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Exhibit 10.17    
    


 
 

SILICON VALLEY BANK
  
    LOAN AND SECURITY AGREEMENT    
    



	Borrower:	 	Alibris
	Address:	 	1250 45th Street, Suite 100

Emeryville, California 94608
	
Date:	
 	
June 30, 2003





        THIS
LOAN AND SECURITY AGREEMENT (the "Agreement") is entered into on the above date between SILICON VALLEY BANK ("Silicon"), whose address is 3003 Tasman Drive, Santa Clara, California
95054 and the borrower(s) named above (jointly and severally, the "Borrower"), whose chief executive office is located at the above address ("Borrower's Address"). The Schedule to this Agreement (the
"Schedule") shall for all purposes be deemed to be a part of this Agreement, and the same is an integral part of this Agreement. (Definitions of certain terms used in this Agreement are set forth in
Section 8 below.) 


1.    LOANS.  


        1.1    Loans.    Silicon will make loans to Borrower (the "Loans") up
to the amounts (the "Credit Limit") shown on the Schedule, provided no Default or Event of Default has occurred and is continuing, and subject to deduction of Reserves for accrued interest and such
other Reserves as Silicon deems proper from time to time in its good faith business judgment. 



        1.2    Interest.    All Loans and all other monetary Obligations shall
bear interest at the rate shown on the Schedule, except where expressly set forth to the contrary in this Agreement. Interest shall be payable monthly, on the last day of the month. Interest may, in
Silicon's discretion, be charged to Borrower's loan account, and the same shall thereafter bear interest at the same rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon. 



        1.3    Overadvances.    If at any time or for any reason the total of
all outstanding Loans and all other monetary Obligations exceeds the Credit Limit (an "Overadvance"), Borrower shall immediately pay the amount of the excess to Silicon, without notice or demand.
Without limiting Borrower's obligation to repay to Silicon the amount of any Overadvance, Borrower agrees to pay Silicon interest on the outstanding amount of any Overadvance, on demand, at the
Default Rate. 


        1.4    Fees.    Borrower shall pay Silicon the fees shown on the
Schedule, which are in addition to all interest and other sums payable to Silicon and are not refundable. 


        1.5    Loan Requests.    To obtain a Loan, Borrower shall make a
request to Silicon by facsimile or telephone. Loan requests received after 12:00 Noon will not be considered by Silicon until the next Business Day. Silicon may rely on any telephone request for a
Loan given by a person whom Silicon believes is an authorized representative of Borrower, and Borrower will indemnify Silicon for any loss Silicon suffers as a result of that reliance. 


        1.6    Letters of Credit.    At the request of Borrower, Silicon may,
in its good faith business judgment, issue or arrange for the issuance of. letters of credit for the account of Borrower, in each case in form and substance satisfactory to Silicon in its sole
discretion (collectively, "Letters of Credit"). The aggregate face amount of all Letters of Credit from time to time outstanding shall not exceed the amount shown on the Schedule (the "Letter of
Credit Sublimit"), and shall be reserved against Loans which would otherwise be available hereunder, and in the event at any time there are 


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insufficient
Loans available to Borrower for such reserve, Borrower shall deposit and maintain with Silicon cash collateral in an amount at all times equal to such deficiency, which shall be held as
Collateral for all purposes of this Agreement. Borrower shall pay all bank charges (including charges of Silicon) for the issuance of Letters of Credit, together with such additional fee as Silicon's
letter of credit department shall charge in connection with the issuance of the Letters of Credit. Any payment by Silicon under or in connection with a Letter of Credit shall constitute a Loan
hereunder on the date such payment is made. Each Letter of Credit shall have an expiry date no later than thirty days prior to the Maturity Date. Borrower hereby agrees to indemnify and hold Silicon
harmless from any loss, cost, expense, or liability, including payments made by Silicon, expenses, and reasonable attorneys' fees incurred by Silicon (collectively, "Damages") arising out of or in
connection with any Letters of Credit, provided that such obligation shall not apply to the extent that such Damages are the result of Silicon's gross negligence or willful misconduct. Borrower agrees
to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Silicon and opened for Borrower's account or by Silicon's interpretations of any Letter of
Credit issued by Silicon for Borrower's account, and Borrower understands and agrees that Silicon shall not be liable for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto, except to the extent that they result from Silicon's gross
negligence or willful misconduct. Borrower understands that Letters of Credit may require Silicon to indemnify the issuing bank for certain costs or liabilities arising out of claims by Borrower
against such issuing bank; provided that such obligation shall not apply to the extent that such Damages are the result of Silicon's gross negligence or willful misconduct. Borrower hereby agrees to
indemnify and hold Silicon harmless with respect to any Damages incurred by Silicon under any Letter of Credit as a result of Silicon's indemnification of any such issuing bank. The provisions of this
Loan Agreement, as it pertains to Letters of Credit, and any other Loan Documents relating to Letters of Credit are cumulative. 


2.    SECURITY INTEREST.  


        To secure the payment and performance of all of the Obligations when due, Borrower hereby grants to Silicon a security interest in all of the following
(collectively, the "Collateral"): all right, title and interest of Borrower in and to all of the following, whether now owned or hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles (including without limitation all Intellectual Property); all Investment Property; all Other Property; and any and all claims,
rights and interests in any of the above, and all guaranties and security for any of the above, and all substitutions and replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against third parties) of, any and all of the above, and all Borrower's books relating to
any and all of the above. Silicon's security interest in the Collateral shall
terminate upon repayment and performance of all Obligations hereunder and termination of this Agreement in accordance with its terms. 


3.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.  



        In order to induce Silicon to enter into this Agreement and to make Loans, Borrower represents and warrants to Silicon as follows, and Borrower covenants that the
following representations will continue to be true, and that Borrower will at all times comply with all of the following covenants, throughout the term of this Agreement and until all Obligations have
been paid and performed in full: 


        3.1    Corporate Existence and Authority.    Borrower is and will
continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business
in all jurisdictions in which any failure to do so would result in a Material Adverse Change. The execution, delivery and performance by Borrower 


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of
this Agreement, and all other documents contemplated hereby (i) have been duly and validly authorized, (ii) are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors' rights generally), and (iii) do not violate
Borrower's articles or certificate of incorporation, or Borrower's by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property, and
(iv) do not constitute grounds for acceleration of any material indebtedness or obligation under any agreement or instrument which is binding upon Borrower or its property. 


        3.2    Name; Trade Names and Styles.    The name of Borrower set forth
in the heading to this Agreement is its correct name. Listed in the Representations are all prior names of Borrower and all of Borrower's present and prior trade names. Borrower shall give Silicon
30 days' prior written notice before changing its name or doing business under any other name. Borrower has complied, and will in the future comply, in all material respects, with all laws
relating to the conduct of business under a fictitious business name, except where the failure to so comply would not reasonably be expected to result in a Material Adverse Change. 


        3.3    Place of Business; Location of Collateral.    The address set
forth in the heading to this Agreement is Borrower's chief executive office. In addition, Borrower has places of business and Collateral is located only at the locations set forth in the
Representations. Borrower will give Silicon at least 30 days prior written notice before opening any additional place of business, changing its chief executive office, or moving any of the
Collateral to a location other than Borrower's Address or one of the locations set forth in the Representations, except that Borrower may maintain (i) sales offices in the ordinary course of
business at which not more than a total of $10,000 fair market value of Equipment is located, and
(ii) move, sell and transfer Inventory in the ordinary course of business, and (iii) grant non-exclusive licenses in the ordinary course of business. 


        3.4    Title to Collateral; Perfection; Permitted Liens.    



	(a)
	Borrower
is now, and will at all times in the future be, the sole owner of all the Collateral, except for items of which are leased or licensed to Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests, encumbrances and adverse claims, except for Permitted Liens. Silicon now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and Borrower will at all times defend Silicon and the Collateral against all claims of
others.



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



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



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	(d)
	None
of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture. Borrower is not and will not become a lessee under
any real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral is located upon premises in which any third party has an interest, Borrower shall, whenever requested by Silicon, use
its best efforts to cause such third party to execute and deliver to Silicon, in form acceptable to Silicon, such waivers and subordinations as Silicon shall specify in its good faith business
judgment. Borrower will keep in full force and effect, and will comply with all material terms of, any lease of real property where any of the Collateral now or in the future may be located. 




        3.5    Maintenance of Collateral.    Borrower will maintain the
Collateral in good working condition (ordinary wear and tear excepted), and Borrower will not use the Collateral for any unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral. 


        3.6    Books and Records.    Borrower has maintained and will maintain
at Borrower's Address complete and accurate books and records, comprising an accounting system in accordance with GAAP. 



        3.7    Financial Condition, Statements and Reports.    All financial
statements now or in the future delivered to Silicon have been, and will be, prepared in conformity with GAAP and now and in the future will fairly present the results of operations and financial
condition of Borrower, in accordance with GAAP, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Silicon and the date hereof, there has
been no Material Adverse Change. 


        3.8    Tax Returns and Payments; Pension Contributions.    Borrower
has timely filed, and will timely file, all required material tax returns and reports, and Borrower has timely paid, and will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by Borrower. Borrower may, however, defer payment of any contested taxes, provided that Borrower (i) in good faith contests Borrower's
obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies Silicon in writing of the commencement of, and any material development
in, the proceedings, and (iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a lien upon any of the Collateral. Borrower is unaware of any claims or
adjustments proposed for any of Borrower's prior tax years which could result in additional taxes of $25,000 or more becoming due and payable by Borrower. Borrower has paid, and shall continue to pay
all amounts necessary to fund all present and future pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not and will not withdraw from
participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 


        3.9    Compliance with Law.    Borrower has, to the best of its
knowledge, complied, and will comply, in all material respects, with all provisions of all foreign, federal, state and local laws and regulations
applicable to Borrower, including, but not limited to, those relating to Borrower's ownership of real or personal property, the conduct and licensing of Borrower's business, and all environmental
matters. 


        3.10    Litigation.    There is no claim, suit, litigation, proceeding
or investigation pending or (to best of Borrower's knowledge) threatened against or affecting Borrower in any court or before any governmental agency (or any basis therefor known to Borrower) which
could reasonably be expected to result, either separately or in the aggregate, in any Material Adverse Change. Borrower will promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted against Borrower involving any single claim of $50,000 or more, or involving $100,000 or more in the aggregate. 


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        3.11    Use of Proceeds.    All proceeds of all Loans shall be used
solely for lawful business purposes. Borrower is not purchasing or carrying any "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System) and no part
of the proceeds of any Loan will be used to purchase or carry any "margin stock" or to extend credit to others for the purpose of purchasing or carrying any "margin stock." 


4.    ACCOUNTS.  


        4.1    Representations Relating to Accounts.    Borrower represents
and warrants to Silicon as follows: Each Account with respect to which Loans are requested by Borrower shall, on the date each Loan is requested and made, (i) represent an undisputed bona fide
existing unconditional obligation of the Account Debtor created by the sale, delivery, and acceptance of goods or the rendition of services, or the non-exclusive licensing of Intellectual
Property, in the ordinary course of Borrower's business, and (ii) meet the Minimum Eligibility Requirements set forth in Section 8 below. 


        4.2    Representations Relating to Documents and Legal
Compliance.    Borrower represents and warrants to Silicon as follows: All statements made and all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Accounts are and shall be true and correct and all such invoices, instruments and other documents and all of Borrower's books and records are and shall be genuine and in all
respects what they purport to be. All sales and other transactions underlying or giving rise to each Account shall comply in all material respects with all applicable laws and governmental rules and
regulations. To the best of Borrower's knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Accounts are and shall be genuine, and all such
documents, instruments and agreements are and shall be legally enforceable in accordance with their terms. 


        4.3    Schedules and Documents relating to Accounts.    Borrower shall
deliver to Silicon transaction reports and schedules of collections, as provided in the Schedule, on Silicon's standard forms; provided, however, that Borrower's failure to execute and deliver the
same shall not affect or limit Silicon's security interest and other rights in all of Borrower's Accounts, nor shall Silicon's failure to advance or lend against a specific Account affect or limit
Silicon's security interest and other rights therein. If requested by Silicon, Borrower shall furnish Silicon with copies (or, at Silicon's request, originals) of all contracts, orders, invoices, and
other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts,
and Borrower warrants the genuineness of all of the foregoing. Borrower shall also furnish to Silicon an aged accounts receivable trial balance as provided in the Schedule. In addition, Borrower shall
deliver to Silicon, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same
form as received, with all necessary endorsements, and copies of all credit memos. 


        4.4    Collection of Accounts.    Borrower shall have the right to
collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. Whether or not an Event of Default has occurred and is continuing, Borrower shall hold all
payments on, and proceeds of, Accounts in trust for Silicon, and Borrower shall immediately deliver all such payments and proceeds to Silicon in their original form, duly endorsed, to be applied to
the Obligations in such order as Silicon shall determine, and after all Obligations have been paid and performed in full, promptly after receipt of such payments and proceeds in immediately available
funds, Silicon shall deposit the remainder into a Deposit Account of Borrower maintained at Silicon. Silicon may, in its good faith business judgment, require that all proceeds of Collateral be
deposited by Borrower into a lockbox account, or such other "blocked account" as Silicon may specify, pursuant to a blocked account agreement in such form as Silicon may specify in its good faith
business judgment. 


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        4.5    Remittance of Proceeds.    All proceeds arising from the
disposition of any Collateral shall be delivered, in kind, by Borrower to Silicon in the original form in which received by Borrower not later than the following Business Day after receipt by
Borrower, to be applied to the Obligations in such order as Silicon shall determine; provided that, if no Default or Event of Default has occurred and is continuing, Borrower shall not be obligated to
remit to Silicon the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm's length transaction for an aggregate purchase price of $25,000 or less (for
all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower's other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Silicon. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement. 


        4.6    Disputes.    Borrower shall notify Silicon promptly of all
disputes or claims relating to Accounts, in excess of $5,000 for each such dispute or claim in any one calendar month or $25,000 in the aggregate for all such disputes and claims in any one calendar
month. Borrower shall not forgive (completely or
partially), compromise or settle any Account for less than payment in full, or agree to do any of the foregoing, except that Borrower may do so, provided that: (i) Borrower does so in good
faith, in a commercially reasonable manner, in the ordinary course of business, and in arm's length transactions, which are reported to Silicon on the regular reports provided to Silicon;
(ii) no Default or Event of Default has occurred and is continuing; and (iii) taking into account all such discounts, settlements and forgiveness, the total outstanding Loans will not
exceed the Credit Limit. 


        4.7    Returns.    Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly determine the reason for such return and promptly issue a credit memorandum to the Account Debtor in the
appropriate amount. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Silicon,
and immediately notify Silicon of the return of the Inventory. 


        4.8    Verification.    Silicon may, from time to time, verify
directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, by means of mail, telephone or otherwise, either in the name of Borrower or Silicon or
such other name as Silicon may choose. 


        4.9    No Liability.    Silicon shall not be responsible or liable for
any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Silicon be
deemed to be responsible for any of Borrower's obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Silicon from liability for its own gross
negligence or willful misconduct. 


5.    ADDITIONAL DUTIES OF BORROWER.  


        5.1    Financial and Other Covenants.    Borrower shall at all times
comply with the financial and other covenants set forth in the Schedule. 



        5.2    Insurance.    Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to Silicon, in such form and amounts as Silicon may reasonably require and that are
customary and in accordance with standard practices for Borrower's industry and locations, and Borrower shall provide evidence of such insurance to Silicon. All such insurance policies shall name
Silicon as an additional loss payee, and shall contain a lenders loss payee endorsement in form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall
apply such proceeds in reduction of the Obligations as Silicon shall determine in its good faith business judgment, except that, provided no Default or Event of Default has 


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occurred
and is continuing, Silicon shall release to Borrower insurance proceeds with respect to Collateral (including Inventory and Equipment) totaling less than $100,000, which shall be utilized by
Borrower for the replacement of the Collateral with respect to which the insurance proceeds were paid. Silicon may require reasonable assurance that the insurance proceeds so released will be so used.
If Borrower fails to provide or pay for any insurance, Silicon may, but is not obligated to, obtain the same at Borrower's expense. Borrower shall promptly deliver to Silicon copies of all material
reports made to insurance companies. 


        5.3    Reports.    Borrower, at its expense, shall provide Silicon
with the written reports set forth in the Schedule, and such other written reports with respect to Borrower (including budgets, sales projections, operating plans and other financial documentation),
as Silicon shall from time to time specify in its good faith business judgment. 



        5.4    Access to Collateral, Books and Records.    At reasonable
times, and on one Business Day's notice, Silicon, or its agents, shall have the right to inspect the Collateral, and the right to audit and copy Borrower's books and records. Silicon shall take
reasonable steps to keep confidential all information obtained in any such inspection or audit, but Silicon shall have the right to disclose any such information to its auditors, regulatory agencies,
and attorneys, and pursuant to any subpoena or other legal process. The foregoing inspections and audits shall be at Borrower's expense and the charge therefor shall be $750 per person per day (or
such higher amount as shall represent Silicon's then current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Silicon schedule
an audit more than 10 days in advance, and Borrower seeks to reschedules the audit with less than 10 days written notice to Silicon, then (without limiting any of Silicon's rights or
remedies), Borrower shall pay Silicon a cancellation fee of $1,000 plus any out-of-pocket expenses incurred by Silicon, to compensate Silicon for the anticipated costs and
expenses of the cancellation. 


        5.5    Negative Covenants.    Except as may be permitted in the
Schedule, Borrower shall not, without Silicon's prior written consent (which shall be a matter of its good faith business judgment), do any of the following: (i) merge or consolidate with
another corporation or entity; (ii) acquire any assets, except in the ordinary course of business; (iii) enter into any other transaction outside the ordinary course of business;
(iv) sell or transfer any Collateral, except for the sale of Inventory in the ordinary course of Borrower's business and the non-exclusive licensing of Intellectual Property in the
ordinary course of business, and except for the sale of obsolete or unneeded Equipment in the ordinary
course of business; (v) store any Inventory or other Collateral with any warehouseman or other third party; (vi) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis; (vii) make any loans of any money or other assets (other than loans outstanding on the date hereof to current and former employees, in
an aggregate amount not to exceed $600,000, and all extensions and renewals of the same); (viii) incur any debts, outside the ordinary course of business, which would result in a Material
Adverse Change; (ix) guarantee or otherwise become liable with respect to the obligations of another party or entity; (x) pay or declare any dividends on Borrower's stock (except for
dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's stock; (xii) make any change in Borrower's
capital structure which would result in a Material Adverse Change; or (xiii) engage, directly or indirectly, in any business other than the businesses currently engaged in by Borrower or
reasonably related thereto; or (xiv) dissolve or elect to dissolve. Transactions permitted by the foregoing provisions of this Section are only permitted if no Default or Event of Default would
occur as a result of such transaction. 


        5.6    Litigation Cooperation.    Should any third-party suit or
proceeding be instituted by or against Silicon with respect to any Collateral or relating to Borrower, Borrower shall, without expense to Silicon, make available Borrower and its officers, employees
and agents and Borrower's books and records, to the extent that Silicon may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding. 


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        5.7    Further Assurances.    Borrower agrees, at its expense, on
request by Silicon, to execute all documents and take all actions, as Silicon, may, in its good faith business judgment, deem necessary or useful in order to perfect and maintain Silicon's perfected
first-priority security interest in the Collateral (subject to Permitted Liens), and in order to fully consummate the transactions contemplated by this Agreement. 


6.    TERM.  


        6.1    Maturity Date.    This Agreement shall continue in effect until
the maturity date set forth on the Schedule (the "Maturity Date"), unless terminated earlier pursuant to Section 6.3 below. 



        6.2    Early Termination.    This Agreement may be terminated prior to
the Maturity Date as follows: (i) by Borrower, effective three Business Days after written notice of termination is given to Silicon; or (ii) by Silicon at any time after the occurrence
and during the continuance of an Event of Default, without
notice, effective immediately. If this Agreement is terminated by Borrower or by Silicon under this Section 6.2, Borrower shall pay to Silicon a termination fee in an amount equal to one
percent (1.0%) of the Maximum Credit Limit, provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from another division of Silicon Valley
Bank. The termination fee shall be due and payable on the effective date of termination and thereafter shall bear interest at a rate equal to the highest rate applicable to any of the Obligations. 


        6.3    Payment of Obligations.    On the Maturity Date or on any
earlier effective date of termination, Borrower shall pay and perform in full all Obligations, whether evidenced by installment notes or otherwise, and whether or not all or any part of such
Obligations are otherwise then due and payable. Without limiting the generality of the foregoing, if on the Maturity Date, or on any earlier effective date of termination, there are any outstanding
Letters of Credit issued by Silicon or issued by another institution based upon an application, guarantee, indemnity or similar agreement on the part of Silicon, then on such date Borrower shall
provide to Silicon cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees and cost due or to become due in connection therewith (as
estimated by Silicon in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit, pursuant to Silicon's then standard form cash pledge agreement.
Notwithstanding any termination of this Agreement, all of Silicon's security interests in all of the Collateral and all of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided that Silicon may, in its sole discretion, refuse to make any further Loans after termination. No termination shall in any
way affect or impair any right or remedy of Silicon, nor shall any such termination relieve Borrower of any Obligation to Silicon, until all of the Obligations have been paid and performed in full.
Upon payment and performance in full of all the Obligations and termination of this Agreement, Silicon shall promptly terminate its financing statements with respect to the Borrower and deliver to
Borrower such other documents as may be required to fully terminate Silicon's security interests. 


7.    EVENTS OF DEFAULT AND REMEDIES.  



        7.1    Events of Default.    The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and Borrower shall give Silicon immediate written notice thereof: (a) Any warranty, representation, statement, report or
certificate made or delivered to Silicon by Borrower or any of Borrower's officers, employees or agents, now or in the future, shall be untrue or misleading in a material respect when made or deemed
to be made; or (b) Borrower shall fail to pay when due any Loan or any interest thereon or any other monetary Obligation; or (c) the total Loans and other Obligations outstanding at any
time shall exceed the Credit Limit; or (d) Borrower shall fail to comply with any of the financial covenants set forth in the Schedule, or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured, or shall fail to permit Silicon to conduct an inspection or audit as specified in Section 5.4 hereof; or
(e) Borrower shall fail to perform 


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any
other non-monetary Obligation, which failure is not cured within five Business Days after the date due; or (f) any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which is not cured within 10 days after the occurrence of the same; or (g) any default or event of default
occurs under any obligation secured by a Permitted Lien, which is not cured within any applicable cure period or waived in writing by the holder of the Permitted Lien; or (h) Borrower breaches
any material contract or obligation, which has resulted or may reasonably be expected to result in a Material Adverse Change; or (i) Dissolution, termination of existence, insolvency or
business failure of Borrower; or appointment of a receiver, trustee or custodian, for all or any part of the property of, assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in
effect; or (j) the commencement of any proceeding against Borrower or any guarantor of any of the Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not cured by the dismissal thereof within 30 days after the date commenced; or
(k) revocation or termination of, or limitation or denial of liability upon, any guaranty of the Obligations or any attempt to do any of the foregoing, or commencement of proceedings by any
guarantor of any of the Obligations under any bankruptcy or insolvency law; or (1) revocation or termination of, or limitation or denial of liability upon, any pledge of any certificate of
deposit, securities or other property or asset of any kind pledged by any third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or commencement of proceedings
by or against any such third party under any bankruptcy or insolvency law; or (m) Borrower makes any payment on account of any indebtedness or obligation which has been subordinated to the
Obligations other than as permitted in the applicable subordination agreement, or if any Person who has subordinated such indebtedness or obligations terminates or in any way limits his subordination
agreement; or (n) there shall be a change in the record or beneficial ownership of an aggregate of more than 20% of the outstanding shares of stock of Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of Borrower in effect on the date hereof, without the prior written consent of Silicon; or (o) Borrower shall generally not pay its
debts as they become due, or Borrower shall conceal, remove or transfer any part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (p) a Material Adverse Change shall occur. Silicon may cease making any Loans hereunder during
any of the above cure periods, and thereafter if an Event of Default has occurred and is continuing. 


        7.2    Remedies.    Upon the occurrence and during the continuance of
any Event of Default, and at any time thereafter, Silicon, at its option, and without notice or demand of any kind (all of which are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower under this Agreement or any other Loan Document; (b) Accelerate and declare all or any part of the Obligations
to be immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Silicon without judicial process to enter onto any of Borrower's premises without interference to
search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge for
so long as Silicon deems it necessary, in its good faith business judgment, in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any of the Collateral by court process, Borrower hereby irrevocably waives: (i) any bond and any surety or security relating thereto required by any
statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession 


9





 



thereof;
and (iii) any requirement that Silicon retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to assemble any or
all of the Collateral and make it available to Silicon at places designated by Silicon which are reasonably convenient to Silicon and Borrower, and to remove the Collateral to such locations as
Silicon may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Silicon
shall have the right to use Borrower's premises, vehicles, hoists, lifts, cranes, and other Equipment and all other property without charge; (f) Sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Silicon obtains possession of it or after further manufacturing, processing or repair, at one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale. Silicon shall have the right
to conduct such disposition on Borrower's premises without charge, for such time or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and the Collateral need not be located at
the place of disposition. Silicon may directly or through any affiliated company purchase or lease any Collateral at any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any liability Borrower may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts and General Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes
Silicon to endorse or sign Borrower's name on all collections, receipts, instruments and other documents, to take possession of and open mail addressed to Borrower and remove therefrom payments made
with respect to any item of the Collateral or proceeds thereof, and, in Silicon's good faith business judgment, to grant extensions of time to pay, compromise claims and settle Accounts and the like
for less than face value; (h) Offset against any sums in any of Borrower's general, special or other Deposit Accounts with Silicon against any or all of the Obligations; and (i) Demand
and receive possession of any of Borrower's federal and state income tax returns and the books and records utilized in the preparation thereof or referring thereto. All reasonable attorneys' fees,
expenses, costs, liabilities and obligations incurred by Silicon with respect to the foregoing shall be added to and become part of the Obligations, shall be due on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations. Without limiting any of Silicon's rights and remedies, from and after the occurrence and during the continuance of any
Event of Default, the interest rate applicable to the Obligations shall be increased by an additional four percent per annum (the "Default
Rate"). Without limiting any of the other provisions of this Agreement, Silicon may, in its sole and absolute discretion, defer taking any enforcement action hereunder with respect to an Event of
Default, if Borrower provides evidence to Silicon, satisfactory to it in its sole discretion, establishing that it has a binding written agreement with investors acceptable to Silicon in its sole
discretion, and that, pursuant to said agreement, such Event of Default will be cured by the investment of funds from such investors within two weeks after the Event of Default has occurred. 


        7.3    Standards for Determining Commercial
Reasonableness.    Borrower and Silicon agree that a sale or other disposition (collectively, "sale") of any Collateral which complies with the following standards
will conclusively be deemed to be commercially reasonable: (i) Notice of the sale is given to Borrower at least ten days prior to the sale, and, in the case of a public sale, notice of the sale
is published at least five days before the sale in a newspaper of general circulation in the county where the sale is to be conducted; (ii) Notice of the sale describes the collateral in
general, non-specific terms; (iii) The sale is conducted at a place designated by Silicon, with or without the Collateral being present; (iv) The sale commences at any time
between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash or by cashier's check or wire transfer is required; (vi) With respect to any sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective purchaser to ascertain directly from Borrower any and all information concerning the same. Silicon shall be free to employ
other methods of noticing and selling the Collateral, in its discretion, if they are commercially reasonable. 


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        7.4    Power of Attorney.    Upon the occurrence and during the.
continuance of any Event of Default, without limiting Silicon's other rights and remedies, Borrower grants to Silicon an irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at any time, at its option, but without obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the following, in Borrower's name or otherwise, but Silicon agrees that if it exercises any right hereunder, it will do so in good faith and in a commercially reasonable manner:
(a) Execute on behalf of Borrower any documents that Silicon may, in its good faith business judgment, deem advisable in order to perfect and maintain Silicon's security interest in the
Collateral, or in order to exercise a right of Borrower or Silicon, or in order to fully consummate all the transactions contemplated under this Agreement, and all other Loan Documents;
(b) Execute on behalf of Borrower, any invoices relating to any Account, any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, any Notice
of Lien, claim of mechanic's, materialman's or other lien, or assignment or satisfaction of mechanic's, materialman's or other lien; (c) Take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; endorse the name of Borrower upon any instruments, or documents, evidence of payment or Collateral that may come into Silicon's
possession; (d) Endorse all checks and other forms of remittances received by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse claim in or
to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (f) Grant extensions of time to pay, compromise claims and settle
Accounts and General Intangibles for less than face value and execute all releases and other documents in connection therewith; (g) Pay any sums required on account of Borrower's taxes or to
secure the release of any liens therefor, or both; (h) Settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor;
(i) Instruct any third party having custody or control of any books or records belonging to, or relating to, Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon
has under this Agreement; and (j) Take any action or pay any sum required of Borrower pursuant to this Agreement and any other Loan Documents. Any and all reasonable sums paid and any and all
reasonable costs, expenses, liabilities, obligations and attorneys' fees incurred by Silicon with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on
demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. In no event shall Silicon's rights under the foregoing power of attorney or any of
Silicon's other rights under this Agreement be deemed to indicate that Silicon is in control of the business, management or properties of Borrower. 


        7.5    Application of Proceeds.    All proceeds realized as the result
of any sale of the Collateral shall be applied by Silicon first to the reasonable costs, expenses, liabilities, obligations and attorneys' fees incurred by Silicon in the exercise of its rights under
this Agreement, second to the interest due upon any of the Obligations, and third to the principal of the Obligations, in such order as Silicon shall determine in its sole discretion. Any surplus
shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Silicon for any deficiency. If, Silicon, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Silicon shall have the option, exercisable at any time, in its good faith business
judgment, of either reducing the Obligations by the principal amount of purchase price or deferring the reduction of the Obligations until the actual receipt by Silicon of the cash therefor. 



        7.6    Remedies Cumulative.    In addition to the rights and remedies
set forth in this Agreement, Silicon shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under
any other instrument or agreement now or in the future entered into between Silicon and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise
by Silicon of one or more of its rights or remedies shall not be deemed an election, nor bar Silicon from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay
of Silicon to exercise any rights or 


11





 



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. 



8.    DEFINITIONS.  


        As used in this Agreement, the following terms have the following meanings: 


        "Account Debtor" means the obligor on an Account. 


        "Accounts" means all present and future "accounts" as defined in the California Uniform Commercial Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without limitation all accounts receivable and other sums owing to Borrower. 



        "Affiliate" means, with respect to any Person, a relative, partner, shareholder, director, officer, or employee of such Person, or any
parent or subsidiary of such Person, or any Person controlling, controlled by or under common control with such Person. 


        "Business Day" means a day on which Silicon is open for business. 


        "Code" means the Uniform Commercial Code as adopted and in effect in the State of California from time to time. 



        "Collateral" has the meaning set forth in Section 2 above. 


        "continuing" and "during the continuance of" when used with reference to a Default or
Event of Default means that the Default or Event of Default has occurred and has not been either waived in writing by Silicon or cured within any applicable cure period. 


        "Default" means any event which with notice or passage of time or both, would constitute an Event of Default. 



        "Default Rate" has the meaning set forth in Section 7.2 above. 


        "Deposit Accounts" means all present and future "deposit accounts" as defined in the California Uniform Commercial Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts and
certificates of deposit. 


        "Eligible Accounts" means Accounts and General Intangibles arising in the ordinary course of Borrower's business from the sale of goods or
the rendition of services, or the non-exclusive licensing of Intellectual Property, which Silicon, in its good faith business judgment, shall deem eligible for borrowing. Without limiting
the fact that the determination of which Accounts are eligible for borrowing is a matter of Silicon's good faith business judgment, the following (the "Minimum Eligibility Requirements") are the
minimum requirements for a Account to be an Eligible Account: (i) the Account must not be outstanding for more than 90 days from its invoice date (the "Eligibility Period"),
(ii) the Account must not represent progress billings, or be due under a fulfillment or requirements contract with the Account Debtor, (iii) the Account must not be subject to any
contingencies (including Accounts arising from sales on consignment, guaranteed sale or other terms pursuant to which payment by the Account Debtor may be conditional), (iv) the Account must
not be owing from an Account Debtor with whom Borrower has any dispute (whether or not relating to the particular Account), (v) the Account must not be owing from an Affiliate of Borrower,
(vi) the Account must not be owing from an Account Debtor which is subject to any insolvency or bankruptcy proceeding, or whose financial condition is not acceptable to Silicon, or which, fails
or goes out of a material portion of its business, (vii) the Account must not be owing from the United States or any department, agency or instrumentality thereof (unless there has been
compliance, to Silicon's satisfaction, with the United 


12





 



States
Assignment of Claims Act), (viii) the Account must not be owing from an Account Debtor located outside the United States or Canada (unless pre-approved by Silicon in its
discretion in writing, or backed by a letter of credit satisfactory to Silicon, or FCIA insured satisfactory to Silicon), (ix) the Account must not be owing from an Account Debtor to whom
Borrower is or may be liable for goods purchased from such Account Debtor or otherwise (but, in such case, the Account will be deemed not eligible only to the extent of any amounts owed by Borrower to
such Account Debtor), (x) the Account must not constitute a credit card receivable, (xi) the Account must not represent a credit balance outstanding more than 90 days, and
(xii) the Account must not be subject to any potential offset for deferred revenue (but, in such case, the Account will be deemed not eligible only to the extent of the amount of any such
deferred revenue). Accounts owing from one Account Debtor will not be deemed Eligible Accounts to the extent they exceed 30% of the total Accounts outstanding. In addition, if more than 50% of the
Accounts owing from an Account Debtor are outstanding for a period longer than their Eligibility Period (without regard to unapplied credits) or are otherwise not eligible Accounts, then all Accounts
owing from that Account Debtor will be deemed ineligible for borrowing. Silicon may, from time to time, in its good faith business judgment, revise the Minimum Eligibility Requirements, upon written
notice to Borrower. 


        "Equipment" means all present and future "equipment" as defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of
the foregoing. 


        "Event of Default" means any of the events set forth in Section 7.1 of this Agreement. 


        "GAAP" means generally accepted accounting principles consistently applied. 


        "General Intangibles means all present and future "general intangibles" as defined in the California Uniform Commercial Code in effect on
the date hereof with such additions to such term as may hereafter be made, and includes without limitation all Intellectual Property, payment intangibles, royalties, contract rights,, goodwill,
franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind. 


        "good faith business iudgment" means honesty in fact and good faith (as defined in Section 1201 of the Code) in the exercise of
Silicon's business judgment. 


        "including" means including (but not limited to). 


        "Intellectual Property" means all present and future (a) copyrights, copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, (b) trade secret rights, including all rights to unpatented
inventions and know-how, and confidential information; (c) mask work or similar rights available for the protection of semiconductor chips; (d) patents, patent applications
and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same;
(e) trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are registered, and all applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with and symbolized by any such trademarks; (f) computer software and computer software products; (g) designs
and design rights; (h) technology; (i) all claims for damages by way of past, present and future 


13





 



infringement
of any of the rights included above; 0) all licenses or other rights to use any property or rights of a type described above. 



        "Inventory" means all present and future "inventory" as defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished
products, including without limitation such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returned goods and any documents of title representing
any of the above. 


        "Investment Property" means all present and future investment property, securities, stocks, bonds, debentures, debt securities,
partnership interests, limited liability company interests, options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any
securities account or otherwise, and all options and warrants to purchase any of the foregoing, wherever located, and all other securities of every kind, whether certificated or uncertificated. 


        "Loan Documents" means, collectively, this Agreement, the Representations, and all other present and future documents, instruments and
agreements between Silicon and Borrower, including, but not limited to those relating to this Agreement, and all amendments and modifications thereto and replacements therefor. 



        "Material Adverse Change" means any of the following: (i) a material adverse change in the business, operations, or financial or
other condition of the Borrower, or (ii) a material impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material impairment of the value or priority of
Silicon's security interests in the Collateral. 


        "Obligations" means all present and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and
indebtedness at any time owing by Borrower to Silicon, whether evidenced by this Agreement or any note or other instrument or document, or otherwise, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including, without limitation, those acquired by assignment and any
participation by Silicon in Borrower's debts owing to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorney's fees,
expert witness fees, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination fees, minimum interest charges and any other sums chargeable to Borrower
under this Agreement or under any other Loan Documents. 


        "Other Property" means the following as defined in the California Uniform Commercial Code in effect on the date hereof with such additions
to such term as may hereafter be made, and all rights relating thereto: all present and future "commercial tort claims" (including without limitation any commercial tort claims identified in the
Representations), "documents", "instruments", "promissory notes", "chattel paper", "letters of credit", "letter-of-credit rights", "fixtures", "farm products" and "money"; and
all other goods and personal property of every kind, tangible and intangible, whether or not governed by the California Uniform Commercial Code. 


        "Permitted Liens" means the following: (i) purchase money security interests in specific items of Equipment; (ii) leases of
specific items of Equipment; (iii) liens for taxes not yet payable; (iv) additional security interests and liens consented to in writing by Silicon, which consent may be withheld in its
good faith business judgment; (v) security interests being terminated substantially concurrently with this Agreement; (vi) liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens arising in the ordinary course of business and securing obligations which are not delinquent; (vii) liens incurred in connection with the extension, renewal or refinancing
of the 


14





 



indebtedness
secured by liens of the type described above in clauses (i) or (ii) above, provided that any extension, renewal or replacement lien is limited to the property encumbered by
the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; (viii) Liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods; and (ix) Liens securing up to an aggregate of $1,000,000 which are subject to a written subordination agreement between
the holder of the Lien and Silicon in the form previously delivered by Silicon to Borrower. Silicon will have the right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an inter-creditor agreement on Silicon's then standard form, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree not to take any action to enforce its subordinate security interest so long as any Obligations remain outstanding, and that Borrower agree that any uncured
default in any obligation secured by the subordinate security interest, which has not been waived in writing by the holder of the additional security interest, shall also constitute an Event of
Default under this Agreement. 


        "Person" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or any other entity. 


        "Representations" means the written Representations and Warranties provided by Borrower to Silicon referred to in the Schedule. 



        "Reserves" means, as of any date of determination, such amounts as Silicon may from time to time establish and revise in its good faith
business judgment, reducing the amount of Loans, Letters of Credit and other financial accommodations which would otherwise be available to Borrower under the lending formula(s) provided in the
Schedule: (a) to reflect events, conditions, contingencies or risks which, as determined by Silicon in its good faith business judgment, do or may adversely affect (i) the Collateral or
any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of
Borrower or any Guarantor, or (iii) the security interests and other rights of Silicon in the Collateral (including the enforceability, perfection and priority thereof); or (b) to
reflect Silicon's good faith belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Silicon is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts which Silicon determines in good faith constitutes an Event of Default or may, with notice or passage of time or
both, constitute an Event of Default. 


        Other Terms. All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in
accordance with GAAP, consistently applied. All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined
therein. 


9.    GENERAL PROVISIONS.  


        9.1    Interest Computation.    In computing interest on the
Obligations, all checks, and other items of payment received by Silicon (including proceeds of Accounts and payment of the Obligations in full, but not including wire transfers) shall be deemed
applied by Silicon on account of the Obligations three Business Days after receipt by Silicon of immediately available funds, and, for purposes of the foregoing, any such funds received after 12:00
Noon on any day shall be deemed received on the next Business Day. Silicon shall not, however, be required to credit Borrower's account for the amount of any item of payment which is unsatisfactory to
Silicon in its good faith business judgment, and Silicon may charge Borrower's loan account for the amount of any item of payment which is returned to Silicon unpaid. 


15





 

        9.2    Application of Payments.    All payments with respect to the
Obligations may be applied, and in Silicon's good faith business judgment reversed and re-applied, to the Obligations, in such order and manner as Silicon shall determine in its good faith
business judgment. 


        9.3    Charges to Accounts.    Silicon may, in its discretion, require
that Borrower pay monetary Obligations in cash to Silicon, or charge them to Borrower's Loan account, in which event they will bear interest at the same rate applicable to the Loans. Silicon may also,
in its discretion, charge any monetary Obligations to Borrower's Deposit Accounts maintained with Silicon. 


        9.4    Monthly Accountings.    Silicon shall provide Borrower monthly
with an account of advances, charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed correct, accurate and binding on Borrower and an account stated (except for
reverses and reapplications of payments made and corrections of errors discovered by Silicon), unless Borrower notifies Silicon in writing to the contrary within 60 days after such account is
rendered, describing the nature of any alleged errors or omissions. 


        9.5    Notices.    All notices to be given under this Agreement shall
be in writing and shall be given either personally or by reputable private delivery service or by regular first-class mail, or certified mail return receipt requested, addressed to Silicon or Borrower
at the addresses shown in the heading to this Agreement, or at any other address designated in writing by one party to the other party. Notices to Silicon shall be directed to the Commercial Finance
Division, to the attention of the Division Manager or the Division Credit Manager. All notices shall be deemed to have been given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery service, or two Business Days following the deposit thereof in the United States mail, with postage prepaid. 


        9.6    Severability.    Should any provision of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this Agreement, which shall continue in full force and effect. 



        9.7    Integration.    This Agreement and such other written
agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreement between Borrower and Silicon and supersede all prior and contemporaneous
negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement. There are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith. 



        9.8    Waivers; Indemnity.    The failure of Silicon at any time or
times to require Borrower to strictly comply with any of the provisions of this Agreement or any other Loan Document shall not waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any
other Loan Document shall be deemed to have been waived by any act or knowledge of Silicon or its agents or employees, but only by a specific written waiver signed by an authorized officer of Silicon
and delivered to Borrower. Borrower waives the benefit of all statutes of limitations relating to any of the Obligations or this Agreement or any other Loan Document, and Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Silicon on which Borrower is or may in any way be liable, and notice of any action taken by Silicon, unless expressly required by this
Agreement. Borrower hereby agrees to indemnify Silicon and its affiliates, subsidiaries, parent, directors, officers, employees, agents, and attorneys, and to hold them harmless from and against any
and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including reasonable attorneys' fees), of every kind, which they may sustain or
incur based upon or arising out of any of the Obligations, or any relationship or 


16





 



agreement
between Silicon and Borrower, or any other matter, relating to Borrower or the Obligations; provided that this indemnity shall not extend to damages proximately caused by the indemnitee's
own gross negligence or willful misconduct. Notwithstanding any provision in this Agreement to the contrary, the indemnity agreement set forth in this Section shall survive any termination of this
Agreement and shall for all purposes continue in full force and effect. 


        9.9    No Liability for Ordinary Negligence.    Neither Silicon, nor
any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing Silicon shall be liable for any claims, demands, losses or damages, of any kind
whatsoever, made, claimed, incurred or suffered by Borrower or any other party through the ordinary negligence of Silicon, or any of its directors, officers, employees, agents, attorneys or any other
Person affiliated with or representing Silicon, but nothing herein shall relieve Silicon from liability for its own gross negligence or willful misconduct. 


        9.10    Amendment.    The terms and provisions of this Agreement may
not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Silicon. 


        9.11    Time of Essence.    Time is of the essence in the performance
by Borrower of each and every obligation under this Agreement. 



        9.12    Attorneys Fees and Costs.    Borrower shall reimburse Silicon
for all reasonable attorneys' fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to, or in connection with, or relating
to this Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys' fees and costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and all present and future documents relating to this
Agreement; obtain legal advice in connection with this Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of the Collateral or any of Borrower's books and records; protect, obtain possession of, lease, dispose of, or otherwise
enforce Silicon's security interest in, the Collateral; and otherwise represent Silicon in any litigation relating to Borrower. In satisfying Borrower's obligation hereunder to reimburse Silicon for
attorneys fees, Borrower may, for convenience, issue checks directly to Silicon's attorneys, Levy, Small & Lallas, but Borrower acknowledges and agrees that Levy, Small & Lallas is
representing only Silicon and not Borrower in connection with this Agreement. If either Silicon or Borrower files any lawsuit against the other predicated on a breach of this Agreement, the prevailing
party in such action shall be entitled to recover its reasonable costs and attorneys' fees, including (but not limited to) reasonable attorneys' fees and costs incurred in the enforcement of,
execution upon or defense of any order, decree, award or judgment. All attorneys' fees and costs to which Silicon may be entitled pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. 


        9.13    Benefit of Agreement.    The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Borrower and Silicon; provided, however, that Borrower may not assign
or transfer any of its rights under this Agreement without the prior written consent of Silicon, and any prohibited assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations. 


        9.14    Joint and Several Liability.    If Borrower consists of more
than one Person, their liability shall be joint and several, and the compromise of any claim with, or the release of, any Borrower shall not constitute a compromise with, or a release of, any other
Borrower. 


17





 



        9.15    Limitation of Actions.    Any claim or cause of action by
Borrower against Silicon, its directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Loan Agreement, or any other Loan Document, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Silicon, its directors,
officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by the filing of
a complaint within one year after the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based, and the service of a summons and complaint on an
officer of Silicon, or on any other person authorized to accept service on behalf of Silicon, within thirty (30) days thereafter. Borrower agrees that such one-year period is a
reasonable and sufficient time for Borrower to investigate and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended
except by the written consent of Silicon in its sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document. 


        9.16    Paragraph Headings; Construction.    Paragraph headings are
only used in this Agreement for convenience. Borrower and Silicon acknowledge that the headings may not describe completely the subject matter of the applicable paragraph, and the headings shall not
be used in any manner to construe, limit, define or interpret any term or provision of this Agreement. This Agreement has been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly against Silicon or Borrower under any rule of construction or otherwise. 


        9.17    Governing Law; Jurisdiction; Venue.    This Agreement and all
acts and transactions hereunder and all rights and obligations of Silicon and Borrower shall be governed by the laws of the State of California. As a material part of the consideration to Silicon to
enter into this Agreement, Borrower (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Silicon's option, be litigated in courts located
within California, and that the exclusive venue therefor shall be Santa Clara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any
such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights Borrower may have to object to the jurisdiction of any such court, or to
transfer or change the venue of any such action or proceeding. 


        9.18    Mutual Waiver of Jury Trial.    BORROWER AND SILICON EACH
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR
BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. 



	BORROWER:	 	SILICON:
	

ALIBRIS	
 	

SILICON VALLEY BANK
	

By:	
 	

/s/ STEVEN GILLAN	
 	

By:	
 	

/s/ KEVIN J. GILLIS
	 	 	
	 	 	 	

	Title:	 	Vice President, CFO	 	Title:	 	Vice President
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
 Secretary or Ass't Secretary	 	 	 	 




18






  



 
 

SILICON VALLEY BANK
  
    SCHEDULE TO LOAN AND SECURITY AGREEMENT    
    



	Borrower:	 	Alibris
	Address:	 	1250 45th Street, Suite 100

Emeryville, California 94608
	
Date:	
 	
June 30, 2003





        This
Schedule forms an integral part of the Loan and Security Agreement between Silicon Valley Bank and the above-borrower of even date. '] 



	1.    CREDIT LIMIT	 	 
	

       (Section 1.1):	
 	

 
	

       (a)    Phase I:	
 	

Until such time as Silicon completes a field examination and audit of Borrower with results acceptable to Silicon in its good faith business judgment and Silicon gives written notice to Borrower of the same ("Phase I"), the Credit Limit shall be as
follows: the lesser of (i) $750,000 or (ii) 50% of the total collections received and allocated by Silicon to Cash Collateral Account No. 1 (as defined below) during the four weeks immediately preceding said day.
	

 	
 	

During Phase I, Borrower shall maintain two cash collateral accounts with Silicon, which shall be in Silicon's name and shall be referred to herein as "Cash Collateral Account No. 1" and "Cash Collateral Account No. 2". During Phase I, all
collections of proceeds of Collateral (including without limitation collections of Accounts, including credit card receivables) shall be remitted to Silicon. The following shall be deposited into Cash Collateral Account No. 2: (i) proceeds of
the collection of credit card receivables; and (ii) Proceeds of Collateral which are not proceeds of the collection of Accounts. All other proceeds shall be deposited into Cash Collateral Account No. 1 or Cash Collateral Account No. 2, as
determined by Silicon in its discretion.
	

 	
 	

All collections received by Silicon in Cash Collateral Account No. 1 and Cash Collateral Account No. 2 will be deposited by Silicon in Borrower's operating account with Silicon, provided that Silicon may, in its sole discretion, at any time,
apply the collections received by Silicon in Cash Collateral Account No. 1 and Cash Collateral Account
	

 	
 	

No. 2 to the outstanding Obligations in such order as it shall determine in its sole discretion.
	

 	
 	

Borrower shall satisfy all conditions to borrowing, and shall borrow from Silicon, an initial Loan of at least $500,000, within one week after the date hereof.
	 	 	 





1





 

	

       (b)    Phase II:	
 	

After such time as Silicon has completed a field examination and audit of Borrower with results acceptable to Silicon in its good faith business judgment and Silicon gives written notice to Borrower of the same ("Phase II"), the Credit limit shall be
as follows:





	

 	
 	

 	
 	

An amount not to exceed the lesser of: (i) $1,250,000 at any one time outstanding (the "Maximum Credit Limit"); or (ii) a percentage determined by Silicon in its good faith business judgment
(the "Advance Rate") multiplied by the amount of Borrower's Eligible Accounts (as defined in Section 8 above).





	

 	
 	

The Advance Rate shall initially be determined by Silicon based on a field examination and audit with results acceptable to Silicon in its good faith business judgment. Silicon may, from time to time, modify the Advance Rate, in its good faith
business judgment, upon notice to the Borrower, based on changes in collection experience with respect to Accounts or other issues or factors relating to the Accounts or other Collateral.
	

       (c)    Combined Sublimit:
	

 	
 	

The total combined amount of Loans available hereunder which Borrower may use under Sections 1(d), (e) and (f) hereof to obtain Cash Management Services, FX Forward Contracts and Letters of Credit (as the foregoing terms are defined herein)
shall not exceed $500,000 (the "Combined Sublimit").
	

       (d)    LC Sublimit:	
 	

 
	

              (Section 1.6) $500,000 (subject to the Combined Sublimit).
	

       (e)    Cash Management Services and Reserves:
	

 	
 	

Borrower may use up to $500,000 of Loans available hereunder (subject to the Combined Sublimit) for Silicon's Cash Management Services (as defined below), including, merchant services, business credit card, ACH and other services identified in the
cash management services agreement related to such service (the "Cash Management Services"). Silicon may, in its sole discretion, reserve against Loans which would otherwise be available hereunder such sums as Silicon shall determine in its good
faith business judgment in connection with the Cash Management Services, and Silicon may charge to Borrower's Loan account, any amounts that may become due or owing to Silicon in connection with the Cash Management Services. Borrower agrees to
execute and deliver to Silicon all standard form applications and agreements of Silicon in connection with the Cash Management Services, and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees
and charges of Silicon in connection with the Cash Management Services. The Cash Management Services shall terminate on the Maturity Date.
	 	 	 



2





 

	

       (f)    Foreign Exchange Contract Sublimit:
	

 	
 	

$500,000 (subject to the Combined Sublimit).
	

 	
 	

Borrower may enter into foreign exchange forward contracts with Silicon, on its standard forms, under which Borrower commits to purchase from or sell to Silicon a set amount of foreign currency more than one business day after the contract date (the
"FX Forward Contracts"); provided that (1) at the time the FX Forward Contract is entered into Borrower has Loans available to it under this Agreement in an amount at least equal to 10% of the amount of the FX Forward Contract; (2) the
total FX Forward Contracts at any one time outstanding may not exceed 10 times the amount of the Foreign Exchange Contract Sublimit set forth above. Silicon shall have the right to withhold, from the Loans otherwise available to Borrower under this
Agreement, a reserve (which shall be in addition to all other reserves) in an amount equal to 10% of the total FX Forward Contracts from time to time outstanding, and in the event at any time there are insufficient Loans available to Borrower for
such reserve, Borrower shall deposit and maintain with Silicon cash collateral in an amount at all times equal to such deficiency, which shall be held as Collateral for.all purposes of this Agreement. Silicon may, in its discretion, terminate the FX
Forward Contracts at any time that an Event of Default occurs and is continuing. Borrower shall execute all standard form applications and agreements of Silicon in connection with the FX Forward Contracts, and without limiting any of the terms of
such applications and agreements, Borrower shall pay all standard fees and charges of Silicon in connection with the FX Forward Contracts.
	

       (g)    Revolving Line.
	

 	
 	

This is a revolving line of credit and Loans may be repaid and reborrowed by the Borrower.
	
2.    INTEREST.	
 	

 
	

       Interest Rate (Section 1.2):
	

 	
 	

A rate equal to the "Prime Rate" in effect from time to time, plus 2% per annum. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. As used in this Agreement, "Prime Rate" means the interest rate
announced from time to time by Silicon as its "prime rate" (which is a base rate upon which other rates charged by Silicon are based, and it is not necessarily the best rate available at Silicon); provided that the Prime Rate on any day shall not be
less than 4.25% per annum. The interest rate applicable to the Obligations shall change on each date there is a change in the Prime Rate.
	
3.    FEES (SECTION 1.4):
	

       Loan Fee:	
 	

$10,000, payable concurrently herewith.
	

       Collateral Monitoring Fee:
	

 	
 	

$750, per month, payable in arrears for each month in which Phase I is in effect throughout the month, and $1,250 per month, payable in arrears for each month or partial month in which Phase II is in effect. The Collateral Monitoring Fee shall
be prorated for any partial month at the beginning and at termination of this Agreement.
	 	 	 





3





 

	
4.    MATURITY DATE
	

       (Section 6.1):	
 	

364 days after the date hereof.
	
5.    FINANCIAL COVENANTS
	

       (Section 5.1):	
 	

 
	

 	
 	

Borrower shall comply with each of the following covenants. Compliance shall be determined as of the end of each month, except as otherwise specifically provided below:
	

       Minimum Tangible Net Worth:
	

 	
 	

Borrower shall maintain a Tangible Net Worth of not less than the following months (the "Minimum Tangible Net Worth Covenant"), provided that the following amounts shall be increased by 50% of all consideration received after the date hereof for
equity securities and subordinated debt of the Borrower. Increases in the Minimum Tangible Net Worth Covenant based on consideration received for equity securities and subordinated debt of the Borrower shall be effective as of the end of the month in
which such consideration is received, and shall continue effective thereafter.





	
 
	
 	

As of the end of each month during the following periods:
	
 	

Minimum Tangible Net Worth

	 	 	Date hereof to and including August 31, 2003	 	$	1,700,000
	

 	
 	

September 1, 2003 to and including December 31, 2003	
 	
$	

1,400,000
	

 	
 	

Thereafter	
 	
$	

1,400,000*





	

 	
 	

*This amount will be revised by Silicon, in its good faith business judgment, based on Borrower's operating budget and projections approved by Borrower's Board of Directors and acceptable to Silicon in its good faith business judgment, which
operating budget and projections shall be provided to Silicon by January 15th of each year for such year. Silicon shall give Borrower written notice of the revised Minimum Tangible Net Worth requirements.
	

       Definitions.	
 	

 
	

 	
 	

For purposes of the foregoing financial covenants, the following term shall have the following meaning:
	

 	
 	

"Tangible Net Worth" shall mean the excess of total assets over total liabilities, determined in accordance with GAAP, with the following adjustments:





	

 	
 	

 	
 	

    (A) there shall be excluded from assets: (i) notes, accounts receivable and other obligations owing to Borrower from its officers or other Affiliates, and (ii) all assets which would be classified as intangible
assets under GAAP, including without limitation goodwill, licenses, patents, trademarks, trade names, copyrights, capitalized software and organizational costs, licenses and franchises
	 	 	 	 	 



4





 

	

 	
 	

 	
 	

(B) there shall be excluded from liabilities: all indebtedness which is subordinated to the Obligations under a subordination agreement in form specified by Silicon or by language in the instrument evidencing the indebtedness which Silicon agrees in
writing is acceptable to Silicon in its good faith business judgment.





	6.    REPORTING.	 	 	 
	

       (Section 5.3):	

 	
 	

 
	

 	

Borrower shall provide Silicon with the following:
	

 	

  1.	
 	

During Phase I, sales report, by customer, for each month, within 10 Business Days after the end of the month.
	

 	

  2.	
 	

During Phase I, a cash collection report for each week, by Monday of the following week.
	

 	

  3.	
 	

During Phase I, monthly estimates as to accounts receivable by customers, and accounts payables not paid within 60 days of invoice date, within fifteen days after the end of each month.
	

 	

  4.	
 	

During Phase II, transaction reports and schedules of collections, each week and at the time of each Loan request, on Silicon's standard form, provided that Silicon may, in its discretion, require these reports and schedules during Phase I by written
notice to Borrower.
	

 	

  5.	
 	

During Phase II, monthly accounts receivable agings, aged by invoice date, within fifteen days after the end of each month.
	

 	

  6.	
 	

During Phase II, monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, within fifteen days after the end of each month.
	

 	

  7.	
 	

During Phase II, monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, and general ledger, and inventory reports, and a statement that at the end of such month there were no held checks, all within fifteen
days after the end of each month.
	

 	

  8.	
 	

Monthly unaudited financial statements, as soon as available, and in any event within thirty days after the end of each month.
	

 	

  9.	
 	

Monthly Compliance Certificates, within thirty days after the end of each month, in such form as Silicon shall reasonably specify, signed by the Chief Financial Officer of Borrower, certifying that as of the end of such month 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 in this Agreement and such other information as Silicon shall reasonably request.
	

 	

10.	
 	

Annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for each fiscal year of Borrower by January 15 of such fiscal year.
	 	 	 	 





5





 

	

 	

11.	
 	

Annual financial statements, as soon as available, and in any event within 20 days following the end of Borrower's fiscal year, certified by, and with an unqualified opinion of, independent certified public accountants acceptable to Silicon,
provided that, during Phase II, said annual financial statements, shall be provided as soon as available, and in any event within 180 days following the end of Borrower's fiscal year.
	
7.    BORROWER INFORMATION:
	

 	

Borrower represents and warrants that the information set forth in the Representations and Warranties of the Borrower dated June 30, 2003, previously submitted to Silicon (the "Representations") is true and correct as of the date
hereof.
	
8.    ADDITIONAL PROVISIONS
	

 	

(1)	
 	
Banking Relationship.    Borrower shall at all times maintain its primary banking relationship with Silicon. Without limiting the generality of the foregoing, Borrower
shall, at all times, (i) maintain not less than $500,000 in its Deposit Accounts with Silicon, and (ii) maintain all of its operating accounts and deposit accounts with Silicon, and (iii) maintain not less than 85% of its total
investments and investment accounts with Silicon. As to any Deposit Accounts and investment accounts maintained with another institution, Borrower shall cause such institution, within 30 days after the date of this Agreement, to enter into a
control agreement in form acceptable to Silicon in its good faith business judgment in order to perfect Silicon's first-priority security interest in said Deposit Accounts and investment accounts.
	

 	

(2)	
 	
Subordination of Inside Debt.    All present and future indebtedness of Borrower to its officers, directors and shareholders ("Inside Debt") shall, at all times, be
subordinated to the Obligations pursuant to a subordination agreement in form acceptable to Silicon in its good faith business judgment. Borrower represents and warrants that there is no Inside Debt presently outstanding, except for Inside Debt
secured by Permitted Liens. Prior to incurring any Inside Debt in the future, Borrower shall cause the person to whom such Inside Debt will be owed to execute and deliver to Silicon a subordination agreement in form acceptable to Silicon in its good
faith business judgment.
	 	 	 	 



6





 

	

 	

(3)	
 	
Loss of Customers during Phase I.    During Phase I, the loss of any of the following customers shall constitute an Event of Default under this Loan Agreement: Amazon,
Barnes & Noble, or Borders. "Loss" of a customer shall be deemed to occur if (i) the customer give notice that it will stop utilizing Borrower; or (ii) there is a decline in collections from the customer in any month of 50%
compared to the immediate prior month, and such decline occurs in two consecutive months.





	BORROWER:	 	SILICON:
	

ALIBRIS	
 	

SILICON VALLEY BANK
	

By:

Title:	
 	

/s/ STEVEN GILLAN
 Vice President, CFO	
 	

By

Title	
 	

/s/ KEVIN J. GILLIS
 Vice President
	

By:	
 	

 Secretary or Ass't Secretary	
 	

 	
 	

 




7





 
 
 

SILICON VALLEY BANK
  
    AMENDMENT TO LOAN AND SECURITY AGREEMENT    
    



	Borrower:	 	Alibris
	Address:	 	1250 45th Street, Suite 100

Emeryville, California 94608
	
Date:	
 	
July 8, 2003





        THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley Bank ("Silicon") and the borrower named above ("Borrower"). 


        The
Parties agree to amend the Loan and Security Agreement between them, dated as of June 30, 2003 (the "Loan Agreement"), as follows, effective as of the date hereof.
(Capitalized terms used but not defined in this Amendment, shall have the meanings set forth in the Loan Agreement.) 



        1.    Phase I Credit Limit.    The portion of Section 1(a) of the Schedule, which presently reads as follows: 




"Until
such time as Silicon completes a field examination and audit of Borrower with results acceptable to Silicon in its good faith business judgment and Silicon gives written notice to Borrower of
the same ("Phase I"), the Credit Limit shall be as follows: the lesser of (i) $750,000 or (ii) 50% of the total collections received and allocated by Silicon to Cash Collateral Account
No. 1 (as defined below) during the four weeks immediately preceding said day." 





        is
hereby amended to read as follows: 




"Until
such time as Silicon completes a field examination and audit of Borrower with results acceptable to Silicon in its good faith business judgment and Silicon gives written notice to Borrower of
the same ("Phase I'), the Credit Limit shall be as follows: 



"(i) On
each day until July 31, 2003: the greater of $500,000 or 50% of the total collections received and allocated by Silicon to Cash Collateral Account No. 1 (as defined below)
during the four weeks immediately preceding said day; and 


"(ii) On
each day on and after July 31, 2003, the lesser of (i) $750,000 or (ii) 50% of the total collections received and allocated by Silicon to Cash Collateral Account
No. 1 (as defined below) during the four weeks immediately preceding said day." 






        2.    Initial Loan.    The portion of Section 1(a) of the Schedule, which presently reads as follows: 




"Borrower
shall satisfy all conditions to borrowing, and shall borrow from Silicon, an initial Loan of at least $500,000, within one week after the date hereof." 





        is
hereby amended to read as follows: 




"Borrower
shall satisfy all conditions to borrowing, and shall borrow from Silicon, an initial Loan of at least $500,000, within two weeks after the date hereof." 





        3.    Representations True.    Borrower represents and warrants to Silicon that all representations and warranties set
forth in the Loan Agreement, as amended hereby, are true and correct. 


1





 

        4.    General Provisions.    This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement
signed by Silicon and Borrower, and the other written documents and agreements between Silicon and Borrower set forth in full all of the representations and agreements of the parties with respect to
the subject matter hereof and supersede all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly
amended, all of the terms and provisions of the Loan Agreement, and all other documents and agreements between Silicon and Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed. 



	BORROWER:	 	SILICON:
	

ALIBRIS	
 	

SILICON VALLEY BANK
	

By:	
 	

/s/ STEVEN G. GILLAN
	
 	

By:	
 	

/s/ KEVIN J. GILLIS

	Name:

Title:	 	Steven G. Gillan

CFO	 	Name:

Title:	 	Kevin J. Gillis

Vice President




2






  



 
 

SILICON VALLEY BANK
  
    AMENDMENT TO LOAN DOCUMENTS    
    



	Borrower:	 	ALIBRIS
	
Address:	
 	

1250 45th Street, Suite 100

Emeryville, California 94608
	
Date:	
 	

As of February 20, 2004





        THIS
AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley Bank ("Silicon") and the borrower named above ("Borrower"). 


        Borrower
and Silicon agree to amend the Loan and Security Agreement between them, dated as of June 30, 2003 (the "Loan Agreement"), as follows, effective as of the date hereof.
(Capitalized terms used but not defined in this Amendment, shall have the meanings set forth in the Loan Agreement.) 


1.    Phase II in Effect. Silicon hereby notifies Borrower, and Borrower hereby accepts such notification, that Phase II is in effect. 



2.    Limited Waiver. Silicon and Borrower hereby agree that the failure of Borrower to maintain the minimum Tangible Net Worth required under
Section 5 of the Schedule to Loan Agreement solely for the month ended December 31, 2003 (the "Designated Default") hereby is waived. It is understood, however, that the foregoing waiver
of the Designated Default does not constitute a waiver of the aforementioned covenant with respect to any other date or time period, or of any other provision or term of the Loan Agreement or any
other Loan Document, nor an agreement to waive in the future such covenant with respect to any other date or time period or any other provision or term of the Loan Agreement or any other Loan
Document. 


3.    Amendments to Loan Agreement. 


        (a)    The
portion of Section 1(b) of the Schedule to Loan Agreement that currently reads: 




An
amount not to exceed the lesser of: (i) $1,250,000 at any one time outstanding (the "Maximum Credit Limit"); or (ii) a percentage
determined by Silicon in its good faith business judgment (the "Advance Rate") multiplied by the amount of Borrower's Eligible Accounts (as defined in Section 8 above). 





        ,
hereby is amended and restated in its entirety to read as follows: 




An
amount not to exceed the lesser of: (i) $1,250,000 at any one time outstanding (the "Maximum Credit Limit"); or (ii) 80% (the "Advance
Rate") of the amount of Borrower's Eligible Accounts (as defined in Section 8 above). 





        (b)    The
portion of Section 5 of the Schedule to Loan Agreement that currently reads: 




Borrower
shall maintain a Tangible Net Worth of not less than the following months (the "Minimum Tangible Net Worth Covenant"), provided that the following amounts shall be increased by 50% of all
consideration received after the date hereof for equity securities and subordinated debt of the Borrower. Increases in the Minimum Tangible Net Worth Covenant based on consideration received for
equity securities and subordinated debt of the Borrower 




1





 


shall
be effective as of the end of the month in which such consideration is received. and shall continue effective thereafter. 




	As of the end of each month

during the following periods:
	 	Minimum Tangible

Net Worth

	Date hereof to and including August 31, 2003	 	$	1,700,000
	

September 1, 2003 to and including December 31, 2003	
 	
$	

1,400,000
	

Thereafter	
 	
$	

1,400,000*







*This
amount will be revised by Silicon, in its good faith business judgment, based on Borrower's operating budget and projections approved by Borrower's Board of Directors and acceptable to Silicon
in its good faith business judgment, which operating budget and projections shall be provided to Silicon by January 15th of each year for such year. Silicon shall give Borrower written notice
of the revised Minimum Tangible Net Worth requirements. 





        ,
hereby is amended and restated in its entirety to read as follows: 




Borrower
shall maintain a Tangible Net Worth of not less than the sum of the following (the "Minimum Tangible Net Worth Covenant"): (i) the TNW Base Amount (as defined below); plus
(ii) the TNW Capital Increase (as defined below), if any. 


The
term "TNW Base Amount" means, as of any date of determination, the amount set forth below corresponding to the time period set forth below [note, amounts in pointed brackets
(<$>) are negative amounts]: 



(A)
during the period commencing on January 1, 2004 and ending on January 31, 2004, <$700,000>; 



(B)
during the period from and after February 1, 2004, $2,200,000. 




The
term "TNW Capital Increase" means, as of any date of determination, the greater of (a) $-0- and (b) 50% of all consideration (if any) received from and after
March 1, 2004 for equity securities and subordinated debt of the Borrower. In no event shall the amount of the TNW Capital Increase be decreased. 


Increases
in the Minimum Tangible Net Worth Covenant based on any TNW Capital Increase shall be effective as of the end of the month in which the applicable consideration is received, and shall
continue effective thereafter. 





        (c)    The
portion of Section 8(1) of the Schedule to Loan Agreement that currently reads: 




Without
limiting the generality of the foregoing, Borrower shall, at all times, (i) maintain not less than $500,000 in its Deposit Accounts with Silicon, and (ii) maintain all of its
operating accounts and deposit accounts with Silicon, and (iii) maintain not less than 85% of its total investments and investment accounts with Silicon. 





        ,
hereby is amended and restated in its entirety to read as follows: 




Without
limiting the generality of the foregoing, Borrower shall, at all times, (i) maintain in its Deposit Accounts with Silicon not less than 85% of Borrower's total unrestricted cash, and
(ii) maintain all of its operating accounts and deposit accounts with Silicon, and (iii) maintain not less than 85% of its total investments and investment accounts with Silicon. 





4.    Fees. In consideration for Bank entering into this Amendment, Borrower shall pay Bank a fee of $1,500 concurrently with the execution
and delivery of this Amendment, which fee shall be non-refundable and in addition to all interest and other fees payable to Bank under the Loan Documents. Bank is authorized to charge said
fees to Borrower's loan account. 


2





 

5.    Representations True. Borrower represents and warrants to Silicon that all representations and warranties set forth in the Loan
Agreement, as amended hereby, are true and correct in all material respects (except to the extent such representations may be affected by transactions permitted by the Loan Agreement, as amended
hereby). 


6.    General Provisions. This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by Silicon and
Borrower, and the other Loan Documents between Silicon and Borrower set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede
all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly amended, all of the terms and provisions of the
Loan Agreement, and all other Loan Documents shall continue in full force and effect and the same are hereby ratified and confirmed. 


[Remainder
of Page Intentionally Left Blank; Signature Page Follows] 


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7.    Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same document. Delivery of an executed counterpart of
this Amendment by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Amendment. 



	Borrower:	 	Silicon:
	

ALIBIRS:	
 	

SILICON VALLEY BANK:
	

By:	

/s/ STEVEN G. GILLAN
	
 	

By:	

/s/ KELVIN CHAN

	Name:	Steven G. Gillan
	 	Name:	Kelvin Chan

	Title:	CFO
	 	Title:	VP












QuickLinks



Exhibit 10.17


SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT



SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT

SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT


SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS