Exhibit 10.3

LOAN AND SECURITY AGREEMENT

LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of March 26, 2013 (the
“Effective Date”) among HSBC BANK, USA, NATIONAL ASSOCIATION, a national banking
association, and SOLAZYME, INC., a Delaware corporation (“Borrower”). The
parties agree as follows:

 

  1 ACCOUNTING AND OTHER TERMS; DEFINITIONS

1.1 Accounting and Other Terms. As used in this Agreement, the Revolving Note,
any other Loan Document, or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not defined in
Section 1.2 or elsewhere in this Agreement and accounting terms partly defined
in Section 1.2 to the extent not defined, shall have the respective meanings
given to them under GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio set forth in any Loan Document, and Borrower
or HSBC shall so request, HSBC and Borrower shall negotiate in good faith to
amend such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to approval by HSBC and Borrower); provided
that, until so amended, such ratio shall continue to be computed in accordance
with GAAP prior to such change therein, and Borrower shall provide to HSBC
within five days after delivery of each certificate or financial report required
hereunder that is affected thereby a written statement of a Responsible Officer
of Borrower setting forth in reasonable detail the differences (including any
differences that would affect any calculations relating to the financial
covenants) that would have resulted if such financial statements had been
prepared giving effect to such change. Capitalized terms not otherwise defined
in this Agreement shall have the meanings set forth in Section 1.2. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meaning provided by the Code to the extent such terms are defined therein.

The terms “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision. Each reference to a Section, an Exhibit or a Schedule shall be
deemed to refer to a Section, an Exhibit or a Schedule, as applicable, of this
Agreement, as modified or supplemented pursuant to the terms hereof. Any pronoun
used shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
references to statutes (including the Code) and related regulations shall
include any amendments of same and any successor statutes and regulations.
Unless otherwise provided, all references to any instruments or agreements to
which HSBC is a party, including, without limitation, references to any of the
other Loan Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof. All references herein to
the time of day shall mean the time in New York. A Default or Event of Default
shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default
or Event of Default is waived in writing pursuant to this Agreement or, in the
case of a Default that is capable of being cured, is cured within any period of
cure expressly provided for in this Agreement; and an Event of Default shall
“continue” or be “continuing” until such Event of Default has been so cured or
waived in writing by HSBC. Wherever the phrase “to the best of Borrower’s
knowledge” or words of similar import relating to the knowledge or the awareness
of Borrower are used in this Agreement or other Loan Documents, such phrase
shall mean and refer to (i) the actual knowledge of a senior officer of Borrower
or (ii) the knowledge that a senior officer would have obtained if he had
engaged in good faith and diligent performance of his duties, including the
making of such reasonably specific inquiries as may be necessary of the
employees or agents of Borrower and a good faith attempt to ascertain the
existence or accuracy of the matter to which such phrase relates.

1.2 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 Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Advance for any
Interest Period, a rate of interest equal to:

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(a) the offered rate for deposits in U.S. dollars in the London interbank market
for the relevant Interest Period which is shown on the Reuters “LIBOR01” screen
(or any successor thereto) that displays the average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the first day
of such Interest Period) as of 11:00 a.m. (London time) on the day which is two
(2) Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, that if, for any reason,
such a rate is not published by the British Bankers’ Association or available on
the Reuters Screen LIBO Page, Adjusted LIBO Rate shall be equal to a rate per
annum equal to the average rate (rounded upwards, if necessary, to the next
1/100 of 1%) at which HSBC determines that U.S. dollars in an amount comparable
to the amount of the applicable Advances are being offered to prime banks at
approximately 11:00 a.m. (London time) on the day which is two (2) Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period for settlement in immediately available funds by leading banks
in the London interbank market selected by HSBC; divided by

(b) a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the
day which is two (2) Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System (the “Euro-Rate Reserve Percentage”); such rate (if greater than
zero) to be rounded upward to the next whole multiple of one-sixteenth of one
percent (0.0625%).

“Advance” or “Advances” means an advance (or advances) under the Revolving Line
and Letters of Credit.

“Affiliate” is, with respect to any Person, each other 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.

“Agreement” is defined in the preamble hereof.

“Availability Amount” is (a) the Revolving Line, minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), and minus (c) the outstanding principal balance of any Advances.

“Base Rate” shall mean a variable rate of interest per annum equal to the
highest of the “prime rate,” “reference rate,” “base rate” or other similar rate
as announced from time to time by HSBC (with the understanding that any such
rate may merely be a reference rate and may not necessarily represent the lowest
or best rate actually charged to any customer by HSBC), such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.

“Base Rate Advance” means an Advance that bears interest based at the Base Rate.

“Base Rate Margin” means the applicable rate per annum corresponding to Pricing
Liquidity, all as set forth in the following table:

 

Pricing Liquidity

  

Base Rate Margin

< $50,000,000    0.50% > $50,000,000, but < $75,000,000    0.75% > $75,000,000
   1.00%

“BNDES Guarantee” means the guarantee issued by HSBC Bank Brasil S.A. in
satisfaction of the bank guarantee required by the Banco Nacional de
Desenvolvimento Econômico e Social (“BNDES”) in Brazil for the account of the
Borrower’s joint venture, Solazyme Bunge Produtos Renováveis Ltda.

 

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“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets, liabilities,
the Collateral, if any, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors and delivered by such Person to HSBC
approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
Secretary, Assistant Secretary or authorized officer 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 HSBC may conclusively rely
on such certificate unless and until such Person shall have delivered to HSBC a
further certificate canceling or amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close, except that if any determination of a
“Business Day” shall relate to a Eurodollar Advance, the term “Business Day”
shall also mean a day on which dealings are carried on in the London interbank
market.

“Cash” means unrestricted cash which shall not be subject to any Lien other than
a Lien in favor of HSBC.

“Cash Equivalents” means (a) marketable securities issued, or directly,
unconditionally and fully guaranteed or insured, by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one (1) year from the date of acquisition by such person, (b) time deposits
and certificates of deposit of HSBC or any commercial bank having, or which is
the principal banking subsidiary of a bank holding company organized under the
laws of the United States, any state thereof or the District of Columbia having,
capital and surplus aggregating in excess of $250,000,000 and a rating of “A”
(or such other similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) with maturities of not more than one year from the date of
acquisition by such person, (c) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause
(a) above entered into with any person meeting the qualifications specified in
clause (b) above, (d) commercial paper having one of the two highest ratings
obtainable from S&P or Moody’s, in each case maturing not more than one year
after the date of acquisition by such person, (e) investments in money market
funds at least 95% of whose assets are comprised of securities of the types
described in clauses (a) through (d) above, and (f) demand deposit accounts
maintained in the ordinary course of business with any bank meeting the
qualifications specified in clause (b) above.

“CFC” means (a) each Person that is a “controlled foreign corporation” for
purposes of the US Internal Revenue Code and (b) each subsidiary of any such
controlled foreign corporation.

“CFC Holding Company” means a Subsidiary of Borrower substantially all of the
assets of which consist of Equity Interests in CFCs.

“Change in Control” means any event, transaction, or occurrence as a result of
which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of Borrower, is or becomes a beneficial owner
(within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of Borrower, representing 40% or more of the combined
voting power of Borrower’s then outstanding securities; or (b) during any period
of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the Board of Directors of Borrower (together with any new
directors whose election by the Board of Directors of Borrower was approved by a
vote of not less than a majority of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office.

 

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“Change in Law” means the occurrence after the date of this Agreement of any of
the following: (a) the adoption or taking effect of any treaty, law, rule or
regulation, (b) any change in any treaty, law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority, or (c) the
making or issuance of any request, guideline, requirement or directive (whether
or not having the force of law) by any Governmental Authority; provided,
however, that notwithstanding anything herein to the contrary, (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements and directives thereunder, issued in connection
therewith or in implementation thereof, and (ii) all requests, rules,
guidelines, requirements and directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law,” regardless of the date enacted, adopted, issued or
implemented. For purposes of this definition references to HSBC also shall
include any corporation or bank directly or indirectly controlling HSBC.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of New York; 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 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, HSBC’s
Lien on any Collateral is governed by the Uniform Commercial Code in effect in a
jurisdiction other than the State of New York, 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 B.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Committed Availability” means, as the date of determination, an amount equal to
the Availability Amount.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such terms as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any Indebtedness under clauses
(a) through (e) of the definition thereof of another Person; (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 (in each case, a “Hedging Obligation”); 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.

“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 HSBC pursuant to which HSBC
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or 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 or any other extension of credit by HSBC for
Borrower’s benefit.

“Credit Party” means Borrower and each of Borrower’s Subsidiaries.

 

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“Default” shall mean an event which, with the giving of notice or passage of
time or both, would constitute an Event of Default.

“Default Rate” is defined in Section 2.3(c).

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is Borrower’s Deposit Account, account number
048387851, maintained with HSBC.

“Diligence Certificate” is defined in Section 5.1.

“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.

“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
HSBC at such time on the basis of the then-prevailing rate of exchange in New
York, New York for sales of the Foreign Currency for transfer to the country
issuing such Foreign Currency.

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States or any state thereof or the District of Columbia.

“Effective Date” is defined in the preamble hereof.

“Eligible Assignee” shall mean (a) HSBC; (b) an Affiliate of a HSBC; (c) any
bank of similar regulated financial institution or finance company that is
engaged in the business of making commercial loans or similar extensions of
credit in the ordinary course of its business; or (d) after an Event of Default
has occurred and is continuing, any other Person (other than a natural person)
approved by HSBC in its sole discretion.

“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.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests, beneficial interests or other ownership interests, whether
voting or nonvoting, in, or interests in the income or profits of, a Person, and
any warrants, options or other rights entitling the holder thereof to purchase
or acquire any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

“Eurodollar Advance” means an Advance that bears interest based at the
Eurodollar Rate.

“Eurodollar Rate” means for any Eurodollar Advance for the then current Interest
Period relating thereto the rate per annum (such Eurodollar Rate to be adjusted
to the next higher 1/100 of 1%) equal to the Adjusted LIBO Rate.

“Eurodollar Rate Margin” means the applicable rate per annum corresponding to
Pricing Liquidity, all as set forth in the following table:

 

Pricing Liquidity

  

Eurodollar Rate Margin

< $50,000,000    2.50% > $50,000,000, but < $75,000,000    2.25% >$75,000,000   
2.00%

 

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“Euro-Rate Reserve Percentage” shall have the meaning set forth in the
definition of Adjusted LIBO Rate.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Excluded Assets” means (i) any US Agency Grant Funds, any Collateral Accounts
holding US Agency Grant Funds, any assets purchased (including by reimbursing
Borrower for such purchases) in whole or in part with US Agency Grant Funds, any
inventory produced with equipment purchased (including by reimbursing Borrower
for such purchases) in whole or in part with US Agency Grant Funds and any
revenues produced from any of the foregoing and any proceeds of the foregoing,
and (ii) any assets subject to Liens permitted pursuant to clause (p) of the
definition of “Permitted Liens”; provided, however, in no event will “Excluded
Assets” include any domestic operating and other deposit accounts and securities
accounts maintained with HSBC and HSBC’s Affiliates.

“Excluded Taxes” means any of the following: (a) taxes imposed on or measured by
net income (however denominated), franchise taxes, and branch profits taxes
imposed as a result of a present or former connection between HSBC and the
jurisdiction imposing such tax (other than connections solely arising from HSBC
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document),
(b) U.S. federal withholding taxes imposed pursuant to a law in effect on the
date on which HSBC changes its lending office, except to the extent that,
pursuant to Section 3.6(a)(i) amounts with respect to such taxes were payable to
HSBC immediately before it changed its lending office, (c) taxes attributable to
HSBC’s failure to comply with Section 3.7 and (d) any U.S. federal withholding
taxes imposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the
date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue
Code.

“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 any date on which an Advance is made to or for the account of
Borrower, which shall be a Business Day.

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, options to purchase or sell real or personal property, rights
in all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

“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,

 

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legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Grant Effective Date” is defined in Section 4.1 hereof.

“Hedging Obligation” is defined in the definition of “Contingent Obligation.”

“HSBC” means HSBC Bank, USA, National Association, a national banking
association, and for purposes of issuing Letters of Credit, any of its
Affiliates.

“HSBC Expenses” are all audit and field exam 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.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, (b) reimbursement and other obligations for surety bonds
and letters of credit, (c) obligations evidenced by notes, bonds, debentures or
similar instruments, (d) capital lease obligations, and (e) Contingent
Obligations.

“Indenture” means that certain Indenture dated as of January 24, 2013 by and
between Borrower and Wells Fargo Bank, National Association, as Trustee, in
connection with Borrower’s 6% Convertible Senior Subordinated Notes due 2018.

“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 dissolution, liquidation,
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;

(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;

(f) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights;

(g) All amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents; and

(h) All proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.

“Interest Payment Date” means, (i) with respect to any Eurodollar Advance, the
last day of each Interest Period applicable to such Eurodollar Advance and,
(ii) with respect to any Base Rate Advance, the first day of each calendar month
(or, if that day of the calendar month does not fall on a Business Day, then on
the first Business Day following such date) and each date a Base Rate Advance is
converted into a Eurodollar Advance to the extent of the amount converted to a
Eurodollar Advance.

 

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“Interest Period” shall mean, with respect to any Eurodollar Advance, the period
commencing on the date such Advance is made as, renewed as or converted into a
Eurodollar Advance and ending on the date one, two or three months thereafter as
selected by Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of such period, as selected by
Borrower pursuant to the provisions below. The duration of each Interest Period
for any Eurodollar Advance shall be for a number of months selected by Borrower
upon notice as set forth in Section 3.5; provided that:

(i) whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall occur on
the next succeeding Business Day; provided, that if such extension of time would
cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the last
Business Day immediately preceding the last day of such Interest Period; and

(ii) if Borrower renews any Eurodollar Advance for an additional Interest
Period, the first day of the new Interest Period shall be the last day of the
preceding Interest Period; however, interest shall only be charged once for such
day at the rate applicable to the Eurodollar Advance for the new Interest
Period.

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

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to, or guarantee or assumption of debt of, any Person.

“Letter of Credit” means a letter of credit issued by HSBC as set forth in
Section 2.1.2.

“Letter of Credit Application” is defined in Section 2.1.2(b).

“Letter of Credit Reserve” is defined in Section 2.1.2(e).

“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.

“Loan Documents” are, collectively, this Agreement, the Diligence Certificate,
the Revolving Note, any other note or notes or guaranties executed by Borrower
or any Guarantor, and any other present or future agreement between Borrower any
Guarantor and/or for the benefit of HSBC in connection with this Agreement, all
as amended, restated, or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of HSBC’s Lien in the Collateral on or after the Grant Effective Date;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower and its consolidated Subsidiaries, taken as
a whole; or (c) a material impairment of the prospect of repayment of any
portion of the Obligations.

“Notice of Borrowing” means a notice given by Borrower to HSBC in accordance
with Section 3.5(b), substantially in the form of Exhibit D, with appropriate
insertions.

“Notice of Conversion” means a notice given by Borrower to HSBC in accordance
with Section 3.5(g), substantially in the form of Exhibit E, with appropriate
insertions.

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, HSBC Expenses and other amounts Borrower owes HSBC now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit (including
reimbursement obligations for drawn and undrawn letters of credit), and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
HSBC, 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 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 and patent applications including without
limitation, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

“Peoria Equipment” is up to One Million Dollars ($1,000,000) of equipment
located at Borrower’s facilities in Peoria, Illinois.

“Payment Office” shall mean initially MM Customer Service Manager; MM Commercial
Banking; 1 HSBC Center, 18th Fl; Buffalo, NY 14203; thereafter, such other
office of HSBC, if any, which it may designate by notice to Borrower to be the
Payment Office.

“Permitted Distributions” are:

(a) purchases of capital stock from former employees, consultants and directors
in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in any fiscal year provided that at the time of such purchase no
Event of Default has occurred and is continuing;

(b) distributions or dividends consisting solely of Borrower’s capital stock;

(c) purchases for value of any rights distributed in connection with any
stockholder rights plan;

(d) purchases of capital stock or options to acquire such capital stock with the
proceeds received from a substantially concurrent issuance of capital stock or
convertible securities;

(e) purchases of capital stock pledged as collateral for loans to employees;

(f) purchases of capital stock in connection with the exercise of stock options
or stock appreciation rights by way of cashless exercise or in connection with
the satisfaction of withholding tax obligations;

(g) purchases or cash in lieu of fractional shares of capital stock arising out
of stock dividends, splits or combinations or business combinations or in
connection with the issuance of warrants, options or other securities
convertible or exchangeable into or exchangeable for capital stock in Borrower;
and

(h) conversions of any convertible securities into other securities or
settlement in cash pursuant to the terms of such convertible securities or
otherwise in exchange therefor.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to HSBC under this Agreement and the other Loan
Documents;

(b) Indebtedness existing on the Effective Date and shown on the Diligence
Certificate (other than the SVB Indebtedness to be paid off on or prior to the
Effective Date);

(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;

 

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(g) capital lease obligations;

(h) Indebtedness of Borrower or any Subsidiary to Borrower or any Subsidiary;

(i) Contingent Obligations in respect of Permitted Indebtedness;

(j) Indebtedness of any Person that becomes a Subsidiary (or of any Person not
previously a Subsidiary that is merged or consolidated with or into a Subsidiary
in a transaction permitted hereunder) after the date hereof, or Indebtedness of
any Person that is assumed by Borrower or any Subsidiary in connection with an
acquisition of assets by Borrower or such Subsidiary in an acquisition permitted
hereunder or another Permitted Investment; provided that (i) such Indebtedness
exists at the time such Person becomes a Subsidiary (or is so merged or
consolidated) or such assets are acquired and is not created in contemplation of
or in connection with such Person becoming a Subsidiary (or such merger or
consolidation) or such assets being acquired; (ii) neither Borrower nor any
Subsidiary (other than such Person or the Person with which such Person is
merged or consolidated or that so assumes such Person’s Indebtedness) shall
guarantee or otherwise become liable for the payment of such Indebtedness and
(iii) so long as no Event of Default has occurred at the time of such
transaction or will occur as a result of such transaction and in the case of
such transaction involving Borrower, Borrower is the surviving legal entity;

(k) Indebtedness owed in respect of any overdrafts and related liabilities
arising from treasury, depository, credit card and cash management services or
in connection with any automated clearing house transfers of funds; provided
that such Indebtedness shall be repaid in full before the same shall become
delinquent;

(l) Indebtedness in respect of letters of credit, bank guarantees and similar
instruments issued for the account of Borrower or any Subsidiary in the ordinary
course of business supporting obligations under (i) workers’ compensation,
unemployment insurance and other social security laws and (ii) bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and obligations of a like nature incurred in the ordinary course of
business;

(m) Indebtedness of Borrower or any Subsidiary in the form of purchase price
adjustments, earn-outs, non-competition agreements or other arrangements
representing acquisition consideration or deferred payments of a similar nature
incurred in connection with any Permitted Investment;

(n) non-speculative Hedging Obligations in the ordinary course of business;

(o) Indebtedness incurred substantially concurrently with and used to fund an
acquisition permitted under Section 7.3 in an aggregate principal amount not
exceeding Forty Million Dollars ($40,000,000) so long as no Event of Default has
occurred at the time of the incurrence of such Indebtedness or will occur as a
result of the incurrence of such Indebtedness;

(p) Indebtedness in respect of letters of credit in an aggregate face amount not
exceeding One Million Dollars ($1,000,000);

(q) Indebtedness in respect of lines of credit provided to Foreign Subsidiaries;

(r) Investments permitted under clause (a) or (l) of the definition of Permitted
Investments constituting Indebtedness;

(s) other Indebtedness in an aggregate principal amount not to exceed $5,000,000
at any time outstanding; and

(t) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (s) 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:

 

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(a) Investments (including, without limitation, Subsidiaries) existing on the
Effective Date and shown on the Diligence Certificate;

(b)(i) Investments consisting of Cash Equivalents, and (ii) any Investments
approved by Borrower’s Board of Directors or otherwise pursuant to a Board
approved investment policy;

(c) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

(d) Investments consisting of Collateral Accounts, so long as on and after the
Grant Effective Date, HSBC has a perfected security interest in such Collateral
Accounts if and to the extent required under Section 6.5(b);

(e) Investments accepted in connection with Transfers permitted by Section 7.1;

(f) Investments (i) by Borrower in Subsidiaries, so long as such Investments are
made in good faith by Borrower for bona fide business purposes, including the
establishment and operation of such Subsidiary, and (ii) by Subsidiaries in
other Subsidiaries or in Borrower;

(g) 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;

(h) 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 including the Transfers of accounts
receivable in the ordinary course of business in connection with the collection
or compromise thereof;

(i) Investments consisting of extensions of credit to Borrower’s or its
Subsidiaries’ customers in the nature of accounts receivable, prepaid royalties
or notes receivable in the ordinary course of business arising from the sale or
lease of goods, provision of services or licensing activities;

(j) non-speculative Hedging Obligations in the ordinary course of business;

(k) licensing and other contributions of Intellectual Property to joint
ventures, and research and/or development agreements;

(l) additional Investments in joint ventures;

(m) additional Investments in strategic manufacturing collaborations with third
parties, including but not limited to the existing collaboration with
Archer-Daniels-Midland Company (“ADM”) at the ADM fermentation facility in
Clinton, Iowa;

(m) other Investments not otherwise permitted by Section 7.7 not exceeding Five
Million Dollars ($5,000,000) in the aggregate outstanding at any time; and

(n) Investments permitted by Section 7.3.

“Permitted Liens” are:

(a)(i) Liens existing on the Effective Date and shown on the Diligence
Certificate (other than any Liens in favor of Silicon Valley Bank relating to
the SVB Indebtedness), or (ii) Liens 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

 

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1986, as amended, and the Treasury Regulations adopted thereunder in an
aggregate amount in excess of One Million Dollars ($1,000,000) and no collection
proceedings with respect to such Liens have begun against any property of
Borrower (other than the filing of a notice of any such Lien or Liens);

(c)(i) Liens on assets acquired or held by Borrower or any Subsidiary incurred
for financing the acquisition of such assets, if the Lien is confined to the
property acquired and improvements and the proceeds of such assets, or
(ii) Liens existing on assets when acquired, if the Lien is confined to the
property acquired and improvements and the proceeds of such assets;

(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 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) any Lien existing on any asset of any Person that becomes a Subsidiary (or
of any Person not previously a Subsidiary that is merged or consolidated with or
into Borrower or a Subsidiary in a transaction permitted hereunder) after the
date hereof prior to the time such Person becomes a Subsidiary (or is so merged
or consolidated); provided that (i) such Lien is not created in contemplation of
or in connection with such acquisition or such Person becoming a Subsidiary (or
such merger or consolidation), (ii) such Lien shall not apply to any other asset
of Borrower or any Subsidiary and (iii) such Lien shall secure only those
obligations that it secures on the date of such acquisition or the date such
Person becomes a Subsidiary (or is so merged or consolidated);

(g)(i) Liens to secure Indebtedness permitted pursuant to clause (o) of the
defined term “Permitted Indebtedness”; provided, that such Lien shall only apply
to the assets and capital stock of any Person being acquired and not apply to
any other asset of Borrower or any Subsidiary and (ii) Liens on assets of a
Foreign Subsidiary to secure Indebtedness of such Foreign Subsidiary permitted
under clause (q) of the definition of Permitted Indebtedness;

(h) 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 HSBC a security interest
therein;

(i)(1) licenses of Intellectual Property of Borrower or its Subsidiaries, and
(2) other contributions of Intellectual Property to joint ventures, research
and/or development programs, material transfer agreements or evaluation
agreements;

(j) Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;

(k) Liens in favor of other financial institutions arising in connection with
deposit and/or securities accounts held at such institutions, provided that on
and after the Grant Effective Date, HSBC has a first priority perfected security
interest in the amounts held in such deposit and/or securities accounts if and
to the extent required under Section 6.5(b);

(l) Liens in favor custom and revenue authorities arising as a matter of law to
secure the payment of custom duties in connection with the importation of goods;

(m) Liens in favor of HSBC arising in connection with Borrower’s Deposit and/or
Securities Accounts maintained with HSBC or its Affiliates;

(n) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), contracts for the purchase of property, leases, statutory
obligations, surety and appeal bonds, performance bonds and

 

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other obligations of a like nature, in each case, incurred in the ordinary
course of business and not representing an obligation for borrowed money;

(o) easements, zoning restrictions, rights of way, licenses, reservations,
covenants, utility easements, building restrictions and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of Borrower or any Subsidiary;

(p) any interest or title of a lessor under any capital lease; provided that
interest or title does not extend to any property other than the property leased
by such lessor to Borrower or any of its Subsidiary under such capital lease;

(q) pledges and deposits in the ordinary course of business securing insurance
premiums or reimbursement obligations under insurance policies, in each case
payable to insurance carriers that provide insurance to Borrower and any
Subsidiary;

(r) Liens on deposit accounts, certificates of deposits or other cash or
securities pledged in an aggregate face amount not exceeding One Million Dollars
($1,000,000) to secure reimbursement obligations with respect to letters of
credit which encumber documents and other property relating to letters of credit
and products and proceeds thereof;

(s) Liens attaching solely to cash earnest money deposits in connection with
Investments permitted by Section 7.3;

(t) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by Borrower or any
Subsidiary in the ordinary course of business covering such goods and not
prohibited by this Agreement;

(u) Liens securing obligations in an aggregate outstanding principal amount not
exceeding $2,500,000 at any time; and

(v) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (u), 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.

“Permitted Pledged Accounts” are Collateral Accounts subject to Liens permitted
pursuant to the following clauses of the definition of “Permitted Liens” (f),
(n), (q), (r), (s) and (u) (so long as the aggregate amount held in such
Collateral Accounts pledged pursuant to clause (u) of the definition of
“Permitted Liens” does not exceed the aggregate amount of obligations so
secured) and (v) (to the extent related to Liens permitted pursuant to clauses
(f), (n), (q), (r), (s) and (u)); provided, however, in no event will “Permitted
Pledged Accounts” include any Collateral Accounts maintained with HSBC and
HSBC’s Affiliates.

“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.

“Pricing Liquidity” means, as of any date of determination, the average daily
balance during the most recently ended fiscal quarter of the sum of Cash and
unrestricted Cash Equivalents maintained by Borrower in Collateral Accounts at
HSBC and not subject to any Lien other than a Lien in favor of HSBC .

“Quarterly Financial Statements” is defined in Section 6.2(c).

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

“Regulatory Change” means, with respect to HSBC, any change on or after the date
of this Agreement in United States federal, state, or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives, or requests applying to a class of
lenders including HSBC, of or

 

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under any United States federal or state, or any foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.

“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.

“Reserve Requirement” means, for any Interest Period, the average maximum rate
at which reserves (including any marginal, supplemental, or emergency reserves)
are required to be maintained during such Interest Period under Regulation D
against “Eurocurrency liabilities” (as such term is used in Regulation D) by
member banks of the Federal Reserve System. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by HSBC by reason of any Regulatory Change against (a) any
category of liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined as provided in the definition of Adjusted
LIBO Rate or (b) any category of extensions of credit or other assets which
include Advances.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.

“Revolving Line” is an Advance or Advances in an aggregate principal amount up
to Thirty Million Dollars ($30,000,000).

“Revolving Line Maturity Date” is March 26, 2015.

“Revolving Note” means a Promissory Note in substantially the form of Exhibit A.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

“Senior Debt” has the meaning ascribed to such term in the Indenture.

“Springing Lien Event” means the occurrence and continuance of any of the
following: (a) Borrower fails or neglects to perform any obligation in
Section 5.9, Section 6.6 or Section 7.12, (b) an Event of Default under
Section 8.1 and Section 8.5, (c) or the representation made by Borrower in
Section 5.11 is incorrect.

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to HSBC (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
HSBC entered into between HSBC and the other creditor).

“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.

“SVB Indebtedness” means all Obligations (as defined under that certain Loan and
Security Agreement dated as of May 11, 2011 between Borrower and Silicon Valley
Bank, as amended from time to time).

“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.

 

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“Transfer” is defined in Section 7.1.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required To Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be renewed,
extended, amended or replaced from time to time.

“US Agency Grant Funds” shall mean any funds provided to the Borrower or its
Affiliates pursuant to a grant from any US Governmental Authority.

 

  2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay HSBC the
outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.

2.1.1 Revolving Advances.

(a) Availability. Subject to the terms and conditions of this Agreement
(including without limitation Borrower’s compliance with Section 6.6), HSBC
shall make Advances not exceeding the Availability Amount. Amounts borrowed
hereunder may be repaid and, prior to the Revolving Line Maturity Date,
reborrowed, subject to the applicable terms and conditions precedent herein.

(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the accrued and unpaid
interest thereon, and all other Obligations relating to the Revolving Line shall
be immediately due and payable (except as set forth in Section 2.1.2(b)).

2.1.2 Letters of Credit Sublimit.

(a) As part of the Revolving Line, HSBC shall issue Letters of Credit
denominated in Dollars or a Foreign Currency for Borrower’s account. The
aggregate Dollar Equivalent amount utilized for the issuance of Letters of
Credit shall at all times reduce the amount otherwise available for Advances
under the Revolving Line. The aggregate Dollar Equivalent amount available to be
used for the issuance of Letters of Credit may not exceed (i) the Revolving
Line, minus (ii) the sum of all outstanding principal amounts of any Advances
(including the face amount of any outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit)).

(b) If, on the Revolving Line Maturity Date (or the effective date of any
termination of this Agreement), there are any outstanding Letters of Credit,
then on such date Borrower shall provide to HSBC cash collateral in an amount
equal to (x) if such Letters of Credit are denominated in Dollars, then up to
one hundred five percent (105%), and (y) if such Letters of Credit are
denominated in a Foreign Currency, then up to one hundred ten percent (110%), 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 HSBC in its commercially reasonable business judgment), to secure
all of the Obligations relating to such Letters of Credit. All Letters of Credit
shall be in form and substance acceptable to HSBC in its sole discretion and
shall be subject to the terms and conditions of HSBC’s standard Application and
Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees
to execute any further documentation in connection with the Letters of Credit as
HSBC may reasonably request. Borrower understands and agrees that HSBC shall not
be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrower’s instructions in good faith or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.

(c) The obligation of Borrower to immediately reimburse HSBC for drawings made
under Letters of Credit shall be absolute, unconditional, and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.

(d) Each Letter of Credit shall, among other things, have an expiry date not
later than twelve (12) months after such Letter of Credit’s date of issuance. In
no event shall any Letters of Credit issued hereunder have an expiry date later
than the Revolving Line Maturity Date unless Borrower provides cash collateral
as described above in Section 2.1.2(b).

 

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2.1.3 General Provisions Relating to the Advances. Each Advance shall, at
Borrower’s option in accordance with the terms of this Agreement, be either in
the form of a Base Rate Advance or a Eurodollar Advance; provided, that in no
event shall there be outstanding more than three (3) Eurodollar Advances at any
time. Borrower shall pay interest accrued on the Advances at the rates and in
the manner set forth in Section 2.3.

2.2 Overadvances. If, at any time, the outstanding principal amount of all
Advances (including the face amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit)), exceeds the Revolving
Line, Borrower shall immediately pay to HSBC in cash such excess.

2.3 Payment of Interest on the Credit Extensions.

(a) Computation of Interest. Interest on the Credit Extensions and all fees
payable hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which such interest accrues.
In computing interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.

(b) Interest; Payment. Each Advance shall bear interest on the outstanding
principal amount thereof from the date when made, continued or converted until
paid in full at a rate per annum equal to (i) for Base Rate Advances, the Base
Rate minus the applicable Base Rate Margin and (ii) for Eurodollar Advances, the
Eurodollar Rate plus the applicable Eurodollar Rate Margin. Pursuant to the
terms hereof, interest on each Advance shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of any
Advance pursuant to this Agreement for the portion of any Advance so prepaid and
upon payment (including prepayment) in full thereof. All accrued and unpaid
interest on the Advances shall be due and payable on the Revolving Line Maturity
Date.

(c) Default Rate. Upon the occurrence and during the continuance of an Event of
Default, Obligations shall bear interest at a rate 2% above the rate that would
otherwise be applicable thereto (the “Default Rate”). Payment or acceptance of
the increased interest provided in this Section 2.3(c) 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 HSBC.

(d) Debit of Accounts. HSBC may debit any of Borrower’s Deposit Accounts
maintained with HSBC, including the Designated Deposit Account, for principal
and interest payments or any other amounts Borrower owes HSBC when due. In
addition, during the existence of an Event of Default, HSBC may debit any other
accounts of Borrower maintained with HSBC with respect to any amounts owing by
Borrower to HSBC.

(e) Letter of Credit Reserve. Borrower may request that HSBC issue a Letter of
Credit payable in a Foreign Currency. If a demand for payment is made under any
such Letter of Credit, HSBC shall treat such demand as an Advance to Borrower of
the Dollar Equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges). To guard against
fluctuations in currency exchange rates, upon the issuance of any Letter of
Credit payable in a Foreign Currency, HSBC may create at its sole discretion a
reserve (the “Letter of Credit Reserve”) under the Revolving Line in an amount
up to ten percent (10%) of the face amount of such Letter of Credit. The amount
of the Letter of Credit Reserve may be adjusted by HSBC from time to time to
account for fluctuations in the exchange rate. The availability of funds under
the Revolving Line shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letter of Credit remains outstanding.

2.4 Fees. Borrower shall pay to HSBC:

(a) Commitment Fee. A fully earned, non-refundable commitment fee of $75,000
(equal to 0.25% of the Revolving Line), on the Effective Date.

(b) Letter of Credit Fee. HSBC’s customary fees and expenses for the issuance or
renewal of Letters of Credit, including, without limitation, a letter of credit
fee of 2.50% per annum (the “LC Fee”) of the face amount of each Letter of
Credit issued, upon the issuance of such Letter of Credit and each anniversary
of the issuance during the term of such Letter of Credit, and upon the renewal
of such Letter of Credit by HSBC. It is understood and agreed that the Borrower
shall pay no other fee in connection with the BNDES Guaranty other than

 

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the LC Fee paid on the Letter of Credit issued in connection with the BNDES
Guaranty pursuant to this Section 2.4(b).

(c) HSBC Expenses. All HSBC Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through
and after the Effective Date, when due.

2.5 Payments; Application of Payments.

(a) All payments (including prepayments) to be made by Borrower under any Loan
Document shall be made in immediately available funds in Dollars, without setoff
or counterclaim, before 3:00 PM (New York time) on the date when due to HSBC at
the Payment Office. Payments of principal and/or interest received after 3:00 PM
(New York 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; provided, that with respect to
Eurodollar Advances, if extending such payment would cause the last day of the
applicable Interest Period to be extended into the next calendar month, then the
due date for such payment shall be the immediately preceding Business Day.

(b) HSBC shall apply the whole or any part of collected funds against the
Revolving Line and other Obligations or credit such collected funds to a
depository account of Borrower with HSBC (or an account maintained by an
Affiliate of HSBC), the order and method of such application to be in the sole
discretion of HSBC. Borrower shall have no right to specify the order or the
accounts to which HSBC shall allocate or apply any payments required to be made
by Borrower to HSBC or otherwise received by HSBC under this Agreement when any
such allocation or application is not specified elsewhere in this Agreement.

 

  3 CONDITIONS OF CREDIT EXTENTIONS

3.1 Conditions Precedent to Initial Credit Extension. HSBC’s obligation to make
the initial Credit Extension is subject to the condition precedent that HSBC
shall have received, in form and substance satisfactory to HSBC in its sole
discretion, such documents, and completion of such other matters, as HSBC may
reasonably deem necessary or appropriate, including, without limitation:

(a) duly executed original signatures to the Loan Documents;

(b) Borrower’s Operating Documents and a good standing certificate of 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;

(c) duly executed original signatures to the completed Borrowing Resolutions for
Borrower;

(d) duly executed original signature to a payoff letter from Silicon Valley
Bank;

(e) evidence that (i) the Liens securing Indebtedness owed by Borrower to
Silicon Valley Bank will be terminated prior to or concurrent with the initial
Credit Extension 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;

(f) certified copies, dated as of a recent date, of bankruptcy, judgment and
lien searches, as HSBC shall request, accompanied by written evidence (including
any UCC termination statements) that the Liens and judgments indicated in any
such search results either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;

(g) the Diligence Certificate of Borrower, together with the duly executed
original signatures thereto;

(h) a legal opinion of Borrower’s counsel dated as of the Effective Date
together with the duly executed original signature thereto;

 

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(i) evidence satisfactory to HSBC that the insurance policies required by
Section 6.4 hereof are in full force and effect; and

(j) payment of the fees and HSBC Expenses then due as specified in Section 2.4
hereof.

3.2 Conditions Precedent to all Credit Extensions. HSBC’s obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the
following conditions precedent:

(a) except as otherwise provided in Section 3.5(a), timely receipt of an
executed Notice of Borrowing;

(b) evidence satisfactory to HSBC that the Designated Deposit Account holds Cash
equal to at least one hundred ten percent (110%) of the aggregate Dollar
Equivalent amount of the outstanding Advances and the Dollar Equivalent amount
of the requested Credit Extensions;

(c) the representations and warranties in this Agreement shall be true,
accurate, and complete in all material respects on the Funding Date of each
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, 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 this Agreement 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; and

(d) in HSBC’s sole discretion, there has not been a Material Adverse Change.

3.3 Post-Springing Lien Event Conditions. Upon the occurrence of a Springing
Lien Event, the Borrower agrees to deliver to HSBC, in form and substance
satisfactory to HSBC:

(a) duly executed original signatures to the Control Agreements required by
Section 6.5(b); and

(b) other documentation HSBC may require to perfect its security interest in the
Collateral.

3.4 Covenant to Deliver. Except as otherwise provided in Section 3.3, Borrower
agrees to deliver to HSBC each item required to be delivered to HSBC under this
Agreement as a condition precedent to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by HSBC of any such
item shall not constitute a waiver by HSBC 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 HSBC’s sole discretion.

3.5 Procedures for Credit Extensions.

(a)(i) Subject to the prior satisfaction of all other applicable conditions to
the making of an Advance set forth in this Agreement, each Advance shall be made
upon Borrower’s irrevocable written notice delivered to HSBC in the form of a
Notice of Borrowing, executed by a Responsible Officer of Borrower or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. HSBC may rely on any telephone notice given
by a person whom HSBC believes is a Responsible Officer or designee (other than
Advances made pursuant to Section 2.1.2). Borrower will indemnify HSBC for any
loss HSBC suffers due to such reliance. Any amount required to be paid as
interest hereunder, or as fees or other charges under this Agreement or any
other agreement with HSBC, or with respect to any other Obligation, which shall
become due, shall be deemed a request for an Advance to be maintained as a Base
Rate Advance as of the date such payment is due, in the amount required to pay
in full such interest, fee, charge or Obligation under this Agreement, or any
other agreement with HSBC and such request shall be irrevocable. (ii) Subject to
the prior satisfaction of all other applicable conditions to the making of an
Advance set forth in this Agreement, with respect to Advances made pursuant to
Section 2.1.2 for the issuance of Letters of Credit, Borrower may request HSBC
to issue or cause the

 

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issuance of a Letter of Credit by delivering to HSBC an irrevocable written
notice in the form of a Notice of Borrowing, a Letter of Credit Application and
any further documentation reasonably requested by HSBC, each executed by a
Responsible Officer of Borrower.

(b) Each Notice of Borrowing must be received by HSBC prior to 2:00 PM (New York
time), (i) at least three (3) Business Days prior to the requested Funding Date,
in the case of Eurodollar Advances, and (ii) on the requested Funding Date, in
the case of Base Rate Advances, specifying: (1) the amount of the Advance which
amount shall be in a minimum amount of One Hundred Thousand Dollars ($100,000)
and in integral multiples of One Hundred Thousand Dollars ($100,000) in excess
thereof; (2) the requested Funding Date; (3) if the Advance shall be transferred
to the Designated Deposit Account or to another account set forth in the Notice
of Borrowing, (4) whether the Advance is to be comprised of Eurodollar Advances
or Base Rate Advances; (5) the duration of the first Interest Period applicable
to any such Eurodollar Advances included in such notice; and (6) whether the
Advance is to be a Letter of Credit; provided, that if the Notice of Borrowing
shall fail to specify the duration of the Interest Period for any Advance
comprised of Eurodollar Advances, such Interest Period shall be one (1) month.
Interest Periods for Eurodollar Advances shall be for one, two, three or six
months. No Eurodollar Advance shall be made available to Borrower during the
continuance of a Default or an Event of Default. After giving effect to each
such borrowing, there shall not be outstanding more than three (3) Eurodollar
Advances, in the aggregate at any time.

(c) The proceeds of all such Advances will then be made available to Borrower on
the Funding Date by HSBC (i) by transfer to the Designated Deposit Account and,
subsequently, by wire transfer to such other account as Borrower may instruct in
the Notice of Borrowing; or (ii) by the issuance of a Letter of Credit pursuant
to the terms of the Letter of Credit Application and the Letter of Credit.

(d) Notwithstanding anything to the contrary contained herein, HSBC shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable Eurodollar market to fund any Eurodollar Advances,
but the provisions hereof shall be deemed to apply as if HSBC had purchased such
deposits to fund the Eurodollar Advances.

(e) Each Interest Period of a Eurodollar Advance shall commence on the date such
Eurodollar Advance is made and shall end on such date as Borrower may elect in
the Notice of Borrowing as set forth in Section 3.5(b) above provided that the
exact length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the Revolving Line Maturity Date.

(f) Borrower shall elect the initial Interest Period applicable to a Eurodollar
Advance by its Notice of Borrowing given to HSBC pursuant to Section 3.5(b) or
by its Notice of Conversion given to HSBC pursuant to Section 3.5(g) as the case
may be. Borrower shall elect the duration of each succeeding Interest Period by
giving irrevocable written notice to HSBC of such duration not less than three
(3) Business Days prior to the last day of the then current Interest Period
applicable to such Eurodollar Advance. If HSBC does not receive timely notice of
the Interest Period elected by Borrower, Borrower shall be deemed to have
elected to convert to a Base Rate Advance subject to Section 3.5(g).

(g) Provided that no Event of Default shall have occurred and be continuing,
Borrower, may, on the last Business Day of the then current Interest Period
applicable to any outstanding Eurodollar Advance, or on any Business Day with
respect to Base Rate Advances, convert any such advance into an advance of
another type in the same aggregate principal amount provided that any conversion
of a Eurodollar Advance shall be made only on the last Business Day of the then
current Interest Period applicable to such Eurodollar Advance. If Borrower
desires to convert an advance, Borrower shall give HSBC a Notice of Conversion
by no later than 2:00 PM (New York time) (i) on the day which is three
(3) Business Days’ prior to the date on which such conversion is to occur with
respect to a conversion from a Base Rate Advance to a Eurodollar Advance, or
(ii) on the day which is one (1) Business Day prior to the date on which such
conversion is to occur with respect to a conversion from a Eurodollar Advance to
a Base Rate Advance, specifying, in each case, the date of such conversion, the
loans to be converted and if the conversion is from a Base Rate Advance to any
other type of loan, the duration of the first Interest Period therefor.

(h) At its option and upon written notice given prior to 2:00 PM (New York time)
(i) on the day which is three (3) Business Days prior to the date of such
prepayment in the case of any Eurodollar Advance and (ii) on the day which is
one (1) Business Day in advance of the date of such prepayment in the case of
any Base

 

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Rate Advance, Borrower may prepay Advances in whole at any time or in part from
time to time, together with amounts which may be owed to HSBC pursuant to
Section 3.5(i), and with accrued interest on the principal being prepaid to the
date of such repayment. Borrower shall specify the date of prepayment of
Advances and the amount of such prepayment. In the event that any prepayment of
a Eurodollar Advance is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, Borrower
shall indemnify HSBC therefor in accordance with Section 3.5(i).

(i) Notwithstanding any other provision hereof, if any Change in Law or
Requirement of Law shall make it unlawful for HSBC (for purposes of this
Section 3.5(i) references to HSBC also shall include any corporation or bank
directly or indirectly controlling HSBC) to make or maintain its Eurodollar
Advances, the obligation of HSBC to make Eurodollar Advances hereunder shall
forthwith be cancelled and Borrower shall, if any affected Eurodollar Advances
are then outstanding, promptly upon request from HSBC, either pay all such
affected Eurodollar Advances or convert such affected Eurodollar Advances into
Base Rate Advances. If any such payment or conversion of any Eurodollar Advances
is made on a day that is not the last day of the Interest Period applicable to
such Eurodollar Advances, Borrower shall pay HSBC, upon HSBC’s request, such
amount or amounts as may be necessary to compensate HSBC for any loss or expense
sustained or incurred by HSBC in respect of such Eurodollar Advance as a result
of such payment or conversion, including (but not limited to) any interest or
other amounts payable by HSBC to lenders of funds obtained by HSBC in order to
make or maintain such Eurodollar Advance. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by HSBC to Borrower
shall be conclusive absent manifest error.

3.6 Additional Provisions Governing Eurodollar Advances. Notwithstanding any
other provision of this Agreement to the contrary, the following provisions
shall govern with respect to Eurodollar Advances as to the matters covered:

(a) Increased Costs. In the event that any Change in Law or compliance by HSBC
with any Change in Law (for purposes of this Section 3.6(a)(ii) or (iii),
references to HSBC also shall include any corporation or bank directly or
indirectly controlling HSBC) shall:

(i) subject HSBC to any tax of any kind whatsoever with respect to this
Agreement or any other Loan Document or change the basis of taxation of payments
to HSBC of principal, fees, interest or any other amount payable hereunder or
under any other Loan Documents (except, in each case, for the imposition of, or
any change with respect to, any Excluded Taxes);

(ii) impose, modify or hold applicable any reserve, special deposit, assessment
or similar requirement (including any compulsory loan requirement, insurance
charge or other assessment) against assets held by, or deposits in or for the
account of, advances or loans by, or other credit extended by, any office of
HSBC, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or

(iii) impose on HSBC or the London interbank Eurodollar market any other
condition, cost or expense (other than taxes) with respect to this Agreement,
any other Loan Document or any Advance or any Letter of Credit;

and the result of any of the foregoing is to increase the cost to HSBC of
making, renewing or maintaining its Advances hereunder or to increase the cost
to HSBC of issuing or maintaining any Letter of Credit by an amount that HSBC
reasonably deems to be material or to reduce the amount of any payment (whether
of principal, interest or otherwise) in respect of any of the Advances by an
amount that HSBC reasonably deems to be material, then, in any case Borrower
shall promptly pay HSBC, upon its demand, such additional amount as will
compensate HSBC for such additional cost or such reduction, as the case may be,
provided that the foregoing shall not apply to increased costs which are
reflected in the Adjusted LIBO Rate. HSBC shall certify the amount of such
additional cost or reduced amount to Borrower, and such certification shall be
conclusive absent manifest error.

HSBC shall endeavor to notify Borrower of any Change in Law that gives rise to
any payment required under this Section 3.6(a), but any failure of HSBC to do so
shall in no way mitigate or discharge the obligation of Borrower to pay such
amounts or cause HSBC any liability under this Section 3.6(a); provided that
Borrower shall not be required to compensate HSBC pursuant to this
Section 3.6(a) for any increased costs or reductions incurred more than 270 days
prior to the date that HSBC notifies Borrower of the Change in Law giving rise
to such increased costs or reductions and of HSBC’s intention to claim
compensation therefor; provided further that, if the

 

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Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof. HSBC shall certify the amount of such
additional cost or reduced amount to Borrower, and such certification shall be
conclusive absent manifest error.

(b) Basis For Determining Interest Rate Inadequate or Unfair. In the event that
HSBC shall have determined that:

(i) reasonable means do not exist for ascertaining the Adjusted LIBO Rate
applicable pursuant to Section 3.5 for any Interest Period; or

(ii) Dollar deposits in the relevant amount and for the relevant maturity are
not available in the London interbank Eurodollar market, with respect to an
outstanding Eurodollar Advance, a proposed Eurodollar Advance, or a proposed
conversion of a Base Rate Advance into a Eurodollar Advance,

then HSBC shall give Borrower prompt written, telephonic or telegraphic notice
of such determination. If such notice is given, (i) any such requested
Eurodollar Advance shall be made as a Base Rate Advance, unless Borrower shall
notify HSBC no later than 2:00 PM (New York time) two (2) Business Days prior to
the date of such proposed borrowing, that its request for such borrowing shall
be cancelled or made as an unaffected type of Eurodollar Advance, (ii) any Base
Rate Advance or Eurodollar Advance which was to have been converted to an
affected type of Eurodollar Advance shall be continued as or converted into a
Base Rate Advance, or, if Borrower shall notify HSBC, no later than 2:00 PM (New
York time) two (2) Business Days prior to the proposed conversion, shall be
maintained as an unaffected type of Eurodollar Advance, and (iii) any
outstanding affected Eurodollar Advances shall be converted into a Base Rate
Advance, or, if Borrower shall notify HSBC, no later than 2:00 PM (New York
time) two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Advance, shall be
converted into an unaffected type of Eurodollar Advance, on the last Business
Day of the then current Interest Period for such affected Eurodollar Advance.
Until such notice has been withdrawn, HSBC shall have no obligation to make an
affected type of Eurodollar Advance or maintain outstanding affected Eurodollar
Advances and Borrower shall have no right to convert a Base Rate Advance or an
unaffected type of Eurodollar Advance into an affected type of Eurodollar
Advance.

(c) Capital Adequacy.

(i) In the event that HSBC shall have determined that any Change in Law
regarding capital adequacy or liquidity requirements, has or would have the
effect of reducing the rate of return on HSBC’s (for purposes of this
Section 3.6(c), references to HSBC also shall include any corporation or bank
directly or indirectly controlling HSBC) capital, as a consequence of its
obligations hereunder, to a level below that which HSBC could have achieved but
for such Change in Law (taking into consideration HSBC’s policies with respect
to capital adequacy and liquidity) by an amount reasonably deemed by HSBC to be
material, then, from time to time, Borrower shall pay upon demand to HSBC such
additional amount or amounts as will compensate HSBC for any such reduction
suffered. In determining such amount or amounts, HSBC may use any reasonable
averaging or attribution methods. The protection of this Section 3.6(c) shall be
available to HSBC regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition.

(ii) HSBC shall certify such amount or amounts as shall be necessary to
compensate it with respect to Section 3.6(c)(i) to Borrower, and such
certification shall be conclusive absent manifest error.

3.7 Tax Forms. If HSBC is entitled to an exemption from or reduction of
withholding tax with respect to payments made under any Loan Document, it shall
deliver to Borrower, at the time or times reasonably requested by Borrower, such
properly completed and executed documentation reasonably requested by Borrower
as will permit such payments to be made without withholding or at a reduced rate
of withholding. In addition, HSBC, if reasonably requested by Borrower, shall
deliver such other documentation prescribed by applicable law or reasonably
requested by Borrower as will enable Borrower to determine whether or not HSBC
is subject to backup withholding or information reporting requirements. HSBC
agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or
certification or promptly notify Borrower in writing of its legal inability to
do so.

 

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  4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants to HSBC, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in and to, and pledges to HSBC, all of the Collateral, wherever
located, whether now owned or existing or hereafter acquired or arising, and all
proceeds and products thereof; provided, that (a) such security interest shall
not be effective unless or until a Springing Lien Event has occurred (the first
such date being the “Grant Effective Date”), (b) such security interest shall
not constitute a cure of the Springing Lien Event giving rise thereto, and
(c) any cure of the Springing Lien Event shall not be deemed a release of HSBC’s
security interest in the Collateral unless HSBC otherwise consents thereto in
writing.

4.2 Priority of Security Interest. Borrower represents, warrants, and covenants
that the security interest granted or to be granted herein is and shall at all
times on and after the Grant Effective Date continue to be a first priority
perfected security interest in the Collateral (subject only to Permitted Liens
that may have superior priority to HSBC’s Lien under this Agreement). On and
after the Grant Effective Date, if Borrower shall acquire a commercial tort
claim in excess of $1,000,000, Borrower shall promptly notify HSBC in a writing
signed by Borrower of the general details thereof and grant to HSBC 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
reasonably satisfactory to HSBC.

If this Agreement is terminated, HSBC’s Lien in the Collateral, if any, shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and at such time as HSBC’s obligation to
make Credit Extensions has terminated, HSBC’s Lien in the Collateral granted
hereunder, if any, shall automatically terminate and all rights therein shall
revert to Borrower, and HSBC shall, at Borrower’s sole cost and expense, deliver
such documents and make such filings as Borrower shall reasonably request to
evidence such termination.

4.3 Authorization to File Financing Statements. Borrower hereby authorizes HSBC
to file financing statements, without notice to Borrower, with all appropriate
jurisdictions to notice the negative-negative pledge set forth in Section 7.5
hereof. Upon the occurrence of a Springing Lien Event, Borrower hereby
authorizes HSBC to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect HSBC’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, except as otherwise permitted under this Agreement
shall be deemed to violate the rights of HSBC under the Code. 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 HSBC’s discretion.

 

  5 REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority. Borrower is duly
existing and in good standing as a Registered Organization in its jurisdiction
of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction 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 have a material adverse effect on
Borrower’s business. In connection with this Agreement, Borrower has delivered
to HSBC a completed certificate signed by Borrower, entitled “Diligence
Certificate”. Borrower represents and warrants to HSBC that as of the date
hereof (a) Borrower’s exact legal name is that indicated on the Diligence
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 Diligence
Certificate; (c) the Diligence Certificate accurately sets forth Borrower’s
organizational identification number or accurately states that Borrower has
none; (d) the Diligence 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) except as
set forth in the Diligence Certificate, Borrower (and each of its predecessors)
has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its
jurisdiction; and (f) all other information set forth on the Diligence
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 Diligence 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 HSBC of such occurrence and provide HSBC with Borrower’s
organizational identification number.

 

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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 Operating 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 the business of Borrower and its
consolidated Subsidiaries, taken as a whole.

5.2 Collateral; Intellectual Property. Borrower has good title to, has rights
in, and the power to transfer each item of the Collateral on or after the Grant
Effective Date upon which it purports to grant a Lien hereunder, free and clear
of any and all Liens except Permitted Liens. 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 Diligence Certificate. To Borrower’s knowledge and belief, each Patent,
Trademark or Copyright 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 the business of Borrower and its consolidated Subsidiaries,
taken as a whole.

5.3 Litigation. There are no actions or proceedings pending or, to the knowledge
of the Responsible Officers, threatened in writing by or against Borrower or any
of its Subsidiaries involving more than, individually or in the aggregate, Five
Million Dollars ($5,000,000).

5.4 Financial Statements; Financial Condition. All consolidated financial
statements for Borrower and any of its Subsidiaries delivered to HSBC fairly
present in all material respects Borrower’s consolidated financial condition and
Borrower’s consolidated results of operations. There has not been any material
adverse change in the consolidated financial condition or business of Borrower
and its consolidated Subsidiaries, taken as a whole, since the date of the most
recent financial statements submitted to HSBC.

5.5 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.

5.6 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. Neither Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably be expected
to have a material adverse effect on the business of Borrower and its
consolidated Subsidiaries taken as a whole. None of Borrower’s or any of its
Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary
in disposing, producing, storing, treating, or transporting any hazardous
substance other than legally, which could reasonably be expected to have a
material adverse effect on the business of Borrower and its Subsidiaries, taken
as a whole. 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 Government Authorities that are necessary to continue
their respective businesses as currently conducted.

5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.

5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits

 

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and contributions owed by Borrower, except, in each case, where the failure to
do so would not reasonably be expected to have a material adverse effect on the
financial condition or business of Borrower and its consolidated Subsidiaries,
taken as a whole. Borrower is unaware of any claims or adjustments proposed for
any of Borrower’s prior tax years which could result in additional material
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 in the aggregate in excess of Five Million Dollars
($5,000,000).

5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions
solely (i) as working capital, to fund its general business requirements and not
for personal, family, household or agricultural purposes and (ii) for other
purposes so long as the Credit Extensions constitute Senior Debt under the
Indenture.

5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to HSBC (other than any
projections or forecasts or other forward looking information), as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to HSBC, 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 HSBC that the projections and forecasts
provided have been prepared by Borrower in good faith and based upon reasonable
assumptions and 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).

5.11 Senior Debt. The Obligations under this Agreement constitute Senior Debt
under the Indenture and benefit from the subordination provisions contained in
Article 13 of the Indenture.

 

  6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance. 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 the business
or operations of Borrower and its consolidated Subsidiaries, taken as a whole.
Borrower shall comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could reasonably be expected to have a material adverse effect on the business
of Borrower and its consolidated Subsidiaries, taken as a whole.

6.2 Financial Statements, Reports, Certificates. Deliver to HSBC:

(a) Quarterly Financial Statements. As soon as available, but no later than
sixty (60) days after the last day of each quarter, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated
operations for such quarter certified by a Responsible Officer and in a form
acceptable to HSBC (the “Quarterly Financial Statements”);

(b) Quarterly Compliance Certificate. Within sixty (60) days after the last day
of each quarter and together with the Quarterly Financial Statements, a duly
completed Compliance Certificate signed by a Responsible Officer, certifying
that as of the end of such quarter, no Default or Event of Default has occurred,
and setting forth calculations showing compliance with the financial covenants
set forth in Section 6.6;

(c) Annual Audited Financial Statements. As soon as available, but no later than
ninety (90) 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 acceptable to HSBC in its
reasonable discretion;

(d) Other Statements. Within five (5) days of delivery, copies of any material
statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt;

 

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(e) SEC Filings. In the event that Borrower becomes subject to the reporting
requirements under the Exchange Act within five (5) days of filing, copies of
all periodic and other reports, proxy statements and other materials filed by
Borrower with the SEC, any Governmental Authority succeeding to any or all of
the functions of the SEC or with any national securities exchange, or
distributed to its shareholders, as the case may be. Documents required to be
delivered pursuant to the terms hereof (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which Borrower posts such documents, or provides a link thereto, on
Borrower’s website on the Internet at Borrower’s website address;

(f) Legal Action Notice. A prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that could
result in damages or costs to Borrower or any of its Subsidiaries of,
individually or in the aggregate, Five Million Dollars ($5,000,000) or more; and

(g) Other Financial Information. Other financial information reasonably
requested by HSBC, including without limitation documentation evidencing
Borrower’s compliance with Section 6.6.

6.3 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely
file, all material tax returns and reports and timely pay, and require each of
its Subsidiaries to timely pay, all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except where the failure to do so would not reasonably be expected
to have a material adverse effect on the financial condition or business of
Borrower and its consolidated Subsidiaries, taken as a whole, and so long as
Borrower posts bonds or takes any other steps required to prevent a Governmental
Authority levying any contested taxes from obtaining a Lien upon any of the
Collateral (other than a Lien allowed under clause (b) of the definition of
Permitted Lien), and shall deliver to HSBC, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their
terms, except to the extent the failure to so pay 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
in the aggregate in excess of Five Million Dollars ($5,000,000).

6.4 Insurance. Keep its business and the Collateral, if any, insured for risks
and in amounts standard for companies in Borrower’s industry and location and as
HSBC may reasonably request. On or after the Grant Effective Date, all property
policies shall have a lender’s loss payable endorsement showing HSBC as a lender
loss payee. On or after the Grant Effective Date, all liability policies shall
show, or have endorsements showing, HSBC as an additional insured. All policies
(or the loss payable and additional insured endorsements) shall provide that the
insurer shall give HSBC at least twenty (20) days notice before canceling,
amending, or declining to renew its policy. At HSBC’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. So
long as no Springing Lien Event has occurred and is continuing, Borrower shall
have the option of applying the proceeds of any casualty policy toward the
replacement or repair of destroyed or damaged property; provided that any such
replaced or repaired property (i) shall be of equal or like value as the
replaced or repaired property and (ii) if such destroyed or damaged property was
Collateral, such replaced or repaired property shall be deemed Collateral in
which HSBC has a first priority security interest on or after the Grant
Effective Date subject to Permitted Liens, and (b) after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such
casualty policy shall, at the option of HSBC, be payable to HSBC 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 HSBC, HSBC 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 HSBC deems prudent.

6.5 Operating Accounts.

(a) Maintain at all times the Designated Deposit Account with HSBC.

(b) Upon the occurrence of a Springing Lien Event, for each Collateral Account
that Borrower at any time maintains, Borrower shall cause the applicable bank or
financial institution (other than HSBC) at or with which any Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect HSBC’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 HSBC. 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

 

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employees and identified to HSBC by Borrower as such, (ii) foreign Collateral
Accounts, (iii) accounts specified in the “Excluded Assets” definition, and
(iv) Permitted Pledged Accounts.

6.6 Financial Covenants.

(a) Maintain at all times with respect to Borrower Cash of at least one hundred
ten percent (110%) of the aggregate Dollar Equivalent amount of the outstanding
Advances in the Designated Deposit Account; and

(b) Maintain at all times with respect to Borrower and its Subsidiaries Cash and
unrestricted Cash Equivalents of at least the sum of Thirty Million Dollars
($30,000,000) plus one hundred ten percent (110%) of the aggregate Dollar
Equivalent amount of the outstanding Advances, which Cash and Cash Equivalents
(i) shall not be subject to any consensual Lien other than a Lien in favor of
HSBC or customary bankers liens or set off rights with respect to deposit
accounts and (ii) shall not include Excluded Assets.

6.7 Protection of Intellectual Property Rights. (a) Use reasonable efforts to
(i) protect, defend and maintain the validity and enforceability of its
Intellectual Property, to the extent the failure to so protect, defend or
maintain would reasonably be expected to have a material adverse effect on the
financial condition or business of Borrower and its consolidated Subsidiaries,
taken as a whole; (ii) promptly advise HSBC 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 HSBC’s written consent.

6.8 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to HSBC, without expense to HSBC,
Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that HSBC may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against HSBC with
respect to any Collateral or relating to Borrower.

6.9 Access to Collateral; Books and Records. Allow HSBC, or its agents, to
inspect the Collateral, if any, and audit and copy Borrower’s Books. 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. The
foregoing inspections and audits shall be at Borrower’s expense, plus reasonable
out-of-pocket expenses.

6.10 Compliance with Laws and Contracts.

(a) Hold all Governmental Approvals necessary for the conduct of its business
and for complying with all applicable laws relating thereto, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Change;

(b) Comply with all federal, state, local, or foreign applicable statutes,
rules, regulations, and orders including, without limitation, those relating to
environmental protection, occupational safety and health, and equal employment
practices, except where the failure to be in compliance could not reasonably be
expected to cause a Material Adverse Change;

(c) Not violate or default under any material agreement to which it is a party
or by which its assets are subject or bound, except with respect to any
violation or default that could not reasonably be expected to cause a Material
Adverse Change;

(d) Ensure that neither Borrower or any Person who owns directly or indirectly a
controlling interest in or is executive officer or director of Borrower is
(i) listed on the Specially Designated Nationals and Blocked Person List
maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, or any other similar lists maintained by OFAC pursuant to any
authorizing statute, executive order or regulation, or (ii) a Person designated
under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar executive orders;

(e) Comply with all applicable Federal Bank Secrecy Act and anti-money
laundering laws and regulations; and

 

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(f) Comply with the USA Patriot Act.

6.11 Further Assurances. Execute any further instruments and take further action
as HSBC reasonably requests to effect the purposes of this Agreement.

 

  7 NEGATIVE COVENANTS

Borrower shall not do any of the following without HSBC’s prior written consent:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for:

(a) Transfers (i) in the ordinary course of business for reasonably equivalent
consideration, (ii) of Inventory in the ordinary course of business; and
(iii) of worn-out or obsolete Equipment or no longer used; and

(b) In connection with Permitted Liens and Permitted Investments;

(c) Transfers of the Peoria Equipment;

(d) Transfers to Borrower, any of its Subsidiaries, any joint ventures or any
strategic manufacturing collaborations from Borrower, any of its Subsidiaries,
any joint ventures or any strategic manufacturing collaborations;

(e) Transfers of property in connection with sale-leaseback transactions;

(f) Transfers of property to the extent such property is exchanged for credit
against, or proceeds are promptly applied to, the purchase price of other
property used or useful in the business of Borrower or its Subsidiaries;

(g)(i) Transfers constituting licenses of Intellectual Property of Borrower or
its Subsidiaries, and (ii) contributions of Intellectual Property to joint
ventures;

(h) Transfers otherwise permitted by the Loan Documents;

(i) Sales or discounting of delinquent accounts in the ordinary course of
business;

(j) Transfers in connection with a permitted acquisition of a portion of the
assets or rights acquired; and

(k) Transfers of a facility or related facilities, including property located
thereon, in connection with a wind down of a business line or project approved
by the Board of Directors of Borrower; and

(l) Other Transfers not to exceed Five Million Dollars ($5,000,000) in the
aggregate in any fiscal year of Borrower.

7.2 Changes in Business, Management, Ownership, 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, except in
the case of Subsidiaries; or (c) permit or suffer any Change in Control.

Borrower shall not, without at least fifteen (15) days prior written notice to
HSBC: (1) change its jurisdiction of organization, (2) change its organizational
structure or type, (3) change its legal name, or (4) change any organizational
number (if any) assigned by its jurisdiction of organization.

 

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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 except where:

(a) where no Event of Default has occurred and is continuing or would result
from such action during the term of this Agreement and Borrower is the surviving
entity;

(b) Borrower or a Subsidiary may acquire all or substantially all of the capital
stock or property of another Person so long as no Event of Default has occurred
and is continuing at the time of such acquisition or would result from such
action, including pursuant to a merger or consolidation, and for all such
transactions involving Borrower, Borrower is the surviving entity;

(c) any Subsidiary may merge or consolidate with (i) Borrower provided that
Borrower is the surviving entity, and (ii) one or more other Subsidiaries;

(d) Borrower or any Subsidiary may acquire, all or substantially all of the
capital stock or property of another Subsidiary; or

(e) such merger, consolidation or acquisition is a Transfer otherwise permitted
pursuant to Section 7.1.

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. (a) 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; (b) permit any Collateral not to be subject to the first priority
security interest granted or to be granted herein, except for Permitted Liens;
or (c) enter into any agreement, document, instrument or other arrangement
(except with or in favor of HSBC) 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 assets or property in favor of
HSBC, except for (i) assets or property subject to an agreement to transfer such
assets or property, provided such assets or property are permitted to be
transferred pursuant to Section 7.1, (ii) assets or property subject to Liens
permitted under clauses (c), (f) or (g) (to the extent related to Liens
permitted pursuant to clauses (c) or (f)) of the definition of “Permitted
Liens”, (iii) Permitted Pledged Accounts, (iv) Excluded Assets and (v) customary
provisions in leases or licenses restricting the assignment thereof.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.5(b) hereof.

7.7 Distributions; Investments. (a) Pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock of Borrower other
than Permitted Distributions; or (b) directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so.

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 (a) 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, (b) between or among Borrower and its Subsidiaries,
(c) Permitted Distributions, (d) Permitted Investments, (e) issuances by
Borrower or its capital stock, and receipt by Borrower of capital contributions,
(f) legal, accounting administrative and other support services provided to
joint ventures, (g) compensation and indemnification of, and other employment
arrangements with, directors, officers and employees of Borrower or any of its
Subsidiaries entered in the ordinary course of business, and (h) described in
“Certain Relationships and Related Party Transactions” in Borrower’s most recent
Form 10-K on file with the SEC.

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 adversely affect
the subordination thereof to Obligations owed to HSBC.

 

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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, 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 the business of Borrower and its consolidated Subsidiaries,
taken as a whole, 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 in the aggregate in excess of Five Million Dollars
($5,000,000).

7.11 Designated Deposit Account. Take any action that could cause or permit the
Cash held in the Designated Deposit Account to be less than one hundred ten
percent (110%) of the aggregate Dollar Equivalent amount of the outstanding
Advances.

7.12 Indenture. Take any action that could cause or permit the Obligations not
to constitute “Senior Debt” under the Indenture.

 

  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 (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day cure period shall not apply to payments
due on the Revolving Line Maturity Date). During the cure period, the failure to
make or pay any payment specified under clause (a) or (b) hereunder is not an
Event of Default (but no Credit Extension will be made during the cure period);

8.2 Covenant Default.

(a) (i) Borrower fails or neglects to perform any obligation in Section 6.2
within five (5) days of when due, or (ii) Borrower fails or neglects to perform
any obligation in Sections 6.5 or 6.6 or violates any covenant in Section 7; or

(b) Borrower 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 (other than those specified in this
Section 8) 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, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Cure periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in clause (a) above;

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 HSBC or any HSBC
Affiliate, or (ii) a notice of lien or levy (other than a Lien allowed under
clause (b) of the definition of Permitted Liens) 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

 

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(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 fails to be solvent as described under Section 5.5
hereof; (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 of any of the
conditions described in clause (a) exist and/or until any Insolvency Proceeding
is dismissed);

8.6 Other Agreements. There is, under (a) any agreement for loans or borrowed
money to which Borrower is a party with HSBC (other than the Loan Documents and
any agreements relating to treasury management services with respect to
Indebtedness in the aggregate less than $750,000) or any Affiliate of HSBC a
default or event of default, or (b) any agreement to which Borrower is a party
with any other party or parties, any default resulting in a right by such 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 Five
Million Dollars ($5,000,000);

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 Five
Million Dollars ($5,000,000) (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 makes any representation, warranty, or other
statement now or later in this Agreement, any Loan Document or in any writing
delivered to HSBC or to induce HSBC to enter this Agreement or any Loan
Document, and such representation, warranty, or other statement is incorrect in
any material respect when made;

8.9 Subordinated Debt. Any subordination provisions under 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; and

8.10 Indenture. There is a default or an event of default under the Indenture,
or any subordination provisions under the Indenture shall for any reason be
revoked, invalidated, otherwise deemed not to be effective or in full force and
effect with respect to the Obligations, any Person shall be in breach of Article
13 (Subordination) of the Indenture or contest in any manner the validity or
enforceability thereof or deny that the Obligations constitute “Senior Debt”
thereunder, or the Obligations shall for any reason be subordinated or shall not
have the priority as “Senior Debt” under the Indenture.

 

  9 BANK’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. While an Event of Default occurs and continues HSBC
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 occurs under Section 8.2(a)(ii) (with respect to a violation of
Section 7.11) or under Section 8.5, all Obligations are immediately due and
payable without any action by HSBC);

(b) stop advancing money or extending credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and HSBC;

(c) demand that Borrower (i) deposit cash with HSBC in an amount up to one
hundred five (105%) (or up to one hundred ten percent (110%) if the Letter of
Credit is denominated in Foreign Currency) of the

 

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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 HSBC 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) on or after the Grant Effective Date, settle or adjust disputes and claims
directly with Account Debtors for amounts on terms and in any order that HSBC
considers advisable, notify any Person owing Borrower money of HSBC’s security
interest in such funds, and verify the amount of such account;

(e) on or after the Grant Effective Date, make any payments and do any acts it
considers necessary or reasonable to protect the Collateral and/or its security
interest in the Collateral. Borrower shall assemble the Collateral if HSBC
requests and make it available as HSBC designates. HSBC 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 HSBC a license to enter and occupy any of its premises, without
charge, to exercise any of HSBC’s rights or remedies;

(f) apply to the Obligations any (i) balances and deposits of Borrower it holds
(including without limitation the Designated Deposit Account), or (ii) any
amount held by HSBC owing to or for the credit or the account of Borrower;

(g) on or after the Grant Effective Date, ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral.
HSBC 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 HSBC’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to HSBC’s benefit;

(h) place a “hold” on any account maintained with HSBC or its Affiliates and/or
on or after the Grant Effective Date, 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) on or after the Grant Effective Date, demand and receive possession of
Borrower’s Books; and

(j) exercise all rights and remedies available to HSBC under the Loan Documents
or at law or equity, including all remedies provided under the Code (including
on or after the Grant Effective Date, disposal of the Collateral pursuant to the
terms thereof).

Whether or not an Event of Default shall have occurred and be continuing and
without prejudice to any of the remedies set forth above, HSBC shall not be
required to comply with any request or instruction of Borrower if the direct
result of complying with such instruction or request would be to cause a Default
or Event of Default to exist.

9.2 Power of Attorney. Borrower hereby irrevocably appoints HSBC as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of
a Springing Lien Event, to: (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms HSBC determines reasonable; (d) make, settle, and adjust
all claims under Borrower’s insurance policies; (e) on or after the Grant
Effective Date, pay, contest or settle any Lien, charge, encumbrance, security
interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and
(f) on or after the Grant Effective Date, transfer the Collateral into the name
of HSBC or a third party as the Code permits. On or after the Grant Effective
Date, Borrower hereby appoints HSBC as its lawful attorney-in-fact to sign
Borrower’s name on any documents necessary to perfect or continue the perfection
of HSBC’s security interest in the Collateral until all Obligations have been
satisfied in full (other than inchoate indemnity obligations) and HSBC is under
no further obligation to

 

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make Credit Extensions hereunder. HSBC’s foregoing appointment as Borrower’s
attorney in fact, and all of HSBC’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed
(other than inchoate indemnity obligations) and HSBC’s obligation to provide
Credit Extensions terminates.

9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.4 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, HSBC may obtain such insurance or make such payment, and all amounts
so paid by HSBC are HSBC Expenses and immediately due and payable, bearing
interest at the then highest rate applicable to the Obligations and, on and
after the Grant Effective Date, secured by the Collateral. HSBC will make
reasonable efforts to provide Borrower with notice of HSBC obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No
payments by HSBC are deemed an agreement to make similar payments in the future
or HSBC’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds Upon Default. If an Event of Default
has occurred and is continuing, HSBC may apply any funds in its possession,
whether from Borrower account balances, payments, proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral , or
otherwise, to the Obligations in such order as HSBC shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to HSBC for any deficiency. If
HSBC, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral , HSBC shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by HSBC of
cash therefor.

9.5 HSBC’s Liability for Collateral. So long as HSBC complies with reasonable
banking practices regarding the safekeeping of the Collateral in the possession
or under the control of HSBC, HSBC 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 .

9.6 No Waiver; Remedies Cumulative. HSBC’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 HSBC
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. HSBC’s rights and remedies under this Agreement and the other
Loan Documents are cumulative. HSBC has all rights and remedies provided under
the Code, by law, or in equity. HSBC’s exercise of one right or remedy is not an
election and shall not preclude HSBC from exercising any other remedy under this
Agreement or other remedy available at law or in equity, and HSBC’s waiver of
any Event of Default is not a continuing waiver. HSBC’s delay in exercising any
remedy is not a waiver, election, or acquiescence.

9.7 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 HSBC on which Borrower is
liable.

 

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  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
(with receipt acknowledged) 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. HSBC 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:                   

Solazyme, Inc.

225 Gateway Blvd.

South San Francisco, CA 94080

Attn: Paul Quinlan

Fax: (650) 989-6700

Email: pquinlan@solazyme.com

If to HSBC:   

HSBC Bank USA, National Association

601 Montgomery Street, Suite 1090

San Francisco, CA 94111, USA

Attn: Christopher M. Ames

Fax: (415) 678-3054
Email: christopher.m.ames@us.hsbc.com

 

  11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE

This Agreement and the other Loan Documents shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by HSBC against Borrower with respect to any of the Obligations, this Agreement
or any other Loan Document or related agreement may be brought in any court of
competent jurisdiction in the County of New York, State of New York, United
States of America, and, by execution and delivery of this Agreement, Borrower
accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts in
connection with any such judicial proceeding brought by HSBC against Borrower,
and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Borrower hereby waives personal service of any
and all process upon it and consents that all such service of process may be
made by registered mail (return receipt requested) directed to Borrower at its
address set forth in Section 10 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America. Nothing herein shall affect the right to serve process
in any manner permitted by law or shall limit the right of HSBC to bring
proceedings against Borrower in the courts of any other jurisdiction. Borrower
waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by Borrower
against HSBC involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related
agreement, shall be brought only in a federal or state court located in the
County of New York, State of New York.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND HSBC 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

 

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Presiding Judge of the New York County, New York 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 New York County,
New York; 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 New York County, New York 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.

 

  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 HSBC’s prior written
consent (which may be granted or withheld in HSBC’s discretion). HSBC has the
right, without the consent of, but with contemporaneous notice to Borrower, to
sell, transfer, assign, or grant participation in all or any part of, or any
interest in, HSBC’s obligations, rights, and benefits under this Agreement and
the other Loan Documents to an Eligible Assignee. No transferee or assignee
shall be entitled to receive any greater payment under Section 3.6(a)(i) with
respect to any transferred interest than the assignor or transferor would have
been entitled to receive, except to the extent such entitlement to receive a
greater payment results from a Change in Law that occurs after the transferee or
assignee acquired the applicable interest.

12.2 Indemnification.

(a) Borrower shall indemnify HSBC and its officers, directors, Affiliates,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable and
documented out-of-pocket expenses, and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against HSBC in any
litigation, proceeding or investigation instituted or conducted by any
governmental agency or instrumentality or any other Person (other than HSBC or
an Affiliate thereof) with respect to any aspect of, or any transaction
contemplated by, or referred to in, or any matter related to, this Agreement or
the other Loan Documents, whether or not HSBC is a party thereto, except to the
extent that any of the foregoing is caused by the gross negligence or willful
misconduct of the party being indemnified (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).

(b) Borrower shall indemnify HSBC and hold HSBC harmless from and against any
and all losses or expenses that HSBC may sustain or incur as a consequence of
any prepayment, conversion of or any default by Borrower in the payment of the
principal of or interest on any Eurodollar Advance or failure by Borrower to
complete a borrowing of, a prepayment of or conversion of or to a Eurodollar
Advance after notice thereof has been given, including, but not limited to, any
interest payable by HSBC to lenders of funds obtained by it in order to make or
maintain its Eurodollar Advances hereunder. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by HSBC to Borrower
shall be conclusive absent manifest error.

(c) Borrower shall indemnify HSBC and hold HSBC harmless from and against any
and all losses or expenses that may be sustained or incurred as a consequence of
HSBC’s (a) actions or failures to act where such actions or failures to act were
at the direction or request of Borrower or (b) actions or failures to act that
were contrary to the direction or request of Borrower where HSBC’s compliance
with such direction or request would have directly resulted in a Default or
Event of Default, except to the extent that any of the foregoing is caused by
the

 

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gross negligence or willful misconduct of the party being indemnified (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment).

(d) This Section 12.2 shall not apply with respect to taxes, other than any
taxes that represent losses, claims, damages, etc. arising from any non-tax
claim. For the avoidance of doubt, this Section 12.2(d) shall not limit the
application of Section 3.6(a)(i).

12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. HSBC may correct patent errors and fill in
any blanks in the Loan Documents consistent with the agreement of the parties so
long as HSBC provides Borrower with written notice of such correction and allows
Borrower at least ten (10) days to object to such correction. In the event of
such objection, such correction shall not be made except by an amendment signed
by both HSBC and Borrower.

12.6 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.

12.7 Maximum Charges. In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under law. In the event
interest and other charges as computed hereunder would otherwise exceed the
highest rate permitted under law, such excess amount shall be first applied to
any unpaid principal balance owed by Borrower, and if the then remaining excess
amount is greater than the previously unpaid principal balance, HSBC shall
promptly refund such excess amount to Borrower and the provisions hereof shall
be deemed amended to provide for such permissible rate.

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. The obligation of Borrower in
Section 12.2 to indemnify HSBC shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.

12.10 Confidentiality/Sharing of Information.

(a) HSBC shall hold all non-public information obtained by Borrower pursuant to
the requirements of this Agreement in accordance with HSBC’s customary
procedures for handling confidential information of this nature; provided,
however, HSBC may disclose such confidential information (i) to its examiners,
affiliates, outside auditors, counsel and other professional advisors, (ii) to
any prospective transferees, and (iii) as required or requested by any
Governmental Authority or pursuant to legal process or applicable law; provided,
further that (x) unless specifically prohibited by applicable law or court
order, HSBC shall use reasonable efforts prior to disclosure thereof, to notify
Borrower of the applicable request for disclosure of such non-public information
(A) by a Governmental Authority (other than any such request in connection with
an examination of the financial condition of HSBC by such Governmental
Authority) or (B) pursuant to legal process and (y) in no event shall HSBC be
obligated to return any materials furnished by Borrower other than those
documents and instruments

 

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in possession of HSBC in order to perfect its Lien on the Collateral once the
Obligations have been paid in full and this Agreement has been terminated.

(b) Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to Borrower or one or more
of its Affiliates (in connection with this Agreement or otherwise) by HSBC or by
one or more Subsidiaries or Affiliates of HSBC and Borrower hereby authorizes
HSBC to share any information delivered to HSBC by Borrower and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of HSBC to enter
into this Agreement, to any such Subsidiary or Affiliate of HSBC, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of this Section 12.10. Such
authorization shall survive the repayment of the Obligations and the termination
of this Agreement

12.11 Attorneys’ Fees, Costs and Expenses. All reasonable and documented
out-of-pocket costs and expenses may be charged to the Designated Deposit
Account and shall be part of the Obligations, including, without limitation:

(a) reasonable and documented attorneys’ fees and disbursements incurred by
HSBC, (i) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral , or (ii) in connection with the entering into,
modification, amendment and administration of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or
(iii) in instituting, maintaining, preserving, enforcing and foreclosing on
HSBC’s security interest in or Lien on any of the Collateral , whether through
judicial proceedings or otherwise, or (iv) in defending or prosecuting any
actions or proceedings arising out of or relating to HSBC’s transactions with
Borrower, or (v) in connection with any advice given to HSBC with respect to its
rights and obligations under this Agreement and all related agreements, or
(vi) in connection with the enforcement of this Agreement or any consent or
waivers hereunder and all related agreements, documents and instruments and

(b) after a Springing Lien Event, reasonable fees and disbursements incurred by
HSBC in connection with any appraisals of Inventory or other Collateral , field
examinations, Collateral analysis or monitoring or other business analysis
conducted by outside Persons in connection with this Agreement and all related
agreements.

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.

12.17 Publicity. Borrower hereby authorizes HSBC, upon prior notice, to make
appropriate announcements of the financial arrangement entered into among
Borrower and HSBC, including, without limitation, announcements which are
commonly known as tombstones, in such publications and to such selected parties
as HSBC shall in its sole and absolute discretion deem appropriate. In addition,
Borrower upon prior notice authorizes

 

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HSBC to include Borrower’s name and logo in select transaction profiles and
client testimonials prepared by HSBC for use in publications, company brochures
and other marketing materials of HSBC.

12.18 Patriot Act Notice. HSBC hereby notifies Borrower that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record
information that identifies Borrower, which information includes the names and
addresses of Borrower and other information that will allow HSBC to identify
Borrower in accordance with the USA PATRIOT Act.

12.19 Injunctive Relief. Borrower recognizes that, in the event Borrower fails
to perform, observe or discharge any of its obligations or liabilities under
this Agreement, any remedy at law may prove to be inadequate relief to Lenders;
therefore, HSBC, if HSBC so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
that actual damages are not an adequate remedy.

12.20 Consequential Damages. None of HSBC nor any agent or attorney for any of
them, shall be liable to Borrower for indirect, punitive, exemplary, incidental,
special or consequential damages arising from any breach of contract, tort or
other wrong relating to the establishment, administration or collection of the
Obligations.

12.21 Senior Debt. All Obligations under this Agreement constitute Senior Debt
for purposes of the Indenture.

[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:

Solazyme, Inc.

By: /s/ Tyler Painter

Name: Tyler Painter

Title: Chief Financial Officer

HSBC:

HSBC Bank, USA, National Association

By: /s/ Christopher Ames

Name: Christopher Ames

Title: VP, Relationship Manager