Silicon Valley Bank

Loan and Security Agreement

Borrower:     Maxwell Technologies,
Inc.

Address:        9244
Balboa Avenue

                       San
Diego, CA 92123

Date:              February
4, 2004

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

1.     LOANS.

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

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

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


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


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


       1.6   Letters of Credit.  At
the request of Borrower, Silicon may, in its good faith business judgment,
issue or arrange for the issuance of letters of credit for the account of
Borrower, in each case in form and substance satisfactory to Silicon in its
sole discretion (collectively, “Letters of Credit”).  The aggregate face amount of all Letters of Credit from time to
time outstanding shall not exceed the amount shown on the Schedule (the “Letter
of Credit Sublimit”), and shall be reserved against Loans which would otherwise
be available hereunder, and in the event at any time there are insufficient
Loans available to Borrower for such reserve, Borrower shall deposit and
maintain with Silicon cash collateral in an amount at all times equal to such
deficiency, which shall be held as Collateral for all purposes of this
Agreement.  Borrower shall pay all bank charges (including charges of Silicon) for the
issuance of Letters of Credit, together with such additional fee as 


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Silicon’s letter of
credit department shall charge in connection with the issuance of the Letters
of Credit.  Any payment by Silicon under
or in connection with a Letter of Credit shall constitute a Loan hereunder on
the date such payment is made.  Each
Letter of Credit shall have an expiry date no later than thirty days prior to
the Maturity Date.  Borrower hereby
agrees to indemnify and hold Silicon harmless from any loss, cost, expense, or
liability, including payments made by Silicon, expenses, and reasonable
attorneys’ fees incurred by Silicon 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 Loan Documents relating to Letters of Credit are
cumulative.

2.     SECURITY INTEREST.  To
secure the payment and performance of all of the Obligations when due, Borrower
hereby grants to Silicon a security interest in all of the following
(collectively, the “Collateral”):  all
right, title and interest of Borrower in and to all of the following, whether
now owned or hereafter arising or acquired and wherever located:  all Accounts; all Inventory; all Equipment;
all Deposit Accounts; all General Intangibles (including without limitation all
Intellectual Property); all Investment Property; all Other Property; and any
and all claims, rights and interests in any of the above, and all guaranties
and security for any of the above, and all substitutions and replacements for,
additions, accessions, attachments, accessories, and improvements to, and
proceeds (including proceeds of any insurance policies, proceeds of proceeds
and claims against third parties) of, any and all of the above, and all
Borrower’s books relating to any and all of the above.


3.     REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BORROWER.


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


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

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


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


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       3.4   Title
to Collateral; Perfection; Permitted Liens.

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


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


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


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


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


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


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


       3.8   Returns and Payments; Pension Contributions.  Borrower
has timely filed, and will timely file, all required tax returns and reports,
and Borrower has timely paid, and will timely pay, all foreign, federal, state
and local taxes, assessments, deposits and contributions now or in the future
owed by Borrower.  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 reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation
or its successors or any other governmental agency.


       3.9   Compliance with Law.  Borrower
has, to the best of its knowledge, complied, and will comply, in all material
respects, with all provisions of all foreign, federal, state and local laws and
regulations applicable to Borrower, including, but 


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not limited to, those
relating to Borrower’s ownership of real or personal property, the conduct and
licensing of Borrower’s business, and all environmental matters.

       3.10  Litigation.  There
is no claim, suit, litigation, proceeding or investigation pending or (to best
of Borrower’s knowledge) threatened against or affecting Borrower in any court
or before any governmental agency (or any basis therefor known to Borrower)
which could reasonably be expected to result, either separately or in the
aggregate, in any Material Adverse Change. 
Borrower will promptly inform Silicon in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
against Borrower involving any single claim of $100,000 or more, or involving
$250,000 or more in the aggregate.

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

4.     ACCOUNTS.


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


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


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


       4.4   Collection of Accounts.  Borrower
shall have the right to collect all Accounts, unless and until a Default or an
Event of Default has occurred and is continuing.  Whether or not an Event of Default has occurred and is
continuing, Borrower shall hold all payments on, and proceeds of, Accounts in
trust for Silicon, and Borrower shall immediately deliver all such payments and
proceeds to Silicon in their original form, duly endorsed, to be applied to the
Obligations in such order as Silicon shall determine.  Silicon may, in its good faith business judgment, require that
all proceeds of Collateral be deposited by Borrower into a lockbox account, or
such other “blocked account” as Silicon may specify, pursuant to a blocked
account agreement in such form as Silicon may specify in its good faith
business judgment.


       4.5   Remittance of Proceeds.  All
proceeds arising from the disposition of any Collateral shall be delivered, in
kind, by Borrower to Silicon in the original form in which received by Borrower
not later than the following Business Day after receipt by Borrower, to be
applied to the Obligations in such order as Silicon shall determine; provided
that, if no Default or Event of Default has occurred and is continuing,
Borrower shall not be obligated to remit to Silicon the proceeds of the sale of
worn out or obsolete Equipment disposed of by Borrower in good faith in an
arm’s length transaction for an aggregate purchase price of $50,000 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 


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such other funds and
property and in an express trust for Silicon. 
Nothing in this Section limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.

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


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


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


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


5.     ADDITIONAL DUTIES OF
BORROWER.


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


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


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


       5.4   Access to Collateral, Books and Records.  At
reasonable times, and on 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.  The
parties contemplate that such audits will be performed no more frequently than
quarterly, but nothing herein restricts Silicon’s right to conduct such audits
more frequently if (i) Silicon believes that it is advisable to do so in
Silicon’s good faith business judgment, or (ii) Silicon believes in good faith
that an event of default or an event which, with notice or passage of time or
both would constitute an event of default, has occurred and is continuing.  Silicon shall take reasonable steps to keep
confidential all information obtained in any such inspection or audit, but
Silicon shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process.  The foregoing inspections and
audits shall be at Borrower’s expense and the charge therefor shall be $750 per
person per day (or such higher amount as shall represent Silicon’s then current
standard charge for the same), plus reasonable out-of-pocket expenses.  In the event Borrower and Silicon schedule
an audit more than 10 days in advance, and Borrower seeks to 


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reschedules the audit
with less than 10 days written notice to Silicon, then (without limiting any of
Silicon’s rights or remedies), Borrower shall pay Silicon a cancellation fee of
$1,000 plus any out-of-pocket expenses incurred by Silicon, to compensate
Silicon for the anticipated costs and expenses of the cancellation.

       5.5   Negative Covenants.  Except
as may be permitted in the Schedule, Borrower shall not, without Silicon’s
prior written consent (which shall be a matter of its good faith business
judgment), do any of the following:  (i)
merge or consolidate with another corporation or entity; (ii) acquire any
assets, except in the ordinary course of business; (iii) enter into any other
transaction outside the ordinary course of business; (iv) sell or transfer any
Collateral, except for the sale of 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 result in a Material Adverse
Change; (ix) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (x) pay or declare any dividends on
Borrower’s stock (except for dividends payable solely in stock of Borrower);
(xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower’s stock; (xii) make any change in Borrower’s capital structure
which would result in a Material Adverse Change; or (xiii) engage, directly or
indirectly, in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto; or (xiv) dissolve or elect to dissolve.  Transactions permitted by the foregoing
provisions of this Section are only permitted if no Default or Event of Default
would occur as a result of such transaction.

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


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


6.     TERM.


       6.1   Maturity Date.  This
Agreement shall continue in effect until the maturity date set forth on the
Schedule (the “Maturity Date”), 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 and during the continuance of an Event
of Default, without notice, effective immediately.  If this Agreement is terminated by Borrower or by Silicon under
this Section 6.2, Borrower shall pay to Silicon a termination fee in an amount
equal to two percent (2.0%) of the Overall Credit Limit (as defined in the
Schedule), provided that the total termination fee under this Loan Agreement
and under the Exim Agreement (as defined in the Schedule) shall not exceed two
percent (2.0%) of the Overall Credit Limit, and, provided that no termination
fee shall be charged if the credit facility hereunder is replaced with a new
facility from another division of Silicon Valley Bank.  The termination fee shall be due and payable
on the effective date of termination and thereafter shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations.


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


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payment and performance
in full of all the Obligations and termination of this Agreement, Silicon shall
promptly terminate its financing statements with respect to the Borrower and
deliver to Borrower such other documents as may be required to fully terminate
Silicon’s security interests.

7.     EVENTS OF DEFAULT AND
REMEDIES.


       7.1   Events of Default.  The occurrence of any of the
following events shall constitute an “Event of Default” under this Agreement,
and Borrower shall give Silicon immediate written notice thereof:  (a) Any warranty, representation, statement,
report or certificate made or delivered to Silicon by Borrower or any of
Borrower’s officers, employees or agents, now or in the future, shall be untrue
or misleading in a material respect when made or deemed to be made; or (b)
Borrower shall fail to pay when due any Loan
or any interest thereon or any other monetary Obligation; or (c) the total
Loans and other Obligations outstanding at any time shall exceed the
Credit Limit; or (d) Borrower shall fail to comply with any of the financial
covenants set forth in the Schedule, or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured, or shall fail to
permit Silicon to conduct an inspection or audit as specified in Section 5.4
hereof; or (e) Borrower shall fail to perform any other non-monetary
Obligation, which failure is not cured within five Business Days after the date
due; or (f) any levy, assessment, attachment, seizure, lien or encumbrance (other
than a Permitted Lien) is made on all or any part of the Collateral which is
not cured within 10 days after the occurrence of the same; or (g) any default
or event of default occurs under any obligation secured by a Permitted Lien,
which is not cured within any applicable cure period or waived in writing by
the holder of the Permitted Lien; or (h) Borrower breaches any material
contract or obligation, which has resulted or may reasonably be expected to
result in a Material Adverse Change; or (i) Dissolution, termination of
existence, insolvency or business failure of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; or j) the commencement of any
proceeding against Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 30 days
after the date commenced; or (k) revocation or termination of, or limitation or
denial of liability upon, any guaranty of the Obligations or any attempt to do
any of the foregoing, or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (1) revocation or
termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind
pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or
against any such third party under any bankruptcy or insolvency law; or (m)
Borrower makes any payment on account of any indebtedness or obligation which
has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
indebtedness or obligations terminates or in any way limits his subordination
agreement; or (n) there shall be a change in the record or beneficial ownership
of an aggregate of more than 20% of the outstanding shares of stock of
Borrower, in one or more transactions, compared to the ownership of outstanding
shares of stock of Borrower in effect on the date hereof, without the prior
written consent of Silicon; or (o) Borrower shall generally not pay its debts
as they become due, or Borrower shall conceal, remove or transfer any part of
its property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (p) a Material Adverse
Change shall occur.  Silicon may cease
making any Loans hereunder during any of the above cure periods, and thereafter
if an Event of Default has occurred and is continuing.


       7.2   Remedies.  Upon
the occurrence and during the continuance of any Event of Default, and at any
time thereafter, Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do any one or
more of the following:  (a) Cease making
Loans or otherwise extending credit to Borrower under this Agreement or any other
Loan Document; (b) Accelerate and declare all or any part of the Obligations to
be immediately due, payable, and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation; (c) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Borrower hereby authorizes Silicon without
judicial process to enter onto any of Borrower’s premises without interference
to search for, take possession of, keep, store, or remove any of the Collateral,
and remain on the premises or cause a custodian to remain on the premises in
exclusive control thereof, without charge for so long as Silicon deems it
necessary, in its good faith business judgment, in order to complete the
enforcement of its rights under this Agreement or any other agreement;
provided, however, that should Silicon seek to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives:  (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of, and not dispose of, any such
Collateral until 


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

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


       7.4   Power
of Attorney.  Upon
the occurrence and during the continuance of any Event of Default, without
limiting Silicon’s other rights and remedies, Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents)
at any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower’s expense, to do any or all of the following, in
Borrower’s name or otherwise, but Silicon agrees that if it exercises any right
hereunder, it will do so in good faith and in a commercially reasonable
manner:  (a) Execute on behalf of
Borrower any documents that Silicon may, in its good faith business judgment,
deem advisable in order to perfect and maintain Silicon’s security interest in
the Collateral, or in order to exercise a right of Borrower or Silicon, or in
order to fully consummate all the transactions contemplated under this
Agreement, and all other Loan Documents; (b) Execute on behalf of Borrower, any
invoices relating to any Account, any draft against any Account Debtor and any
notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic’s, materialman’s or other lien, or assignment or
satisfaction of mechanic’s, materialman’s or other lien; (c) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of Borrower upon any instruments, or documents, evidence of
payment or Collateral that may come into Silicon’s possession; (d) Endorse all
checks and other forms of remittances received by Silicon; (e) Pay, contest or
settle any lien, charge, encumbrance, security interest and adverse claim in or
to any of the Collateral, or any judgment based thereon, or otherwise take any
action to terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Borrower’s taxes or to
secure the release of any liens therefor, or both; (h) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; 


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 (i) Instruct any third party having custody
or control of any books or records belonging to, or relating to, Borrower to
give Silicon the same rights of access and other rights with respect thereto as
Silicon has under this Agreement; and j) Take any action or pay any sum
required of Borrower pursuant to this Agreement and any other Loan
Documents.  Any and all reasonable sums
paid and any and all reasonable costs, expenses, liabilities, obligations and
attorneys’ fees incurred by Silicon with respect to the foregoing shall be
added to and become part of the Obligations, shall be payable on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations.  In no event
shall Silicon’s rights under the foregoing power of attorney or any of
Silicon’s other rights under this Agreement be deemed to indicate that Silicon
is in control of the business, management or properties of Borrower.

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

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


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


        “Account
Debtor” means the obligor on an Account.


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


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


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


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


        “Collateral”
has the meaning set forth in Section 2 above.


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


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


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


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


        “Eligible
Inventory” [Not Applicable]


        “Eligible
Accounts” means Accounts and General Intangibles arising in the ordinary
course of Borrower’s business from the sale of goods or the rendition of
services, or the non-exclusive licensing of Intellectual Property, which
Silicon, in its good faith business judgment, shall deem eligible for
borrowing.  Without limiting the fact
that the determination of which 


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

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


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


        “GAAP”
means generally accepted accounting principles consistently applied.


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


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


        “including”
means including (but not limited to).


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


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


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

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

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


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


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


        “Payment”
means all checks, wire transfers and other items of payment received by Silicon
(including proceeds of Accounts and payment of the Obligations in full) for
credit to Borrower’s outstanding Loans or, if the balance of the Loans have
been reduced to zero, for credit to its Deposit Accounts.


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


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


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


        “Reserves” means, as of any date of
determination, such amounts as Silicon may from time to time establish and
revise in its good faith business judgment, reducing the amount of
Loans, Letters of Credit and other financial accommodations which would
otherwise be available to Borrower under the lending formula(s) provided in the
Schedule:  (a) to reflect events,
conditions, contingencies or risks which, as determined by Silicon in its good
faith business judgment, do or may adversely affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation 


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any increase in
delinquencies of Accounts), (ii) the assets, business or prospects of Borrower
or any Guarantor, or (iii) the security interests and other rights of Silicon
in the Collateral (including the enforceability, perfection and priority
thereof); or (b) to reflect Silicon’s good faith belief that any collateral
report or financial information furnished by or on behalf of Borrower or any
Guarantor to Silicon is or may have been incomplete, inaccurate or misleading
in any material respect; or (c) in respect of any state of facts which Silicon
determines in good faith constitutes an Event of Default or may, with notice or
passage of time or both, constitute an Event of Default.

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

9.     GENERAL PROVISIONS.


       9.1   Interest Computation; Float Charge. 
In computing interest on the Obligations, all Payments
received after 12:00 Noon on any day shall be deemed received on the next
Business Day.  In addition, Silicon
shall be entitled to charge Borrower a “float” charge in an amount equal to
three Business Days interest, at the interest rate applicable to the Loans, on
all Payments received by Silicon.  Said
float charge is not included in interest for purposes of computing Minimum Monthly
Interest (if any) under this Agreement. 
The float charge for each month shall be payable on the last day of the
month.


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


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


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


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


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


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


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


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  Silicon
  Valley Bank
	
  Loan and Security Agreement

	
   
	
  



  



expressly required by
this Agreement.  Borrower hereby agrees
to indemnify Silicon and its affiliates, subsidiaries, parent, directors,
officers, employees, agents, and attorneys, and to hold them harmless from and
against any and all claims, debts, liabilities, demands, obligations, actions,
causes of action, penalties, costs and expenses (including reasonable
attorneys’ fees), of every kind, which they may sustain or incur based upon or
arising out of any of the Obligations, or any relationship or agreement between
Silicon and Borrower, or any other matter, relating to Borrower or the Obligations;
provided that this indemnity shall not extend to damages proximately caused by
the indemnitee’s own gross negligence or willful misconduct.  Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this Section
shall survive any termination of this Agreement and shall for all purposes
continue in full force and effect.

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

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


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


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


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


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


       9.15  Limitation of Actions.  Any
claim or cause of action by Borrower against Silicon, its directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Loan Agreement, or any other Loan Document, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or
any other matter, cause or thing whatsoever, occurred, done, omitted or
suffered to be done by Silicon, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
the filing of a complaint within one year after the first act, occurrence or
omission upon which such claim or cause of 


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  Silicon
  Valley Bank
	
  Loan and Security Agreement

	
   
	
  



  



action, or any part
thereof, is based, and the service of a summons and complaint on an officer of
Silicon, or on any other person authorized to accept service on behalf of
Silicon, within thirty (30) days thereafter. 
Borrower agrees that such one-year period is a reasonable and sufficient
time for Borrower to investigate and act upon any such claim or cause of
action.  The one-year period provided
herein shall not be waived, tolled, or extended except by the written consent
of Silicon in its sole discretion.  This
provision shall survive any termination of this Loan Agreement or any other
Loan Document.

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


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


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


	
  Borrower:
	
   
	
  Silicon:
	
   

	
   
	
   
	
   
	
   

	
      MAXWELL TECHNOLOGIES, INC.
	
   
	
  SILICON VALLEY BANK
	
   

	
   
	
   
	
   
	
   

	
      By
	
   
	
   
	
  By
	
   
	
   

	
   
	
  



  	
   
	
   
	
  



  	
   

	
   
	
  President or Vice President
	
   
	
  Title
	
   
	
   

	
   
	
   
	
   
	
   
	
  



  	
   

	
      By
	
   
	
   
	
   
	
   
	
   

	
   
	
  



  	
   
	
   
	
   
	
   

	
   
	
  Secretary or Ass’t Secretary
	
   
	
   
	
   
	
   

							



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