Exhibit to Pivotal 10Q (12/31/2002)




EXHIBIT 10.47  












Silicon Valley Bank




Loan and Security
Agreement 





	
Borrower:  	
Pivotal Corporation, a British Columbia corporation ("Parent");
and Pivotal Corporation, a Washington corporation
("Pivotal US")  
	  
	Address: 	858 Beatty Street, Suite 700

Vancouver, British Columbia, Canada V6B 1C1 
	  
	
Date: 
	
December __, 2002 






THIS LOAN AND SECURITY
AGREEMENT is entered into on the above date between SILICON VALLEY BANK
(“Silicon”), whose main address is 3003 Tasman Drive, Santa Clara, California
95054 (and with an office at 4110 Carillon Point, Kirkland, Washington 98033), and the
borrower(s) named above (individually and collectively, and 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. Subject to the terms and conditions of this Agreement, Silicon will
make loans to Borrower (the “Loans”), in amounts determined by Silicon in its
good faith business judgment,up to the amounts (the “Credit Limit”) shown
in Section 1 of 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. *** 




      *
(i)  





      **
(ii) so long as the ABL Provisions are in effect,  





      ***
Clause (ii) of the immediately preceding sentence is an ABL Provision.  



        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. Regardless of the amount of Obligations that may be outstanding from time to
time, Borrower shall pay Silicon minimum monthly interest during the term of this
Agreement in the amount set forth on the Schedule (the “Minimum Monthly
Interest”). 



        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. 
















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        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 (California time) 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 sole
discretion, 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 Borrower agrees that the
aggregate face amount of all outstanding Letters of Credit from time to time shall never
exceed the lesser of amount defined in Section 1 of the Schedule as the “Letter of
Credit Sublimit” or the amount of Loans and other extensions of credit which are from
time to time available hereunder, and that the amount of outstanding Letters of Credit
shall be reserved against Loans and other extensions of credit which would otherwise be
available hereunder. If at any time or for any reason the aggregate face amount of all
outstanding Letters of Credit shall exceed the foregoing limit, Borrower shall immediately
pay an amount equal to said excess to Silicon, without notice or demand. Borrower shall
pay all bank charges (including charges of Silicon) for the issuance * of Letters
of Credit, together with such additional fees 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, save, and hold Silicon harmless from any loss, cost, expense, or
liability, including payments made by Silicon, expenses, and reasonable attorneys’
fees incurred by Silicon arising out of or in connection with any Letters of Credit.
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. 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. Borrower hereby agrees to
indemnify and hold Silicon harmless with respect to any loss, cost, expense, or liability
incurred by Silicon under any Letter of Credit as a result of Silicon’s
indemnification of any such issuing bank. The provisions of this Agreement, as it pertains
to Letters of Credit, and any other present or future documents or agreements between
Borrower and Silicon relating to Letters of Credit are cumulative. 





      *
(and confirmation, if applicable)  



        **
; provided that a Letter of Credit may have an expiry date later than thirty days prior to
the Maturity Date if and only if Borrower’s reimbursement obligation with respect to
such Letter of Credit is secured by cash on terms acceptable to Silicon and in the manner
set forth in Section 6.3 hereof. The outstanding Letters of Credit shall be secured by
cash in amounts and on terms and conditions acceptable to Silicon in its sole discretion
upon the occurrence of any CSL Provisions Trigger and so long as the CSL Provisions are in
effect. The immediately preceding sentence is a CSL Provision. 



2.              SECURITY
INTEREST. To secure the payment and performance of all           of the
Obligations when due, Borrower hereby pledges and 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. ** 





      *
all payment intangibles;  



        **
The Collateral does not include any Excluded General Intangibles; provided,
however, that the Collateral shall include the proceeds of all Intellectual
Property (including, without limitation, proceeds consisting of Accounts or payment
intangibles of Borrower) if a judicial authority (including a U.S. Bankruptcy Court or
Canadian equivalent) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in such items that are proceeds of the
Intellectual Property, and in such circumstance, then the Collateral shall automatically,
and effective as of the date of this Agreement, include the Intellectual Property to the
extent necessary to permit perfection of Silicon’s security interest in such proceeds
(including, without limitation, proceeds consisting of Accounts or payment intangibles of
Borrower). 


















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Loan and Security Agreement  
	














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 could reasonably be expected
to result in a Material Adverse Change. The execution, delivery and performance by
Borrower 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 could 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 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. 





      *
$25,000  




      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 Equipment which are leased 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 in lien
priority           only to those Permitted Liens that are expressly entitled to such
priority over           the security interests of Silicon by operation of law or by
written           subordination agreement duly executed and delivered by Silicon in favor
of the           holders of such 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, in accordance with
          Section 8(1) of the Schedule, 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. 





         *
$250,000  



    
(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 

















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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 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
(collectively, “Taxes”). Borrower may, however, defer payment of any contested
Taxes (other than federal taxes and payroll 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 Taxes 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. *** 






      *
(or provincial),  





      **
(or municipal) 





      ***
Section 10(C) of the Schedule is incorporated herein by this reference.  



        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. *** 





      *
(or provincial),  





      **
(or municipal)  



        ***
Borrower is not in default of its filing obligations with any securities regulatory
authority having jurisdiction over it. 



        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. 





      *
$150,000  





      **
$250,000  



        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  


















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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.” 




      3.12
Environmental Compliance.  



         (a)       
          To the best of Borrower’s knowledge, Borrower has not Released, generated,
          used, stored, treated, transported, manufactured, handled, produced or disposed
          of any Contaminants on or off its premises (whether or not owned by Borrower),
          in any manner that violates in any material respect any applicable Environmental
          Laws or any Governmental Approvals, and the Business and operations of Borrower
          comply in all material respects with all Environmental Laws and all Governmental
          Approvals and similar authorizations. 



         (b)       
          (i) There is not and has not been any Remedial Action taken with respect to any
          real estate leased by Borrower, (ii) there has not been nor is there now pending
          any investigation, proceeding, complaint, order, directive, claim, citation or
          notice by any governmental authority or any other person with respect to any
          non-compliance with or violation of the requirements of any Environmental Laws
          by Borrower, and (iii) there has not been any Release, threatened or actual, of
          any Contaminants, or generation, use, storage, treatment, transportation,
          manufacture, handling, production, or disposal of any Contaminants, or any other
          environmental, health or safety matter, which affects adversely in any material
          respect (A) Borrower, (B) its Business, operations, or assets, or (C) any
          properties at which Borrower has transported, or stored any Contaminants. 



         (c)       
          Borrower does not have any liability (contingent or otherwise) for any known
          Release, threatened or actual, from any real property owned or leased by
          Borrower, or the generation, use, storage, treatment, transportation,
          manufacture, handling, production, or disposal of any Contaminant, on the owned
          or leased real property of Borrower. 



         (d)       
          All material Governmental Approvals or similar authorizations required to be
          obtained or filed in connection with the operations of Borrower under any
          Environmental Laws have been obtained, and all Governmental Approvals and
          similar authorizations are valid and in full force and effect in all material
          respects. 


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. ** 




      *
So long as the ABL Provisions are in effect,  




      **
This Section 4.1 is an ABL Provision.  



        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 indorsements, and copies of all credit memos. ** 



















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      *
and so long as the ABL Provisions are in effect,  




      **
The immediately preceding sentence is an ABL Provision.  



        
4.4
Collection of Accounts and payment intangibles. Borrower shall have the
right to collect all Accounts and payment intangibles, 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 and payment intangibles 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. *** 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. 




      *
Upon the occurrence and during the continuation of an Event of Default,  




      **
, which payments and proceeds Silicon shall have the right to apply  



        ***
The immediately preceding sentence is an ABL Provision to the extent applicable as set
forth therein. 




        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.  




        *
, and, upon the occurrence and during the continuation of an Event of Default or so long
as the ABL Provisions are in effect, Silicon shall have the right to apply any and all
such proceeds  



        **
The immediately preceding sentence is an ABL Provision to the extent applicable as set
forth therein. 



        4.6
Disputes. Borrower shall notify Silicon promptly of all disputes or claims
* relating to Accounts. 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. 




      *
, in excess of $100,000 in the aggregate at any one time,  



        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. 



















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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 insured and loss payee, and shall
contain a lenders (or mortgagee) 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 occurred and
is continuing, Silicon shall release to Borrower insurance proceeds with respect to
Equipment totaling less than $100,000, which shall be utilized by Borrower for the
replacement of the Equipment with respect to which the insurance proceeds were paid.
Silicon may require reasonable assurance that the insurance proceeds so released will be
so used. If 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 at
least 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 $700 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. 



        *
; provided, however, that, so long as no Event of Default has occurred and is continuing,
any audits (other than the initial audit conducted prior to the date of this Agreement and
other than audits conducted while the ABL Provisions are in effect) shall be conducted no
more often than once every 6 months (it being understood that audits taking place at one
or more locations of Borrower during substantially the same overall examination period
shall constitute but a single audit for purposes of the foregoing proviso) 



        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: (A) the
non-exclusive licensing of Intellectual Property by Borrower (as licensor) in the ordinary
course of business; (B) the sale of finished Inventory in the ordinary course of
Borrower’s business; (C) 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;
(viii) incur any debts, outside the ordinary course of business, which could reasonably be
expected to 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 could reasonably be expected to 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 5.5 are only
permitted if no Default or Event of Default would occur as a result of such transaction.
Borrower agrees that it shall not, while this Agreement is in effect, transfer funds,
assets or any Collateral to any of Borrower’s subsidiaries and affiliates (except for
such transfers by one Borrower to the other Borrower, in each case, subject to
Silicon’s continuing security interests therein and the continued perfection and
priority of such security interests). 


















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        *
enter into any merger, amalgamation, “arrangement” (as such business combination
term is used under applicable Canadian law), or consolidation 




      **
(except for the Cross-Guaranty)  




      ***
: (a) dividends paid by Pivotal US to Parent; and (b)  



        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. 



        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 the
first-lien-priority of, Silicon’s security interests in the Collateral (subject in
lien priority only to those Permitted Liens that are expressly entitled to such priority
over the security interests of Silicon by operation of law or by written subordination
agreement duly executed and delivered by Silicon in favor of the holders of such Permitted
Liens), and in order to fully consummate the transactions contemplated by this Agreement. 




      5.8
Environmental Covenants. Borrower shall:  



         (a)       
          keep any property either owned or operated by Borrower free of any Environmental
          Liens or post bonds or other financial assurances sufficient to satisfy the
          obligations or liability evidenced by such Environmental Liens; 



         (b)       
          comply, in all material respect, with Environmental Laws and provide to Silicon
          documentation of such compliance which Silicon reasonably requests; 



         (c)       
          promptly notify Silicon of any release of a Contaminant in any reportable
          quantity from or onto property owned or operated by Borrower and take any
          Remedial Actions required to abate said release or otherwise to come into
          compliance with applicable Environmental Law; 



         (d)       
          promptly provide Silicon with written notice within 10 days of the receipt of
          any of the following: (i) notice that an Environmental Lien has been filed
          against any of the real or personal property of Borrower, (ii) commencement of
          any Environmental Action or notice that an Environmental Action will be filed
          against Borrower, and (iii) notice of a violation, citation, or other
          administrative order which reasonably could be expected to result in a Material
          Adverse Effect; 



         (e)       
          ensure that any Contaminant brought onto, stored or used by any Person on any
          lands used in the Business shall be transported, used and stored only in
          accordance with all applicable laws, regulations, by-laws and other lawful
          requirements; 



         (f)       
          ensure that the lands used in the Business will not be used for storing or using
          any Contaminant except in compliance with all Environmental Laws and regulations
          and no use of any lands used in the Business will be allowed which may cause or
          increase the likelihood of the escape, seepage, leakage, spillage, release or
          discharge of any Contaminant on, from or under any such lands or into the
          environment or permit any policy of insurance to be cancelled or cancellable; 



         (g)       
          Borrower shall promptly notify Silicon as soon as it knows of or suspect that
          any Contaminant (other than in the normal course of the Business and in
          compliance with Environmental Laws) has been brought onto any lands used in the
          Business or that there is any actual, threatened or potential escape, seepage,
          leakage, spillage, release or discharge of any Contaminant on, from or under the
          any lands used in the Business or into the environment; 



         (h)       
          Borrower shall otherwise comply in all respects with all Environmental Laws,
          rules and regulations affecting or relating to the Business and will assume and
          perform any and all liabilities and obligations arising under Environmental Laws
          relating to the Business, or other property used in the Businesses or for
          otherwise failing to comply with Environmental Laws including, without
          limitation, any liability for the clean up of any Contaminant on, under or
          emanating from the Business, or any lands used in the Business; and 



         (i)       
          Borrower shall, at their expense, furnish such information and such
          environmental audits and studies with respect to the Business as Silicon may
          reasonably request from time to time, such audits or studies to be prepared by
          an engineer or environmental consultant reasonably satisfactory to Silicon;
          without limiting the generality of the foregoing Borrower shall permit Silicon
          and its agents access to the lands used in the Business at all reasonable times
          for the purpose of conducting such environmental assessments as Silicon may
          require from time to time. 



















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6. TERM.  



        6.1
Maturity Date. This Agreement shall continue in effect until the maturity
date set forth on the Schedule (the “Maturity Date”), subject to Section 6.3
below. 




      6.2
Early Termination.  



         (a)       
          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. 



         (b)       
          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 two percent (2.0%) 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. *** 





      *
So long as the ABL Provisions are in effect, if  




      **
Such  





      ***
This Section 6.2(b) is an ABL Provision.  



        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. 




      *
or PPSA registrations (as the case may be)  



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 (i) shall fail to comply with any of the financial covenants set forth in the
Schedule, or (ii) shall fail to perform any other non-monetary Obligation which by its
nature cannot be cured, or (iii) 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 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 could
reasonably be expected to result in a Material Adverse Change; or (i) Dissolution,
termination of existence, insolvency or business failure of Borrower or any guarantor of
any of the Obligations; 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 















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proceeding by 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; 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 (l) 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) without
the prior written consent of Silicon, (1) a “person”or “group” (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) becomes, after the date of this Agreement, the “beneficial owner” (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of more than 20% of the total voting power of all classes of capital stock
then outstanding of any Borrower, or (2) a majority of the members of the Board of
Directors of any Borrower shall not constitute Continuing Directors **; 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; or (q) Silicon, acting in good faith and in a commercially reasonable
manner, deems itself insecure because of the occurrence of an event prior to the
effective date hereof of which Silicon had no knowledge on the effective date or because
of the occurrence of an event on or subsequent to the effective date; or (s) an event of
default has occurred and is continuing under any other Loan Document (after giving effect
to, but without duplication of, any applicable grace periods). 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.  




      *
10 Business Days  



      **
, or (3) Parent shall cease to own and control 100% of the issued and outstanding capital
stock of Pivotal US  



        7.2
Remedies. Upon the occurrence and during the continuance of any Event of
Default, 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 Loan Document; 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 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  





















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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, payment
intangibles, and the like for less than face value; (h) Effect an administrative “hold” or
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”).  




      *
payment intangibles  





      **
(or provincial)  



        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 ten 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. 



        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. 




      *
payment intangibles  






















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        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 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 in cash and otherwise performed and this Agreement has been terminated. 



     8.    
          DEFINITIONS. As used in this Agreement, the following terms
          have the following meanings: 




      “ABL
Provisions” has the meaning set forth in Section 5 of the Schedule.  




        “ABL
Provisions Trigger” has the meaning set forth in Section 5 of the Schedule. 



        “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.  



        “Bankruptcy
Code” means (a) the United States Bankruptcy Code (11 U.S.C. Sections 101
et seq.), as amended, and any successor statute, and (b) the Bankruptcy and
Insolvency Act (Canada), as amended, and any successor statute, and the Companies
Creditors Arrangement Act, as amended, and any successor statute. 



        “Business”
means the business of Borrower as conducted by Borrower as at the date hereof and as
proposed to be conducted by Borrower hereafter, including the ownership, operation and
lease of assets and property in connection therewith and the investment therein and all
other activities necessary, useful, incidental or ancillary to the foregoing. 



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



        “Canada”
means Canada, its provinces, territories and possessions, and/or any department, agency,
or instrumentality of any of the foregoing. 



        “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. 



        “Contaminant”
means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special
waste, petroleum or petroleum-derived substance or waste, or any constituent of any such
substance or waste. 



        “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. 



        “Continuing
Director” means (a) any member of the Board of Directors who was a director (or
comparable manager) of Borrower on the date of this Agreement, and (b) any individual who
becomes a member of the Board of Directors after the date of this Agreement if such
individual was appointed or nominated for election to the Board of Directors by a majority
of the Continuing Directors, but excluding any such individual originally proposed for
election in opposition to the Board of Directors in office at the date of this Agreement
in an actual or threatened election contest relating to the election of the  


















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directors (or comparable managers)
of Borrower (as such terms are used in Rule 14a-11 under the Securities Exchange Act of
1934, as amended) and whose initial assumption of office resulted from such contest or
the settlement thereof.  





      “CSL
Provisions” has the meaning set forth in Section 5 of the Schedule.  



        “CSL
Provisions Trigger” has the meaning set forth in Section 5 of the Schedule. 



        “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. 



        “Dollars”
and “$” means and refers to United States dollars or such coin or
currency of the United States as at the time of payment shall be legal tender for the
payment of public and private debts in the United States. 



        “Dot
Com Account Debtor” means an Account Debtor that, in Silicon’s sole
discretion, is an internet based company. 



        “Eligible
Accounts” means Accounts of Borrower arising in the ordinary course of
Borrower’s business from the sale of goods by Borrower or the rendition of services
by Borrower, or the non-exclusive licensing of Intellectual Property by Borrower (as
licensor), that 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 requirements
in the remainder of this definition (the “Minimum Eligibility
Requirements”) are the minimum requirements for an 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 States Assignment of Claims Act); (viii) the Account must not be owing
from an Account Debtor located outside the United States or those provinces or territories
of Canada that have adopted the Personal Property Security Act (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 or services purchased by
Borrower, or third-party intellectual property licensed by Borrower (as licensee), 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 be owing from a Dot Com Account Debtor unless and to the extent
specifically approved by Silicon; (xi) ** the Account must not be owing by an
Account Debtor as to whom Borrower has recognized or can recognize deferred revenue,
unless and in which case the portion of such Account that is equal to such deferred
revenue amount shall be ineligible under this clause (xi), and (xii) the Account must have
been billed to the Account Debtor. Accounts owing from one Account Debtor will not be
deemed Eligible Accounts to the extent they exceed 25% of the total Eligible 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. 




      *
120  




      **
if an Event of Default has occurred and is continuing,  




      “Eligible
Inventory” [Not Applicable]  



        “Environmental
Action” means any complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, judicial or administrative proceeding, judgement, letter, or
other communication from any Official Body, or any third party involving violations of
Environmental Laws or releases of Contaminants from (a) any assets, properties, or
Business or any predecessor in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Contaminants secreted by Borrower or any
predecessor in interest. 



















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        “Environmental
Laws” means all federal, provincial, state, municipal, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment, including
laws relating to emissions, discharges, Releases or threatened Releases of pollutants,
Contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water, ground water, or
land), or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, removal, transport, or handling of pollutants, Contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes, and all regulations, notices or
demand letters issued, entered, promulgated or approved thereunder. 



        “Environmental
Liabilities and Costs” means all liabilities, monetary obligations, Remedial
Actions, losses, damages, punitive damages, consequential damages, costs and expenses
(including all reasonable fees, disbursements, expenses and applicable taxes of counsel,
experts or consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by any
Official Body or any third party, and which relate to Environmental Action. 



        “Environmental
Liens” means any Lien in favor of an Official Body for Environmental Liabilities
and Costs. 



        “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. 



        “Exchange
Rate” means and refers to the nominal rate of exchange available to Silicon from
or through recognized brokers in a recognized foreign exchange market for the purchase by
Silicon at 12:00 noon, local time (or such other time as Silicon may determine in its good
faith business judgment), one Business Day prior to any date of determination, expressed
as the number of units of such currency per one (1) Dollar. 



        “Excluded
General Intangibles” means General Intangibles other than payment intangibles. 



        “GAAP”
means U.S. 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 and payment intangibles. 



        “good
faith business judgment” means honesty in fact and good faith (as defined in
Section 1201 of the Code) in the exercise of Silicon’s business judgment. 



        “Governmental
Approvals” means all authorizations, consents, approvals, licenses and exemptions
of, registrations and filings with, and reports to, all governmental bodies, whether
federal, state, provincial, local, municipal, or foreign, and all agencies thereof. 



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



      “Interest
Act” means the Interest Act (Canada), as amended. 



        “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. 























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        “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. 



        “Lien”
as applied to the property of any Person means: (a) any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, conditional sale or other title retention agreement,
or other security interest, security title or encumbrance of any kind in respect of any
property of such Person, or upon the income or profits therefrom, and (b) any other
arrangement, express or implied, under which any property of such Person is transferred,
sequestered or otherwise identified for the purpose of subjecting the same to the payment
of indebtedness or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person. 



        “Loan
Documents” means, collectively, this Agreement, the Representations, and all
other present and future documents, instruments and agreements between Silicon, on the one
hand, and any Borrower or any guarantor of any of the Obligations, on the other hand,
including, but not limited to those relating to this Agreement or any other Loan Document,
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 any one or more of the Borrowers
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 any debts of any one or more of the Borrowers 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 any one or
more of the Borrowers under this Agreement or under any other Loan Documents (including
any interest and other amounts that, but for the provisions of the * Bankruptcy
Code, would have accrued). It is expressly acknowledged and agreed that each and all of
the Borrowers are, and at all times shall be, jointly and severally liable for all
Obligations, regardless of which Borrower or Borrowers requested, received, used, or
directly enjoyed the benefit of, the Obligations. 




      *
applicable  



        “Official
Body” means any government or political subdivision or any agency, authority,
bureau, central bank, monetary authority, commission, department or instrumentality
thereof, or any court, tribunal, grand jury or arbitrator, whether foreign or domestic. 



        “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) (A)
liens of landlords, warehousemen, and other bailees, if and to the extent such lien is (1)
pursuant to applicable law, expressly junior and subordinate to the security interests of
Silicon, or (2) subject to a landlord agreement or bailee agreement (in form and substance
satisfactory to Silicon in its good faith business judgment) duly executed and delivered
to Silicon by such lienholder and in full force and effect; and (B) liens of materialmen,
mechanics, 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 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 























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refinanced does not increase; and
(viii) Liens in favor of customs and revenue authorities which secure payment of customs
duties in connection with the importation of goods. Silicon will have the right to
require, as a condition to its consent under subparagraph (iv) above, that the holder of
the additional security interest or lien sign an intercreditor agreement on Silicon’s
then standard form, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree not to take any action to enforce its subordinate
security interest so long as any Obligations remain outstanding, and Borrower hereby
agrees that any uncured default in any obligation secured by the subordinate 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, limited liability company,
government, or any agency or political division thereof, or any other entity. 



        “PPSA”
means, as the context may require, any or all personal property security act(s) in effect
from time to time in any Canadian jurisdiction. 



        “Release”
means release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the outdoor environment or into or out of any
property, including the movement of Contaminants through or in the air, soil, surface
water or groundwater. 



        “Remedial
Action” means actions required to (a) clean up, remove, treat or in any other way
address Contaminants in the outdoor environment; (b) prevent the Release or threat of
Release or minimize the further Release of Contaminants so they do not migrate or endanger
or threaten to endanger public health or welfare or the outdoor environment; or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and care. 



        “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 of any of the Obligations, 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 of any of
the Obligations, 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. 



        “Restricted
Pledged Cash” means cash of Borrower held in a Deposit Account of Borrower
maintained at Silicon and as to which Borrower’s access is restricted on terms and
conditions satisfactory to Silicon; it being acknowledged and agreed that the same is
pledged to Silicon as Collateral pursuant to Section 2 of this Agreement. 



        “Tax
Act” means the Income Tax Act (Canada), as amended, and any successor statute. 



        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,
wire transfers and other items of payment received by Silicon (including proceeds of
Accounts and payment of the Obligations in full) 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 (California time) 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. 



        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. 





















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        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 any one or more of
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, and addressed as
follows: (a) if to Borrower (in care of Parent with respect to any and all Borrowers) at
the address for Borrower shown in the heading to this Agreement; (b) if to Silicon, at
Silicon Valley Bank, 4110 Carillon Point, Kirkland, Washington 98033, Attn: Manager; or
(c) at any other address designated in writing by one party to the other party in
accordance with this Section 9.5. **  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.



        *
, or by facsimile (if to Borrower at 604.699.8001 or if to Silicon at 425.827.6404), 



        **
All notices shall be deemed to have been given: (a) in the case of notices personally
delivered, upon delivery; (b) if sent by facsimile, when receipt is acknowledged by the
receiving facsimile equipment (or at the opening of the next business day if receipt is
after normal business hours); and (c) 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 (in the case of Silicon) or Canada Post (in the case of
Borrower), 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. To the
maximum extent permitted by applicable law, 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 or any
other Loan Document. 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 agreement between
Silicon and Borrower, or any other matter, relating to Borrower or the Obligations;
provided that, with respect to any indemnitee, 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. * 




      **
Section 10(D) of the Schedule is incorporated herein by this reference.  



        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



















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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 Section 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. 



        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 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 Agreement or any other Loan Document. 



        9.16
Section Headings; Construction. Section 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 section, 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 (except to the
extent expressly provided to the  





















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contrary) the other Loan Documents
and all acts and transactions hereunder and (except to the extent expressly provided to
the contrary) thereunder 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 and the other Loan Documents, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this Agreement and
the other Loan Documents 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. 



        9.19
Payments without Setoffs or Counterclaims, etc. All payments hereunder and
under the other Loan Documents made by or on behalf of Borrower shall be made: (a) without
setoff or counterclaim; and (b) * free and clear of, and without deduction or
withholding for or on account of, any foreign, federal, provincial, state, or local Taxes. 




      *
subject to Section 10(C) of the Schedule,  




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IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed and delivered as of the
date first above written.  









	Borrower:


PIVOTAL CORPORATION, a British Columbia 

corporation




By                
           
           
           
           
           


       President or Vice President 




By                
           
           
           
           
           


       Secretary or Ass't Secretary	Silicon:


SILICON VALLEY BANK




By                
           
           
           
           
           



Title                
           
           
           
           
        
 








	
PIVOTAL CORPORATION, a Washington corporation




By                
           
           
           

       President or Vice President 




By                
           
           
           

       Secretary or Ass't Secretary	
 













Signature Page 













































Silicon Valley
Bank 




Schedule to 


Loan and Security Agreement 








	
Borrower:  	
Pivotal Corporation, a British Columbia corporation ("Parent");
and Pivotal Corporation, a Washington corporation
("Pivotal US")  
	  
	Address: 	858 Beatty Street, Suite 700

Vancouver, British Columbia, Canada V6B 1C1 
	  
	
Date: 
	
December __, 2002 







This Schedule forms an integral part
of the Loan and Security Agreement between Silicon Valley Bank and the above-named
borrower(s) (individually and collectively, and jointly and severally, the
“Borrower”) of even date (as amended, restated, supplemented, or otherwise
modified from time to time, this “Agreement”). 




JOINT AND SEVERAL
LIABILITY



        The
Borrowers each are, and at all times shall be, jointly and severally liable for each and
every one of the Obligations, regardless of which Borrower or Borrowers requested,
received, used, or directly enjoyed the benefit of, the Obligations. All of the
Collateral shall secure all of the Obligations.  









1. CREDIT LIMIT

     (Section 1.1): 



	  	
The Credit Limit equals: (a) so long as the ABL Provisions are not in effect, an amount
not to exceed at any one time outstanding the result of (i) $7,000,000 (the “Maximum
Credit Limit”), minus (ii) the sum of (y) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) and (z) the FX Reserve; and
(b) upon the occurrence of the ABL Provisions Trigger and so long as the ABL Provisions
are in effect, an amount not to exceed the result of (i) the lesser of (y) the Maximum
Credit Limit and (z) the sum of (1) 80% (the “Advance Rate”) of the
amount of Borrower’s Eligible Accounts (as defined in Section 8 above) and (2) the
amount of Restricted Pledged Cash (if any) of Borrower, minus (ii) the sum of (y) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit) and (z) the FX Reserve. The foregoing clause (b) is an ABL Provision.  


















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Anything
herein to the contrary notwithstanding, all outstanding Loans shall be immediately repaid
upon the occurrence of the CSL Provisions Trigger and no further Loans shall be made so
long as the CSL Provisions are in effect. This paragraph is a CSL Provision. 






	  	
Anything
herein to the contrary notwithstanding, all outstanding Loans shall be immediately repaid
upon the occurrence of the ABL Provisions Trigger and no further Loans shall be made so
long as the ABL Provisions are in effect. This paragraph is an ABL Provision. 






	  	
Upon
the occurrence of the ABL Provisions Trigger and so long as the ABL Provisions are in
effect, extensions of credit (other than Loans) hereunder will be made to (or for the
account of) each Borrower based on the Eligible Accounts and Restricted Pledged Cash of
such Borrower, subject to the Maximum Credit Limit for all such extensions of credit to
(or for the account of) all Borrowers combined. This paragraph is an ABL Provision. 






	  	
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. 








	Foreign Exchange

Contract Sublimit  	


$1,000,000
 (subject to all provisions in this Section 1 of this Schedule relative to the
Credit Limit).  






	  	
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 credit availability 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 or
other extensions of credit 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 (the “FX Reserve”), and in
the event at any time there are insufficient Loans and other extensions of credit
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



















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time that an Event of Default occurs and is continuing. The FX Forward Contracts shall terminate
upon the earlier of (a) the Maturity Date, or (b) any earlier effective date of
termination of this Agreement (or such later date requested by Borrower as Silicon may
agree in writing in its sole discretion if and to the extent Borrower’s Obligations
in respect of the FX Forward Contracts are secured by cash in amounts and on terms and
conditions acceptable to Silicon in its sole discretion). The FX Forward Contracts shall
be secured by cash in amounts and on terms and conditions acceptable to Silicon in its
sole discretion upon the occurrence of any CSL Provisions Trigger and so long as the CSL
Provisions are in effect. The immediately preceding sentence is a CSL Provision. 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. All amounts that Silicon pays or expends in respect of any
FX Forward Contracts shall constitute Obligations hereunder.  









	
Letter of Credit Sublimit

(Section 1.6): 	
$7,000,000
(subject to all provisions in this Section 1 of this Schedule relative to the Credit
Limit).  















2.  INTEREST. 




	
Interest Rate 
(Section 1.2): 	
A rate equal to the sum of the “Prime Rate” in effect from time to time, plus
0.50% per annum (the “Contract Rate”). “Prime Rate” means the
rate announced from time to time by Silicon as its “prime rate”; it is a base
rate upon which other rates charged by Silicon are based, and it is not necessarily the
best rate available at Silicon. The interest rate applicable to the Obligations shall
change on each date there is a change in the Prime Rate. Interest shall be calculated on
the basis of a 360-day year for the actual number of days elapsed. 







	  	
As
a result, based on a Prime Rate of 4.25% per annum in effect on the date of this
Agreement, the actual rate of interest chargeable hereunder in the absence of an Event of
Default, as of the date of this Agreement and in accordance with the Interest Act, is
approximately 4.81597 percent per annum for any year other than a leap year. Upon any
change in the Prime Rate after the date of this Agreement, the effective annual rate of
interest chargeable hereunder in accordance with the  

























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Interest
Act shall be that percent per annum resulting from multiplying the Contract Rate or the
Default Rate (as the case may be) applicable hereunder by the applicable Conversion
Factor (as defined below). For purposes of this Section 2 of the Schedule, the term “Conversion
Factor” shall mean: (a) for any year other than a leap year (i.e., a year with 365
days), the quotient obtained from dividing 365 by 360, or (b) for any leap year (i.e., a
year with 366 days), the quotient obtained from dividing 366 by 360. For ease of
reference, the effective annual rate of interest for a 365 day year, as calculated by
application of the foregoing formula, in respect of certain Contract Rates appears next
to the specified Prime Rate in Schedule C-1 attached hereto. At any time and from time to
time, Borrower may request in writing that Silicon provide it with a written confirmation
of the effective annual rate of interest chargeable hereunder in accordance with the
Interest Act if, for any reason, the calculation thereof in accordance with the formula
set forth in this paragraph cannot be determined by reference to Schedule C-1. For
purposes of this Agreement and the other Loan Documents, all borrowings, repayments, and
calculations in respect of Obligations shall be in Dollars.  







	Minimum Monthly 

Interest

(Section 1.2): 	
n/a. 



















     3.    
          FEES (Section 1.4): 



	Loan
Fee:	
$30,625, which is fully earned on the date of this Agreement
and is due and payable as promptly
as practicable after the date of this Agreement but in any event no later than January 3,
2003. 








	LC
Fees: 	
In addition to the charges, commissions, fees, and costs described in Section 1.6 of
the Agreement, Borrower shall pay Silicon an issuance fee with respect to each Letter of
Credit, in an amount equal to the product of (i) a percentage equal to (y) 1.15%, in the
case of any Letter of Credit issued to Canadian Imperial Bank of Commerce as beneficiary),
and (z) 1.25%, in the case of any other Letter of Credit, times (ii) the original
face amount of such Letter of Credit, which fee shall be earned in full on the date of
issuance of such Letter of Credit and shall be due and payable in 4 equal quarterly
installments, with each installment in an amount equal to 1/4 of such issuance fee, with
the first such installment due and payable on the date of issuance of such Letter of
Credit and each successive installment on the first day of each calendar quarter
thereafter until the fee is paid in cash in full; provided, however, that all such
installments shall be due and payable upon termination of this Agreement. 




















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4.  MATURITY DATE

 



	(Section 6.1): 	
November 15, 2003. 











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 quarter, except as otherwise specifically provided below:  







	Minimum Qualifying
Cash: 	
Without limiting the generality of the first sentence of Section 8(1) of this Schedule, Pivotal
US shall, at all times, maintain Qualifying Cash on deposit in Deposit Accounts of
Pivotal US maintained with Silicon in an amount not less than: (a) so long as the CSL
Provisions are not in effect, the Required Deposit Amount plus the Supplemental Required
Deposit Amount; and (b) so long as the CSL Provisions are in effect, the Reduced Required
Deposit Amount plus the Supplemental Required Deposit Amount. As used herein, the term
“Required Deposit Amount” means $9,500,000. As used herein, the term “Reduced
Required Deposit Amount” means $3,000,000. As used herein, the term “Qualifying
Cash” means Restricted Pledged Cash of Pivotal US or unrestricted cash of Pivotal
US, in each case, which shall not directly or indirectly be funded from Loans or other
extensions of credit by Silicon, and which at all times shall be subject to Silicon’s
first-priority perfected security interest but not encumbered by any other lien. As used
herein, the term “Supplemental Required Deposit Amount” means, as of any date
of determination, an amount equal to: (i) until such time (if ever) that Silicon receives
all items required under clauses (a) and (b) of Section 8(7) of this Schedule,
$1,000,000; and (b) thereafter, $–0–.  







	
Maximum Quarterly Net Loss 	
Borrower shall not cause, suffer, or permit its net loss (and, in the case of
the fiscal quarter ending December 31, 2002, the portion of such net loss attributable to
negative EBITDA), measured on a fiscal quarter-end basis, to exceed the amount set forth
in the following table for the applicable period set forth opposite thereto:  






	
Maximum Quarterly Net Loss	
Fiscal Quarter Ending
	
$17,000,000, and of which net loss negative EBITDA may not account for
more than $7,000,000	
December 31, 2002 





















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	$5,000,000	March 31, 2003
	$4,000,000	June 30, 2003
	$3,000,000	September 30, 2003










	Special Provisions 

Relating
to Violations:  	
(1) Solely with respect to the first violation (if ever) of the Maximum
Quarterly Net Loss financial covenant set forth above occurring after the date of this
Agreement, such violation (the “ABL Provisions Trigger”) shall constitute an
Event of Default that is immediately and automatically waived, but shall trigger the
applicability of the provisions herein and in the other Loan Documents that specifically
are identified as an ABL Provision (collectively, the “ABL Provisions”); it
being acknowledged and agreed that the ABL Provisions shall remain in effect unless and
until either (a) Silicon in its sole discretion waives the applicability thereof or (b) a
Net Loss CSL Provisions Trigger occurs (and thereupon the CSL Provisions shall be in
effect in lieu of the ABL Provisions). 







	 	
(2) Solely
with respect to the second violation (if ever) of the Maximum Quarterly           Net
Loss financial covenant set forth above occurring after the date of this
          Agreement, such violation (the “Net Loss CSL Provisions Trigger”)
          shall constitute an Event of Default that is immediately and automatically
          waived, but shall trigger the applicability of the provisions herein and in the
          other Loan Documents that specifically are identified as a CSL Provision
          (collectively, the “CSL Provisions”); it being acknowledged and
agreed           that the CSL Provisions shall remain in effect unless and until either
(a)           Silicon in its sole discretion waives the applicability thereof or (b)
solely in           the case that a Qualifying Cash CSL Provisions Trigger occurs, the
Qualifying           Cash CSL Deactivation Condition is satisfied.  







	 	
(3) Solely
with respect to the first violation (if ever) of the Minimum Qualifying           Cash
financial covenant set forth above occurring after the date of this           Agreement,
such violation (the “Qualifying Cash CSL Provisions           Trigger”) shall
constitute an Event of Default that is immediately and           automatically waived,
but shall trigger the applicability of the CSL Provisions; provided, however,
that the CSL Provisions shall be deactivated if           and only if, within 15 Business
Days following the occurrence of the Qualifying           Cash CSL Provisions Trigger,
Pivotal US deposits sufficient additional           Qualifying Cash in Deposit Accounts
of Pivotal US maintained with Silicon such           that the aggregate amount of
Qualifying Cash in Deposit Accounts of Pivotal US           maintained with Silicon
thereafter at all times shall equal at least 























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the
          Required Deposit Amount plus the Supplemental Required Deposit Amount (the
          “Qualifying Cash CSL Deactivation Condition”).  







	 	
(4) As
used herein, the term “CSL Provisions Trigger” means, individually
          and collectively, the Net Loss CSL Provisions Trigger and the Qualifying Cash
          CSL Provisions Trigger.  







	 	
           (5) For the avoidance of doubt, any violation of the Maximum Quarterly Net Loss
          financial covenant set forth above occurring after the date of this Agreement
          that is not the ABL Provisions Trigger or the Net Loss CSL Provisions Trigger
          shall constitute an Event of Default that is not automatically waived. 


          



	 	
           (6) For the avoidance of doubt, any violation of the Minimum Qualifying Cash
          financial covenant set forth above occurring after the date of this Agreement
          that is not the Qualifying Cash CSL Provisions Trigger shall constitute an Event
          of Default that is not automatically waived and that is not eligible for
          deactivation by the Qualifying Cash CSL Deactivation Condition. 


          



	
Definitions.	
For
purposes of the foregoing financial covenants:  






	  	
“EBITDA”
shall be determined in accordance with GAAP; provided, however, that net loss shall be so
determined with the following adjustments 






	  	
“Net
loss”shall be determined in accordance with GAAP, with the following adjustments:  






		
(A) non-cash writedowns of goodwill shall be excluded for purposes of determining
net loss; and 


          



	 	
(B) any post-September 2002 capitalized development costs shall be treated as
R&D expenses for purposes of determining net loss. 


          


















6.  REPORTING.
 



	(Section 5.3):  	
Borrower
shall provide Silicon with the following:  








	 	1.	Upon
the occurrence of the ABL Provisions Trigger and so long as the ABL
               Provisions are in effect, transaction reports and schedules of collections
in                respect of US and Canadian Accounts, on Silicon’s standard form,
               concurrently in connection with each requested Loan or other extension of
credit (but in any event 










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	 	  	not less
frequently than on a weekly basis). The immediately preceding sentence is
an ABL Provision.  








	   	2.	Monthly
US and Canadian accounts receivable agings, aged by invoice date, within
               fifteen days after the end of each month.  







	 	3.	Monthly
US and Canadian accounts payable agings, aged by invoice date, and
               outstanding or held check registers, if any, within fifteen days after the
end                of each month.  







	 	4.	Monthly
reconciliations of US and Canadian accounts receivable agings (aged by
               invoice date), transaction reports, and general ledger, within fifteen
days                after the end of each month.  







	   	5.	Monthly
schedule of US and Canadian deferred maintenance revenues, within                fifteen
days after the end of each month.  







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







	 	7.	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, (or, if                Borrower was not in such full compliance,
specifying the nature and period of                existence of such non-compliance), and
setting forth calculations showing                compliance (or non-compliance, as the
case may be) with the financial covenants                set forth in this Agreement and
such other information as Silicon shall                reasonably request, including,
without limitation, a statement that at the end                of such month there were
no held checks.  







	 	8.	Quarterly
unaudited financial statements, as soon as available, and in any event
               within forty-five days after the end of each fiscal quarter of Borrower.  







	 	9.	Annual
operating budgets (including income statements, balance sheets and cash
               flow statements, by quarter) for the upcoming fiscal year of Borrower
within                thirty days prior to the end of each fiscal year of Borrower.  







	 	10.	Annual
financial statements, as soon as available, and in any event within 120
               days following the end of Borrower’s fiscal year, certified by, and
with an                unqualified opinion of, independent certified public accountants
approved by the                Board of Directors and requisite shareholders of Parent
(so long as Parent                remains a publicly traded company) or otherwise
acceptable to Silicon.  







With respect to Items #1, 2, 3, 4,
and 5 above, the relevant amounts covered thereby shall be reported in Dollars. 















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With respect to the financial
statements referred to above, the relevant amounts covered thereby shall be reported in
Dollars. 




With respect to the financial
statements referred to above, Borrower agrees to deliver financial statements prepared on
both a consolidated and consolidating basis and agrees that no subsidiary of Borrower
existing as of the date of this Agreement (other than Market First, if and to the extent
such different fiscal year is disclosed and accounted for in accordance with GAAP) will
have a fiscal year different from that of Borrower.  









7. BORROWER INFORMATION: 



	  	
Borrower
represents and warrants that the information set forth in the Representations and
Warranties of the Borrower dated December 23, 2002, 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
(including without limitation operating accounts and investment services) with Silicon.
As to any Deposit Accounts and Investment Property (including securities 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 such Deposit Accounts and grant Silicon “control” (within
the meaning of Articles 8 and 9 of the Code) over such Investment Property (including
securities accounts). Thereafter, Borrower shall not maintain any Deposit Accounts or
Investment Property (including securities accounts) with any bank, securities
intermediary, or other institution unless Silicon has received such a control agreement
duly executed by such party in favor of Silicon covering such Deposit Account or
Investment Property (including securities accounts), as the case may be.  







	 	(2) 	Subordination
of Inside Debt. All present and future indebtedness of           Borrower to its
officers, directors, shareholders, and subsidiaries           (“Inside Debt”)
shall, at all times, be subordinated to the           Obligations pursuant to one or more
subordination agreements in form and           substance satisfactory to Silicon
(individually and collectively, the           “Insider Subordination Agreement”).
Borrower represents and warrants           that there is no 























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	 	  	Inside Debt
presently outstanding. 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 an Insider Subordination           Agreement.  











	 	(3) 	Copyrights,
etc.; Excluded General Intangibles 







     	 	
        (a) Section 11 of this Schedule identifies, as of the date of this Agreement, any
          and all maskworks, computer software, and other copyrights of Borrower that
          generate Accounts from the sale or licensing thereof (individually, a
          “Material Copyright” and, collectively, the “Material
          Copyrights”) and, in each case, whether such Material Copyright is
          registered (or is the subject of any application for registration) with the
          United States Copyright Office. Borrower will NOT register
          with the United States Copyright Office (or apply for such registration of) any
          of Borrower’s maskworks or computer software, unless Borrower has provided
          Silicon not less than 30 days prior written notice of the commencement of such
          registration/application and Borrower has executed and delivered to Silicon such
          security agreement(s) and other documentation (in form and substance reasonably
          satisfactory to Silicon) which Silicon in its good faith business judgment deems
          necessary for the grant by Borrower to Silicon of security interests in such
          maskworks or computer software (and all proceeds and products (including without
          limitation licensing revenue) thereof) and for filing with respect to such
          registration or application. Borrower will: (i) protect, defend and maintain the
          validity and enforceability of Borrower’s copyrights, patents, and
          trademarks; (ii) promptly advise Silicon in writing of material infringements of
          Borrower’s copyrights, patents, or trademarks of which Borrower is or
          becomes aware; and (iii) not allow any material item of Borrower’s
          copyrights, patents, or trademarks to be abandoned, forfeited or dedicated to
          the public without Silicon’s written consent. 


          



     	 	
          (b) (i) Borrower shall not sell or transfer (except as permitted under clause (iv)
          of Section 5.5 of this Agreement) any Excluded General Intangibles; (ii)
          Borrower shall not mortgage, pledge, grant a security interest in, or encumber
          any of Borrower’s Excluded General Intangibles (except in favor of Silicon,
          if and to the extent required under Section 8(3)(a) of this Schedule or Silicon
          and Borrower otherwise agree to do so in writing, and except for Permitted
          Liens); and (iii) Borrower hereby represents and warrants that Borrower has not
          agreed, and Borrower hereby covenants and agrees that Borrower shall not agree,
          in favor of any Person other than Silicon, that Borrower will not sell,
           


          

























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transfer,  mortgage, pledge, grant a security interest in, or encumber any of           Borrower’s
Excluded General Intangibles (except for Permitted Liens).  








	 	(4) 	Landlord
Agreement. With respect to any leased premises of Borrower,           Borrower shall,
promptly upon Silicon’s request therefor, deliver to           Silicon a landlord
agreement (in form and substance satisfactory to Silicon)           duly executed by the
lessor of such leased premises.  







	 	(5) 	Bailee
Agreement. Borrower hereby represents and warrants that, as of           the date of
execution and deliver of this Agreement, no goods of Borrower are in           the
possession of any warehouseman or other bailee, and hereby covenants that
          Borrower promptly shall deliver written notice to Silicon of any goods of
          Borrower being in the possession of any warehouseman or other bailee. With
          respect to any goods of Borrower in the possession of any warehouseman or other
          bailee, Borrower shall, promptly upon Silicon’s request therefor, deliver
          to Silicon a bailee agreement (in form and substance satisfactory to Silicon)
          duly executed by such warehouseman or other bailee.  







	  	(6) 	Broker. Borrower
shall pay any and all brokerage commissions or finders           fees incurred in
connection with or as a result of Borrower’s obtaining           financing from
Silicon under this Agreement. Borrower agrees and acknowledges           that payment of
all such brokerage commissions or finders fees shall be the sole           responsibility
of Borrower, and Borrower agrees to indemnify, defend, and hold           Silicon
harmless from and against any claim of any broker or finder arising out           of
Borrower’s obtaining financing from Silicon under this Agreement (and           any
reasonable attorneys fees and costs incurred by Silicon in connection
          therewith).  







	 	(7) 	Certain
Post-Closing Requirements. As conditions subsequent to initial           closing
hereunder, Silicon shall receive timely each of the following (the           failure of
Silicon to timely receive any of the following constituting an Event           of
Default):  








	  	
        (a) as
 soon as practicable and in any event no later than January 30, 2003, Silicon
          shall receive each of the items described in clause (b) of the last sentence of
          Section 9(A) of this Schedule, if and to the extent the same was not already
          delivered on or before the date of this Agreement pursuant to Section 9(A) of
          this Schedule.  
























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        (b) as
soon as practicable and in any event no later than February 10, 2003,           Silicon
shall receive the following searches (the results of which shall be
          satisfactory to Silicon) relative to Parent: (i) Corporation Capital Tax; (ii)
          Social Services Tax; and (iii) Canada Customs and Revenue Agency regarding (x)
          Source Deductions, (y) Corporate Tax remittances, and (z) Excise Branch, Goods
          and Services Tax; in each case, if and to the extent the same was not already
          received by Silicon on or before the date of this Agreement pursuant to Section
          9(B) of this Schedule.  








	  	
        (c) without
limiting the generality of Sections 8(4) and 8(5) of this Schedule,           Silicon
shall receive, as soon as practicable and in any event no later than           January
30, 2003, landlord agreements or bailee agreements (as the case may be)           in
respect of each location of Borrower or Borrower’s goods identified in           the
Representations.  








	  	
        (d) as
soon as practicable and in any event no later than January 30, 2003,           evidence
satisfactory to Silicon that Pivotal US is in good standing with the           State of
Washington Secretary of State as of a date following the date of this
          Agreement.  














9. CONDITIONS
PRECEDENT



	  	
In
addition to the other conditions precedent set forth in this Agreement, the making of the
initial Loan is subject to the following additional conditions: 






	  	
(A) Silicon shall have received lien searches listing all effective financing
          statements and PPSA registrations which name any Borrower (or any predecessor
          corporation or any tradename thereof or any seller of assets acquired by any
          Borrower outside of the ordinary course of business) as debtor that are filed in
          the applicable filing offices with respect to such Borrower, none of which
          financing statements and PPSA registrations shall cover any of the Collateral of
          any Borrower, except (1) financing statements and PPSA registrations perfecting
          Permitted Liens, (2) financing statements and PPSA registrations as to which
          Silicon has received duly executed authorization by the applicable secured party
          to file executed termination statements, partial release statements, or
          authorizations to discharge, each in form and substance satisfactory to Silicon,
          or (3) as otherwise agreed in writing by Silicon. Without limiting the
          generality of the foregoing, Silicon shall have received: (a) a letter, in form
          and substance satisfactory to Bank, duly executed and delivered by Canadian
          Imperial Bank of Commerce (“Existing Lender”)  

















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to
Silicon (the           “Payoff Letter”) respecting the amount (or Letters of
Credit in such           amount) necessary to repay (or, in the case of Letters of
Credit, to secure) in           full all of the obligations of Borrower owing to Existing
Lender and authorizing           the filing of executed UCC/PPSA termination statements
or discharges and           evidencing the termination by Existing Lender of its security
interests in the           properties and assets of Borrower or any guarantor of any of
the Obligations;           and (b) except to the extent (if any) permitted by Silicon to
be delivered after           the date of this Agreement pursuant to Section 8(7) of this
Schedule, written           authorization by the respective secured parties to terminate
(or amend, in form           and substance satisfactory to Silicon) each of the following
financing           statements or PPSA registrations: (i) PPSA filing listing Parent as
debtor and           DSM Leasing Ltd. as secured party, registered with the British
Columbia Personal           Property Registry on November 26, 2002 as Registration
#744436A; (ii) PPSA           filing listing Parent as debtor and Gould Leasing Ltd. as
secured party,           registered with the British Columbia Personal Property Registry
on November 25,           2002 as Registration #742571A; (iii) PPSA filing listing Parent
as debtor and           Onset Capital Corporation as secured party, registered with the
British Columbia           Personal Property Registry on November 2, 2001 as Registration
#045256A; (iv)           PPSA filing listing Parent as debtor and Sun Microsystems
Finance as secured           party, registered with the British Columbia Personal
Property Registry on June           14, 2001 as Registration #9509924; and (v) PPSA
filing listing Parent as debtor           and Sun Microsystems Finance as secured party,
registered with the British           Columbia Personal Property Registry on May 2, 2001
as Registration #9432771 .  







	  	
(B) Except
to the extent (if any) permitted by Silicon to be delivered after the           date of
this Agreement pursuant to Section 8(7) of this Schedule, Silicon shall           have
received satisfactory evidence that (i) all returns required to be filed by
          Borrower have been timely filed with Canada Customs and Revenue Agency (Income
          Tax and GST), the Ministry of Finance and Corporate Relations (British
          Columbia), and with the comparable Ministry in those other provinces that
          require Borrower to file such returns, and (ii) all Taxes upon Borrower or its
          properties, assets, income and franchises (including real property Taxes and
          payroll Taxes) have been paid prior to delinquency, except such Taxes that are
          permitted to be, and in fact are, contested in accordance with the second
          sentence of Section 3.8 of the Agreement.  







	  	
(C) Each
Borrower shall execute and deliver to Silicon a continuing guaranty with
          respect to all of the Obligations of all other Borrowers, in form and substance
          satisfactory to Silicon (the “Cross Guaranty”). Throughout the term
of           this Agreement, Borrower shall not cause, suffer, or permit the Cross
Guaranty           to cease to be in full force and effect.  
















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(D) Each
Borrower (and guarantor of any of the Obligations) shall execute and           deliver to
Silicon a subordination agreement with respect to all indebtedness           and
obligations of all other Borrowers (and guarantors of any of the           Obligations)
owing to such Borrower (and guarantor of any of the Obligations),           on Silicon’s
standard form (the “Intercompany Subordination           Agreement”).
Throughout the term of this Agreement, Borrower shall not           cause, suffer, or
permit the Intercompany Subordination Agreement to cease to be           in full force
and effect.  







	  	
(E) Parent
shall execute and deliver a Pledge Agreement to Silicon, on           Silicon’s
standard form, granting Silicon a security interest in 100% of           the outstanding
stock of Pivotal US in order to secure all of the Obligations.           Borrower shall
cause said Pledge Agreement to continue in full force and effect           at all times
during the term of this Agreement with respect to 100% of the           outstanding stock
of Pivotal US now outstanding or hereafter issued and 100% of           all options and
warrants to acquire stock of Pivotal US hereafter issued.           Borrower represents
and warrants that there are no outstanding options or           warrants to acquire stock
of Pivotal US. Borrower shall deliver to Silicon           possession of the original
stock certificates respecting all of the issued and           outstanding shares of stock
of Pivotal US, together with stock powers with           respect thereto endorsed in
blank.  







	  	
(F) Parent
shall execute and deliver a General Security Agreement (governed under           British
Columbia law and other applicable Canadian laws), granting Silicon a           security
interest in all personal property of Parent (other than Excluded           General
Intangibles) in order to secure all of the Obligations. Such General           Security
Agreement (as the same may be amended, restated, supplemented, or           otherwise
modified from time to time, the “GSA”) and this Agreement           are
intended by the parties to be construed together; provided, however, that to
          the extent that any provision of this Agreement conflicts with any provision of
          the GSA, the provision giving Silicon greater rights or remedies shall govern
          (to the maximum extent permitted by applicable law), it being understood that
          the purpose of this Agreement, the GSA, or any other Loan Document is to add
to,           and not detract from, the rights granted to Silicon under the Loan
Documents;           provided further that, subject to the foregoing, in the case of any
          irreconcilable conflict between the GSA and this Agreement with respect to the
          security interests granted by Parent to Silicon in any Collateral located in
          Canada and the rights and remedies of Silicon relative thereto, the GSA shall
          govern with respect to such conflict.  











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10. ADDITIONAL
CANADA-RELATED PROVISIONS




	  	
(A) The
Obligations shall be payable in Dollars. The Loans and other extensions of
          credit shall be funded or made in Dollars. The amounts of Obligations and
          Reserves shall be calculated in Dollars. The amounts of Accounts shall be
          determined in Dollars, and any amount of Accounts that is denominated in a
          currency other than Dollars shall be valued in Dollars based on the applicable
          Exchange Rate for such currency as of the date one day prior to the date of
          determination.  







	  	
(B) In
the event that Silicon obtains any judgment in Canadian dollars in respect           of
any liability of Borrower in Dollars, Silicon and Borrower agree that the
          Exchange Rate to be used in determining the amount of the judgment shall be the
          Exchange Rate determined on the Business Day immediately preceding the date of
          such judgment. The liability of the Borrower in respect of any amount due in
          Dollars shall, despite any judgment in Canadian dollars, be discharged only to
          the extent on the Business Day following receipt of the payment or satisfaction
          of the judgment, Silicon is able to purchase the required amount of Dollars
with           Canadian dollars. If the amount of Dollars purchased by Silicon is less
than the           amount of Dollars due to it under this Agreement and the other Loan
Documents,           Borrower agrees, as a separate obligation to indemnify Silicon
against such           loss, and if the amount so purchased exceeds the amount due to
Silicon under           this Agreement and the other Loan Documents, Silicon agrees to
remit such excess           to the Borrower.  







	  	
(C) Without
limiting the generality of the Section 3.8 of the Agreement: (1)           Borrower shall
(a) timely file all returns required to be filed by Borrower with           Canada
Customs and Revenue Agency (Income Tax and GST), the Ministry of Finance           and
Corporate Relations (British Columbia), and with the comparable Ministry in
          those other provinces that require Borrower to file such returns, and (b) pay
          all Taxes upon Borrower or its properties, assets, income and franchises
          (including real property Taxes and payroll Taxes) prior to delinquency, except
          such Taxes that are permitted to be, and in fact are, contested in accordance
          with the second sentence of Section 3.8 of the Agreement; and (2) (a) Borrower
          agrees to deliver to Silicon copies of each of Borrower’s future Canadian
          federal income Tax returns, and any amendments thereto, within thirty (30) days
          of the filing thereof with Canada Customs and Revenue Agency; and (b) anything
          in Section 9.19 of the Agreement to the contrary notwithstanding, if Borrower
          (or any guarantor of the Obligations) shall be required by applicable Canadian
          law or the administration thereof to deduct or withhold any Canadian Taxes from
          or in respect of any sum payable to Silicon hereunder or under the other Loan
          Documents, (i) the sum payable to Silicon shall be increased as may  











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be
necessary           so that after making all required deductions or withholdings
(including           deductions or withholdings applicable to additional amounts paid
under this           Section 10(C) of this Schedule), Silicon receives an amount equal to
the sum it           would have received if no such deduction or withholding had been
made, and (ii)           Borrower (or any guarantor of the Obligations) shall make such
deductions or           withholdings, and promptly shall pay the full amount deducted or
withheld to the           relevant taxation or other authority in accordance with
applicable law. Without           limiting the generality of the foregoing, Borrower
agrees that it will pay to           Canada Customs and Revenue Agency, no less
frequently than monthly, the           applicable withholding tax required to be paid by
Silicon under the provisions           of the Tax Act or under the Convention Between the
United States of America and           Canada with Respect to Taxes on Income and on
Capital brought into force August           16, 1984, or any successor treaty of similar
import, whichever is applicable,           with respect to the interest, charges, and
other fees payable by Borrower           hereunder and under the other Loan Documents
and, within ten (10) days of the           end of each month, Borrower agrees to provide
Silicon with documentation           sufficient to establish its full payment of such Tax
amounts.  







	  	
(D) Without
limiting the generality of Section 9.8 of the Agreement, Borrower           agrees to
pay, indemnify, and hold Silicon harmless from (i) any and all           Canadian Taxes,
if any, that may be payable or determined to be payable in           connection with the
execution and delivery of, or consummation of any of the           transactions
contemplated by, this Agreement, any Loans or other extensions of           credit made
pursuant hereto or the other Loan Documents, or the payment or           accrual of any
and all interest, charges, or fees charged under this Agreement           or the other
Loan Documents, including any amounts due under the provisions of           the Tax Act,
other than any such Taxes that result from the establishment in           Canada by
Silicon of a “permanent establishment” within the meaning of           Article
V of the Convention Between the United States of America and Canada with
          Respect to Taxes on Income and on Capital brought into force August 16, 1984,
or           any successor treaty of similar import, (ii) foreign exchange risks or costs
          (other than in respect of FX Forward Contracts pursuant to Section 1 of this
          Schedule), (iii) any and all costs, expenses, reserves, or capital requirements
          imposed upon Silicon with respect to the subject transactions by the Canadian
          governmental authorities or those of any province in which Borrower conducts
its           business (other than those that result solely from it being established
that           Silicon is engaging in the banking business in Canada, which neither
Borrower           nor Silicon in good faith believe Silicon is doing in entering into
this           Agreement and the related transactions), and (iv) any penalties, interest,
or           other liabilities accrued or resulting from any failure of Borrower to pay
such           amounts when first due and payable. Silicon agrees that, during the term
of this           Agreement, it will cooperate in good faith (at Borrower’s expense)
to           assist Borrower in connection with any attempts 











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by
Borrower in good faith to           seek appropriate refunds of any and all such Canadian
Tax amounts. This Section           10(D) of this Schedule and Section 9.8 of this
Agreement shall survive the           termination of this Agreement.  







	  	
(E) Notwithstanding
any provision to the contrary contained herein, in no event           shall the aggregate
“interest” (as defined in Section 347 of the Criminal Code, R.S.C. 1985,
c. C-46, as the same may be amended, replaced           or re-enacted from time to time)
payable hereunder exceed the effective annual           rate of interest on the “credit
advanced” (as defined in that section)           hereunder lawfully permitted under
that section and, if any payment, collection           or demand pursuant to this
Agreement in respect of “interest” (as           defined in that section) is
determined to be contrary to the provisions of that           section, such payment,
collection or demand shall be deemed to have been made by           mutual mistake of
Borrower and Silicon and the amount of such payment or           collection shall be
refunded to Borrower; for purposes hereof the effective           annual rate of interest
shall be determined in accordance with generally           accepted actuarial practices
and principles over the term of the Loans on the           basis of annual compounding of
the rate lawfully permitted under that section           and, in the event of a dispute,
a certificate of a Fellow of the Canadian           Institute of Actuaries appointed by
Silicon will be prima facie evidence           for the purposes of such
determination.  






	  	
(F)  Borrower represents, warrants and agrees: 


          



	  	
          (1) 
Section 12 of this Schedule lists all the employee benefit, health, welfare,
          supplemental unemployment benefit, bonus, pension, profit sharing, deferred
          compensation, stock compensation, stock purchase, retirement, hospitalization
          insurance, medical, dental, legal, disability and similar plans or arrangements
          or practices relating to the employees or former employees of Borrower which are
          currently maintained or were maintained at any time in the last five calendar
          years (the “Employee Plans”). 


          





     	 	
          (2) All of the Employee
Plans are and have been established, registered, qualified,
          invested and administered in all respects in accordance with all laws,
          regulations, orders or other legislative, administrative or judicial
          promulgations applicable to the Employee Plans (“Applicable Employee
          Benefit Laws”). No fact or circumstance exists that could adversely affect
          the tax-exempt status of an Employee Plan. 


          



     	 	
                   (3) 
           All obligations regarding the Employee Plans have been satisfied, there are no
          outstanding defaults or violations by any party  


          
















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to
any Employee Plan and no           taxes, penalties or fees are owing or exigible under
any of the Employee Plans. 






	  	
                  (4) Borrower may unilaterally amend, modify, vary, revoke or terminate, in whole or
          in part, each Employee Plan and take contribution holidays under or withdraw
          surplus from each Employee Plan, subject only to approvals required by
          Applicable Employee Benefit Laws. 


          




	  	
                  (5) No
Employee Plan, nor any related trust or other funding medium thereunder, is
          subject to any pending investigation, examination or other proceeding, action
or           claim initiated by any governmental agency or instrumentality, or by any
other           party (other than routine claims for benefits), and there exists no state
of           facts which after notice or lapse of time or both could reasonably be
expected           to give rise to any such investigation, examination or other
proceeding, action           or claim or to affect the registration of any Employee Plan
required to be           registered.  







	  	
                  (6) All
contributions or premiums required to be made by Borrower under the terms           of
each Employee Plan or by Applicable Employee Benefit Laws have been made in a
          timely fashion in accordance with Applicable Employee Benefit Laws and the
terms           of the Employee Plans, and Borrower does not have, and as of the date of
this           Agreement will not have, any liability (other than liabilities accruing
after           the date of this Agreement) with respect to any of the Employee Plans.
          Contributions or premiums will be paid by Borrower on an accrual basis for the
          period up to the date of this Agreement even though not otherwise required to
be           made until a later date.  






	  	
                  (7) No
amendments have been made to any Employee Plan and no improvements to any
          Employee Plan have been promised and no amendments or improvements to an
          Employee Plan will be made or promised by the Borrowers before the Closing
Date.  






	  	
                  (8) 
There have been no improper withdrawals, applications or transfers of assets
          from any Employee Plan or the trusts or other funding media relating thereto,
          and neither Borrower nor any of its agents has been in breach of any fiduciary
          obligation with respect to the administration of the Employee Plans or the
          trusts or other funding media relating thereto. 


          




	  	
                  (9) Subject
to approvals under Applicable Employee Benefit Laws, Borrower may           amend, revise
or merge any Employee Plan or the assets transferred from any           Employee Plan
with any other arrangement, plan or fund.  

















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                  (10) Each
Employee Plan is fully funded or fully insured on both an ongoing and           solvency
basis pursuant to the actuarial assumptions and methodology set forth           in
Section 12 of this Schedule.  







	  	
                  (11) None
of the Employee Plans enjoys any special tax status under Applicable           Employee
Benefit Laws, nor have any advance tax rulings been sought or received           in
respect of the Employee Plans.  






	  	
                  (12) 
No insurance policy or any other contract or agreement affecting any Employee
          Plan requires or permits a retroactive increase in premiums or payments due
          thereunder. The level of insurance reserves under each insured Employee Plan is
          reasonable and sufficient to provide for all incurred but unreported claims. 


          



	  	
                  (13) 
Except as disclosed in Section 12 of
this Schedule, none of the Employee Plans           provides benefits to retired
employees or to the beneficiaries or dependents of           retired employees.  






	  	
(G) 
Without limiting the generality of the foregoing, Borrower represents, warrants
          and agrees that: 


          




	  	
                  (1) all
tax returns and reports, assessments for workers’ compensation,           pension
plan payments, unemployment insurance payments, employment standards           payments,
excise taxes and any other statutory payment required by law to be           filed by
Borrower (including without limitation all federal, provincial and           state income
tax returns), have been and will continue to be properly filed on a           timely
basis and are true, complete and correct; and  






	  	
                  (2) There
are no liabilities of Borrower as to property taxes, income taxes,           pension plan
payments, unemployment insurance, payroll taxes, social services           taxes, goods
and services taxes, workers’ compensation assessments,           corporation capital
taxes, employment standards assessments or any other amount           due or owing to any
taxing or Official Body and all taxes and other assessments           which Borrower are
required by law to withhold or to collect have been duly           recorded, withheld and
collected, and have been and will continue to be paid           over to the proper
Official Body.  























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11. MATERIAL
COPYRIGHTS



[Identify all Material Copyrights and
whether each such Material Copyright is registered (or is the subject of any application
for registration) with the United States Copyright Office] 
















12. EMPLOYEE PLANS



[Borrower to complete per Section
10(F) of this Schedule.] 






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IN WITNESS WHEREOF, the
parties hereto have caused this Schedule to Loan and Security Agreement to be executed and
delivered as of the date first above written. 





	Borrower:


PIVOTAL CORPORATION, a British Columbia 

corporation




By                
           
           
           
           
           


       President or Vice President 




By                
           
           
           
           
           


       Secretary or Ass't Secretary	Silicon:


SILICON VALLEY BANK




By                
           
           
           
           
           



Title                
           
           
           
           
        
 








	
PIVOTAL CORPORATION, a Washington corporation




By                
           
           
           

       President or Vice President 




By                
           
           
           

       Secretary or Ass't Secretary