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                                                                  Exhibit 10.1


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                          LOAN AND SECURITY AGREEMENT
                            BLUE WAVE SYSTEMS, INC,

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TABLE OF CONTENTS
<TABLE>
<CAPTION>


                                                                                Page
                                                                                ----
<S>  <C>                                                                        <C>
1    ACCOUNTING AND OTHER TERMS..............................................     4
-    --------------------------

2    LOAN AND TERMS OF PAYMENT...............................................     4
-    -------------------------
     2.1  Advances...........................................................     4
     2.2  Overadvances.......................................................     4
     2.3  Interest Rate, Payments............................................     4
     2.4  Fees...............................................................     5

3    CONDITIONS OF LOANS.....................................................     6
-    -------------------
     3.1  Conditions Precedent to Initial Advance............................     6
     3.2  Conditions Precedent to all Advances...............................     6

4    CREATION OF SECURITY INTEREST...........................................     6
-    -----------------------------
     4.1  Grant of Security Interest.........................................     6

5    REPRESENTATIONS AND WARRANTIES..........................................     6
-    ------------------------------
     5.1  Due Organization and Authorization.................................     6
     5.2  Collateral.........................................................     6
     5.3  Litigation.........................................................     7
     5.4  No Material Adverse Change in Financial Statements.................     7
     5.5  Solvency...........................................................     7
     5.6  Regulatory Compliance..............................................     7
     5.7  Subsidiaries.......................................................     7
     5.8  Full Disclosure....................................................     7

6    AFFIRMATIVE COVENANTS...................................................     8
-    ---------------------
     6.1  Government Compliance..............................................     8
     6.2  Financial Statements, Reports, Certificates........................     8
     6.3  Inventory; Returns.................................................     8
     6.4  Taxes..............................................................     8
     6.5  Insurance..........................................................     8
     6.6  Primary Accounts...................................................     9
     6.7  Financial Covenants................................................     9
     6.8  Registration of Intellectual Property Rights.......................     9
     6.9  Further Assurances.................................................     9

7    NEGATIVE COVENANTS......................................................     9
-    ------------------
     7.1  Dispositions.......................................................     9
     7.2  Changes in Business, Ownership, Management or Business Locations...     9
     7.3  Mergers or Acquisitions............................................    10
     7.4  Indebtedness.......................................................    10
     7.5  Encumbrance........................................................    10
     7.6  Distributions; Investments.........................................    10
     7.7  Transactions with Affiliates.......................................    10
     7.8  Subordinated Debt..................................................    10
     7.9  Compliance.........................................................    10

8  EVENTS OF DEFAULT.........................................................    10
-  -----------------
   8.1  Payment Default......................................................    11
   8.2  Covenant Default.....................................................    11
   8.3  Material Adverse Change..............................................    11
</TABLE>

                                       2
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<TABLE>
<S>  <C>                                                                        <C>
   8.4  Attachment...........................................................    11
   8.5  Insolvency...........................................................    11
   8.6  Other Agreements.....................................................    11
   8.7  Judgments............................................................    11
   8.8  Misrepresentations...................................................    12

9  BANK'S RIGHTS AND REMEDIES................................................    12
-  --------------------------
   9.1  Rights and Remedies..................................................    12
   9.2  Power of Attorney....................................................    12
   9.3  Accounts Collection..................................................    13
   9.4  Bank Expenses........................................................    13
   9.5  Bank's Liability for Collateral......................................    13
   9.6  Remedies Cumulative..................................................    13
   9.7  Demand Waiver........................................................    13

10 NOTICES...................................................................    13
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11  CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER..............................    13
--  -------------------------------------------

12  GENERAL PROVISIONS.......................................................    14
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    12.1  Successors and Assigns.............................................    14
    12.2  Indemnification....................................................    14
    12.3  Time of Essence....................................................    14
    12.4  Severability of Provision..........................................    14
    12.5  Amendments in Writing, Integration.................................    14
    12.6  Counterparts.......................................................    14
    12.7  Survival...........................................................    14
    12.8  Confidentiality....................................................    14
    12.9  Attorneys' Fees, Costs and Expenses................................    15
13  DEFINITIONS..............................................................    15
--  -----------
    13.1  Definitions........................................................    15
</TABLE>

                                       3
<PAGE>

       This LOAN AND SECURITY AGREEMENT dated March 1, 2000, between SILICON
VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 with a loan production office located at 16633 Dallas Parkway,
Sixth Floor, Dallas, TX  75248 and BLUE WAVE SYSTEMS, INC, ("Borrower"), whose
address is 2410 Luna Road, Suite 132Carrollton, Texas 75006 provides the terms
on which Bank will lend to Borrower and Borrower will repay Bank. 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    Advances.

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

2.1.1  Revolving Advances.

       (a)    Bank will make Advances not exceeding the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base. 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
instructions 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 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.

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

2.2    Overadvances.

       If Borrower's Obligations under Section 2.1.1 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 1 percentage point above the Prime
Rate. 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.
Bank will not compute the interest in a manner that would cause Bank to contract
for, charge or receive interest that would exceed the Maximum Lawful Rate or the
Maximum Lawful Amount. After an Event of Default, Obligations accrue interest at
the Default Interest Rate. The Default Interest Rate is, at the Bank's options,
(I) the Maximum Lawful Rate, if the Maximum Lawful rate is established by
applicable law, or (ii) the interest rate applicable immediately prior to the
occurrence of the Event of Default plus 5 percentage points, if no Maximum
Lawful Rate law has been established by applicable law; or (iii) 18% per annum;
or (iv) such lesser rate of interest as Bank in its sole discretion may choose
to charge; but in no event more than the Maximum Lawful Rate.

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       (b) Spreading of Interest. Due to irregular periodic balances of
principal, the variable nature of the interest rate, or prepayment, the total
interest that will accrue under this Agreement cannot be determined in advance.
Bank does not intend to contract for, charge or receive more than the Maximum
Lawful Rate or Maximum Lawful Amount permitted by applicable state or federal
law, and to prevent such an occurrence Bank and Borrower agree that all amounts
of interest, whenever contracted for, charged or received by Bank, with respect
to the Obligations, will be spread, prorated or allocated over the full period
of time the Obligations are unpaid, including the period of any renewal or
extension thereof. If the maturity of the Obligations is accelerated for any
reason whether as a result of an Event of Default or otherwise prior to the full
stated term, the total amount of interest contracted for, charged or received to
the time of such demand shall be spread, prorated or allocated along with any
interest thereafter accruing over the full period of time that the Obligations
thereafter remain unpaid for the purpose of determining if such interest exceeds
the Maximum Lawful Amount.

       (c) Excess Interest. At maturity (whether by acceleration or otherwise)
or on earlier final payment of the Obligations, Bank will compute the total
amount of interest that has been contracted for, charged or received by Bank or
payable by Borrower hereunder and compare such amount to the Maximum Lawful
Amount that could have been contracted for, charged or received by Bank. If such
computation reflects that the total amount of interest that has been contracted
for, charged or received by Bank or payable by Borrower exceeds the Maximum
Lawful Amount, then Bank shall apply such excess to the reduction of the
principal balance, such excess shall be refunded to Borrower. This provision
concerning the crediting or refund of excess interest shall control and take
precedence over all other agreements between Borrower and Bank so that under no
circumstances shall the total interest contracted for, charged or received by
Bank exceed the Maximum Lawful Amount.

       (d) Payments. Interest due on the Committed Revolving Line is payable on
the 1st 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 set-
off. 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.

       (e) Lockbox Account. Borrower shall open and maintain with Bank an
account (the "Collateral Account") into which all funds received by Borrower
from account debtors shall immediately be deposited. Borrower shall direct all
account debtors to mail or deliver all checks or other forms of payment for
amounts owing to Borrower to a post office box designated by Bank, over which
Bank shall have exclusive and unrestricted access. Bank shall collect the mail
delivered to such post office box, open such mail, and endorse and credit all
items to the Lockbox Account. Borrower shall direct all account debtors or other
persons owing money to Borrower who make payments by electronic transfer of
funds to wire such funds directly to the Lockbox Account. Bank shall have all
right, title and interest in all of the items from time to time in the
Collateral Account and their proceeds. Bank and Borrower, Bank shall have the
right from time to time in its sole discretion to apply all amounts in the
Collateral Account against outstanding Obligations of Borrower. At such time,
neither Borrower nor any person claiming through Borrower shall have any right
in or control over the use of, or any right to withdraw any amount from, the
Collateral Account, which shall be under the sole control of Bank.

2.4    Fees.

       Borrower will pay:

       (a) Commitment Fee. Borrower shall pay Bank a Commitment Fee equal to one
quarter of one percent, per annum, of the average unused portion of the
Committed Revolving Line, payable in arrears quarterly on June 1, September 1,
December 1 and March 1; and

       (b) 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.

                                       5
<PAGE>

3      CONDITIONS OF LOANS
       -------------------

3.1    Conditions Precedent to Initial Advance.

       Bank's obligation to make the initial Advance is subject to the condition
precedent that it receive the agreements, documents and fees it requires.

3.2    Conditions Precedent to all Advances.

       Bank's obligations to make each Advance, including the initial Advance,
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
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance 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

                                       6
<PAGE>

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.

                                       7
<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 30 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.

       (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 at such time as 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 satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a lender's loss

                                       8
<PAGE>

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.

       Borrower will maintain as of the last day of each quarter:

           (i)  Quick Ratio. A ratio of Quick Assets to Current Liabilities of
at least 1.25 to 1.00.

           (ii) Tangible Net Worth. A Tangible Net Worth of at least $13,750,000
provided however, beginning with quarter ending June 30th and each quarter
thereafter, Borrower shall maintain quarterly step-ups equal to a minimum of 50%
of the previous quarter's net income plus 50% of new equity or Subordinated
Debt.

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    Changes 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 a material change in its ownership or management (other than the
sale of Borrower's equity securities in a public offering or to

                                       9
<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.

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 Advance 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.

8      EVENTS OF DEFAULT
       -----------------

       Any one of the following is an Event of Default:

                                       10
<PAGE>

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 Advance 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 Advances 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 Advances 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 Advances 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
$100,000 or that could cause a Material Adverse Change;

8.7    Judgments.

       If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied); or

                                       11
<PAGE>

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 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 Advances terminates.

                                       12
<PAGE>

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

     Texas 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 Dallas County, Texas.

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 AND THAT IT

                                       13
<PAGE>

KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH 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. 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.

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,

                                       14
<PAGE>

(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   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 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.

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

       "Closing Date" is the date of this Agreement.

       "Code" is the Texas Uniform Commercial Code.

       "Collateral" is the property described on Exhibit A.
                                                 ---------

       "Committed Revolving Line" is an Advance of up to $3,500,000.

       "Contingent Obligation" 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

                                       15
<PAGE>

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 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.

       "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, unless the Bank approves in writing;

       (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;

       (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.

        "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.

                                       16
<PAGE>

       "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 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.

        "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.

        "Maximum Lawful Rate" is the maximum rate of interest and the term
"Maximum Lawful Amount" means the maximum amount of interest that is permissible
under applicable state or federal laws for the type of loan evidenced by the
Loan Documents.   If the Maximum Lawful Rate is increased by statute or other
governmental action after the Closing Date, then the new Maximum Lawful Rate
will be applicable to the payments from the date of the effective date of the
rate change, unless otherwise prohibited by law.

                                       17
<PAGE>

       "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.

       "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;
and

       (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., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.

       "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, or
(ii) existing on equipment when acquired, if the Lien is confined to the
                                          --
property and improvements and the proceeds of the equipment;

       (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.

                                       18
<PAGE>

       "Prime Rate" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.

       "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 February 28, 2002.

       "Schedule" is any attached schedule of exceptions.

       "Subordinated Debt" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.

       "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 and service marks and names, Copyrights and research and
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:

Blue Wave Systems, Inc.


By:
    ---------------------------------

Title:
       ------------------------------


BANK:

SILICON VALLEY BANK


By:
    ---------------------------------

Title:
       ------------------------------

                                       19
<PAGE>

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

       This Intellectual Property Security Agreement is entered into as of March
1, 2000 by and between SILICON VALLEY BANK ("Bank") and Blue Wave Systems, Inc,
("Grantor").


                                    RECITALS
                                    --------

       A.  Bank has agreed to make certain advances of money and to extend
certain financial accommodation to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement by and between Bank
and Grantor dated March 1, 2000 (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"; capitalized terms used
herein are used as defined in the Loan Agreement). Bank is willing to make the
Loans to Grantor, but only upon the condition, among others, that Grantor shall
grant to Bank a security interest in certain Copyrights, Trademarks, Patents,
and Mask Works to secure the obligations of Grantor under the Loan Agreement.

       B.  Pursuant to the terms of the Loan Agreement, Grantor has granted to
Bank a security interest in all of Grantor's right, title and interest, whether
presently existing or hereafter acquired, in, to and under all of the
Collateral.

       NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound, as collateral security
for the prompt and complete payment when due of its obligations under the Loan
Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:

                                   AGREEMENT
                                   ---------

       To secure its obligations under the Loan Agreement, Grantor grants and
pledges to Bank a security interest in all of Grantor's right, title and
interest in, to and under its Intellectual Property Collateral (including
without limitation those Copyrights, Patents, Trademarks and Mask Works listed
on Schedules A, B, C, and D hereto), and including without limitation all
proceeds thereof (such as, by way of example but not by way of limitation,
license royalties and proceeds of infringement suits), the right to sue for
past, present and future infringements, all rights corresponding thereto
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part thereof.

       This security interest is granted in conjunction with the security
interest granted to Bank under the Loan Agreement. The rights and remedies of
Bank with respect to the security interest granted hereby are in addition to
those set forth in the Loan Agreement and the other Loan Documents, and those
which are now or hereafter available to Bank as a matter of law or equity. Each
right, power and remedy of Bank provided for herein or in the Loan Agreement or
any of the Loan Documents, or now or hereafter existing at law or in equity
shall be cumulative and concurrent and shall be in addition to every right,
power or remedy provided for herein and the exercise by Bank of any one or more
of the rights, powers or remedies provided for in this Intellectual Property
Security Agreement, the Loan Agreement or any of the other Loan Documents, or
now or hereafter existing at law or in equity, shall not preclude the
simultaneous or later exercise by any person, including Bank, of any or all
other rights, powers or remedies.


  IN WITNESS WHEREOF, the parties have cause this Intellectual Property Security
Agreement to be duly executed by its officers thereunto duly authorized as of
the first date written above.
<PAGE>

                                    GRANTOR:

Address of Grantor:                 Blue Wave Systems, Inc,


2410 Luna Road, Suite 132           By:
                                        -------------------------------------
Carrollton, Texas 75006.            Title:
                                           ----------------------------------
Attn:
      -----------------------------


                                    BANK:

Address of Bank:                    SILICON VALLEY BANK

9020 Capital of Texas Hwy. North    By:
                                        -------------------------------------
Austin, TX 78759
                                    Title:
                                           ----------------------------------
Attn:
      -----------------------------



                                       2