Exhibit 10.25

Silicon Valley Bank

Loan and Security Agreement

Borrower: COM21, INC.

Address: 750 Tasman Drive

Milpitas, California 95035

Date: November __, 2001

THIS LOAN AND SECURITY AGREEMENT

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

1. LOANS.

1.1 Loans.

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

* and other credit extensions

1.2 Interest.

All Loans and all other monetary Obligations shall bear interest at the rate
shown on the Schedule, except where expressly set forth to the contrary in this
Agreement. Interest shall be payable monthly, on the last day of the month.
Interest may, in Silicon's discretion, be charged to Borrower's loan account,
and the same shall thereafter bear interest at the same rate as the other Loans.
Silicon may, in its discretion, charge interest to Borrower's Deposit Accounts
maintained with Silicon. Regardless of the amount of Obligations that may be
outstanding from time to time, Borrower shall pay Silicon minimum monthly
interest during the term of this Agreement in the amount set forth on the
Schedule (the "Minimum Monthly Interest").

1.3 Overadvances.

If at any time or for any reason * the total of all outstanding Loans and all
other Obligations exceeds the Credit Limit (** an "Overadvance"), Borrower shall
immediately *** pay the amount of the excess to Silicon, without notice or
demand. Without limiting Borrower's obligation to repay to Silicon on demand the
amount of any Overadvance, Borrower agrees to pay Silicon interest on the
outstanding amount of any Overadvance, on demand, at a rate equal to the
interest rate which would otherwise be applicable to the Overadvance , plus an
additional 2% per annum.

* either (A) the total of all outstanding Loans and all other Obligations (other
than the Celestica Letter of Credit) exceeds the amount set forth in clause (a)
of Section 1 of the Schedule, or (B)

** in either case,

*** promptly (and in any event within 3 days)

1.4 Fees.

Borrower shall pay Silicon the fee(s) shown on the Schedule, which are in
addition to all interest and other sums payable to Silicon and are not
refundable.

1.5 Letters of Credit.

At the request of Borrower, Silicon may, in its sole discretion, issue or
arrange for the issuance of letters of credit for the account of Borrower, in
each case in form and substance satisfactory to Silicon in its sole discretion
(collectively, "Letters of Credit"). The aggregate face amount of all
outstanding Letters of Credit * from time to time shall not exceed the amount
shown on the Schedule (the "Letter of Credit Sublimit"), and shall be reserved
against Loans which would otherwise be available hereunder. ** Borrower shall
pay all bank charges (including charges of Silicon) for the issuance of Letters
of Credit, together with such additional fee as Silicon's letter of credit
department shall charge in connection with the issuance of the Letters of
Credit. Any payment by Silicon under or in connection with a Letter of Credit *
shall constitute a Loan hereunder on the date such payment is made. Each Letter
of Credit shall have an expiry date no later than thirty days prior to the
Maturity Date. Borrower hereby agrees to indemnify, save, and hold Silicon
harmless from any loss, cost, expense, or liability, including payments made by
Silicon, expenses, and reasonable attorneys' fees incurred by Silicon arising
out of or in connection with any Letters of Credit. Borrower agrees to be bound
by the regulations and interpretations of the issuer of any Letters of Credit
guarantied by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
Letters of Credit may require Silicon to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify and hold Silicon harmless with respect
to any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon's indemnification of any such issuing bank. The
provisions of this Loan Agreement, as it pertains to Letters of Credit, and any
other present or future documents or agreements between Borrower and Silicon
relating to Letters of Credit are cumulative.

* (other than the Celestica Letter of Credit)

** The Celestica Letter of Credit is fully cash-secured by the Celestica LC Cash
Collateral, and therefore is not counted against the Letter of Credit Sublimit.

2. SECURITY INTEREST.

2.1 Security Interest.

To secure the payment and performance of all of the Obligations when due,
Borrower hereby grants to Silicon a security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and wherever
located: All Inventory, Equipment, Receivables, and General Intangibles,
including, without limitation, all of Borrower's Deposit Accounts, and all
money, and all property now or at any time in the future in Silicon's possession
(including claims and credit balances), and all proceeds (including proceeds of
any insurance policies, proceeds of proceeds and claims against third parties),
all products and all books and records related to any of the foregoing (all of
the foregoing, together with all other property in which Silicon may now or in
the future be granted a lien or security interest, is referred to herein,
collectively, as the "Collateral"). *

* In addition, to secure the payment and performance of all of the Obligations
arising out of or in connection with the Celestica Letter of Credit, Borrower
hereby grants to Silicon a security interest in all of Borrower's interest in
the Celestica LC Cash Collateral.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations * will continue to be true, and that Borrower
will at all times comply with all of the following covenants:

* shall be true, correct, and complete in all material respects, as of the date
hereof, and shall be true, correct, and complete in all material respects at and
as of the date of the making of each Loan (or other extension of credit) made
hereafter, as though made on and as of the date of such Loan (or other extension
of credit) (except to the extent that such representations and warranties
expressly relate solely to an earlier date), and shall be true, correct, and
complete in all material respects at and as of the date of delivery of each
executed Compliance Certificate required under Section 6(6) of the Schedule, as
though made on and as of the date of such delivery (except to the extent that
such representations and warranties expressly relate solely to an earlier date)

3.1 Corporate Existence and Authority.

Borrower, if a corporation, is and will continue to be, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Borrower is and will continue to be qualified and licensed to do
business in all jurisdictions in which any failure to do so would have a
material adverse effect on Borrower. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (i) have
been duly and validly authorized, (ii) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally), and (iii) do not violate
Borrower's articles or certificate of incorporation, or Borrower's by-laws, or
any law or any material agreement or instrument which is binding upon Borrower
or its property, and (iv) do not constitute grounds for acceleration of any
material indebtedness or obligation under any material agreement or instrument
which is binding upon Borrower or its property.

3.2 Name; Trade Names and Styles.

The name of Borrower set forth in the heading to this Agreement is its correct
name. Listed on the Schedule are all prior names of Borrower and all of
Borrower's present and prior trade names. Borrower shall give Silicon 30 days'
prior written notice before changing its name or doing business under any other
name. Borrower has complied, and will in the future comply, with all laws
relating to the conduct of business under a fictitious business name.

3.3 Place of Business; Location of Collateral.

The address set forth in the heading to this Agreement is Borrower's chief
executive office. In addition, Borrower has places of business and Collateral is
located only at the locations set forth on the Schedule. Borrower will give
Silicon at least 30 days prior written notice before opening any additional
place of business, changing its chief executive office, or moving any of the
Collateral to a location other than Borrower's Address or one of the locations
set forth on the Schedule.

3.4 Title to Collateral; Permitted Liens.

Borrower is now, and will at all times in the future be, the sole owner of all
the Collateral, except for items of Equipment which are leased by Borrower. The
Collateral now is and will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for Permitted Liens.
Silicon now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Borrower will at all times defend Silicon and the
Collateral against all claims of others. None of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture. Borrower is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral and no such lease now prohibits, restrains, impairs or will prohibit,
restrain or impair Borrower's right to remove any Collateral from the leased
premises. Whenever any Collateral is located upon premises in which any third
party has an interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lien or otherwise), Borrower shall, whenever requested by Silicon, use
its best * efforts to cause such third party to execute and deliver to Silicon,
in form acceptable to Silicon, such waivers and subordinations as Silicon shall
specify, so as to ensure that Silicon's rights in the Collateral are, and will
continue to be, superior to the rights of any such third party. Borrower will
keep in full force and effect, and will comply with all the terms of, any lease
of real property where any of the Collateral now or in the future may be
located.

* commercially reasonable

3.5 Maintenance of Collateral.

Borrower will maintain the Collateral in good working condition, and Borrower
will not use the Collateral for any unlawful purpose. Borrower will immediately
advise Silicon in writing of any material loss or damage to the Collateral.

3.6 Books and Records.

Borrower has maintained and will maintain at Borrower's Address complete and
accurate books and records, comprising an accounting system in accordance with
generally accepted accounting principles.

3.7 Financial Condition, Statements and Reports.

All financial statements now or in the future delivered to Silicon have been,
and will be, prepared in conformity with generally accepted accounting
principles and now and in the future will completely and accurately reflect the
financial condition of Borrower, at the times and for the periods therein
stated. Between the last date covered by any such statement provided to Silicon
and the date hereof, there has been no material adverse change in the financial
condition or business of Borrower. Borrower is now and will continue to be
solvent.

3.8 Tax Returns and Payments; Pension Contributions.

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

3.9 Compliance with Law.

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

3.10 Litigation.

Except as disclosed in the Schedule, there is no claim, suit, litigation,
proceeding or investigation pending or (to best of Borrower's knowledge)
threatened by or against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which may result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Silicon in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$50,000 * or more, or involving $100,000 ** or more in the aggregate.

* $250,000

** $1,000,000

3.11 Use of Proceeds.

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

4. Receivables.

4.1 Representations Relating to Receivables.

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

4.2 Representations Relating to Documents and Legal Compliance.

Borrower represents and warrants to Silicon as follows: All statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.

4.3 Schedules and Documents relating to Receivables.

Borrower shall deliver to Silicon transaction reports and loan requests,
schedules and assignments of all Receivables, and schedules of collections, all
on Silicon's standard forms; provided, however, that Borrower's failure to
execute and deliver the same shall not affect or limit Silicon's security
interest and other rights in all of Borrower's Receivables, nor shall Silicon's
failure to advance or lend against a specific Receivable affect or limit
Silicon's security interest and other rights therein. Loan requests received
after 12:00 Noon will not be considered by Silicon until the next Business Day.
* Together with each such schedule and assignment, or later if requested by
Silicon, Borrower shall furnish Silicon with copies (or, at Silicon's request,
originals) of all contracts, orders, invoices, and other similar documents, and
all original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of which gave
rise to such Receivables, and Borrower warrants the genuineness of all of the
foregoing. Borrower shall also furnish to Silicon an aged accounts receivable
trial balance in such form and at such intervals as Silicon shall request. In
addition, Borrower shall deliver to Silicon the originals of all instruments,
chattel paper, security agreements, guarantees and other documents and property
evidencing or securing any Receivables, immediately upon receipt thereof and in
the same form as received, with all necessary indorsements, all of which shall
be with recourse. Borrower shall also provide Silicon with copies of all credit
memos within two days after the date issued.

* The following provisions of this Section 4.3 are subject to any applicable
less stringent reporting or delivery requirements set forth in the Streamline
Facility Agreement:

4.4 Collection of Receivables.

Borrower shall have the right to collect all Receivables, unless and until a
Default or an Event of Default has occurred *. Borrower shall hold all payments
on, and proceeds of, Receivables in trust for Silicon, and ** Borrower shall
immediately deliver all such payments and proceeds to Silicon in their original
form, duly endorsed in blank, to be applied to the Obligations in such order as
Silicon shall determine. Silicon may, in its discretion, require that all
proceeds of Collateral be deposited by Borrower into a lockbox account, or such
other "blocked account" as Silicon may specify, pursuant to a blocked account
agreement in such form as Silicon may specify. Silicon or its designee may, at
any time, notify Account Debtors that the Receivables have been assigned to
Silicon.

* and is continuing

** , subject to the Streamline Facility Agreement,

4.5. Remittance of Proceeds.

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

* and is continuing

4.6 Disputes.

Borrower shall notify Silicon promptly of all disputes or claims relating to
Receivables. Borrower shall not forgive (completely or partially), compromise or
settle any Receivable for less than payment in full, or agree to do any of the
foregoing, except that Borrower may do so, provided that: (i) Borrower does so
in good faith, in a commercially reasonable manner, in the ordinary course of
business, and in arm's length transactions, which are reported to Silicon on the
regular reports provided to Silicon; (ii) no Default or Event of Default has
occurred and is continuing; and (iii) taking into account all such discounts
settlements and forgiveness, the total outstanding Loans will not exceed the
Credit Limit. Silicon may, at any time after the occurrence * of an Event of
Default, settle or adjust disputes or claims directly with Account Debtors for
amounts and upon terms which Silicon considers advisable in its reasonable
credit judgment and, in all cases, Silicon shall credit Borrower's Loan account
with only the net amounts received by Silicon in payment of any Receivables.

* and during the continuation

4.7 Returns.

Provided no Event of Default has occurred and is continuing, if any Account
Debtor returns any Inventory to Borrower in the ordinary course of its business,
Borrower shall promptly determine the reason for such return and promptly issue
a credit memorandum to the Account Debtor in the appropriate amount (sending a
copy to Silicon). In the event any attempted return occurs after the occurrence
* of any Event of Default, Borrower shall (i) hold the returned Inventory in
trust for Silicon, (ii) segregate all returned Inventory from all of Borrower's
other property, (iii) conspicuously label the returned Inventory as Silicon's
property, and (iv) immediately notify Silicon of the return of any Inventory,
specifying the reason for such return, the location and condition of the
returned Inventory, and on Silicon's request deliver such returned Inventory to
Silicon.

* and during the continuation

4.8 Verification.

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

4.9 No Liability.

Silicon shall not under any circumstances be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to a Receivable, or for any error,
act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Receivable, or for settling any
Receivable in good faith for less than the full amount thereof, nor shall
Silicon be deemed to be responsible for any of Borrower's obligations under any
contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve Silicon from liability for its own gross negligence or willful
misconduct.

5. ADDITIONAL DUTIES OF BORROWER.

5.1 Financial and Other Covenants.

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

5.2 Insurance.

Borrower shall, at all times insure all of the tangible personal property
Collateral and carry such other business insurance, with insurers reasonably
acceptable to Silicon, in such form and amounts as Silicon may reasonably
require, and Borrower shall provide evidence of such insurance to Silicon, so
that Silicon is satisfied that such insurance is, at all times, in full force
and effect. All such insurance policies shall name Silicon as an additional
insured and loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole discretion, except that, provided no Default
or Event of Default has occurred and is continuing, Silicon shall release to
Borrower insurance proceeds with respect to Equipment totaling less than
$100,000, which shall be utilized by Borrower for the replacement of the
Equipment with respect to which the insurance proceeds were paid. Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used. If Borrower fails to provide or pay for any insurance, Silicon may, but is
not obligated to, obtain the same at Borrower's expense. Borrower shall promptly
deliver to Silicon copies of all reports made to insurance companies.

5.3 Reports.

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

5.4 Access to Collateral, Books and Records.

At reasonable times, and on * one Business Day's notice, Silicon, or its agents,
shall have the right to inspect the Collateral, and the right to audit and copy
Borrower's books and records. Silicon shall take reasonable steps to keep
confidential all information obtained in any such inspection or audit, but
Silicon shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process. The foregoing inspections and audits shall be at Borrower's expense and
the charge therefor shall be $700 per person per day (or such higher amount as
shall represent Silicon's then current standard charge for the same), plus
reasonable out of pocket expenses. Borrower will not enter into any agreement
with any accounting firm, service bureau or third party to store Borrower's
books or records at any location other than Borrower's Address, without first
obtaining Silicon's written consent, which may be conditioned upon such
accounting firm, service bureau or other third party agreeing to give Silicon
the same rights with respect to access to books and records and related rights
as Silicon has under this Loan Agreement. ** Borrower waives the benefit of any
accountant-client privilege or other evidentiary privilege precluding or
limiting the disclosure, divulgence or delivery of any of its books and records
(except that Borrower does not waive any attorney-client privilege).

* at least

** Solely as between Borrower and Silicon, and after the occurrence and during
the continuation of an Event of Default,

5.5 Negative Covenants.

Except as may be permitted in the Schedule, Borrower shall not, without
Silicon's prior written consent, do any of the following: (i) merge or
consolidate with another corporation or entity *; (ii) acquire any assets,
except in the ordinary course of business; (iii) enter into any other
transaction outside the ordinary course of business; (iv) sell or transfer any
Collateral, except for the sale of finished Inventory in the ordinary course of
Borrower's business, and except for the sale of obsolete or unneeded Equipment
in the ordinary course of business; (v) store any Inventory or other Collateral
with any warehouseman or other third party; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis; (vii)
make any loans of any money or other assets **; (viii) incur any debts, outside
the ordinary course of business, which would have a material, adverse effect on
Borrower or on the prospect of repayment of the Obligations; (ix) guarantee or
otherwise become liable with respect to the obligations of another party or
entity; (x) pay or declare any dividends on Borrower's stock (except for
dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's stock ***; (xii)
make any change in Borrower's capital structure which would have a material
adverse effect on Borrower or on the prospect of repayment of the Obligations;
or (xiii) **** pay total compensation, including salaries, fees, bonuses,
commissions, and all other payments, whether directly or indirectly, in money or
otherwise, to Borrower's executives, officers and directors (or any relative
thereof) in an amount in excess of the amount set forth on the Schedule; or
(xiv) dissolve or elect to dissolve. Transactions permitted by the foregoing
provisions of this Section are only permitted if no Default or Event of Default
would occur as a result of such transaction.

* ; provided, however, that, so long as no Event of Default has occurred and is
continuing or would otherwise result therefrom, a domestic subsidiary of
Borrower may merge with or consolidate into Borrower upon Silicon's receipt of
all applicable lien searches relative to such subsidiary, the results of which
shall be satisfactory to Silicon in its good faith business judgment

** , except for loans consisting of travel advances, employee relocation loans,
and other employee loans/advances in the ordinary course of business; provided,
however, that the aggregate amount of such loans shall not exceed $500,000 at
any one time outstanding

*** , except for repurchases of stock (in accordance with applicable law) from
former employees or directors of Borrower as required under the terms and
conditions of Borrower's employee stock ownership plan; provided, however, that
the aggregate amount of such repurchases shall not exceed $100,000 while this
Agreement is in effect and any Obligation remains outstanding

**** [intentionally omitted]

5.6 Litigation Cooperation.

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

5.7 Further Assurances.

Borrower agrees, at its expense, on request by Silicon, to execute all documents
and take all actions, as Silicon, may deem reasonably necessary or useful in
order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate the transactions contemplated by
this Agreement.

6. TERM.

6.1 Maturity Date.

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

6.2 Early Termination.

This Agreement may be terminated prior to the Maturity Date as follows: (i) by
Borrower, effective three Business Days after written notice of termination is
given to Silicon; or (ii) by Silicon at any time after the occurrence * of an
Event of Default, without notice, effective immediately. If this Agreement is
terminated by Borrower ** or by Silicon under this Section 6.2, Borrower shall
pay to Silicon a termination fee in an amount equal to *** two percent (2.0%) of
the Maximum Credit Limit, provided that **** no termination fee shall be charged
if the credit facility hereunder is replaced with a new facility from another
division of Silicon Valley Bank. The termination fee shall be due and payable on
the effective date of termination and thereafter shall bear interest at a rate
equal to the highest rate applicable to any of the Obligations.

* and during the continuation

** under this Section 6.2 prior to the 60th day preceding the Maturity Date

*** one percent (1.0%) of the Maximum Revolving Amount;

**** (y) no termination fee shall be payable if this Agreement is terminated by
Borrower under this Section 6.2 and all Obligations are paid in full in cash at
any time during the 60 days immediately preceding the Maturity Date; and (z)

6.3 Payment of Obligations.

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

7. EVENTS OF DEFAULT AND REMEDIES.

7.1 Events of Default.

The occurrence of any of the following events shall constitute an "Event of
Default" under this Agreement, and Borrower shall give Silicon immediate written
notice thereof: (a) Any warranty, representation, statement, report or
certificate made or delivered to Silicon by Borrower or any of Borrower's
officers, employees or agents, now or in the future, shall be untrue or
misleading in a material respect; or (b) Borrower shall fail to pay when due any
Loan or any interest thereon or any other monetary Obligation *; or (c) the
total Loans and other Obligations outstanding at any time shall exceed the
Credit Limit **; or (d) Borrower shall fail to comply with any of the financial
covenants set forth in the Schedule or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured; or (e) Borrower
shall fail to perform any other non-monetary Obligation, which failure is not
cured within 5 Business Days after the date due; or (f) any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made
on all or any part of the Collateral which is not cured within 10 + days after
the occurrence of the same; or (g) any default or event of default occurs under
any obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted Lien;
or (h) Borrower breaches any material contract or obligation, which has or may
reasonably be expected to have a material adverse effect on Borrower's business
or financial condition; or (i) Dissolution, termination of existence, insolvency
or business failure of Borrower; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceeding by Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (j) the commencement of any proceeding against Borrower or
any guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within 30 *** days after the date commenced; or (k)
revocation or termination of, or limitation or denial of liability upon, any
guaranty of the Obligations or any attempt to do any of the foregoing, or
commencement of proceedings by any guarantor of any of the Obligations under any
bankruptcy or insolvency law; or (l) revocation or termination of, or limitation
or denial of liability upon, any pledge of any certificate of deposit,
securities or other property or asset of any kind pledged by any third party to
secure any or all of the Obligations, or any attempt to do any of the foregoing,
or commencement of proceedings by or against any such third party under any
bankruptcy or insolvency law; or (m) Borrower makes any payment on account of
any indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if any
Person who has subordinated such indebtedness or obligations terminates or in
any way limits his subordination agreement; or (n) there shall be a change in
the record or beneficial ownership of an aggregate of more than 20% of the
outstanding shares of stock of Borrower, in one or more transactions, compared
to the ownership of outstanding shares of stock of Borrower in effect on the
date hereof, without the prior written consent of Silicon ****; or (o) Borrower
shall generally not pay its debts as they become due, or Borrower shall conceal,
remove or transfer any part of its property, with intent to hinder, delay or
defraud its creditors, or make or suffer any transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or (p) there shall be a material adverse change in Borrower's business or
financial condition; or (q) Silicon, acting in good faith and in a commercially
reasonable manner, deems itself insecure because of the occurrence of an event
prior to the effective date hereof of which Silicon had no knowledge on the
effective date or because of the occurrence of an event on or subsequent to the
effective date *****. Silicon may cease making any Loans hereunder during any of
the above cure periods, and thereafter if an Event of Default has occurred
******.

* (and solely with respect to Overadvances, subject to the time period permitted
in Section 1.3 within which to pay Silicon the amount of the excess described
therein constituting such Overadvance)

** and Borrower shall fail to pay Silicon the amount of such excess within the
time period required by Section 1.3

+ Business Days

*** 45

**** : (1) a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes, after the
date of this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or indirectly, of
more than 20% of the total voting power of all classes of capital stock then
outstanding of Borrower entitled to vote in the election of directors, or (2) a
majority of the members of the Board of Directors of Borrower shall not
constitute Continuing Directors

***** [intentionally omitted]

****** and is continuing

7.2 Remedies.

Upon the occurrence * of any Event of Default, and at any time thereafter,
Silicon, at its option, and without notice or demand of any kind (all of which
are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes Silicon without judicial process to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof,
without charge for so long as Silicon deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence * of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional four *** percent per annum.

* and during the continuation

** three

7.3 Standards for Determining Commercial Reasonableness.

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

* ten

7.4 Power of Attorney.

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

* and during the continuation

** permitted by applicable law

7.5 Application of Proceeds.

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

7.6 Remedies Cumulative.

In addition to the rights and remedies set forth in this Agreement, Silicon
shall have all the other rights and remedies accorded a secured party under the
California Uniform Commercial Code and under all other applicable laws, and
under any other instrument or agreement now or in the future entered into
between Silicon and Borrower, and all of such rights and remedies are cumulative
and none is exclusive. Exercise or partial exercise by Silicon of one or more of
its rights or remedies shall not be deemed an election, nor bar Silicon from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of Silicon to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been fully paid and performed.

8. Definitions.

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

"Account Debtor" means the obligor on a Receivable.

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

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

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

"Collateral" has the meaning set forth in Section 2.1 above.

"Continuing Director" means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower on the date of this Agreement, and
(b) any individual who becomes a member of the Board of Directors after the date
of this Agreement if such individual was appointed or nominated for election to
the Board of Directors by a majority of the Continuing Directors, but excluding
any such individual originally proposed for election in opposition to the Board
of Directors in office at the date of this Agreement in an actual or threatened
election contest relating to the election of the directors (or comparable
managers) of Borrower (as such terms are used in Rule 14a-11 under the
Securities Exchange Act of 1934, as amended) and whose initial assumption of
office resulted from such contest or the settlement thereof.

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

"Deposit Account" has the meaning set forth in Section 9102(a) of the Code.

"Eligible Inventory" [NOT APPLICABLE].

"Eligible Receivables" means Receivables arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services, which
Silicon, in its sole judgment, shall deem eligible for borrowing, based on such
considerations as Silicon may from time to time deem appropriate. Without
limiting the fact that the determination of which Receivables are eligible for
borrowing is a matter of Silicon's discretion, the following (the "Minimum
Eligibility Requirements") are the minimum requirements for a Receivable to be
an Eligible Receivable: (i) the Receivable must not be outstanding for more than
90 days from its invoice date, (ii) the Receivable must not represent progress
billings, or be due under a fulfillment or requirements contract with the
Account Debtor, (iii) the Receivable must not be subject to any contingencies
(including Receivables arising from sales on consignment, guaranteed sale or
other terms pursuant to which payment by the Account Debtor may be conditional),
(iv) the Receivable must not be owing from an Account Debtor with whom Borrower
has any dispute (whether or not relating to the particular Receivable), (v) the
Receivable must not be owing from an Affiliate of Borrower, (vi) the Receivable
must not be owing from an Account Debtor which is subject to any insolvency or
bankruptcy proceeding, or whose financial condition is not acceptable to
Silicon, or which, fails or goes out of a material portion of its business,
(vii) the Receivable must not be owing from the United States or any department,
agency or instrumentality thereof (unless there has been compliance, to
Silicon's satisfaction, with the United States Assignment of Claims Act), (viii)
the Receivable must not be owing from an Account Debtor located outside the
United States or Canada (unless pre-approved by Silicon in its discretion in
writing, or backed by a letter of credit satisfactory to Silicon, or FCIA
insured satisfactory to Silicon *), and (ix) the Receivable must not be owing
from an Account Debtor to whom Borrower is or may be liable for goods purchased
from such Account Debtor or otherwise **. Receivables owing from one Account
Debtor will not be deemed Eligible Receivables to the extent they exceed 25% of
the total Receivables outstanding. In addition, if more than 50% of the
Receivables owing from an Account Debtor are outstanding more than 90 days from
their invoice date (without regard to unapplied credits) or are otherwise not
eligible Receivables, then all Receivables owing from that Account Debtor will
be deemed ineligible for borrowing. Silicon may, from time to time, in its
discretion, revise the Minimum Eligibility Requirements, upon written notice to
Borrower.

* ; without limiting the generality of the foregoing, as to each of the foreign
Account Debtors identified in the definition of Permitted Foreign Eligible
Receivables, Receivables owing by such Account Debtor up to the respective
maximum amount relating to such Account Debtor as identified in the definition
of Permitted Foreign Eligible Receivables shall be deemed pre- approved by
Silicon for purposes of this clause (viii) so long as such Receivables are
backed by a letter of credit satisfactory to Silicon for such maximum amount or
FCIA insured satisfactory to Silicon for such maximum amount

** ; and (x) (so long as any UCC-1 filings covering any property of Borrower are
of record in favor of NTFC Capital Corporation) the Receivable must not
constitute proceeds of any property sold, leased, licensed or sublicensed, or
otherwise supplied by NTFC Capital Corporation to Borrower

"Equipment" means all of Borrower's present and hereafter acquired machinery,
molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dyes, jigs, goods and other tangible
personal property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions or improvements to any of the foregoing, wherever
located.

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

"General Intangibles" means all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation life insurance, key
man insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).

"Inventory" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.

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

"Permitted Foreign Eligible Receivables" means, collectively: (a) Receivables
owing by the foreign Account Debtor known as Cablecom AG, in an aggregate amount
not to exceed $100,000 at any one time outstanding; (b) Receivables owing by the
foreign Account Debtor known as France Telecom Cable Interactive, in an
aggregate amount not to exceed $2,000,000 at any one time outstanding; (c)
Receivables owing by the foreign Account Debtor known as Fringes Systemns, in an
aggregate amount not to exceed $250,000 at any one time outstanding; (d)
Receivables owing by the foreign Account Debtor known as Fujikura, in an
aggregate amount not to exceed $2,000,000 at any one time outstanding; (e)
Receivables owing by the foreign Account Debtor known as Fujikawa Electric Co.,
in an aggregate amount not to exceed $1,800,000 at any one time outstanding; (f)
Receivables owing by the foreign Account Debtor known as Hitachi Cable America,
in an aggregate amount not to exceed $1,000,000 at any one time outstanding; (g)
Receivables owing by the foreign Account Debtor known as OSI Plus Corp., in an
aggregate amount not to exceed $250,000 at any one time outstanding; (h)
Receivables owing by the foreign Account Debtor known as Philips Iberica, in an
aggregate amount not to exceed $1,500,000 at any one time outstanding; (i)
Receivables owing by the foreign Account Debtor known as Siemens Nederland, in
an aggregate amount not to exceed $2,000,000 at any one time outstanding; (j)
Receivables owing by the foreign Account Debtor known as Spie Trindel, in an
aggregate amount not to exceed $100,000 at any one time outstanding; (k)
Receivables owing by the foreign Account Debtor known as Telia Sofia, in an
aggregate amount not to exceed $100,000 at any one time outstanding; (l)
Receivables owing by the foreign Account Debtor known as Telindus BV, in an
aggregate amount not to exceed $5,000,000 at any one time outstanding; and (m)
Receivables owing by the foreign Account Debtor known as Thalamus Networks, in
an aggregate amount not to exceed $100,000 at any one time outstanding.

"Permitted Liens" means the following: (i) purchase money security interests in
specific items of Equipment; (ii) leases of specific items of Equipment; (iii)
liens for taxes not yet payable; (iv) additional security interests and liens
consented to in writing by Silicon, which consent shall not be unreasonably
withheld; (v) security interests being terminated substantially concurrently
with this Agreement; (vi) liens of materialmen, mechanics, warehousemen,
carriers, or other similar liens arising in the ordinary course of business and
securing obligations which are not delinquent; (vii) liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Silicon will have
the right to require, as a condition to its consent under subparagraph (iv)
above, that the holder of the additional security interest or lien sign an
intercreditor agreement * on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Silicon,
and agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.

* , in form and substance satisfactory to Silicon in its good faith business
judgment,

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

"Receivables" means all of Borrower's now owned and hereafter acquired accounts
(whether or not earned by performance), letters of credit, contract rights,
chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.

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

"Streamline Facility Agreement" means that certain Streamline Facility
Agreement, dated as of even date herewith, entered into by and between Silicon
and Bank concurrently herewith.

Other Terms

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

9. GENERAL PROVISIONS.

9.1 Interest Computation.

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

9.2 Application of Payments.

All payments with respect to the Obligations may be applied, and in Silicon's
sole discretion reversed and re-applied, to the Obligations, in such order and
manner as Silicon shall determine in its sole discretion.

9.3 Charges to Accounts.

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

9.4 Monthly Accountings.

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

9.5 Notices.

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

9.6 Severability.

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

9.7 Integration.

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

* (including the Streamline Facility Agreement)

9.8 Waivers.

The failure of Silicon at any time or times to require Borrower to strictly
comply with any of the provisions of this Agreement or any other present or
future agreement between Borrower and Silicon shall not waive or diminish any
right of Silicon later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to Silicon shall be deemed to have been waived by any act or knowledge
of Silicon or its agents or employees, but only by a specific written waiver
signed by an authorized officer of Silicon and delivered to Borrower. Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension or
renewal of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by Silicon on which Borrower is or may in
any way be liable, and notice of any action taken by Silicon, unless expressly
required by this Agreement.

9.9 No Liability for Ordinary Negligence.

Neither Silicon, nor any of its directors, officers, employees, agents,
attorneys or any other Person affiliated with or representing Silicon shall be
liable for any claims, demands, losses or damages, of any kind whatsoever, made,
claimed, incurred or suffered by Borrower or any other party through the
ordinary negligence of Silicon, or any of its directors, officers, employees,
agents, attorneys or any other Person affiliated with or representing Silicon,
but nothing herein shall relieve Silicon from liability for its own gross
negligence or willful misconduct.

9.10 Amendment.

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

9.11 Time of Essence.

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

9.12 Attorneys Fees and Costs.

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

9.13 Benefit of Agreement.

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

9.14 Joint and Several Liability.

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

9.15 Limitation of Actions.

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

* two years

** two-year

9.16 Paragraph Headings; Construction.

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

9.17 Governing Law; Jurisdiction; Venue.

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

9.18 Mutual Waiver of Jury Trial.

Borrower and Silicon each hereby waive the right to trial by jury in any action
or proceeding based upon, arising out of, or in any way relating to, this
Agreement or any other present or future instrument or agreement between Silicon
and Borrower, or any conduct, acts or omissions of Silicon or Borrower or any of
their directors, officers, employees, agents, attorneys or any other persons
affiliated with Silicon or Borrower, in all of the foregoing cases, whether
sounding in contract or tort or otherwise.

[Signature page immediately follows]

IN WITNESS WHEREOF,

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

Borrower:

COM21, INC.

 

By

President or Vice President

By

Secretary or Ass't Secretary

Silicon:

SILICON VALLEY BANK

 

By

Title

 

Form 3/24/99

Version -0

 

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

Silicon Valley Bank

Schedule to

Loan and Security Agreement

Borrower: COM21, INC.

Address: 750 Tasman Drive

Milpitas, California 95035

Date: November __, 2001

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

 

 

1. Credit Limit

(Section 1.1): An amount not to exceed the lesser of $20,000,000 (the "Maximum
Credit Limit") and the sum of (a) plus (b) below:

(a) Revolving Loans: Revolving Loans (the "Revolving Loans") in an amount not to
exceed the lesser of: (i) $10,000,000 at any one time outstanding (the "Maximum
Revolving Amount"); or (ii) 75% of the amount of Borrower's Eligible Receivables
(as defined in Section 8 above); plus

(b) Celestica Letter of Credit: one or more special purpose Letters of Credit
issued for the account of Borrower to Celestica Inc. as beneficiary, in an
aggregate face amount not to exceed $10,000,000 (individually and collectively,
the "Celestica Letter of Credit"). Borrower's Obligations arising out of or in
connection with the Celestica Letter of Credit shall be fully cash- secured
pursuant to Silicon's standard form cash pledge agreement (such cash security,
the "Celestica LC Cash Collateral"; it being understood and agreed that the
Celestica LC Cash Collateral constitutes additional Collateral). Borrower hereby
covenants and agrees that the amount of cash collateral pledged to Silicon as
the Celestica LC Cash Collateral shall at all times be at least $10,000,000 plus
all interest, fees and costs due or to become due in connection with the
Celestica Letter of Credit.

Letter of Credit Sublimit

(Section 1.5): $2,000,000 in the aggregate as to all Letters of Credit other
than the Celestica Letter of Credit

 

2. Interest.

Interest Rate

(Section 1.2):

A rate per annum equal to the "Prime Rate" in effect from time to time, plus the
Applicable Margin (as defined below). Interest shall be calculated on the basis
of a 360-day year for the actual number of days elapsed. "Prime Rate" means the
rate announced from time to time by Silicon as its "prime rate;" it is a base
rate upon which other rates charged by Silicon are based, and it is not
necessarily the best rate available at Silicon. The interest rate applicable to
the Obligations shall change on each date there is a change in the Prime Rate or
in the Applicable Margin. As used herein, the term "Applicable Margin" means, as
of any date of determination, 2.0%; provided, however, that solely if (i)
Borrower, after the date of this Agreement, achieves profitability (in
accordance with generally accepted accounting principles consistently applied)
of not less than $1 for each of 2 consecutive fiscal quarters, (ii) Silicon
timely receives the unaudited quarterly financial statements required under this
Agreement in respect of each of such 2 consecutive fiscal quarters, which
financial statements accurately reflect Borrower's achievement of such requisite
profitability, and (iii) no Event of Default has occurred and is continuing,
then the Applicable Margin shall equal 1.5%, effective from and after the date
of such receipt of such financial statements.

Minimum Monthly

Interest

(Section 1.2): $2,500 per month.

 

3. Fees

(Section 1.4):

Loan Fee: $100,000 (i.e., 1.0% of the Maximum Revolving Amount), payable
concurrently herewith.

Collateral Monitoring

Fee: Subject to the Streamline Facility Agreement, $1,500 per month, payable in
arrears (prorated for any partial month at the beginning and at termination of
this Agreement).

Letter of Credit Fees: With respect to Letters of Credit, Silicon's standard
Letter of Credit fees, which fees shall be payable monthly, on the last day of
the month. Such fees may, in Silicon's discretion, be charged to Borrower's loan
account, and the same shall thereafter bear interest at the same rate as
Revolving Loans.

 

4. Maturity Date

(Section 6.1): One year from the date of this Agreement.

 

5. Financial Covenants

(Section 5.1): Borrower shall comply with each of the following covenant(s).
Compliance shall be determined as of the end of each month, except as otherwise
specifically provided below:

Minimum Tangible

Net Worth:

Borrower shall maintain a Tangible Net Worth of not less than the sum of (a)
$24,000,000 plus (b) the TNW Capital Increase (if any).

The term "TNW Capital Increase" means, as of any date of determination, the
greater of (a) $-0- and (b) 60% of all consideration (if any) received after the
date of this Agreement for equity securities of the Borrower. In no event shall
the amount of the TNW Capital Increase be decreased.

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

"Liabilities" shall have the meaning ascribed thereto by generally accepted
accounting principles.

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

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

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

 

6. Reporting.

(Section 5.3):

Borrower shall provide Silicon with the following:

1. Monthly Receivable agings, aged by invoice date, within fifteen days after
the end of each month.

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

3. Monthly reconciliations of Receivable agings (aged by invoice date),
transaction reports, and general ledger, within fifteen days after the end of
each month.

4. Monthly perpetual inventory reports for the Inventory valued on a first-in,
first-out basis at the lower of cost or market (in accordance with generally
accepted accounting principles) or such other inventory reports as are
reasonably requested by Silicon, all within fifteen days after the end of each
month.

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

6. Monthly Compliance Certificates, within thirty days after the end of each
month, in such form as Silicon shall reasonably specify, signed by the Chief
Financial Officer of Borrower, certifying that as of the end of such month
Borrower was in full compliance with all of the terms and conditions of this
Agreement, and setting forth calculations showing compliance with the financial
covenants set forth in this Agreement and such other information as Silicon
shall reasonably request, including, without limitation, a statement that at the
end of such month there were no held checks.

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

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

9. Annual financial statements, as soon as available, and in any event within
120 days following the end of Borrower's fiscal year, certified by independent
certified public accountants acceptable to Silicon.

7. Compensation

(Section 5.5): [Intentionally Omitted]

 

8. Borrower Information:

Prior Names of

Borrower

(Section 3.2): See Representations and Warranties Certificate of Borrower dated
November 6, 2001, incorporated herein by this reference.

Prior Trade

Names of Borrower

(Section 3.2): See Representations and Warranties Certificate of Borrower dated
November 6, 2001, incorporated herein by this reference.

Existing Trade

Names of Borrower

(Section 3.2): See Representations and Warranties Certificate of Borrower dated
November 6, 2001, incorporated herein by this reference.

Other Locations

and

Addresses (Section 3.3): See Representations and Warranties Certificate of
Borrower dated November 6, 2001, incorporated herein by this reference.

Material Adverse

Litigation (Section 3.10): On October 3, 2001, Linear Technology Corporation
filed a lawsuit against against Com21 for breach of contract in the Superior
Court of California, County of Santa Clara (Case No. CV 801968). Linear, a
supplier of Com21, claims damages of approximately $520,000.

 

 

9. Other Covenants

(Section 5.1): Borrower shall at all times comply with all of the following
additional covenants:

(1) Banking and Investment Account Relationship.

Borrower shall at all times maintain its primary banking and investment account
relationships with Silicon. With respect to any deposit accounts or securities
accounts maintained by Borrower at any financial institution other than Silicon,
Borrower agrees, upon Silicon's request therefor, to cause such other financial
institution to execute and deliver to Silicon, in form and substance
satisfactory to Silicon, a Deposit Account Control Agreement or a Securities
Account Control Agreement (as the case may be) with respect to all such accounts
maintained by Borrower at such other financial institution.

(2)

Subordination of Inside Debt. All present and future indebtedness of Borrower to
its officers, directors and shareholders ("Inside Debt") shall, at all times, be
subordinated to the Obligations pursuant to a subordination agreement on
Silicon's standard form. Borrower represents and warrants that there is no
Inside Debt presently outstanding, except for the following: NONE. Prior to
incurring any Inside Debt in the future, Borrower shall cause the person to whom
such Inside Debt will be owed to execute and deliver to Silicon a subordination
agreement on Silicon's standard form.

(3) Patents, Trademarks and Copyrights.

Concurrently with the execution of this Agreement, Borrower shall execute and
deliver to Silicon, on Silicon's standard form(s), any security agreement(s) and
other documentation which Silicon deems necessary for filing in the United
States Patent and Trademark Office, the United States Copyright Office, and any
other governmental office, with respect to Borrower's copyrights, patents,
trademarks and related collateral. Borrower promptly will identify to Silicon in
writing and register with the United States Copyright Office (i) any maskworks
and computer software that generates Receivables from the sale or licensing
thereof or that is otherwise material to the business of Borrower (each, a
"Material Copyright") it has, develops or acquires, including those in Exhibit A
to the Intellectual Property Security Agreement, within 30 days of the date of
execution and delivery of this Agreement, and (ii) any additional Material
Copyright developed or acquired (including significant revisions, additions or
improvements to any Material Copyright or revisions, additions or improvements
which significantly improve the functionality of any Material Copyright) after
the date of execution and delivery of this Agreement, concurrently with the
required delivery of the quarterly unaudited financial statements of Borrower
under Section 6(7) of the Schedule, and Borrower will execute such additional
security agreement(s) and other documentation which Silicon deems necessary for
filing with respect to such additional registered copyright(s). Borrower will
promptly notify Silicon upon Borrower's filing of any application or
registration of any patent or trademark rights with the United States Patent and
Trademark Office and Borrower will execute and deliver any and all instruments
and documents as Bank may require to evidence or perfect Bank's security
interest in such application or registration. Borrower will: (i) protect, defend
and maintain the validity and enforceability of the copyrights, patents, and
trademarks; (ii) promptly advise Bank in writing of material infringements of
the copyrights, patents, or trademarks of which Borrower is or becomes aware;
and (iii) not allow any material item of copyrights, patents, or trademarks to
be abandoned, forfeited or dedicated to the public without Bank's written
consent.

(4) Landlord Agreement.

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

(5) Bailee Agreement.

With respect to any goods of Borrower in the possession of any warehouseman or
other bailee, Borrower shall, promptly upon Silicon's request therefor, deliver
to Silicon a bailee agreement (in form and substance satisfactory to Silicon)
duly executed by such warehouseman or other bailee.

(6) Stock Pledge.

Borrower shall concurrently execute and deliver a Pledge Agreement to Silicon,
on Silicon's standard form, granting Silicon a security interest in 100% of the
outstanding stock of each Subsidiary of Borrower to secure all of the
Obligations. Borrower shall cause said Pledge Agreement to continue in full
force and effect at all times during the term of this Agreement with respect to
100% of the outstanding stock of each Subsidiary now outstanding or hereafter
issued and 100% of all options and warrants to acquire stock of each Subsidiary
hereafter issued. Borrower represents and warrants that there are no outstanding
options or warrants to acquire stock of any Subsidiary. Borrower shall deliver
to Silicon possession of the original stock certificates respecting all of the
issued and outstanding shares of stock of each such Subsidiary, together with
stock powers with respect thereto endorsed in blank. As used in this Agreement,
the term "Subsidiary" means, with respect to any Person, a corporation,
partnership, limited liability company, or other entity in which that Person
directly or indirectly owns or controls the shares of capital stock or other
equity interests having ordinary voting power to elect a majority of the board
of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.

 

10. CONDITIONS PRECEDENT

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

(A) Silicon shall have received lien searches listing all effective financing
statements which name Borrower (or any predecessor corporation or any tradename
thereof or any seller of assets acquired by Borrower outside of the ordinary
course of business) as debtor that are filed in the applicable filing offices
with respect to Borrower, none of which financing statements shall cover any of
the Collateral of Borrower, except (i) Permitted Liens, (ii) financing
statements as to which Silicon has received duly executed authorization by the
applicable secured party to file executed termination statements or partial
release statements in form and substance satisfactory to Silicon, or (iii) as
otherwise agreed in writing by Silicon. Without limiting the generality of the
foregoing, Silicon shall have received (x) a written authorization by NTFC
Capital Corporation to file appropriate termination statements in respect of
NTFC Capital Corporation 's UCC-1 filings covering any property of Borrower, or
(y) evidence satisfactory to Silicon that NTFC Capital Corporation does not have
any financing statements covering any property of Borrower other than the
specific Equipment of Borrower that is leased by NTFC Capital Corporation (as
lessor) to Borrower (as lessee) and the specific software that is licensed or
sublicensed by NTFC Capital Corporation (as licensor or sublicensor) to Borrower
(as licensee or sublicensee), and the proceeds thereof, or (z) a written
authorization by NTFC Capital Corporation to file appropriate partial releases
or amendments in respect of NTFC Capital Corporation 's UCC-1 filings to conform
the collateral descriptions therein to the property described in the foregoing
clause (y). Borrower represents and warrants that Borrower does not claim any
interest in the property described in that certain UCC-1 Financing Statement,
listing BIT-COM, INC. as debtor and Tri Counties Bank as secured party, filed
with the California Secretary of State on May 22, 1997 as File No. 9714860559.

(B) Silicon shall have received a letter, in form and substance satisfactory to
Bank, duly executed and delivered by Comerica Bank to Silicon (the "Payoff
Letter") respecting the amount necessary to repay in full all of the obligations
of Borrower owing to Comerica Bank and authorizing the filing of executed UCC
termination statements and evidencing the termination by Comerica Bank of its
Liens in and to the properties and assets of Borrower.

(C) Without limiting the generality of Section 9(1) of this Schedule, Borrower
shall deliver to Silicon either (y) evidence that Borrower has closed its
deposit accounts currently maintained with Comerica Bank (collectively, the
"Comerica Deposit Account") and transferred all amounts on deposit therein to
deposit accounts maintained at Silicon, or (z) a Deposit Account Control
Agreement, in form and substance satisfactory to Silicon, with respect to the
Comerica Deposit Account.

(D) Each of (i) VOS [located at 930 Wrigley Way, Milpitas, California _______],
(ii) Flite Pak [located at 15700-Z Export Plaza, Houston, Texas 77032], (iii)
All Van Transportation [located at 1096 Pecten Court, Milpitas, California
95035], and (iv) Windart Express LLC [located at 8621 Bellanca Avenue, Suite
103, Los Angeles, California 90045], shall execute and deliver to Silicon, on
Silicon's standard form (with such changes thereto as shall be acceptable to
Silicon in its discretion), a bailee agreement containing such terms and
conditions as Silicon may require.

[Signature page immediately follows]

IN WITNESS WHEREOF,

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

Borrower:

COM21, INC.

 

By_______________________________

President or Vice President

By_______________________________

Secretary or Ass't Secretary

Silicon:

SILICON VALLEY BANK

 

By_______________________________

Title_____________________________

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

Silicon Valley Bank

Certified Resolution and Incumbency Certificate

Borrower: COM21, INC.,

a corporation organized under the laws of the State of Delaware

Date: November __, 2001

I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.

resolved, that this corporation borrow from Silicon Valley Bank ("Silicon"),
from time to time, such sum or sums of money as, in the judgment of the officer
or officers hereinafter authorized hereby, this corporation may require.

resolved further, that any officer of this corporation be, and he or she is
hereby authorized, directed and empowered, in the name of this corporation, to
execute and deliver to Silicon, and Silicon is requested to accept, the loan
agreements, security agreements, notes, financing statements, and other
documents and instruments providing for such loans and evidencing and/or
securing such loans, with interest thereon, and said authorized officers are
authorized from time to time to execute renewals, extensions and/or amendments
of said loan agreements, security agreements, and other documents and
instruments.

resolved further, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all indebtedness of
this corporation to Silicon, whether arising pursuant to this resolution or
otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise
hypothecate to Silicon, or deed in trust for its benefit, any property of any
and every kind, belonging to this corporation, including, but not limited to,
any and all real property, accounts, inventory, equipment, general intangibles,
instruments, documents, chattel paper, notes, money, deposit accounts,
furniture, fixtures, goods, and other property of every kind, and to execute and
deliver to Silicon any and all grants, transfers, trust receipts, loan or credit
agreements, pledge agreements, mortgages, deeds of trust, financing statements,
security agreements and other hypothecation agreements, which said instruments
and the note or notes and other instruments referred to in the preceding
paragraph may contain such provisions, covenants, recitals and agreements as
Silicon may require and said authorized officers may approve, and the execution
thereof by said authorized officers shall be conclusive evidence of such
approval.

resolved further, that Silicon may conclusively rely upon a certified copy of
these resolutions and a certificate of the Secretary or Ass't Secretary of this
corporation as to the officers of this corporation and their offices and
signatures, and continue to conclusively rely on such certified copy of these
resolutions and said certificate for all past, present and future transactions
until written notice of any change hereto or thereto is given to Silicon by this
corporation by certified mail, return receipt requested.

The undersigned further hereby certifies that the following persons are the duly
elected and acting officers of the corporation named above as borrower and that
the following are their actual signatures:

NAMES

OFFICE(S)

ACTUAL SIGNATURES

__________________________

__________________________

x

_________________________

__________________________

__________________________

x

_________________________

__________________________

__________________________

x

_________________________

__________________________

__________________________

x

_________________________

in witness whereof, I have hereunto set my hand as such Secretary or Assistant
Secretary on the date set forth above.

___________________________________________

Secretary or Assistant Secretary

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