{"id":41135,"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-invision.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"loan-and-security-agreement-silicon-valley-bank-and-invision","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/loan-and-security-agreement-silicon-valley-bank-and-invision.html","title":{"rendered":"Loan and Security Agreement – Silicon Valley Bank and InVision Technologies Inc."},"content":{"rendered":"\n-------------------------------------------------------------------------------\n\n INVISION TECHNOLOGIES, INC.\n\n LOAN AND SECURITY AGREEMENT\n--------------------------------------------------------------------------------\n\n\n TABLE OF CONTENTS\n\n PAGE\n\n1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . 1.\n 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1.\n 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . .10.\n\n2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . .10.\n 2.1 Advances.. . . . . . . . . . . . . . . . . . . . . . . . . . .10.\n 2.2 Overadvances.. . . . . . . . . . . . . . . . . . . . . . . . .13.\n 2.3 Interest Rates, Payments, and Calculations.. . . . . . . . . .13.\n 2.4 Crediting Payments.. . . . . . . . . . . . . . . . . . . . . .13.\n 2.5 Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.\n 2.6 Additional Costs.. . . . . . . . . . . . . . . . . . . . . . .14.\n 2.7 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15.\n\n3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . .15.\n 3.1 Conditions Precedent to Initial Advance. . . . . . . . . . . .15.\n 3.2 Conditions Precedent to all Advances . . . . . . . . . . . . .15.\n\n4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . .16.\n 4.1 Grant of Security Interest.. . . . . . . . . . . . . . . . . .16.\n 4.2 Delivery of Additional Documentation Required. . . . . . . . .16.\n 4.3 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . .16.\n\n5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . .16.\n 5.1 Due Organization and Qualification.. . . . . . . . . . . . . .16.\n 5.2 Due Authorization; No Conflict.. . . . . . . . . . . . . . . .16.\n 5.3 No Prior Encumbrances. . . . . . . . . . . . . . . . . . . . .17.\n 5.4 Bona Fide Eligible Accounts. . . . . . . . . . . . . . . . . .17.\n 5.5 Merchantable Inventory.. . . . . . . . . . . . . . . . . . . .17.\n 5.6 Intellectual Property. . . . . . . . . . . . . . . . . . . . .17.\n 5.7 Name; Location of Chief Executive Office.. . . . . . . . . . .17.\n 5.8 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . .17.\n 5.9 No Material Adverse Change in Financial Statements.. . . . . .18.\n 5.10 Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . .18.\n 5.11 Regulatory Compliance. . . . . . . . . . . . . . . . . . . . .18.\n 5.12 Environmental Condition. . . . . . . . . . . . . . . . . . . .18.\n 5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18.\n 5.14 Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . .19.\n 5.15 Government Consents. . . . . . . . . . . . . . . . . . . . . .19.\n 5.16 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . .19.\n\n6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . .19.\n 6.1 Good Standing. . . . . . . . . . . . . . . . . . . . . . . . .19.\n\n\n i.\n\n TABLE OF CONTENTS\n (CONTINUED)\n\n PAGE\n\n 6.2 Government Compliance. . . . . . . . . . . . . . . . . . . . .19.\n 6.3 Financial Statements, Reports, Certificates. . . . . . . . . .19.\n 6.4 Inventory; Returns.. . . . . . . . . . . . . . . . . . . . . .20.\n 6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20.\n 6.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .21.\n 6.7 Principal Depository.. . . . . . . . . . . . . . . . . . . . .21.\n 6.8 Adjusted Quick Ratio.. . . . . . . . . . . . . . . . . . . . .21.\n 6.9 Debt-Net Worth Ratio.. . . . . . . . . . . . . . . . . . . . .21.\n 6.10 Tangible Net Worth.. . . . . . . . . . . . . . . . . . . . . .21.\n 6.11 Profitability. . . . . . . . . . . . . . . . . . . . . . . . .21.\n 6.12 Registration of Intellectual Property Rights.. . . . . . . . .21.\n 6.13 Further Assurances.. . . . . . . . . . . . . . . . . . . . . .22.\n\n7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . .22.\n 7.1 Dispositions.. . . . . . . . . . . . . . . . . . . . . . . . .22.\n 7.2 Change in Business.. . . . . . . . . . . . . . . . . . . . . .23.\n 7.3 Mergers or Acquisitions. . . . . . . . . . . . . . . . . . . .23.\n 7.4 Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . .23.\n 7.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . .23.\n 7.6 Distributions. . . . . . . . . . . . . . . . . . . . . . . . .23.\n 7.7 Investments. . . . . . . . . . . . . . . . . . . . . . . . . .23.\n 7.8 Transactions with Affiliates.. . . . . . . . . . . . . . . . .23.\n 7.9 Intellectual Property Agreements.. . . . . . . . . . . . . . .23.\n 7.10 Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . .24.\n 7.11 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . .24.\n 7.12 Compliance.. . . . . . . . . . . . . . . . . . . . . . . . . .24.\n\n8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . .24.\n 8.1 Payment Default. . . . . . . . . . . . . . . . . . . . . . . .24.\n 8.2 Covenant Default.. . . . . . . . . . . . . . . . . . . . . . .24.\n 8.3 Material Adverse Change. . . . . . . . . . . . . . . . . . . .25.\n 8.4 Attachment . . . . . . . . . . . . . . . . . . . . . . . . . .25.\n 8.5 Insolvency.. . . . . . . . . . . . . . . . . . . . . . . . . .25.\n 8.6 Other Agreements.. . . . . . . . . . . . . . . . . . . . . . .25.\n 8.7 Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . .25.\n 8.8 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . .25.\n 8.9 Misrepresentations.. . . . . . . . . . . . . . . . . . . . . .25.\n\n9. BANK'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . .26.\n 9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . . . .26.\n\n ii.\n\n TABLE OF CONTENTS\n (CONTINUED)\n\n PAGE\n\n 9.2 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . .27.\n 9.3 Accounts Collection. . . . . . . . . . . . . . . . . . . . . .28.\n 9.4 Bank Expenses. . . . . . . . . . . . . . . . . . . . . . . . .28.\n 9.5 Bank's Liability for Collateral. . . . . . . . . . . . . . . .28.\n 9.6 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . .28.\n 9.7 Demand; Protest. . . . . . . . . . . . . . . . . . . . . . . .28.\n\n10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29.\n\n11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . .29.\n\n12. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .29.\n 12.1 Successors and Assigns.. . . . . . . . . . . . . . . . . . . .29.\n 12.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . .30.\n 12.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . .30.\n 12.4 Severability of Provisions.. . . . . . . . . . . . . . . . . .30.\n 12.5 Amendments in Writing, Integration.. . . . . . . . . . . . . .30.\n 12.6 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . .30.\n 12.7 Survival.. . . . . . . . . . . . . . . . . . . . . . . . . . .30.\n 12.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . .30.\n\n iii.\n\n\n \n This LOAN AND SECURITY AGREEMENT is entered into as of February 20, 1997,\nby and between SILICON VALLEY BANK (\"Bank\") and INVISION TECHNOLOGIES, INC.\n(\"Borrower\").\n RECITALS\n\n Borrower wishes to obtain credit from time to time from Bank, and Bank\ndesires to extend credit to Borrower. This Agreement sets forth the terms on\nwhich Bank will advance credit to Borrower, and Borrower will repay the amounts\nowing to Bank. \n AGREEMENT\n\n The parties agree as follows: \n\n 1. DEFINITIONS AND CONSTRUCTION \n\n 1.1 DEFINITIONS. As used in this Agreement, the following terms\nshall have the following definitions:\n\n \"ACCOUNTS\" means all presently existing and hereafter\narising accounts, contract rights, and all other forms of obligations owing to\nBorrower arising out of the sale or lease of goods (including, without\nlimitation, the licensing of software and other technology) or the rendering of\nservices by Borrower, whether or not earned by performance, and any credit\ninsurance, guaranties, and other security therefor, as well as all merchandise\nreturned to or reclaimed by Borrower and Borrower's Books relating to any of the\nforegoing. \n\n \"ADVANCE\" or \"ADVANCES\" means an Advance under the Revolving\nFacility. \n\n \"AFFILIATE\" means, with respect to any Person, any Person\nthat owns or controls directly or indirectly such Person, any Person that\ncontrols or is controlled by or is under common control with such Person, and\neach of such Person's senior executive officers, directors, and partners. \n \n\n \"BANK EXPENSES\" means all: reasonable costs or expenses\n(including reasonable attorneys' fees and expenses) incurred in connection with\nthe preparation, negotiation,administration, and enforcement of the Loan\nDocuments; and Bank's reasonable attorneys' fees and expenses incurred in\namending, enforcing or defending the Loan Documents (including fees and expenses\nof appeal), whether or not suit is brought.\n\n \"BORROWER'S BOOKS\" means all of Borrower's books and records\nincluding: ledgers; records concerning Borrower's assets or liabilities, the\nCollateral, business operations or financial condition; and all computer\nprograms, or tape files, and the equipment, containing such information. \n\n \"BORROWING BASE\" has the meaning set forth in Section 2.1\nhereof. \n 1.\n\n\n \"BUSINESS DAY\" means any day that is not a Saturday, Sunday,\nor other day on which banks in the State of California are authorized or\nrequired to close.\n\n \"CLOSING DATE\" means the date of this Agreement. \n\n \"CODE\" means the California Uniform Commercial Code.\n \n \"COLLATERAL\" means the property described on EXHIBIT A\nattached hereto. \n\n \"COMMITTED LINE\" means Four Million Five Hundred Thousand\nDollars ($4,500,000). \n\n \"CONTINGENT OBLIGATION\" means, as applied to any Person, any\ndirect or indirect liability, contingent or otherwise, of that Person with\nrespect to (i) any indebtedness, lease, dividend, letter of credit or other\nobligation of another, including, without limitation, any such obligation\ndirectly or indirectly guaranteed, endorsed, co-made or discounted or sold with\nrecourse by that Person, or in respect of which that Person is otherwise\ndirectly or indirectly liable; (ii) any obligations with respect to undrawn\nletters of credit issued for the account of that Person; and (iii) all\nobligations arising under any interest rate, currency or commodity swap\nagreement, interest rate cap agreement, interest rate collar agreement, or other\nagreement or arrangement designated to protect a Person against fluctuation in\ninterest rates, currency exchange rates or commodity prices; provided, however,\nthat the term Contingent Obligation\" shall not include endorsements for\ncollection or deposit in the ordinary course of business. The amount of any\nContingent Obligation shall be deemed to be an amount equal to the stated or\ndetermined amount of the primary obligation in respect of which such Contingent\nObligation is made or, if not stated or determinable, the maximum reasonably\nanticipated liability in respect thereof as determined by such Person in good\nfaith; provided, however, that such amount shall not in any event exceed the\nmaximum amount of the obligations under the guarantee or other support\narrangement. \n \n \"COPYRIGHTS\" means any and all copyright rights, copyright\napplications, copyright registrations and like protections in each work or\nauthorship and derivative work thereof, whether published or unpublished and\nwhether or not the same also constitutes a trade secret, now or hereafter\nexisting, created, acquired or held. \n\n \"CURRENT ASSETS\" means, as of any applicable date, all\namounts that should, in accordance with GAAP, be included as current assets on\nthe consolidated balance sheet of Borrower and its Subsidiaries as at such date.\n \n \"CURRENT LIABILITIES\" means, as of any applicable date, all\namounts that should, in accordance with GAAP, be included as current liabilities\non the consolidated balance sheet of Borrower and its Subsidiaries, as at such \ndate, plus, to the extent not already included therein, all outstanding Advances\nmade under this Agreement, including all Indebtedness that is payable upon \ndemand or within one year from the date of determination thereof unless such \n\n 2.\n\n\nIndebtedness is renewable or extendable at the option of Borrower or any \nSubsidiary to a date more than one year from the date of determination, but \nexcluding Subordinated Debt. \n\n \"DAILY BALANCE\" means the amount of the Obligations owed at\nthe end of a given day. \n\n \"ELIGIBLE ACCOUNTS\" means those Accounts that arise in the\nordinary course of Borrower's business that comply with all of Borrower's\nrepresentations and warranties to Bank set forth in Section 5.4; PROVIDED that\nstandards of eligibility may be fixed and revised from time to time by Bank in\nBank's reasonable judgment and upon notification thereof to Borrower in\naccordance with the provisions hereof. Unless otherwise agreed to by Bank,\nEligible Accounts shall not include the following: \n\n 1.1.1 Accounts that the account debtor has failed to pay\nwithin ninety (90) days of invoice date; \n\n 1.1.2 Accounts with respect to an account debtor, fifty\npercent (50%) of whose Accounts the account debtor has failed to pay within\nninety (90) days of invoice date;\n\n 1.1.3 Accounts with respect to which the account debtor is\nan officer, employee, or agent of Borrower; \n\n 1.1.4 Accounts with respect to which goods are placed on\nconsignment, guaranteed sale, sale or return, sale on approval, bill and hold, \nor other terms by reason of which the payment by the account debtor may be\nconditional; \n\n 1.1.5 Accounts with respect to which the account debtor is\nan Affiliate of Borrower; \n\n 1.1.6 Accounts with respect to which the account debtor\ndoes not have its principal place of business in the United States; \n\n 1.1.7 Accounts with respect to which the account debtor is\nthe United States or any department, agency, or instrumentality of the United\nStates, except for those Accounts of the United States or any department, agency\nor instrumentality thereof as to which the payee has assigned its rights to\npayment thereof to Bank and the assignment has been acknowledged, pursuant to\nthe Assignment of Claim Section Act of 1940, as amended (31 U.S.C. Section\n3727); \n\n 1.1.8 Accounts with respect to which Borrower is liable to\nthe account debtor for goods sold or services rendered by the account debtor to\nBorrower, but only to the extent of any amounts owing to the account debtor\nagainst amounts owed to Borrower; \n\n 1.1.9 Accounts with respect to an account debtor,\nincluding Subsidiaries and Affiliates, whose total obligations to Borrower\nexceed twenty-five percent (25%) of all\n\n 3.\n\n\nAccounts, to the extent such obligations exceed the aforementioned percentage,\nexcept with respect to the United States Federal Aviation Administration, as to\nwhich the percentage shall be one hundred percent (100%) subject to subsection\n(g) hereof, and except as approved in writing by Bank;\n\n 1.1.10 Accounts with respect to which the account debtor\ndisputes liability or makes any claim with respect thereto as to which Bank\nbelieves, in its reasonable discretion, that there may be a basis for dispute\n(but only to the extent of the amount subject to such dispute or claim), or is\nsubject to any Insolvency Proceeding, or becomes insolvent, or goes out of\nbusiness; and \n \n 1.1.11 Accounts the collection of which Bank reasonably\ndetermines to be doubtful.\n\n \"EQUIPMENT\" means all present and future machinery,\nequipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and\nattachments in which Borrower has any interest. \n\n \"ERISA\" means the Employment Retirement Income Security Act\nof 1974, as amended, and the regulations thereunder. \n\n \"GAAP\" means generally accepted accounting principles as in\neffect from time to time. \n\n \"INDEBTEDNESS\" means (a) all indebtedness for borrowed money\nor the deferred purchase price of property or services, including without\nlimitation reimbursement and other obligations with respect to surety bonds and\nletters of credit, (b) all obligations evidenced by notes, bonds, debentures or\nsimilar instruments, (c) all capital lease obligations and (d) all Contingent\nObligations. \n\n \"INSOLVENCY PROCEEDING\" means any proceeding commenced by or\nagainst any person or entity under any provision of the United States Bankruptcy\nCode, as amended, or under any other bankruptcy or insolvency law, including\nassignments for the benefit of creditors, formal or informal moratoria,\ncompositions, extension generally with its creditors, or proceedings seeking\nreorganization, arrangement, or other relief. \n\n\n \"INTELLECTUAL PROPERTY COLLATERAL\" means\n\n (a) Copyrights, Trademarks and Patents;\n\n (b) Any and all trade secrets, and any and all intellectual\nproperty rights in computer software and computer software products now or\nhereafter existing, created, acquired or held; \n\n 4.\n\n\n (c) Any and all design rights which may be available to\nBorrower now or hereafter existing, created, acquired or held; \n\n (d) Any and all claims for damages by way of past,\npresent and future infringement of any of the rights included above, with the\nright, but not the obligation, to sue for and collect such damages for said use\nor infringement of the intellectual property rights identified above; \n (e) All licenses or other rights to use any of the Copyrights, Patents or\nTrademarks, and all license fees and royalties arising, from such use to the\nextent permitted by such license or rights;\n\n (f) All amendments, renewals and extensions of any of\nthe Copyrights, Trademarks or Patents; and\n\n (g) All proceeds and products of the foregoing,\nincluding without limitation all payments under insurance or any indemnity or\nwarranty payable in respect of any of the foregoing. \n\n \"INVENTORY\" means all present and future inventory in which\nBorrower has any interest, including merchandise, raw materials, parts,\nsupplies, packing and shipping materials, work in process and finished products\nintended for sale or lease or to be furnished under a contract of service, of\nevery kind and description now or at any time hereafter owned by or in the\ncustody or possession, actual or constructive, of Borrower, including such\ninventory as is temporarily out of its custody or possession or in transit and\nincluding any returns upon any accounts or other proceeds, including insurance\nproceeds, resulting from the sale or disposition of any of the foregoing and any\ndocuments of title representing any of the above, and Borrower's Books relating\nto any of the foregoing. \n \n \"INVESTMENT\" means any beneficial ownership of (including\nstock, partnership interest or other securities) any Person, or any loan, \nadvance or capital contribution to any Person. \n\n \"IRC\" means the Internal Revenue Code of 1986, as amended,\nand the regulations thereunder. \n\n \"LIEN\" means any mortgage, lien, deed of trust, charge,\npledge, security interest or other encumbrance. \n\n \"LOAN DOCUMENTS\" means, collectively, this Agreement, any\nnote or notes executed by Borrower, and any other agreement entered into between\nBorrower and Bank in connection with this Agreement, all as amended or extended\nfrom time to time. \n\n \"MATERIAL ADVERSE EFFECT\" means a material adverse effect on\n(i) the business. operations or condition (financial or otherwise) of Borrower\nand its Subsidiaries taken\n\n 5.\n\n\nas a whole or (ii) the ability of Borrower to repay the Obligations or otherwise\nperform its obligations under the Loan Documents.\n\n\n \"NEGOTIABLE COLLATERAL\" means all of Borrower's present and\nfuture letters of credit of which it is a beneficiary, notes, drafts,\ninstruments, securities, documents of title, and chattel paper, and Borrower's\nBooks relating to any of the foregoing. \n\n \"OBLIGATIONS\" means all debt, principal, interest, Bank\nExpenses and other amounts owed to Bank by Borrower pursuant to this Agreement\nor any other agreement, whether absolute or contingent, due or to become due,\nnow existing or hereafter arising, including any interest that accrues after the\ncommencement of an Insolvency Proceeding and including any debt, liability, or\nobligation owing from Borrower to others that Bank may have obtained by\nassignment or otherwise. \n\n \"PATENTS means all patents, patent applications and like\nprotections including without limitation improvements, divisions, continuations,\nrenewals, reissues, extensions and continuations-in-part of the same. \n\n \"PERIODIC PAYMENTS\" means all installments or similar \nrecurring payments that Borrower may now or hereafter become obligated to pay \nto Bank pursuant to the terms and provisions of any instrument, ore, agreement \nnow or hereafter in existence between Borrower and Bank. \n\n \"PERMITTED INDEBTEDNESS\" means: \n\n (a) Indebtedness of Borrower in favor of Bank arising\nunder this Agreement or any other Loan Document; \n\n (b) Indebtedness existing on the Closing Date and\ndisclosed in the Schedule; \n\n (c) Subordinated Debt;\n\n (d) Indebtedness to trade creditors incurred in the\nordinary course of business; \n\n\n (e) Leases of Equipment pursuant to sale - leaseback\ntransactions, provided that sales of such leased-back equipment shall not \nexceed, in the aggregate, Two Million Dollars ($2,000,000) in any fiscal year;\n\n (f) Capital leases or indebtedness incurred solely to\npurchase equipment which is secured in accordance with clause (c) of \"Permitted\nLiens\" below and is not in excess of the lesser of the purchase price of such\nequipment or the fair market value of such equipment on the date of acquisition;\n \n 6.\n\n\n (g) Indebtedness secured by Permitted Liens; and \n \n\n (h) Extensions, refinancings, modifications, amendments and\nrestatements of any of items of Permitted Indebtedness (a) through (g) above,\nprovided that the principal amount thereof is not increased or the terms thereof\nare not modified to impose more burdensome terms upon Borrower or its\nSubsidiary, as the case may be. \n\n\n \"PERMITTED INVESTMENT\" means:\n\n (a) Investments existing on the Closing Date disclosed in\nthe Schedule; and \n (b) (i) marketable direct obligations issued or\nunconditionally guaranteed by the United States of America or any agency or any\nState thereof maturing within one (1) year from the date of acquisition thereof,\n(ii) commercial paper maturing no more than one (1) year from the date of\ncreation thereof and currently having the highest rating obtainable from either\nStandard & Poor's Corporation or Moody's Investors Service, Inc., and\n(iii) certificates of deposit maturing no more than one (1) year from the date \nof investment therein issued by Bank. \n\n (c) Investments consisting of notes receivable of, or\nprepaid royalties and other credit extensions to, customers and suppliers who\nare not Affiliates, in the ordinary course of business; provided that this\nparagraph (c) shall not apply to Investments by Borrower in any Subsidiary; \n \n\n (d) Investments consisting of the endorsement of\nnegotiable instruments for deposit or collection or similar transaction in the\nordinary course of business; \n\n (e) Investments (including debt obligations) received in\nconnection with the bankruptcy or reorganization of customers or suppliers and\nin settlement of delinquent obligations of, and other disputes with, customers\nor suppliers arising in the ordinary course of business; and \n\n (f) Investments consisting of (i) compensation of\nemployees, officers and directors of Borrower or its Subsidiaries so long as the\nBoard of Directors of Borrower determines that such compensation is in the best\ninterests of Borrower, (ii) travel advances, employee relocation loans and other\nemployee loans and advances in the ordinary course of business, (iii) loans to\nemployees, officers or directors relating to the purchase of equity securities\nof Borrower or its Subsidiaries pursuant to employee stock purchase plans or\nagreements approved by Borrower's Board of Directors in an aggregate amount not\nin excess of Two Hundred Fifty Thousand Dollars ($250,000) outstanding at any\ntime; (iv) other loans to officers and employees approved by the Board of\nDirectors in an aggregate amount not in excess of Two Hundred Fifty Thousand\nDollars ($250,000) outstanding at any time; and\n\n (g) Other Investments (including the creation of any\nSubsidiary) aggregating not in excess of Two Hundred Fifty Thousand Dollars\n($250,000) at any time. \n\n 7.\n\n\n \"PERMITTED LIENS\" means the following: \n\n (a) Any Liens existing on the Closing Date and disclosed\nin the Schedule or arising under this Agreement or the other Loan Documents;\n \n (b) Liens for taxes, fees, assessments or other\ngovernmental charges or levies, either not delinquent or being contested in good\nfaith by appropriate proceedings, PROVIDED the same have no priority over any of\nBank's security interests;\n\n (c) Liens (i) upon or in any equipment acquired or held\nby Borrower or any of its Subsidiaries to secure the purchase price of such\nequipment or indebtedness incurred solely for the purpose of financing the\nacquisition of such equipment, or (ii) existing on such equipment at the time of\nits acquisition, PROVIDED that the Lien is confined solely to the property so\nacquired and improvements thereon, and the proceeds of such equipment; \n\n (d) Liens on Equipment leased by Borrower or any\nSubsidiary pursuant to an operating or capital lease in the ordinary course of\nbusiness (including proceeds thereof and accessions thereto) incurred solely\nfor the purpose of financing the lease of such Equipment (including Liens\npursuant to leases permitted pursuant to Section 7.1 and Liens arising from UCC\nfinancing statements regarding leases permitted by this Agreement); \n\n (e) Liens arising from judgments, decrees or attachments\nin circumstances not constituting an Event of Default under Section 8.8; \n\n (f) Easements, reservations, rights-of-way,\nrestrictions, minor defects or irregularities in title and other similar charges\nor encumbrances affecting real property not constituting a Material Adverse\nEffect; \n (g) Liens in favor of customs and revenue authorities\narising as a matter of law to secure payments of customs duties in connection\nwith the importation of goods; \n\n (h) Liens that are not prior to the Lien of Bank which\nconstitute rights of set-off of a customary nature or banker's Liens with\nrespect to amounts on deposit, whether arising by operation of law or by\ncontract, in connection with arrangement entered in to with banks in the\nordinary course of business; and \n\n (i) Liens incurred in connection with the extension,\nrenewal or refinancing of the indebtedness secured by Liens of the type\ndescribed in clauses (a) through (c) above, PROVIDED that any extension, renewal\nor replacement Lien shall be limited to the property encumbered by the existing\nLien and the principal amount of the indebtedness being extended,renewed or\nrefinanced does not increase. \n\n \"PERSON\" means any individual, sole proprietorship,\npartnership, limited liability company, joint venture, trust, unincorporated\norganization, association, corporation,\n\n 8.\n\n\ninstitution, public benefit corporation, firm, joint stock company, estate,\nentity or governmental agency.\n\n \"PRIME RATE\" means the variable rate of interest, per annum,\nmost recently announced by Bank, as its \"prime rate,\" whether or not such \nannounced rate is the lowest rate available from Bank. \n\n \"QUICK ASSETS\" means, at any date as of which the amount\nthereof shall be determined, the consolidated cash, cash-equivalents, accounts\nreceivable and investments, with maturities not to exceed 90 days, of Borrower\ndetermined in accordance with GAAP. \n\n \"RESPONSIBLE OFFICER\" means each of the Chief Executive\nOfficer, the Chief Financial Officer and the Controller of Borrower. \n\n \"REVOLVING MATURITY DATE\" means the date immediately \npreceding the first anniversary of the Closing Date.\n\n \"REVOLVING FACILITY\" means the facility under which Borrower\nmay request Bank to issue cash advances, as specified in Section 2.l hereof. \n \n\n \"SCHEDULE\" means the schedule of exceptions attached hereto.\n \n \"SUBORDINATED DEBT\" means any debt incurred by Borrower that\nis subordinated to the debt owing by Borrower to Bank on terms acceptable to\nBank (and identified as being such by Borrower and Bank). \n\n \"SUBSIDIARY\" means any corporation or partnership in which\n(i) any general partnership interest or (ii) more than 50% of the stock of which\nby the terms thereof ordinary voting' power to elect the Board of Directors,\nmanagers or trustees of the entity shall, at the time as of which any\ndetermination is being made, be owned by Borrower, either directly or through an\nAffiliate. \n\n \"TANGIBLE NET WORTH\" means at any date as of which the\namount thereof shall be determined, the consolidated total assets of Borrower\nand its Subsidiaries MINUS, without duplication, (i) the sum of any amounts\nattributable to (a) goodwill, (b) intangible items such as unamortized debt\ndiscount and expense, patents, trade and service marks and names, copyrights and\nresearch and development expenses except prepaid expenses, and (c) all reserves\nnot already deducted from assets, AND (ii) Total Liabilities. \n\n \"TOTAL LIABILITIES\" means at any date as of which the amount\nthereof shall be determined, all obligations that should, in accordance with\nGAAP be classified as liabilities on the consolidated balance sheet of Borrower,\nincluding in any event all Indebtedness, but specifically excluding Subordinated\nDebt. \n\n 9.\n\n\n \"TRADEMARKS\" means any trademark and servicemark rights,\nwhether registered or not, applications to register and registrations of the\nsame and like protections, and the entire goodwill of the business of Borrower\nconnected with and symbolized by such trademarks.\n\n 1.2 ACCOUNTING TERMS. All accounting terms not specifically\ndefined herein shall be construed in accordance with GAAP and all calculations\nmade hereunder shall be made in accordance with GAAP. When used herein, the\nterms \"financial statements\" shall include the notes and schedules thereto. \n\n 2. LOAN AND TERMS OF PAYMENT \n\n 2.1 ADVANCES.\n\n (a) Subject to and upon the terms and conditions of this\nAgreement, Bank agrees to make Advances to Borrower in an aggregate amount not \nto exceed the lesser of (i) the Committed Line minus the face amount of all\noutstanding Letters of Credit (including drawn but unreimbursed Letters of\nCredit) minus the Foreign Exchange Reserve (defined in Section 2.1.3) or (ii)\nthe Borrowing Base minus the face amount of all outstanding Letters of Credit\n(including drawn but unreimbursed Letters of Credit) minus the Foreign Exchange\nReserve. For purposes of this Agreement, \"Borrowing Base\" shall mean an amount\nequal to (i) eighty percent (80%) of Eligible Accounts. Subject to the terms and\nconditions of this Agreement, amounts borrowed pursuant to this Section 2.1 may\nbe repaid and reborrowed at anytime prior to the Revolving Maturity Date. \n\n (b) Whenever Borrower desires an Advance, Borrower will\nnotify Bank by facsimile transmission or telephone no later than 3:00 p.m.\nCalifornia time, on the Business Day that the Advance is to be made. Each such\nnotification shall be promptly confirmed by a Payment\/Advance Form in\nsubstantially the form of EXHIBIT B hereto. Bank is authorized to make Advances\nunder this Agreement, based upon instructions received from a Responsible\nOfficer, or without instructions if in Bank's discretion such Advances are\nnecessary to meet Obligations which have become due and remain unpaid. Bank\nshall be entitled to rely on any telephonic notice given by a person who Bank\nreasonably believes to be a Responsible Officer, and Borrower shall indemnify \nand hold Bank harmless for any damages or loss suffered by Bank as a result of\nsuch reliance. Bank will credit the amount of Advances made under this Section \n2.1 to Borrower's deposit account. \n\n (c) The Revolving Facility shall terminate on the\nRevolving Maturity Date, at which time all Advances under this Section 2.1 and\nother amounts due under this Agreement shall be immediately due and payable. \n \n\n 2.1.1 LETTERS OF CREDIT. \n\n (a) Subject to the terms and conditions of this\nAgreement, Bank agrees to issue or cause to be issued letters of credit for the\naccount of Borrower in an aggregate face\n\n 10.\n\n\n\n\n\namount not to exceed (i) the lesser of the Committed Line or the Borrowing Base\nminus (ii) the then outstanding principal balance of the Advances provided that\nthe face amount of outstanding Letters of Credit (including drawn but\nunreimbursed Letters of Credit) shall not in any case exceed One Million Dollars\n($1,000,000). Each such letter of credit shall have an expiry date no later\nthan the Revolving Maturity Date. All such letters of credit shall be, in form\nand substance, acceptable to Bank in its sole discretion and shall be subject to\nthe terms and conditions of Bank's form of application and letter of credit\nagreement. All amounts actually paid by Bank in respect of a letter of credit\nshall, when paid, constitute an Advance under this Agreement. \n\n (b) The Obligation of Borrower to immediately reimburse\nBank for drawings made under Letters of Credit shall be absolute, unconditional\nand irrevocable, and shall be performed strictly in accordance with the terms of\nthis Agreement and such Letters of Credit, under all circumstances whatsoever.\nBorrower shall indemnify, defend and hold Bank harmless from any loss, cost,\nexpense or liability, including, without limitation, reasonable attorneys' fees,\narising out of or in connection with any letters of credit issued for the\naccount of Borrower. \n\n 2.1.2 LETTER OF CREDIT REIMBURSEMENT; RESERVE. \n\n (a) Borrower may request that Bank issue a letter of\ncredit payable in a currency other than United States Dollars. If a demand for\npayment is made under any such letter of credit, Bank shall treat such demand as\nan advance to Borrower of the equivalent of the amount thereof (plus cable\ncharges) in United States currency at the then prevailing rate of exchange in\nSan Francisco, California, for sales of that other currency for cable transfer\nto the country of which it is the currency. \n\n (b) Upon the issuance of any letter of credit payable in\na currency other than United States Dollars, Bank shall create a reserve under\nthe Committed Line for letters of credit against fluctuations in currency\nexchange rates, in an amount equal to twenty percent (20%) of the face amount of\nsuch letter of credit. The amount of such reserve may be amended by Bank from\ntime to time to account for fluctuations in the exchange rate. The availability\nof funds under the Committed Line shall be reduced by the amount of such reserve\nfor so long as such letter of credit remains outstanding. \n\n 2.1.3 FOREIGN EXCHANGE CONTRACT; FOREIGN EXCHANGE SETTLEMENTS. \n\n (a) Subject to the terms of this Agreement, Borrower may\nenter into foreign exchange contracts (the \"Exchange Contracts\") not to exceed\nan aggregate amount of $1,000,000 (the \"Contract Limit\"), pursuant to which Bank\nshall sell to or purchase from Borrower foreign currency on a spot or future\nbasis. Borrower shall not request any Exchange Contracts at any time it is out\nof compliance with any of the provisions of this Agreement. All Exchange\nContracts must provide for delivery of settlement on or before the Revolving\nMaturity Date. The amount available under the Committed Line at any time shall\nbe reduced by the following amounts (the \"Foreign Exchange Reserve\") on any\ngiven day (the \"Determination \n\n 11.\n\n\nDate\"): (i) on all outstanding Exchange Contracts on which delivery is to be\neffected or settlement allowed more than two business days after the\nDetermination Date, 10% of the gross amount of the Exchange Contracts; plus (ii)\non all outstanding Exchange Contracts on which delivery is to be effected or\nsettlement allowed within two business days after the Determination Date, 100%\nof the gross amount of the Exchange Contracts.\n\n (b) Bank may, in its discretion, terminate the Exchange\nContracts at any time (a) that an Event of Default occurs or (b) that there is\nno sufficient availability under the Committed Line and Borrower does not have\navailable funds in its bank account to satisfy the Foreign Exchange Reserve. If\nBank terminates the Exchange Contracts, and without limitation of any applicable\nindemnities, Borrower agrees to reimburse Bank for any and all reasonable fees,\ncosts and expenses relating thereto or arising in connection therewith. \n\n (c) Borrower shall not permit the total gross amount of\nall Exchange Contracts On which delivery is to be effected and settlement\nallowed in any two business day period to be more than $500,000 (the \"Settlement\nLimit\"), nor shall Borrower permit the total gross amount of all Exchange\nContracts to which Borrower is a party, outstanding at any one time, to exceed\nthe Contract Limit. Notwithstanding the above, however, the amount which may be\nsettled in any two (2) business. day period may be increased above the\nSettlement Limit up to, but in no event to exceed, the amount of the Contract\nLimit under either of the following circumstances: \n\n (i) if there is sufficient availability under the\nCommitted Line in the amount Of the Foreign Exchange Reserve as of each\nDetermination Date, provided that Bank in advance shall reserve the full amount\nof the Foreign Exchange Reserve against the Committed Line; or \n\n (ii) if there is insufficient availability under\nthe Committed Line,as to settlements within any two (2) business day period,\nprovided that Bank, in its sole discretion, may: (A) verify good funds overseas\nprior to crediting Borrower's deposit account with Bank (in the case of\nBorrower's sale of foreign currency); or (B) debit Borrower's deposit account\nwith Bank prior to delivering foreign currency overseas (in the case of\nBorrower's purchase of foreign currency). \n\n (d) In the case of Borrower's purchase of foreign\ncurrency, Borrower in advance shall instruct Bank upon settlement either to\ntreat the settlement amount as an .advance under the Committed Line, or to debit\nBorrower's account for the amount settled. \n\n (e) Borrower shall execute all standard form\napplications and agreements of Bank in connection with the Exchange Contracts\nand, without limiting any of the terms of such applications and agreements,\nBorrower will pay all standard fees and charges of Bank in connection with the\nExchange Contracts. \n\n (f) Without limiting any of the other terms of this\nAgreement or any such standard form applications and agreements of Bank,\nBorrower agrees to indemnify Bank\n\n 12.\n\n\nand hold it harmless from and against any and all claims, debts, liabilities,\ndemands, obligations, actions, costs and expenses (including, without \nlimitation, reasonable attorneys' fees of counsel of Bank's choice), of \nevery nature and description which it may sustain or incur, based upon, arising\nout of, or in any way relating to any of the Exchange Contracts or any \ntransactions relating thereto or contemplated thereby. \n\n 2.2 OVERADVANCES. If, at any time or for any reason, the amount\nof Obligations owed by Borrower to Bank pursuant to Section 2.1 of this\nAgreement is greater than the lesser of (i) the Committed Line or (ii) the\nBorrowing Base, Borrower shall immediately pay to Bank, in cash, the amount of\nsuch excess. \n\n 2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS. \n\n (a) INTEREST RATE. Except as set forth in Section\n2.3(b), any Advances shall bear interest, on the average Daily Balance, at a\nrate equal to one (1.0) percentage point above the Prime Rate.\n\n (b) DEFAULT RATE. All Obligations shall bear interest,\nfrom and after the occurrence and during the continuance of an Event of Default,\nat a rate equal to five (5) percentage points above the interest rate applicable\nimmediately prior to the occurrence of the Event of Default. \n\n (c) PAYMENTS. Interest hereunder shall be due and\npayable in arrears on the nineteenth calendar day of each month during the term\nhereof. Bank shall, at its option, charge such interest, all Batik Expenses, and\nall Periodic Payments against any of Borrower's deposit accounts or against the\nCommitted Line, in which case those amounts shall thereafter accrue interest at\nthe rate then applicable hereunder. Any interest not paid when due shall be\ncompounded by becoming a part of the Obligations, and such interest shall\nthereafter accrue interest at the rate then applicable hereunder. \n\n (d) COMPUTATION. In the event the Prime Rate is changed\nfrom time to time hereafter, the applicable rate of interest hereunder shall be\nincreased or decreased effective as of 12:01 a.m. on the day the Prime Rate is\nchanged, by an amount equal to such change in the Prime Rate. All interest\nchargeable under the Loan Documents shall be computed on the basis of a three\nhundred sixty (360) day year for the actual number of days elapsed.\n\n 2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of\nDefault, Bank shall credit a wire transfer of funds, check or other item of\npayment to such deposit account or Obligation as Borrower specifies. After the\noccurrence and during the continuance of an Event of Default, the receipt by\nBank of any wire transfer of funds, check, or other item of payment shall be\nimmediately applied to conditionally reduce Obligations, but shall not be\nconsidered a payment on account unless such payment is of immediately available\nfederal funds or unless and until such check or other item of payment is\nhonored. when presented for payment. Notwithstanding anything to the contrary\ncontained herein, any wire transfer or payment received by Bank after 12:00 noon\nCalifornia time shall be deemed to have been\n\n\n 13.\n\n\nreceived by Bank as of the opening of business on the immediately following\nBusiness Day. Whenever any payment to Bank under the Loan Documents would\notherwise be due (except by reason of acceleration) on a date that is not a\nBusiness Day, such payment shall instead be due on the next Business Day, and\nadditional fees or interest, as the case may be, shall accrue and be payable for\nthe period of such extension. \n\n\n 2.5 FEES. Borrower shall pay to Bank the following: \n\n (a) FACILITY FEE. A Facility Fee equal to one quarter of\none percent (0.25%) per annum of the Committed Line (of which Bank acknowledges\nreceipt of $11,500), which fee shall be due on the Closing Date and shall be\nfully earned and nonrefundable; \n\n (b) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's\ncustomary fees and out-of-pocket expenses for Bank's audits of Borrower's\nAccounts, and for each appraisal of Collateral and financial analysis and\nexamination of Borrower performed from time to time by Bank or its agents; \n\n (c) BANK EXPENSES. Upon the date hereof, all Bank\nExpenses incurred through the Closing Date, including reasonable attorneys' fees\nand expenses, and, after the date hereof, all Bank Expenses, including\nreasonable attorneys' fees and expenses, as and when they become due. \n\n 2.6 ADDITIONAL COSTS. In case any change in any law,\nregulation, treaty or official directive or the interpretation or application\nthereof by any court or any governmental authority charged with the\nadministration thereof or the compliance with any guideline or request of any\ncentral bank or other governmental authority (whether or not having the force of\nlaw), in each case after the date of this Agreement:\n\n (a) subjects Bank to any tax with respect to payments of\nprincipal or interest or any others amounts payable hereunder by Borrower or\notherwise with respect to the transactions contemplated hereby (except for taxes\non the overall net income of Bank imposed by the United States of America or any\npolitical subdivision thereof);\n\n (b) imposes, modifies or deems applicable any deposit\ninsurance, reserve, special deposit or similar requirement against assets held\nby, or deposits in or for the account of, or loans by, Bank; or \n\n (c) imposes upon Bank any other condition with respect\nto its performance under this Agreement,\n\nand the result of any of the foregoing is to increase the cost to Bank, reduce\nthe income receivable by Bank or impose any expense upon Bank with respect to \nany loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank \nthe amount of such increase in cost, reduction in income or additional expense\nas and when such cost, reduction or expense is recurred or determined, upon\npresentation by Bank of a statement :of the amount and setting \n\n 14.\n\n\nforth Bank's calculation thereof, all in reasonable detail, which statement\nshall be deemed true and correct absent manifest error; provided, however, that\nBorrower shall not be liable for any such amount attributable to any period\nprior to the date of hundred eighty (180) days prior to the date of such\nstatement. \n\n 2.7 TERM. This Agreement shall become effective on the Closing\nDate, and subject to Section 12.7, shall continue in full force and effect for a\nterm ending on the Revolving Maturity Date. Notwithstanding the foregoing, Bank\nshall have the right to terminate its obligation to make Advances under this\nAgreement immediately and without notice upon the occurrence and during the\ncontinuance of an Event of Default. Notwithstanding termination, Bank's Lien on\nthe Collateral shall remain in effect for so long as any Obligations are\noutstanding.\n\n 3. CONDITIONS OF LOANS \n\n 3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of\nBank to make the initial Advance is subject to the condition precedent that Bank\nshall have received, in form and substance satisfactory to Bank, the following:\n\n (a) this Agreement; \n\n (b) a certificate of the Secretary of Borrower with\nrespect to incumbency and resolutions authorizing the execution and delivery of\nthis Agreement;\n\n (c) an intellectual property security agreement; \n \n (d) financing statement (Form UCC-1); \n\n (e) insurance certificate; \n\n (f) payment of the fees and Bank Expenses then due\nspecified in Section 2.5 hereof; and\n\n (g) such other documents, and completion of such other\nmatters, as Bank may reasonably deem necessary or appropriate. \n\n 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of\nBank to make each Advance, including the initial Advance, is further subject to\nthe following conditions: \n\n (a) timely receipt by Bank of the Payment\/Advance Form as\nprovided in Section 2.1; and \n\n (b) the representations and warranties contained in Section\n5 shall be true and correct in all material respects on and as of the date of\nsuch Payment\/Advance Form and on the effective date of each Advance as though\nmade at and as of each such date, and no\n\n 15.\n\n\nEvent of Default shall have occurred and be continuing, or would result from\nsuch Advance. The making of each Advance shall be deemed to be a representation\nand warranty by Borrower on the date of such Advance as to the accuracy of the\nfacts referred to in this Section 3.2(b). \n\n 4. CREATION OF SECURITY INTEREST \n\n 4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to \nBank a continuing security interest in all presently existing and hereafter \nacquired or arising Collateral in order to secure prompt repayment of any and \nall Obligations and in order to secure prompt performance by Borrower of each \nof its covenants and duties under the Loan Documents. Except as set forth in \nthe Schedule, such security interest constitutes a valid, first priority \nsecurity interest in the presently existing Collateral, and will constitute a \nvalid, first priority security interest in Collateral acquired after the date \nhereof. As long as an Event of Default has not occurred and is continuing, \nupon (i) Borrower's achievement of three (3) consecutive quarters of minimum \nnet profit of at least $1, and (ii) Borrower's receipt of cash proceeds of at \nleast $16,000,000 from the issuance of its equity securities after the date \nhereof, Bank shall release its security interest in Intellectual Property \nCollateral, and from and after such release, the Intellectual Property \nCollateral shall not constitute \"Collateral\" for purposes of the Loan \nDocuments. \n\n 4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower \nshall from time to time execute and deliver to Bank, at the request of Bank, \nall Negotiable Collateral, all financing statements and other documents that \nBank may reasonably request, in form satisfactory to Bank, to perfect and \ncontinue perfected Bank's security interests in the Collateral and in order \nto fully consummate all of the transactions contemplated under the Loan \nDocuments. \n\n 4.3 RIGHT TO INSPECT. Bank (through any of its officers, \nemployees, or agents) shall have the right, upon reasonable prior notice, from \ntime to time during Borrower's usual business hours, to inspect Borrower's \nBooks and to make copies thereof and to check, test, and appraise the \nCollateral in order to verify Borrower's financial condition or the amount, \ncondition of, or any other matter relating to, the Collateral. \n\n 5. REPRESENTATIONS AND WARRANTIES \n\n Borrower represents and warrants as follows: \n\n 5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each \nSubsidiary is a corporation duly existing and in good standing under the laws \nof its state of incorporation and qualified and licensed to do business in, \nand is in good standing in, any state in which the conduct of its business or \nits ownership of property requires that it be so qualified, except for states \nas to which any failure to so qualify would not have a Material Adverse \nEffect. \n\n 5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery,\nand performance of the Loan Documents are within Borrower's powers, have been\nduly authorized, and are not in conflict with nor constitute :a breach of any\nprovision contained in Borrower's\n\n 16.\n\n\nCertificate of Incorporation or Bylaws, nor will they constitute an event of\ndefault under any material agreement to which Borrower is a party or by which\nBorrower is bound. Borrower is not in default under any material agreement to\nwhich it is a party Or by which it is bound, which default could have a Material\nAdverse Effect. \n\n 5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible\ntitle to the Collateral, free and clear of Liens, except for Permitted Liens.\n\n 5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona\nfide existing obligations. The property giving rise to such Eligible Accounts\nhas been delivered to the account debtor or to the account debtor's agent for\nimmediate shipment to and unconditional acceptance by the account debtor.\nBorrower has not received notice of actual or imminent Insolvency Proceeding of\nany account debtor that is included in any Borrowing Base Certificate as an\nEligible Account. \n\n 5.5 MERCHANTABLE INVENTORY. All Inventory is in all material\nrespects of good and marketable quality, free from all material defects. \n\n 5.6 INTELLECTUAL PROPERTY. Borrower is the sole owner of the\npresently registered Intellectual Property Collateral, except for non-exclusive\nlicenses granted by Borrower to its customers in the ordinary course of\nbusiness. Each of the registered Patents is valid and enforceable, and no part\nof the Intellectual Property Collateral has been judged invalid or\nunenforceable, in whole or in part, and no claim has been made that any part of\nthe Intellectual Property Collateral violates the rights of any third party.\nExcept for and upon the filing with the United States Patent and Trademark\nOffice with respect to the Patents and Trademarks and the Register of Copyrights\nwith respect to the Copyrights necessary to perfect the security interests\ncreated hereunder, and except as has been already made or obtained, no\nauthorization, approval or other action by, and no notice to or filing with, any\nUnited States governmental authority or United States regulatory body is\nrequired either (i) for the grant by Borrower of the security interest granted\nhereby or for the execution, delivery or performance of Loan Documents by\nBorrower in the United States or (ii) for the perfection in the United States or\nthe exercise by Bank of its rights and remedies hereunder. \n\n 5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as \ndisclosed in the Schedule, Borrower has not done business under any name other \nthan that specified on the signature page hereof. The chief executive office of \nBorrower is located at the address indicated in Section 10 hereof. \n\n 5.8 LITIGATION. Except as set forth in the Schedule, there are \nno actions or proceedings pending by or against Borrower or any Subsidiary \nbefore any court or administrative agency in which an adverse decision could \nhave a Material Adverse Effect or a material adverse effect on Borrower's \ninterest or Bank's security interest in the Collateral. Borrower does not \nhave knowledge of any such pending or threatened actions or proceedings. \n \n\n 17.\n\n\n 5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All\nconsolidated financial statements related to Borrower and any Subsidiary that\nhave been delivered by Borrower to Bank fairly present in all material respects\nBorrower's consolidated financial condition as of the date thereof and\nBorrower's consolidated results of operations for the period then ended. There\nhas not been a material adverse change in the consolidated financial condition\nof Borrower since the date of the most recent of such financial statements\nsubmitted to Bank. \n\n 5.10 SOLVENCY. The fair saleable value of Borrower's assets\n(including goodwill minus disposition costs) exceeds the fair value of its\nliabilities; the Borrower is not left with unreasonably small capital after the\ntransactions contemplated by this Agreement; and Borrower is able to pay its\ndebts (including trade debts) as they mature. \n\n\n 5.11 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met\nthe minimum funding requirements of ERISA with respect to any employee benefit\nplans subject to ERISA. No event has occurred resulting from Borrower's failure\nto comply with ERISA that is reasonably likely to result in Borrower's.incurring\nany liability that could have a Material Adverse Effect. Borrower is not an\n\"investment company\" or a company \"controlled\" by an \"investment company\" within\nthe meaning of the Investment Company Act of 1940. Borrower is not engaged\nprincipally, or as one of the important activities, in the business of extending\ncredit for the purpose of purchasing or carrying margin stock (within the\nmeaning of Regulations G, T and U of the Board of Governors of the Federal\nReserve System). Borrower has complied with all the provisions of the Federal\nFair Labor Standards Act. Borrower has not violated any statutes, laws,\nordinances or rules applicable to it, violation of which could have a Material\nAdverse Effect. \n\n 5.12 ENVIRONMENTAL CONDITION. None of Borrower's or any\nSubsidiary's properties or assets has ever been used by Borrower or any\nSubsidiary or, to the best of Borrower's knowledge, by previous owners or\noperators, in the disposal of, or to produce, store, handle, treat, release, or\ntransport, any hazardous waste or hazardous substance other than in accordance\nwith applicable law; to the best of Borrower's knowledge, none of Borrower's\nproperties or assets has ever been designated or identified in any manner\npursuant to any environmental protection statute as a hazardous waste or\nhazardous substance disposal site, or a candidate for closure pursuant to any\nenvironmental protection statute; no lien arising under any environmental\nprotection statute has attached to any revenues or to any real or personal\nproperty owned by Borrower or any Subsidiary; and neither Borrower nor any\nSubsidiary has received a summons, citation, notice, or directive from the\nEnvironmental Protection Agency or any other federal, state or other\ngovernmental agency concerning any action or omission by Borrower or any\nSubsidiary resulting in the releasing, or otherwise disposing of hazardous waste\nor hazardous substances into the environment. \n\n 5.13 TAXES. Borrower and each Subsidiary has filed or caused to\nbe filed all tax returns required to be filed, and has paid, or has made\nadequate provision for the payment of, all taxes reflected therein. \n\n 18.\n\n 5.14 SUBSIDIARIES. Borrower does not own any stock, partnership\ninterest or other equity securities of any Person, except for Permitted\nInvestments. \n\n 5.15 GOVERNMENT CONSENTS. Borrower and each Subsidiary has\nobtained all consents, approvals and authorizations of, made all declarations or\nfilings with, and given all notices to, all governmental authorities that are\nnecessary for the continued operation of Borrower's business as currently\nconducted. \n\n 5.16 FULL DISCLOSURE. No representation, warranty or other\nstatement made by Borrower in any certificate or written statement furnished to\nBank contains any untrue statement of a material fact or omits to state a\nmaterial fact necessary in order to make the statements contained in such\ncertificates or Statements not misleading. \n\n 6. AFFIRMATIVE COVENANTS \n\n Borrower covenants and agrees that, until payment in full of all\noutstanding Obligations, and for so long as Bank may have any commitment to make\nan Advance hereunder, Borrower shall do all of the following: \n\n 6.1 GOOD STANDING. Borrower shall maintain its and each of its\nSubsidiaries' corporate existence and good standing in its jurisdiction of\nincorporation and maintain qualification in each jurisdiction in which the\nfailure to so qualify could reasonably be expected to have a Material Adverse\nEffect. Borrower shall maintain, and shall cause each of its Subsidiaries to\nmaintain, to the extent consistent with prudent management of Borrower's\nbusiness, in force all licenses, approvals and agreements, the loss of which\ncould have a Material Adverse Effect. \n\n 6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each\nSubsidiary to meet, the minimum funding requirements of ERISA with respect to\nany employee benefit plans subject to ERISA. Borrower shall comply, and shall\ncause each Subsidiary to comply, with all statutes, laws, ordinances and\ngovernment rules and regulations to which it is subject, noncompliance with\nwhich could reasonably be expected to have a Material Adverse Effect or a\nmaterial adverse effect on the Collateral or the priority of Bank's Lien on the\nCollateral. \n\n 6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall\ndeliver to Bank: (a) as soon as available, but in any event within thirty (30)\ndays after the end of each fiscal quarter, a company prepared consolidated\nbalance sheet and income statement covering Borrower's consolidated operations\nduring such period, certified by a Responsible Officer; (b)as soon as available,\nbut in any event within ninety' (90) days after the end of Borrower's fiscal\nyear, audited consolidated financial statements of Borrower prepared in\naccordance with GAAP, consistently applied, together with an unqualified opinion\non such financial statements of an independent certified public accounting firm\nreasonably acceptable to Bank; (c) within five (5) days upon becoming available,\ncopies of all statements, reports, and notices sent or made available generally\nby Borrower to its security holders or to any holders of Subordinated Debt\n\n 19.\n\n\nand all reports on Form 10-K and 10-Q filed with the Securities and Exchange\nCommission; (d) promptly upon receipt of notice thereof, a report of any legal\nactions pending or threatened against Borrower or any Subsidiary that could\nresult in damages or costs to Borrower or any Subsidiary of One Hundred Thousand\nDollars ($100,000) or more; (e) prompt notice of any material change in the\ncomposition of the Intellectual Property Collateral, including, but not limited\nto, any subsequent ownership right of the Borrower in or to any Copyright,\nPatent or Trademark not specified in any intellectual property security\nagreement between Borrower and Bank or knowledge of an event that materially\nadversely effects the value of the Intellectual Property Collateral; and (f)\nsuch budgets, sales projections, operating plans or other financial information\nas Bank may reasonably request from time to time. \n \n Within twenty (20) days after the last day of each month in which an\nAdvance is outstanding (and as a condition to Borrower requesting an Advance),\nBorrower shall deliver to Bank a Borrowing Base Certificate signed by a\nResponsible Officer in substantially the form of EXHIBIT C hereto, together with\naged listings of accounts receivable and accounts payable. \n\n Borrower shall deliver to Bank with the quarterly financial statements a\nCompliance Certificate signed by a Responsible Officer in substantially the form\nof EXHIBIT D hereto. \n\n Bank shall have a right from time to time hereafter to audit Borrower's\nAccounts at Borrower's expense, provided that such audits will be conducted no\nmore often than every six (6) months unless an Event of Default has occurred and\nis continuing.\n\n 6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in\ngood and marketable condition, free from all material defects. Returns and \nallowances, if any, as between Borrower and its account debtors shall be on \nthe same basis and in accordance with the usual customary practices of \nBorrower, as they exist at the time of the execution and delivery of this \nAgreement. Borrower shall promptly notify Bank of all returns and recoveries \nand of all disputes and claims, where the return, recovery, dispute or claim \ninvolves more than Fifty Thousand Dollars ($50,000). \n\n 6.5 TAXES. Borrower shall make, and shall cause each Subsidiary\nto make, due and timely payment or, deposit of all material federal, state, \nand local taxes, assessments, or contributions required of it by law, and will \nexecute and deliver to Bank, on demand, appropriate certificates attesting to \nthe payment or deposit thereof; and Borrower will make, and will cause each \nSubsidiary to make, timely payment or deposit of all material tax payments \nand withholding taxes required of it by applicable laws, including, but not \nlimited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and \nlocal, state, and federal income taxes, and will, upon request, furnish Bank \nwith proof satisfactory to Bank indicating that Borrower or a Subsidiary has \nmade such payments or deposits; provided that Borrower or a Subsidiary, need \nnot make any payment if the amount or validity of such payment is contested \nin good faith by appropriate proceedings and is reserved against (to the \nextent required by GAAP) by Borrower. \n\n 20.\n\n\n 6.6 INSURANCE. \n\n (a) Borrower, at its expense, shall keep the Collateral \ninsured against loss or damage by fire, theft, explosion, sprinklers, and all \nother hazards and risks, and in such amounts, as ordinarily insured against \nby other owners in similar businesses conducted in the locations where \nBorrower's business is conducted on the date hereof. Borrower shall also \nmaintain insurance relating to Borrower's ownership and use of the Collateral \nin amounts and of a type that are customary to businesses similar to \nBorrower's. \n\n (b) All such policies of insurance shall be in such form, \nwith such companies, and in such amounts as reasonably satisfactory to Bank. \nAll such policies of property insurance shall contain a lender's loss payable \nendorsement, in a form satisfactory to Bank,showing Bank as an additional \nloss payee thereof and all liability insurance policies shall show the Bank \nas an additional insured, and shall specify that the insurer must give at \nleast twenty (20) days notice to Bank before canceling its policy for any \nreason. Upon Bank's request, Borrower shall deliver to Bank certified copies\nof such policies of insurance and evidence of the payments of all premiums \ntherefor. All proceeds payable under any such policy shall, at the option of \nBank, be payable to Bank to be applied on account of the Obligations.\n\n 6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal\ndepository and operating accounts with Bank.\n\n 6.8 ADJUSTED QUICK RATIO. Borrower shall maintain, as of the last \nday of each fiscal quarter, a ratio of Quick Assets to Current Liabilities, \nexcluding deferred revenue and customer deposits, of at least 1.25 to 1.0. \nFor purposes of this Section, Quick Assets shall be deemed to include cash, \ncash-equivalents, and investments with maturities not exceeding 90 days held \nin deposit accounts in which Bank has a Lien prior to any other Lien. \n\n 6.9 DEBT-NET WORTH RATIO. Borrower shall maintain, as of the\nlast day of each fiscal quarter, a ratio of Total Liabilities, excluding\ndeferred revenue and customer deposits, less Subordinated Debt to Tangible Net\nWorth plus Subordinated Debt of not more than 1.0 to 1.0. \n\n 6.10 TANGIBLE NET WORTH. Borrower shall maintain, as of the last\nday of each fiscal quarter, a Tangible Net Worth of not less than Eight Million\nDollars ($8,000,000) plus seventy-five percent of the net proceeds from the sale\nof Borrower's equity securities after the Closing Date.\n\n 6.11 PROFITABILITY. Borrower shall be profitable for each fiscal\nquarter, except Borrower may suffer a loss not to exceed $600,000 for one fiscal\nquarter in any fiscal year. \n\n 6.12 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. \n\n (a) Borrower shall register or cause to be registered\n(to the extent not already registered) with the United States Patent and\nTrademark Office or the United States\n\n 21.\n\n\nCopyright Office, as applicable, those intellectual property rights listed on\nExhibits A, B and C to the Intellectual Property Security Agreement delivered to\nBank by Borrower in connection with this Agreement within thirty (30) days of\nthe date of this Agreement. Borrower shall have no duty to register or cause to\nbe registered with the United States Patent and Trademark Office or the United\nStates Copyright Office, as applicable, those additional intellectual property\nrights developed or acquired by Borrower from time to time in connection with\nany product prior to the sale or licensing of such product to any third party,\nincluding without limitation revisions or additions to the intellectual property\nrights listed on such Exhibits A, B and C. \n\n (b) Borrower shall execute and deliver such additional\ninstruments and documents from time to time as Bank shall reasonably request to\nperfect Bank's security interest in the Intellectual Property Collateral.\n\n (c) Borrower shall (i) protect, defend and maintain the\nvalidity and enforceability of the Trademarks, Patents and Copyrights, (ii) use\nits best efforts to detect infringements of the Trademarks, Patents and\nCopyrights and promptly advise Bank in writing of material infringements\ndetected and (iii) not allow any Trademarks, Patents or Copyrights to be\nabandoned, forfeited or dedicated to the public without the written consent of\nBank, which shall not be unreasonably withheld, unless Bank determines that\nreasonable business practices suggest that abandonment is appropriate. \n \n (d) Bank shall have the right, but not the obligation,\nto take, at Borrower's sole expense, any actions that Borrower is required under\nthis Section 6.12 to take but which Borrower fails to take, after fifteen (15)\ndays' notice to Borrower. Borrower shall reimburse and indemnify Bank for all\nreasonable costs and reasonable expenses incurred in the reasonable exercise of\nits rights under this Section 6.12.\n\n 6.13 FURTHER ASSURANCES. At any time and from time to time\nBorrower shall execute and deliver such further instruments and take such\nfurther action as may reasonably be requested by Bank to effect the purposes of\nthis Agreement.\n\n 7. NEGATIVE COVENANTS \n\n Borrower covenants and agrees that, so long as any credit hereunder shall \nbe available and until payment in full of the outstanding Obligations or for so\nlong as Bank may have any commitment to make any Advances, Borrower will not do\nany of the following:\n\n 7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise\ndispose of (collectively, a \"Transfer\"), or permit any of its Subsidiaries to\nTransfer, all or any part of its business or property, other than: (i) Transfers\nof Inventory in the ordinary course of business; (ii) Transfers of non-exclusive\nlicenses and similar arrangements for the use of the property of Borrower or its\nSubsidiaries; (iii) Transfers of worn-out or obsolete Equipment; or (iv)\nsale-leaseback transactions of Equipment as described in clause (e) of the\ndefined term \"Permitted Indebtedness.\" \n\n 22.\n\n\n 7.2 CHANGE IN BUSINESS. Engage in any business, or permit any\nof its Subsidiaries to engage in any business, other than the businesses\ncurrently engaged in by Borrower and any business substantially similar or\nrelated thereto (or incidental thereto), or suffer a material change in\nBorrower's ownership of greater than forty percent (40%). Borrower will not,\nwithout thirty (30) days prior written notification to Bank, relocate its chief\nexecutive office. \n\n 7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit\nany of its Subsidiaries to merge or consolidate, with or into any other business\norganization, or acquire, or permit any of its Subsidiaries to acquire, all or\nsubstantially all of the capital stock or property of another Person, except\nsuch transactions that do not result in a change of more than 25% of Borrower's\nNet Worth PROVIDED that immediately after giving effect to such merger or\nconsolidation, no Event of Default, or event which with the lapse of time or\ngiving of notice or both, would result in an Event of Default shall have\noccurred and be continuing. \n\n 7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable\nwith respect to any Indebtedness, or permit any Subsidiary so to do, other than\nPermitted Indebtedness.\n\n 7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any\nLien with respect to any of its property, or assign or otherwise convey any\nright to receive income, including the sale of any Accounts, or permit any of\nits Subsidiaries so to do, except for Permitted Liens. \n\n 7.6 DISTRIBUTIONS. Pay any dividends or make any other\ndistribution or payment on account of or in redemption, retirement or purchase\nof any capital stock. Notwithstanding the foregoing, Borrower may redeem or\nrepurchase its common stock and pay dividends on its preferred stock, provided\nthe sum of (i) the purchase price of any stock sore deemed or repurchased and\n(ii) any such dividends paid on preferred stock does not exceed, in the\naggregate, $250,000 in any fiscal year.\n\n 7.7 INVESTMENTS. Directly or indirectly acquire or own, or make\nany Investment in or to any Person, or permit any of its Subsidiaries so to do,\nother than Permitted Investments. \n\n 7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter\ninto or permit to exist any material transaction with any Affiliate of Borrower\nexcept for transactions that are in the ordinary course of Borrower's business,\nupon fair and reasonable terms that are no less favorable to Borrower than would\nbe obtained in an arm's length transaction with a nonaffiliated Person. \n\n 7.9 INTELLECTUAL PROPERTY AGREEMENTS. Borrower shall not permit\nthe inclusion in any material contract to which it becomes a party of any\nprovisions that could or might in any way prevent the creation of a security\ninterest in Borrower's rights and interests in any property included within the\ndefinition of the Intellectual Property Collateral acquired under such\ncontracts. \n\n 23.\n\n\n 7.10 SUBORDINATED DEBT. Make any payment in respect of any\nSubordinated Debt, or permit any of its Subsidiaries to make any such payment,\nexcept in compliance with the terms of such Subordinated Debt, or amend any\nprovision contained in any documentation relating to the Subordinated Debt\nwithout Bank's prior written consent. \n\n 7.11 INVENTORY. Store the Inventory with a bailee, warehouseman,\nor similar party unless Bank has received a pledge of the warehouse receipt\ncovering such Inventory. Except for Inventory sold in the ordinary course of\nbusiness and except for such other locations as Bank may approve in writing,\nBorrower shall keep the Inventory only at the location set forth in Section 10\nhereof and such other locations of which Borrower gives Bank prior written\nnotice and as to which Borrower signs and files a financing statement where\nneeded to perfect Bank's security interest. \n\n 7.12 COMPLIANCE. Become an \"investment company\" controlled by\nan \"investment company,\" within the meaning of the Investment Company Act of\n1940, or become principally engaged in, or undertake as one of its important\nactivities, the business of extending credit for the purpose of purchasing or\ncarrying margin stock, or use the proceeds of any Advance for such purpose. Fail\nto meet the minimum funding requirements of ERISA, permit a Reportable Event or\nProhibited Transaction, as defined in ERISA, to occur, fail to comply with the\nFederal Fair Labor Standards Act or violate any law or regulation, which\nviolation could have a Material Adverse Effect or a material adverse effect on\nthe Collateral or the priority of Bank's Lien on the Collateral, or permit any\nof its Subsidiaries to do any of the foregoing.\n\n 8. EVENTS OF DEFAULT \n\n Any one or more of the following events shall constitute an Event of\nDefault by Borrower under this Agreement: \n\n 8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of,\nor any interest on, any Advances when due and payable; or fails to pay any\nportion of any other Obligations not constituting such principal or interest,\nincluding without limitation Bank Expenses, within thirty (30) days of receipt\nby Borrower of an invoice for such other Obligations; \n\n\n 8.2 COVENANT DEFAULT. If Borrower fails to perform any\nobligation under Sections 6.7, 6.8, 6.9, 6.10, or 6.11 or violates any of the\ncovenants contained in Article 7 of this Agreement, or fails or neglects to\nperform, keep, or observe any other material term, provision, condition,\ncovenant, or agreement contained in this Agreement, in any of the Loan\nDocuments, or in any other present or future agreement between Borrower and Bank\nand as to any default under such other term, provision, condition, covenant or\nagreement that can be cured, has failed to cure such default within ten (10)\ndays after Borrower receives notice thereof or any officer of Borrower becomes\naware thereof; provided, however, that if the default cannot by its nature be\ncured within the ten (10) day period or cannot after diligent attempts by\nBorrower be cured within such ten (10) day period, and such default is likely to\nbe cured within a reasonable time, then Borrower shall have an additional\nreasonable period (which shall not in\n\n 24.\n\n\nany case exceed thirty (30) days) to attempt to cure such default, and within\nsuch reasonable time period the failure to have cured such default shall not be\ndeemed an Event of Default (provided that no Advances will be required to be \nmade during such cure period); \n\n 8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse\nchange in Borrower's business or financial condition or a material impairment of\nthe value or priority of Bank's security interests in the Collateral; \n\n 8.4 ATTACHMENT. If any material portion of Borrower's assets is\nattached, seized, subjected to a writ or distress warrant, or is levied upon, or\ncomes into the possession of any trustee, receiver or person acting in a similar\ncapacity and such attachment, seizure, writ or distress warrant or levy has not\nbeen removed, discharged or rescinded within thirty (30) days, or if Borrower is\nenjoined, restrained, or in any way prevented by court order from continuing to\nconduct all or any material part of its business affairs, or if a judgment or\nother claim becomes a lien or encumbrance upon any material portion of\nBorrower's assets, or if a notice of lien, levy, or assessment is filed of\nrecord with respect to any of Borrower's assets by the United States Government,\nor any department, agency, or instrumentality thereof, or by any state, county,\nmunicipal, or governmental agency, and the same is not paid within thirty,\n(30) days after Borrower receives notice thereof, provided that none of the\nforegoing shall constitute an Event of Default where such action or event is\nstayed or an adequate bond has been posted pending a good faith contest by\nBorrower (provided that no Advances will be required to be made during such cure\nperiod); \n\n 8.5 INSOLVENCY. If Borrower becomes insolvent, or if an\nInsolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding\nis commenced against Borrower and is not dismissed or stayed within thirty (30)\ndays (provided that no Advances will be made prior to the dismissal of such\nInsolvency Proceeding); \n\n 8.6 OTHER AGREEMENTS. If there is a default in any agreement to\nwhich Borrower is a party with a third party or parties resulting in the\nexercise of a right by such third party or parties to accelerate the maturity of\nany Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars\n($250,000) or that could have a Material Adverse Effect; \n\n\n 8.7 SUBORDINATED DEBT. If Borrower makes any payment on account\nof Subordinated Debt, except to the extent such payment is allowed under any\nsubordination agreement entered into with Bank; \n\n 8.8 JUDGMENTS. If a judgment or judgments for the payment of\nmoney in an amount, individually or in the aggregate, of at least One Hundred\nFifty Thousand Dollars($150,000) shall be rendered against Borrower and shall\nremain unsatisfied and unstayed for a period of thirty (30) days (provided that\nno Advances will be made prior to the satisfaction or stay of such judgment); or\n\n 8.9 MISREPRESENTATIONS. If any material misrepresentation or\nmaterial misstatement exists now or as of any date made or deemed made or\nhereafter in any warranty\n\n\n 25.\n\n\nor representation set forth herein or in any certificate delivered to Bank by\nany Responsible Officer pursuant to this Agreement or to induce Bank to enter\ninto this Agreement or any other Loan Document. \n\n 9. BANK'S RIGHTS AND REMEDIES \n\n 9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the\ncontinuance of an Event of Default, Bank may, at its election, without notice of\nits election and without demand, do any one or more of the following, all of\nwhich are authorized by Borrower: \n\n (a) Declare all Obligations, whether evidenced by this\nAgreement, by any of the other Loan Documents, or otherwise, immediately due and\npayable (provided that upon the occurrence of an Event of Default described in\nSection 8.5 all Obligations shall become immediately due and payable without any\naction by Bank); \n\n (b) Cease advancing money or extending credit to or for\nthe benefit of Borrower under this Agreement or under any other agreement\nbetween Borrower and Bank; \n\n (c) Demand that Borrower (i) deposit cash with Bank in\nan amount equal to the amount of any Letters of Credit remaining undrawn, as\ncollateral security for the repayment of any future drawings under such Letters\nof Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)\npay in advance all Letters of Credit fees scheduled to be paid or payable over\nthe remaining term of the Letters of Credit; \n\n (d) Settle or adjust disputes and claims directly with\naccount debtors for amounts, upon terms and in whatever order that Bank\nreasonably considers advisable;\n\n (e) Without notice to or demand upon Borrower, make\nsuch payments and do such acts as Bank considers necessary or reasonable to\nprotect its security interest in the Collateral. Borrower agrees to assemble the\nCollateral if Bank so requires, and to make the Collateral available to Bank as\nBank may designate. Borrower authorizes Bank to enter the premises where the\nCollateral is located, to take and maintain possession of the Collateral, or any\npart of it, and to pay, purchase, contest, or compromise any encumbrance,\ncharge, or lien which in Bank's determination appears to be prior or superior to\nits security interest and to pay all expenses incurred in connection therewith.\nWith respect to any of Borrower's owned premises, Borrower hereby grants Bank a\nlicense to enter into possession of such premises and to occupy the same,\nwithout charge, in order to exercise any of Bank's rights or remedies provided\nherein, at law, in equity, or otherwise;\n\n (f) Without notice to Borrower set off and apply to the\nObligations any and all (i) balances and deposits of Borrower held by Bank, or\n(ii) indebtedness at any time owing to or for the credit or the account of\nBorrower held by Bank;\n\n (g) Ship, reclaim, recover, store, finish, maintain,\nrepair, prepare for sale, advertise for sale, and sell (in the manner provided\nfor herein) the Collateral. Bank is\n\n\n 26.\n\n\nhereby granted a license or other right, solely pursuant to the provisions of\nthis Section 9.1, to use, without charge, Borrower's labels, patents,\ncopyrights, rights of use of any name, trade secrets, trade names, trademarks,\nservice marks, and advertising matter, or any property of a similar nature, as\nit pertains to the Collateral, in completing production of, advertising for\nsale, and selling any Collateral and, in connection with Bank's exercise of its\nrights under this Section 9.1, Borrower's rights under all licenses and all\nfranchise agreements shall inure to Bank's benefit; \n\n (h) Sell the Collateral at either a public or private sale,\nor both, by way of one or more contracts or transactions, for cash or on terms,\nin such manner and at such places (including Borrower's premises) as Bank\ndetermines is commercially reasonable, and apply any proceeds to the Obligations\nin whatever manner or order Bank deems appropriate; \n\n (i) Bank may credit bid and purchase at any public sale;\nand \n (j) Any deficiency that exists after disposition of the\nCollateral as provided above will be paid immediately by Borrower. \n\n\n 9.2 POWER OF ATTORNEY. Effective only upon the occurrence and\nduring the continuance of an Event of Default, Borrower hereby irrevocably\nappoints Bank (and any of Bank's designated officers, or employees) as\nBorrower's true and lawful attorney to: (a) send requests for verification of\nAccounts or notify account debtors of Bank's security interest in the Accounts;\n(b) endorse Borrower's name on any checks or other forms of payment or security\nthat may come into Bank's possession; (c) sign Borrower's name on any invoice or\nbill of lading relating to any Account, drafts against account debtors,\nschedules and assignments of Accounts, verifications of Accounts, and notices to\naccount debtors; (d) make, settle, and adjust all claims under and decisions\nwith respect to Borrower's policies of insurance; (e) settle and adjust disputes\nand claims respecting the accounts directly with account debtors, for amounts\nand upon terms which Bank determines to be reasonable; (f) to modify, in its\nsole discretion, any intellectual property security agreement entered into\nbetween Borrower and Bank without first obtaining Borrower's approval of or\nsignature to such modification by amending Exhibit A, Exhibit B and Exhibit C,\nthereof, as appropriate, to include reference to any right, title or interest in\nany Copyrights, Patents or Trademarks acquired by Borrower after the execution\nhereof or to delete any reference to any right, title or interest in any\nCopyrights, Patents or Trademarks in which Borrower no longer has or claims any\nright, title or interest; (g) to file, in its sole discretion, one or more\nfinancing or continuation statements and amendments thereto, relative to any of\nthe Collateral without the signature of Borrower where permitted by law; and (h)\nto transfer the Intellectual Property Collateral into the name of Bank or a\nthird party to the extent permitted under the California Uniform Commercial Code\nprovided Bank may exercise such power of attorney to sign the name of Borrower\non any of the documents described in Section 4.2 regardless of whether an Event\nof Default has occurred. The appointment of Bank as Borrower's attorney in fact,\nand each and every one of Bank's rights and powers, being coupled with an\ninterest, is irrevocable until all of the Obligations have been fully repaid and\nperformed and Bank's obligation to provide advances hereunder is terminated. \n\n 27.\n\n\n\n 9.3 ACCOUNTS COLLECTION. At any time from the date of this\nAgreement, Bank may notify any Person owing funds to Borrower of Bank's security\ninterest in such funds and verify the amount of such Account. Upon the\noccurrence and during the continuance of an Event of Default, Borrower shall\ncollect all amounts owing to Borrower for Bank, receive in trust all payments as\nBank's trustee, and immediately deliver such payments to Bank in their original\nform as received from the account debtor, with proper endorsements for deposit.\n \n 9.4 BANK EXPENSES. If Borrower fails to pay any amounts or\nfurnish any required proof of payment due to third persons or entities, as\nrequired under the terms of this Agreement, then Bank may do any or all of the\nfollowing: (a) make payment of the same or any part thereof; (b) set up such\nreserves under the Revolving Facility as Bank deems necessary to protect Bank\nfrom the exposure created by such failure; or (c) obtain and maintain insurance\npolicies of the type discussed in Section 6.6 of this Agreement, and take any\naction with respect to such policies as Bank deems prudent. Any amounts so paid\nor deposited by Bank shall constitute Bank Expenses, shall be immediately due\nand payable, and shall bear interest at the then applicable rate hereinabove\nprovided, and shall be secured by the Collateral. Any payments made by Bank\nshall not constitute an agreement by Bank to make similar payments in the future\nor a waiver by Bank of any Event of Default under this Agreement. Bank shall\nhave a non-exclusive, royalty-free license to use the Intellectual Property\nCollateral to the extent reasonably necessary to permit Bank to exercise its\nrights and remedies upon the occurrence of an Event of Default. \n\n\n 9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies\nwith reasonable banking practices, Bank shall not in any way or manner be liable\nor responsible for: (a) the safekeeping of the Collateral; (b) any loss or \ndamage thereto occurring or arising in any manner or fashion from any cause; (c)\nany diminution in the value thereof; or (d) any act or default of any carrier,\nwarehouseman, bailee, forwarding agency, or other person whomsoever. All risk \nof loss, damage or destruction of the Collateral shall be borne by Borrower,\nexcept for any loss, damage or destruction caused by Bank's gross negligence or\nwilful misconduct. \n\n 9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this\nAgreement, the Loan Documents, and all other agreements shall be cumulative. \nBank shall have all other rights and remedies not inconsistent herewith as \nprovided under the Code, by law, or in equity. No exercise by Bank of one \nright or remedy shall be deemed an election, and no waiver by Bank of any \nEvent of Default on Borrower s part shall be deemed a continuing waiver. No \ndelay by Bank shall constitute a waiver, election, or acquiescence by it. No \nwaiver by Bank shall be effective unless made in a written document signed on \nbehalf of Bank and then shall be effective only in the specific instance and \nfor the specific purpose for which it was given. \n\n 9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of\nprotest, notice of default or dishonor, notice of payment and nonpayment, notice\nof any default, nonpayment at maturity, release, compromise, settlement,\nextension, or renewal of accounts, documents, instruments, chattel paper, and\nguarantees at any time held by Bank on which Borrower may in any way be liable.\n\n 28.\n\n\n 10. NOTICES \n\n Unless otherwise provided in this Agreement, all notices or demands by any\nparty relating to this Agreement or any other agreement entered into in\nconnection herewith shall be in writing and (except for financial statements and\nother informational documents which may be sent by first-class mail, postage\nprepaid) shall be personally delivered or sent by a recognized overnight\ndelivery service, certified mail, postage prepaid, return receipt requested, or\nby telefacsimile to Borrower or to Bank, as the case may be, at its addresses\nset forth below: \n\n If to Borrower: InVision Technologies, Inc.\n 3420 E. Third Avenue\n Foster City, CA 94404 \n Attn: Curt DiSibio, CFO \n FAX: (415) 578-0930 \n\n If to Bank: Silicon Valley Bank\n 3003 Tasman Drive \n Santa Clara, CA 95054 \n Attn: Patrick McCarthy\n FAX: (408)748-9478 \n\n The parties hereto may change the address at which they are to receive\nnotices hereunder, by notice in writing in the foregoing manner given to the\nother.\n\n 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER \n\n The Loan Documents shall be governed by, and construed in accordance with,\nthe internal laws of the State of California, without regard to principles of\nconflicts of law. Each of Borrower and Bank hereby submits to the exclusive\njurisdiction of the state and Federal courts located in the County of Santa\nClara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE\nRIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT\nOF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED\nTHEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL\nOTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE\nFOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS\nAGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER\nWITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY\nTRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. \n\n 12. GENERAL PROVISIONS \n\n 12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure\nto the benefit of the respective successors and permitted assigns of each of the\nparties; PROVIDED,\n\n 29.\n\n\nHOWEVER, that neither this Agreement nor any rights hereunder may be assigned by\nBorrower without Bank's prior written consent, which consent may be granted or\nwithheld in Bank's sole discretion. Bank shall have the right without the\nconsent of or notice to Borrower to sell, transfer, negotiate, or grant\nparticipation in all or any part of, or any interest in, Bank's obligations,\nrights and benefits hereunder. \n\n 12.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold\nharmless Bank and its officers, employees, and agents against: (a) all\nobligations, demands, claims, and liabilities claimed or asserted ,by any other\nparty in connection with the transactions contemplated by the Loan Documents;\nand (b) all losses or Bank Expenses in any way suffered, incurred, or paid by\nBank as a result of or in any way arising out of, following, or consequential to\ntransactions between Bank and Borrower whether under the Loan Documents, or\notherwise (including without limitation reasonable attorneys fees and expenses),\nexcept for losses caused by Bank's gross negligence or willful misconduct.\n\n 12.3 TIME OF ESSENCE. Time is of the essence for the performance\nof all obligations set forth in this Agreement. \n\n 12.4 SEVERABILITY OF PROVISIONS. Each provision of this\nAgreement shall be severable from every other provision of this Agreement for\nthe purpose of determining the legal enforceability of any specific provision.\n\n 12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot \nbe amended or terminated orally. All prior agreements, understandings, \nrepresentations, warranties, and negotiations between the parties hereto with \nrespect to the subject matter of this Agreement, if any, are merged into this \nAgreement and the Loan Documents. \n\n 12.6 COUNTERPARTS. This Agreement may be executed in any number\nof counterparts and by different parties on separate counterparts, each of\nwhich, when executed and delivered, shall be deemed to be an original, and all\nof which, when taken together, shall constitute but one and the same Agreement.\n\n 12.7 SURVIVAL. All covenants, representations and warranties \nmade in this Agreement shall continue in full force and effect so long as any\nObligations remain outstanding. The obligations of Borrower to indemnify Bank\nwith respect to the expenses, damages, losses, costs and liabilities described \nin Section 12.2 shall survive until all applicable statute of limitations \nperiods with respect to actions that may be brought against Bank have run.\n\n 12.8 CONFIDENTIALITY. In handling any confidential information\nBank shall exercise the same degree of care that it exercises with respect to\nits own proprietary information of the same types to maintain the\nconfidentiality of any non-public information thereby received or received\npursuant to this Agreement except that disclosure of such information may be\nmade (i) to the subsidiaries or affiliates of Bank in connection with their\npresent or prospective business relations with Borrower, (ii) to prospective\ntransferees or purchasers of any interest in the Loans, provided that they have\nentered into a comparable confidentiality agreement in favor\n\n 30.\n\n\nof Borrower and have delivered a copy to Borrower, (iii) as required by law,\nregulations, rule or order, subpoena, judicial order or similar order, (iv) as\nmay be required in connection with the examination, audit or similar\ninvestigation of Bank and (v) as Bank may determine in connection with the\nenforcement of any remedies hereunder. Confidential information hereunder shall\nnot include information that either: (a) is in the public domain or in the\nknowledge or possession of Bank when disclosed to Bank, or becomes part of the\npublic domain after disclosure to Bank through no fault of Bank; or (b) is\ndisclosed to Bank by a third party, provided Bank does not have actual knowledge\nthat such third party is prohibited from disclosing such information. \n\n IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be\nexecuted as of the date first above written. \n\n INVISION TECHNOLOGIES, INC. \n\n By: \n --------------------------------------\n Title: \n ---------------------------------\n\n SILICON VALLEY BANK \n\n By: \n --------------------------------------\n\n Title: \n -----------------------------------\n\n\n 31.\n\n\n EXHIBIT A \n\n The Collateral shall consist of all right, title and interest of Borrower\nin and to the following: \n\n (a) All goods and equipment now owned or hereafter acquired, including,\nwithout limitation, all machinery, fixtures, vehicles (including motor vehicles\nand trailers), and any interest in any of the foregoing, and all attachments,\naccessories, accessions, replacements, substitutions, additions, and \nimprovements to any of the foregoing, wherever located; \n\n (b) All inventory, now owned or hereafter acquired, including, without\nlimitation, all merchandise, raw materials, parts, supplies, packing and\nshipping materials, work in process and finished products including such\ninventory as is temporarily out of Borrower's custody or possession or in\ntransit and including any returns upon any accounts or other proceeds, including\ninsurance proceeds, resulting from the sale or disposition of any of the\nforegoing and any documents of title representing any of the above, and\nBorrower's Books relating to any of the foregoing; \n\n (c) All contract rights and general intangibles now owned or hereafter\nacquired, including, without limitation, goodwill, trademarks, service marks, \ntrade styles, trade names, patents, patent applications, leases, license \nagreements, franchise agreements, blueprints, drawings, purchase orders, \ncustomer lists, route lists, infringements, claims, computer programs, \ncomputer discs, computer tapes, literature, reports, catalogs, design rights, \nincome tax refunds, payments of insurance and rights to payment of any kind; \n \n\n (d) All now existing and hereafter arising accounts, contract rights,\nroyalties, license rights and all other forms of obligations owing to Borrower\narising out of the sale or lease of goods, the licensing of technology or the\nrendering of services by Borrower, whether or not earned by performance, and any\nand all credit insurance, guaranties, and other security therefor, as well as \nall merchandise returned to or reclaimed by Borrower and Borrower's Books \nrelating to any of the foregoing; \n\n (e) All documents, cash, deposit accounts, securities, letters of credit,\ncertificates of deposit, instruments and chattel paper now owned or hereafter\nacquired and Borrower's Books relating to the foregoing; \n\n\n (f) All copyright rights, copyright applications, copyright registrations\nand like protections in each work of authorship and derivative work thereof,\nwhether published or unpublished, now owned or hereafter acquired; all trade\nsecret rights, including all rights to unpatented inventions, know-how,\noperating manuals, license rights and agreements and confidential information,\nnow owned or hereafter acquired; all mask work or similar rights available for\nthe protection of semiconductor chips, now owned or hereafter acquired; all\nclaims for damages by way of any past, present and future infringement of any of\nthe foregoing; and \n\n (g) Any and all claims, rights and interests in any of the above and all\nsubstitutions for, additions and accessions to and proceeds thereof. \n\n 32.\n\n\n EXHIBIT C \n\n BORROWING BASE CERTIFICATE\n--------------------------------------------------------------------------------\nBorrower: InVision Technologies, Inc. Lender: Silicon Valley Bank\n\nCommitment Amount: $4,500,000 \n\n-------------------------------------------------------------------------------\n\nACCOUNTS RECEIVABLE \n\n 1. Accounts Receivable Book Value as of ______ $ _____________________\n 2. Additions (please explain on reverse) $ _____________________\n 3. TOTAL ACCOUNTS RECEIVABLE $ _____________________\n\nACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) $ _____________________\n\n 4. Amounts over 90 days due $ _____________________\n 5. Balance of 50% over 90 day accounts$ \n 6. Concentration Limits $ _____________________\n 7. Foreign Accounts $ _____________________\n 8. Ineligible Governmental Accounts $ _____________________\n 9. Contra Accounts $ _____________________\n 10. Promotion or Demo Accounts $ _____________________\n 11. Intercompany\/Employee Accounts $ _____________________\n 12. Other (please explain on reverse) $ _____________________\n 13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $ _____________________\n 14. Eligible Accounts (#3 minus #13) $ _____________________\n 15. LOAN VALUE OF ACCOUNTS (80% of #14) $ _____________________\n\n BALANCES \n 16. Maximum Loan Amount $ ____________________ \n 17. Total Funds Available [Lesser of #16 or #15 $ _____________________\n 18. Present balance owing on Line of Credit $ _____________________\n 19. Outstanding:under Sublimits ( ) $ _____________________\n 20. RESERVE POSITION (#17 minus #18 and #19) $ _____________________\n\n\nTHE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND\nCORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE\nCOMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AND\nSECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.\n\nCOMMENTS:\n\nInVision Technologies, Inc.\n\nBy: BANK USE ONLY\n --------------------- Rec'd By: \n --------------------\n Auth. Signer \n\n Date: \n --------------------\n\n Verified: \n -------------------\n Auth. Signer\n Date: \n ----------------------\n\n ----------------------\n\n 33.\n\n DISCLOSURE SCHEDULE TO LOAN AND SECURITY AGREEMENT BETWEEN\n INVISION TECHNOLOGIES, INC. AND SILICON VALLEY BANK \n\n<\/pre>\n
\n\n Liens
\n ——
\nSecured Party UCC File No. Date
\n————- ———– ——
\n
\nTelogy, Inc. 9434560289 Dec. 2, 1994<\/p>\nYale-Northern California, Inc.
\nCiticorp Dealer Finance 9504860580 Feb. 10, 1995<\/p>\n
Instituto Bancario San Paolo di
\nTorino, SpA
\n(To be terminated on or prior to Closing Date) 9600260210 Dec. 28, 1995<\/p>\n
Anaconda Partners, L.P.
\n(To be terminated on or prior to Closing Date) 9600260218 Dec. 28, 1995<\/p>\n
Leasing Technologies International, Inc. 9613560835 May 13, 1996<\/p>\n
Leasing Technologies International, Inc. 9633160900 Nov. 25, 1996<\/p>\n
European American Bank 9626960074 Sep. 20, 1996 <\/p>\n
<\/c><\/c><\/s><\/caption>\n<\/table>\n
INVESTMENTS
\n ———– <\/p>\n
Investments in subsidiaries: Imatron Federal Systems, Inc. and Invision
\nInternational, Inc. <\/p>\n
INDEBTEDNESS
\n ————
\nLender
\n—–
\nTelogy, Inc. <\/p>\n
Yale-Northern California, Inc.
\n Citicorp Dealer Finance <\/p>\n
Leasing Technologies
\n International, Inc. <\/p>\n
Equipment purchased from Hyster to be financed. <\/p>\n
OTHER
\n —–
\nInvision’s Intellectual Property rights are subject to FAA contracts. <\/p>\n
34.<\/p>\n
EXHIBIT A<\/p>\n
INVISION CTX 5000 SP TECHNICAL SPECIFICATIONS<\/p>\n
THE CTX 5000 SP SCREENS PASSENGER LUGGAGE, PACKAGES AND LIGHT CARGO FOR
\nEXPLOSIVES OR NARCOTICS. CTX IS THE ONLY SYSTEM TO USE COMPUTERIZED TOMOGRAPHY
\nAND IS THE ONLY FAA CERTIFIED EXPLOSIVES DETECTION SYSTEM. CTX CAN BE USED
\nSTAND-ALONE OR INTEGRATED INTO AN AIRPORT BAGGAGE HANDLING SYSTEM. IT CAN
\nOPERATE AT 3 DIFFERENT LEVELS OF DETECTION FOR SCREENING UNDER LOW, MEDIUM OR
\nHIGH THREAT CONDITIONS. <\/p>\n
[illustration of CTX 5000 SP]<\/p>\n
\n\nSCANNER WORKSTATION<\/p>\n
\nWeight 9320 lbs. 4208 kg Dimensions 42″ L x 53″ W x 54″ H
\n 1069 x 1336 x 1350 mm<\/p>\nLength 174 in. 4421 mm <\/p>\n
Footprint 56 sq.ft. 5.2 sq. m Monitors (VDL) 2 x 17″<\/p>\n
Conveyor Height (+ 1″) 29.25 in. 740 mm Monitor resolution 800 x 600.028 mm<\/p>\n
Loading Velocity 1.8 ft.\/sec 0.45 m\/sec. Image depth 128 grey level + colors<\/p>\n
Unload Velocity LESS THAN- LESS THAN 2.5m\/sec SP image resolution 576 x 410 pixels
\n 9.8 ft.\/ sec CT image resolution 512 x 512 pixels<\/p>\n
LUGGAGE Threat coloring red
\n Detonator coloring green<\/p>\n
Maximum dimension 46 in. L x 26 in. W x Metal coloring blue
\n 22 in. H Controls (images, hard-soft keys, trackball
\n 119 cm L x 66 cm W x system)
\n 56 cm H<\/p>\n
Maximum weight 110 lbs. 50 kg Cable length 16.5 ft. 5 m
\n (Standard)<\/p>\n
ENVIRONMENT SAFETY<\/p>\n
Voltage 350-480V 3 phase
\n 3 W & PE Exceeds FDA 21 CFR 1020.40<\/p>\n
Frequency 30 – 60 Hz X-ray shielded cabinet with safety
\n interlocks<\/p>\n
Power 12 kVA Emergency stop<\/p>\n
Tolerance =5% Uninterrupted power supply for
\n computer (20 min)<\/p>\n
Temperature 10 – 40 DEG C <\/p>\n
Humidity LESS THAN-80%<\/p>\n
X-RAY SYSTEM<\/p>\n
SP Operating range 140 kV. 0.8 mA
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
35.<\/p>\n
SP sensitivity 12 bit<\/p>\n
Sp detectors 768<\/p>\n
CT Operating range 80-200 kV. 1-20 mA<\/p>\n
CT sensitivity 18 bit<\/p>\n
CT detectors 480<\/p>\n
Cooling system Continuous oil filled <\/p>\n
36.<\/p>\n
EXHIBIT B<\/p>\n
DRAFT
\n EDS SPECIFICATIONS
\n [Illustration of EDS System]<\/p>\n
Definition of the components:<\/p>\n
\n\n————————————————————————————————————
\n————————————————————————————————————
\nCOMPONENT: DEFINITION: RESPONSIBILITY:
\n————————————————————————————————————
\n
\nQ Queuing conveyor belt: One or more queuing Joint
\n conveyor belts that feed the luggage to the system or forward
\n inspected luggage to the bags movement system. Their
\n number defines the input and output queue length, their
\n functionality is controlled by the CTX.
\n————————————————————————————————————
\nLPA Active Luggage Positioner: Positions the luggage at the InVision
\n center of the conveyor belt with the long dimension of the
\n luggage in direction of the movement. May stop oversize
\n luggage.
\n————————————————————————————————————
\nZ The Z-scanner made by EG&G Astrophysics Astrophysics
\n————————————————————————————————————
\nD Diverter: Optional luggage diverter that may be required Joint
\n for some non certified application of the EDS System
\n————————————————————————————————————
\nCTX The CTX 5000 without the pre-scanner InVision
\n————————————————————————————————————
\nCONSOLE The CTX 5000 operator console InVision
\n————————————————————————————————————
\nI\/O BOX The common and only interface between the EDS Joint
\n SYSTEM and the airport bags movement system<\/p>\n————————————————————————————————————
\n————————————————————————————————————
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
Overall performance:
\n – FAA certification at 500 bph or better
\n – Maximum throughput in non FAA certified mode of 1200 bph with the
\n diverter
\n – Detection mode changeable from bag to bag <\/p>\n
The Prototypes will be jointly manufactured by the two parties at a
\n location to be agreed upon<\/p>\n
37.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7912,8832],"corporate_contracts_industries":[9415,9454],"corporate_contracts_types":[9560,9567],"class_list":["post-41135","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-invision-technologies-inc","corporate_contracts_companies-silicon-valley-bancshares","corporate_contracts_industries-financial__banks","corporate_contracts_industries-manufacturing__industrial","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41135"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41135"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41135"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}