<PAGE>

         THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated November
29,1999, between SILICON VALLEY BANK ("Bank"), whose address is 3003 Tasman
Drive, Santa Clara, California 95954 with a loan production office located at
10585 Santa Monica Boulevard, Suite 140, Los Angeles, California 90025 and
SONOMA SYSTEMS ("Borrower"), whose address is 4640 Admiralty Way, Suite 600,
Marina Del Rey, California 90292.

                                    RECITALS

         A. Bank and Borrower are parties to that certain QuickStart Loan and
Security Agreement and Schedules attached thereto, dated April 20, 1998, as
amended (collectively, the "Original Agreement").

         B. Borrower and Bank desire in this Agreement to set forth their
agreement with respect to a working capital loan and to amend and restate in its
entirety without novation the Original Agreement in accordance with the
provisions herein. This Agreement shall be construed to impart upon Bank a duty
to act reasonably at all times.

                                   AGREEMENT

         The parties agree as follows:

1        ACCOUNTING AND OTHER TERMS

         Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.

2        LOAN AND TERMS OF PAYMENT

2.1      CREDIT EXTENSIONS.

         Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1    REVOLVING ADVANCES.

         (a) Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line minus the Cash Management Services Sublimit or (B) the
Borrowing Base, minus (ii) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit). Amounts borrowed under
this Section may be repaid and reborrowed during the term of this Agreement.

         (b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instruction from a Responsible Officer 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 give 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.

         (c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.


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2.1.2    LETTERS OF CREDIT SUBLIMIT.

         Bank will issue or have issued Letters of Credit for Borrower's account
not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing
Base minus (ii) the outstanding principal balance of the Advances minus the Cash
Management Sublimit; however, the face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) may not exceed $500,000.
Each Letter of Credit will have an expiry date of no later than 90 days after
the Revolving Maturity Date, but Borrower's reimbursement obligation will be
secured by cash on terms acceptable to Bank at any time after the Revolving
Maturity Date if the term of this Agreement is not extended by Bank. Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.

2.1.3    CASH MANAGEMENT SERVICES SUBLIMIT.

         Borrower may use up to $300,000 for Bank's Cash Management Services,
which may include, (i) $50,000 for business credit card services; and (ii)
$250,000 for merchant services, direct deposit of payroll, and check cashing
services identified in various cash management services agreements related to
such services (the "Cash Management Services"). Such aggregate credit limit
shall reduce the amount otherwise available to be borrowed under the
Committed Revolving Line, by a factor of 1.25. All amounts Bank pays for any
Cash Management Services will be treated as Advances under the Committed
Revolving Line.

2.2      OVERADVANCES.

         If Borrower's Obligations under Section 2.1.1 and 2.1.2 exceed the
lesser of either (i) the committed Revolving Line or (ii) the Borrowing Base,
Borrower must immediately pay Bank the excess.

2.3      INTEREST RATE, PAYMENTS.

         (a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate of 0.75 of 1 percentage point above the
Prime Rate; decreasing, upon occurrence of the Private Placement, to a per annum
rate of 0.25 of 1 percentage point above the Prime Rate. After an Event of
Default, Obligations accrue interest at 5 percent above the rate effective
immediately before the Event of Default. The interest rate increases or
decreases when the Prime Rate changes. Interest is computed on a 360 day year
for the actual number of days elapsed.

         (b) Payment. Interest due on the Committed Revolving Line is payable on
the 28th day of each month. Bank may debit any of Borrower's deposit accounts
including Account Number _________________ for principal and interest payments
owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when
it debits Borrower's accounts. These debits are not a setoff. Payments received
after 12:00 noon Pacific time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest
accrue.

2.4      FEES.

         Borrower will pay:

         (a) Facility Fee. A fully earned, non-refundable Facility Fee of $7,500
due on the Closing Date;

         (b) Unused Portion Fee. A fully earned, non-refundable Unused Portion
Fee in an amount of 1/8% per annum on the available, unused portion of the
Committed Revolving line, due and payable on a quarterly basis in arrears; and

         (c) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and reasonable expenses) incurred through and after the date of this
Agreement, are payable when due.


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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 it receive the agreements, documents and fees
it requires.

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) timely receipt of any Payment/Advance Form; and

      (b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of
each Credit Extension and no Event of Default may 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 of Section 5 remain true.

4     CREATION OF SECURITY INTEREST

4.1   GRANT OF SECURITY INTEREST.

      Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and
performance of each of Borrower's duties under the Loan Documents. Except for
Permitted Liens, any security interest will be a first priority security
interest in the Collateral. Bank may place a "hold" on any deposit account
pledged as Collateral. If this Agreement is terminated, Bank's lien and
security interest in the Collateral will continue until Borrower fully
satisfies its Obligations.

5     REPRESENTATIONS AND WARRANTIES

      Borrower represents and warrants as follows:

5.1   DUE ORGANIZATION AND AUTHORIZATION.

      Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in
good standing in, any state in which the conduct of its business or its
ownership of property requires that it be qualified, except where the failure
to do so could not reasonably be expected to cause a Material Adverse Change.

      The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower
is bound. Borrower is not in default under any agreement to which or by which
it is bound in which the default could cause reasonably be expected to cause
a Material Adverse Change.

5.2   COLLATERAL.

      Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or
its agent for immediate shipment to and unconditional acceptance by the
account debtor. Borrower has no notice of any actual or imminent Insolvency
Proceeding of any account debtor whose accounts are an Eligible Account in
any Borrowing Base Certificate. All Inventory is in all material respects of
good and marketable quality, free from material defects. Borrower is the sole
owner of the Intellectual Property, except for non-exclusive licenses granted
to its customers in the ordinary course of


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business. Each Patent is valid and enforceable and no part of the
Intellectual Property has been judged invalid or unenforceable, in whole or
in part, and no claim has been made that any part of the Intellectual Property
violates the rights of any third party, except to the extent such claim could
not reasonably be expected to cause a Material Adverse Change.

5.3   LITIGATION.

      Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers and legal
counsel, threatened by or against Borrower or any Subsidiary in which a
likely adverse decision could reasonably be expected to cause a Material
Adverse Change.

5.4   NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

      All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5   SOLVENCY.

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

5.6   REGULATORY COMPLIANCE.

      Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock
(under Regulations T and U of the Federal Reserve Board of Governors).
Borrower has complied in all material respects with the Federal Fair Labor
Standards Act. Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to cause a Material Adverse
Change. None of Borrower's or any Subsidiary's properties or assets 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 legally. Borrower and each
Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested
in good faith with adequate reserves under GAAP. Borrower and each Subsidiary
has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently
conducted, except where the failure to do so could not reasonably be expected
to cause a Material Adverse Change.

5.7   SUBSIDIARIES.

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

5.8   FULL DISCLOSURE.

      No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all
such written certificates and written statements 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 and
forecasted results.


                                       4
<PAGE>

6.       AFFIRMATIVE COVENANTS

          Borrower will do all of the following:

6.1      GOVERNMENT COMPLIANCE.

          Borrower will maintain its and all Subsidiaries' legal existence
and good standing in its jurisdiction of formation and maintain qualification
in each jurisdiction in which the failure to so qualify would reasonably be
expected to cause a material adverse effect on Borrower's business or
operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower's business or
operations or would reasonably be expected to cause a Material Adverse Change.

6.2      FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

         (a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's
consolidated operations during the period, in a form and certified by a
Responsible Officer acceptable to Bank; (ii) as soon as available, but no
later than 90 days after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) a prompt report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower
or any Subsidiary of $100,000 or more; (iv) budgets, sales projections,
operating plans or other financial information Bank reasonably requests; and
(v) prompt notice of any material change in the composition of the
Intellectual Property, including any subsequent ownership right of Borrower
in or to any Copyright, Patent or Trademark not shown in any intellectual
property security agreement between Borrower and Bank or knowledge of an
event that materially adversely affects the value of the Intellectual
Property.

         (b) Within 20 days after the last day of each month, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer
in the form of Exhibit C, with aged listings of accounts receivable and
accounts payable and inventory reports.

         (c) Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.

         (d) Bank has the right to audit Borrower's Collateral at Borrower's
expense, but the audits will be conducted no more often than every 6 months
unless an Event of Default has occurred and is continuing.

6.3      INVENTORY; RETURNS.

         Borrower will keep all Inventory in good and marketable condition,
free from material defects. Returns and allowances between Borrower and its
account debtors will follow Borrower's customary practices as they exist at
execution of this Agreement. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims, that involve more than $50,000.

6.4      TAXES.

         Borrower will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments and
will deliver to Bank, on demand, appropriate certificates attesting to the
payment.

6.5      INSURANCE.

         Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank may reasonably request. Insurance policies will be in
a form, with companies, and in amounts that are


                                       5

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satisfactory to Bank in Bank's reasonable discretion. All property policies
will have a lender's loss payable endorsement showing Bank as an additional
loss payee and all liability policies will show the Bank as an additional
insured and provide that the insurer must give Bank at least 20 days notice
before canceling its policy. At Bank's request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy will, at Bank's option, be payable to Bank on
account of the Obligations.

6.6      PRIMARY ACCOUNTS.

         Borrower will maintain its primary depository and operating accounts
with Bank.

6.7      FINANCIAL COVENANTS.

          Beginning with the earlier to occur of: (i) Borrower's receipt of
$7,000,000 of the Private Placement; or (ii) December 31, 1999, Borrower will
maintain as of the last day of each month:

               (i)     QUICK RATIO. A ratio of Quick Assets to Current
Liabilities of at least 1.50 to 1.00.

              (ii)     TANGIBLE NET WORTH.  A Tangible Net Worth of at least
$5,000,000.

6.8      REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.

         Borrower will register with the United States Patent and Trademark
Office or the United States Copyright Office its Intellectual Property within 30
days of the date of this Agreement, and additional Intellectual Property rights
developed or acquired including revisions or additions with any product before
the sale or licensing of the product to any third party.

         Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in
writing of material infringements and (ii) not allow any Intellectual
Property to be abandoned, forfeited or dedicated to the public without Bank's
written consent.

6.9      FURTHER ASSURANCES.

         Borrower will execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank's security
interest in the Collateral or to effect the purposes of this Agreement.

7        NEGATIVE COVENANTS

         Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:

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, other than Transfers (i) of Inventory in the
ordinary course of business; (ii) of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in
the ordinary course of business; or (iii) of worn-out or obsolete Equipment.

7.2      CHNAGE IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

         Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower or
reasonably related thereto or have an material change in its ownership or
management (other than the sale of Borrower's equity securities in a public
offering or to


                                       6

<PAGE>

venture capital investors approved by Bank) of greater than 25%.  Borrower
will not, without at least 30 days prior written notice, relocate its chief
executive office or add any new offices or business locations.

7.3  MERGERS OR ACQUISITIONS.

     Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) result in a decrease of more than 25% of Tangible Net
Worth.  A Subsidiary may merge or consolidate into another Subsidiary or into
Borrower.  Notwithstanding the foregoing, provided no Event of Default has
occurred and is continuing, Borrower may reincorporate in the State of
Delaware during the term of this Agreement, provided, however, that Borrower
notifies Bank in writing no less than 10 prior to such reincorporation and
Borrower agrees to execute any and all documents required by Bank to, among
other things, maintain Bank's perfected security interest in the Collateral,
including but not limited to an assumption agreement and a UCC Financing
Statement.

7.4  INDEBTEDNESS.

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

7.5  ENCUMBRANCE.

     Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or
permit any Collateral not to be subject to the first priority security
interest granted here, subject to Permitted Liens.

7.6  DISTRIBUTIONS; INVESTMENTS.

     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.  Pay any dividends or make any distribution or payment
or redeem, retire or purchase any capital stock.

7.7  TRANSACTIONS WITH AFFILIATES.

     Directly or indirectly enter or permit any material transaction with any
Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an
arm's length transaction with a non-affiliated Person.

7.8  SUBORDINATED DEBT.

     Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document
relating to the Subordinated Debt without Bank's prior written consent.

7.9  COMPLIANCE.

     Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or
use the proceeds of any Credit Extension for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with
the Federal Fair Labor Standards Act or violate any other law or regulation,
if the violation could reasonable be expected to have a material adverse
effect on Borrower's business or operations or would reasonably be expected
to cause a Material Adverse Change, or permit any of its Subsidiaries to do
so.


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<PAGE>

8    EVENTS OF DEFAULT

     Any one of the following is an Event of Default:

8.1  PAYMENT DEFAULT.

     If Borrower fails to pay any of the Obligations within 3 days after
their due date.  During the additional period the failure to cure the default
is not an Event of Default (but no Credit Extension will be made during the
cure period);

8.2  COVENANT DEFAULT.

     If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or
cannot be cured after Borrower's attempts within 10 day period, and the default
may be cured within a reasonable time, then Borrower has an additional period
(of not more than 30 days) to attempt to cure the default.  During the
additional time, the failure to cure the default is not an Event of Default
(but no Credit Extensions will be made during the cure period);

8.3  MATERIAL ADVERSE CHANGE.

     (i) If there occurs a material impairment in the perfection or priority
of the Bank's security interest in the Collateral or in the value of such
Collateral (other than normal depreciation) which is not covered by adequate
insurance or (ii) if the Bank determines, based upon information available to
it and in its reasonable judgment, that there is a reasonable likelihood that
Borrower will fail to comply with one or more of the financial covenants in
Section 6 during the next succeeding financial reporting period.

8.4  ATTACHMENT.

     If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of
its business or if a judgment or other claim becomes a Lien on a material
portion of Borrower's assets, or if a notice of lien, levy, or assessment is
filed against any of Borrower's assets by any government agency and not paid
within 10 days after Borrower receives notice.  These are not Events of
Default if stayed or if a bond is posted pending contest by Borrower (but no
Credit Extensions will be made during the cure period);

8.5  INSOLVENCY.

     If Borrower becomes insolvent or if Borrower begins an insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made
before any Insolvency Proceeding is dismissed);

8.6  OTHER AGREEMENTS.

     If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $250,000 or that could cause a Material Adverse Change;


                                      8
<PAGE>

8.7  JUDGMENTS.

     If a money judgment(s) in the aggregate of at least $250,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or

8.8  MISREPRESENTATIONS.

     If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

9    BANK'S RIGHTS AND REMEDIES
     --------------------------

9.1  RIGHTS AND REMEDIES.

     When 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) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;

     (d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires 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;

     (e) 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;

     (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is 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; and

     (g) Dispose of the Collateral according to the Code.

9.2  POWER OF ATTORNEY.

     Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's
name on any checks or other forms of payment or security; (ii) sign
Borrower's name on any invoice or bill of lading for any Account or drafts
against account debtors, (iii) make, settle, and adjust all claims under
Borrower's insurance policies; (iv) settle and adjust disputes and claims
about the Accounts directly with account debtors, for amounts and on terms
Bank determines reasonable; and (v) transfer the Collateral into the name of
Bank or a third party


                                       9

<PAGE>

as the Code permits. Bank may exercise the power of attorney to sign
Borrower's name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred. Bank's 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  ACCOUNTS COLLECTION.

     When an Event of Default occurs and continues, Bank may notify any
person owing Borrower money of Bank's security interest in the funds and
verify the amount of the Account. Borrower must collect all payments in trust
for Bank and, if requested by Bank, immediately deliver the payments to Bank
in the form received from the account debtor, with proper endorsements for
deposit.

9.4  BANK EXPENSES.

     If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to
make similar payments in the future or Bank's waiver of any Event of Default.

9.5  BANK'S LIABILITY FOR COLLATERAL.

     If Bank complies with reasonable banking practices and Section 9-207 of
the Code, it is not liable 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  REMEDIES CUMULATIVE.

     Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements 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 is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.

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 or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by
an overnight delivery service, by certified mail, postage prepaid, return
receipt requested, or by telefacsimile to the addresses set forth at the
beginning of this Agreement. A party may change its notice address by giving
the other party written notice.

11   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
     ------------------------------------------

     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 Los Angeles County,
California.


                                      10

<PAGE>

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF ANY OF 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.

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. Other than stated in Section 7.3 of this
Agreement, Borrower may not assign this Agreement or any rights 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.

12.2   INDEMNIFICATION.

       Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities 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 Bank from, following, or consequential to
transactions between Bank and Borrower (including reasonable attorneys fees
and expenses), except for losses caused by Bank'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 PROVISION.

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

12.5   AMENDMENTS IN WRITING, INTEGRATION.

       All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into
this Agreement and the Loan Documents.

12.6   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.

12.7   SURVIVAL.

       All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The
obligations of Borrower in Section 12.2 to indemnify Bank will survive until
all statutes of limitations for actions that may be brought against Bank have
run.


                                       11

<PAGE>

12.8   CONFIDENTIALITY

       In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or
affiliates in connection with their business with Borrower, (ii) to
prospective transferees or purchasers of any interest in the loans, (iii) as
required by law, regulation, subpoena, or other order, (iv) as required in
connection with Bank's examination or audit and (v) as Bank considers
appropriate exercising remedies under this Agreement. Confidential
information does not include information that either: (a) 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; or (b) is disclosed to Bank by a
third party, if Bank does not know that the third party is prohibited from
disclosing the information.

12.9   EFFECT OF AMENDMENT AND RESTATEMENT.

       This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All credit extensions or loans
outstanding under the Original Agreement are and shall continue to be
outstanding under this Agreement. All security interests granted under the
Original Agreement are hereby confirmed and ratified and shall continue to
secure all Obligations under this Agreement.

12.10  ATTORNEYS' FEES, COSTS AND EXPENSES.

       In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred,
in addition to any other relief to which it may be entitled.

13     DEFINITIONS

13.1   DEFINITIONS

       In this Agreement:

       "ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or
lease of goods (including licensing software and other technology) or
provision of services, all credit insurance, guaranties, other security and
all merchandise returned or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing.

       "ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.

       "AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is
under common control with the Person, and each of that Person's senior
executive officers, directors, partners and, for any Person that is a limited
liability company, that Person's managers and members.

       "BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including appeals or insolvency Proceedings).

       "BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs
or any equipment containing the information.

       "BORROWING BASE" is (i) 80% of Eligible Accounts plus (ii) the
lesser of 25% of the value of Borrower's Eligible Inventory (valued at the
lower of cost or wholesale fair market value) or $500,000, as determined by
Bank from Borrower's most recent Borrowing Base Certificate; PROVIDED,
HOWEVER, that Bank may lower the percentage of the Borrowing Base after
performing an audit of Borrower's Collateral.


                                       12

<PAGE>

     "BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

     "CASH MANAGEMENT SERVICES" are defined in Section 2.1.3.

     "CLOSING DATE" is the date of this Agreement.

     "CODE" Is the California Uniform Commercial Code.

     "COLLATERAL" is the property described on EXHIBIT A.

     "COMMITTED REVOLVING LINE" is an Advance of up to $2,000,000.

     "CONTINGENT OBLIGATIONS" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an
obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or
indirectly liable; (ii) any obligations for undrawn letters of credit for the
account of that Person; and (iii) 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 rate 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 the guarantee or
other support arrangement.

     "COPYRIGHTS" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

     "CREDIT EXTENSION" is each Advance, Letter of Credit, or any other
extension of credit by Bank for Borrower's benefit.

     "CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.

     "ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section
5; BUT Bank may change eligibility standards by giving Borrower notice.
Unless Bank agrees otherwise in writing, Eligible Accounts will not include:

     (a) Accounts that the account debtor has not paid within 90 days of
     invoice date;

     (b) Accounts for an account debtor, 50% or more of whose Accounts have
     not been paid within 90 days of invoice date;

     (c) Credit balances over 90 days from invoice date;

     (d) Accounts for an account debtor, including Affiliates, whose total
     obligations to Borrower exceed 25% of all Accounts for the amounts that
     exceed that percentage, except for those certain Accounts from Newbridge
     Networks, for which the percentage may be 60%; decreasing to 50%
     beginning May 1, 2000; further decreasing to 40% beginning August 1,
     2000;

     (e) Accounts for which the account debtor does not have its principal
     place of business in the United States;

     (f) Accounts for which the account debtor is a federal, state or local
     government entity or any department, agency, or instrumentality;


                                      13

<PAGE>

     (g) Accounts for which Borrower owes the account debtor, but only up to
     the amount owed (sometimes called "contra" accounts, accounts payable,
     customer deposits or credit accounts);

     (h) Accounts for demonstration or promotional equipment, or in which
     goods are consigned, sales guaranteed, sale or return, sale on
     approval, bill and hold, or other terms if account debtor's payment may
     be conditional;

     (i) Accounts for which the account debtor is Borrower's Affiliate,
     officer, employee, or agent;

     (j) Accounts in which the account debtor disputes liability or makes any
     claim and Bank believes there may be a basis for dispute (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;

     (k) Accounts for which Bank reasonably determines collection to be
     doubtful.

     "ELIGIBLE INVENTORY" is Borrower's Inventory located at its principal
place of business (or any location permitted under Section 7.2) that complies
with representations and warranties in Section 5.2, limited to raw materials
and finished goods comprised of Intel chips, standard motherboards, commodity
integrated circuits and RAM chips and chipsets, and will not include used,
returned, obsolete, consigned, work in progress, demonstrative or custom
inventory, supplies, packing or shipping materials.

     "EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

     "ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.

     "GAAP" is generally accepted accounting principles.

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

     "INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

     "INTELLECTUAL PROPERTY" is:

     (a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;

     (b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created,
acquired or held;

     (c) All design rights which may be available to Borrower now or later
created, acquired or held;

     (d) Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above;

     All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.

     "INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished


                                      14

<PAGE>

products intended for sale or lease or to be furnished under a contract of
service, of every kind and description now or later owned by or in the
custody or possession, actual or constructive, of Borrower, including
inventory temporarily out of its custody or possession or in transit and
including returns on any accounts or other proceeds (including insurance
proceeds) from the sale or disposition of any of the foregoing and any
documents of title.

     "INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.

     "LETTER OF CREDIT" is defined in Section 2.1.2.

     "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

     "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or
future agreement between Borrower and/or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.

     "MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.

     "MATERIAL ADVERSE CHANGE" is defined in Section 8.3.

     "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including
interest accruing after Insolvency Proceedings begin and debts, liabilities,
or obligations of Borrower assigned to Bank.

     "ORIGINAL AGREEMENT" has the meaning set forth in recital paragraph A.

     "PATENTS" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

     "PERMITTED INDEBTEDNESS" is:

     (a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;

     (b) Indebtedness existing on the Closing Date and shown on the Schedule;

     (c) Subordinated Debt;

     (d) Indebtedness to trade creditors incurred in the ordinary course of
business; and

     (e) Indebtedness secured by Permitted Liens.

     "PERMITTED INVESTMENTS" are:

     (a) Investments shown on the Schedule and existing on the Closing Date;

     (b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard &
Poor's Corporation or Moody's Investors Service, Inc., (iii) Bank's
certificates of deposit issued maturing no more than 1 year after issue; and

     (c) Investments in Retix Europe Ltd. and its Subsidiary, Sonoma Systems
Europe, Ltd.


                                       15

<PAGE>

     "PERMITTED LIENS" are:

     (a) Liens existing on the Closing Date and shown on the Schedule or
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, IF they have no priority
over any of Bank's security interests;

     (c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment,
(ii) existing on equipment when acquired, IF the Lien is confined to the
property and improvements and the proceeds of the equipment, or (iii)
Transamerica's Liens on Equipment specifically financed by said entity;

     (d) Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any license or
sublicense, IF the licenses and sublicenses permit granting Bank a security
interest;

     (e) Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property;

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

     "PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, 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.

     "PRIVATE PLACEMENT" is Borrower's closing of Series E round of equity
financing in a minimum amount of $10,000,000.

     "QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.

     "RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

     "REVOLVING MATURITY DATE" is November 28, 2000.

     "SCHEDULE" is any attached schedule of exceptions.

     "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank.)

     "SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates
of the Person.

     "TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries MINUS, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade service marks and names, Copyrights and research and


                                       16

<PAGE>

development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, AND (ii) Total Liabilities.

    "TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed to
be paid, but excluding all other Subordinated Debt.

    "TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.


BORROWER:

Sonoma Systems


By:  /s/ Steve Waszak
   --------------------------------

Title: Executive Vice President
      ------------------------------
          and CFO


BANK:

SILICON VALLEY BANK


By: /s/ [ILLEGIBLE]
   ----------------------------

Title:     A.V.P.
      ------------------------------

                                       17

<PAGE>

                                    EXHIBIT C
                           BORROWING BASE CERTIFICATE
--------------------------------------------------------------------------------
Borrower   Sonoma Systems                          Bank:   Silicon Valley Bank
                                                           3003 Tasman Drive
                                                           Santa Clara, CA 95054
Commitment Amount:   $2,000,000
--------------------------------------------------------------------------------
<TABLE>
<S>                                                                   <C>                 <C>
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.         Credit balances over 90 days                                $____________
7.         Concentration Limits*                                       $____________
8.         Foreign Accounts                                            $____________
9.         Governmental Accounts                                       $____________
10.        Contra Accounts                                             $
11.        Promotion or Demo Accounts                                  $____________
12.        Intercompany/Employee Accounts                              $____________
13.        Other (please explain on reverse)                           $____________
14.        TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                            $____________
15.        Eligible Accounts (#3 minus #14)                                                $____________
16.        LOAN VALUE OF ACCOUNTS (80% of #15)                                             $____________
</TABLE>
*60% for Newbridge Networks, decreasing to 50% beginning 5/1/00 and further
decreasing to 40% beginning 8/1/00



<TABLE>
<S>                                                                   <C>                 <C>
INVENTORY
17.        Inventory Value as of                                       $

INVENTORY DEDUCTIONS
18.        Obsolete Inventory                                          $____________
19.        Any Demo Inventory                                          $____________
20.        Inventory sold on consignment                               $____________
21.        Inventory with offsetting claims                            $____________
22.        Work in process                                             $
23.        Other (please explain on reverse)                           $____________
24.        TOTAL INVENTORY DEDUCTIONS                                                      $____________
25.        Eligible Inventory (#17 minus #24)                                              $____________
26.        LOAN VALUE OF INVENTORY (lesser of 25% of #25
                                    or $500,000)                                              $____________

BALANCES
27.        Maximum Loan Amount                                         $____________
28.        Total Funds Available [Lesser of #27 or (#16 plus #26)]                         $____________
29.        Present balance owing on Line of Credit                     $____________
30.        Outstanding under Sublimits (LC)                            $____________
31.        RESERVE POSITIONS (#28 minus #29 and #30)                                       $____________
</TABLE>