EX 10.39





	








AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
TANISYS TECHNOLOGY, INC. 






















	


TABLE OF CONTENTS 









		 
	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	 
	5	 
	      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	 	9	 
	      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	 	10	 
	      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	 	11	 
	      8.1    Payment Default	 	11	 
	      8.2    Covenant Default	 	11	 
	      8.3    Material Adverse Change	 
	11	 
	      8.4    Attachment	 	11	 
	      8.5    Insolvency	 	11	 
	      8.6    Other Agreements	 	11	 
	      8.7    Judgments	 	12	 
	      8.8    Misrepresentations	 	12	 








	




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	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	 
	11   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER	 	13	 
	12   GENERAL PROVISIONS	 	14	 
	       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	 
	15	 
	       12.9    Effect of Amendment and Restatement	 	15	 
	       12.10    Attorneys’ Fees, Costs and Expenses	 	15	 
	13   DEFINITIONS	 	15	 
	        13.1    Definitions	 	15	 











	




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          This
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated September 19, 2000, between
SILICON VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 with a loan production office located at 9020 Capital of Texas Hwy.
North, Austin, Texas 78759 and TANISYS TECHNOLOGY, INC. (“Borrower”), whose
address is 12201 Technology Boulevard, Suite 125, Austin, Texas 78727 provides the terms
on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as
follows:  



RECITALS



          
A.    Bank
and Borrower are parties to that certain Accounts Receivable Financing Agreement dated
April 3, 2000, 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.  



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.
This Agreement shall be construed to impart upon Bank a duty to act reasonably at all
times.  



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.  














	




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2.3    Interest
Rate, Payments.



          (a)
Interest Rate. Advances accrue interest on the outstanding principal balance at a per
annum rate of 1.50 percentage points above the Prime Rate, decreasing to a per annum rate
of 1.00 percentage point above the Prime Rate, effective the first day of the month
following Borrower maintaining a Quick Ratio (as described in Section 6.7) of at least
1.50 to 1.00 for 3 consecutive months. 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.
 



          (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 18th 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.  



2.4    Fees.



          Borrower
will pay: 



          (a)
Facility Fee. A fully earned, non-refundable Facility Fee of $5,000 due on the Closing
Date; 



          (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; and 












	




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          (c)
Non-Usage Fee. A non-usage fee equal to the daily unused portion under the Committed
Revolving Line, multiplied by a per annum rate of 0.50%, calculated and payable quarterly
in arrears.  



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.  



          The
purpose of the initial Advance shall be to pay off any and all outstandings under that
certain Accounts Receivable Financing Agreement, dated April 3, 2000, by and between
Borrower and Bank. 



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
continues to grant 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
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 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.  












	




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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.  












	




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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)
Prior to the initial Advance and at such times as Advances are outstanding, 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.  



          (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 year 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.  












	




8 














	






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 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 month:  



          (i)
Quick Ratio. A ratio of Quick Assets to Current Liabilities of at least 1.15 to
1.00 for the month ended August 31, 2000, increasing to 1.20 to 1.00 for the months
ending September 30, 2000 through December 31, 2000, increasing to 1.30 to 1.00 for the
months ending January 31, 2001 through March 31, 2001, and increasing to 1.50 to 1.00 for
the month ending April 30, 2001 and thereafter. 



          (ii) Profitability.
Borrower will have a quarterly minimum net profit of $300,000 as of the quarter ending
September 30, 2000; $100,000 as of the quarter ending December 31, 2000; $300,000 as of
the quarter ending March 31, 2001; and $300,000 as of the quarter ending June 30, 2001.
 



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.  











	




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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 (i) ownership (other than the sale of Borrower’s equity securities in a
public offering or to venture capital investors approved by Bank) of greater than 25% or
(ii) key management without Bank’s approval, which such approval shall not be
unreasonably withheld. 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) such transaction would not 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 into 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 reasonably 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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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
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;  












	




11 














	





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  



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 














	






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
Travis or Williamson County, Texas.  












	




13 














	







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 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.  











	




14 














	







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 advances 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 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.  












	




15 















	





          “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 $2,000,000.  



          “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 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; butBank
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, unless the Bank approves in writing; 



          (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; 











	




16 














	






          (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.  



          “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.
 











	




17 














	






          “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.
 



          “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; 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, ifthey have no priority over any of Bank’s security
interests;  











	




18 














	






          (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, ifthe 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.  



          “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 September 18, 2001. 



          “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.  












	




19 














	






BORROWER: 



Tanisys Technology, Inc. 




By:
/s/ Terry Reynolds 



Title:
Vice President 



BANK: 



SILICON VALLEY BANK 




By:
/s/ Sheila Colson 



Title: V.P. 












	




20 














	







EXHIBIT A 





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



          All
goods and equipment now owned or hereafter acquired, including, without limitation, all
machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest
in any of the foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever located;
 



          All
inventory, now owned or hereafter acquired, including, without limitation, all
merchandise, raw materials, parts, supplies, packing and shipping materials, work in
process and finished products including such inventory as is temporarily out of Borrower’s
custody or possession or in transit and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above;  



          All
contract rights and general intangibles now owned or hereafter acquired, including,
without limitation, goodwill, trademarks, servicemarks, trade styles, trade names,
patents, patent applications, leases, license agreements, franchise agreements,
blueprints, drawings, purchase orders, customer lists, route lists, infringements,
claims, computer programs, computer discs, computer tapes, literature, reports, catalogs,
design rights, income tax refunds, payments of insurance and rights to payment of any
kind;  



          All
now existing and hereafter arising accounts, contract rights, royalties, license rights
and all other forms of obligations owing to Borrower arising out of the sale or lease of
goods, the licensing of technology or the rendering of services by Borrower, whether or
not earned by performance, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by Borrower;
 



          All
documents, cash, deposit accounts, securities, securities entitlements, securities
accounts, investment property, financial assets, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and Borrower’s
Books relating to the foregoing;  



          All
copyright rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative work thereof, whether published or unpublished,
now owned or hereafter acquired; all trade secret rights, including all rights to
unpatented inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; all mask work or similar
rights available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future infringement of
any of the foregoing; and  



          All
Borrower’s Books relating to the foregoing and any and all claims, rights and
interests in any of the above and all substitutions for, additions and accessions to and
proceeds thereof.  















	








INTELLECTUAL
PROPERTY SECURITY AGREEMENT


           


          This
Intellectual Property Security Agreement is entered into as of September 19, 2000 by and
between SILICON VALLEY BANK (“Bank”) and Tanisys Technology, 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 Amended and Restated Loan and Security Agreement by and between Bank and
Grantor dated September 19, 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.  

















		
	Address of Grantor:

12201 Technology Boulevard, Suite 125
Austin, TX 78727

          
Attn:
          ——————————————	GRANTOR:

Tanisys Technology, Inc.

By: /s/ Terry Reynolds

Title: Vice President
	

Address of Bank:

9020 Capital of Texas Hwy. North
Austin, TX 78727

          
Attn:
          ——————————————	

BANK:

SILICON VALLEY BANK

By: /s/ Sheila Colson

Title: V.P.







	




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