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Exhibit 10.1
 
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
This THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”)
dated as of April 5, 2016 (the “Effective Date”) is by and among (a) SILICON
VALLEY BANK, a California corporation (“Bank”), and (b) (i) GIGOPTIX, INC., a
Delaware corporation (“GigOptix”), CHIPX, INCORPORATED, a Delaware corporation
(“ChipX”), ENDWAVE CORPORATION, a Delaware corporation (“Endwave”)  and MAGNUM
SEMICONDUCTOR, INC., a Delaware corporation (“Magnum”) (GigOptix, ChipX, Endwave
and Magnum are individually and collectively, jointly and severally,
“Borrower”), and provides the terms on which Bank shall lend to Borrower, and
Borrower shall repay Bank.  The parties agree as follows:
 
A.            Bank, GigOptix, ChipX and Endwave have previously entered into
that certain Second Amended and Restated Loan and Security Agreement dated as of
March 25, 2013, by and among Bank, GigOptix, ChipX and Endwave, as amended by a
certain First Amendment to Second Amended and Restated Loan and Security
Agreement dated as of March 9, 2015, and as further amended by a certain Second
Amendment to Second Amended and Restated Loan and Security dated as of May 15,
2015 (as the same has been amended, modified, supplemented or restated, the
“Prior Loan Agreement”).
 
B.            Borrower and Bank have agreed to amend and restate, and replace,
the Prior Loan Agreement in its entirety.  Bank and Borrower hereby agree that
the Prior Loan Agreement is amended and restated in its entirety as follows:
 

 
1
ACCOUNTING AND OTHER TERMS

 
Accounting terms not defined in this Agreement shall be construed following
GAAP, unless otherwise specifically stated.  Calculations and determinations
must be made following GAAP; provided that if at any time any change in GAAP
would affect the computation of any financial ratio or requirement set forth in
any Loan Document, and either Borrower or Bank shall so request, Borrower and
Bank shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP; provided,
further, that, until so amended, (a) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (b)
Borrower shall provide Bank financial statements and other documents required
under this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.  Notwithstanding the foregoing, all
financial calculations (whether for pricing covenants, or otherwise) shall be
made with regard to Borrower only and not on a consolidated basis.  The term
“financial statements” includes the notes and schedules.  Capitalized terms not
otherwise defined in this Agreement shall have the meanings set forth in
Section 13 of this Agreement.  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.
 

 
2
LOAN AND TERMS OF PAYMENT

 
2.1         Promise to Pay.  Borrower hereby unconditionally promises to pay
Bank the outstanding principal amount of all Credit Extensions and accrued and
unpaid interest thereon together with any fees and Finance Charges as and when
due in accordance with this Agreement.
 
2.1.1     Financing of Accounts
 
(a)           Availability.
 
(i)            Subject to the terms of this Agreement and provided that Borrower
is not Streamline Facility Eligible, Borrower may request that Bank finance
specific Eligible Accounts.  Bank may, in its good faith business discretion,
finance such specific Eligible Accounts by extending credit to Borrower in an
amount equal to the result of the Advance Rate multiplied by the face amount of
the Eligible Account.  Bank may, in its sole discretion, change the percentage
of the Advance Rate for a particular Eligible Account on a case by case basis.
 
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(ii)           Subject to the terms of this Agreement and provided that Borrower
is Streamline Facility Eligible, Borrower may request that Bank finance Eligible
Accounts on an aggregate basis (the “Aggregate Eligible Accounts”).  Bank may,
in its good faith business discretion, finance Aggregate Eligible Accounts by
extending credit to Borrower in an aggregate amount outstanding at any time of
up to the Availability Amount.  Bank may, in its reasonable discretion, change
the percentage of the Borrowing Base on a case by case basis.
 
(iii)         Any extension of credit made pursuant to the terms of subsections
(i) or (ii) above shall hereinafter be referred to as an “Advance”, and,
collectively, the “Advances”.  When Bank makes an Advance, the specific Eligible
Account or the Aggregate Eligible Accounts each become a separate “Financed
Receivable”.
 
(b)           Maximum Advances.
 
(i)            The aggregate face amount of all Financed Receivables outstanding
at any time may not exceed the Facility Amount.  In addition and notwithstanding
the foregoing, (A) the aggregate amount of Advances outstanding at any time may
not exceed the Maximum Availability Amount and (B) while Borrower is Streamline
Facility Eligible, the aggregate amount of Advances outstanding at any time may
not exceed the Availability Amount.
 
(ii)           If, at any time, amounts outstanding exceed the amounts set forth
in this Section 2.1.1(b), Borrower shall immediately pay to Bank in cash such
excess amount, and Borrower hereby irrevocably authorizes Bank to debit any of
its accounts maintained with Bank or any of Bank’s Affiliates in connection
therewith.
 
(c)           Borrowing Procedure.  Borrower will deliver an Advance Request and
Invoice Transmittal in the form attached hereto as Exhibit C signed by a
Responsible Officer for each Advance it requests, accompanied by (i) an accounts
receivable aging, an accounts payable aging and a Borrowing Base Certificate,
with respect to requests for Advances based upon Aggregate Eligible Accounts, or
(ii) invoices, an accounts receivable aging and an accounts payable aging with
respect to requests for Advances based upon specific Eligible Accounts.  Bank
may rely on information set forth in or provided with the Advance Request and
Invoice Transmittal.  In addition, upon Bank’s request, Borrower shall deliver
to Bank any contracts, purchase orders, shipping documents or other underlying
supporting documentation with respect to any Eligible Account (including those
Eligible Accounts comprising all or any portion of the Aggregate Eligible
Accounts).
 
(d)           Credit Quality; Confirmations.  Bank may, at its option, conduct a
credit check of the Account Debtor for each Account requested by Borrower for
financing hereunder to approve any such Account Debtor’s credit before agreeing
to finance such Account.  Bank may also verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts
(including confirmations of Borrower’s representations in Section 5.3 of this
Agreement) by means of mail, email, telephone or otherwise, either in the name
of Borrower or Bank from time to time in its sole discretion.
 
(e)           Accounts Notification/Collection.  Bank may notify any Account
Debtor of Bank’s security interest in Borrower’s Accounts and verify and/or
collect them.
 
(f)            Early Termination.  This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three (3) Business Days
after written notice of termination is given to Bank; or (ii) by Bank at any
time after the occurrence of an Event of Default, without notice, effective
immediately.  If this Agreement is terminated (A) by Bank in accordance with
clause (ii) in the foregoing sentence, or (B) by Borrower for any reason,
Borrower shall pay to Bank a non-refundable termination fee in an amount equal
to one-half of one percent of the Maximum Availability Amount (the “Early
Termination Fee”).  The Early Termination Fee shall be due and payable on the
effective date of such termination and thereafter shall bear interest at a rate
equal to the highest rate applicable to any of the Obligations.  Notwithstanding
the foregoing, Bank agrees to waive the Early Termination Fee if Bank closes on
the refinance and re-documentation of this Agreement under another division of
Bank (in its sole and exclusive discretion) prior to the Maturity Date.
 
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(g)           Maturity.  All Obligations outstanding hereunder with respect to
(i) Advances shall be immediately due and payable in full on the Maturity Date
or the earlier termination of this Agreement and (ii) the Term Loan Advance
shall be immediately due and payable in full on the Term Loan Maturity Date or
the earlier termination of this Agreement.
 
(h)           End of Streamline Facility Eligible Status.  On any day that
Borrower ceases to be Streamline Facility Eligible, all outstanding Advances
made based on Aggregate Eligible Accounts shall be immediately due and payable,
together with all Finance Charges accrued thereon.  Provided no Event of Default
then exists hereunder and subject to the terms of this Agreement, Bank may, in
its good faith business discretion, refinance the outstanding principal amount
of such Advances with new Advances made based on specific Eligible Accounts (in
accordance with this Agreement, including, without limitation, Section 2.1.1
hereof).  In connection with same, Borrower shall deliver to Bank an Advance
Request and Invoice Transmittal in the form attached hereto as Exhibit C
containing detailed invoice reporting, signed by a Responsible Officer, together
with a current accounts receivable aging and a copy of each invoice, all in
accordance with Section 6.2(h) hereof and Bank may, in its good faith business
discretion, finance same (in accordance with this Agreement, including, without
limitation, Section 2.1.1 hereof) and each Eligible Account financed shall
thereafter be deemed to be a Financed Receivable for purposes of this
Agreement.  If, following such determination, the outstanding principal amount
of the Obligations in connection with Advances made pursuant to Section 2.1.1
exceeds the amount of Advances Bank has agreed to make based on specific
Eligible Accounts, Borrower shall immediately pay to Bank the excess and, in
connection with same, hereby irrevocably authorizes Bank to debit any account of
Borrower maintained by Borrower with Bank or any of Bank’s Affiliates for the
amount of such excess.
 
(i)            Commencement of Streamline Facility Eligible Status.  On any day
that Borrower becomes Streamline Facility Eligible, all outstanding Advances
made based on specific Eligible Accounts shall be immediately due and payable,
together with all Finance Charges and Collateral Handling Fees accrued thereon. 
Provided no Event of Default then exists hereunder and subject to the terms of
this Agreement, Bank may, in its good faith business discretion, refinance such
Advances with new Advances made based on Aggregate Eligible Accounts (in
accordance with this Agreement, including, without limitation, Section 2.1.1
hereof).  In connection with such request, Borrower shall deliver to Bank (i) an
Advance Request and Invoice Transmittal in the form attached hereto as Exhibit C
containing a current accounts receivable aging, and (ii) a Borrowing Base
Certificate, and Bank may, in its good faith business discretion, refinance the
outstanding principal amount of such Advances with new Advances made based on
Aggregate Eligible Accounts (in accordance with this Agreement, including,
without limitation, Section 2.1.1 hereof) and the Aggregate Eligible Accounts
financed shall thereafter be deemed to be a Financed Receivable for purposes of
this Agreement.  If, following such determination, the outstanding principal
amount of the Obligations in connection with Advances made pursuant to Section
2.1.1 exceeds the amount of Advances Bank has agreed to make based on Aggregate
Eligible Accounts, Borrower shall immediately pay to Bank the excess and, in
connection with same, hereby irrevocably authorizes Bank to debit any account of
Borrower maintained by Borrower with Bank or any of Bank’s Affiliates for the
amount of such excess.
 
2.1.2    Term Loan Advance
 
(a)            Availability.  Subject to the terms and conditions of this
Agreement, upon Borrower’s request, Bank shall make one (1) term loan advance
(the “Term Loan Advance”) available to Borrower on the Effective Date in an
original principal amount of up to Fifteen Million Dollars ($15,000.000.00). 
After repayment, the Term Loan Advance (or any portion thereof) may not be
reborrowed.
 
(b)            Repayment.  Commencing on May 2, 2016, and continuing on each
Payment Date thereafter, Borrower shall repay the Term Loan Advance in (i) sixty
(60) equal monthly installments of principal, plus (ii) monthly payments of
accrued interest at the rate set forth in Section 2.1.2(e)(i).  All outstanding
principal and accrued and unpaid interest under the Term Loan Advance, and all
other outstanding Obligations with respect to the Term Loan Advance, are due and
payable in full on the Term Loan Maturity Date.
 
(c)            Permitted Prepayment.  Borrower shall have the option to prepay
all, or any portion, of the Term Loan Advance, provided Borrower (i) delivers
written notice to Bank of its election to prepay the Term Loan Advances at least
ten (10) days prior to such prepayment, and (ii) pays, on the date of such
prepayment (A) all outstanding principal plus accrued and unpaid interest with
respect to the portion of the Term Loan Advance being prepaid, (B) the Term Loan
Prepayment Premium with respect to the portion of the Term Loan Advance being
prepaid and (C) all other sums, if any, that shall have become due and payable
with respect to the Term Loan Advance, including interest at the Default Rate
with respect to any past due amounts.
 
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(d)            Mandatory Prepayment Upon an Acceleration.  If the Term Loan
Advance is accelerated by Bank following the occurrence and during the
continuance of an Event of Default, Borrower shall immediately pay to Bank an
amount equal to the sum of (i) all outstanding principal plus accrued and unpaid
interest with respect to the Term Loan Advance, (ii) the Term Loan Prepayment
Premium and (iii) all other sums, if any, that shall have become due and payable
with respect to the Term Loan Advance, including interest at the Default Rate
with respect to any past due amounts.
 
(e)           Interest.
 
(i)          Interest Rate.  Subject to Section 2.1.2(e)(ii), the principal
amount of the Term Loan Advance outstanding shall accrue interest at a floating
per annum rate equal to the Prime Rate plus one and one-quarter of one percent
(1.25%), which interest shall be payable monthly in accordance with Section
2.1.2(e)(v) below.
 
(ii)         Default Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations in connection with the Term Loan
Advance shall bear interest at the Default Rate.  Fees and expenses which are
required to be paid by Borrower pursuant to the Loan Documents (including,
without limitation, Bank Expenses) but are not paid when due shall bear interest
until paid at a rate equal to the highest rate applicable to the Obligations. 
Payment or acceptance of the increased interest rate provided in this
Section 2.1.2(e)(ii) is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of Bank.
 
(iii)        Adjustment to Interest Rate.  Changes to the interest rate of the
Term Loan Advance based on changes to the Prime Rate shall be effective on the
effective date of any change to the Prime Rate and to the extent of any such
change.
 
(iv)        Computation; 360-Day Year.  In computing interest with respect to
the Term Loan Advance, the date of the making of the Term Loan Advance shall be
included and the date of payment shall be excluded; provided, however, that if
the Term Loan Advance is repaid on the same day on which it is made, such day
shall be included in computing interest on the Term Loan Advance.  Interest with
respect to the Term Loan Advance shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
 
(v)         Interest Payment Date.  Unless otherwise provided, interest with
respect to the Term Loan Advance is payable monthly on the Payment Date
(provided that the first such payment shall not be payable until May 2, 2016).
 
(f)            Borrowing Procedure.  Subject to the prior satisfaction of all
other applicable conditions to the making of the Term Loan Advance set forth in
this Agreement, to obtain the Term Loan Advance, Borrower shall notify Bank
(which notice shall be irrevocable) by electronic mail, facsimile, or telephone
by 12:00 p.m. Pacific time two (2) Business Days prior to the requested Funding
Date of the Term Loan Advance.  Together with any such electronic or facsimile
notification, Borrower shall deliver to Bank by electronic mail or facsimile a
completed Payment/Advance Form executed by a Responsible Officer or his or her
designee.  Bank may rely on any telephone notice given by a person whom Bank
believes is a Responsible Officer or designee.  Bank shall credit the Term Loan
Advance to a deposit account of Borrower maintained with Bank.  Bank may make
the Term Loan Advance under this Agreement based on instructions from a
Responsible Officer or his or her designee or without instructions if the Term
Loan Advance is necessary to meet Obligations which have become due.
 
(g)           Application of Payments.  All payments to be made by Borrower
under any Loan Document in respect of the Term Loan Advance shall be made in
immediately available funds in Dollars, without setoff or counterclaim, before
3:00 p.m. Pacific time on the date when due.  Payments of principal and/or
interest received after 3:00 p.m. Pacific time are considered received at the
opening of business on the next Business Day.  When a payment is due on a day
that is not a Business Day, the payment shall be due the next Business Day, and
additional fees or interest, as applicable, shall continue to accrue until
paid.  Notwithstanding any terms in this Agreement to the contrary, any payments
of principal with respect to the Term Loan Advance (including, without
limitation, any prepayments), other than regularly scheduled payments set forth
in Section 2.1.2(b), will be applied to the principal balance of the Term Loan
Advance in the inverse order of maturity.
 
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2.2         Collections, Finance Charges, Remittances and Fees.  The Obligations
shall be subject to the following fees and Finance Charges.  Unpaid fees and
Finance Charges may, in Bank’s discretion, accrue interest at the then highest
rate applicable to the Obligations.
 
2.3          Collections. Collections will be credited to the Financed
Receivable Balance for such Financed Receivable, but if there is an Event of
Default, Bank may apply Collections to the Obligations in any order it chooses. 
If Bank receives a payment for both a Financed Receivable and a non-Financed
Receivable, the funds will first be applied to the Financed Receivable and, if
there is no Event of Default then existing, the excess will be remitted to
Borrower, subject to Section 2.9 of this Agreement.
 
2.4         Loan Fees.
 
(a)            A fully-earned, non-refundable working capital facility fee of
Forty Two Thousand Dollars ($42,000.00) shall be earned, due and payable upon
the Effective Date (the “Working Capital Facility Fee”).
 
(b)            A fully earned, non-refundable anniversary fee of Twenty One
Thousand Dollars ($21,000.00) in connection with the working capital facility
(the “Anniversary Fee”) shall be earned as of the Effective Date, and shall be
due and payable on the earliest to occur of (i) the date that is one (1) year
from the Effective Date, (ii) the occurrence of an Event of Default, or (iii)
the termination of this Agreement.
 
(c)            A fully-earned, non-refundable term loan commitment fee of One
Hundred Twelve Thousand Five Hundred Dollars ($112,500.00) shall be earned, due
and payable on the Effective Date (the “Term Loan Commitment Fee”).
 
The Working Capital Facility Fee and the Term Loan Commitment Fee are
hereinafter collectively referred to as the “Loan Fees”.
 
2.5         Finance Charges. In computing Finance Charges on the Obligations
under this Agreement, all Collections received by Bank shall be deemed applied
by Bank on account of the Obligations on the day of receipt of such
Collections.  Borrower will pay a finance charge (the “Finance Charge”) on the
Financed Receivable Balance or Account Balance (as applicable) which is equal to
the Applicable Rate divided by 360 multiplied by the number of days each such
Financed Receivable is outstanding multiplied by (a) with respect to Financed
Receivables based on specific Eligible Accounts, the outstanding Financed
Receivable Balance, and (b) with respect to Financed Receivables based on
Aggregate Eligible Accounts, the outstanding Account Balance.  Except as
otherwise provided in Section 2.1.1(h), Section 2.1.1(i) and/or Section
2.11.1(b)(i), the Finance Charge is payable when the Advance made based on such
Financed Receivable is due and payable in accordance with Section 2.11 of this
Agreement.  Immediately upon the occurrence of an Event of Default, the
Applicable Rate will increase to the Default Rate.
 
2.6         Collateral Handling Fee.  With respect to Financed Receivables based
upon specific Eligible Accounts, financed at such time as when Borrower is not
Streamline Facility Eligible, Borrower will pay to Bank a collateral handling
fee equal to 0.15% per Reconciliation Period of the Financed Receivable Balance
for each such Financed Receivable outstanding based upon a 360 day year (the
“Collateral Handling Fee”).  The Collateral Handling Fee is charged on a daily
basis and is equal to the Collateral Handling Fee divided by 30, multiplied by
the number of days each such Financed Receivable is outstanding, multiplied by
the outstanding Financed Receivable Balance with respect to such Financed
Receivables.  Except as otherwise provided in Section 2.1.1(i), the Collateral
Handling Fee is payable when the Advance made based on such Financed Receivable
is payable in accordance with Section 2.11 of this Agreement.  In computing
Collateral Handling Fees under this Agreement, all Collections received by Bank
shall be deemed applied by Bank on account of Obligations on the day of receipt
of such Collections.  Immediately upon the occurrence of an Event of Default,
the Collateral Handling Fee will increase an additional 0.50%.
 
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2.7         Accounting.  After each Reconciliation Period, Bank will provide
Borrower with an accounting of the transactions for that Reconciliation Period,
including the amount of all Financed Receivables, all Collections, Adjustments,
Finance Charges and Collateral Handling Fees.  If Borrower does not object to
the accounting in writing within thirty (30) days it shall be considered
accurate absent manifest error by Bank.  All Finance Charges and other interest
and fees are calculated on the basis of a 360 day year and actual days elapsed.
 
2.8         Deductions.  Bank may deduct fees, Bank Expenses, interest, Finance
Charges, Collateral Handling Fees, the Loan Fees, Credit Extensions which become
due, and other amounts due pursuant to this Agreement from any Credit Extensions
made or Collections received by Bank.  Bank shall notify Borrower when it debits
Borrower’s accounts for any payments other than payments on account of
principal, interest, Finance Charges or Collateral Handling Fees.
 
2.9          Lockbox; Account Collection Services
 
(a)           Borrower shall direct each Account Debtor (and each depository
institution where proceeds of Accounts are on deposit) to remit payments with
respect to the Accounts to a lockbox account established with Bank or to wire
transfer payments to a cash collateral account that Bank controls (collectively,
the “Lockbox”).  It will be considered an immediate Event of Default if the
Lockbox is not established and operational on the Effective Date and at all
times thereafter.
 
(b)           Upon receipt by Borrower of any proceeds of Accounts, Borrower
shall immediately transfer and deliver same to Bank, along with a detailed cash
receipts journal.
 
(c)           Provided no Event of Default exists or an event that with notice
or lapse of time will be an Event of Default, within three (3) days of receipt
of any proceeds of the Accounts by Bank (whether received by Bank in the
Lockbox, directly from Borrower, or otherwise), Bank will turn over to Borrower
such proceeds other than (i) Collections applied by Bank pursuant to Section 2.3
of this Agreement in respect of Financed Receivables based upon specific
Eligible Accounts, and (ii) such proceeds which shall be used by Bank to repay
any other amounts due to Bank in respect of Financed Receivables based upon
specific Eligible Accounts, such as the Finance Charge, Collateral Handling
Fees, the Loan Fees, and Bank Expenses; provided, however, Bank may hold any
proceeds of the Accounts (whether received by Bank in the Lockbox, directly from
Borrower, or otherwise and whether or not in respect of Financed Receivables) as
a reserve until the end of the applicable Reconciliation Period if Bank, in its
discretion, determines that other Financed Receivable(s) may no longer qualify
as an Eligible Account or Aggregate Eligible Accounts at any time prior to the
end of the subject Reconciliation Period.
 
(d)          This Section 2.9 does not impose any affirmative duty on Bank to
perform any act other than as specifically set forth herein.  All Accounts and
the proceeds thereof are Collateral, and if an Event of Default occurs, Bank
may, without notice, apply the proceeds of such Accounts to the Obligations.
 
2.10      Bank Expenses.  Borrower shall pay all Bank Expenses (including
reasonable attorneys’ fees and expenses, plus expenses, for documentation and
negotiation of this Agreement) incurred through and after the Effective Date,
when due, provided that, prior to the occurrence and continuance of an Event of
Default, Bank will endeavor to provide notice to Borrower of Bank Expenses when
incurred (it being understood and recognized by Borrower that Bank’s failure to
provide such notice shall not result in any liability of the Bank and shall in
no way limit this Agreement or Borrower’s obligations hereunder to pay Bank
Expenses).
 
2.11      Repayment of Obligations; Adjustments
 
2.11.1 Repayment.
 
(a)            Borrower will repay each Advance made based upon a specific
Eligible Account on the earliest of: (i) the date on which payment is received
of the Financed Receivable with respect to which the Advance was made, (ii) the
date on which the Financed Receivable is no longer an Eligible Account, (iii)
the date on which any Adjustment is asserted to the Financed Receivable (but
only to the extent of the Adjustment if the Financed Receivable otherwise
remains an Eligible Account), (iv) the date on which there is a breach of any
representation or warranty in Section 5.3 of this Agreement or of any covenant
in the Loan Documents, (v) as required pursuant to Section 2.1.1(i), or (vi) the
Maturity Date (including any early termination).  Each payment shall also
include all accrued Finance Charges and Collateral Handling Fees with respect to
such Advance and all other amounts then due and payable hereunder.
 
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(b)            With respect to each Advance made based upon Aggregate Eligible
Accounts:
 
(i)            Borrower shall pay to Bank, on the first day of each
Reconciliation Period, all Finance Charges accrued thereon; and
 
(ii)           Borrower will pay the principal amount of such Advances on the
earliest of: (A) the date on which the aggregate amount of outstanding Advances
made based upon Aggregate Eligible Accounts exceeds the Availability Amount (but
only up to the amount exceeding the Availability Amount), (B) the Maturity Date
(including any early termination), or (C) as required pursuant to Section
2.1.1(h).  Any payment made pursuant to (B) or (C) shall also include all
accrued Finance Charges with respect to the Advances based upon Aggregate
Eligible Accounts and all other amounts then due and payable hereunder.
 
2.11.2 Repayment on Event of Default.  When there is an Event of Default,
Borrower will, if Bank demands (or, upon the occurrence of an Event of Default
under Section 8.5 of this Agreement, immediately without notice or demand from
Bank) repay all of the Obligations.  The demand may, at Bank’s option, include
all Credit Extensions then outstanding and all accrued interest, Finance
Charges, Collateral Handling Fees, the Early Termination Fee, the Term Loan
Prepayment Premium, the Loan Fees, attorneys’ and professional fees, court costs
and expenses, Bank Expenses and any other Obligations.
 
2.11.3 Debit of Accounts.  Bank may debit any of Borrower’s deposit accounts for
payments or any amounts Borrower owes Bank hereunder.  These debits shall not
constitute a set-off.
 
2.12      Power of Attorney.  Borrower irrevocably appoints Bank and its
successors and assigns as attorney-in-fact and authorizes Bank and its
successors and assigns, to: (a) following the occurrence of an Event of Default,
(i) sell, assign, transfer, pledge, compromise, or discharge all or any part of
the Financed Receivables; (ii) demand, collect, sue, and give releases to any
Account Debtor for monies due and compromise, prosecute, or defend any action,
claim, case or proceeding about the Financed Receivables, including filing a
claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s name, as
Bank chooses; and (iii) prepare, file and sign Borrower’s name on any notice,
claim, assignment, demand, draft, or notice of or satisfaction of lien or
mechanics’ lien or similar document; and (b) regardless of whether an Event of
Default has occurred and is continuing, (i) notify all Account Debtors to pay
Bank directly; (ii) receive, open, and dispose of mail addressed to Borrower;
(iii) endorse Borrower’s name on checks or other instruments (to the extent
necessary to pay amounts owed pursuant to any of the Loan Documents); and (iv)
execute on Borrower’s behalf any instruments, documents, financing statements to
perfect Bank’s interests in the Financed Receivables and Collateral and do all
acts and things necessary or prudent, as determined solely and exclusively by
Bank, to protect or  preserve Bank’s rights and remedies under the Loan
Documents, as directed by Bank.
 

 
3
CONDITIONS OF LOANS

 
3.1          Conditions Precedent to Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:
 
(a)           the Loan Documents;
 
(b)           the Warrant;
 
(c)           the SVB Control Agreement any Control Agreement(s) required by
Bank;
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(d)           Borrower’s Operating Documents and a long form good standing
certificate of each Borrower certified by the Secretary of State of the State of
Delaware as of a date no earlier than thirty (30) days prior to the Effective
Date;
 
(e)           GigOptix Guarantor’s Operating Documents and a long form good
standing certificate of GigOptix Guarantor certified by the Secretary of State
of the State of Idaho, as of a date no earlier than thirty (30) days prior to
the Effective Date;
 
(f)             the completed and executed Borrowing Resolutions for each
Borrower and GigOptix Guarantor;
 
(g)           a payoff letter from Capital IP;
 
(h)           evidence that (i) the Liens securing Indebtedness owed by Borrower
to Capital IP will be terminated and (ii) the documents and/or filings
evidencing the perfection of such Liens, including without limitation any
financing statements and/or control agreements, have or will, concurrently with
the initial Credit Extension, be terminated;
 
(i)             completed exhibits to the IP Agreement and copies of searches
with the United States Patent and Trademark Office and the United States
Copyright Office for each Borrower;
 
(j)             completed exhibits to the IP Agreement (as defined in the
GigOptix Security Agreement) and copies of searches with the United States
Patent and Trademark Office and the United States Copyright Office for GigOptix
Guarantor;
 
(k)            certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;
 
(l)             the Perfection Certificates of Borrower and GigOptix Guarantor,
together with the duly executed original signatures thereto;
 
(m)            a legal opinion of Borrower’s and GigOptix Guarantor’s counsel
(authority and enforceability) dated as of the Effective Date together with the
duly executed original signature thereto;
 
(n)          evidence satisfactory to Bank that the insurance policies required
by Section 6.4 of this Agreement are in full force and effect, together with
appropriate evidence showing lender loss payable and additional insured clauses
and cancellation notice to Bank (including certificates on Acord 25 and Acord 28
forms and endorsements to the policies reflecting the same);
 
(o)           evidence satisfactory to Bank that the insurance policies required
by Section 3.4 of the GigOptix Security Agreement are in full force and effect,
together with appropriate evidence showing lender loss payable and additional
insured clauses and cancellation notice to Bank (including certificates on Acord
25 and Acord 28 forms reflecting the same);
 
(p)           payment of the fees and Bank Expenses then due as specified in
Section 2.10 of this Agreement, to the extent not already paid;
 
(q)           Certificates of Good Standing/Foreign Qualification for each
Borrower and GigOptix Guarantor (from each state in which each entity is
qualified to transact business);
 
(r)             a current quality of earnings report for Magnum;
 
(s)            copies of all transaction documents in connection with the Magnum
Acquisition; and
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(t)            evidence that all conditions precedent to the closing of the
Magnum Acquisition have been satisfied and all funds for the purchase price have
been paid (other than funds from the Term Loan Advance).
 
3.2            Conditions Precedent to all Credit Extensions.  Bank’s agreement
to make each Credit Extension, including the initial Credit Extension, is
subject to the following:
 
(a)            receipt of (i) with respect to requests for Advances, the Advance
Request and Invoice Transmittal and the documents required by Section 2.1.1(c)
of this Agreement, and (ii) with respect to the request for the Term Loan
Advance, an executed Payment/Advance Form;
 
(b)            Bank shall have (at its option) conducted the confirmations and
verifications as described in Section 2.1.1(d) of this Agreement; and
 
(c)            each of the representations and warranties in Section 5.3 of this
Agreement shall be true, accurate, and complete on the date of the Advance
Request and Invoice Transmittal and/or the Payment/Advance Form, as applicable,
and on the effective date of each Credit Extension and no Event of Default shall
have occurred and be continuing, or result from the Credit Extension.  Each
Credit Extension is Borrower’s representation and warranty on that date that the
representations and warranties in in Section 5.3 of this Agreement remain true,
accurate, and complete; and
 
(d)            each of the representations and warranties in this Agreement
(other than those in Section 5.3) shall be true, accurate, and complete in all
material respects on the date of the Advance Request and Invoice Transmittal
and/or the Payment/Advance Form, as applicable, and on the effective date of
each Credit Extension and no Event of Default shall have occurred and be
continuing, or result from the Credit Extension (provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof, and provided further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date).  Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and warranties
in this Agreement (other than those in Section 5.3) remain true, accurate, and
complete in all material respects (provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof, and
provided further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date).
 
3.3         Suspension of Credit Extensions.  Borrower’s ability to request that
Bank make Credit Extensions hereunder will terminate if, in Bank’s reasonable
discretion, there has been a material adverse change in the general affairs,
management, results of operation, condition (financial or otherwise) or the
prospect of repayment of the Obligations, or there has been any material adverse
deviation by Borrower from the most recent business plan of Borrower presented
to and accepted by Bank prior to the Effective Date.
 
3.4         Covenant to Deliver.  Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a condition precedent
to any Credit Extension.  Borrower expressly agrees that a Credit Extension made
prior to the receipt by Bank of any such item shall not constitute a waiver by
Bank of Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.
 

 
4
CREATION OF SECURITY INTEREST

 
4.1            Grant of Security Interest.  Borrower hereby grants Bank, to
secure the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Bank, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof.  Borrower represents, warrants, and covenants that the
security interest granted herein shall be and shall at all times continue to be
a first priority perfected security interest in the Collateral subject only to
Permitted Liens that are permitted to have priority over Bank’s Liens
hereunder.  If Borrower shall at any time acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the
general details thereof and grant to Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to Bank.
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Borrower acknowledges that it may have previously entered, and/or may in the
future enter, into Bank Services with Bank.  Regardless of the terms of any Bank
Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
security interest granted herein (subject only to Permitted Liens that are
permitted to have priority over Bank’s Liens hereunder).
 
If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are satisfied
in full, and at such time, Bank shall, at Borrower’s sole cost and expense,
terminate its security interest in the Collateral and all rights therein shall
revert to Borrower. In the event (a) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and (b)
this Agreement is terminated, Bank shall terminate the security interest granted
herein upon Borrower providing cash collateral acceptable to Bank in its good
faith business judgment for Bank Services, if any.  In the event such Bank
Services consist of outstanding Letters of Credit, Borrower shall provide to
Bank cash collateral in an amount equal to one hundred two percent (102.0%) for
Letters of Credit denominated in Dollars and one hundred five percent (105.0%)
for Letters of Credit denominated in a currency other than Dollars, in each case
of the Dollar Equivalent of the face amount of all such Letters of Credit plus
all interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment), to secure all of the
Obligations relating  to such  Letters of Credit.
 
4.2         Authorization to File Financing Statements.  Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.  Any such financing statements may indicate the Collateral as
“all assets of the Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Bank’s discretion.
 

 
5
REPRESENTATIONS AND WARRANTIES

 
Borrower represents and warrants as follows:
 
5.1            Due Organization and Authorization.  Borrower and each of its
Subsidiaries are duly existing and in good standing as Registered Organizations
in their respective jurisdictions of formation and are qualified and licensed to
do business and are in good standing in any other jurisdiction in which the
conduct of their respective business or ownership of property requires that they
be qualified except where the failure to do so could not reasonably be expected
to have a material adverse effect on Borrower’s business.  In connection with
this Agreement, Borrower has delivered to Bank a completed certificate signed by
Borrower, entitled Perfection Certificate (the “Perfection Certificate”). 
Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is
that indicated on the Perfection Certificate and on the signature page hereof;
(b) Borrower is an organization of the type and is organized in the jurisdiction
set forth in the Perfection Certificate; (c) the Perfection Certificate
accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate
accurately sets forth Borrower’s place of business, or, if more than one, its
chief executive office as well as Borrower’s mailing address (if different than
its chief executive office); (e) Borrower (and each of its predecessors) has
not, in the past five (5) years, changed its jurisdiction of formation,
corporate structure, organizational type, or any organizational number assigned
by its jurisdiction; and (f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries is accurate and
complete (it being understood and agreed that Borrower may from time to time
update certain information in the Perfection Certificate after the Effective
Date to the extent permitted by one or more specific provisions in this
Agreement).  If Borrower is not now a Registered Organization but later becomes
one, Borrower shall promptly notify Bank of such occurrence and provide Bank
with Borrower’s organizational identification number.
 
The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect), or (v) constitute an event of default under any material
agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could reasonably be expected to have a material adverse effect on Borrower’s
business.
 
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5.2         Collateral.  Borrower has good title to, has rights in, and the
power to transfer, each item of the Collateral upon which it purports to grant a
Lien hereunder, free and clear of any and all Liens except Permitted Liens. 
Borrower has no deposit accounts other than the deposit accounts with Bank, the
deposit accounts, if any, described in the Perfection Certificate delivered to
Bank in connection herewith, or of which Borrower has given Bank notice and
taken such actions as are necessary to give Bank a perfected security interest
therein.  The Accounts are bona fide, existing obligations of the Account
Debtors.  All Inventory is in all material respects of good and marketable
quality, free from material defects.
 
The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate.  None of
the components of the Collateral are currently being maintained at locations
other than as provided in the Perfection Certificate or as permitted pursuant to
Section 7.2 of this Agreement.
 
Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) non-exclusive licenses granted to its customers
in the ordinary course of business, (b) over-the-counter software that is
commercially available to the public, and (c) material Intellectual Property
licensed to Borrower and noted on the Perfection Certificate.  Each Patent which
it owns or purports to own and which is material to Borrower’s business is valid
and enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  To the best of Borrower’s
knowledge, no claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such claim would not
reasonably be expected to have a material adverse effect on Borrower’s
business.  Except as noted on the Perfection Certificate, Borrower is not a
party to, nor is it bound by, any Restricted License.
 
5.3         Financed Receivables.  Borrower represents and warrants for each
Financed Receivable:
 
(a)            Such Financed Receivable is an Eligible Account;
 
(b)            Borrower is the owner of and has the legal right to sell,
transfer, assign and encumber such Financed Receivable;
 
(c)            The correct amount is on the Advance Request and Invoice
Transmittal and is not disputed;
 
(d)            Payment is not contingent on any obligation or contract and
Borrower has fulfilled all its obligations as of the Advance Request and Invoice
Transmittal date;
 
(e)            Such Financed Receivable is based on an actual sale and delivery
of goods and/or services rendered, is due to Borrower, is not past due or in
default, has not been previously sold, assigned, transferred, or pledged and is
free of any liens, security interests and encumbrances other than Permitted
Liens;
 
(f)            There are no defenses, offsets, counterclaims or agreements for
which the Account Debtor may claim any deduction or discount;
 
(g)            Borrower reasonably believes no Account Debtor is insolvent or
subject to any Insolvency Proceedings;
 
(h)            Borrower has not filed or had filed against it Insolvency
Proceedings and does not anticipate any filing;
 
(i)            Bank has the right to endorse and/ or require Borrower to endorse
all payments received on Financed Receivables and all proceeds of Collateral;
and
 
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(j)            No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statement contained in the certificates or statement not misleading.
 
5.4          Litigation.  There are no actions or proceedings pending or, to the
knowledge of Borrower’s Responsible Officers, threatened in writing by or
against Borrower or any Subsidiary in which an adverse decision could reasonably
be expected to cause a Material Adverse Change.
 
5.5         No Material Deviation in Financial Statements and Deterioration in
Financial Condition.  All consolidated financial statements for Borrower and any
Subsidiary delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations.  There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
 
5.6        Solvency.  The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.

5.7         Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations X, T and U of the
Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated
any laws, ordinances or rules, the violation of which could reasonably be
expected to cause a Material Adverse Change.  None of Borrower’s or any
Subsidiary’s properties or assets have been used by Borrower or any Subsidiary
or, to the best of Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally.  Borrower and each of its Subsidiaries have obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Governmental Authorities that are necessary to
continue their respective businesses as currently conducted.
 
5.8         Subsidiaries.  Borrower does not own any stock, membership interest,
partnership interest or other equity securities except for Permitted
Investments.
 
5.9         Tax Returns and Payments; Pension Contributions.  Except with
respect to tax liabilities not exceeding Fifty Thousand Dollars ($50,000.00) in
the aggregate, Borrower and each Subsidiary have timely filed all required tax
returns and reports, and Borrower and each Subsidiary have timely paid all
foreign, federal, state and local taxes, assessments, deposits and contributions
owed by Borrower and each Subsidiary.  Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (b) notifies Bank in writing of the commencement of,
and any material development in, the proceedings and (c) posts bonds or takes
any other steps required to prevent the Governmental Authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a “Permitted Lien”.  Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could result in additional
taxes becoming due and payable by Borrower.  Borrower has paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or
permitted 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.
 
5.10      Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that any projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
 
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6
AFFIRMATIVE COVENANTS

 
Borrower shall do all of the following:
 
6.1         Government Compliance
 
(a)            Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower’s business
or operations.  Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower’s business.
 
(b)            Obtain all of the Governmental Approvals necessary for the
performance by Borrower of its obligations under the Loan Documents to which it
is a party and the grant of a security interest to Bank in all of its property. 
Borrower shall promptly provide copies of any such obtained Governmental
Approvals to Bank.
 
(c)            Deliver to Bank, within five (5) days after the same are sent or
received, copies of all correspondence, reports, documents and other filings
with any Governmental Authority regarding compliance with or maintenance of
Governmental Approvals or Requirements of Law or that could reasonably be
expected to have a material adverse effect on any of the Governmental Approvals
or otherwise on the operations of Borrower or any of its Subsidiaries.
 
6.2         Financial Statements, Reports, Certificates
 
(a)            Deliver to Bank: (i) as soon as available, but no later than
thirty (30) days after the last day of each Reconciliation Period, a company
prepared consolidated and consolidating balance sheet and income statement
covering Borrower’s and its Subsidiaries consolidated and consolidating
operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available, but no later than one hundred
eighty (180) days after the last day of Borrower’s fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) within five (5) days of filing, copies of all statements, reports and
notices made available to Borrower’s security holders or to any holders of
Subordinated Debt and all reports on Form 10-K, 10-Q and 8‑K filed with the SEC;
(iv) a prompt report of any legal actions pending or threatened against Borrower
or any Subsidiary that could result in damages or costs to Borrower or any
Subsidiary of Three Hundred Fifty Thousand Dollars ($350,000.00) or more; (v) as
soon as available, but no later than thirty (30) days after the last day of
Borrower’s fiscal year, and contemporaneously with any updates or amendments
thereto, annual financial projections approved by Borrower’s board of directors,
together with any related business forecasts used in the preparation of such
annual financial plans and projections; and (vii) budgets, sales projections,
operating plans or other financial information reasonably requested by Bank.
 
(b)            Within thirty (30) days after the last day of each Reconciliation
Period, deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit B.
 
(c)            Allow Bank to inspect the Collateral and audit and copy
Borrower’s Books, including, but not limited to, Borrower’s Accounts, upon
reasonable notice to Borrower.  Such inspections or audits shall be conducted no
more often than once every twelve (12) months unless an Event of Default has
occurred and is continuing.  In addition, so long as no Event of Default has
occurred, Bank agrees that it shall not conduct the first such inspection or
audit until after Borrower makes its first annual 10-K filing after the
Effective Date.  The foregoing inspections and audits shall be at Borrower’s
expense, and the charge therefor shall be (i) on or prior to the date that is
two (2) years from the Effective Date, Eight Hundred Fifty Dollars ($850.00) per
person per day, plus reasonable out-of-pocket expenses, and (ii) after the date
that is two (2) years from the Effective Date, One Thousand Dollars ($1,000.00)
per person per day (or such higher amount as shall represent Bank’s then-current
standard charge for the same), plus reasonable out-of-pocket expenses.  In the
event Borrower and Bank schedule an audit more than ten (10) days in advance,
and Borrower cancels or seeks to reschedule the audit with less than ten (10)
days written notice to Bank, then (without limiting any of Bank’s rights or
remedies), Borrower shall pay Bank a fee of One Thousand Dollars ($1,000.00)
plus any out-of-pocket expenses incurred by Bank to compensate Bank for the
anticipated costs and expenses of the cancellation or rescheduling.  After the
occurrence of an Event of Default, Bank may audit Borrower’s Collateral at
Borrower’s expense, including, but not limited to, Borrower’s Accounts as
frequently as Bank deems necessary at Borrower’s expense and at Bank’s sole and
exclusive discretion, without notification to and authorization from Borrower.
 
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(d)            Upon Bank’s request, provide a written report on any Financed
Receivable, where payment of such Financed Receivable does not occur by its due
date and include the reasons for the delay.
 
(e)            Provide Bank with, (i) as soon as available, but no later than
thirty (30) days following each Reconciliation Period, and (ii) together with
each request for an Advance, an aged listing of accounts receivable and accounts
payable by invoice date, in form and detail acceptable to Bank.
 
(f)            Provide Bank with, as soon as available, but no later than thirty
(30) days following each Reconciliation Period, a Deferred Revenue report, in
form and detail acceptable to Bank.
 
(g)            Immediately upon Borrower becoming Streamline Facility Eligible,
and thereafter until Borrower is no longer Streamline Facility Eligible, provide
Bank with (i) as soon as available, but no later than thirty (30) days following
each Reconciliation Period, (ii) together with each request for an Advance based
upon Aggregate Eligible Accounts, and (iii) as required by Section 2.1.1(i), a
duly completed Borrowing Base Certificate signed by a Responsible Officer.
 
(h)            Immediately upon Borrower ceasing to be Streamline Facility
Eligible, provide Bank with a current aging of Accounts in form and detail
acceptable to Bank and, to the extent not previously delivered to Bank, a copy
of the invoice for each Eligible Account and an Advance Request and Invoice
Transmittal with respect to each such Account.
 
(i)            Provide Bank prompt written notice of (i) any material change in
the composition of the Intellectual Property, (ii) the registration of any
Copyright, including any subsequent ownership right of Borrower in or to any
Copyright, Patent or Trademark not shown in the IP Agreement, and
(iii) Borrower’s knowledge of an event that could reasonably be expected to
materially and adversely affect the value of the Intellectual Property.
 
(j)            Provide Bank with, within one (1) Business Day of filing, a copy
of any certificate of amendment or equivalent document filed with Borrower’s or
any Subsidiary’s jurisdiction of formation in connection with any Excepted Name
Change.
 
6.3         Taxes.  Make, and cause each Subsidiary to make, timely payment of
all foreign, federal, state, and local taxes or assessments in excess of Fifty
Thousand Dollars ($50,000.00) in the aggregate (other than taxes and assessments
which Borrower is contesting in good faith, with adequate reserves maintained in
accordance with GAAP) and will deliver to Bank, on demand, appropriate
certificates attesting to such payments.
 
6.4         Insurance.  Keep its business and the Collateral insured for risks
and in amounts standard for companies in Borrower’s industry and location, and
as Bank may reasonably request.  Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank.  All property policies
shall have a lender’s loss payable endorsement showing Bank as the sole lender
loss payee and waive subrogation against Bank, and all liability policies shall
show, or have endorsements showing, Bank as an additional insured.  All policies
(or the lender loss payable and additional insured endorsements) shall provide
that the insurer must give Bank at least thirty (30) days notice before
canceling, amending, or declining to renew its policy.  At Bank’s request,
Borrower shall deliver certified copies of policies and evidence of all premium
payments.  Proceeds payable under any policy shall, at Bank’s option, be payable
to Bank on account of the Obligations.  If Borrower fails to obtain insurance as
required under this Section 6.4 or to pay any amount or furnish any required
proof of payment to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section 6.4, and take
any action under the policies Bank deems prudent.
 
6.5         Accounts
 
(a)            To permit Bank to monitor Borrower’s financial performance and
condition, maintain all of Borrower’s and its Subsidiaries’ depository and
operating accounts and securities/investment accounts with Bank and Bank’s
Affiliates; provided that, (i) until the date that is thirty (30) days following
the Effective Date, Magnum shall be permitted to maintain its existing account
no. ending 709 with East West Bank provided that all funds in such account must
be transferred to an account of Borrower maintained with Bank on a weekly basis
(the “East West Payroll Account”), (ii) until the date that is ninety (90) days
following the Effective Date, Magnum shall be permitted to maintain its existing
accounts nos. ending 626 and 717 with East West Bank provided that all funds in
such accounts must be transferred to an account of Borrower maintained with Bank
on a weekly basis (collectively, the “East West Deposit Accounts”), (iii)
Borrower shall be permitted to maintain its payment processing account with
PayPal existing on the Effective Date that is disclosed on the Perfection
Certificate containing an aggregate amount not to exceed Twenty Thousand Dollars
($20,000.00) and (iv) Borrower’s Foreign Subsidiaries may maintain accounts with
financial institutions other than Bank located outside of the United States so
long as the aggregate amount contained in such accounts (for all such accounts
together) does not represent more than ten percent (10.0%) of the dollar value
of such Subsidiaries’ accounts at all financial institutions at any time (the
accounts in subsections (iii) and (iv) are hereinafter collectively referred to
as the “Permitted Accounts”).  Any Guarantor shall maintain all depository and
operating accounts with Bank, and, with respect to securities accounts, with an
affiliate of Bank.  In addition to the foregoing, Borrower and its Subsidiaries
shall conduct all letters of credit and foreign exchange banking with Bank and
Bank’s Affiliates.
 
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(b)            For any domestic Collateral Account that Bank in its sole
discretion permits Borrower at any time to open or maintain, Borrower shall
cause the applicable bank or financial institution (other than Bank) at or with
which any domestic Collateral Account is maintained to execute and deliver a
Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of Bank.  The provisions of the
previous sentence shall not apply to (i) deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower’s employees and identified to Bank by Borrower as such,
(ii) for a period that is ninety (90) days from the Effective Date, the East
West Deposit Accounts and (iii) the East West Payroll Account and the Permitted
Accounts.
 
6.6         Inventory; Returns; Notices of Adjustments.  Keep all Inventory in
good and marketable condition, free from material defects.  Returns and
allowances between Borrower and its Account Debtors shall follow Borrower’s
customary practices as they exist at the Effective Date.  If, at any time during
the term of this Agreement, any Account Debtor asserts an Adjustment in excess
of One Hundred Thousand Dollars ($100,000.00), Borrower issues a credit
memorandum, or any representation, warranty or covenant set forth in this
Agreement or the other Loan Documents is no longer true in all material
respects, Borrower will promptly advise Bank.
 
6.7         Financial Covenants.  Maintain at all times:
 
(a)            Liquidity Ratio.  To be tested as of the last day of each month,
a Liquidity Ratio of at least 1.25 to 1.0.
 
(b)            Fixed Charge Coverage Ratio.  To be tested as of the last day of
each calendar quarter commencing with the calendar quarter ending March 31,
2016, a Fixed Charge Coverage Ratio of at least 1.25 to 1.0.
 
6.8          Protection and Registration of Intellectual Property Rights
 
(a)            (i) Protect, defend and maintain the validity and enforceability
of its Intellectual Property; (ii) promptly advise Bank in writing of material
infringements of its Intellectual Property; and (iii) not allow any Intellectual
Property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Bank’s written consent.
 
(b)            If Borrower (i) obtains any Patent, registered Trademark,
registered Copyright, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for
any Patent or the registration of any Trademark, then Borrower shall immediately
provide written notice thereof to Bank and shall execute such intellectual
property security agreements and other documents and take such other actions as
Bank shall request in its good faith business judgment to perfect and maintain a
first priority perfected security interest in favor of Bank in such property. 
If Borrower decides to register any Copyrights or mask works in the United
States Copyright Office, Borrower shall: (x) provide Bank with at least fifteen
(15) days prior written notice of Borrower’s intent to register such Copyrights
or mask works together with a copy of the application it intends to file with
the United States Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement and such other documents and take such
other actions as Bank may request in its good faith business judgment to perfect
and maintain a first priority perfected security interest in favor of Bank in
the Copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the
Copyright or mask work application(s) with the United States Copyright Office. 
Borrower shall promptly provide to Bank copies of all applications that it files
for Patents or for the registration of Trademarks, Copyrights or mask works,
together with evidence of the recording of the intellectual property security
agreement necessary for Bank to perfect and maintain a first priority perfected
security interest in such property.
 
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(c)            Provide written notice to Bank within ten (10) days of entering
or becoming bound by any Restricted License (other than over-the-counter
software that is commercially available to the public).  Borrower shall take
such steps as Bank requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for (i) any Restricted License to be deemed
“Collateral” and for Bank to have a security interest in it that might otherwise
be restricted or prohibited by law or by the terms of any such Restricted
License, whether now existing or entered into in the future, and (ii) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of
such Collateral in accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents.
 
6.9         Litigation Cooperation.  From the Effective Date and continuing
through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower’s
Books, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.
 
6.10      Post-Closing Requirements. Deliver to Bank, each in form and substance
satisfactory to Bank, (a) within one (1) day of the Effective Date, a copy of
the filed certificate of merger filed with the Delaware Secretary of State of
the State of Delaware in connection with the Magnum Acquisition and (b) within
forty-five (45) days of the Effective Date, (i) evidence that (A) all
Indebtedness owed by Borrower to Brian Eliot Peierls, E. Jeffrey Peierls, Excess
Venture Fund I, LLC, Global Alliance Inc., Gold Hill Venture Lending 03, LP,
Hatteras VC Co-Investment Fund II, LLC, Najeti Capital, S.A., Ell & Co., The
Peierls Foundation, Inc., UD Ethel F. Peierls Charitable Lead Trust has been
paid in full, (B) the Liens securing Indebtedness owed by Borrower to such
creditors has been terminated and (C) the documents and/or filings evidencing
the perfection of such Liens, including without limitation any financing
statements and/or control agreements, have been terminated and (ii) endorsements
to Borrower’s general liability and property policies that comply with the
requirements of Section 6.4.
 
6.11     Further Assurances.  Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement.
 

 
7
NEGATIVE COVENANTS

 
Borrower shall not do any of the following without Bank’s prior written consent:
 
7.1         Dispositions.  Convey, sell, lease, transfer, assign, or otherwise
dispose of (collectively a “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) in connection with Permitted Liens and Permitted Investments.
 
7.2         Changes in Business, Management, Control, or Business Locations. 
(a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; (b) liquidate or dissolve; (c) have a
change in management; or (d) permit or suffer any Change in Control.
 
Borrower shall not, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Fifty Thousand
Dollars ($50,000.00) in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, except that, so long as Borrower complies with
Section 6.2(j), no such notice is required for a change of legal name from
GigOptix, Inc. to GigPeak, Inc. within thirty (30) days of the Effective Date
and to any changes to the legal name of any Subsidiary within such time (each,
an “Excepted Name Change”), (5) change any organizational number (if any)
assigned by its jurisdiction of organization, or (6) deliver any portion of the
Collateral to a bailee, unless (i) such bailee location contains less than Fifty
Thousand Dollars ($50,000.00) in Borrower’s assets or property and (ii) Bank and
such bailee are parties to a bailee agreement governing both the Collateral and
the location to which Borrower intends to deliver the Collateral.
 
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Borrower hereby agrees upon Borrower adding any new office or business location,
including any warehouse, Borrower will cause its landlord to enter into a
landlord consent in favor of Bank prior to such new office or business location
containing Fifty Thousand Dollars ($50,000.00) of Collateral.
 
Borrower hereby agrees that prior to Borrower delivering any Collateral to a
bailee, Borrower shall cause such bailee to execute and deliver a bailee
agreement in form and substance satisfactory to Bank.
 
7.3         Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person.  A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
 
7.4         Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
 
7.5         Encumbrance.  Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s
Intellectual Property, except as is otherwise permitted in Section 7.1 of this
Agreement and the definition of “Permitted Liens” herein.
 
7.6         Maintenance of Collateral Accounts.  Maintain any Collateral Account
except pursuant to the terms of Section 6.5 of this Agreement.
 
7.7         Distributions; Investments.  (a) Directly or indirectly acquire or
own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (b) pay any
dividends or make any distribution, or payment or redeem, retire or purchase any
capital stock.
 
7.8         Transactions with Affiliates.  Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the ordinary course of Borrower’s business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.
 
7.9         Subordinated Debt.  (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b)
amend any provision in any document relating to the Subordinated Debt which
would increase the amount owed by Borrower thereof, shorten the maturity
thereof, increase the rate of interest applicable thereto or adversely affect
the subordination thereof to Obligations owed to Bank.
 
7.10     Compliance.  Become an “investment company” or a company controlled by
an “investment company”, under the Investment Company Act of 1940, as amended,
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, each as defined in ERISA, to occur;
fail to comply with the Federal Fair Labor Standards Act or violate any other
law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower’s business, or permit any of its
Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation 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.
 
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8
EVENTS OF DEFAULT

 
Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:
 
8.1         Payment Default.  Borrower fails to pay any of the Obligations when
due;
 
8.2         Covenant Default.  Borrower fails or neglects to perform any
obligation in Section 2.9 or Section 6 of this Agreement or violates any
covenant in Section 7 of this Agreement or fails or neglects to perform, keep,
or observe any other term, provision, condition, covenant or agreement contained
in this Agreement or any Loan Documents and as to any default under such other
term, provision, condition, covenant or agreement that can be cured, has failed
to cure the default within ten (10) days after the occurrence thereof; provided,
however, grace and cure periods provided under this Section 8.2 shall not apply
to financial covenants or any other covenants that are required to be satisfied,
completed or tested by a date certain;
 
8.3         Material Adverse Change.  A Material Adverse Change occurs;
 
8.4         Attachment; Levy; Restraint on Business
 
(a) (i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or of any entity under the control of Borrower (including
a Subsidiary) on deposit or otherwise maintained with Bank or any Bank
Affiliate, or (ii) a notice of lien or levy is filed against any of Borrower’s
assets by any government agency, and the same under subclauses (i) and (ii)
hereof are not, within ten (10) days after the occurrence thereof, discharged or
stayed (whether through the posting of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period; or
 
(b) (i) any material portion of Borrower’s assets is attached, seized, levied
on, or comes into possession of a trustee or receiver, or (ii) any court order
enjoins, restrains, or prevents Borrower from conducting any material part of
its business;
 
8.5         Insolvency.  (a) Borrower is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty-five (45) days (but no
Credit Extensions shall be made while any of the conditions described in clause
(a) exist and/or until any Insolvency Proceeding is dismissed);
 
8.6        Other Agreements.  There is, under any agreement to which Borrower or
any Guarantor is a party with a third party or parties, (a) any default
resulting in a right by such third party or parties, whether or not exercised,
to accelerate the maturity of any Indebtedness in an amount individually or in
the aggregate in excess of Three Hundred Fifty Thousand Dollars ($350,000.00);
or (b) any default by Borrower or Guarantor, the result of which could result in
a Material Adverse Change to Borrower’s or any Guarantor’s business;
 
8.7        Judgments.  One or more final judgments, orders, or decrees for the
payment of money in an amount, individually or in the aggregate, of at least Two
Hundred Fifty Thousand Dollars ($250,000.00) (not covered by independent
third-party insurance as to which liability has been accepted by such insurance
carrier) shall be rendered against Borrower and the same are not, within ten
(10) days after the entry thereof, discharged or execution thereof stayed or
bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay (provided that no Credit Extensions will be made
prior to the discharge, stay, or bonding of such judgment, order, or decree);
 
8.8         Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later  in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;
 
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8.9         Subordinated Debt.  Any document, instrument, or agreement
evidencing any Subordinated Debt shall for any reason be revoked or invalidated
or otherwise cease to be in full force and effect, any Person shall be in breach
thereof or contest in any manner the validity or enforceability thereof or deny
that it has any further liability or obligation thereunder, or the Obligations
shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement or the applicable subordination agreement;
 
8.10     Guaranty.  (a) Any guaranty of any Obligations (including, without
limitation, the GigOptix Guaranty) terminates or ceases for any reason to be in
full force and effect; (b) any Guarantor does not perform any obligation or
covenant under any guaranty of the Obligations; (c) any circumstance described
in Sections 8.3, 8.4, 8.5, 8.6, 8.7, or 8.8 of this Agreement occurs with
respect to any Guarantor; (d) the death, liquidation, winding up, or termination
of existence of any Guarantor; or (e) (i) a material impairment in the
perfection or priority of Bank’s Lien in the collateral provided by Guarantor or
in the value of such collateral or (ii) a material adverse change in the general
affairs, management, results of operation, condition (financial or otherwise) or
the prospect of repayment of the Obligations occurs with respect to any
Guarantor;
 
8.11     Governmental Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any such Governmental Approval or that could result
in the Governmental Authority taking any of the actions described in clause (a)
above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction; or
 
8.12      Lumera Corporation.  Lumera Corporation acquires, owns, or holds any
assets or property or has any operations.
 

 
9
BANK’S RIGHTS AND REMEDIES

 
9.1         Rights and Remedies.  When an Event of Default occurs and continues
beyond any applicable grace period Bank may, without notice or demand, do any or
all of the following:
 
(a)            declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 of this Agreement occurs, all
Obligations are immediately due and payable without any action by Bank);
 
(b)            stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;
 
(c)            demand that Borrower (i) deposit cash with Bank in an amount
equal to one hundred two percent (102.0%) for Letters of Credit denominated in
Dollars and one hundred five percent (105.0%) for Letters of Credit denominated
in a currency other than Dollars, in each case of the Dollar Equivalent of the
aggregate face amount of all Letters of Credit remaining undrawn (plus all
interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment)), to secure all of the
Obligations relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter
of credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;
 
(d)            settle or adjust disputes and claims directly with Account
Debtors for amounts, on terms and in any order that Bank considers advisable and
notify any Person owing Borrower money of Bank’s security interest in such funds
and verify the amount of such account.  Borrower shall collect all payments in
trust for Bank and, if requested by Bank, immediately deliver the payments to
Bank in the form received from the Account Debtor, with proper endorsements for
deposit;
 
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(e)            make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral.  Borrower shall
assemble the Collateral if Bank requests and make it available as Bank
designates.  Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank’s rights
or remedies;
 
(f)            apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) amount held by Bank owing to or for the credit or the
account of Borrower;
 
(g)            ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements inure to Bank’s benefit;
 
(h)            place a “hold” on any account maintained with Bank and/or deliver
a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;
 
(i)            demand and receive possession of Borrower’s Books; and
 
(j)            exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).
 
9.2         Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.4 of this Agreement or fails to pay any premium thereon
or fails to pay any other amount which Borrower is obligated to pay under this
Agreement or any other Loan Document, Bank may obtain such insurance or make
such payment, and all amounts so paid by Bank are Bank Expenses and immediately
due and payable, bearing interest at the then highest rate applicable to the
Obligations, and secured by the Collateral.  Bank will make reasonable efforts
to provide Borrower with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter.  No payments by Bank are
deemed an agreement to make similar payments in the future or Bank’s waiver of
any Event of Default.
 
9.3         Bank’s Liability for Collateral.  So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person.  Borrower bears
all risk of loss, damage or destruction of the Collateral.
 
9.4         No Waiver; Remedies Cumulative.  Bank’s failure, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith.  No waiver hereunder shall be effective unless signed by the party
granting the waiver and then is only effective for the specific instance and
purpose for which it is given.  Bank’s rights and remedies under this Agreement
and the other Loan Documents are cumulative.  Bank has all rights and remedies
provided under the Code, by law, or in equity.  Bank’s exercise of one right or
remedy is not an election and shall not preclude Bank from exercising any other
remedy under this Agreement or other remedy available at law or in equity, and
Bank’s waiver of any Event of Default is not a continuing waiver.  Bank’s delay
in exercising any remedy is not a waiver, election, or acquiescence.
 
9.5         Demand Waiver.  Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
 
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9.6         Borrower Liability.  Any Borrower may, acting singly, request Credit
Extensions hereunder.  Each Borrower hereby appoints the other as agent for
itself for all purposes hereunder, including with respect to requesting Credit
Extensions hereunder.  Each Borrower hereunder shall be jointly and severally
obligated to repay all Credit Extensions made hereunder, regardless of which
Borrower actually receives said Credit Extensions, as if each Borrower hereunder
directly received all Credit Extensions.  Each Borrower waives (a) any
suretyship defenses available to it under the Code or any other applicable law,
including, without limitation, the benefit of California Civil Code Section 2815
permitting revocation as to future transactions and the benefit of California
Civil Code Sections 1432, 2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850,
and 2899 and 3433, and (b) any right to require Bank to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any security; or
(iii) pursue any other remedy.  Bank may exercise or not exercise any right or
remedy it has against any Borrower or any security it holds (including the right
to foreclose by judicial or non-judicial sale) without affecting any Borrower’s
liability. 
 
Notwithstanding any other provision of this Agreement or other related document,
each Borrower irrevocably waives all rights that it may have at law or in equity
(including, without limitation, any law subrogating Borrower to the rights of
Bank under this Agreement) to seek contribution, indemnification or any other
form of reimbursement from any other Borrower, or any other Person now or
hereafter primarily or secondarily liable for any of the Obligations, for any
payment made by Borrower with respect to the Obligations in connection with this
Agreement or otherwise and all rights that it might have to benefit from, or to
participate in, any security for the Obligations as a result of any payment made
by Borrower with respect to the Obligations in connection with this Agreement or
otherwise.  Any agreement providing for indemnification, reimbursement or any
other arrangement prohibited under this Section 9.6 shall be null and void.  If
any payment is made to a Borrower in contravention of this Section 9.6, such
Borrower shall hold such payment in trust for Bank and such payment shall be
promptly delivered to Bank for application to the Obligations, whether matured
or unmatured.
 

 
10
NOTICES

 
All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.
 

  If to Borrower: GigOptix, Inc.

ChipX, Incorporated
Endwave Corporation
Magnum Semiconductor, Inc.
130 Baytech Drive
San Jose, CA 95134

Attn: Dr. Avi Katz

Fax: (408) 522-3102

Email: akatz@gigoptix.com

with a copy to: Crowell & Moring LLP

275 Battery Street, 23rd Floor
San Francisco, CA 94111
Attention: Jeffrey Selman
Fax No.: (415) 986-2827

If to Bank: Silicon Valley Bank

2400 Hanover Street
Palo Alto, California 95134
Attn: Ms. Janice Ahn
Fax:  (650) 320-0016

Email: JAhn@svb.com

 
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with a copy to: Riemer & Braunstein LLP

Three Center Plaza
Boston, Massachusetts  02108

Attn: David A. Ephraim, Esquire

Fax: (617) 880-3456

Email: DEphraim@riemerlaw.com

 
11          CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
 
Except as otherwise expressly provided in any of the Loan Documents, California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrower and Bank each submit to the exclusive jurisdiction of the State
and Federal courts in Santa Clara County, California; provided, however, that
nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize
on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank.  Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Borrower hereby waives any objection that it may have based upon
lack of personal jurisdiction, improper venue, or forum non conveniens and
hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court.  Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in,
or subsequently provided to Borrower in accordance with, Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.
 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
 
WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive.  The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers.  All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed.  If during the course of any dispute, a party desires to
seek provisional relief, but a judge has not been appointed at that point
pursuant to the judicial reference procedures, then such party may apply to the
Santa Clara County, California Superior Court for such relief.  The proceeding
before the private judge shall be conducted in the same manner as it would be
before a court under the rules of evidence applicable to judicial proceedings. 
The parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings.  The private judge shall oversee discovery and may enforce
all discovery rules and orders applicable to judicial proceedings in the same
manner as a trial court judge.  The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to California Code of Civil Procedure § 644(a).  Nothing in
this paragraph shall limit the right of any party at any time to exercise
self-help remedies, foreclose against collateral, or obtain provisional
remedies.  The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.
 
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12
GENERAL PROVISIONS

 
12.1     Successors and Assigns.  This Agreement binds and is for the benefit of
the successors and permitted assigns of each party.  Borrower may not assign
this Agreement or any rights or obligations under it without Bank’s prior
written consent (which may be granted or withheld in Bank’s discretion).  Bank
has the right, without the consent of Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents (other than the Warrant, as to which assignment, transfer and other
such actions are governed by the terms of the Warrant), provided that, prior to
the occurrence and continuance of an Event of Default, Bank will provide notice
to Borrower prior to or contemporaneously with any such sale, transfer,
assignment, negotiation or any grant of participation.
 
12.2      Indemnification.  Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against:  (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
(including Bank Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Bank and Borrower (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such
Indemnified Person’s gross negligence or willful misconduct.
 
12.3      Right of Set-Off.  Borrower hereby grants to Bank, a lien, security
interest and right of setoff as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them.  At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations.  ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
 
12.4      Time of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.
 
12.5     Correction of Loan Documents.  Bank may correct patent errors and fill
in any blanks in the Loan Documents consistent with the agreement of the
parties.
 
12.6      Severability of Provisions.  Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
 
12.7     Amendments in Writing; Waiver; Integration.  No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any
obligation under any Loan Document, shall be enforceable or admissible unless,
and only to the extent, expressly set forth in a writing signed by the party
against which enforcement or admission is sought.  Without limiting the
generality of the foregoing, no oral promise or statement, nor any action,
inaction, delay, failure to require performance or course of conduct shall
operate as, or evidence, an amendment, supplement or waiver or have any other
effect on any Loan Document.  Any waiver granted shall be limited to the
specific circumstance expressly described in it, and shall not apply to any
subsequent or other circumstance, whether similar or dissimilar, or give rise
to, or evidence, any obligation or commitment to grant any further waiver.  The
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of the Loan Documents merge into the Loan
Documents.
 
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12.8     Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute
one Agreement.
 
12.9     Survival.  All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been paid in full and satisfied.  Without limiting the
foregoing, except as otherwise provided in Section 4.1, the grant of a security
interest by Borrower in Section 4.1 shall survive until the termination of this
Agreement and all Bank Services Agreements.  The obligation of Borrower in
Section 12.2 of this Agreement to indemnify Bank shall survive until the statute
of limitations with respect to such claim or cause of action shall have run.
 
12.10  Confidentiality.  In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with
Bank, each a “Bank Entity” and collectively, the “Bank Entities”); (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use its best efforts to obtain any prospective
transferee’s or purchaser’s agreement to the terms of this Section 12.10);
(c) as required by law, regulation, subpoena, or other order; (d) to Bank’s
regulators or as otherwise required in connection with Bank’s examination or
audit; (e) as Bank considers appropriate in exercising remedies under the Loan
Documents; and (f) to third-party service providers of Bank so long as such
service providers have executed a confidentiality agreement with Bank with terms
no less restrictive than those contained herein.  Confidential information does
not include information that is: (i) either in the public domain other than as a
result of Bank’s breach of this Section 12.10 or is in Bank’s possession when
disclosed to Bank; or (ii) disclosed to Bank by a third party on a
nonconfidential basis if Bank does not know that the third party is prohibited
from disclosing the information.

Bank Entities may use the confidential information for reporting purposes and
the development and distribution of databases and market analyses so long as
such confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly prohibited by Borrower.  The provisions of the
immediately preceding sentence shall survive the termination of this Agreement.

12.11  Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between
Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.
 
12.12  Electronic Execution of Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.
 
12.13  Captions.  The headings used in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.
 
12.14 Construction of Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.
 
12.15  Relationship.  The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement.  The parties do not
intend to create any agency, partnership, joint venture, trust, fiduciary or
other relationship with duties or incidents different from those of parties to
an arm’s-length contract.
 
12.16  Third Parties.  Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.
 
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12.17  Amended and Restated Agreement.  This Agreement amends and restates, in
its entirety, and replaces, the Prior Loan Agreement.
 

 
13
DEFINITIONS

 
13.1     Definitions.  As used in the Loan Documents, the word “shall” is
mandatory, the word “may” is permissive, the word “or” is not exclusive, the
words “includes” and “including” are not limiting, the singular includes the
plural, and numbers denoting amounts that are set off in brackets are negative. 
As used in this Agreement, the following capitalized terms have the following
meanings:
 
“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.
 
“Account Balance” is, on any date, the aggregate outstanding amount of all
Advances made based upon Aggregate Eligible Accounts.
 
“Account Debtor” is as defined in the Code and shall include, without
limitation, any person liable on any Financed Receivable, such as, a guarantor
of the Financed Receivable and any issuer of a letter of credit or banker’s
acceptance.
 
“Adjusted EBITDA” means EBITDA excluding to the extent otherwise included in the
calculation of EBITDA (a) non-cash stock compensation expenses, (b) one-time
expenses reflected in reports filed by Borrower with the SEC, and as is
reflected in the reconciliation tables filed with the SEC, provided that such
expenses have been approved by Bank in writing on a case-by-case basis in Bank’s
sole discretion, (c) one-time cost cuts realized in the 2015 calendar year
related to Magnum’s shut down of operations in China in an aggregate amount not
to exceed Four Million Two Hundred Thousand Dollars ($4,200,000.00), (d)
one-time costs realized in the 2015 calendar year and the first quarter of the
2016 calendar year related to Magnum’s restructuring in an aggregate amount not
to exceed One Million Six Hundred Thousand Dollars ($1,600,000.00) and (e)
one-time cost cuts realized in the twelve (12) month period commencing on the
Effective Date related the Magnum Acquisition in an aggregate amount not to
exceed Two Million Three Hundred Thousand Dollars ($2,300,000.00).
 
“Adjustments” are all discounts allowances, returns, recoveries, disputes,
claims of any kind (including, without limitation, counterclaims or warranty
claims), offsets, defenses, rights of recoupment, rights of return, or short
payments, asserted by or on behalf of any Account Debtor for any Financed
Receivable.
 
“Advance” is defined in Section 2.1.1 of this Agreement.
 
“Advance Rate” is eighty percent (80.0%), net of any offsets related to each
specific Account Debtor, including, without limitation, Deferred Revenue, or
such other percentage as Bank establishes under Section 2.1.1 of this Agreement.
 
“Advance Request and Invoice Transmittal” shows specific Eligible Accounts
and/or Aggregate Eligible Accounts, which Bank may finance, and (a) with respect
to requests for Advances based upon specific Eligible Accounts, includes the
Account Debtor’s name, address, invoice amount, invoice date and invoice number,
and (b) with respect to requests for Advances based upon Aggregate Eligible
Accounts, includes (i) the Account Debtor’s name, address, invoice amount,
invoice date and invoice number, (ii) the current outstanding amount of Advances
made based upon Aggregate Eligible Accounts and (iii) the Availability Amount.
 
“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners, and, for any Person that is a limited liability
company, that Person’s managers and members.
 
“Aggregate Eligible Accounts” is defined in Section 2.1.1.
 
“Agreement” is defined in the preamble of this Agreement.
 
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“Anniversary Fee” is defined in Section 2.4 of this Agreement.
 
“Applicable Rate” is a per annum rate equal to the Prime Rate plus four-tenths
of one percent (0.40%).
 
“Availability Amount” is the lesser of (a) the Maximum Availability Amount and
(b) the Borrowing Base.
 
“Bank” is defined in the preamble of this Agreement.
 
“Bank Entities” is defined in Section 12.10.
 
“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower or any Guarantor.
 
“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).
 
“Bank Services Agreement” is defined in the definition of Bank Services.
 
“Borrower” is defined in the preamble of this Agreement.
 
“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
 
“Borrowing Base” is eighty percent (80.0%) (or such other percentage as Bank
establishes under Section 2.1.1) multiplied by Borrower’s Aggregate Eligible
Accounts (net of any offsets related to each specific Account Debtor, including,
without limitation, Deferred Revenue).
 
“Borrowing Base Certificate” is that certain certificate in the form attached
hereto as Exhibit D.
 
“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s board of directors (or the limited liability equivalent
and, if required under the terms of such Person’s Operating Documents,
stockholders, members or managers (as applicable) and delivered by such Person
to Bank approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary, members or managers (as applicable) on behalf of such Person
certifying that (a) such Person has the authority to execute, deliver, and
perform its obligations under each of the Loan Documents to which it is a party,
(b) that attached as Exhibit A to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and
ratifying the execution, delivery, and performance by such Person of the Loan
Documents to which it is a party, (c) the name(s) of the Person(s) authorized to
execute the Loan Documents on behalf of such Person, together with a sample of
the true signature(s) of such Person(s), and (d) that Bank may conclusively rely
on such certificate unless and until such Person shall have delivered to Bank a
further certificate canceling or amending such prior certificate.
 
“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.
 
“Capital IP” means, collectively, Capital IP Investment Partners LLC and any
other parties for which such entity is serving as administrative agent.
 
“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.
 
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“Change in Control” means (a) at any time, any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), shall become,
or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)‑5 under the
Exchange Act), directly or indirectly, of twenty-five percent (25.0%) or more of
the ordinary voting power for the election of directors of Borrower (determined
on a fully diluted basis) other than by the sale of Borrower’s equity securities
in a public offering or to venture capital or private equity investors so long
as Borrower identifies to Bank the venture capital or private equity investors
at least seven (7) Business Days prior to the closing of the transaction and
provides to Bank a description of the material terms of the transaction; (b)
during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of Borrower cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body; or (c) at any time,
Borrower shall cease to own and control, of record and beneficially, directly or
indirectly, one hundred percent (100.0%) of each class of outstanding capital
stock or other equity securities of each subsidiary of Borrower free and clear
of all Liens (except Liens created by this Agreement).
 
“ChipX” is defined in the preamble of this Agreement.
 
“Claims” is defined in Section 12.2 of this Agreement.
 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the State of California, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.
 
 “Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.
 
“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.
 
“Collateral Handling Fee” is defined in Section 2.6 of this Agreement.
 
“Collections” are all funds received by Bank from or on behalf of an Account
Debtor for Financed Receivables.
 
“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.
 
“Compliance Certificate” is attached as Exhibit B.
 
“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co‑made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business.  The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.
 
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“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Collateral Account.
 
“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.
 
“Credit Extension” is any Advance, the Term Loan Advance, or any other extension
of credit by Bank for Borrower’s benefit.
 
“Default Rate” is a per annum rate of interest which is three percent (3.0%)
above the rate that is then in effect.
 
“Deferred Revenue” is all amounts received or invoiced, as appropriate, in
advance of performance under contracts and not yet recognized as revenue.
 
“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.
 
“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.
 
“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.
 
“Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States or any state or territory thereof or the District of Columbia.
 
“Early Termination Fee” is defined in Section 2.1.1(f) of this Agreement.
 
“East West Deposit Accounts” is defined in Section 6.5(a).
 
“East West Payroll Account” is defined in Section 6.5(a).
 
“EBITDA” means earnings before interest, taxes, depreciation and amortization in
accordance with GAAP.
 
“Effective Date” is defined in the preamble hereof.
 
“Eligible Accounts” are billed Accounts in the ordinary course of Borrower’s
business that meet all Borrower’s representations and warranties in Section 5.3
of this Agreement, have been, at the option of Bank, confirmed in accordance
with Section 2.1.1(d) of this Agreement, and are due and owing from Account
Debtors deemed creditworthy by Bank in its sole discretion.  Without limiting
the fact that the determination of which Accounts are eligible hereunder is a
matter of Bank discretion in each instance, Eligible Accounts shall not include
the following Accounts (which listing may be amended or changed in Bank’s
discretion with notice to Borrower):
 
(a)          Accounts for which the Account Debtor is Borrower’s Affiliate,
Subsidiary, officer, employee, or agent, or intercompany Accounts or invoices;
 
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(b)          Accounts that the Account Debtor has not paid within ninety (90)
days of invoice date regardless of invoice payment period terms;
 
(c)          Accounts with credit balances over ninety (90) days from invoice
date;
 
(d)          Accounts owing from an Account Debtor which does not have its
principal place of business in the United States or Canada, unless such Accounts
are otherwise (i) Eligible Accounts and are owing from Permitted Foreign Account
Debtors or (ii) approved by Bank in writing on a case-by-case basis in its sole
discretion;
 
(e)          Accounts billed and/or payable outside of the United States, unless
otherwise approved by Bank in writing on a case-by-case basis in its sole
discretion;
 
(f)            Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise - sometimes called “contra” accounts, accounts
payable, customer deposits or credit accounts), with the exception of customary
credits, adjustments and/or discounts given to an Account Debtor by Borrower in
the ordinary course of its business;
 
(g)            Accounts owing from an Account Debtor which is a United States
government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been
acknowledged under the Federal Assignment of Claims Act of 1940, as amended,
except for accounts for which Borrower has not assigned its payment rights to
Bank or not acknowledged under the Federal Assignment of Claims Act of 1940 in
an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000.00) at
any time;
 
(h)          Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
approval”, or other terms if Account Debtor’s payment may be conditional;
 
(i)            Accounts owing from an Account Debtor where goods or services
have not yet been rendered to the Account Debtor (sometimes called memo billings
or pre-billings);
 
(j)            Accounts subject to contractual arrangements between Borrower and
an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements (sometimes called contracts accounts
receivable, progress billings, milestone billings, or fulfillment contracts);
 
(k)          Accounts owing from an Account Debtor the amount of which may be
subject to withholding based on the Account Debtor’s satisfaction of Borrower’s
complete performance (but only to the extent of the amount withheld; sometimes
called retainage billings or retention billings);
 
(l)            Accounts subject to trust provisions, subrogation rights of a
bonding company, or a statutory trust;
 
(m)         Accounts owing from an Account Debtor that has been invoiced for
goods that have not been shipped to the Account Debtor unless Bank, Borrower,
and the Account Debtor have entered into an agreement acceptable to Bank in its
sole discretion wherein the Account Debtor acknowledges that (i) it has title to
and has ownership of the goods wherever located, (ii) a bona fide sale of the
goods has occurred, and (iii) it owes payment for such goods in accordance with
invoices from Borrower (sometimes called “bill and hold” accounts);
 
(n)          Accounts for which the Account Debtor has not been invoiced;
 
(o)          Accounts that represent non-trade receivables or that are derived
by means other than in the ordinary course of Borrower’s business;
 
(p)          Accounts with a due date that is more than ninety (90) days from
invoice date;
 
(q)          Accounts subject to chargebacks, debit memos, or other payment
deductions taken by an Account Debtor;
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(r)            Accounts arising from product returns and/or exchanges (sometimes
called “warranty” or “RMA” accounts);
 
(s)           Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
 
(t)            Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue);
 
(u)          Accounts for which Bank in its good faith business judgment
determines collection to be doubtful, including, without limitation, accounts
represented by “refreshed” or “recycled” invoices; and
 
(u)            Accounts owing from an Account Debtor, fifty percent (50.0%) or
more of whose Accounts have not been paid within ninety (90) days of invoice
date.
 
“Endwave” is defined in the preamble of this Agreement.
 
“Equipment” is all “equipment” as defined in the Code 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.
 
“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.
 
“Events of Default” are set forth in Section 8 of this Agreement.
 
“Excepted Name Change” is defined in Section 7.2.
 
“Exchange Act” is the Securities Exchange Act of 1934, as amended.
 
“Facility Amount” is Seventeen Million Five Hundred Thousand Dollars
($17,500,000.00).
 
“Finance Charges” is defined in Section 2.5 of this Agreement.
 
“Financed Receivables” are all those specific Eligible Accounts and Aggregate
Eligible Accounts, including their proceeds which Bank finances and makes an
Advance, as set forth in Section 2.1.1 of this Agreement.  A Financed Receivable
stops being a Financed Receivable (but remains Collateral) when the Advance made
for the Financed Receivable has been fully paid.
 
“Financed Receivable Balance” is the total outstanding gross face amount, at any
time, of any Financed Receivable.
 
“Fixed Charge Coverage Ratio” shall mean, at any date of determination, with
respect to the twelve-month period ending on such date of determination, the
ratio of (a) (i) Adjusted EBITDA minus (ii) unfunded capital expenditures minus
(iii) dividends paid in cash minus (iv) taxes paid in cash divided by (b)
principal and interest payments made on account of Total Liabilities (provided,
however, with respect to principal and interest payments on account of the
Indebtedness in favor of Bank, until there are four (4) full quarters of such
payments to be included in such calculation, the amount of payments (as
calculated commencing on the Effective Date) with respect to such Indebtedness
shall, for purposes of this calculation, be annualized).
                                   
“Foreign Currency” means lawful money of a country other than the United States.
 
“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.
 
“Funding Date” is the date on which the Term Loan Advance is made to or for the
account of Borrower, which shall be a Business Day.
 
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“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
 
“GigOptix” is defined in the preamble of this Agreement.
 
“GigOptix Guarantor” is GigOptix LLC, an Idaho limited liability company.
 
“GigOptix Guaranty” is that certain Amended and Restated Unconditional Guaranty
dated as of the Effective Date, executed by GigOptix Guarantor in favor of Bank,
as amended, modified or restated from time to time.
 
“GigOptix Security Agreement” is that certain Amended and Restated Security
Agreement dated as of the Effective Date, by and between GigOptix Guarantor and
Bank, as amended, modified or restated from time to time.
 
“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.
 
“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
 
“Guarantor” is any present or future guarantor of the Obligations, including,
without limitation, GigOptix Guarantor.
 
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
 
“Indemnified Person” is defined in Section 12.2 of this Agreement.
 
“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
 
“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following:

(a)           its Copyrights, Trademarks and Patents;
 
(b)           any and all trade secrets and trade secret rights, including,
without limitation, any rights to unpatented inventions, know-how, operating
manuals;
 
(c)           any and all source code;
 
(d)           any and all design rights which may be available to Borrower;
 
(e)           any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and
 
(f)            all amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents.
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“Inventory” is all “inventory” as defined in the Code in effect on the Effective
Date with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
 
“Investment” is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
 
“IP Agreement” is, collectively, (a) that certain Amended and Restated
Intellectual Property Security Agreement dated as of the Effective Date between
GigOptix and Bank, (b) that certain Amended and Restated Intellectual Property
Security Agreement dated as of the Effective Date between ChipX and Bank, (c)
that certain Amended and Restated Intellectual Property Security Agreement dated
as of the Effective Date between Endwave and Bank and (d) that certain
Intellectual Property Security Agreement dated as of the Effective Date between
Magnum and Bank, in each case as amended, modified or restated from time to
time.
 
“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank.
 
“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.
 
“Liquidity Ratio” means a ratio of (a) Borrower’s (i) unrestricted cash
maintained with Bank or Bank’s Affiliates, plus (ii) net billed accounts
receivable to (b) the aggregate amount of all outstanding obligations and
liabilities of Borrower and each Guarantor to Bank, including, without
limitation, the Obligations.
 
“Loan Documents” are, collectively, this Agreement, the Warrant, the Perfection
Certificate, the IP Agreement, the Loan Documents (as defined in the GigOptix
Security Agreement), any subordination agreements, the SVB Control Agreement,
any Bank Services Agreement, the Borrowing Resolutions, any note, or notes or
guaranties executed by Borrower and/or any Guarantor, and any other present or
future agreement between Borrower and/or any Guarantor and/or for the benefit of
Bank, all as amended, restated, or otherwise modified.
 
“Loan Fees” is defined in Section 2.4 of this Agreement.
 
“Lockbox” is defined in Section 2.9 of this Agreement.
 
“Magnum” is defined in the preamble of this Agreement.
 
“Magnum Acquisition” means the acquisition by GigOptix of one hundred percent
(100.0%) of the outstanding capital stock of Magnum pursuant to a certain
Agreement and Plan of Merger dated as of April 1, 2016.
 
“Material Adverse Change” is: (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations; or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6 of this Agreement during the next succeeding
financial reporting period.
 
“Maturity Date” is two (2) years from the Effective Date.
 
“Maximum Availability Amount” is Fourteen Million Dollars ($14,000,000.00).
 
“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, the Term Loan Prepayment Premium, the Loan Fees, the Early Termination
Fee, Bank Expenses and other amounts Borrower owes Bank now or later, whether
under this Agreement, the Loan Documents, or otherwise, including, without
limitation, any interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank, and to perform
Borrower’s duties under the Loan Documents.
 
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 “Operating Documents” are, for any Person, such Person’s formation documents,
as certified with the Secretary of State of such Person’s state of formation on
a date that is no earlier than thirty (30) days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
 
“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.
 
“Payment/Advance Form” is that certain form attached hereto as Exhibit E.
 
“Payment Date” is the first (1st) Business Day of each month.

“Perfection Certificate” is defined in Section 5.1 of this Agreement.
 
“Permitted Accounts” is defined in Section 6.5(a).
 
“Permitted Foreign Account Debtors” means Cisco, Huawei, ZTE, OpNext, Oclaro,
Alcatel-Lucent, Barco Silex, Fujitsu, Mitsubishi, Sumitomo, Sony, NTT, FUJIFILM
SonoSite, Inc., Northrop Grumman (cx), Pangaea (H.K.) Limited, Avnet, Nokia
Siemens Networks GmbH & Co. KG., Thomson, Appear TV, Arris, Sencore and
Sumavision.
 
“Permitted Indebtedness” is:
 
(a)            Borrower’s Indebtedness to Bank under this Agreement and the
other Loan Documents;
 
(b)            Indebtedness existing on the Effective Date which is shown on the
Perfection Certificate;
 
(c)            Subordinated Debt;
 
(d)            unsecured Indebtedness to trade creditors incurred in the
ordinary course of business;
 
(e)            Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
 
(f)            Indebtedness secured by Liens permitted under clauses (a) and (c)
of the definition of “Permitted Liens” hereunder; and
 
(g)            extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
 
“Permitted Investments” are:
 
(a)            Investments (including, without limitation, Subsidiaries)
existing on the Effective Date and shown on the Perfection Certificate (but
specifically excluding any future Investments un any Subsidiaries unless
otherwise permitted hereunder);
 
(b)            Investments consisting of Cash Equivalents;
 
(c)            Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;
 
(d)            Investments accepted in connection with Transfers permitted by
Section 7.1 of this Agreement;
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(e)            Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower’s board of
directors;
 
(f)            Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business; and
 
(g)            Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (g)
shall not apply to Investments of Borrower in any Subsidiary.
 
“Permitted Liens” are:
 
(a)            Liens existing on the Effective Date which are shown on the
Perfection Certificate or arising under this Agreement and the other Loan
Documents;
 
(b)            Liens for taxes, fees, assessments or other government charges or
levies, either (i) not due and payable or (ii) being contested in good faith and
for which Borrower maintains adequate reserves on Borrower’s Books, provided
that no notice of any such Lien has been filed or recorded under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;
 
(c)            purchase money Liens (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment securing no
more than One Hundred Thousand Dollars ($100,000.00)  in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the Equipment;
 
(d)            Liens of carriers, warehousemen, suppliers, or other Persons that
are possessory in nature arising in the ordinary course of business so long as
such Liens attach only to Inventory, securing liabilities in the aggregate
amount not to exceed One Hundred Thousand Dollars ($100,000.00) and which are
not delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
 
(e)            Liens to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like obligations incurred
in the ordinary course of business (other than Liens imposed by ERISA);
 
(f)              Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
 
(g)            leases or subleases of real property granted in the ordinary
course of Borrower’s business (or, if referring to another Person, in the
ordinary course of such Person’s business), and leases, subleases, non-exclusive
licenses or sublicenses of personal property (other than Intellectual Property)
granted in the ordinary course of Borrower’s business (or, if referring to
another Person, in the ordinary course of such Person’s business), if the
leases, subleases, licenses and sublicenses do not prohibit granting Bank a
security interest therein;
 
(h)            non-exclusive licenses of Intellectual Property granted to third
parties in the ordinary course of business; and
 
(i)            Liens arising from attachments or judgments, orders, or decrees
in circumstances not constituting an Event of Default under Sections 8.4 and 8.7
of this Agreement.
 
“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
 
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“Prime Rate” is, with respect to any day, the “Prime Rate” as quoted in the Wall
Street Journal print edition on such day (or, if such day is not a day on which
the Wall Street Journal is published, the immediately preceding day on which the
Wall Street Journal was published).
 
“Prior Loan Agreement” is defined in Recital A of this Agreement.
 
“Reconciliation Period” is each calendar month.
 
“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.
 
“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
 
“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.
 
“Restricted License” is any material license or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with Bank’s right to sell any Collateral.

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.
 
“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.
 
“Streamline Facility Eligible” means, as of any day during any Subject Month,
Borrower has provided evidence to Bank that Borrower (a) had an Liquidity Ratio
of greater than 1.35 to 1.0 at all times during the applicable Testing Month,
and (b) has an Liquidity Ratio of greater than 1.35 to 1.0 on such day.
 
“Subject Month” is the month which is two (2) calendar months after any Testing
Month.
 
“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.
 
“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person.  Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower or
Guarantor.
 
“SVB Control Agreement” is, collectively, (a) that certain Securities Account
Control Agreement by and among SVB Securities, Apex Clearing Corporation,
GigOptix and Bank, (b) that certain Securities Account Control Agreement by and
among SVB Securities, Apex Clearing Corporation, ChipX and Bank, (c) that
certain Securities Account Control Agreement by and among SVB Securities, Apex
Clearing Corporation, Magnum and Bank, (d) that certain Securities Account
Control Agreement by and among SVB Securities, Apex Clearing Corporation,
GigOptix Guarantor and Bank and (e) that certain Securities Account Control
Agreement by and among SVB Asset Management, U.S. Bank, N.A., Endwave and Bank.
 
“Term Loan Advance” are each defined in Section 2.1.2(a).
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 “Term Loan Commitment Fee” is defined in Section 2.4 of this Agreement.
 
“Term Loan Maturity Date” is April 1, 2021.
 
“Term Loan Prepayment Premium” shall be an additional fee payable to Bank in an
amount equal to (a) for a prepayment of the Term Loan Advance made on or prior
to the first (1st) anniversary of the Funding Date of the Term Loan Advance, two
percent (2.0%) of the amount prepaid and (b) for a prepayment of the Term Loan
Advance made after the first (1st) anniversary of the Funding Date of the Term
Loan Advance but on or prior to the second (2nd) anniversary of the Funding Date
of the Term Loan Advance, one percent (1.0%) of the amount prepaid and (iii)
after the second (2nd) anniversary of the Funding Date of the Term Loan Advance,
one-half of one percent (0.50%) of the amount prepaid.
 
“Testing Month” is any month with respect to which Bank has tested Borrower’s
Liquidity Ratio to determine whether Borrower is Streamline Facility Eligible.

“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness.
 
“Trademarks” means any trademark and servicemark rights, whether registered or
not, 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 such trademarks.
 
“Transfer” is defined in Section 7.1 of this Agreement.
 
“Warrant” is, collectively, (a) that certain Amended and Restated Warrant to
Purchase Stock for 4,125 shares of Borrower’s common stock dated as of the
Effective Date between GigOptix and Bank and (b) that certain Amended and
Restated Warrant to Purchase Stock for 125,000 shares of Borrower’s common stock
dated as of the Effective Date between GigOptix and Bank, in each case as
amended, modified or restated from time to time.
 
“Working Capital Facility Fee” is defined in Section 2.4 of this Agreement.

[Signature page follows.]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.
 
BORROWER

GIGOPTIX, INC.

By: /s/ Avi Katz
Name: Avi Katz
Title: Chief Executive Officer
 
CHIPX, INCORPORATED

By: /s/ Avi Katz
Name: Avi Katz
Title: President
 
ENDWAVE CORPORATION

By: /s/ Avi Katz
Name: Avi Katz
Title: President
 
MAGNUM SEMICONDUCTOR, INC.
 
By: /s/ Avi Katz
Name: Avi Katz
Title: President

BANK
 
SILICON VALLEY BANK
 
By: /s/ Janice Ahn
Name: Janice Ahn
Title: Vice President

--------------------------------------------------------------------------------

EXHIBIT A

The Collateral consists of all of Borrower’s right, title and interest in and to
the following:

All goods, equipment, inventory, contract rights or rights to payment of money,
leases, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, all certificates of deposit, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and any copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired;
any patents, trademarks, service marks and applications therefor; trade styles,
trade names, any trade secret rights, including any rights to unpatented
inventions, know‑how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; or any claims for
damages by way of any past, present and future infringement of any of the
foregoing; and
 
All Borrower’s books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

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EXHIBIT B

[image0.jpg]

SPECIALTY FINANCE DIVISION
Compliance Certificate

I, an authorized officer of GIGOPTIX, INC., CHIPX, INCORPORATED, ENDWAVE
CORPORATION and MAGNUM SEMICONDUCTOR, INC. (jointly and severally, individually
and collectively, “Borrower”) certify under the Third Amended and Restated Loan
and Security Agreement (as amended, the “Agreement”) between Borrower and
Silicon Valley Bank (“Bank”) as follows for the period ending
____________________ (all capitalized terms used herein shall have the meaning
set forth in the Agreement):

Borrower represents and warrants for each Financed Receivable:

Each Financed Receivable is an Eligible Account;

Borrower is the owner with legal right to sell, transfer, assign and encumber
such Financed Receivable;

The correct amount is on the Advance Request and Invoice Transmittal and is not
disputed;

Payment is not contingent on any obligation or contract and Borrower has
fulfilled all its obligations as of the Advance Request and Invoice Transmittal
date;

Each Financed Receivable is based on an actual sale and delivery of goods and/or
services rendered, is due to Borrower, is not past due or in default, has not
been previously sold, assigned, transferred, or pledged and is free of any
liens, security interests and encumbrances other than Permitted Liens;

There are no defenses, offsets, counterclaims or agreements for which the
Account Debtor may claim any deduction or discount;

Borrower reasonably believes no Account Debtor is insolvent or subject to any
Insolvency Proceedings;

Borrower has not filed or had filed against it Insolvency Proceedings and does
not anticipate any filing;

Bank has the right to endorse and/or require Borrower to endorse all payments
received on Financed Receivables and all proceeds of Collateral; and

No representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statement contained in
the certificates or statement not misleading.

Additionally, Borrower represents and warrants as follows:

Borrower and each Subsidiary is duly existing and in good standing in its state
of formation and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change.  The execution,
delivery and performance of the Loan Documents have been duly authorized, and do
not conflict with Borrower’s organizational documents, nor constitute an event
of default under any material agreement by which Borrower is bound.  Borrower is
not in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.
 

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Borrower has good title to the Collateral, free of Liens except Permitted
Liens.  All inventory is in all material respects of good and marketable
quality, free from material defects.
 
Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act of 1940, as amended. 
Borrower is not engaged as one of its important activities in extending credit
for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors).  Borrower has complied in all material respects with the Federal
Fair Labor Standards Act.  Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to cause a Material
Adverse Change.  None of Borrower’s or any Subsidiary’s properties or assets
have been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally.  Borrower and each
Subsidiary has timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP.  Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to obtain
or make such consents, declarations, notices or filings would not reasonably be
expected to cause a Material Adverse Change.

Borrower is in compliance with the financial covenants set forth in Section 6.7
of the Agreement.  Attached are the required documents supporting the
certification.  The undersigned certifies that these are prepared in accordance
with GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes.

The undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered.

Financial Covenants
   
Required
         Actual
Compliance
           
Liquidity Ratio (tested monthly)
 
> 1.25:1.0
          ______:1.0
Yes   No
         
Fixed Charge Coverage
       
Ratio (twelve-month) (tested quarterly
commencing with the quarter ending
March 31, 2016)
 
> 1.25:1.0
          ______:1.0
Yes   No   N/A
         
Streamline Facility Eligibility
             
Required
         Actual
Eligible
           
Liquidity Ratio
 
 > 1.35:1.0
         ___:1.0
Yes   No

All other representations and warranties in the Agreement are true and correct
in all material respects on this date, and Borrower represents that there is no
existing Event of Default.

[Continued on following page.]
 

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Sincerely,

GIGOPTIX, INC.
CHIPX, INCORPORATED
ENDWAVE CORPORATION
MAGNUM SEMICONDUCTOR, INC.

                           
Signature
                                
Title
                                  
Date
 

 

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EXHIBIT C

[To be provided by Bank]
 

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EXHIBIT D

BORROWING BASE CERTIFICATE

Borrower: GIGOPTIX, INC., CHIPX, INCORPORATED, ENDWAVE CORPORATION and MAGNUM
SEMICONDUCTOR, INC.

Lender: Silicon Valley Bank

Commitment Amount: $14,000,000.00

ACCOUNTS RECEIVABLE
       
1.
Accounts Receivable (invoiced) Book Value as of ____________________
  $    
2.
Additions (please explain on next page)
 
$
 
 
3.
Less: Intercompany / Employee / Non-Trade Accounts
 
$
   
4.
NET TRADE ACCOUNTS RECEIVABLE
 
$
 
             
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
       
5.
Affiliate/Subsidiary/Intercompany/Employee Accounts/invoices
 
$
 
 
6.
90 Days Past Invoice Date
 
$
 
 
7.
Credit Balances over 90 days
 
$
 
 
8.
Foreign Account Debtors (non-U.S./Canada other than accounts owing from
Permitted Foreign Account Debtors)
 
$
 
 
9.
Accounts billed and/or payable outside the United States
 
$
 
 
10.
Contra/Customer Deposit Accounts
 
$
 
 
11
U.S. Government Accounts w/o assignment of claims (exclusion only applies to
accounts w/o assignment of claims in excess of $500,000 in the aggregate)
 
$
 
 
12.
Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts
 
$
 
 
13.
Accounts with Memo or Pre-Billings
 
$
   
14.
Contract Accounts; Accounts with Progress/Milestone Billings
 
$
 
 
15.
Accounts for Retainage or Retention Billings
 
$
 
 
16.
Trust / Bonded Accounts
 
$
 
 
17.
Bill and Hold Accounts
 
$
 
 
18.
Unbilled Accounts
 
$
 
 
19.
Non-Trade Accounts (if not already deducted above)
 
$
 
 
20.
Payment Terms over 90 Days
 
$
 
 
21.
Chargebacks Accounts / Debit Memos
 
$
 
 
22.
Product Returns/Exchanges
 
$
 
 
23.
Disputed Accounts; Insolvent Account Debtor Accounts
 
$
   
24.
Deferred Revenue
 
$
 
 
25.
Balance of 50% over 90 Days Accounts (cross-age or current affected)
 
$
 
 
26.
Doubtful / Refreshed / Recycled Accounts
 
$
 
 
27.
Other (please explain on next page)
 
$
 
 
28.
TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
 
$
 
 
29.
Eligible Accounts (#4 minus #28)
 
$
 
 
30.
ELIGIBLE AMOUNT OF ACCOUNTS (80.0% of #29)
 
$
 
             
BALANCES
       
31.
Maximum Loan Amount
 
$
14,000,000.00
 
32.
Total Funds Available (lesser of #30 or #31)
 
$
 
 
33.
Present balance of Advances
 
$
 
 
34.
RESERVE POSITION (#32 minus #33)
 
$
 
 

[Continued on following page.]
 

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Explanatory comments from previous page:

                                                                  
                                                                              

The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Third Amended and Restated Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
 

     
BANK USE ONLY
 
COMMENTS:
   
Received by:
         
authorized signer
 
GIGOPTIX, INC.
   
Date:  
     
CHIPX, INCORPORATED
   
Verified:
   
ENDWAVE CORPORATION
   
authorized signer
 
MAGNUM SEMICONDUCTOR, INC.
   
Date:
           
Compliance Status:                     Yes            No
 
By:
                              
Authorized Signer
       
Date:
                                       

 

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EXHIBIT E
LOAN PAYMENT/ADVANCE REQUEST FORM

Deadline for same day processing is Noon Pacific Time

Fax To:
Date:
   

 
Loan Payment:
             
GIGOPTIX, INC., CHIPX, INCORPORATED, ENDWAVE CORPORATION and MAGNUM
SEMICONDUCTOR, INC.
         
From Account #
     
To Account #
   
(Deposit Account #)
 
(Loan Account #)
Principal $
       
and/or Interest $
           
Authorized Signature:
     
Phone Number:
   
Print Name/Title:
                       

 
Loan Advance:
                 
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
           
From Account #
           
To Account #
   
(Loan Account #)
 
(Deposit Account #)
           
Amount of Term Loan Advance $
                     
All Borrower’s representations and warranties in the Third Amended and Restated
Loan and Security Agreement are true, correct and complete in all material
respects on the date of the request for an advance; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date:
           
Authorized Signature:
       
Phone Number:
     
Print Name/Title:
                             

 

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Outgoing Wire Request:
     
Complete only if all or a portion of funds from the loan advance above is to be
wired.
 
Deadline for same day processing is noon, Pacific Time
             
Beneficiary Name:
     
Amount of Wire: $
       
Beneficiary Bank:
     
Account Number:
       
City and State:
                   
Beneficiary Bank Transit (ABA) #:
     
Beneficiary Bank Code (Swift, Sort, Chip, etc.):
   
(For International Wire Only)
             
Intermediary Bank:
     
Transit (ABA) #:
       
For Further Credit to:
             
Special Instruction:
           
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
         
Authorized Signature:
   
2nd Signature (if required):
     
Print Name/Title:
     
Print Name/Title:
       
Telephone #:
     
Telephone #:
                   

 
 

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