exh101.htm


    Exhibit 10.1

    
 

    LOAN
AND SECURITY AGREEMENT

     

    THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of the
Effective Date between SILICON
VALLEY BANK, a California corporation (“Bank”), and MIPS TECHNOLOGIES, INC., a
Delaware corporation (“Borrower”), provides the terms
on which Bank shall lend to Borrower and Borrower shall repay
Bank.  The parties agree as follows:

     

    1    ACCOUNTING AND OTHER
TERMS

     

    Accounting
terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following
GAAP.  Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in Section 13.  All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning
provided by the Code to the extent such terms are defined therein.

     

    2    LOAN AND TERMS OF
PAYMENT

     

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

     

    2.1.1 Revolving
Advances.

     

    (a) Availability.  Subject
to the terms and conditions of this Agreement, Bank shall make Advances not
exceeding the Availability Amount.  Amounts borrowed hereunder may be
repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to
the applicable terms and conditions precedent herein.

     

    (b) Termination;
Repayment.  The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest
thereon, and all other Obligations relating to the Revolving Line shall be
immediately due and payable.  In addition, at Borrower’s option, so
long as an Event of Default has not occurred and is not continuing, Borrower
shall have the option to terminate the Revolving Line without penalty or
premium, provided Borrower (i) provides written notice to Bank of its election
to  terminate the Revolving Line at least fifteen (15) days prior to
such termination, and (ii) pays, on the date of the  termination (A)
all accrued and unpaid interest with respect to the Revolving Line through the
date  of termination; (B) all remaining unpaid principal amount owing
on the Revolving Line as of  the termination date; and (C) all other
sums, if any, that shall have become due and payable hereunder with respect to
the Revolving Line.

     

    2.1.2 Letters of Credit
Sublimit.

     

    (a) As part
of the Revolving Line, Bank shall issue or have issued Letters of Credit for
Borrower’s account.  Such aggregate amounts utilized hereunder shall
at all times reduce the amount otherwise available for Advances under the
Revolving Line.  The aggregate amount available to be used for the
issuance of Letters of Credit may not exceed the Availability
Amount.  If, on the Revolving Line Maturity Date, there are any
outstanding Letters of Credit, then on such date Borrower shall provide to Bank
cash collateral in an amount equal to 100% of the face amount of all such
Letters of Credit plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business judgment),
to secure all of the Obligations relating to said Letters of
Credit.  Upon expiration of each such Letter of Credit, Bank shall
return the cash collateral securing the Obligations relating to such Letter of
Credit, to the extent not applied to such Obligation.  All Letters of
Credit shall be in form and substance acceptable to Bank in its sole discretion
and shall be subject to the terms and conditions of Bank’s standard Application
and Letter of Credit Agreement (the “Letter of Credit
Application”).  Borrower agrees to execute any further documentation
in connection with the Letters of Credit as Bank may reasonably
request.  Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank 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, except if Bank’s gross negligence or willful misconduct is
the sole reason for such error or mistake.

     

     

    
      
        
        

      

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

     

    (c) Borrower
may request that Bank issue a Letter of Credit payable in a Foreign
Currency.  If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.

     

    (d) To guard
against fluctuations in currency exchange rates, upon the issuance of any Letter
of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”)
under the Revolving Line in an amount equal to ten percent (10%) of the face
amount of such Letter of Credit.  The amount of the Letter of Credit
Reserve may be adjusted by Bank from time to time to account for fluctuations in
the exchange rate.  The availability of funds under the Revolving Line
shall be reduced by the amount of such Letter of Credit Reserve for as long as
such Letter of Credit remains outstanding.

     

    2.1.3 Foreign Exchange
Sublimit.  As part of the Revolving Line, Borrower may enter
into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a
“FX Forward Contract”)
on a specified date (the “Settlement
Date”).  FX Forward Contracts shall have a Settlement Date of
at least one (1) FX Business Day after the contract date and shall be subject to
a reserve of ten percent (10%) of each outstanding FX Forward Contract in a
maximum aggregate amount equal to One Million Dollars ($1,000,000) (the “FX Reserve”).  The
aggregate amount of FX Forward Contracts at any one time may not exceed ten (10)
times the amount of the FX Reserve.  The amount otherwise available
for Credit Extensions under the Revolving Line shall be reduced by an amount
equal to ten percent (10%) of each outstanding FX Forward Contract (the “FX Reduction
Amount”).  Any amounts needed to fully reimburse Bank will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.

     

    2.1.4 Cash Management Services
Sublimit.  Borrower may use up to Ten Million Dollars
($10,000,000) of the Revolving Line for Bank’s cash management services which
may include merchant services, direct deposit of payroll, business credit card,
and check cashing services identified in Bank’s various cash management services
agreements (collectively, the “Cash Management
Services”).  Any amounts Bank pays on behalf of Borrower for
any Cash Management Services will be treated as Advances under the Revolving
Line and will accrue interest at the interest rate applicable to
Advances.

     

    2.1.5 [Omitted.]

     

    2.1.6 Term Loan.

     

    (a) Availability.  Subject
to the satisfaction of the terms and conditions of this Agreement, Bank shall
make one (1) term loan available to Borrower in an amount up to the Term Loan
Amount on the Effective Date and up to ten (10) days thereafter.

     

    (b) Repayment.  Borrower
shall repay the Term Loan in (i) forty-eight (48) equal installments of
principal, plus (ii) monthly payments of accrued interest (the “Term Loan
Payment”).  Beginning on the first day of the month following
the month in which the Funding Date occurs, each Term Loan Payment shall be
payable on the first day of each month.  Borrower’s final Term Loan
Payment, due on the Term Loan Maturity Date, shall include all outstanding
principal and accrued and unpaid interest under the Term Loan

     

    (c) Prepayment.  At
Borrower’s option, Borrower shall have the option to prepay all or any portion
of the outstanding principal balance on the Term Loan, provided Borrower (a)
provides written notice to Bank of its election to prepay the Term Loan at least
fifteen (15) days prior to such prepayment, and (b) pays, on the date of the
prepayment (i) all accrued and unpaid interest with respect to the portion of
the Term Loan being prepaid through the date the prepayment is made; (ii) the
principal amount to be prepaid; and (iii) all other sums, if any, that shall
have become due and payable hereunder with respect to this
Agreement.

     

    2.1.7 General Provisions Relating to the
Advances and the Term Loan. Each Advance or Term Loan shall, at
Borrower’s option in accordance with the terms of this Agreement, be either in
the form of a Prime Rate Loan or a LIBOR Loan; provided that in no event shall
Borrower maintain at any time LIBOR Loans having more than two (2) different
Interest Periods.  Borrower shall pay interest accrued on the Prime
Rate Loans and LIBOR Loans at the rates and in the manner set forth in Section
2.3(b).

     

     

    
      
        
        

      

      
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    2.2 Overadvances.  If, at any time, the sum of (a) the outstanding principal
amount of any Advances (including any amounts used for Cash Management
Services), plus (b) the face amount of any outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of Credit
Reserve), plus (c) the FX Reduction Amount exceeds the lesser of either the
Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in
cash such excess.

     

    2.3 Payment of Interest on the Credit
Extensions.

     

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

     

    (b) Prime Rate Loan; LIBOR
Loan.  Each Prime Rate Loan and LIBOR Loan shall bear interest
on the outstanding principal amount thereof from the date when made, continued
or converted until paid in full at a rate per annum equal to the Prime Rate plus
the Prime Rate Margin or the LIBOR Rate plus the LIBOR Rate Margin, as the case
may be. On and after the expiration of any Interest Period applicable to any
LIBOR Loan outstanding on the date of occurrence of an Event of Default or
acceleration of the Obligations, the Effective Amount of such LIBOR Loan shall,
at the option of Bank, during the continuance of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Prime Rate plus two
percent (2.00%). Pursuant to the terms hereof, interest on each Prime Rate Loan
and LIBOR Loan shall be paid in arrears on each Interest Payment Date. Interest
shall also be paid on the date of any prepayment of any Prime Rate Loan or LIBOR
Loan pursuant to this Agreement for the portion of any Prime Rate Loan or LIBOR
Loan so prepaid and upon payment (including prepayment) in full thereof. All
accrued but unpaid interest on the Prime Rate Loan or LIBOR Loan shall be due
and payable on the Revolving Line Maturity Date or the Term Loan Maturity Date,
as the case may be.

     

    (c) Default
Interest.  Except as otherwise provided in Section 2.3(b),
after an Event of Default, Obligations, at the option of Bank, shall bear
interest two percent (2.00%) above the rate that is otherwise applicable thereto
(the “Default Rate”).
Payment or acceptance of the increased interest provided in this Section 2.3(c)
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Bank.

     

    (d) Prime Rate
Loans.  Each change in the interest rate of the Prime Rate
Loans based on changes in the Prime Rate shall be effective on the effective
date of such change and to the extent of such change.  Bank shall use
its best efforts to give Borrower prompt notice of any such change in the Prime
Rate; provided, however, that any failure by Bank to provide Borrower with
notice hereunder shall not affect Bank’s right to make changes in the interest
rate of the Prime Rate Loan based on changes in the Prime Rate.

     

    (e) LIBOR Loans. The
interest rate applicable to each LIBOR Loan shall be determined in accordance
with Section 3.6(a) hereunder. Subject to Sections 3.6 and 3.7, such rate shall
apply during the entire Interest Period applicable to such LIBOR Loan, and
interest calculated thereon shall be payable on the Interest Payment Date
applicable to such LIBOR Loan.

     

    (f) Debit of Accounts.
Bank may debit any of Borrower’s deposit accounts, including the Designated
Deposit Account, for principal and interest payments when due, or any other
amounts Borrower owes Bank, when due. Bank shall promptly notify Borrower after
it debits Borrower’s accounts. These debits shall not constitute a
set-off.

     

    2.4 Fees.  Borrower
shall pay to Bank:

     

    (a) Loan
Fee.  A fully earned, non-refundable commitment fee equal to
three-eights percent (0.375%) of the Revolving Line, on the Effective
Date;

     

     

    
      
        
        

      

      
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    (b) Commitment
Fee.  A fully earned, non-refundable commitment fee equal to
one half percent (0.50%) of the Term Loan Amount, on the Effective Date;
and

     

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

     

    3    CONDITIONS OF
LOANS

     

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

     

    
      	
              (a)  

            	
              duly
      executed original signatures to the Loan Documents to which it is a
      party;

            


    

     

    
      	
              (b)  

            	
              [reserved]

            


    

     

    
      	
              (c)  

            	
              its
      Operating Documents and a good standing certificate of Borrower certified
      by the Secretary of State of the State of Delaware as of a date no earlier
      than thirty (30) days prior to the Effective
  Date;

            


    

     

    
      	
              (d)  

            	
              duly
      executed original signatures to the completed Borrowing Resolutions for
      Borrower and similar resolutions for MIPS Technologies Holding
      LLC;

            


    

     

    
      	
              (e)  

            	
               a payoff letter
      from Jefferies Finance, LLC;

            


    

     

    
      	
              (f)  

            	
              evidence
      that (i) the Liens securing Indebtedness owed by Borrower to Jefferies
      Finance, LLC will be terminated and (ii) the documents and/or filings
      evidencing the perfection of such Liens, including without limitation any
      financing statements and/or control agreements, have or will, concurrently
      with the initial Credit Extension, be
  terminated.

            


    

     

    
      	
              (g)  

            	
              certified
      copies, dated as of a recent date, of financing statement searches, as
      Bank shall request, accompanied by written evidence (including any UCC
      termination statements) that the Liens indicated in any such financing
      statements either constitute Permitted Liens or have been or, in
      connection with the initial Credit Extension, will be terminated or
      released;

            


    

     

    
      	
              (h)  

            	
              the
      Perfection Certificate(s) executed by
Borrower;

            


    

     

    
      	
              (i)  

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

            


    

     

    
      	
              (j)  

            	
              a
      pledge agreement, in form and substance satisfactory to Bank, executed by
      Borrower and pledging to Lender a security interest in (a) 100% of the
      shares of the outstanding capital stock, of any class, of each material
      Subsidiary of Borrower that is incorporated under the laws of any State of
      the United States or the District of Columbia and (b) 65% of the shares of
      the outstanding capital stock, of any class, of each material Subsidiary
      of Borrower that is not incorporated under the laws of any State of the
      United States or the District of Columbia (the “Pledge
      Agreement”);

            


    

     

    
      	
              (k)  

            	
              evidence
      satisfactory to Bank that the insurance policies required by Section 6.5
      hereof are in full force and effect, together with appropriate evidence
      showing lender loss payable and/or additional insured clauses or
      endorsements in favor of Bank;

            


    

     

    
      	
              (l)  

            	
              payment
      of the fees and Bank Expenses then due as specified in Section 2.4 hereof;
      and

            


    

     

    
      	
              (m)  

            	
              delivery
      to Bank of all stock certificates and promissory notes held by Borrower
      within three (3) Business Days;

            


    

     

     

    
      
        
        

      

      
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    3.1.A Conditions Precedent to Certain
Advances.  Bank’s obligation to make any Advance in excess of
$3,000,000 is subject to the prior completion of the Initial Audit within sixty
days of the Effective Date.

     

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

     

    
      	
              (a)  

            	
              for
      Advances under the Revolving Line, timely receipt of a Notice of
      Borrowing;

            


    

     

    
      	
              (b)  

            	
              for
      any other Credit Extension, timely receipt of any completed and executed
      Payment/Advance Form;

            


    

     

    
      	
              (c)  

            	
              the
      representations and warranties in Section 5 shall be true and accurate in
      all material respects on the date of the Notice of Borrowing or
      Payment/Advance Form, as applicable, and on the effective date of each
      Credit Extension, except as disclosed in writing by Borrower and approved
      in writing by Bank; provided, however, that such materiality qualifier
      shall not be applicable to any representations and warranties that already
      are qualified or modified by materiality in the text thereof; and
      provided, further that those representations and warranties expressly
      referring to a specific date shall be true, accurate and complete in all
      material respects as of such date, and no Event of Default shall have
      occurred and be continuing or result from the Credit Extension. Each
      Credit Extension is Borrower’s representation and warranty on that date
      that the representations and warranties in Section 5 remain true, accurate
      and complete in all material respects; provided, however, that such
      materiality qualifier shall not be applicable to any representations and
      warranties that already are qualified or modified by materiality in the
      text thereof; and provided, further that those representations and
      warranties expressly referring to a specific date shall be true, accurate
      and complete in all material respects as of such date;
  and

            


    

     

    
      	
              (d)  

            	
               in
      Bank’s reasonable discretion, there has not been a Material Adverse
      Change.

            


    

     

    3.3 Covenant to Deliver.


     

    Borrower
agrees to deliver to Bank each item required to be delivered to Bank under this
Agreement as a condition to any Credit Extension.  Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of any such
item shall not constitute a waiver by Bank of Borrower’s obligation to deliver
such item, and any such Credit Extension in the absence of a required item shall
be made in Bank’s sole discretion.

     

    3.4 Procedures for
Borrowing.

     

    (a) Subject
to the prior satisfaction of all other applicable conditions to the making of an
Advance set forth in this Agreement, each Advance shall be made upon Borrower’s
irrevocable written notice delivered to Bank in the form of a Notice of
Borrowing, each executed by a Responsible Officer of Borrower or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower
will indemnify Bank for any loss Bank suffers due to such reliance. Such Notice
of Borrowing must be received by Bank prior to 12:00 p.m. Pacific time, (i) at
least three (3) Business Days prior to the requested Funding Date, in the case
of LIBOR Loans, and (ii) on the requested Funding Date, in the case of Prime
Rate Loans, specifying:

     

    
      	
              (1)  

            	
              the
      amount of the Advance, which, if a LIBOR Loan is requested, shall be in an
      aggregate principal amount of not less than
  $1,000,000;

            


    

     

    
      	
              (2)  

            	
              the
      requested Funding Date;

            


    

     

    
      	
              (3)  

            	
              whether
      the Advance is to be comprised of LIBOR Loans or Prime Rate Loans;
      and

            


    

     

    
      	
              (4)  

            	
              the
      duration of the Interest Period applicable to any such LIBOR Loans
      included in such notice; provided that if the Notice of Borrowing shall
      fail to specify the duration of the Interest Period for any Advance
      comprised of LIBOR Loans, such Interest Period shall be one (1)
      month.

            


    

     

     

    
      
        
        

      

      
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    (b) The
proceeds of all such Advances will then be made available to Borrower on the
Funding Date by Bank by transfer to the Designated Deposit Account or to such
other account(s) as specified by Borrower and, subsequently, by wire transfer to
such other account as Borrower may instruct in the Notice of Borrowing. No
Advances shall be deemed made to Borrower, and no interest shall accrue on any
such Advance, until the related funds have been deposited in the Designated
Deposit Account or such other account(s).

     

    3.5 Conversion
and Continuation Elections.

     

    (a) So long
as (i) no Event of Default or Default exists; (ii) Borrower shall not have sent
any notice of termination of this Agreement; and (iii) Borrower shall have
complied with such customary procedures as Bank has established from time to
time for Borrower’s requests for LIBOR Loans, Borrower may, upon irrevocable
written notice to Bank:

     

    
      	
              (1)  

            	
              elect
      to convert on any Business Day, Prime Rate Loans in an amount equal to not
      less than $1,000,000 into LIBOR
Loans;

            


    

     

    
      	
              (2)  

            	
              elect
      to continue on any Interest Payment Date any LIBOR Loans maturing on such
      Interest Payment Date (or any part thereof in an amount equal to not less
      than $1,000,000); provided, that if the aggregate amount of LIBOR Loans
      shall have been reduced, by payment, prepayment, or conversion of part
      thereof, to be less than $1,000,000, such LIBOR Loans shall automatically
      convert into Prime Rate Loans, and on and after such date the right of
      Borrower to continue such LIBOR Loans as, or convert such Prime Rate Loans
      into, LIBOR Loans shall terminate;
or

            


    

     

    
      	
              (3)  

            	
              elect
      to convert on any Interest Payment Date any LIBOR Loans maturing on such
      Interest Payment Date (or any part thereof in an amount equal to not less
      than $1,000,000 into Prime Rate
Loans.

            


    

     

    (b) Borrower
shall deliver a Notice of Conversion/Continuation in accordance with Section 10 to be received by
Bank prior to 12:00 p.m. Pacific time (i) at least three (3) Business Days in
advance of the Conversion Date or Continuation Date, if any Prime Rate Loans or
LIBOR Loans are to be converted into or continued as LIBOR Loans; and (ii) on
the Conversion Date, if any LIBOR Loans are to be converted into Prime Rate
Loans, in each case specifying the:

     

    
      	
              (1)  

            	
              proposed
      Conversion Date or Continuation
Date;

            


    

     

    
      	
              (2)  

            	
              aggregate
      amount of the Prime Rate Loans or LIBOR Loans to be converted or continued
      which, if any Prime Rate Loans or LIBOR Loans are to be converted into or
      continued as LIBOR Loans, shall be in an aggregate principal amount of not
      less than $1,000,000;

            


    

     

    
      	
              (3)  

            	
              nature
      of the proposed conversion or continuation;
and

            


    

     

    
      	
              (4)  

            	
              duration
      of the requested Interest Period.

            


    

     

    (c) If upon
the expiration of any Interest Period applicable to any LIBOR Loans, Borrower
shall have timely failed to select a new Interest Period to be applicable to
such LIBOR Loans, Borrower shall be deemed to have elected to convert such LIBOR
Loans into Prime Rate Loans.

     

    (d)  Any
LIBOR Loans shall, at Bank’s option, convert into Prime Rate Loans in the event
that an Event of Default or Default shall exist.  In addition, to the
extent the aggregate principal amount of the Prime Rate Loans which have been
previously converted to LIBOR Loans, or the aggregate principal amount of
existing LIBOR Loans continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed the
Revolving Line, then at Bank’s option, such excess amount of LIBOR Loans shall
convert into Prime Rate Loans.  Borrower agrees to pay Bank, upon
demand by Bank (or Bank may, at its option, charge the Designated Deposit
Account or any other account Borrower maintains with Bank) any amounts required
to compensate Bank for any loss (including loss of anticipated profits), cost,
or expense incurred by Bank, as a result of the conversion of LIBOR Loans to
Prime Rate Loans pursuant to any of the foregoing.

     

     

    
      
        
        

      

      
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    3.6 Special
Provisions Governing LIBOR Loans.

     

    Notwithstanding any other provision of
this Agreement to the contrary, the following provisions shall govern with
respect to LIBOR Loans as to the matters covered:

     

    (a) Determination of Applicable
Interest Rate. As soon as practicable on each Interest Rate Determination
Date, Bank shall determine (which determination shall, absent manifest error in
calculation, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the LIBOR Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to
Borrower.

     

    (b) Inability to Determine
Applicable Interest Rate. In the event that Bank shall have determined
(which determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any LIBOR Loan,
that by reason of circumstances affecting the London interbank market adequate
and fair means do not exist for ascertaining the interest rate applicable to
such Advance or Term Loan on the basis provided for in the definition of LIBOR,
Bank shall on such date give notice (by facsimile or by telephone confirmed in
writing) to Borrower of such determination, whereupon (i) no Advances or Term
Loans may be made as, or converted to, LIBOR Loans until such time as Bank
notifies Borrower that the circumstances giving rise to such notice no longer
exist, and (ii) any Notice of Borrowing or Notice of Conversion/Continuation
given by Borrower with respect to Advances or Term Loans in respect of which
such determination was made shall be deemed to be rescinded by
Borrower.

     

    (c) Compensation for Breakage or
Non-Commencement of Interest Periods. Borrower shall compensate Bank,
upon written request by Bank (which request shall set forth the manner and
method of computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Loans and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment
of such funds) such that Bank may incur: (i) if for any reason (other than a
default by Bank or due to any failure of Bank to fund LIBOR Loans due to
impracticability or illegality under Sections 3.7(d) and 3.7(e)) a borrowing or
a conversion to or continuation of any LIBOR Loan does not occur on a date
specified in a Notice of Borrowing or a Notice of Conversion/Continuation, as
the case may be, or (ii) if any principal payment or any conversion of any of
its LIBOR Loans occurs on a date prior to the last day of an Interest Period
applicable to that Advance or Term Loan (other than the payment of an
installment of principal in accordance with Section 2.1.6(b).

     

    (d) Assumptions Concerning
Funding of LIBOR Loans. Calculation of all amounts payable to Bank under
this Section 3.6 shall be made as though Bank had actually funded each of its
relevant LIBOR Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to the definition of LIBOR Rate in an
amount equal to the amount of such LIBOR Loan and having a maturity comparable
to the relevant Interest Period; provided, however, that Bank may fund each of
its LIBOR Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this Section
3.6.

     

    (e) LIBOR Loans After
Default. After the occurrence and during the continuance of an Event of
Default, (i) Borrower may not elect to have an Advance or Term Loan be made as,
or a LIBOR Loan continued as, or a Prime Rate Loan converted to, a LIBOR Loan
after the expiration of any Interest Period then in effect for such Advance or
Term Loan and (ii) subject to the provisions of Section 3.6(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Borrower and be deemed a request to convert into or continue as
Prime Rate Loans.

     

    3.7 Additional Requirements/Provisions
Regarding LIBOR Loans.

     

    (a) [Reserved]

     

    (b) Borrower
shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any costs incurred by Bank that
Bank determines are attributable to its making or maintaining of any amount
receivable by Bank hereunder in respect of any LIBOR Loan relating thereto (such
increases in costs and reductions in amounts receivable being herein called
“Additional Costs”), in each case resulting from any Regulatory Change
which:

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (i) changes
the basis of taxation of any amounts payable to Bank under this Agreement in
respect of any LIBOR Loan (other than changes which affect taxes measured by or
imposed on the overall net income of Bank by the jurisdiction in which Bank has
its principal office);

     

    (ii) imposes
or modifies any reserve, special deposit or similar requirements relating to any
extensions of credit or other assets of, or any deposits with, or other
liabilities of Bank (including any LIBOR Loan or any deposits referred to in the
definition of LIBOR); or

     

    (iii)  imposes
any other condition affecting this Agreement (or any of such extensions of
credit or liabilities). Bank will notify Borrower of any event occurring after
the Closing Date which will entitle Bank to compensation pursuant to this
Section 3.7 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Bank will furnish Borrower with a
statement setting forth the basis and amount of each request by Bank for
compensation under this Section 3.7. Determinations and allocations by Bank for
purposes of this Section 3.7 of the effect of any Regulatory Change on its costs
of maintaining its obligations to make LIBOR Loans, of making or maintaining
LIBOR Loans, or on amounts receivable by it in respect of LIBOR Loans, and of
the additional amounts required to compensate Bank in respect of any Additional
Costs, shall be conclusive absent manifest error.

     

    (c) If Bank
shall determine that the adoption or implementation of any applicable law, rule,
regulation, or treaty regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its applicable lending office)
with any respect or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank, or comparable agency, has
or would have the effect of reducing the rate of return on capital of Bank or
any person or entity controlling Bank (a “Parent”) as a consequence of its
obligations hereunder to a level below that which Bank (or its Parent) could
have achieved but for such adoption, change, or compliance (taking into
consideration policies with respect to capital adequacy) by an amount deemed by
Bank to be material, then from time to time, within fifteen (15) days after
demand by Bank, Borrower shall pay to Bank such additional amount or amounts as
will compensate Bank for such reduction. A statement of Bank claiming
compensation under this Section 3.7(c) and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive absent manifest
error.

     

    (d) If, at
any time, Bank, in its sole and absolute discretion, determines that (i) the
amount of LIBOR Loans for periods equal to the corresponding Interest Periods
are not available to Bank in the offshore currency interbank markets, or (ii)
LIBOR does not accurately reflect the cost to Bank of lending the LIBOR Loans,
then Bank shall promptly give notice thereof to Borrower. Upon the giving of
such notice, Bank’s obligation to make the LIBOR Loans shall terminate;
provided, however, Advances and Term Loans shall not terminate if Bank and
Borrower agree in writing to a different interest rate applicable to LIBOR
Loans.

     

    (e) If it
shall become unlawful for Bank to continue to fund or maintain any LIBOR Loans,
or to perform its obligations hereunder, upon notice to the Borrower, Bank’s
obligation to make LIBOR Loans shall terminate and all outstanding LIBOR Loans
shall be automatically converted into Prime Rate Loans. Notwithstanding the
foregoing, to the extent a determination by Bank as described above relates to a
LIBOR Loan then being requested by Borrower pursuant to a Notice of Borrowing or
a Notice of Conversion/Continuation, Borrower shall have the option, subject to
the provisions of Section 3.6(c), to (i) rescind such Notice of Borrowing or
Notice of Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives
notice of its determination as described above, or (ii) modify such Notice of
Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Loan or to
have outstanding LIBOR Loans converted into or continued as Prime Rate Loans by
giving notice (by facsimile or by telephone confirmed in writing) to Bank of
such modification on the date on which Bank gives notice of its determination as
described above.

     

    4    CREATION
OF SECURITY INTEREST

     

    4.1 Grant of Security
Interest.  Borrower hereby grants Bank, to secure the payment
and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products
thereof.  Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement).  If Borrower shall acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the
general details thereof and grant to Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to
Bank.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    If this
Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in
cash.  Upon payment in full in cash of the Obligations and at such
time as Bank’s obligation to make Credit Extensions has terminated, Bank shall,
at Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower.

     

    4.2 Authorization to File Financing
Statements.  Borrower hereby authorizes Bank to file financing
statements, without notice to Borrower, with all appropriate jurisdictions to
perfect or protect Bank’s interest or rights hereunder, including a notice that
any disposition of the Collateral, by either Borrower or any other Person, shall
be deemed to violate the rights of Bank under the Code.  Such
financing statements may indicate the Collateral as “all assets of the Debtor”
or words of similar effect, or as being of an equal or lesser scope, or with
greater detail, all in Bank’s discretion.

     

    5    REPRESENTATIONS AND
WARRANTIES

     

    Borrower
represents and warrants as follows:

     

    5.1 Due Organization, Authorization;
Power and Authority.  Borrower is duly existing and in good
standing as a Registered Organization in its jurisdiction of formation and is
qualified and licensed to do business and is in good standing in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on Borrower’s
business.  In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and warrants to Bank that
(a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an
organization of the type and is organized in the jurisdiction set forth in the
Perfection Certificate; (c) the Perfection Certificate accurately sets forth
Borrower’s organizational identification number or accurately states that
Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office
as well as Borrower’s mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational structure
or type, or any organizational number assigned by its jurisdiction; and (f) all
other information set forth on the Perfection Certificate pertaining to Borrower
and each of its Subsidiaries is accurate and complete in all material respects
(it being understood and agreed that Borrower may from time to time update
certain information in the Perfection Certificate after the Effective Date to
the extent permitted by one or more specific provisions in this
Agreement).  If Borrower is not now a Registered Organization but
later becomes one, Borrower shall promptly notify Bank of such occurrence and
provide Bank with Borrower’s organizational identification number.

     

    The
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party have been duly authorized, and do not (i) conflict with any of
Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect)
or (v) constitute an event of default under any material agreement by which
Borrower is bound.  Borrower is not in default under any agreement to
which it is a party or by which it is bound in which the default could
reasonably be expected to have a material adverse effect on Borrower’s
business.

     

    5.2 Collateral.  Borrower
has good title to, has rights or leasehold interests in, and the power to
transfer each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted
Liens.  Borrower has no deposit accounts other than the deposit
accounts with Bank, the deposit accounts, if any, described in the Perfection
Certificate delivered to Bank in connection herewith, or of which Borrower has
given Bank notice and taken such actions as are necessary to give Bank a
perfected security interest therein.  The Accounts are bona fide,
existing obligations of the Account Debtors.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    The Collateral is not in the possession
of any third party bailee (such as a warehouse) except as otherwise provided in
the Perfection Certificate.  None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection
Certificate; provided that Borrower may maintain at any location not more than
$100,000 in the aggregate of inventory or equipment in transit, equipment used
by employees at off-site locations or other such Collateral.  In the
event that Borrower, after the date hereof, intends to store or otherwise
deliver any portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Bank and such bailee must execute and deliver a
bailee agreement in form and substance satisfactory to Bank in its sole
discretion.

     

    Borrower owns, or is licensed to use,
or could obtain ownership or rights to use on terms not materially adverse to
it, the intellectual property necessary for the conduct of its business as
currently conducted.  To the knowledge of Borrower, each patent owned
by Borrower is valid and enforceable, and no part of the intellectual property
owned by Borrower has been judged invalid or unenforceable, in whole or in part,
and to the best of Borrower’s knowledge, no claim has been made that the use by
Borrower of its intellectual property violates the rights of any third party
except to the extent such claim could not reasonably be expected to have a
material adverse effect on Borrower’s business.  Except as noted on
the Perfection Certificate (as updated from time to time by notice to Bank) and
other than over-the-counter software that is commercially available to the
public, Borrower is not a party to, nor is bound by, any material license or
other agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property except to the extent
such prohibition on assignment is subject to 9-406(d) or 9-408 the
Code.  Borrower shall provide written notice to Bank within ten (10)
days of entering or becoming bound by any such material license or agreement
(other than over-the-counter software that is commercially available to the
public).

     

    Other
than those listed on Schedule 5.2, Borrower does not own or hold any
certificated securities.

     

    5.3 Accounts Receivable;
Inventory.  For any Eligible Account or Recurring Royalty
Account in any Borrowing Base Certificate, all statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
such Eligible Accounts or Recurring Royalty Accounts are and shall be true and
correct and all such invoices, instruments and other documents, and all of
Borrower's Books are genuine and in all respects what they purport to
be.  Whether or not an Event of Default has occurred and is
continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s
security interest in such funds and verify the amount of such Eligible Account
or Recurring Royalty Account by (i) mail, electronic mail or facsimile
transmission with Borrowers initiating the verification and Bank receiving such
verification directly from the relevant Account Debtor, or (ii) telephone,
provided that one or more officers, employees or other representatives of a
Borrower initiates and conducts any telephone call regarding any such
verification while Bank is present on such call.  All sales and other
transactions underlying or giving rise to each Eligible Account or Recurring
Royalty Account shall comply in all material respects with all applicable laws
and governmental rules and regulations.  Borrower has no knowledge of
any actual or imminent Insolvency Proceeding of any Account Debtor whose
accounts are Eligible Accounts or Recurring Royalty Accounts in any Borrowing
Base Certificate.  To the best of Borrower’s knowledge, all signatures
and endorsements on all documents, instruments, and agreements relating to all
Eligible Accounts or Recurring Royalty Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting creditors’ rights and remedies generally, and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

     

    5.4 Litigation.  Except
as disclosed on the Perfection Certificate, there are no actions or proceedings
pending or, to the knowledge of the Responsible Officers, threatened in writing
by or against Borrower or any of its Subsidiaries involving more than One
Million Dollars ($1,000,000).

     

    5.5 No Material Deviation in Financial
Statements.  All consolidated financial statements for Borrower
and any of its Subsidiaries delivered to Bank fairly present in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations.  There has not been any material deterioration
in Borrower’s consolidated financial condition since the date of the most recent
financial statements submitted to Bank.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    5.6 Solvency.  The fair
salable value of Borrower’s assets (including goodwill minus disposition costs)
exceeds the fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and
Borrower is able to pay its debts (including trade debts) as they
mature.

     

    5.7 Regulatory
Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors).  Borrower has complied in all
material respects with the Federal Fair Labor Standards Act.  Except
as noted in the Perfection Certificate, Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to have
a material adverse effect on its business.  None of Borrower’s or any
of its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than in compliance with applicable laws or as would not reasonably be
expected to result in a material liability to Borrower.  Borrower and
each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Government Authorities that are necessary to continue their respective
businesses as currently conducted.

     

    5.8 Subsidiaries;
Investments.  Except as disclosed on the Perfection
Certificate, Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.

     

    5.9 Tax Returns and Payments; Pension
Contributions.  Borrower has timely filed all required material
tax returns and reports, and Borrower has timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower,
except for taxes, assessments, deposits and contributions contest in good faith
by appropriate proceedings as set forth below.  Borrower may defer
payment of any contested taxes, assessments, deposits and contributions,
provided that Borrower (a) in good faith contests its obligation to pay the
taxes, assessments, deposits and contributions by appropriate proceedings
promptly and diligently instituted and conducted, and (b) posts bonds or takes
any other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a “Permitted Lien”.  Borrower is unaware of any claims or
adjustments proposed for any of Borrower's prior tax years which could result in
additional taxes becoming due and payable by Borrower.  Borrower has
paid all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not
withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any material
liability of Borrower, including any material liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental
agency.

     

    5.10 Use of
Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely for debt repayment and as working capital and to fund its
general business requirements and not for personal, family, household or
agricultural purposes.

     

    5.11           [Omitted.]

    


    5.12           Full Disclosure.  No
written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank, as of the date such
representation, warranty, or other statement was made, taken together with all
such written certificates and written statements given to Bank, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

    


    6    AFFIRMATIVE
COVENANTS

     

    Borrower
shall do all of the following:

     

    6.1 Government
Compliance.  Borrower shall, and shall cause each of its
Subsidiaries to, maintain its legal existence and good standing in its
jurisdiction of formation and each jurisdiction in which the nature of its
business requires them to be so qualified, except where the failure to take such
action would not reasonably be expected to have a material adverse effect on
Borrower’s and its Subsidiaries’ business or operations, taken as a whole;
provided, that (a) the legal existence of any Subsidiary that is not a Guarantor
may be terminated or permitted to lapse, and any qualification of such
Subsidiary to do business may be terminated or permitted to lapse, if, in the
good faith judgment of Borrower, such termination or lapse is in the best
interests of Borrower and its Subsidiaries, taken as a whole, and (b) Borrower
may not permit its qualification to do business in the jurisdiction of its chief
executive office to terminate or lapse; and provided, further, that this Section
6.1 shall not be construed to prohibit any other transaction that is otherwise
expressly permitted in Section 7 of this Agreement. Borrower shall comply, and
shall have each Subsidiary comply, with all laws, ordinances and regulations to
which it is subject, noncompliance with which could have a material adverse
effect on Borrower’s business.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

          6.2 Financial Statements, Reports,
Certificates.

     

    
      	
              (a)  

            	
              10Q and 10K
      Reports.

            


    

     

    
      	
              (i)  

            	
              As
      soon as available, but no later than the earlier of (x) five (5) days
      after filing with the Securities Exchange Commission or (y) forty-five
      (45) days after the fiscal quarter end (other than a fiscal quarter end
      that is also a fiscal year end), deliver to Bank Borrower’s quarterly
      reports on Form 10-Q (”10Q Reports”); Borrower
      may deliver 10Q Reports by providing a link thereto on Borrower’s or
      another website on the Internet;
and

            


    

     

    
      	
              (ii)  

            	
              As
      soon as available, but no later than the earlier of (x) five (5) days
      after filing with the Securities Exchange Commission or (y) ninety (90)
      days after the fiscal year end, deliver to Bank Borrower’s annual reports
      on Form 10-K (“10K
      Reports”); provided, however, that Borrower may delay sending a 10K
      Report if Borrower has filed for an extension to file such 10K Report
      pursuant to Rule 12b-25 under the  Securities Exchange Act of
      1934, as amended, but only if Borrower provides to Bank (1) company
      prepared, consolidated financial statements together with the completed
      Form 12b-25 (including all attachments) within the original time
      prescribed in the first sentence of this Section 6.2(a)(ii) and (2) the
      10K Report upon filing with the Securities Exchange
      Commission.  Borrower may deliver 10K Reports by providing a
      link thereto on Borrower’s or another website on the
    Internet.

            


    

     

    
      	
              (b)  

            	
              Compliance
      Certificate.  Together with the delivery of any 10Q
      Report, 10K Report or, in case a 10K Report is delayed as permitted in
      Section 6.2(a), company prepared financial statements together with the
      filed Form 12b-25 (including attachments) (or delivery of the link, as the
      case may be), deliver to Bank a duly completed Compliance Certificate
      signed by a Responsible Officer setting forth calculations showing
      compliance with the financial covenants set forth in this
      Agreement;

            


    

     

    
      	
              (c)  

            	
              Consolidating
      Financial Statements.  Together with the delivery of any
      10Q Report, 10K Report or, in case a 10K Report is delayed as permitted in
      Section 6.2(a), company prepared, consolidated financial statements
      together with the filed Form 12b-25 (including attachments) (or delivery
      of the link, as the case may be),  deliver to Bank Borrower’s
      consolidating financial statements to the extent not included in the 10Q
      Report or 10K Report.

            


    

     

    
      	
              (d)  

            	
              Annual Financial
      Projections.  No later than ten (10) days after approval
      by Borrower’s board of directors (but in any event within ninety (90) days
      after the end of each fiscal year), deliver to Bank Borrower’s annual
      financial projections for the following fiscal year (on a quarterly basis)
      as approved by Borrower’s board of directors, together with any related
      business forecasts used in the preparation of such annual financial
      projections;

            


    

     

    
      	
              (e)  

            	
              Borrowing Base
      Certificate; Accounts Receivable and Accounts Payable Aging; Deferred
      Revenue.  If any Advances are outstanding under the
      Revolving Line, within thirty (30) days after the last day of each month,
      deliver to Bank a duly completed Borrowing Base Certificate signed by a
      Responsible Officer, with (i) aged listings of accounts receivable
      (by invoice date, for domestic U.S. account receivables and previously
      approved foreign accounts only), (ii) aged listing of accounts payable (by
      invoice date) and (iii) a report detailing Borrower’s Deferred
      Revenue.  If no Advance is outstanding under the Revolving Line,
      the Borrowing Base Certificate together with the reports required under
      Section 6.2(e)(i)-(iii) shall be due no later than five (5) days prior to
      the next Revolving Line Advance.

            


    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              (f)  

            	
              Royalty Trend
      Report.  Within thirty (30) days of the end of each
      fiscal quarter, provide to Bank a royalty trend report for Borrower’s
      Recurring Royalty Accounts, which report shall include (i) a listing, by
      customer, of all royalty revenue received during such quarter and (ii) the
      total of all royalties generated during such
  quarter.

            


    

     

    
      	
              (g)  

            	
              Legal Action
      Report.  Deliver to Bank a prompt report of any legal
      actions pending or threatened against Borrower or any Subsidiary that is
      reasonably expected to result in damages or costs to Borrower or any
      Subsidiary of One Million Dollars ($1,00,000) or
  more;

            


    

     

    
      	
              (h)  

            	
              Collateral
      Audit.  Allow Bank to audit Borrower’s Collateral at
      Borrower’s expense.  Such audits shall be conducted no more
      often than once every year unless an Event of Default has occurred and is
      continuing.

            


    

     

    
      	
              (i)  

            	
              Other. Deliver
      to Bank all budgets, sales projections, operating plans or other financial
      information Bank reasonably
requests;

            


    

     

    6.3 Control
Agreement.  Within thirty (30) days of the Effective Date,
deliver to Bank a duly executed original Control Agreement for each account for
which a Control Agreement is required pursuant to Section 6.6(b) of the
Agreement.

     

    6.4 Taxes;
Pensions.  Timely file or be granted an extension to file, and
require each of its Subsidiaries to timely file or be granted an extension to
file, all required tax returns and reports and timely pay, and require each of
its Subsidiaries to timely file, all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes, assessments, deposits
and contributions contested pursuant to the terms of Section 5.9 hereof, and
shall deliver to Bank, on demand, appropriate certificates attesting to such
payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their
terms.

     

    6.5 Insurance.  Keep its
business and the Collateral insured for risks and in amounts standard for
companies in Borrower’s industry and location and as Bank may reasonably
request.  Insurance policies shall be in a form, with companies, and
in amounts that are satisfactory to Bank.  All property policies shall
have a lender’s loss payable endorsement showing Bank as lender loss payee and
waive subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured.  All policies (or
the loss payable and additional insured endorsements) shall provide that the
insurer shall endeavor to give Bank at least twenty (20) days notice before
canceling, amending, or declining to renew its policy.  At Bank’s
request, Borrower shall deliver certified copies of policies and evidence of all
premium payments.  After the occurrence and during the continuance of
an Event of Default, all proceeds payable under such casualty policy shall, at
the option of Bank, be payable to Bank on account of the
Obligations.  If Borrower fails to obtain insurance as required under
this Section 6.5 or to pay any amount or furnish any required proof of
payment to third persons and Bank, Bank may make all or part of such payment or
obtain such insurance policies required in this Section 6.5, and take any action
under the policies Bank deems prudent.

     

    6.6 Operating
Accounts.

     

    (a) No later than ninety (90) days from the
Effective Date, and at all times thereafter, maintain its primary and its
Subsidiaries’ primary domestic operating and other deposit accounts and
securities accounts with Bank and Bank’s Affiliates. 

     

    (b) Provide
Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or Bank’s
Affiliates.  For each Domestic Collateral Account that Borrower at any
time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Domestic Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Domestic Collateral Account to perfect Bank’s
Lien in such Domestic Collateral Account in accordance with the terms
hereunder.  The provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower’s employees and
identified to Bank by Borrower as such.

     

     

    
      
        
        

      

      
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    6.7 Financial
Covenants.

     

    Borrower
shall maintain on a consolidated basis with respect to Borrower and its
Subsidiaries:

     

    
      	
              (a)  

            	
              Fixed Charge
      Coverage.  As of the end of each fiscal quarter, a ratio
      of (x) EBITDA for the quarter then ended and the immediately preceding
      quarter minus unfunded capital expenditures during such two (2) quarters
      divided
      by (y) the sum of the same rolling 2 quarters’ scheduled payments
      of principal and interest on all Indebtedness (excluding the pay-off or
      pre-payment of Indebtedness to Jefferies Finance LLC on or before the
      Effective Date), which ratio shall be not less than (a) 1.25 to 1.00 for
      the quarters ending September 30, 2008 and December 31, 2008 and (b) 1.50
      to 1.00 for all quarters ending
thereafter;

            


    

     

    
      	
              (b)  

            	
              Senior Debt Leverage
      Ratio.  As of the end of each fiscal quarter, a ratio of
      (x) the sum of all Indebtedness consisting of all amounts owed to banks
      (including the Advances and Term Loan hereunder) plus all capital lease
      obligations divided
      by (y) the annualized EBITDA calculated from the EBITDA for the
      quarter then ended and the immediately preceding quarter, which ratio
      shall be not more than 2.00 to 1.00;
and

            


    

     

    
      	
              (c)  

            	
              Adjusted Quick
      Ratio.  As of the end of each fiscal quarter, a ratio of
      (x) the sum of Quick Assets divided
      by (y) Current Liabilities minus Deferred Revenue, which ratio
      shall be not less than (a) 0.65 to 1.00, for the quarter ending September
      30, 2008, (b) 0.75 to 1.00, for the quarters ending December 31, 2008 and
      March 31, 2009 and (c) 1.00 to 1.00 for each quarter ending
      thereafter.

            


    

     

     

    6.8 Protection and Registration of
Intellectual Property Rights.  Borrower shall:  (a)
use commercially reasonable efforts to protect, defend and maintain the validity
and enforceability of its intellectual property; (b) promptly advise Bank in
writing of material infringements of its intellectual property; and (c) not
allow any intellectual property owned by Borrower and material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s
written consent unless Borrower shall reasonably determine that any intellectual
property is not of material value or has no business value and such abandonment,
forfeiture or dedication would not result in a Material Adverse
Change.

     

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

     

    6.10 [Omitted.]

     

    6.11 Designated Senior
Indebtedness.  Borrower shall designate all principal of,
interest (including all interest accruing after the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding), and all fees, costs,
expenses and other amounts accrued or due under this Agreement as “Designated
Senior Indebtedness”, or such similar term, in any future Subordinated Debt
incurred by Borrower after the date hereof.

     

    6.12 Further
Assurances.  Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement.  Deliver to
Bank, within five
(5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
that could reasonably be expected to have a material effect on the operations of
Borrower or any of its Subsidiaries (other than anything available to the
general public without charge on Borrower’s or another website).

     

     

    
      
        
        

      

      
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    7    NEGATIVE
COVENANTS

     

    Borrower
shall not do any of the following without Bank’s prior written consent (which
shall not be unreasonably withheld or delayed):

     

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

    


    (a)           Transfers
in the ordinary course of business for reasonably equivalent
consideration;

    


    (b)           Transfers
to Borrower or any of its Subsidiaries from Borrower or any of its
Subsidiaries;

    


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

    


    
      	
               
      

            	
              (d)

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

            


    

    


    
      	
               
      

            	
              (e)

            	
              Transfers
      constituting non-exclusive licenses and similar arrangements for the use
      of the property of Borrower or its Subsidiaries in the ordinary course of
      business and other non-perpetual licenses that may be exclusive in some
      respects other than territory (and/or that may be exclusive as to
      territory only in discreet geographical areas outside of the United
      States), but that could not result in a legal transfer of Borrower’s title
      in the licensed property;

            


    

    


    
      	
               
      

            	
              (f)

            	
              Transfers
      otherwise permitted by the Loan
Documents;

            


    

    


    
      	
               
      

            	
              (g)

            	
              sales
      or discounting of delinquent accounts or notes receivables in the ordinary
      course of business;

            


    

    


    
      	
               
      

            	
              (h)

            	
              Transfers
      associated with the making or disposition of a Permitted
      Investment;

            


    

    


    
      	
               
      

            	
              (i)

            	
              Transfers
      in connection with a permitted acquisition of a portion of the assets or
      rights acquired;

            


    

    


    
      	
               
      

            	
              (j)

            	
              dispositions
      of worn out, obsolete, uneconomic or surplus
  property;

            


    

     

    


     

    
      	
               
      

            	
              (k)

            	
              leases
      or subleases of the real property located at Tagus Park, Av. Dr. Mario
      Soarez 33, 2740-119 Portu Salvo;

            


    

     

    
      	
               
      

            	
              (l)

            	
              Transfers
      of intellectual property immaterial to Borrower’s business and which, in
      the aggregate, accounted for no more than $500,000 of revenue in the
      calendar year preceding each such disposition;
  and

            


    

     

    
      	
               
      

            	
              (n)

            	
              Transfers
      of assets (other than Accounts, and Inventory (unless such Transfer is in
      the ordinary course of Borrower’s business)) not otherwise permitted in
      this Section 7.1, provided, that the aggregate book value of all such
      Transfers by Borrower and its Subsidiaries, together, shall not exceed in
      any fiscal year, $500,000.

            


    

     

    7.2 Changes in Business; Change in
Control; Jurisdiction of Formation.

    


    Engage in
any material line of business other than those lines of business conducted by
Borrower and its Subsidiaries on the date hereof and any businesses reasonably
related, complementary or incidental thereto or reasonable extensions
thereof; or permit or suffer any
Change in Control.  Borrower will not, without prior written notice,
change its jurisdiction of formation.

     

     

    
      
        
        

      

      
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    7.3 Mergers or
Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any Person other than with Borrower
or any Subsidiary, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of a Person other than
Borrower or any Subsidiary, except where no Event of Default has occurred and is
continuing or would result from such action during the term of this Agreement,
and (a) if Borrower is a party to the merger, Borrower is the surviving entity
or (b) such merger or consolidation is not a Transfer prohibited by Section 7.1
hereof.

    


    7.4 Indebtedness.  Create,
incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do
so, other than Permitted Indebtedness.

     

    7.5 Encumbrance.  (i)
Create, incur, allow, or suffer any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except as is otherwise permitted by
Section 7.1 hereof and except for Permitted Liens, (ii) permit any Collateral
not to be subject to the first priority security interest granted herein, except
to the extent any Permitted Liens have priority over the security interests
granted herein, or (iii) enter into any agreement, document, instrument or other
arrangement (except with or in favor of Bank) with any Person which directly or
indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary
from assigning, mortgaging, pledging, granting a security interest in or upon,
or encumbering any of Borrower’s or any Subsidiary’s intellectual property,
except in connection with Transfers permitted in Section 7.1 hereof, customary
non-assignment provisions contained in licenses or sublicenses and Permitted
Liens.

     

    7.6 Maintenance of Collateral
Accounts.  Maintain any Collateral Account except pursuant to
the terms of Section 6.6(b) hereof.

     

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

     

    7.8 Transactions with
Affiliates.  Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower or permit
Guarantor directly or indirectly to enter into or permit to exist any material
transactions between Guarantor and any Affiliate of Guarantor except for (a)
transactions that are in the ordinary course of Borrower’s or Guarantor’s
business, upon fair and reasonable terms (when viewed in the context of any
series of transactions of which it may be a part, if applicable); or
(b) transactions among Borrower or Guarantor and its Subsidiaries and among
Borrower’s or Guarantor’s Subsidiaries so long as no Event of Default exists or
could result therefrom.

     

    7.9 Subordinated
Debt.  Make or permit any payment on or amendments of any
Subordinated Debt, except (a) payments pursuant to the terms of the Subordinated
Debt; (b) payments made with Borrower’s capital stock or other Subordinated
Debt; or (c) amendments to Subordinated Debt so long as such Subordinated
Debt remains subordinated in right of payment to this Agreement and any Liens
securing such Subordinated Debt remain subordinate in priority to Bank’s Lien
hereunder.

     

    7.10 Compliance.  Become
an “investment company” or a company controlled by an “investment company”,
under the Investment Company Act of 1940, as amended, or undertake as one of its
important activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System), or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event (other
than those events as to which the thirty day notice period is waived under
subsections .27, .28, .29, .30, .31, .32, .34 or .35 of Pension Benefit Guaranty
Corporation Reg. §4043) or Prohibited Transaction, as defined in ERISA, to
occur; fail to comply with the Federal Fair Labor Standards Act or violate any
other law or regulation, if such failure to comply or such violation could
reasonably be expected to have a material adverse effect on Borrower’s business,
or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.

     

     

    
      
        
        

      

      
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    8    EVENTS OF
DEFAULT

     

    Any one
of the following shall constitute an event of default (an “Event of Default”) under this
Agreement:

     

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

     

    8.2 Covenant Default.

     

    (a)
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5,
6.6, 6.7, 6.11 or violates any covenant in Section 7; or

     

    (b)
Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period).  Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (a) above;

     

    8.3 Material Adverse
Change.  A Material Adverse Change occurs;

     

    8.4 Attachment; Levy; Restraint on
Business.  (a) (i) The service of process seeking to attach, by
trustee or similar process, any funds of Borrower or of any entity under control
of Borrower (including a Subsidiary) on deposit with Bank or any Bank Affiliate,
or (ii) a notice of lien, levy, or assessment is filed against any of Borrower’s
assets by any government agency, and the same under subclauses (i) and (ii)
hereof are not, within ten (10) days after the occurrence thereof, discharged or
stayed (whether through the posting of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period; and (b)
(i) any material portion of Borrower’s assets is attached, seized, levied on, or
comes into possession of a trustee or receiver, or (ii) any court order
enjoins, restrains, or prevents Borrower from conducting any part of its
business;

     

    8.5 Insolvency.  (a)
Borrower is unable to pay its debts (including trade debts) as they become due
or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower and not dismissed or
stayed within forty-five (45) days (but no Credit Extensions shall be made while
of any of the conditions described in clause (a) exist and/or until any
Insolvency Proceeding is dismissed);

     

    8.6 Other
Agreements.  If Borrower fails to (a) make any payment that is
due and payable with respect to any Material Indebtedness and such failure
continues after the applicable grace or notice period, if any, specified in the
agreement or instrument relating thereto, or (b) perform or observe any
other condition or covenant, or any other event shall occur or condition exist
under any agreement or instrument relating to any Material Indebtedness, and
such failure continues after the applicable grace or notice period, if any,
specified in the agreement or instrument relating thereto and the effect of such
failure, event or condition is to cause the holder or holders of such Material
Indebtedness to accelerate the maturity of such Material Indebtedness or cause
the mandatory repurchase of any Material Indebtedness;

     

    8.7 Judgments.  One or
more judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Five Hundred Thousand Dollars
($500,000) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered against
Borrower and shall remain unsatisfied, unvacated, or unstayed for a period of
thirty (30) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment,
order, or decree);

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    8.8 Misrepresentations.  Borrower
or any Person acting for Borrower makes any representation, warranty, or other
statement in writing now or later in this Agreement, any Loan Document or in any
writing delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document, and such representation, warranty, or other statement in writing is
incorrect in any material respect when made;

     

    8.9 Subordinated
Debt.  A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement;
or

     

    8.10 Guaranty.  (a) Any
guaranty of any Obligations terminates or ceases for any reason to be in full
force and effect; (b) any Guarantor does not perform any obligation or covenant
under any guaranty of the Obligations; (c) any circumstance described in
Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor;
(d) the liquidation, winding up, or termination of existence of any
Guarantor (other than by virtue of a merger or liquidation into Borrower or
other Guarantor); or (e) a material impairment in the perfection or
priority of Bank’s Lien in the collateral provided by Guarantor or in the value
of such collateral.

     

    8.11           Governmental
Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not
renewed in the ordinary course for a full term or (b) subject to any
decision by a Governmental Authority that designates a hearing with respect to
any applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal has, or could reasonably be expected to have, a
Material Adverse Change.

     

    9    BANK’S RIGHTS AND
REMEDIES

     

    9.1 Rights and
Remedies.  While an Event of Default occurs and continues Bank
may, without notice or demand, do any or all of the following:

     

    (a) declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Bank);

     

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

     

    (c) demand
that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter
of Credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;

     

    (d) terminate
any FX Forward Contracts;

     

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

     

    (f) make any
payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral.  Borrower
shall assemble the Collateral if Bank requests and make it available as Bank
designates.  Bank may enter premises where the Collateral is located,
take and maintain possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Borrower grants Bank a license
to enter and occupy any of its premises, without charge, to exercise any of
Bank’s rights or remedies;

     

    (g) apply to
the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of
Borrower;

     

    (h) ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s
benefit;

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (i) place a
“hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to
any Control Agreement or similar agreements providing control of any
Collateral;

     

    (j) demand
and receive possession of Borrower’s Books; and

     

    (k) exercise
all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).

     

    9.2 Power of
Attorney.  Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse Borrower’s name
on any checks or other forms of payment or security; (b) sign Borrower’s name on
any invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of Bank or a third party as the Code permits.  Borrower
hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on
any documents necessary to perfect or continue the perfection of Bank’s security
interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations have been satisfied in full and Bank is under no
further obligation to make Credit Extensions hereunder.  Bank’s
foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights
and powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.

     

    9.3 Protective
Payments.  During the continuance of an Event of Default, if
Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay
any premium thereon or fails to pay any other amount which Borrower is obligated
to pay under this Agreement to any third party or any other Loan Document, Bank
may obtain such insurance or make such payment, and all amounts so paid by Bank
are Bank Expenses and immediately due and payable, bearing interest at the then
highest applicable rate, and secured by the Collateral.  Bank will
make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time
thereafter.  No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of
Default.

     

    9.4 Application of Payments and Proceeds.  Borrower
shall have no right to specify the order or the accounts to which Bank shall
allocate or apply any payments required to be made by Borrower to Bank or
otherwise received by Bank under this Agreement when any such allocation or
application is not specified elsewhere in this Agreement.  If an Event
of Default has occurred and is continuing, Bank may apply any funds in its
possession, whether from Borrower account balances, payments, proceeds realized
as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion.  Any surplus shall be paid to
Borrower or other Persons legally entitled thereto; Borrower shall remain liable
to Bank for any deficiency.  If Bank, 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, Bank shall have the
option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor.

     

    9.5 Bank’s Liability for
Collateral.  So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under
the control of Bank, Bank shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person.  Borrower bears all
risk of loss, damage or destruction of the Collateral.

     

    9.6 No Waiver; Remedies
Cumulative.  Bank’s failure, at any time or times, to require
strict performance by Borrower of any provision of this Agreement or any other
Loan Document shall not waive, affect, or diminish any right of Bank thereafter
to demand strict performance and compliance herewith or therewith.  No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is
given.  Bank’s rights and remedies under this Agreement and the other
Loan Documents are cumulative.  Bank has all rights and remedies
provided under the Code, by law, or in equity.  Bank’s exercise of one
right or remedy is not an election, and Bank’s waiver of any Event of Default is
not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    9.7 Demand
Waiver.  Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

     

    10    NOTICES

     

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

     

    If to
Borrower:   MIPS
Technologies, Inc.

                1225 Charleston
Road

                Mountain View, CA
94043

                Attn:
General Counsel

                Fax:  (650)
567-5154

                Email: stu@mips.com

     

    If to
Bank:      Silicon Valley Bank

                2400
Hanover Street

                Palo
Alto, CA 94303

                Attn:
Nick Tsiagkas

                Fax: (650)
320-0016

                Email: NTsiagkas@svb.com

     

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

     

    California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank.  Borrower
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and Borrower hereby waives any objection that
it may have based upon lack of personal jurisdiction, improper venue, or forum
non conveniens and hereby consents to the granting of such legal or equitable
relief as is deemed appropriate by such court.  Borrower hereby waives
personal service of the summons, complaints, and other process issued in such
action or suit and agrees that service of such summons, complaints, and other
process may be made by registered or certified mail addressed to Borrower at the
address set forth in Section 10 of this Agreement and that service so made shall
be deemed completed upon the earlier to occur of Borrower’s actual receipt
thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid.

     

    TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF
DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES
TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER
WITH ITS COUNSEL.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is
not enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided by
a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be
conducted pursuant to and in accordance with the provisions of California Code
of Civil Procedure §§ 638 through 645.1, inclusive.  The private judge
shall have the power, among others, to grant provisional relief, including
without limitation, entering temporary restraining orders, issuing preliminary
and permanent injunctions and appointing receivers.  All such
proceedings shall be closed to the public and confidential and all records
relating thereto shall be permanently sealed.  If during the course of
any dispute, a party desires to seek provisional relief, but a judge has not
been appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the Santa Clara County, California Superior Court for
such relief.  The proceeding before the private judge shall be
conducted in the same manner as it would be before a court under the rules of
evidence applicable to judicial proceedings.  The parties shall be
entitled to discovery which shall be conducted in the same manner as it would be
before a court under the rules of discovery applicable to judicial
proceedings.  The private judge shall oversee discovery and may
enforce all discovery rules and order applicable to judicial proceedings in the
same manner as a trial court judge.  The parties agree that the
selected or appointed private judge shall have the power to decide all issues in
the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California Code of Civil Procedure
§ 644(a).  Nothing in this paragraph shall limit the right of any
party at any time to exercise self-help remedies, foreclose against collateral,
or obtain provisional remedies.  The private judge shall also
determine all issues relating to the applicability, interpretation, and
enforceability of this paragraph.

     

    12    GENERAL
PROVISIONS

     

    12.1 Successors and
Assigns.  This Agreement binds and is for the benefit of the
successors and permitted assigns of each party.  Borrower may not
assign this Agreement or any rights or obligations under it without Bank’s prior
written consent (which may be granted or withheld in Bank’s
discretion).  Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank’s obligations, rights, and benefits under this
Agreement and the other Loan Documents.

     

    12.2 Indemnification.  Borrower
agrees to indemnify, defend and hold Bank and its directors, officers,
employees, agents, attorneys, or any other Person affiliated with or
representing Bank (each, an “Indemnified Person”) harmless
against:  (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”)
asserted by any other party in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by
such Indemnified Person from, following, or arising from transactions between
Bank and Borrower (including reasonable attorneys’ fees and expenses), except
for Claims and/or losses directly caused by such Indemnified Person’s gross
negligence or willful misconduct.

     

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

     

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

     

    12.5 Correction of Loan
Documents.  Bank may correct patent errors and fill in any
blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.

     

    12.6 Amendments in Writing;
Integration.  All amendments to this Agreement must be in
writing and signed by both Bank and Borrower.  This Agreement and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    12.7 Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.

     

    12.8 Survival.  All
covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied.  The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

     

    12.9 Confidentiality.  In
handling any confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order;
(d) to Bank’s regulators or as otherwise required in connection with Bank’s
examination or audit; (e) as Bank considers appropriate in exercising remedies
under the Loan Documents; and (f) to third-party service providers of Bank so
long as such service providers have executed a confidentiality agreement with
Bank with terms no less restrictive than those contained
herein.  Confidential information does not include information that
either: (i) is in the public domain or in Bank’s possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank through no
fault of Bank; or (ii) is disclosed to Bank by a third party, if Bank does not
know that the third party is prohibited from disclosing the
information.

     

    Bank may
use confidential information for any purpose, including, without limitation, for
the development of client databases, reporting purposes, and market analysis, so
long as Bank does not disclose Borrower’s identity or the identity of any person
associated with Borrower unless otherwise expressly permitted by this
Agreement.  The provisions of the immediately preceding sentence shall
survive the termination of this Agreement.

     

    12.10 Attorneys’ Fees, Costs and
Expenses.  In any action or proceeding between Borrower and
Bank arising out of or relating to the Loan Documents, the prevailing party
shall be entitled to recover its reasonable attorneys’ fees and other costs and
expenses incurred, in addition to any other relief to which it may be
entitled.

     

    13    DEFINITIONS

     

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

     

    “Account” is any “account” as
defined in the Code with such additions to such term as may hereafter be made,
and includes, without limitation, all accounts receivable and other sums owing
to Borrower.

     

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

     

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

     

    “Affiliate” of any Person is a
Person that owns or controls directly or indirectly the Person, any Person that
controls or is controlled by or is under common control with the Person, and
each of that Person’s senior executive officers, directors, partners (if such
Person is a partnership) and, for any Person that is a limited liability
company, that Person’s managers and members.

     

    “Agreement” is defined in the
preamble hereof.

     

    “Availability Amount” is (a)
the lesser of (i) the Revolving Line or (ii) the amount available under the
Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to the
Letter of Credit Reserve, minus (c) the FX Reserve, minus (d) any amounts used
for Cash Management Services, and minus (e) the outstanding principal balance of
any Advances.

     

    “Bank” is defined in the
preamble hereof.

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    “Bank Expenses” are all audit
fees and expenses, costs, and expenses (including reasonable attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings).

     

     “Borrower” is defined in the
preamble hereof

     

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

     

    “Borrowing Base” is (a) Three
Million Dollars ($3,000,000) plus (b)
the sum of (i) 80% of Eligible Accounts and (ii) 60% of Recurring Royalty
Accounts billed during the preceding fiscal quarter; provided
that  the amount in clause (b)(ii) shall be no more than Six Million
Dollars ($6,000,000).  Each of the foregoing shall be determined by
Bank from Borrower’s most recent Borrowing Base
Certificate.  Notwithstanding the foregoing, Bank may decrease the
foregoing amounts or percentages in its good faith business judgment based on
events, conditions, contingencies, or risks which, as determined by Bank, may
adversely affect Collateral.

    


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

     

    “Borrowing Resolutions” are,
with respect to any Person, those resolutions substantially in the form of the
resolutions included in Exhibit D and which
resolutions were adopted by such Person’s Board of Directors and delivered by
such Person to Bank approving the Loan Documents to which such Person is a party
and the transactions contemplated thereby, together with a certificate
substantially in the form of the certificate attached to this Agreement as Exhibit D executed by
its secretary on behalf of such Person certifying that (a) such Person has
the authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that the resolutions included in
such certificate are a true, correct, and complete copy of the resolutions then
in full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and
until such Person shall have delivered to Bank a further certificate canceling
or amending such prior certificate.

     

     “Business Day” is any day other
than a Saturday, Sunday or other day on which banking institutions in the State
of California are authorized or required by law or other governmental action to
close, except that if any determination of a “Business Day” shall relate to a
LIBOR Loan, the term “Business Day” shall also mean a day on which dealings are
carried on in the London interbank market, and if any determination of a
“Business Day” shall relate to an FX Forward Contract, the term “Business Day”
shall mean a day on which dealings are carried on in the country of settlement
of the foreign (i.e., non-Dollar) currency.

     

     “Cash Equivalents” means
(a) marketable direct obligations issued or unconditionally guaranteed by the
United States or any agency or any State thereof; (b) commercial paper maturing
no more than one (1) year after its creation and having the highest rating from
either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.;
(c) certificates of deposit issued maturing no more than one (1) year after
issue and either issued by Bank or any commercial bank that issues (or the
parent of which issues) commercial paper described in clause (b), is organized
under the laws of the United States or any state thereof and has combined
capital and surplus aggregating in excess of $500,000,000, (d) demand deposit
accounts maintained in the ordinary course of business, (e) repurchase
obligations of Bank or any other commercial bank described in clause (c) above,
and (f) investments in money market, mutual or similar funds 90% of whose assets
are composed of securities of the type described in clauses (a) through (e)
above.

     

    “Cash Management Services” is
defined in Section 2.1.4.

     

    “Change in Control” means any
event, transaction, or occurrence as a result of which (a) any “person” (as such
term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as an amended (the “Exchange Act”)), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
Borrower, representing forty percent (40%) or more of the combined voting power
of Borrower’s then outstanding securities; or (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the Board of Directors of Borrower (together with any new directors
whose election by the Board of Directors of Borrower was approved by a vote of
at least a majority of the directors then still in office who either were
directors at the beginning of such period  or whose election or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office.

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    


    “Chipidea” means MIPSABG
Chipidea, Lda. (formerly known as, Chipidea Microelectronica, S.A.), a
Subsidiary of Borrower located in Portugal and incorporated under the laws of
Portugal.

    


    “Chipidea Share Purchase
Agreement” means that certain Share Purchase Agreement, dated as of
August 24, 2007, among Borrower, Atlantic Acquos, Limitada, the former Chipidea
shareholders and Espirito Santo Ventures – Sociedade de Capital de Risco, SA, as
shareholder representative.

    


    “Code” is the Uniform
Commercial Code, as the same may, from time to time, be enacted and in effect in
the State of California; provided, that, to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to, Bank’s
Lien on any Collateral is governed by the Uniform Commercial Code in effect in a
jurisdiction other than the State of California, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes on the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such
provisions.

    


    “Collateral” is any and all
properties, rights and assets of Borrower described on Exhibit
A.

     

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

     

    “Comfort Letter” is that
certain letter from Borrower to Banco Espirito Santo, S.A., Lisboa, Portugal
dated March 4, 2008 making reference to a certain €500,000 credit
facility.

     

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

     

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

     

    “Contingent Obligation” is, for
any Person, any direct or indirect liability, contingent or not, of that Person
for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another Person such as an obligation directly or indirectly guaranteed,
endorsed, co-made, discounted or sold with recourse by that Person, or for which
that Person is directly or indirectly liable; (b) any obligations for undrawn
letters of credit for the account of that Person; and (c) all obligations from
any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a
Person against fluctuation in interest rates, currency exchange rates or
commodity prices; but “Contingent Obligation” does not include endorsements in
the ordinary course of business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith;
but the amount may not exceed the maximum of the obligations under any guarantee
or other support arrangement.

     

    “Continuation Date” means any
date on which Borrower elects to continue a LIBOR Loan into another Interest
Period.

     

    “Control Agreement” is any
control agreement entered into among the depository institution at which
Borrower maintains a Domestic Deposit Account or the securities intermediary or
commodity intermediary at which Borrower maintains a Domestic Securities Account
or a Domestic Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Domestic Deposit
Account, Domestic Securities Account, or Domestic Commodity
Account.

     

    “Conversion Date” means any
date on which Borrower elects to convert a Prime Rate Loan to a LIBOR Loan or a
LIBOR Loan to a Prime Rate Loan.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    “Credit Extension” is any
Advance, Letter of Credit, Term Loan, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for
Borrower’s benefit.

     

     “Current Assets” are amounts
that under GAAP should be included on that date as current assets on Borrower’s
consolidated balance sheet.

     

    “Current Liabilities” is the
aggregate amount of Borrower’s current liabilities, as determined in accordance
with GAAP and on a consolidated basis, but not including any liabilities with
respect to (i) earn-out payments out of the Founders Deferral Escrow Account or
(ii) indemnification payments out of the Indemnification Escrow Account (each of
(i) and (ii) as defined in, and pursuant to, Section 2.2 of the Chipidea Share
Purchase Agreement).

     

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

     

    “Deferred Revenue” is all
amounts received or invoiced in advance of performance under contracts and not
yet recognized as revenue in accordance with GAAP.

     

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

     

    “Designated Deposit Account” is
Borrower’s deposit account, account number 3300610305, maintained with
Bank.

     

    “Dollars,” “dollars” and “$” each mean lawful money of
the United States.

     

    “Domestic” means located in the
United States or governed by United States, or any of its States’,
law.

     

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

     

     “EBITDA” shall mean, for any
fiscal period, (a) Net Income for such period, plus (b) Interest Expense for
such period, plus (c) consolidated income taxes of Borrower and its Subsidiaries
for such period, plus (d) to the extent deducted in the calculation of Net
Income, consolidated depreciation expense and amortization expense of Borrower
and its Subsidiaries for such period, plus (e) other consolidated non-cash
expenses, including non-cash stock compensation expense, of Borrower and its
Subsidiaries for such period, plus (f) non-cash charges for the amortization of
amounts in the Founders Deferral Escrow Account (as defined in the Chipidea
Share Purchase Agreement) if and to the extent such amounts constitute employee
compensation.

     

    “Effective Amount” means with
respect to any Advances on any date, the aggregate
outstanding  principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such
date.

     

    “Effective Date” is the date
Bank executes this Agreement as indicated on the signature page
hereof.

     

    “Eligible Accounts” means
Accounts (exclusive of Recurring Royalty Accounts) which arise in the ordinary
course of Borrower’s business that meet all Borrower’s representations and
warranties in Section 5.3.  Bank reserves the right at any time after
the Effective Date to adjust any of the criteria set forth below and to
establish new criteria in its good faith business judgment.  Eligible
Accounts shall not include:

     

    
      	
               
      

            	
              (a)

            	
              Accounts
      that the Account Debtor has not paid within ninety (90) days of invoice
      date regardless of invoice payment period
terms;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Accounts
      owing from an Account Debtor, fifty percent (50%) or more of whose
      Accounts have not been paid within ninety (90) days of invoice
      date;

            


    

     

    
      	
               
      

            	
              (c)

            	
              Accounts
      billed in the United States and owing from an Account Debtor which does
      not have its principal place of business in the United States or Canada
      unless such Accounts are otherwise Eligible Accounts and (i) covered in
      full by credit insurance satisfactory to Bank, less any deductible,
      (ii) supported by letter(s) of credit acceptable to Bank,
      (iii) supported by a guaranty from the Export-Import Bank of the
      United States, or (iv) Bank, acting reasonably, otherwise approves of
      in writing.;

            


    

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (d)

            	
              Except
      if separately approved by Bank, acting reasonably, in writing on an
      Account-by-Account basis, Accounts billed and payable outside of the
      United States unless the Bank has a first priority, perfected security
      interest or other enforceable Lien in such Accounts; provided that all
      Accounts with Motorola Inc. and Sony Corporation, including all of their
      subsidiaries, shall be included in the calculation of Eligible
      Accounts;

            


    

     

    
      	
               
      

            	
              (e)

            	
              Accounts
      owing from an Account Debtor to the extent that Borrower is indebted or
      obligated in any manner to the Account Debtor (as creditor, lessor,
      supplier or otherwise - sometimes called “contra” accounts, accounts
      payable, customer deposits or credit accounts) that could give rise to any
      right of set-off or recoupment against such accounts, with the exception
      of customary credits, adjustments and/or discounts given to an Account
      Debtor by Borrower in the ordinary course of its business and provided
      that the portion of such accounts in excess of the amounts owed to such
      Account debtor shall be deemed “Eligible Accounts” to
      the extent that such portion would otherwise be an “Eligible
      Account”;

            


    

     

    
      	
               
      

            	
              (f)

            	
              Accounts
      for which the Account Debtor is Borrower’s Affiliate (other than any
      Person that is an Affiliate of the Borrower solely because a director or
      officer of such Person serves as a director of the Borrower), officer,
      employee, or agent;

            


    

     

    
      	
               
      

            	
              (g)

            	
              [Reserved]

            


    

     

    
      	
               
      

            	
              (h)

            	
              Accounts
      owing from an Account Debtor whose total obligations to Borrower exceed
      twenty-five (25%) of all Accounts, for the amounts that exceed that
      percentage, unless Bank approves in
writing;

            


    

     

    
      	
               
      

            	
              (i)

            	
              Accounts
      owing from an Account Debtor which is a United States government entity or
      any department, agency, or instrumentality thereof unless Borrower has
      assigned its payment rights to Bank and the assignment has been
      acknowledged under the Federal Assignment of Claims Act of 1940, as
      amended;

            


    

     

    
      	
               
      

            	
              (j)

            	
              Accounts
      for demonstration or promotional equipment, or in which goods are
      consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
      approval”, or other terms if Account Debtor’s payment may be
      conditional;

            


    

     

    
      	
               
      

            	
              (k)

            	
              Accounts
      owing from an Account Debtor that has not been invoiced or where goods or
      services have not yet been rendered to the Account Debtor (sometimes
      called memo billings or
pre-billings);

            


    

     

    
      	
               
      

            	
              (l)

            	
              Accounts
      subject to contractual arrangements between Borrower and an Account Debtor
      where payments shall be scheduled or due according to completion or
      fulfillment requirements where the Account Debtor has a right of offset
      for damages suffered as a result of Borrower’s failure to perform in
      accordance with the contract (sometimes called contracts accounts
      receivable, progress billings, milestone billings, or fulfillment
      contracts) (but only to the extent of such right to
    offset);

            


    

     

    
      	
               
      

            	
              (m)

            	
              Accounts
      owing from an Account Debtor the amount of which may be subject to
      withholding based on the Account Debtor’s satisfaction of Borrower’s
      complete performance (but only to the extent of the amount withheld;
      sometimes called retainage
billings);

            


    

     

    
      	
               
      

            	
              (n)

            	
              Accounts
      subject to trust provisions, subrogation rights of a bonding company, or a
      statutory trust (but only to the extent of such
  rights);

            


    

     

    
      	
               
      

            	
              (o)

            	
              Accounts
      owing from an Account Debtor that has been invoiced for goods that have
      not been shipped to the Account Debtor unless Bank, Borrower, and the
      Account Debtor have entered into an agreement acceptable to Bank in its
      sole discretion wherein the Account Debtor acknowledges that (i) it has
      title to and has ownership of the goods wherever located, (ii) a bona fide
      sale of the goods has occurred, and (iii) it owes payment for such goods
      in accordance with invoices from Borrower (sometimes called “bill and
      hold” accounts);

            


    

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (p)

            	
              Accounts
      for which the Account Debtor has not been
  invoiced;

            


    

     

    
      	
               
      

            	
              (q)

            	
              Accounts
      that represent non-trade receivables or that are derived by means other
      than in the ordinary course of Borrower’s
  business;

            


    

     

    
      	
               
      

            	
              (r)

            	
              Accounts
      subject to chargebacks or others payment deductions taken by an Account
      Debtor (provided that such Accounts shall be deemed “Eligible Accounts” to
      the extent the chargeback is determined invalid and subsequently collected
      by Borrower);

            


    

     

    
      	
               
      

            	
              (s)

            	
              Accounts
      in which the Account Debtor disputes liability or makes any claim (but
      only up to the disputed or claimed amount), or if the Account Debtor is
      subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
      business; and

            


    

     

    
      	
               
      

            	
              (t)

            	
              Accounts
      for which Bank in its good faith business judgment determines collection
      to be doubtful.

            


    

     

    “Equipment” is all “equipment”
as defined in the Code with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing.

     

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

     

    “Euros,” “euro” and “€”each mean lawful money of
the European Union.

     

    “Event of Default” is defined
in Section 8.

     

    “Foreign Currency” means lawful
money of a country other than the United States.

     

    “Foreign Subsidiary” means any
Subsidiary which is not a Domestic Subsidiary.

     

    “Funding Date” is any date on
which a Credit Extension is made to or on account of Borrower which shall be a
Business Day.

     

    “FX Business Day” is any day
when (a) Bank’s Foreign Exchange Department is conducting its normal business
and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign
Currency.

     

    “FX Forward Contract” is defined in Section
2.1.3.

     

    “FX Reduction Amount” is
defined in Section 2.1.3.

     

    “FX Reserve” is defined in Section
2.1.3.

     

    “GAAP” is generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other Person as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

     

    “General Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other 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.

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    “Governmental Approval” is any
consent, authorization, approval, order, license, franchise, permit,
certificate, accreditation, registration, filing or notice, of, issued by, from
or to, or other act by or in respect of, any Governmental
Authority.

    


    “Governmental Authority” is any
nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

     

    “Guarantor” is any present or future
guarantor of the Obligations, including MIPS Technologies Holding LLC, a limited
liability corporation organized under the laws of Delaware.

     

     “Indebtedness” is (a)
indebtedness for borrowed money or the deferred price of property or services,
such as reimbursement and other obligations for surety bonds and letters of
credit (but excluding accounts payable in the ordinary course of business,
accrued payroll expenses accrued in the ordinary course of business and
obligations in respect of time-based licenses for computer-aided design
software), (b) obligations evidenced by notes, bonds, debentures or similar
instruments, (c) capital lease obligations, and (d) Contingent
Obligations.

     

    “Indemnified Person” is defined
in Section 12.2.

     

    “Initial Audit” is Bank’s
inspection of Borrower’s Accounts, the Collateral, and Borrower’s
Books.

     

    “Insolvency Proceeding” is any
proceeding by or against any Person under the United States Bankruptcy Code, or
any other bankruptcy or insolvency law, including assignments for the benefit of
creditors, compositions, extensions generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

     

    “Interest Expense” means for
any fiscal period, consolidated interest expense (whether cash or non-cash) for
Borrower and its Subsidiaries determined in accordance with GAAP for the
relevant period ending on such date, including, in any event, interest expense
with respect to any Credit Extension and other Indebtedness of Borrower and its
Subsidiaries.

     

    “Interest Payment Date” means,
with respect to any LIBOR Loan, the last day of each Interest Period applicable
to such LIBOR Loan and, with respect to Prime Rate Loans, the first (1st) day of
each month (or, if the first day of the month does not fall on a Business Day,
then on the first Business Day following such date), and each date a Prime Rate
Loan is converted into a LIBOR Loan to the extent of the amount converted to a
LIBOR Loan.

     

    “Interest Period” means, as to
any LIBOR Loan, the period commencing on the date of such LIBOR Loan, or on the
conversion/continuation date on which the LIBOR Loan is converted into or
continued as a LIBOR Loan, and ending on the date that is one (1), two (2),
three (3), or six (6) months thereafter, in each case as Borrower may elect in
the applicable Notice of Borrowing or Notice of Conversion/Continuation;
provided, however, that (a) no Interest Period with respect to any LIBOR Loan
shall end later than the Revolving Line Maturity Date or the Term Loan Maturity
Date, as the case may be, (b) the last day of an Interest Period shall be
determined in accordance with the practices of the LIBOR interbank market as
from time to time in effect, (c) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of a LIBOR Loan, the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business Day, (d)
any Interest Period pertaining to a LIBOR Loan that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.

     

    “Interest Rate Determination
Date” means each date for calculating the LIBOR for purposes of
determining the interest rate in respect of an Interest Period. The Interest
Rate Determination Date shall be the second Business Day prior to the first day
of the related Interest Period for a LIBOR Loan.

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

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

     

     “Letter of Credit” means a
standby letter of credit issued by Bank or another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Bank as
set forth in Section 2.1.2.

     

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

     

    “Letter of Credit Reserve” has
the meaning set forth in Section 2.1.2(d).

     

    “LIBOR” means, for any Interest
Rate Determination Date with respect to an Interest Period for any Advance or
Term Loan to be made, continued as or converted into a LIBOR Loan, the rate of
interest per annum determined by Bank to be the per annum rate of interest at
which deposits in United States Dollars are offered to Bank in the London
interbank market (rounded upward, if necessary, to the nearest 1/10,000th of one
percent (0.0001%)) in which Bank customarily participates at 11:00 a.m. (local
time in such interbank market) two (2) Business Days prior to the first day of
such Interest Period for a period approximately equal to such Interest Period
and in an amount approximately equal to the amount of such Advance or Term
Loan.

     

    “LIBOR Loan” means an Advance
or Term Loan that bears interest based on the LIBOR Rate.

     

    “LIBOR Rate” means, for each
Interest Period in respect of LIBOR Loans comprising part of the same Advances
or Term Loan, an interest rate per annum (rounded upward, if necessary, to the
nearest 1/10,000th of one percent (0.0001%)) equal to LIBOR for such Interest
Period divided by one (1) minus the Reserve Requirement for such Interest
Period.

     

    “LIBOR Rate Margin” means (a)
for LIBOR Loans under the Revolving Line, two and three-quarters percent (2.75%)
and (b) for LIBOR Loans under the Term Loan, three percent (3.00%).

     

    “Lien” is a claim, mortgage,
deed of trust, levy, charge, pledge, security interest or other encumbrance of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise against any property.

     

     “Loan Documents” are,
collectively, this Agreement, the Perfection Certificate, the Uncertificated
Security Control Agreement, the Unconditional Guaranty and Security Agreement,
any note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreements between Borrower any Guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.

     

    “Material Adverse Change” is
(a) a material impairment in the perfection or priority of Bank’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse change in
the business, operations, or condition (financial or otherwise) of Borrower; or
(c) a material impairment of the prospect of repayment of any portion of the
Obligations.

    


    “Material Indebtedness” is any
Indebtedness the principal amount of which is equal to or greater than
$500,000.

     

    “Net Income” means, for any
fiscal period as calculated on a consolidated basis for Borrower and its
Subsidiaries, the consolidated net profit (or loss), of Borrower and its
Subsidiaries for such period taken as a single accounting period, as determined
in accordance with GAAP.

     

    “Notice of Borrowing” means a
notice given by Borrower to Bank in accordance with Section 3.2(a),
substantially in the form of Exhibit G, with
appropriate insertions.

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    “Notice of
Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5, substantially in the form of Exhibit F, with
appropriate insertions.

     

    “Obligations” are Borrower’s
obligation to pay when due any debts, principal, interest, Bank Expenses and
other amounts Borrower owes Bank now or later, whether under this Agreement, the
Loan Documents, or otherwise, including, without limitation, all obligations
relating to letters of credit (including reimbursement obligations for drawn and
undrawn letters of credit), cash management services, and foreign exchange
contracts, if any, and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower  assigned to
Bank, and the performance of Borrower’s duties under the Loan
Documents.

     

    “Operating Documents” are, for
any Person, such Person’s formation documents, as certified with the Secretary
of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a corporation,
its bylaws in current form, (b) if such Person is a limited liability company,
its limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications
thereto.

     

     “Payment/Advance Form” is that
certain form attached hereto as Exhibit
B.

     

    “Perfection Certificate” is
defined in Section 5.1.

     

     “Permitted Distributions”
means:

     

    (a)           purchases
of capital stock from former employees, consultants and directors pursuant to
repurchase agreements, employee stock option, restricted stock or stock option
plans or other similar agreements in an aggregate amount not to exceed $500,000
in any fiscal year provided that at the time of such purchase no Default or
Event of Default has occurred and is continuing;

     

    (b)           distributions
or dividends consisting solely of Borrower's capital stock or other
non-redeemable equity securities;

     

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

     

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

     

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

     

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

     

    (g)           purchases
of fractional shares of capital stock arising out of stock dividends, splits or
combinations or business combinations;

     

    (h)           the
settlement or performance of such Person’s obligations under any equity
derivative transaction, option contract or similar transaction or combination of
transactions;

     

    (i)           distributions
or dividends by any Subsidiary to Borrower or, so long as not a guarantee, to
another Subsidiary, or in the case of subsidiaries that are not wholly owned by
Borrower or such other Subsidiary, dividends or distributions by such
subsidiaries to each equity owner thereof on a pro rata basis (or on a more
favorable basis to Borrower or such other Subsidiary); and

     

    (j)           other
distributions, dividends or purchases of Borrower’s capital stock in cash,
provided that the aggregate amount of such distributions, dividends, or
purchases made pursuant to this clause (i) during the period commencing on the
Effective Date and ending on the date of determination, when combined with
purchases of Subordinated Debt during such period, shall not exceed $500,000,
and no Default or Event of Default exists or could result from such other
distribution, dividend, or purchase.

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    “Permitted Indebtedness”
is:

     

            
 (a) Borrower’s
Indebtedness to Bank under this Agreement and any other Loan
Document;

     

     (b) (i) any
Indebtedness that does not exceed $250,000 in principal amount existing on the
Effective Date, (ii) any Indebtedness in excess of $250,000 in principal amount
existing on the Effective Date and shown on the Perfection Certificate and (iii)
any Indebtedness listed in Schedule P-I;

     

           
 (c) Subordinated
Debt;

     

    (d) unsecured
Indebtedness to trade creditors and with respect to surety bonds and similar
obligations incurred in the ordinary course of business;

     

    (e) guaranties
of Permitted Indebtedness;

     

    (f) Indebtedness
incurred as a result of endorsing negotiable instruments received in the
ordinary course of business and in respect of rehiring services, overdraft
protections and otherwise in connection with deposit accounts;

     

    (g) Indebtedness
consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect Borrower
against fluctuations in interest rates, currency exchange rates, or commodity
prices (collectively, “Hedging
Contracts”);

     

    (h) Indebtedness
between Borrower and any of its Subsidiaries or among any of Borrower’s
Subsidiaries;

     

    (i) Indebtedness
with respect to documentary letters of credit;

     

    (j) (i)
capitalized leases and purchase money Indebtedness not to exceed $500,000 in the
aggregate in any fiscal year secured by Permitted Liens and (ii) capitalized
leases and purchase money Indebtedness of Chipidea which, together with item 6
on Schedule P-I, do not to exceed €1,500,000 outstanding at any
time;

     

    (k) Indebtedness
of entities acquired in any permitted merger or acquisition
transaction;

     

    (l) other
Indebtedness, if, on the date of incurring any Indebtedness pursuant to this
clause (l), the outstanding aggregate amount of all Indebtedness incurred
pursuant to this clause (l) does not exceed $500,000.

     

    (m) refinanced
Permitted Indebtedness listed in (a) through (l), provided that the amount of
such Indebtedness is not increased except by an amount equal to a reasonable
premium or other reasonable amount paid in connection with such refinancing and
by an amount equal to any existing, but unutilized, commitment
thereunder;

     

    (n) bank
guarantees of Chipidea, from certain Portuguese banks which in an aggregate
amount outstanding, together with item 7 of Schedule P-I, do not to exceed
€2,000,000, and unsecured bank loans of Chipidea, from certain Portuguese banks
existing as of the Effective Date, provided that (i) the total available
unsecured credit under such bank loans, together with item 8 of Schedule P-I, is
not more than €2,000,000 at any time, (ii) the terms and conditions of those
bank loans are identical to those in place as of the Effective Date and (iii) no
more than €500,000 of such bank loans are guaranteed by Borrower pursuant to the
Comfort Letter under Section (p) of this definition of Permitted
Indebtedness;

     

    (o) Indebtedness
of Borrower or any of its Subsidiaries in the aggregate not in excess of
$500,000 arising from agreements providing for indemnification, adjustment to
purchase price, escrows, earn-outs or similar obligations, or guaranties or
letters of credit, surety bonds or performance bonds securing Borrower or any
such Subsidiary’s performance pursuant to such agreements, in connection with
Transfers not prohibited by Section 7.1 or acquisitions not prohibited by
Section 7.3 (including the acquisition of Chipidea pursuant to the Chipidea
Share Purchase Agreement); and

     

    (p) unsecured
Indebtedness of Borrower in respect of the Comfort Letter (and any replacements
or renewals thereof) in an aggregate amount not in excess of the amount thereof
on the Effective Date.

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

     “Permitted Investments”
are:

     

    (a)           Investments
existing on the Effective Date;

     

    (b)           Investments
in cash and Cash Equivalents;

     

    (c)           Contingent
Obligations not prohibited by Section 7.4;

     

    (d)   Investments
approved by the Borrower’s Board of Directors or otherwise pursuant to a
Board-approved investment policy;

     

    (e) (e)           (i)
Investments in or to Borrower or any Guarantor by any of their Subsidiaries,
(ii) investments by Borrower or any Guarantor in any other Subsidiary not in
excess of $5,000,000 in the aggregate; and (iii) investments by any Subsidiary
of Borrower that is not a Guarantor in another Subsidiary of
Borrower.

     

    (f)    Investments
consisting of Collateral Accounts in the name of Borrower or any Subsidiary so
long as Bank has a first priority, perfected security interest in such
Collateral Accounts;

     

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

     

    (h)   Investments
received in satisfaction or partial satisfaction of obligations owed by
financially troubled obligors;

     

    (i)    Investments
acquired in exchange for any other Investments in connection with or as a result
of a bankruptcy, workout, reorganization or recapitalization;

     

    (j)    Investments
acquired as a result of a foreclosure with respect to any secured
Investment;

     

    (k)    Investments
consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect a Person
against fluctuations in interest rates, currency exchange rates, or commodity
prices;

     

    (l)    Investments
consisting of loans and advances to employees in an aggregate amount not to
exceed $250,000 at any time outstanding.

     

    (m)          joint
ventures or strategic alliances consisting of the non-exclusive licensing of
technology, the development of technology or the providing of technical support,
provided that any cash investments (net of return) by Borrower do not exceed
$500,000 in the aggregate;

     

    (n)           Investments
constituting accounts receivable arising in the ordinary course of business,
trade debt granted in the ordinary course of business or deposits made in
connection with the purchase price of goods or services in the ordinary course
of business;

     

    (o)           other
Investments not otherwise permitted by Section 7.7 not exceeding $500,000 in the
aggregate outstanding at any time.

     

    “Permitted Liens”
are:

     

    (a) (i)
Liens securing Permitted Indebtedness described under clauses (b), (m) (to the
extent the Permitted Indebtedness being refinanced was secured by Permitted
Liens) or (n)  of the definition of “Permitted Indebtedness” or (ii)
Liens arising under this Agreement or other Loan Documents;

     

    (b)           Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, provided that no notice of any such Lien has
been filed or recorded under the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations adopted thereunder;

     

    (c)           Liens
(including with respect to capital leases) (i) on property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by Borrower or
its Subsidiaries incurred for financing such property (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto,
and the proceeds thereof) other than Accounts and Inventory, or (ii) existing on
property (and accessions, additions, parts, replacements, fixtures, improvements
and attachments thereto, and the proceeds thereof) when acquired other than
Accounts an Inventory, if the Lien is confined to such property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof);

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (d)           Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement
Lien must be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness it secures may not increase;

     

    (e)           leases
or subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than
real property or intellectual property) granted in the ordinary course of
Borrower’s business, if the leases, subleases, licenses and sublicenses do not
prohibit granting Bank a security interest;

     

    (f)           non-exclusive
licenses of intellectual property granted to third parties in the ordinary
course of business, and licenses of intellectual property that could not result
in a legal transfer of title of the licensed property that may be exclusive in
respects other than territory and that may be exclusive as to territory only as
to discreet geographical areas outside of the United States;

     

    (g)           leases
or subleases granted in the ordinary course of Borrower’s business, including in
connection with Borrower’s leased premises or leased property;

     

    (h)           Liens
in favor of other financial institutions arising in connection with Borrower’s
deposit or securities accounts held at such institutions;

     

    (i)           Liens
to secure payment of workers’ compensation, employment insurance, old-age
pensions, social security and other like obligations incurred in the ordinary
course of business (other than Liens imposed by ERISA);

     

    (j)           Liens
arising from filing Uniform Commercial Code or personal property security
financing statements  regarding operating leases;

     

    (k)           Liens
on property of, or on shares of stock or Indebtedness of, any corporation
existing at the time such corporation becomes, or becomes a part of, any
Subsidiary; provided that such Liens do not extend to or cover any property or
assets of Borrower or any Subsidiary other than the property or assets acquired
and the proceeds and products thereof and were not incurred in anticipation of
such Person becoming a Subsidiary;

     

    (l)           Liens
arising by operation of law of landlords and carriers, warehousemen, mechanics,
suppliers, sellers, materialmen or repairmen, or other similar
Liens;

     

    (m)           easements,
rights-of-way, municipal and zoning and building ordinances and similar charges,
encumbrances, title defects or other irregularities, governmental restrictions
on the use of property or conduct of business, and Liens in favor of
governmental authorities and public utilities, that do not materially interfere
with the ordinary course of business of Borrower and its Subsidiaries, taken as
a whole;

     

    (n)           any
option or other agreement to purchase any asset of Borrower or any Subsidiary
the Transfer of which is not prohibited by Section 7.1;

     

    (o)           Liens
arising from the rendering of an interim or final judgment or order against
Borrower or any Subsidiary that does not give rise to an Event of
Default;

     

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

     

    (q)           Liens
encumbering customary initial deposits and margin deposits, and other Liens that
are either within the general parameters customary in the industry or incurred
in the ordinary course of business, in each case, securing Indebtedness under
Hedging Contracts;

     

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (r)           any
provision for retention of title to an asset by the vendor or transferor of such
asset which asset is acquired by Borrower or any Subsidiary in the ordinary
course of business;

     

    (s)           Liens
not otherwise permitted, provided that (i) the amount of all such Liens is not
in excess of $500,000 (with any such Lien valued as the amount of the obligation
secured by such Lien) and (ii) such Liens are subordinate in priority to Bank’s
Lien hereunder.

     

    “Person” is any individual,
sole proprietorship, partnership, limited liability company, joint venture,
company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.

     

    “Prime Rate” is Bank’s most
recently announced “prime rate,” even if it is not Bank’s lowest
rate.

     

    “Prime Rate Loan” means an
Advance or Term Loan that bears interest based on the Prime Rate.

     

    “Prime Rate Margin” means (a)
for Prime Rate Loans under the Revolving Line, one-quarter of one percent
(0.25%) and (b) for Prime Rate Loans under the Term Loan, one-half of one
percent (0.50%).

     

     “Quick Assets” is, on any date,
Borrower’s consolidated, unrestricted cash and Cash Equivalents, not less than
50% of which are held in accounts of Borrower in the United States, gross
accounts receivables and investments with maturities of fewer than 12 months as
determined according to GAAP.

     

    “Recurring Royalty Accounts”
means Accounts which (i) arise in the ordinary course of Borrower’s business,
(ii) meet all Borrower’s representations and warranties in Section 5.3, (iii)
arise from recurring quarterly earned royalty fees under signed license
agreements between Borrower and the licensee and (iv) accrue when the licensee
ships products to its customers that are produced under such
license.

     

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

     

    “Regulatory Change” means, with
respect to Bank, any change on or after the date of this Agreement in United
States federal, state, or foreign laws or regulations or the adoption or making
on or after such date of any interpretations, directives, or requests applying
to a class of lenders including Bank, of or under any United States federal or
state, or any foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.

     

     “Requirement of Law” is as to
any Person, the organizational or governing documents of such Person, and any
law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

     

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

     

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

     

    “Revolving Line” is an Advance
or Advances in an amount equal to Ten Million Dollars
($10,000,000).

     

    “Revolving Line Maturity Date”
is July 2, 2009.

     

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

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    “Settlement Date” is defined in Section
2.1.3.

     

    “Subordinated Debt” is (a)
Indebtedness incurred by Borrower subordinated to Borrower’s Indebtedness owed
to Bank and which is reflected in a written agreement in a manner and form
reasonably acceptable to Bank and approved by Bank in writing and (b) to the
extent the terms of subordination do not change adversely to Bank, refinancings,
refundings, renewals, amendments or extensions of any of the
foregoing.

     

    “Subsidiary” means, with
respect to any Person, any Person of which more than 50.0% of the voting stock
or other equity interests (in the case of Persons other than corporations) is
owned or controlled directly or indirectly by such Person or one or more of
Affiliates of such Person.

     

     “Term Loan” is a loan
made by Bank pursuant to the terms of Section 2.1.6 hereof.

     

    “Term Loan Amount” is an
amount equal to Fifteen Million Dollars ($15,000,000).

     

    “Term Loan Maturity Date” is
August 1, 2012.

     

    “Term Loan Payment” is defined
in Section 2.1.6(b).

     

    “Total Liabilities” is on any
day, obligations that should, under GAAP, be classified as liabilities on
Borrower’s consolidated balance sheet.

     

    “Transfer” is defined in
Section 7.1.

     

     [Signature page
follows.]

     


    
      
         


      

      
        35

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the Effective
Date.

     

    BORROWER:

     

    MIPS
TECHNOLOGIES, INC.

     

    By:  /s/ STUART NICHOLS                

     

    Name:  Stuart Nichols                    

     

    Title:  Vice
President, General Counsel & Corporate Secretary 

     

     

    BANK:

     

    SILICON
VALLEY BANK

     

    By: /s/ NICK TSIAGKAS                  

     

    Name:  Nick Tsiagkas                    

     

    Title:  Relationship Manager                

     

    Effective
Date:  July 3, 2008                 

     


    
      
         


      

      
        36

        
          

        

      

      
         


      

    


    Schedule 5.2 - Certificated
Securities

    


    

 

    
      
        	
                Sonics,
      Inc.

                 

              	
                Series
      D Preferred

              	
                Private
      company

              	
                500,000
      shares

              
	
                Sonics,
      Inc.

                 

              	
                Warrants
      - Series D Preferred

              	
                Private
      company

              	
                250,000
      shares

              
	
                Stream
      Processors, Inc.

              	
                Series
      B Preferred

              	
                Private
      company

              	
                3,344,000
      shares

              
	
                Centillium
      Communications, Inc.

              	
                Common
      Stock

              	
                Public
      company

              	
                10,000
      shares

              
	
                Raza
      Microelectronics, Inc.

              	
                Series
      B-2 Preferred

              	
                Private
      company

              	
                633,682
      shares

              
	
                Fulcrum
      Microsystems, Inc.

              	
                Series
      A-1 Preferred

              	
                Private
      company

              	
                15,000
      shares

              
	
                Tzero
      Stock,

              	
                Series
      A-2 Preferred

              	
                Private
      company

              	
                30,488
      shares

              
	
                SiCortex,
      Inc.

              	
                Common
      Stock

              	
                Private
      company

              	
                500,000
      shares

              


      

      


      


      In
addition, Borrower holds the stock certificates in respect of all of the
outstanding equity of the following Subsidiaries:

      


      MIPS
Technologies International, Ltd.

      MIPS
Technologies (UK) Limited

      MIPS
Technologies International AG




    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule P-I - Permitted
Indebtedness

    


    
      	
              1.  

            	
              Existing
      Indebtedness of Chipidea in an amount not to exceed
      €5,000,000  relating to the sale leaseback obligations for Tagus
      Park, Av. Dr. Mario Soarez 33, 2740-119 Portu
  Salvo.

            


    

     

    
      	
              2.  

            	
              Existing
      Indebtedness of Borrower in an amount not to exceed $14,500,000 deposited
      in the Founders Deferral Escrow Account established pursuant to Section
      2.2 of the Chipidea Share Purchase
Agreement.

            


    

     

    
      	
              3.  

            	
              Existing
      Indebtedness of Borrower in an amount not to exceed $14,700,000 deposited
      in the Indemnification Escrow Account established pursuant to Section 2.2
      of the Chipidea Share Purchase
Agreement.

            


    

     

    
      	
              4.  

            	
              [Reserved]

            


    

     

    
      	
              5.  

            	
              Existing
      Indebtedness of Borrower not in excess of $264,000 in respect of that
      certain letter of credit issued by Bank of America to secure Borrower’s
      obligations to its landlord under the lease for the real property located
      in Mountain View, California (and any replacements or renewals
      thereof).

            


    

     

    
      	
              6.  

            	
              Existing
      Indebtedness of Chipidea in respect of capital lease and purchase money
      financing obligations in an amount not to exceed
    €1,200,000.

            


    

     

    
      	
              7.  

            	
              Existing
      Indebtedness of Chipidea in respect of bank guarantees in an amount not to
      exceed €1,765,000.00, of which €566,280 is secured by restricted cash,
      plus NOK 167,000 (where NOK means lawful money of
  Norway).

            


    

     

    
      	
              8.  

            	
              Existing
      Indebtedness of Chipidea in respect of certain bank loans from various
      Portuguese banks in an amount not to exceed
  €1,600,000.

            


    

     

    
      	
              9.  

            	
              Existing
      Indebtedness of Chipidea in respect of certain Portuguese government
      subsidies in an amount not to exceed
€154,000.

            


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    Exhibit A - Collateral
Description

    


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

    


    All goods, Accounts, Equipment,
Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

    


    All Borrower’s Books relating to the
foregoing, and any and all claims, rights and interests in any of the above and
all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.

    


    Notwithstanding the foregoing, the
Collateral does not include any of the following, whether now owned or hereafter
acquired or whether now licensed or hereafter licensed to Borrower: (a) any
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, any patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing; (b) any Account,
contract right, license or other General Intangible of Borrower, or any permit,
instrument, promissory note or chattel paper of Borrower, if and to the extent
such Account, contract right, General Intangible, permit, instrument, promissory
note or chattel paper contains restrictions on assignments and the creation of
Liens, or under which such an assignment or Lien would cause a default to occur
under such Account, contract rights, license, General Intangible, permit,
instrument, promissory note or chattel paper (other than to the extent that any
such term would be rendered ineffective pursuant to Sections 9-406(d), 9-407(a)
or 9-408(a) of Article 9 of the Code); provided, that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and Borrower shall be deemed to have granted a security interest
in, all such right, title and interests as if such provision had never been in
effect;  (c) any equity interest in any of Borrower’s Subsidiaries
that are not organized under the laws of the United States or any State thereof
in excess of 65% of the voting securities of such Subsidiaries; (d) any intent
to use application at the U.S. Patent and Trademark Office with respect to
intellectual property to the extent an assignment for security purposes would
void the same;  and (e) any government permit or franchise that
prohibits Liens on or collateral assignment of such permit or
franchise.

     

    Pursuant to the terms of a certain
negative pledge arrangement with Bank, Borrower has agreed not to encumber any
of its assets or property, including, without limitation, any copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing, without Bank’s prior written
consent.

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit B - Loan
Payment/Advance Request Form

     

    Deadline
for same day processing is Noon P.S.T.*

    


    Fax
To:                                                                                                                             Date:
_____________________

    


    
      LOAN PAYMENT:

    

    
      MIPS Technologies,
Inc.

      


    

    
      From
Account
#________________________________                                                                                To
Account #__________________________________________________

    

    
      (Deposit
Account
#)                                                                                                          (Loan Account
#)

    

    
      Principal
$_____________________________________                                                                                 and/or
Interest $________________________________________________

      


    

    
      Authorized
Signature:  __________________________                                                                              Phone
Number:  ________________________________________________

    

    
      Print
Name/Title: ________________________________                                 

      


    

    


    
      Loan Advance:

      


      Complete
Outgoing Wire Request
section below if all or a portion of the funds from this loan advance are for an
outgoing wire.

      


      From
Account
#________________________________                                                                                  To
Account #__________________________________________________

    

    
          (Loan Account
#)                                                                                                    (Deposit Account
#)

    

    
      


      Amount of
Advance $___________________________

      


      All
Borrower’s representations and warranties in the Loan and Security Agreement are
true, correct and complete in all material respects on the date of the request
for an advance; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such
date:

      


    

    
      Authorized
Signature:     ____________________________________                                                     
Phone
Number:                     ____________________________________                                        

    

    
      Print
Name/Title:  __________________________________________                                                       

    

    
      


    

    


    
      Outgoing Wire
Request:

      Complete
only if all or a portion of funds from the loan advance above is to be
wired.

      Deadline
for same day processing is noon, P.S.T.

      


    

    
      Beneficiary
Name:
_____________________________                                                                                  
Amount of Wire: $_______________________________________________

      Beneficiary
Bank: _____________________________   
                                                                                Account
Number:________________________________________________

    

    
      City and
State:  _______________________________                                                            

    

    
      


    

    
      Beneficiary
Bank Transit (ABA)
#:   _______________                                      
                                              
Beneficiary Bank Code (Swift, Sort, Chip,
etc.):__________________________

    

    
                                  (For International
Wire Only)

    

    
      


    

    
      Intermediary
Bank:______________________________                                                                   
Transit (ABA)
#:     ________________________________________________                                                                 

    

    
       

      For
Further Credit
to:      __________________________________________________________________________________________________________________________                                                     

    

    
      


    

    
      Special
Instruction:      ___________________________________________________________________________________________________________________________

    

    
      


      By
signing below, I (we) acknowledge and agree that my (our) funds transfer request
shall be processed in accordance with and subject to the terms and conditions
set forth in the agreements(s) covering funds transfer service(s), which
agreements(s) were previously received and executed by me (us).

      


      Authorized
Signature:
___________________________                                                                               2nd
Signature (if required): _______________________________________

      Print
Name/Title:
_______________________________                                                                                Print
Name/Title: ______________________________________________

    

    
      Telephone
#:__________________________________                                                               
Telephone
#:    _______________________________________________                                                          

    

    

      

    

      
      * Unless otherwise provided for an
Advance bearing interest at LIBOR.

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    EXHIBIT C - BORROWING BASE
CERTIFICATE

    


    BORROWING
BASE CERTIFICATE

    


    Borrower:  MIPS Technologies,
Inc.

    Lender:  Silicon
Valley Bank

    Commitment
Amount:  up to $10,000,000

    
      	
              ACCOUNTS
      RECEIVABLE

            	 
      
	
              1. Accounts
      Receivable Book Value as of ____________________

            	
              $_______________

            
	
              2. Additions
      (please explain on reverse)

            	
              $_______________

            
	
              3. TOTAL
      ACCOUNTS RECEIVABLE

            	
              $_______________

            
	 
      	 
      
	
              ACCOUNTS
      RECEIVABLE DEDUCTIONS (without duplication)

            	 
      
	
              4. Amounts
      over 90 days due

            	
              $_______________

            
	
              5. Balance
      of 50% over 90 day accounts

            	
              $_______________

            
	
              6. Concentration
      Limits

            	
              $_______________

            
	
              7. Foreign
      Accounts from account debtors not approved by Bank

            	
              $_______________

            
	
              8. Governmental
      Accounts (unless compliance
      with Federal Assignment of Claims Act)

            	
              $_______________

            
	
              9. Contra
      Accounts

            	
              $_______________

            
	
              10. Promotion
      or Demo Accounts

            	
              $_______________

            
	
              11. Intercompany/Employee
      Accounts

            	
              $_______________

            
	
              12. Disputed
      Accounts

            	
              $_______________

            
	
              13. Deferred
      Revenue

            	
              $_______________

            
	
              14. Recurring
      Royalty Accounts

            	
              $_______________

            
	
              15. Other
      (please explain on reverse)

            	
              $_______________

            
	
              16. TOTAL
      ACCOUNTS RECEIVABLE DEDUCTIONS (Sum of #4 to #15)

            	
              $_______________

            
	 
      	 
      
	
              17. Eligible
      Accounts (#3 minus #17)

            	
              $_______________

            
	
              18. ELIGIBLE
      AMOUNT OF ACCOUNTS ( 80% of #17)

            	
              $_______________

            
	 
      	 
      
	
              19. Recurring
      Royalty Accounts (RRA)

            	
              $_______________

            
	
              20. ELIGIBLE
      AMOUNT OF RRA (60% of  #19, up to $6,000,000)

            	
              $_______________

            
	 
      	 
      
	
              21. BORROWING
      BASE  ($3,000,000 plus #18 plus
    #20)

            	
              $_______________

            
	 
      	 
      
	
              BALANCES

            	 
      
	
              22. Maximum
      Loan Amount

            	
              $_______________

            
	
              23. Total
      Funds Available (Lesser of #21 or #22)

            	
              $_______________

            
	
              24. Present
      balance owing on Revolving Line

            	
              $_______________

            
	
              25. RESERVE
      POSITION (#23 minus #24)

            	
              $_______________

            


    

    


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

    
      	
              COMMENTS:

               

               

              By:
      ___________________________

              Authorized
      Signer

              Date:

            	
              BANK
      USE ONLY

              Received
      by: _____________________

              authorized
      signer

              Date:   __________________________

              Verified:
      ________________________

              authorized
      signer

              Date:
      ___________________________

              Compliance
      Status:                                           Yes           No

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit D - Secretary’s
Certificate

    


    CORPORATE
BORROWING CERTIFICATE

    


    


    Borrower:  MIPS Technologies,
Inc.                                                                                                                                                Date:__________________________________

    Bank:             Silicon
Valley Bank

     

     

            I hereby certify as
follows, as of the date set forth above:

     

    


    1.  I
am the Secretary, Assistant Secretary or other officer of the
Borrower.   My title is as set forth below.

    


    2.  Borrower’s
exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of Delaware.  [print
name of state]

    


    3.  Attached
hereto are true, correct and complete copies of Borrower’s Articles/Certificate
of Incorporation (including amendments), as filed with the Secretary of State of
the state in which Borrower is incorporated as set forth in paragraph 1
above.  Such Articles/Certificate of Incorporation have not been
amended, annulled, rescinded, revoked or supplemented, and remain in full force
and effect as of the date hereof.

    


    4.  The
following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from
Borrower.

    


    Resolved,
that any one of the
following officers or employees of Borrower, whose names, titles and signatures
are below, may act on behalf of Borrower:

    


    
      	
               

              Name

            	
               

              Title

            	
               

              Signature

            	
              Authorized
      to Add or Remove Signatories

            
	
              John
      Bourgoin

            	
               

              President,
      Chief Executive Officer

            	 
      	
              ý

               

            
	
              Maury
      Austin

            	
               

              Chief
      Financial Officer

            	 
      	
              ý

               

            
	
              Stuart
      Nichols

            	
              Vice
      President, General Counsel & Corporate Secretary

            	 
      	
              ý

               

            


    

    


    Resolved
Further, that any
one of the persons designated above with a checked box beside his or her
name may, from time to time, add or remove any individuals to and from the above
list of persons authorized to act on behalf of Borrower.

    


    Resolved
Further, that
such individuals may, on behalf of Borrower:

    


    Borrow
Money.  Borrow money from Silicon Valley Bank
("Bank").

    Execute Loan
Documents.  Execute any loan documents Bank
requires.

    Grant
Security.  Grant Bank a security interest in any of Borrower’s
assets.

    Negotiate
Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

    Letters of
Credit.  Apply for letters of credit from Bank.

    Foreign Exchange
Contracts.  Execute spot or forward foreign exchange
contracts.

    Further
Acts.  Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

    


    Resolved
Further, that all
acts authorized by the above resolutions and any prior acts relating thereto are
ratified.

    


    5.  The
persons listed above are Borrower's officers or employees with their titles and
signatures shown next to their names.

    


    


    By:                                 

    Name:  Stuart Nichols                       

    Title: 
  Vice
President, General Counsel & Corporate Secretary

    


    


    *** If the Secretary, Assistant
Secretary or other certifying officer executing above is designated by the
resolutions set forth in paragraph 4 as one of the authorized signing officers,
this Certificate must also be signed by a second authorized officer or director
of Borrower.

    


    


    I, the Chief Financial Officer of
Borrower, hereby certify as to paragraphs 1 through 5 above, as

    
 

    of the
date set forth above.

    


    


    By:                           

    Name:  Maury Austin                        

    Title:  
 Chief Financial
Officer                   

    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT E - COMPLIANCE
CERTIFICATE

    


    


    TO:                      SILICON
VALLEY
BANK                                                                                                Date:  ___________

    FROM:               MIPS
TECHNOLOGIES, INC.

    


    The
undersigned authorized officer of MIPS Technologies, Inc. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed
all required tax returns and reports (or has been granted an extension to file
such tax return and reports), and Borrower has timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower
except as otherwise permitted pursuant to the terms of Section 5.9 of the
Agreement, and (5) no Liens have been levied or claims made against Borrower or
any of its Subsidiaries relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to
Bank.  Attached are the required documents supporting the
certification.  The undersigned certifies that these are prepared in
accordance with GAAP consistently applied from one period to the next except as
explained in an accompanying letter or footnotes.  The undersigned
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.  Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.

    


    
      	
              Please
      indicate compliance status by circling Yes/No under “Complies”
      column.

            
	 
      
	
              Reporting
      Covenant

            	
              Required
      by*

            	
              Complies

            
	 
      	 
      	 
      
	
              Borrowing
      Base Certificate

            	
              If any amount is outstanding
      under the Revolving Line:

              30
      days after month end

              Otherwise:

              5
      days prior to borrowing under the Revolving Line

            	
              Yes   No

            
	
              A/R
      & A/P Agings plus Deferred Revenue

            	
              With
      every Borrowing Base Certificate

            	
              Yes   No

            
	
              10K
      (or link thereto)

            	
              5
      days after SEC filing or 90 days after FYE

            	
              Yes   No

            
	
              10Q
      (or link thereto)

            	
              5
      days after SEC filing or 45 days after FQE

            	
              Yes   No

            
	
              Compliance
      Certificate

            	
              With
      every 10K or 10Q report

            	
              Yes   No

            
	
              Consolidating
      Financial Statements

            	
              With
      every 10K or 10Q report

            	
              Yes   No

            
	
              Royalty
      Trend Report

            	
              30
      days after FQE

            	
              Yes   No

            
	
              Annual
      financial projections

            	
              90
      days after FYE or 10 days after Board approval

            	
              Yes   No

            
	 
      
	
              FYE=Fiscal
      Year End     FQE=Fiscal Quarter
      End                                                                               
                  *
      If more than one deadline is indicated, the earlier deadline is the
      required deadline.

            


    

    


    
      	
              Financial
      Covenant

            	
              Required

            	
              Actual

            	
              Complies

            
	
              Maintain
      at the end of each quarter:

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Minimum Fixed Charge
      Coverage

              (rolling
      two fiscal quarters’ basis)

            	
              FQE
      09/30/08:                                1.25
      to 1.00

              FQE
      12/31/08:                                1.25
      to 1.00

              Following
      FQEs:                           1.50
      to 1.00

            	
              _____:1.00

            	
              Yes   No

            
	 
      	 
      	 
      	 
      
	
              Maximum
      Senior Debt Leverage Ratio

            	
              2.00 to 1.00

            	
              _____:1.00

            	
              Yes   No

            
	 
      	 
      	 
      	 
      
	
              Minimum
      Adjusted Quick Ratio

            	
              FQE
      09/30/08:                                0.65
      to 1.00

              FQE
      12/31/08:                                0.75
      to 1.00

              FQE
      03/31/09:                                0.75
      to 1.00

              Following
      FQEs:                           1.00
      to 1.00

            	
              _____:1.00

            	
              Yes   No

            


    

    


    The following financial covenant
analys[is][es] and information set forth in Schedule 1 attached hereto are true
and accurate as of the date of this Certificate.

    


    The following are the exceptions with
respect to the certification above:  (If no exceptions exist, state
“No exceptions to note.”)

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

    


    


    
      	
              MIPS
      Technologies, Inc.

               

               

              By:

              Name:

              Title:

               

            	
              BANK
      USE ONLY

               

              Received
      by: ______________________

              authorized
      signer

              Date:           ________________________

               

              Verified:     
      ________________________

              authorized
      signer

              Date:           ________________________

               

              Compliance
      Status:                                           Yes     No

            


    

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule 1 to Compliance
Certificate

    


    Financial Covenants of
Borrower

    


    In the event of a conflict between this
Schedule and the Loan Agreement, the terms of the Loan Agreement shall
govern.

    


    Dated:  ____________________

    


    I.           Calculation
of Quick Assets

     

    
      	
              A.

            	
              Aggregate
      value of the unrestricted cash and Cash Equivalents of Borrower and its
      Subsidiaries (not less than 50% of which are held in the
    US)

            	
              $____________

            
	
              B.

            	
              Aggregate
      value of the gross accounts receivable of Borrower and its
      Subsidiaries

            	
              $____________

               

            
	
              C.

            	
              Aggregate
      value of the Investments with maturities of fewer than 12
      months

              of
      Borrower and it Subsidiaries

            	
              $____________

            
	
              D.

            	
              Quick
      Assets (the sum of lines A through C)

            	
              $____________

            
	 
      	 
      	 
      


    

     

    
 

    *           *           *           *           *

    


    II.           Calculation of EBITDA  (on a
rolling-2 quarter basis)

    


    
      	
              A.

            	
              Net
      Income

            	
              $____________

            
	
              B.

            	
              To
      the extent included in the determination of Net Income

            	 
      
	 
      	
              1.           Interest
      Expense

               

            	
              $____________

            
	 
      	
              2.           Consolidated
      income taxes

               

            	
              $____________

            
	 
      	
              3.           Amortization
      expense

               

            	
              $____________

            
	 
      	
              4.           Depreciation
      expense

               

            	
              $____________

            
	 
      	
              5.           All
      other non-cash charges (including non-cash stock compensation
      expense)

               

            	
              $____________

            
	 
      	
              6.   Non-cash
      charges for amortization of amounts in the Founders Deferral Escrow
      Account if constituting employee compensation

               

            	
              $____________

            
	 
      	
              7.           The
      sum of lines 1 through 6

               

            	
              $____________

            
	
              C.

            	
              EBITDA
      (line A plus line B.7)

            	
              $____________

            


    

     

    
 

    *           *           *           *           *

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    III.           Fixed Charge Coverage Ratio
Covenant (Section 6.7(a) of Loan Agreement)

    


    Required:

     

    Fixed
Charge Coverage Ratio as at the last day of any period of two consecutive fiscal
quarters ending with any fiscal quarters set forth below to be not less than the
ratio set forth below opposite such fiscal quarters:

    


    
      	
              Fiscal Quarter
      Ending

               

            	
              Fixed Charge Coverage
      Ratio

            
	
              September
      30, 2008

            	
              1.25:1.00

            
	
              December
      31, 2008

            	
              1.25:1.00

            
	
              March
      31, 2009 and thereafter

            	
              1.50:1.00

            


    

    


    Actual:

     

    
      	
              A.

            	
              EBITDA
      (from Line II.C above)

               

            	
              $____________

            
	
              B.

            	
              Unfunded
      capital expenditures

               

            	
              $____________

            
	
              C.

            	
              Line
      A minus Line B

               

            	
              $____________

            
	
              D.

            	
              Scheduled
      payments of principal and interest on all Indebtedness (for the same two
      rolling quarters, but excluding the pay-off or pre-payment of Indebtedness
      to Jefferies Finance LLC on or before July 3, 2008)

               

            	
              $____________

            
	
              E.

            	
              Fixed
      Charge Coverage Ratio

            	
              _____:1.00

               

            


    

    


    Is line
III.E equal to or greater
than the required ratios set forth above?

    


    _________  No, not in
compliance                                                                                     __________  Yes,
in compliance

     

    


    *           *           *           *           *

    


    IV.           Senior Debt Leverage Ratio
(Section 6.7(b) of Loan Agreement)

     

    Required:

     

    Senior
Debt Leverage Ratio of not more than 2.00:1.00 as of the last day of any fiscal
quarter

    


    Actual:

     

    
      	
              A.

            	
              All
      Indebtedness (including Advances and Term Loans)  owed to
      banks

               

            	
              $____________

            
	
              B.

            	
              Capital
      lease obligations

               

            	
              $____________

            
	
              C.

            	
              Sum
      of Line A plus Line B

               

            	
              $____________

            
	
              D.

            	
              EBITDA
      (line II.C above) annualized

               

            	
              $____________

            
	
              E.

            	
              Senior
      Debt Leverage Ratio (line C divided by line D)

               

            	
              _____:1.00

            


    

    


    Is line
IV.E equal to or less
than the required ratios set forth above?

    


                
 _________  No,
not in
compliance                                                                                     __________  Yes,
in compliance

     

    


    *           *           *           *           *


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    V.           Adjusted Quick Ratio (Section
6.7(c) of Loan Agreement)

    


    Required:

    
      	
              Fiscal Quarter
      Ending

               

            	
              Adjusted Quick
      Ratio

            
	
              September
      30, 2008

            	
              0.65:1.00

            
	
              December
      31, 2008

            	
              0.75:1.00

            
	
              March
      31, 2009

            	
              0.75:1.00

            
	
              June
      30, 2009 and thereafter

            	
              1.00:1.00

            


    

    


    


    Actual:

    


    
      	
              A.

            	
              Quick
      Assets (Line I.D above)

               

            	
              $____________

            
	
              B.

            	
              Current
      Liabilities (as defined in the Agreement)

               

            	
              $____________

            
	
              C.

            	
              Deferred
      Revenue

               

            	
              $____________

            
	
              D.

            	
              Line
      B minus line C

               

            	
              $____________

            
	
              E.

            	
              Adjusted
      Quick Ratio (line A divided by line D)

               

            	
              _____:1.00

            


    

    


    Is line
V.G equal to or greater
than the number required in the table above?

     

     

                                  _________  No,
not in
compliance                                                                                     __________  Yes,
in compliance

    


    


    *           *           *           *           *

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT F - FORM OF
NOTICE OF
CONVERSION/CONTINUATION

    MIPS
Technologies, Inc.

    


     

                                                                                                    Date:                     

     

    
      	
              To:

            	
              Silicon
      Valley Bank

            


    

    3003
Tasman Drive

    Santa
Clara, CA  95054

    Attention:

     

    
      	
              Re:

            	
              Loan
      and Security Agreement dated as of ________ ___, 2008 (as amended,
      modified, supplemented or restated from time to time, the “Loan Agreement”), by
      and between MIPS
      Technologies, Inc. (“Borrower”), and Silicon
      Valley Bank (the “Bank”)

            


    

     

    Ladies
and Gentlemen:

     

               The
undersigned refers to the Loan Agreement, the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably, pursuant to
Section 3.5 of the
Loan Agreement, of the [conversion] [continuation] of the Prime Rate Loans or
LIBOR Loans specified herein, that:

     

    1.           The
date of the [conversion] [continuation] is                                            ,
20___.

     

    
      	
               
      

            	
              2.

            	
              The
      aggregate amount of the proposed Prime Rate Loans or LIBOR Loans to be
      [converted] is

            


    

     

    
      	
               
      

            	
              $                            
      or [continued] is $                                  .

            


    

     

    3.           The
Prime Rate Loans or LIBOR Loans are to be [converted into] [continued as]
[LIBOR] [Prime Rate] Loans.

     

    
      	
               
      

            	
              4.

            	
              The
      duration of the Interest Period for the LIBOR Loans included in the
      [conversion] [continuation] shall be           
      months.

            


    

     

               The
undersigned, on behalf of Borrower, hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto and
to the application of the proceeds therefrom:

     

    
      	
               
      

            	
              (a)

            	
              all
      representations and warranties of Borrower stated in the Loan Agreement
      are true, accurate and complete in all material respects as of the date
      hereof; [provided,
      however, that such materiality qualifier shall not be applicable to any
      representations and warranties that already are qualified or modified by
      materiality in the text thereof; and provided, further that those
      representations and warranties expressly referring to a specific date
      shall be true, accurate and complete in all material respects as of such
      date];
      and

            


    

     

    
      	
               
      

            	
              (b)

            	
              no
      Default or Event of Default has occurred and is continuing, or would
      result from such proposed [conversion]
  [continuation].

            


    

     

    [Signature
page follows.]

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Borrower                                                                             
MIPS Technologies, Inc.

     

    


     

      
By:   _____________________________                                                               

      
Name:  ___________________________

              
Title: ____________________________

     

    


    For
internal Bank use only

     

    
      	
              LIBOR
      Pricing Date

            	
              LIBOR

            	
              LIBOR
      Variance

            	
              Maturity
      Date

            
	 
      	 
      	
              ____%

            	 
      


    

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT G - FORM OF NOTICE
OF BORROWING

    MIPS
Technologies, Inc.

    


                                                                                                    Date:  ______________

     

    
      	
              To:

            	
              Silicon
      Valley Bank

            


    

    3003
Tasman Drive

    Santa
Clara, CA 95054

    Attention:  Corporate
Services Department

     

    
      	
              Re:

            	
              Loan
      and Security Agreement dated as of ________ ___, 2008 (as amended,
      modified, supplemented or restated from time to time, the “Loan Agreement”), by
      and between MIPS
      Technologies, Inc. (“Borrower”), and Silicon
      Valley Bank (the “Bank”)

            


    

     

    Ladies
and Gentlemen:

     

               The
undersigned refers to the Loan Agreement, the terms defined therein and used
herein as so defined, and hereby gives you notice irrevocably, pursuant to Section 3.4(a) of the
Loan Agreement, of the borrowing of an Advance.

     

    1. The
Funding Date, which shall be a Business Day, of the requested borrowing is
_____________.

     

    2. The
aggregate amount of the requested borrowing is $_____________.

     

    3. The
requested Advance shall consist of $___________ of Prime Rate Loans and $______
of LIBOR Loans.

     

    4. The
duration of the Interest Period for the LIBOR Loans included in the requested
Advance shall be __________ months.

     

    The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the proposed Advance before and after
giving effect thereto, and to the application of the proceeds therefrom, as
applicable:

     

    (a)           all
representations and warranties of Borrower contained in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such
date;

     

    (b)           no
Default or Event of Default has occurred and is continuing, or would result from
such proposed Advance; and

     

    (c)           the
requested Advance will not cause the aggregate principal amount of the
outstanding Advances to exceed, as of the designated Funding Date, (i) the
lesser of (A) the Revolving Line or (B) the Borrowing Base minus (ii) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate outstanding
Advances.

     

    [Signature
page follows.]

     

    


     

    
      Borrower                                                                             
MIPS Technologies, Inc.

       

      


       

         By:   _____________________________                                                               

        
Name:  ___________________________

                
Title: ____________________________

       



    For
internal Bank use only

     

    
      	
              LIBOR
      Pricing Date

            	
              LIBOR

            	
              LIBOR
      Variance

            	
              Maturity
      Date

            
	 
      	 
      	
              ____%