  A rate per \nannum equal to the 'Prime Rate' in effect from time to time, plus the \nApplicable Margin (as defined below).  Interest shall be calculated on the basis \nof a 360-day year for the actual number of days elapsed.  \"Prime Rate\" means the \nrate announced from time to time by Silicon as its 'prime rate;' it is \na base rate upon which other rates charged by Silicon are based, and it is not \nnecessarily the best rate available at Silicon.  The interest rate applicable to \nthe Obligations shall change on each date there is a change in the Prime Rate or \nin the Applicable Margin.  As used herein, the term 'Applicable \nMargin' means, as of any date of determination, 2.0%; provided, however, \nthat solely if (i) Borrower, after the date of this Agreement, achieves \nprofitability (in accordance with generally accepted accounting principles \nconsistently applied) of not less than $1 for each of 2 consecutive fiscal \nquarters, (ii) Silicon timely receives the unaudited quarterly financial \nstatements required under this Agreement in respect of each of such 2 \nconsecutive fiscal quarters, which financial statements accurately reflect \nBorrower's achievement of such requisite profitability, and (iii) no Event of \nDefault has occurred and is continuing, then the Applicable Margin shall equal \n1.5%, effective from and after the date of such receipt of such financial \nstatements.<\/p>\n  <\/b>
<\/p>\n
\t  Minimum Monthly <\/p>\n
\tInterest (Section 1.2):     $2,500 per month.<\/p>\n  
<\/p>\n<\/b>
 <\/p>\n  
3.  Fees (Section \n1.4): <\/b><\/p>\n  
<\/p>\n
\t  Loan \nFee:\t$100,000 (i.e., 1.0% of the Maximum Revolving Amount), payable \nconcurrently herewith.<\/p>\n
<\/p>\n  
\t  Collateral \nMonitoring<\/p>\n  
\t  Fee:\tSubject \nto the Streamline Facility Agreement, $1,500 per month, payable in arrears \n(prorated for any partial month at the beginning and at termination of this \nAgreement).<\/p>\n
<\/p>\n
\tLetter of Credit Fees:\tWith respect to Letters of \nCredit, Silicon's standard Letter of Credit fees, which fees shall be payable \nmonthly, on the last day of the month.  Such fees may, in Silicon's discretion, \nbe charged to Borrower's loan account, and the same shall thereafter bear \ninterest at the same rate as Revolving Loans.<\/p>\n
<\/p>\n  <\/b>
 <\/p>\n  
4.  Maturity Date <\/p>\n  
\t  (Section \n6.1): \tOne year from the date of this Agreement.<\/p>\n
<\/p>\n  <\/b>
 <\/p>\n  
5.  Financial Covenants \n<\/p>\n  
\t  (Section \n5.1):\tBorrower shall comply with each of the following covenant(s).  \nCompliance shall be determined as of the end of each month, except as otherwise \nspecifically provided below: <\/p>\n  <\/b>
<\/p>\n
\t  Minimum Tangible <\/p>\n
\tNet Worth:\tBorrower shall maintain a Tangible Net \nWorth of not less than the sum of (a) $24,000,000 plus (b) the TNW Capital \nIncrease (if any).<\/p>\n  
<\/p>\n  
The term 'TNW Capital \nIncrease' means, as of any date of determination, the greater of (a) $-0- \nand (b) 60% of all consideration (if any) received after the date of this \nAgreement for equity securities of the Borrower. In no event shall the amount of \nthe TNW Capital Increase be decreased.<\/p>\n  
<\/p>\n
\t  Definitions.\t<\/b>For purposes of the foregoing financial covenants, \nthe following term shall have the following meaning:<\/p>\n
<\/p>\n
\t\t'Liabilities' shall have the meaning \nascribed thereto by generally accepted accounting principles.<\/p>\n
<\/p>\n
\t\t'Tangible Net Worth' shall mean the excess \nof total assets over total liabilities, determined in accordance with generally \naccepted accounting principles, with the following adjustments:  <\/p>\n  
<\/p>
\n\n
\t\t  (A) there shall be \nexcluded from assets:  (i) notes, accounts receivable and other obligations \nowing to Borrower from its officers or other Affiliates, and (ii) all assets \nwhich would be classified as intangible assets under generally accepted \naccounting principles, including without limitation goodwill, licenses, patents, \ntrademarks, trade names, copyrights, capitalized software and organizational \ncosts, licenses and franchises<\/p>\n
<\/p>\n
\t\t(B) there shall be excluded from liabilities:  all \nindebtedness which is subordinated to the Obligations under a subordination \nagreement in form specified by Silicon or by language in the instrument \nevidencing the indebtedness which is acceptable to Silicon in its \ndiscretion.<\/p>\n<\/dir>\n\n  <\/b>
<\/p>\n
 <\/p>\n\n  
6.  Reporting.<\/p>\n
      (Section 5.3):<\/p>\n\n
Borrower shall provide Silicon with the following:<\/p>\n
1.\tMonthly Receivable agings, aged by invoice date, within \nfifteen days after the end of each month.<\/p>\n
2.\tMonthly accounts payable agings, aged by invoice date, \nand outstanding or held check registers, if any, within fifteen days after the \nend of each month. <\/p>\n
3.\tMonthly reconciliations of Receivable agings (aged by \ninvoice date), transaction reports, and general ledger, within fifteen days \nafter the end of each month. <\/p>\n
4.\tMonthly perpetual inventory reports for the Inventory \nvalued on a first-in, first-out basis at the lower of cost or market (in \naccordance with generally accepted accounting principles) or such other \ninventory reports as are reasonably requested by Silicon, all within fifteen \ndays after the end of each month. <\/p>\n
5.\tMonthly unaudited financial statements, as soon as \navailable, and in any event within thirty days after the end of each month. <\/p>\n
6.\tMonthly Compliance Certificates, within thirty days \nafter the end of each month, in such form as Silicon shall reasonably specify, \nsigned by the Chief Financial Officer of Borrower, certifying that as of the end \nof such month Borrower was in full compliance with all of the terms and \nconditions of this Agreement, and setting forth calculations showing compliance \nwith the financial covenants set forth in this Agreement and such other \ninformation as Silicon shall reasonably request, including, without limitation, \na statement that at the end of such month there were no held checks.<\/p>\n
7.\tQuarterly unaudited financial statements, as soon as \navailable, and in any event within forty-five days after the end of each fiscal \nquarter of Borrower.<\/p>\n
8.\tAnnual operating budgets (including income statements, \nbalance sheets and cash flow statements, by month) for the upcoming fiscal year \nof Borrower within thirty days prior to the end of each fiscal year of Borrower.  \n<\/p>\n
9.\tAnnual financial statements, as soon as available, and \nin any event within 120 days following the end of Borrower's fiscal year, \ncertified by independent certified public accountants acceptable to Silicon.<\/p>\n  <\/b>
<\/p>\n  
7.  \nCompensation  \t<\/p>\n
\t  (Section \n5.5):\t[Intentionally Omitted] <\/p>\n
<\/p>\n  <\/b>
 <\/p>\n  
8.  Borrower \nInformation:<\/p>\n  
<\/p>\n
\t  Prior Names of <\/p>\n
\tBorrower <\/p>\n  
\t  (Section \n3.2):\t\tSee Representations and Warranties Certificate of Borrower dated \nNovember 6, 2001, incorporated herein by this reference.<\/p>\n  <\/b>
\t  Prior Trade \n<\/p>\n
\tNames of Borrower  <\/p>\n  
\t  (Section \n3.2):\t\tSee Representations and Warranties Certificate of Borrower dated \nNovember 6, 2001, incorporated herein by this reference. <\/p>\n  <\/b>
\t  Existing \nTrade <\/p>\n
\tNames of Borrower  <\/p>\n  
\t  (Section \n3.2):\t\tSee Representations and Warranties Certificate of Borrower dated \nNovember 6, 2001, incorporated herein by this reference. <\/p>\n  <\/b>
\t  Other \nLocations and <\/b><\/p>\n  
\t  Addresses<\/b> (Section 3.3):\t\tSee Representations and Warranties \nCertificate of Borrower dated November 6, 2001, incorporated herein by this \nreference. <\/p>\n  <\/b>
\t  Material \nAdverse <\/p>\n  
\t  Litigation<\/b> (Section 3.10):\tOn October 3, 2001, Linear Technology \nCorporation filed a lawsuit against against Com21 for breach of contract in the \nSuperior Court of California, County of Santa Clara (Case No. CV 801968).  \nLinear, a supplier of Com21, claims damages of approximately $520,000.<\/p>\n  
<\/p>\n<\/b>
 <\/p>\n
 <\/p>\n  
9.  Other Covenants<\/p>\n  
\t  (Section \n5.1):\tBorrower shall at all times comply with all of the following additional \ncovenants:<\/p>\n
<\/p>
\n\n\n<\/b>
(1)  \tBanking and Investment Account Relationship.  \nBorrower shall at all times maintain its primary banking and investment \naccount relationships with Silicon.  With respect to any deposit accounts or \nsecurities accounts maintained by Borrower at any financial institution other \nthan Silicon, Borrower agrees, upon Silicon's request therefor, to cause such \nother financial institution to execute and deliver to Silicon, in form and \nsubstance satisfactory to Silicon, a Deposit Account Control Agreement or a \nSecurities Account Control Agreement (as the case may be) with respect to all \nsuch accounts maintained by Borrower at such other financial institution.<\/p>\n  
<\/p>\n  <\/b>
 (2) \n\tSubordination of Inside Debt<\/b>.  All present and future indebtedness of \nBorrower to its officers, directors and shareholders ('Inside Debt') \nshall, at all times, be subordinated to the Obligations pursuant to a \nsubordination agreement on Silicon's standard form.  Borrower represents and \nwarrants that there is no Inside Debt presently outstanding, except for the \nfollowing: NONE.  Prior to incurring any Inside Debt in the future, Borrower \nshall cause the person to whom such Inside Debt will be owed to execute and \ndeliver to Silicon a subordination agreement on Silicon's standard form.<\/p>\n  <\/b>
<\/p>\n  
(3)\tPatents, Trademarks \nand Copyrights. Concurrently with the execution of this Agreement, Borrower \nshall execute and deliver to Silicon, on Silicon's standard form(s), any \nsecurity agreement(s) and other documentation which Silicon deems necessary for \nfiling in the United States Patent and Trademark Office, the United States \nCopyright Office, and any other governmental office, with respect to Borrower's \ncopyrights, patents, trademarks and related collateral. Borrower promptly will \nidentify to Silicon in writing and register with the United States Copyright \nOffice (i) any maskworks and computer software that generates Receivables from \nthe sale or licensing thereof or that is otherwise material to the business of \nBorrower (each, a 'Material Copyright') it has, develops or acquires, \nincluding those in Exhibit A to the Intellectual Property Security Agreement, \nwithin 30 days of the date of execution and delivery of this Agreement, and (ii) \nany additional Material Copyright developed or acquired (including significant \nrevisions, additions or improvements to any Material Copyright or revisions, \nadditions or improvements which significantly improve the functionality of any \nMaterial Copyright) after the date of execution and delivery of this Agreement, \nconcurrently with the required delivery of the quarterly unaudited financial \nstatements of Borrower under Section 6(7) of the Schedule, and Borrower will \nexecute such additional security agreement(s) and other documentation which \nSilicon deems necessary for filing with respect to such additional registered \ncopyright(s).  Borrower will promptly notify Silicon upon Borrower's filing of \nany application or registration of any patent or trademark rights with the \nUnited States Patent and Trademark Office and Borrower will execute and deliver \nany and all instruments and documents as Bank may require to evidence or perfect \nBank's security interest in such application or registration. Borrower will:  \n(i) protect, defend and maintain the validity and enforceability of the \ncopyrights, patents, and trademarks; (ii) promptly advise Bank in writing of \nmaterial infringements of the copyrights, patents, or trademarks of which \nBorrower is or becomes aware; and (iii) not allow any material item of \ncopyrights, patents, or trademarks to be abandoned, forfeited or dedicated to \nthe public without Bank's written consent.<\/p>\n  <\/b>
<\/p>\n  
(4)\tLandlord \nAgreement. With respect to any leased premises of Borrower, Borrower shall, \npromptly upon Silicon's request therefor, deliver to Silicon a landlord \nagreement (in form and substance satisfactory to Silicon) duly executed by the \nlessor of such leased premises.<\/p>\n  
<\/p>\n  <\/b>
(5)\tBailee \nAgreement. With respect to any goods of Borrower in the possession of any \nwarehouseman or other bailee, Borrower shall, promptly upon Silicon's request \ntherefor, deliver to Silicon a bailee agreement (in form and substance \nsatisfactory to Silicon) duly executed by such warehouseman or other bailee.<\/p>\n  
<\/p>\n  <\/b>
(6)\tStock \nPledge.  Borrower shall concurrently execute and deliver a Pledge Agreement \nto Silicon, on Silicon's standard form, granting Silicon a security interest in \n100% of the outstanding stock of each Subsidiary of Borrower to secure all of \nthe Obligations. Borrower shall cause said Pledge Agreement to continue in full \nforce and effect at all times during the term of this Agreement with respect to \n100% of the outstanding stock of each Subsidiary now outstanding or hereafter \nissued and 100% of all options and warrants to acquire stock of each Subsidiary \nhereafter issued.  Borrower represents and warrants that there are no \noutstanding options or warrants to acquire stock of any Subsidiary.  Borrower \nshall deliver to Silicon possession of the original stock certificates \nrespecting all of the issued and outstanding shares of stock of each such \nSubsidiary, together with stock powers with respect thereto endorsed in blank.  \nAs used in this Agreement, the term \"Subsidiary\" means, with respect to any \nPerson, a corporation, partnership, limited liability company, or other entity \nin which that Person directly or indirectly owns or controls the shares of \ncapital stock or other equity interests having ordinary voting power to elect a \nmajority of the board of directors (or appoint other comparable managers) of \nsuch corporation, partnership, limited liability company, or other entity.<\/p>\n  
<\/p>\n<\/b>
 <\/p><\/dir>\n<\/dir>\n\n  
10.  CONDITIONS PRECEDENT \n<\/p>\n  
<\/p>\n\n  
In addition to the other \nconditions precedent set forth in this Agreement, the making of the initial Loan \nis subject to the following additional conditions:<\/p>\n  
<\/p>\n  
(A) Silicon shall have \nreceived lien searches listing all effective financing statements which name \nBorrower (or any predecessor corporation or any tradename thereof or any seller \nof assets acquired by Borrower outside of the ordinary course of business) as \ndebtor that are filed in the applicable filing offices with respect to Borrower, \nnone of which financing statements shall cover any of the Collateral of \nBorrower, except (i) Permitted Liens, (ii) financing statements as to which \nSilicon has received duly executed authorization by the applicable secured party \nto file executed termination statements or partial release statements in form \nand substance satisfactory to Silicon, or (iii) as otherwise agreed in writing \nby Silicon. Without limiting the generality of the foregoing, Silicon shall have \nreceived (x) a written authorization by NTFC Capital Corporation to file \nappropriate termination statements in respect of NTFC Capital Corporation 's \nUCC-1 filings covering any property of Borrower, or (y) evidence satisfactory to \nSilicon that NTFC Capital Corporation does not have any financing statements \ncovering any property of Borrower other than the specific Equipment of Borrower \nthat is leased by NTFC Capital Corporation (as lessor) to Borrower (as lessee) \nand the specific software that is licensed or sublicensed by NTFC Capital \nCorporation (as licensor or sublicensor) to Borrower (as licensee or \nsublicensee), and the proceeds thereof, or (z) a written authorization by NTFC \nCapital Corporation to file appropriate partial releases or amendments in \nrespect of NTFC Capital Corporation 's UCC-1 filings to conform the collateral \ndescriptions therein to the property described in the foregoing clause (y).  \nBorrower represents and warrants that Borrower does not claim any interest in \nthe property described in that certain UCC-1 Financing Statement, listing\nBIT-COM, INC. as debtor and Tri Counties Bank as secured party, filed with the \nCalifornia Secretary of State on May 22, 1997 as File No. 9714860559.<\/p>\n
<\/p>\n
(B) Silicon shall have received a letter, in form and \nsubstance satisfactory to Bank, duly executed and delivered by Comerica Bank to \nSilicon (the \"Payoff Letter\") respecting the amount necessary to repay in full \nall of the obligations of Borrower owing to Comerica Bank and authorizing the \nfiling of executed UCC termination statements and evidencing the termination by \nComerica Bank of its Liens in and to the properties and assets of Borrower.<\/p>\n
<\/p>\n
(C) Without limiting the generality of Section 9(1) of this \nSchedule, Borrower shall deliver to Silicon either (y) evidence that Borrower \nhas closed its deposit accounts currently maintained with Comerica Bank \n(collectively, the \"Comerica Deposit Account\") and transferred all amounts on \ndeposit therein to deposit accounts maintained at Silicon, or (z) a Deposit \nAccount Control Agreement, in form and substance satisfactory to Silicon, with \nrespect to the Comerica Deposit Account.<\/p>\n
<\/p>\n
(D) Each of (i) VOS [located at 930 Wrigley Way, Milpitas, \nCalifornia _______], (ii) Flite Pak [located at 15700-Z Export Plaza, Houston, \nTexas 77032], (iii) All Van Transportation [located at 1096 Pecten Court, \nMilpitas, California 95035], and (iv) Windart Express LLC [located at 8621 \nBellanca Avenue, Suite 103, Los Angeles, California 90045], shall execute and \ndeliver to Silicon, on Silicon's standard form (with such changes thereto as \nshall be acceptable to Silicon in its discretion), a bailee agreement containing \nsuch terms and conditions as Silicon may require.<\/p>\n    
<\/p>\n<\/dir>\n\n
[Signature page immediately follows]<\/p>\n
<\/p>\n    <\/b>
IN \nWITNESS WHEREOF, the parties hereto have caused this Schedule to Loan and \nSecurity Agreement to be executed and delivered as of the date first above \nwritten.<\/p>\n  
<\/p>\n\n
\n  
Borrower:<\/p>
\n\n
COM21, INC.<\/p>\n
<\/p>\n
 <\/p>\n
By_______________________________<\/p>\n
\tPresident or Vice President<\/p>\n
<\/p>\n
By_______________________________<\/p><\/dir>\n\n
\t\tSecretary or Ass't Secretary  <\/p><\/td>\n
\n  
Silicon:<\/p>\n
SILICON VALLEY BANK<\/p>\n
<\/p>\n
 <\/p>\n
By_______________________________<\/p>\n
Title_____________________________  <\/p><\/td>\n<\/tr>\n<\/table>\n\n
\n
\n
\n
\n
\n
\n
\n\n  
<\/p>\n    <\/b>
Silicon Valley \nBank     <\/i><\/p>\n    
Certified Resolution and \nIncumbency Certificate<\/p>\n    \n
\n\n    
Borrower:\tCOM21, \nINC.,<\/p>\n
 a corporation organized under the laws of the State of Delaware<\/p>\n<\/dir>\n\n
Date:\t\t\tNovember __, 2001<\/p>\n    
I, the \nundersigned, Secretary or Assistant Secretary of the above-named borrower, a \ncorporation organized under the laws of the state set forth above, do hereby \ncertify that the following is a full, true and correct copy of resolutions duly \nand regularly adopted by the Board of Directors of said corporation as required \nby law, and by the by-laws of said corporation, and that said resolutions are \nstill in full force and effect and have not been in any way modified, repealed, \nrescinded, amended or revoked.<\/p>
\n\n
resolved, that this corporation borrow from Silicon Valley \nBank (\"Silicon\"), from time to time, such sum or sums of money as, in the \njudgment of the officer or officers hereinafter authorized hereby, this \ncorporation may require.<\/p>\n
resolved further, that any officer of this corporation be, and he or she is \nhereby authorized, directed and empowered, in the name of this corporation, to \nexecute and deliver to Silicon, and Silicon is requested to accept, the loan \nagreements, security agreements, notes, financing statements, and other \ndocuments and instruments providing for such loans and evidencing and\/or \nsecuring such loans, with interest thereon, and said authorized officers are \nauthorized from time to time to execute renewals, extensions and\/or amendments \nof said loan agreements, security agreements, and other documents and \ninstruments.<\/p>\n
resolved further, that said authorized officers be and they \nare hereby authorized, directed and empowered, as security for any and all \nindebtedness of this corporation to Silicon, whether arising pursuant to this \nresolution or otherwise, to grant, transfer, pledge, mortgage, assign, or \notherwise hypothecate to Silicon, or deed in trust for its benefit, any property \nof any and every kind, belonging to this corporation, including, but not limited \nto, any and all real property, accounts, inventory, equipment, general \nintangibles, instruments, documents, chattel paper, notes, money, deposit \naccounts, furniture, fixtures, goods, and other property of every kind, and to \nexecute and deliver to Silicon any and all grants, transfers, trust receipts, \nloan or credit agreements, pledge agreements, mortgages, deeds of trust, \nfinancing statements, security agreements and other hypothecation agreements, \nwhich said instruments and the note or notes and other instruments referred to \nin the preceding paragraph may contain such provisions, covenants, recitals and \nagreements as Silicon may require and said authorized officers may approve, and \nthe execution thereof by said authorized officers shall be conclusive evidence \nof such approval.<\/p>\n
resolved further, that Silicon may conclusively rely upon a certified copy of \nthese resolutions and a certificate of the Secretary or Ass't Secretary of this \ncorporation as to the officers of this corporation and their offices and \nsignatures, and continue to conclusively rely on such certified copy of these \nresolutions and said certificate for all past, present and future transactions \nuntil written notice of any change hereto or thereto is given to Silicon by this \ncorporation by certified mail, return receipt requested.<\/p>\n    
<\/p><\/dir>\n\n    
The \nundersigned further hereby certifies that the following persons are the duly \nelected and acting officers of the corporation named above as borrower and that \nthe following are their actual signatures:<\/p>  \n\n
\n  <\/u>
NAMES  <\/p><\/td>\n
\n  <\/u>
OFFICE(S)  <\/p><\/td>\n
\n  <\/u>
ACTUAL \nSIGNATURES  <\/p><\/td>\n<\/tr>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  <\/b>
<\/p>\n
x_________________________  <\/p><\/td>\n<\/tr>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  <\/b>
<\/p>\n
x_________________________  <\/p><\/td>\n<\/tr>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  <\/b>
<\/p>\n
x_________________________  <\/p><\/td>\n<\/tr>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  
<\/p>\n
__________________________  <\/p><\/td>\n
\n  <\/b>
<\/p>\n
x_________________________  <\/p><\/td>\n<\/tr>\n<\/table>\n\n  <\/u>
<\/p>\n
in witness whereof, I have hereunto set my hand as such \nSecretary or Assistant Secretary on the date set forth above.<\/p>\n\n
___________________________________________<\/p>\n\n    
\t\t\t\t\t\t\t  \n  Secretary or Assistant Secretary
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