1
EXHIBIT 10.139
[LOGO] SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: ALPHA MICROSYSTEMS
ADDRESS: 2722 SOUTH FAIRVIEW STREET
SANTA ANA, CALIFORNIA 92704
DATE: JULY 10, 1995
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa
Clara, California 95054-2895 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").
1. LOANS.
1.1 LOANS. Silicon, in its reasonable discretion, will make loans to the
Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount (the "Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default
has occurred. The Borrower is responsible for monitoring the total amount of
Loans and other Obligations outstanding from time to time, and Borrower shall
not permit the same, at any time, to exceed the Credit Limit. If at any time
the total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's
deposit accounts maintained with Silicon.
1.3 FEES. The Borrower shall pay to Silicon a loan origination fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.
2. GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means the
following: the obligation to pay all Loans and all interest thereon when due,
and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon, whether joint or several, monetary
or non-monetary, and whether created pursuant to this Agreement or any other
present or future agreement or otherwise. Silicon may, in its discretion,
require that Borrower pay monetary Obligations in cash to Silicon, or charge
them to Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans. Silicon may also, in its discretion, charge
any monetary Obligations to Borrower's deposit accounts maintained with
Silicon.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby grants
Silicon a continuing security interest in all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): (a) All accounts, contract
rights, chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) All inventory, goods, merchandise, materials, raw materials, work
in process, finished goods, farm products, advertising, packaging and shipping
materials, supplies, and all other tangible personal property which is held for
sale or lease or furnished under contracts of service or consumed in the
Borrower's business, and all warehouse receipts and other documents; and (c)
All equipment, including without limitation all machinery, fixtures, trade
fixtures, vehicles, furnishings, furniture, materials, tools, machine tools,
office equipment, computers and peripheral devices, appliances, apparatus,
parts, dies, and jigs; (d) All general intangibles including, but not limited
to, deposit accounts, goodwill, names, trade names, trademarks and the goodwill
of the business symbolized thereby, trade secrets, drawings, blueprints,
customer lists, patents, patent applications, copyrights, security deposits,
loan commitment fees, federal, state and
-1-
2
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
local tax refunds and claims, all rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, all claims of
Borrower against Silicon, all rights to purchase or sell real or personal
property, all rights as a licensor or licensee of any kind, all royalties,
licenses, processes, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation
credit, liability, property and other insurance), and all other rights,
privileges and franchises of every kind; (e) All books and records, whether
stored on computers or otherwise maintained; and (f) All substitutions,
additions and accessions to any of the foregoing, and all products, proceeds
and insurance proceeds of the foregoing, and all guaranties of and security for
the foregoing; and all books and records relating to any of the foregoing.
Silicon's security interest in any present or future technology (including
patents, trade secrets, and other technology) shall be subject to any licenses
or rights now or in the future granted by the Borrower to any third parties in
the ordinary course of Borrower's business; provided that if the Borrower
proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
discretion.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the Borrower
covenants that the following representations will continue to be true, and that
the Borrower will comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower, if a corporation, is
and will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The Borrower is and
will continue to be qualified and licensed to do business in all jurisdictions
in which any failure to do so would have a material adverse effect on the
Borrower. The execution, delivery and performance by the Borrower of this
Agreement, and all other documents contemplated hereby have been duly and
validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of, and are not
grounds for acceleration under, any agreement or instrument which is binding
upon the Borrower.
3.2 NAME; TRADE NAMES AND STYLES. The name of the Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule hereto
are all prior names of the Borrower and all of Borrower's present and prior
trade names. The Borrower shall give Silicon 15 days' prior written notice
before changing its name or doing business under any other name. The Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is the Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of equipment which are leased by the Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for the following ("Permitted Liens"):
(i) purchase money security interests in specific items of equipment; (ii)
leases of specific items of equipment; (iii) liens for taxes not yet payable;
(iv) additional security interests and liens consented to in writing by Silicon
in its reasonable discretion, which consent shall not be unreasonably withheld;
and (v) security interests being terminated substantially concurrently with
this Agreement. Silicon will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on Silicon's then
standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that the Borrower agree that any uncured default in any
obligation secured by the subordinate security interest shall also constitute
an Event of Default under this Agreement. Silicon now has, and will continue
to have, a perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and the Borrower will at all
times defend Silicon and the Collateral against all claims of others. None of
the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture.
3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the Collateral in
good working condition, and the Borrower will not use the Collateral for any
unlawful purpose. The Borrower will immediately advise Silicon in writing of
any material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. The Borrower has maintained and will maintain at the
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or in
the future delivered to Silicon have been, and will be, prepared in conformity
with generally accepted accounting principles and now and in the future will
completely and accurately reflect the financial condition of the Borrower, at
the times and for the periods therein stated. Since the last date covered by
any such statement, there has been no material adverse change in the
-2-
3
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
financial condition or business of the Borrower. The Borrower is now and will
continue to be solvent. The Borrower will provide Silicon: (i) within 30 days
after the end of each month, a monthly financial statement prepared by the
Borrower, and a Compliance Certificate in such form as Silicon shall reasonably
specify, signed by the Chief Financial Officer of the Borrower, certifying that
as of the end of such month the Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth on the Schedule and such
other information as Silicon shall reasonably request; and (ii) * [and (ii)
within 120 days following the end of the Borrower's fiscal year, complete
annual financial statements, certified by independent certified public
accountants acceptable to Silicon.]
* (II) WITHIN 5 DAYS AFTER THE EARLIER OF THE DATE THE REPORT 10-Q IS FILED OR
IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, SUCH 10-Q
REPORT, A QUARTERLY FINANCIAL STATEMENT PREPARED BY THE BORROWER, AND A
COMPLIANCE CERTIFICATE, SIGNED BY THE CHIEF FINANCIAL OFFICER OF THE BORROWER,
CERTIFYING THAT THROUGHOUT SUCH PERIOD THE BORROWER WAS IN FULL COMPLIANCE WITH
ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT, AND SETTING FORTH
CALCULATIONS SHOWING COMPLIANCE WITH THE FINANCIAL COVENANTS SET FORTH ON THE
SCHEDULE AND SUCH OTHER INFORMATION AS SILICON SHALL REASONABLY REQUEST; AND
(III) WITHIN 5 DAYS AFTER THE EARLIER OF THE DATE THE REPORT 10-K IS FILED OR
IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, SUCH 10-K
REPORT, COMPLETE ANNUAL FINANCIAL STATEMENTS, CERTIFIED BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS ACCEPTABLE TO SILICON, AND A COMPLIANCE
CERTIFICATE FOR THE PERIOD THEN ENDED, SIGNED BY THE CHIEF FINANCIAL OFFICER OF
THE BORROWER, CERTIFYING THAT THROUGHOUT SUCH PERIOD THE BORROWER WAS IN FULL
COMPLIANCE WITH ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT, AND SETTING
FORTH CALCULATIONS SHOWING COMPLIANCE WITH THE FINANCIAL COVENANTS SET FORTH ON
THE SCHEDULE AND SUCH OTHER INFORMATION AS SILICON SHALL REASONABLY REQUEST.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and the Borrower has timely paid, and will timely
pay, all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by the Borrower. The Borrower may,
however, defer payment of any contested taxes, provided that the Borrower (i)
in good faith contests the Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (ii)
notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower. The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
3.9 COMPLIANCE WITH LAW. The Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to the Borrower, including, but not limited to,
those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against the Borrower involving amounts in excess of $250,000.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule to this
Agreement.
4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit, without
limiting Silicon's other remedies, and whether or not Silicon declares an Event
of Default, Borrower shall remit to Silicon all checks and other proceeds of
Borrower's accounts and general intangibles, in the same form as received by
Borrower, within one day after Borrower's receipt of the same, to be applied to
the Obligations in such order as Silicon shall determine in its discretion.
4.3 INSURANCE. The Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in
-3-
4
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
reduction of the Obligations as Silicon shall determine in its sole and
absolute discretion, except that, provided no Event of Default has occurred,
Silicon shall release to the Borrower insurance proceeds with respect to
equipment totaling less than $100,000, which shall be utilized by the Borrower
for the replacement of the equipment with respect to which the insurance
proceeds were paid. Silicon may require reasonable assurance that the
insurance proceeds so released will be so used. If the Borrower fails to
provide or pay for any insurance, Silicon may, but is not obligated to, obtain
the same at the Borrower's expense. The Borrower shall promptly deliver to
Silicon copies of all reports made to insurance companies.
4.4 REPORTS. The Borrower shall provide Silicon with such written reports
with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify *.
* , WHICH REPORTS, IF BORROWER INFORMS SILICON ARE CONFIDENTIAL, SILICON SHALL
MAINTAIN AS SUCH IN ACCORDANCE WITH THE CONFIDENTIALITY PROVISION (AS DEFINED
IN SECTION 4.5)
4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times, and
upon one business day notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy the Borrower's
accounting books and records and Borrower's books and records relating to the
Collateral. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have
the right to disclose any such information to its auditors, regulatory
agencies, and attorneys, and pursuant to any subpoena or other legal process *.
The foregoing audits shall be at Silicon's expense, except that the Borrower
shall reimburse Silicon for its reasonable out of pocket costs for semi-annual
accounts receivable audits by third parties retained by Silicon, and Silicon
may debit Borrower's deposit accounts with Silicon for the cost of such
semi-annual accounts receivable audits (in which event Silicon shall send
notification thereof to the Borrower) **. Notwithstanding the foregoing, after
the occurrence of an Event of Default all audits shall be at the Borrower's
expense.
* (THE "CONFIDENTIALITY PROVISION")
** , WITH THE UNDERSTANDING THAT COST ASSOCIATED WITH THE FIRST SUCH AUDIT
WILL NOT EXCEED $2,500, AND THE COST ASSOCIATED WITH SUBSEQUENT AUDITS WILL NOT
EXCEED $1,800 PER AUDIT
4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule hereto,
the Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation, except that the
Borrower may merge or consolidate with another corporation if the Borrower is
the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined in the Schedule) as of the end of the month prior to the effective date
of the merger, and the assets of the corporation acquired in the merger are not
subject to any liens or encumbrances, except Permitted Liens; (ii) acquire any
assets outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined in the Schedule) as
of the end of the month prior to the effective date of the acquisition; (iii)
enter into any other transaction outside the ordinary course of business
(except as permitted by the other provisions of this Section); (iv) sell or
transfer any Collateral, except for the sale of finished inventory in the
ordinary course of the Borrower's business, and except for the sale of obsolete
or unneeded equipment * in the ordinary course of business; (v) make any loans
of any money or any other assets; (vi) incur any debts, outside the ordinary
course of business, which would have a material, adverse effect on the Borrower
or on the prospect of repayment of the Obligations; (vii) guarantee or
otherwise become liable with respect to the obligations of another party or
entity; (viii) pay or declare any dividends on the Borrower's stock (except for
dividends payable solely in stock of the Borrower); (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of the Borrower's
stock; (x) make any change in the Borrower's capital structure which has a
material adverse effect on the Borrower or on the prospect of repayment of the
Obligations; or (xi) dissolve or elect to dissolve. Transactions permitted by
the foregoing provisions of this Section are only permitted if no Event of
Default and no event which (with notice or passage of time or both) would
constitute an Event of Default would occur as a result of such transaction.
* OR SOFTWARE
4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to
Silicon, make available the Borrower and its officers, employees and agents and
the Borrower's books and records to the extent that Silicon may deem them
reasonably necessary in order to prosecute or defend any such suit or
proceeding.
4.8 VERIFICATION. Silicon may, from time to time, following prior
notification to Borrower, verify directly with the respective account debtors
the validity, amount and other matters relating to the Borrower's accounts, by
means of mail, telephone or otherwise, either in the name of the Borrower or
Silicon or such other name as Silicon may reasonably choose, provided that no
prior notification to Borrower shall be required following an Event of Default.
4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its expense,
on request by Silicon, to execute all documents in form satisfactory to
Silicon, as Silicon, may deem reasonably necessary or useful in order to
perfect and maintain Silicon's perfected security interest in the Collateral,
and in order to fully consummate all of the transactions contemplated by this
Agreement.
-4-
5
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
5. TERM.
5.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule hereto (the "Maturity Date").
5.2 EARLY TERMINATION. This Agreement may be terminated, without penalty,
prior to the Maturity Date as follows: (i) by the Borrower, effective three
business days after written notice of termination is given to Silicon; or (ii)
by Silicon at any time after the occurrence of an Event of Default, without
notice, effective immediately.
5.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, the Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or
on any earlier effective date of termination, there are any outstanding letters
of credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an
amount equal to the face amount of all such letters of credit plus all
interest, fees and cost due or to become due in connection therewith, to secure
all of the Obligations relating to said letters of credit, pursuant to
Silicon's then standard form cash pledge agreement. Notwithstanding any
termination of this Agreement, all of Silicon's security interests in all of
the Collateral and all of the terms and provisions of this Agreement shall
continue in full force and effect until all Obligations have been paid and
performed in full; provided that, without limiting the fact that Loans are
subject to the reasonable discretion of Silicon, Silicon may, in its sole
discretion, refuse to make any further Loans after termination. No termination
shall in any way affect or impair any right or remedy of Silicon, nor shall any
such termination relieve the Borrower of any Obligation to Silicon, until all
of the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations, Silicon shall promptly deliver to
the Borrower termination statements, requests for reconveyances and such other
documents as may be required to fully terminate any of Silicon's security
interests.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and the Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon
by the Borrower or any of the Borrower's officers, employees or agents, now or
in the future, shall be untrue or misleading in any material respect; or (b)
the Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time exceed the Credit Limit; or (d) the Borrower shall fail
to comply with any of the financial covenants set forth in the Schedule or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured; or (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, which failure is not cured within [5 business] * days
after the date due; or (f) Any levy, assessment, attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral which is not cured
within [10] * days after the occurrence of the same; or (g) Dissolution,
termination of existence, insolvency or business failure of the Borrower; or
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by the Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect; or (h) the
commencement of any proceeding against the Borrower or any guarantor of any of
the Obligations under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; (i) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing; or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (j) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing; or commencement
of proceedings by or against any such third party under any bankruptcy or
insolvency law; or (k) the Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement or if any person
who has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (l) there shall be a change in the
record or beneficial ownership of an aggregate of more than [20%] ** of the
outstanding shares of stock of the Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of the Borrower in
effect on the date hereof, without the prior written consent of Silicon; or (m)
the Borrower shall generally not pay its debts as they become due; or the
Borrower shall conceal, remove or transfer any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law. Silicon may cease making any Loans
hereunder during any of the above cure periods, and thereafter if an Event of
Default has occurred.
* 30
** 30%
6.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time
thereafter, Silicon, at its option,
-5-
6
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
and without notice or demand of any kind (all of which are hereby expressly
waived by the Borrower), may do any one or more of the following: (a) Cease
making Loans or otherwise extending credit to the Borrower under this Agreement
or any other document or agreement; (b) Accelerate and declare all or any part
of the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation; (c) Take possession of any or all of
the Collateral wherever it may be found, and for that purpose the Borrower
hereby authorizes Silicon without judicial process to enter onto any of the
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof
without charge for so long as Silicon deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of
any or all of the Collateral by Court process, the Borrower hereby irrevocably
waives: (i) any bond and any surety or security relating thereto required by
any statute, court rule or otherwise as an incident to such possession; (ii)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof; and (iii) any requirement that Silicon retain
possession of and not dispose of any such Collateral until after trial or final
judgment; (d) Require the Borrower to assemble any or all of the Collateral and
make it available to Silicon at places designated by Silicon which are
reasonably convenient to Silicon and the Borrower, and to remove the Collateral
to such locations as Silicon may deem advisable; (e) Require Borrower to
deliver to Silicon, in kind, all checks and other payments received with
respect to all accounts and general intangibles, together with any necessary
indorsements, within one day after the date received by the Borrower; (f)
Complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use the Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (g) Sell, lease
or otherwise dispose of any of the Collateral in its condition at the time
Silicon obtains possession of it or after further manufacturing, processing or
repair, at any one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit, and to adjourn any such sale
from time to time without notice other than oral announcement at the time
scheduled for sale. Silicon shall have the right to conduct such disposition
on the Borrower's premises without charge, for such time or times as Silicon
deems reasonable, or on Silicon's premises, or elsewhere and the Collateral
need not be located at the place of disposition. Silicon may directly or
through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve the
Borrower of any liability the Borrower may have if any Collateral is defective
as to title or physical condition or otherwise at the time of sale; (h) Demand
payment of, and collect any accounts and general intangibles comprising
Collateral and, in connection therewith, the Borrower irrevocably authorizes
Silicon to endorse or sign the Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to the Borrower and remove therefrom payments made with respect to any item of
the Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) Offset against any sums in any of Borrower's
general, special or other deposit accounts with Silicon; and (j) Demand and
receive possession of any of the Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon with respect to the foregoing
shall be added to and become part of the Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations. Without limiting any of Silicon's rights and
remedies, from and after the occurrence of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional four
percent per annum.
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect
to any sale of any of the Collateral, Silicon may (but is not obligated to)
direct any prospective purchaser to ascertain directly from the Borrower any
and all information concerning the same. Silicon may employ other methods of
noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default, without
limiting Silicon's other rights and remedies, the Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents)
at any time, at its option, but without obligation, with or without notice to
the Borrower, and at the Borrower's expense, to do any or all of the following,
in the Borrower's name or otherwise: (a) Execute on behalf of the Borrower any
documents that Silicon may, in its sole and absolute discretion, deem advisable
in order to perfect and maintain Silicon's security
-6-
7
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
interest in the Collateral, or in order to exercise a right of the Borrower or
Silicon, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements; (b) Execute
on behalf of the Borrower any document exercising, transferring or assigning
any option to purchase, sell or otherwise dispose of or to lease (as lessor or
lessee) any real or personal property which is part of Silicon's Collateral or
in which Silicon has an interest; (c) Execute on behalf of the Borrower, any
invoices relating to any account, any draft against any account debtor and any
notice to any account debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic's, materialman's or other lien, or assignment or
satisfaction of mechanic's, materialman's or other lien; (d) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of the Borrower upon any instruments, or documents, evidence
of payment or Collateral that may come into Silicon's possession; (e) Endorse
all checks and other forms of remittances received by Silicon; (f) Pay, contest
or settle any lien, charge, encumbrance, security interest and adverse claim in
or to any of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (g) Grant extensions of time to
pay, compromise claims and settle accounts and general intangibles for less
than face value and execute all releases and other documents in connection
therewith; (h) Pay any sums required on account of the Borrower's taxes or to
secure the release of any liens therefor, or both; (i) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (j) Instruct any third party having custody or control
of any books or records belonging to, or relating to, the Borrower to give
Silicon the same rights of access and other rights with respect thereto as
Silicon has under this Agreement; and (k) Take any action or pay any sum
required of the Borrower pursuant to this Agreement and any other present or
future agreements. Silicon shall exercise the foregoing powers in a
commercially reasonable manner. Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon's rights under the foregoing power of attorney or any
of Silicon's other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of the
Borrower.
6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the
exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to the Borrower or other persons legally entitled thereto; the Borrower
shall remain liable to Silicon for any deficiency. If, Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale or other disposition of
Collateral, Silicon shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Silicon of the cash therefor.
6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights
and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be
deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.
7. GENERAL PROVISIONS.
7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower
at the addresses shown in the heading to this Agreement, or at any other
address designated in writing by one party to the other party. All notices
shall be deemed to have been given upon delivery in the case of notices
personally delivered to the Borrower or to Silicon, or at the expiration of two
business days following the deposit thereof in the United States mail, with
postage prepaid.
7.2 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
7.3 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between the Borrower and Silicon and supersede all prior
and contemporaneous negotiations and oral representations and agreements, all
of which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.
7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future
-7-
8
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
agreement between the Borrower and Silicon shall not waive or diminish any
right of Silicon later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether
prior or subsequent thereto. None of the provisions of this Agreement or any
other agreement now or in the future executed by the Borrower and delivered to
Silicon shall be deemed to have been waived by any act or knowledge of Silicon
or its agents or employees, but only by a specific written waiver signed by an
officer of Silicon and delivered to the Borrower. The Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, general intangible, document or guaranty
at any time held by Silicon on which the Borrower is or may in any way be
liable, and notice of any action taken by Silicon, unless expressly required by
this Agreement.
7.5 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by the Borrower or any other party through the ordinary negligence of
Silicon, or any of its directors, officers, employees, agents, attorneys or any
other person affiliated with or representing Silicon.
7.6 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by the Borrower and a duly authorized
officer of Silicon.
7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
7.8 ATTORNEYS FEES AND COSTS. The Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, account debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of the Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to the Borrower. In satisfying Borrower's
obligation hereunder to reimburse Silicon for attorneys fees, Borrower may, for
convenience, issue checks directly to Silicon's attorneys, Levy, Small &
Lallas, but Borrower acknowledges and agrees that Levy, Small & Lallas is
representing only Silicon and not Borrower in connection with this Agreement.
If either Silicon or the Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and costs to which Silicon may be entitled
pursuant to this Paragraph shall immediately become part of the Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
7.9 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of the parties hereto; provided, however,
that the Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall
release the Borrower from its liability for the Obligations.
7.10 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than one
person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
7.11 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or the Borrower under any rule of construction or
otherwise.
7.12 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY CONDUCT, ACTS
OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR
THE BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE.
-8-
9
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
7.13 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall,
at Silicon's option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Orange County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights the Borrower may have to
object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
BORROWER:
ALPHA MICROSYSTEMS
BY DOUGLAS J. TULLIO
--------------------------------
PRESIDENT OR VICE PRESIDENT
BY JOHN F. GLADE
--------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY TERRY BESS
--------------------------------
TITLE VICE PRESIDENT
-----------------------------
-9-
10
[LOGO] SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: ALPHA MICROSYSTEMS
ADDRESS: 2722 SOUTH FAIRVIEW STREET
SANTA ANA, CALIFORNIA 92704
DATE: JULY 10, 1995
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of:
(i) $2,000,000 at any one time
outstanding; or (ii) 70% of the Net
Amount of Borrower's accounts, which
Silicon in its discretion deems eligible
for borrowing*. "Net Amount" of an
account means the gross amount of the
account, minus all applicable sales, use,
excise and other similar taxes and minus
all discounts, credits and allowances of
any nature granted or claimed.
* , SUBJECT TO THE RESERVE AS SET FORTH
IN PARAGRAPH 6 OF THE SECTION OF THIS
SCHEDULE ENTITLED "OTHER COVENANTS
(SECTION 4.1)".
Without limiting the fact that the
determination of which accounts are
eligible for borrowing is a matter of
Silicon's discretion, the following will
not be deemed eligible for borrowing*:
accounts outstanding for more than 90
days from the invoice date, accounts
subject to any contingencies, accounts
owing from the United States or any
department, agency or instrumentality of
the United States or any state, city or
municipality**, accounts owing from an
account debtor outside the United States
*** (unless pre-approved by Silicon in
its discretion, or backed by a letter of
credit satisfactory to Silicon, or FCIA
insured satisfactory to Silicon),
accounts owing from one account debtor to
the extent they exceed 25% of the total
eligible accounts outstanding, accounts
owing from an affiliate of Borrower, and
accounts owing from an account debtor to
whom Borrower is or may be liable for
goods purchased from such account debtor
or otherwise. In addition, if more than
50% of the accounts owing from an account
debtor are outstanding more than 90 days
from the invoice date or are otherwise
not eligible accounts, then all accounts
owing from that account debtor will be
deemed ineligible for borrowing.
* (WITHOUT LIMITING THE DISCRETION OF
SILICON TO DETERMINE WHICH ACCOUNTS ARE
ELIGIBLE FOR BORROWING, SILICON MAY DEEM
OTHER ACCOUNTS INELIGIBLE FOR BORROWING
AFTER REVIEW OF THE ACCOUNTS
-1-
11
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
RECEIVABLE AUDIT BEING CONDUCTED PRIOR TO
THE MAKING OF LOANS HEREUNDER)
** (PROVIDED THAT SUCH RESTRICTIONS DO
NOT APPLY TO SCHOOL DISTRICT ACCOUNT
DEBTORS RELATING TO ACCOUNTS ARISING FROM
THE PANDA SOFTWARE PRODUCT)
*** OR CANADA
LETTER OF CREDIT SUBLIMIT: Silicon, in its reasonable discretion,
will from time to time during the term of
this Agreement issue letters of credit
for the account of the Borrower ("Letters
of Credit"), in an aggregate amount at
any one time outstanding not to exceed
$500,000, upon the request of the
Borrower, provided that, on the date the
Letters of Credit are to be issued,
Borrower has available to it Accounts
Loans in an amount equal to or greater
than the face amount of the Letters of
Credit to be issued. Prior to the
issuance of any Letters of Credit,
Borrower shall execute and deliver to
Silicon Applications for Letters of
Credit and such other documentation as
Silicon shall specify (the "Letter of
Credit Documentation"). Fees for the
Letters of Credit shall be as provided in
the Letter of Credit Documentation.
Letters of Credit may have a maturity
date up to twelve months beyond the
Maturity Date in effect from time to
time, provided that if on the Maturity
Date, or on any earlier effective date of
termination, there are any outstanding
letters of credit issued by Silicon or
issued by another institution based upon
an application, guarantee, indemnity or
similar agreement on the part of Silicon,
then on such date Borrower shall provide
to Silicon cash collateral in an amount
equal to the face amount of all such
letters of credit plus all interest, fees
and cost due or to become due in
connection therewith, to secure all of
the Obligations relating to said letters
of credit, pursuant to Silicon's then
standard form cash pledge agreement.
The Credit Limit set forth aboveand the
Accounts Loans available under this
Agreement at any time shall be reduced by
the face amount of Letters of Credit from
time to time outstanding.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT Up to $1,000,000 (the "Contract Limit")
of the Credit Limit may be utilized for
spot and future foreign exchange
contracts (the "Exchange Contracts").
The Credit Limit available at any time
shall be reduced by the following amounts
(the "Foreign Exchange Reserve") on each
day (the "Determination Date"): (i) on
all outstanding Exchange Contracts on
which delivery is to be effected or
settlement allowed more than two business
days from the Determination Date, 20% of
the gross amount of the Exchange
Contracts; plus (ii) on all outstanding
Exchange Contracts on which delivery is
to be effected or settlement allowed
within two business days after the
Determination Date, 100% of the gross
amount of the Exchange Contracts. In
lieu of the Foreign Exchange Reserve for
100% of the gross amount of any Exchange
Contract, the Borrower may request that
Silicon debit the Borrower's bank account
with Silicon for such amount, provided
Borrower has immediately available funds
in such amount in its bank account.
-2-
12
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
Silicon may, in its discretion, terminate
the Exchange Contracts at any time (a)
that an Event of Default occurs or (b)
that there is not sufficient availability
under the Credit Limit and Borrower does
not have available funds in its bank
account to satisfy the Foreign Exchange
Reserve. If either Silicon or Borrower
terminates the Exchange Contracts, and
without limitation of the FX Indemnity
Provisions (as referred to below),
Borrower agrees to reimburse Silicon for
any and all fees, costs and expenses
relating thereto or arising in connection
therewith.
Borrower shall not permit the total gross
amount of all Exchange Contracts on which
delivery is to be effected and settlement
allowed in any two business day period to
be more than $500,000 (the "Settlement
Limit"), nor shall Borrower permit the
total gross amount of all Exchange
Contracts to which Borrower is a party,
outstanding at any one time, to exceed
the Contract Limit.
Notwithstanding the above, however, the
amount which may be settled in any two
(2) business day period may, in Silicon's
sole discretion, be increased above the
Settlement Limit up to, but in no event
to exceed, the amount of the Contract
Limit (the "Discretionary Settlement
Amount") under either of the following
circumstances (the "Discretionary
Settlement Circumstances"):
(i) if there is sufficient availability
under the Credit Limit in the amount
of the Foreign Exchange Reserve as
of each Determination Date, provided
that Silicon in advance shall reserve
the full amount of the Foreign Exchange
Reserve against the Credit Limit; or
(ii) if there is insufficient
availability under the Credit Limit as
to settlements within any two (2)
business day period if Silicon is able
to: (A) verify good funds overseas
prior to crediting Borrower's deposit
account with Silicon (in the case of
Borrower's sale of foreign currency);
or (B) debit Borrower's deposit account
with Silicon prior to delivering
foreign currency overseas (in the case
of Borrower's purchase of foreign
currency);
Provided that it is expressly understood
that Silicon's willingness adopt the
Discretionary Settlement Amount is a
matter of Silicon's sole discretion and
the existence of the Discretionary
Settlement Circumstances in no way means
or implies that Silicon shall be
obligated to permit the Borrower to
exceed the Settlement Limit in any two
business day period.
In the case of Borrower's purchase of
foreign currency, Borrower in advance
shall instruct Silicon upon settlement
either to treat the settlement amount as
an advance under the Credit Limit, or to
debit Borrower's account for the amount
settled.
The Borrower shall execute all standard
form applications and agreements of
Silicon in connection with the Exchange
Contracts, and without limiting any of
the terms of such applications and
agreements,
-3-
13
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
the Borrower will pay all standard fees
and charges of Silicon in connection
with the Exchange Contracts.
Without limiting any of the other terms
of this Loan Agreement or any such
standard form applications and agreements
of Silicon, Borrower agrees to indemnify
Silicon and hold it harmless, from and
against any and all claims, debts,
liabilities, demands, obligations,
actions, costs and expenses (including,
without limitation, attorneys' fees of
counsel of Silicon's choice), of every
nature and description, which it may
sustain or incur, based upon, arising out
of, or in any way relating to any of the
Exchange Contracts or any transactions
relating thereto or contemplated thereby
(collectively referred to as the "FX
Indemnity Provisions").
The Exchange Contracts shall have
maturity dates no later than the
Maturity Date.
INTEREST RATE (Section 1.2): A rate equal to the "Prime Rate" in
effect from time to time, plus 1.50% per
annum. Interest shall be calculated on
the basis of a 360-day year for the
actual number of days elapsed. "Prime
Rate" means the rate announced from time
to time by Silicon as its "prime rate;"
it is a base rate upon which other rates
charged by Silicon are based, and it is
not necessarily the best rate available
at Silicon. The interest rate applicable
to the Obligations shall change on each
date there is a change in the Prime Rate.
LOAN ORIGINATION FEE
(Section 1.3): $15,000. (Any Commitment Fee previously
paid by the Borrower in connection with
this loan shall be credited against this
Fee.)
MATURITY DATE
(Section 5.1): JULY __, 1996
PRIOR NAMES OF BORROWER
(Section 3.2): NONE
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): SEE ATTACHEMENT A
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent,
Borrower may do the following, provided
that, after giving effect thereto, no
Event of Default has occurred and no
event has occurred which, with notice or
passage of time or both, would constitute
an Event of Default, and provided that
the following are done in compliance with
all applicable laws, rules and
regulations: (i) repurchase shares of
Borrower's stock pursuant to any employee
stock purchase or benefit plan, provided
that the total amount paid by Borrower
for such stock does not exceed $500,000
in any fiscal year or (ii) make loans or
effect other transfers
-4-
14
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
of funds to its subsidiary,
AlphaHealthCare, Inc. provided that
Borrower is and remains a 100% owner of
AlphaHealthCare, Inc.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the
following covenants. Compliance shall be
determined as of the end of each month,
except as otherwise specifically provided
below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick
Assets" to current liabilities of not
less than 1.30 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net
worth of not less than $6,500,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total
liabilities to tangible net worth of not
more than 1.00 to 1.
PROFITABILITY Borrower shall not incur a loss (after
taxes) for any fiscal year, provided that
Borrower may incur losses (after taxes)
in two consecutive fiscal quarters during
any fiscal years if the aggregate amount
of such losses for such two fiscal
quarters does not exceed $300,000.
DEFINITIONS: "Current assets," and "current
liabilities" shall have the meanings
ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of
total assets over total liabilities,
determined in accordance with generally
accepted accounting principles, excluding
however all assets which would be
classified as intangible assets under
generally accepted accounting principles,
including without limitation goodwill,
licenses, patents, trademarks, trade
names, copyrights, capitalized software
and organizational costs, licences and
franchises.
"Quick Assets" means cash on hand or on
deposit in banks, readily marketable
securities issued by the United States,
readily marketable commercial paper rated
"A-1" by Standard & Poor's Corporation
(or a similar rating by a similar rating
organization), certificates of deposit
and banker's acceptances, and accounts
receivable (net of allowance for doubtful
accounts).
DEFERRED REVENUES: For purposes of the above quick asset
ratio, deferred revenues shall not be
counted as current liabilities. For
purposes of the above debt to tangible
net worth ratio, deferred revenues shall
not be counted in determining total
liabilities but shall be counted in
determining tangible net worth for
purposes of such ratio. For all other
purposes deferred revenues shall be
counted as liabilities in accordance with
generally accepted accounting principles.
SUBORDINATED DEBT: "Liabilities" for purposes of the
foregoing covenants do not include
indebtedness which is subordinated to the
indebtedness to Silicon under a
subordination agreement in form specified
by Silicon or by
-5-
15
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
language in the instrument evidencing the
indebtedness which is acceptable to
Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with
all of the following additional
covenants:
1. BANKING RELATIONSHIP. Borrower
shall at all times maintain its primary
banking relationship with Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE
AND LISTING. Within 20 days after the
end of each month, Borrower shall provide
Silicon with a Borrowing Base Certificate
in such form as Silicon shall specify,
and an aged listing of Borrower's
accounts receivable.
3. WARRANTS. The Borrower shall
provide Silicon with five-year warrants
to purchase 50,000 shares of Common stock
of the Borrower, at a price per share
equal to the market price per share as
reflected on the date prior to the
Borrower's execution of this Agreement,
on the terms and conditions in the
Warrant to Purchase Stock and related
documents being executed concurrently
with this Agreement. Upon the issuance
and delivery of such new warrant to
Silicon, Silicon agrees to cancel and
return to the Borrower the warrant for
20,000 shares of Common Stock of the
Borrower that the Borrower had previously
issued to Silicon in connection with the
prior Silicon loan facility with the
Borrower.
4. INDEBTEDNESS. Without limiting any
of the foregoing terms or provisions of
this Agreement, Borrower shall not in the
future incur indebtedness for borrowed
money, except for (i) indebtedness to
Silicon, and (ii) indebtedness incurred
in the future for the purchase price of
or lease of equipment in an aggregate
amount not exceeding $100,000 at any time
outstanding.
5. COPYRIGHT SECURITY AGREEMENT. In
connection with the Agreement, the
Borrower agrees to execute and deliver to
Silicon concurrently herewith a security
agreement regarding the intellectual
property collateral of Borrower on
Silicon's standard form.
6. RESERVE AGAINST AVAILABILITY.
Borrower understands and agrees that
Silicon has established a reserve of
$350,000 that reduces the amount of
Loans, Letters of Credit and Exchange
Contracts which would otherwise be
available to Borrower under the terms of
the Credit Limit and that such reserve
will remain in effect until such time
that the Borrower has provided to Silicon
a copy of a filed and duly executed UCC
termination statement for the UCC-1
financing statement filed with the
California Secretary of State on February
14, 1991 as File No. 91026128, with
Borrower, as debtor, and Metropolitan
Life Insurance Company, as secured party.
7. ALPHAHEALTHCARE, INC. Borrower
shall cause its subsidiary corporation,
ALPHAHEALTHCARE, INC., to execute and
deliver to Silicon a guaranty of the
Obligations, a security agreement to
collateralize such guaranty obligation,
and such other agreements and instruments
relating thereto as Silicon determines
are reasonably necessary, with each of
such agreements to be on Silicon's
standard form.
-6-
16
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
8. INITIAL AUDIT. The first,
semi-annual audit referred to in
Section 4.5 of this Agreement shall
be completed by prior to the making
of any Loans hereunder.
BORROWER:
ALPHA MICROSYSTEMS
BY DOUGLAS J. TULLIO
-------------------------------
PRESIDENT OR VICE PRESIDENT
BY JOHN F. GLADE
-------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY TERRY BESS
-------------------------------
TITLE VICE PRESIDENT
----------------------------
-7-
17
ATTACHMENT A
18
ALPHA MICROSYSTEMS SALES REGIONS
INTERNATIONAL
PETER WHITE, MANAGING DIRECTOR
European Operations
Enterprise House
1B Roxborough Way
Foundation Park, Cannon Lane
Maidenhead, Berkshire, UK
SL63UK
Phone 011-44-1628-822120
Fax 011-44-1628-824478
CUSTOMER RELATIONS
PEGGY DENSON - DIRECTOR
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 714-641-6260
Fax 714-641-7676
NATIONAL SALES
PHIL SMITH - VICE PRESIDENT
Sales and Marketing
5808 Leslie Lane
Mt. Airy, MD 21771
Phone 301-829-9598
Inhouse phone 714-641-6431
Fax 301-829-9599
DALE HICKS - REGION MANAGER
1061 E. Indiantown Road
Suite 410
Jupiter, FL 33477
Phone 407-745-7748
Fax 407-745-0577
DON WHITE - SALES ENGINEER
2652 Oakbrook Drive
Largo, FL 34640
Phone 813-584-7748
Fax 813-584-7868
ORDER ADMINISTRATION
SANDY SLIFKA
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 800-289-2574
Fax 714-641-7676
DENISE FUNK
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 800-289-2574
Fax 714-641-7676
HELEN JOHNSON
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 800-289-2574
Fax 714-641-7676
PACIFIC RIM, ASIA, LATIN
AMERICA
ABEL BACA - MANAGER
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 714-641-6492
Fax 714-641-7676
LINDA SIMPSON - MANAGER ORDER
ADMINISTRATION AND EXPORT
ADMINISTRATOR
2722 S. Fairview St.
Santa Ana, CA 92704
Phone 714-641-6255
Fax 714-641-7676
19
NEW OFFICE ADDRESS IN SAN DIEGO, CA, & HOME OFFICES IN CHARLOTTE, NC, MAINE, &
SALT LAKE CITY, UT, AND PERSONNEL CHANGES.
CONFIDENTIAL 7/6/95
ALPHA MICROSYSTEMS
SERVICES OPERATION
2722 S. FAIRVIEW STREET
P.O. BOX 25059
SANTA ANA, CA 92799
Customer Service: (800) 548-4848 Corporate Main Line: (800) 777-7406
FIELD OFFICE LOCATIONS
ALEXANDRIA #656 (leased)
5220 Rue Verdun, Suite B
Alexandria, LA 71303
(318) 442-6682
Kent Arrington
ATLANTA #672 (leased)
Franklin Office Park, Suite 402
7001 Peachtree Industrial Blvd.
Norcross, GA 30092
(404) 447-0303
FAX (404) 447-0527
Ron Thomas
AUSTIN #651 (HOME)
10 Matador Trail
Wimberley, TX 78676
(512) 842-1103
Steve Head
BOSTON (North) #687 (HOME)
10 Ferry Avenue
Hudson, NH 03051
(603) 881-7238
Mark Turner
BOSTON (South) #687 (leased)
200 Revere St., Suite 1
Canton, MA 02021
(617) 828-0086 (FAX, also)
Dave Keenan - E.I.C.
BUFFALO #689 (HOME)
435 Schiller Street
Buffalo, NY 14212
(716) 895-9189
Doc Doiron
CANADA (Toronto) #691 (leased)
475 Cochrane Dr., Unit 8
Markham, Ontario L3R 9R5
(905) 470-9855
FAX (905) 470-2175
Bruno Macchiusi - Branch Mgr. (#602)
Malcolm Skinner, Bill Yong
CANADA (Montreal) #691 (HOME)
266 Carufel Charlemagne
Montreal, Quebec J5Z 1A3
(514) 585-1161
Guy Cote'
CANADA (Ottawa) #691 (HOME)
369 Ryan Street
Gatineau, Quebec J8P 3B5
(819) 643-3153
Wolfgang Strauss
CHARLOTTE #676 (HOME)
9101 Windknob Court
Huntersville, NC 28078
(704) 948-3986 (FAX, also)
Jim Jay
CHICAGO #661 (leased)
1438 Elmhurst Road
Elk Grove Village, IL 60007
(708) 593-6661, 62, 63, 68
FAX (708) 593-7853
Tim Bryce - E.I.C.
John Annarella, Darrell Ghere,
Bob Miller, Scott Walker
CLEVELAND #667 (leased)
1917 N. Ridge Rd., Suite B
Lorain, OH 44055
(216) 277-6780
FAX (216) 277-6980
Rich Guziewicz - E.I.C
Jim DeSantis
CONCORD #631 (leased)
2490 Arnold Industrial Way, Suite N
Concord, CA 94520
(510) 356-2401, 02
FAX (510) 356-2420
Arthur Tong, Reg. Specialist (#601)
Craig Chang, E.I.C.
Mark Ayres, Jay Bass, Joe Boylan,
Ben Fernandes, Dave Henderson,
Mike McIntyre, Bill Munn, Bob Snyder
20
DALLAS #652 (leased)
1600 North I-35, Suite 108
Carrollton, TX 75006
(214) 323-1762, 1662, 1862
FAX (214) 466-3888
Michael Zappavigna - E.I.C.
Gene Childress - Reg. Specialist (#602)
Charley Farley
DENVER #611 (leased)
4760 Oakland, Suite 120
Denver, CO 80239
(303) 371-2455, 2516; FAX (303) 371-2455
Kenny Odom - E.I.C.
DETROIT #664 (leased)
Parkside Pavilion
18292 Middlebelt Rd.
Livonia, MI 48152
(810) 442-7050, 51
Bill Edwards
AMSO SALES: #440 (leased)
7938 Cooley Lake Rd., Suite 400W
Waterford, MI 48327
(810) 360-7394
FAX (810) 360-7399
Christine Stiltner, National Sales Mgr.
Bonnie Peterson
48588 Lakeview Circle, #238 (HOME)
Utica, MI 48317
(800) 365-1267, (810) 254-6223
FAX ( 810) 254-4857
Mary Jacobs, John Reeves
EUGENE #641 (HOME)
3412 Parish Street Send boxes or pkgs to:
Eugene, OR 97401 c/o Alpha HealthCare
(503) 484-6664 (FAX,also) 10 Coburg Road
Bill Tamulinas Eugene, OR 97401
FT. LAUDERDALE #673 (leased)
1287 E. Newport Ctr Dr., Suite 201
Deerfield Beach, FL 33442
(305) 427-6703
FAX (305) 427-9803
Steve Siegel, Branch Mgr. (#602)
Pete Perico, Bill Wright
FRESNO #634 (leased)
4539 N. Brawley, #103
Fresno, CA 93722
(209) 275-5999
Hoss Riahizadeh
HOUSTON #653 (leased)
13003 Southwest Fwy., Suite 190
Stafford, TX 77477
(713) 240-5005, 6, 7
FAX (713) 240-5005
Ray Parker Jr. - District Mgr. (#602)
Jimmy Britton, Eric Mortimer
JACKSONVILLE #674 (HOME)
127 Wimbledon Court
Port Orange, FL 32127
(904) 756-6489
FAX (904) 756-6489
Joe Teira - E.I.C.
KANSAS CITY #613 (leased)
15000 W. 106th St.
Lenexa, KS 66215
(913) 492-8720, 8711
FAX (913) 492-8711
Jim Moore - District Mgr. (#602)
Gary Anderson
LONG ISLAND #685 (leased)
415 Central Ave., Suite C
Bohemia, NY 11716
(516) 567-5640
John Arends, Jerry Erb
LOS ANGELES #628 (leased)
6910 E. Hayvenhurst Ave., Suite 106
Van Nuys, CA 91406
(818) 994-2772, 994-2873
FAX (818) 994-2898
Tom Dager - E.I.C.
Mark Dunlap, Manny Gil, Greg Kollasch,
Chris Quinn, Enrique Serrano
MAINE #687 (HOME)
11 Mountain View Drive
Minot, ME 04258
(207) 966-3418
John Ayres
MIAMI #673 (leased)
5209 N.W. 74th Ave., Suite 205
Miami, FL 33166
(305) 592-4089
Hal Pacheco
MINNEAPOLIS #614 (leased)
7362 University Ave. NE, Suite 202
Fridley, MN 55432-3102
(612) 574-2126 (FAX, also)
Jim Jackson
NASHVILLE #657 (HOME)
open
(800) 548-4848
NEW JERSEY #686 (leased)
(aka EDISON)
1090 King George's Post Rd., Suite 603
Edison, NJ 08837
(908) 225-5353, FAX (908) 225-5359
Mark Fletcher - District Mgr. (#602)
Mike Reta - Reg. Specialist (#602)
Ben Varricchio - E.I.C.
Sandy Leonhardt, Chris Pisano, Rick Rice
21
NEW ORLEANS #655 (leased)
3001 Ridgelake Dr.
Metairie, LA 70002
(504) 831-8211
Mike Frey
NEW YORK #686 (HOME)
61 Clearview Circle
Hopewell Junction, NY 12533
(914) 896-7379
Jasbeer Rai
PHILADELPHIA #688 (leased)
137-F Gaither Drive
Mt. Laurel, NJ 08054
(609) 722-1010
FAX (609) 722-1171
Jay White - E.I.C.
John Geary
PHOENIX #626 (leased)
8146 N. 23rd Ave., Suite F
Phoenix, AZ 85021
(602) 864-1138
FAX (602) 864-8607
Julie Atkinson, Murray Rehder
PORTLAND #642 (leased)
8536 S.W. St. Helens Dr., Suite A
Wilsonville, OR 97070
(503) 682-0434
FAX (503) 682-4496
Jon Jagow
SACRAMENTO #633 (leased)
11275 Sunrise Gold Circle, Suite U
Rancho Cordova, CA 95742
(916) 852-1119
FAX (916) 852-1502
Gary Duncan, Jim Haddock
Steve Brown (AMSO SALES #635)
ST. L0UIS #665 (HOME)
3628 Brookville Drive
St. Louis, MO 63125
(314) 845-7655
Barry King
SALT LAKE CITY #646 (HOME)
1282 Bluebird, #20
West Valley, UT 84119
(801) 262-2931
Brian Latturner
SAN DIEGO #624 (leased)
9169 Chesapeake Drive
San Diego, CA 92123
(619) 277-6303
FAX (619) 277-2482
Jeff Dotson, Richard Schulenberg
SAN DIMAS #627 (leased)
555 W. Allen Ave., Suite 4
San Dimas, CA 91773
(909) 394-1691, 2
FAX (909) 394-1694
Steve Dolphin, Robert Garcia, Tony Gawel,
Bruce Hopkins, Jay Rentmeester
SANTA ANA #621 (leased)
Regional Office
3511 W. Sunflower Ave.
Santa Ana, CA 92704
(714) 957-8500 (800) 548-4848 - Dispatch
FAX (714) 641-7677
Franci Shrake - Field Service Admin. (#601)
Matt Sanna - District Mgr. (#601)
Alex Gonzalez - Reg. Specialist (#601)
Ron Narike - E.I.C.
Ken Brandt, Greg Gordon,
Monte Hale, Michael Novellino
SEATTLE #643 (leased)
#12 37th St., N.W.
Auburn, WA 98001
(206) 735-9569, 67; 735-1831, 41
FAX (206) 735-3896
Randy Dotson - District Manager (#601)
Shirley Weller, Admin. Asst. (#601)
Sothy Kem, Kirk Norman,
Jeff Rugon, Bruce Wartella
SPOKANE #644 (leased)
E. 9922 Montgomery Ave., Suite 2
Spokane, WA 99206
(509) 926-6705, 1396 OR 922-4061
FAX (509) 924-7120
Bob Donovan, Sean Frank,
Renee Hill, Dave Murphy
TAMPA #674 (HOME)
9507 Norchester Circle
Tampa, FL 33647
(813) 991-0187
FAX (813) 973-7082
Bob Cunningham
WILMINGTON, DE #684 (HOME)
9705 Matzon Road
Baltimore, MD 21220
(410) 687-4605
Bill Linton