LOAN MODIFICATION AND FORBEARANCE AGREEMENT


     This Loan  Modification  and Forbearance  Agreement  (this  "Agreement") is
entered  into as of August 3, 2001,  by and  between  Tanisys  Technology,  Inc.
("Borrower") and Silicon Valley Bank ("Bank").

1. DESCRIPTION OF EXISTING  INDEBTEDNESS:  Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents,  an Accounts Receivable Financing  Agreement,  dated May 30, 2001, as
may be amended from time to time (the "Loan Agreement").  Defined terms used but
not  otherwise  defined  herein  shall  have  the same  meanings  as in the Loan
Agreement.

Hereinafter,  all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness".

2.  DESCRIPTION OF COLLATERAL AND GUARANTIES.  Repayment of the  Indebtedness is
secured by the  Collateral  described in the Loan  Agreement.  Hereinafter,  the
above-described  security  documents  and  guaranties,  together  with all other
documents  securing  repayment of the  Indebtedness  shall be referred to as the
"Security  Documents".  Hereinafter,  the Security Documents,  together with all
other documents  evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents".

3. FORBEARANCE.  Bank agrees to forebear from exercising its rights and remedies
under the Existing Loan  Documents and law ("Default  Rights") until the earlier
of (a) August 31, 2001, (b) the close of a new equity round of the Borrower,  or
(c) the occurrence of a Default under this Agreement (the "Forbearance Period"),
notwithstanding Borrower's existing default under the Loan Agreement as a result
of  Borrower's  failure to comply with the maximum loss  covenant for the period
ending 6/30/01 as described in Section 6.2 entitled  "Affirmative  Covenants" of
the Loan  Agreement (the  foregoing  being referred to as "Existing  Defaults").
Hereinafter,  the Existing Loan Documents, as modified by this Loan Modification
and  Forbearance  Agreement  are  hereinafter   collectively  called  the  "Loan
Documents".

     By signing below, Borrower acknowledges that it is currently in default and
as a result of the Existing Defaults,  Bank is entitled to exercise its remedies
as provided in the Existing Loan Documents and as provided under applicable law.
The Forbearance Period shall be immediately  terminated,  without notice, if (a)
Borrower  breaches  of any of the  terms set  forth in this  Agreement,  (b) the
occurrence of any default (other than the Existing  Defaults) under the Existing
Loan Documents,  or (c) if any recital,  representation or warranty made herein,
in any document executed and delivered in connection herewith, or in any report,
certificate, financial statement or other instrument or document previously, now
or hereafter  furnished by or on behalf of the Borrower in connection  with this
Agreement or any other document  executed and delivered in connection  with this
Agreement,  shall  prove to have been false,  incomplete  or  misleading  in any
material  respect  on  the  date  as of  which  it  was  made  (collectively,  a
"Default"),  whereupon Bank, at its option,  without any notice to Borrower, may
immediately  cease making any further Advances and may immediately  exercise any
Default Rights.

     Bank's  agreement to forbear from  enforcing  its Default  Rights under the
Existing Loan Documents  until the end of the  Forbearance  Period (a) in no way
shall be deemed an agreement  by Bank to waive  Borrower's  compliance  with all
other  terms  of  the  Existing  Loan  Documents,   as  modified  by  this  Loan
Modification and Forbearance  Agreement and (b) shall not limit or impair Bank's
right to demand  strict  performance  of all other terms and covenants as of any
date.  Nothing in this Loan  Modification  and Forbearance  Agreement in any way
shall constitute Bank's waiver of the Existing Defaults. Borrower further agrees
that  the  exercise  of any  Default  Rights  by Bank  upon  termination  of the
Forbearance  Period shall not be affected by reason of this  Agreement,  and the
Borrower  shall not assert as a defense  thereto the passage of time,  estoppel,
laches or any  statute of  limitations  to the extent  that the  exercise of any
Default Rights was precluded by this Agreement.

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4.   DESCRIPTION OF CHANGE IN TERMS.

     A.   Modification(s) to Loan Agreement.

          1.   Notwithstanding  the terms and conditions  contained in Section 2
               entitled  "Financing  of Accounts  Receivable",  from the date of
               this Agreement  until such time Bank receives  executed copies of
               final documents pertaining to the new equity investment, Borrower
               shall no longer be entitled for further Advances.

5. CONSISTENT CHANGES.  The Loan Documents are hereby amended wherever necessary
to reflect the changes described above.

6. NO DEFENSES OF BORROWER.  Borrower agrees that, as of the date hereof, it has
no defenses  against the obligations to pay any amounts under the  Indebtedness.
The Borrower acknowledges and warrants that Bank has acted in good faith and has
conducted in a commercially reasonable manner its relationships with Borrower in
connection  with  this  Agreement  and in  connection  with the Loan  Documents,
including the Loan Agreement and the  Indebtedness,  the Borrower  hereby waives
and releases any claims to the contrary.

7.  CONCERNING  REVISED ARTICLE 9 OF THE UNIFORM  COMMERCIAL  CODE. The Borrower
affirms and reaffirms that  notwithstanding  the terms of the Security Documents
to the contrary, (i) that the definition of "Code", "UCC" or "Uniform Commercial
Code" as set forth in the Security  Documents  shall be deemed to mean and refer
to "the  Uniform  Commercial  Code as adopted  by the State of Texas,  as may be
amended and in effect from time to time and (ii) the Collateral is all assets of
the Borrower.  In connection  therewith,  the Collateral shall include,  without
limitation,  the following  categories  of assets as defined in the Code:  goods
(including  inventory,   equipment  and  any  accessions  thereto),  instruments
(including     promissory     notes),     documents,     accounts     (including
health-care-insurance  receivables,  and license  fees),  chattel paper (whether
tangible or electronic),  deposit accounts,  letter-of-credit rights (whether or
not the letter of credit is  evidenced  by a writing),  commercial  tort claims,
securities and all other investment  property,  general  intangibles  (including
payment  intangibles  and  software),  supporting  obligations  and  any and all
proceeds  of any  thereof,  wherever  located,  whether  now owned or  hereafter
acquired.

8.  WAIVER AND  RELEASE OF  CLAIMS.  (a)  Borrower  signing  below  (each of the
foregoing being a "Releasing  Party") hereby releases,  acquits,  and discharges
Bank and  Bank's  employees,  agents,  representative,  consultants,  attorneys,
fiduciaries,  servants, officers, directors, partners, predecessors,  successors
and assigns, subsidiary corporations, parent corporations, and related corporate
divisions (all of the foregoing hereinafter called the "Released Parties"), from
all actions and causes of action, judgments,  executions,  suits, debts, claims,
demands,  liabilities,  obligations,  damages,  and  expenses  of any and  every
character,  known or unknown,  direct and/or indirect,  at law or in equity,  of
whatsoever  kind or nature,  whether  heretofore  or hereafter  arising,  for or
because of any matter or things  done,  omitted or suffered to be done by any of
the Released Parties prior to and including the date of execution hereof, and in
any way directly or indirectly arising out of or in any way connect to this Loan
Modification  and  Forbearance   Agreement  and  the  Existing  Loan  Documents,
including,  but not limited to, claims  relating to any  settlement  negotiation
(all of the foregoing hereinafter called the "Released Matters"). Each Releasing
Party  acknowledges  that the  agreements  in this section are intended to be in
full  satisfaction  of  all  or any  alleged  injuries  or  damages  arising  in
connection with the Released Matters.

     (b) Each Releasing Party  acknowledges that it has not relied, in executing
the release set forth in this section, upon any representations,  warranties, or
conditions by Bank or any other entity except as are  specifically  set forth in
this Loan Modification and Forbearance Agreement.

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     (c) Nothing contained herein shall be construed at any time as an admission
by Bank of any liability to Borrower or any other entity.

     (d) Each  Releasing  Party  warrants to Bank that it has not  purported  to
transfer,  assign,  or  otherwise  convey any right,  title or  interest of such
Releasing  Party  in any  Released  Matter  to any  other  entity,  and that the
foregoing constitutes a full and complete release of all Released Matters.

9. CONTINUING  VALIDITY.  Borrower  understands and agrees that in modifying the
existing  Indebtedness,   Bank  is  relying  upon  Borrower's   representations,
warranties,  and  agreements,  as set  forth in the Loan  Documents.  Except  as
expressly modified pursuant to this Loan Modification and Forbearance Agreement,
the terms of the Loan Documents  remain  unchanged and in full force and effect.
Bank's agreement to modifications to the existing  Indebtedness pursuant to this
Loan  Modification  and  Forbearance  Agreement in no way shall obligate Bank to
make  any  future  modifications  to the  Indebtedness.  Nothing  in  this  Loan
Modification  and Forbearance  Agreement shall  constitute a satisfaction of the
Indebtedness.  It is the  intention  of Bank and  Borrower  to  retain as liable
parties  all makers and  endorsers  of the Loan  Documents,  unless the party is
expressly released by Bank in writing. No maker,  endorser, or guarantor will be
released by virtue of this Loan  Modification  and  Forbearance  Agreement.  The
terms of this Paragraph apply not only to this Loan Modification and Forbearance
Agreement, but also to all subsequent loan modification agreements.

10. INTEGRATION. This Loan Modification and Forbearance Agreement, together with
the Loan Documents, constitutes the entire agreement and understanding among the
parties  relating to the subject  matter  hereof,  and  supersedes all prior and
contemporaneous proposals, negotiations, agreements, and understandings relating
to the subject matter.  In entering into this Loan  Modification and Forbearance
Agreement,   Borrower   acknowledges   that  it  is  relying  on  no  statement,
representation, warranty, covenant, or agreement of any kind made by the Bank or
any  employee  or agent of Bank,  except  for the  agreements  of Bank set forth
herein.  No  modification,  rescission,  waiver,  release,  or  amendment of any
provision of this Loan  Modification  and  Forbearance  Agreement shall be made,
except by a written agreement signed by Bank and Borrower.

11. GOVERNING LAW, HEADINGS. This Loan Modification and Forbearance Agreement is
one of the Loan  Documents  defined in the Loan  Agreement and shall be governed
and  construed  in  accordance  with the laws of the  State of  California.  The
headings and captions in this Loan  Modification  and Forbearance  Agreement are
for the  convenience  of the  parties  only  and  are  not a part  of this  Loan
Modification and Forbearance Agreement.

     This Loan Modification and Forbearance Agreement is executed as of the date
first written above.

BORROWER:                                   SILICON:

Tanisys Technology, Inc.                    SILICON VALLEY BANK


By: /s/ Terry W. Reynolds                   By: /s/ Lee Shodiss
    -------------------------------             -------------------------------
Name: Terry W. Reynolds                     Name: Lee Shodiss
      -----------------------------               -----------------------------
Title: Vice President and                   Title: Senior Vice President
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         Chief Financial Officer
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